Trust Is An Issue For Brands

I don’t put much stock in the annual 100 Best Global Brands report from BusinessWeek for two reasons: the valuations by Interbrand never seem to have any relevance and the list is too U.S. centric to truly be called a global brand ranking.

Nevertheless, there is one interesting and pertinent point made in the BusinessWeek article accompanying this annual listing. This concerns the element of trust, or what the article’s two writers refer to as “the most perishable of assets.”

According to the article, recent polling (in the USA) shows that distrust amongst consumers for business as a whole is growing. Citing a phone survey by public relations firm Edelman, only 44% of Americans say they trusted business, a significant decline from the 58% level recorded two years ago.

This point got me to dust off a posting from The Reputation Garage Blog from October 2008 that I had filed.

In that post, a reprint from an article that appeared in HR Leaders magazine, trust is called “one of the defining issues of the emerging century.”

Public trust in big business, governments, and even non-profit organizations has been declining throughout the 21st century. Here are some “fun” statistics that I gleaned from The Reputation Garage Blog:

* As few as 13% of all Americans place their trust in big business (and it’s not much higher for other mature consumer societies!).
* Only 39% of employees in a Watson Wyatt survey said they trusted senior leadership.
* Some three-quarters of US consumers feel that companies don’t tell the truth in advertising.
* Three-quarters of employees in big companies observed violations of the law or company standards in a 12-month period.

As economies start to rebound, marketers and organizational leaders have an important task in front of them: re-establishing their torn and tattered brands and re-building trust with all constituencies.

Failure to do so is not an option. Unless you want the tombstone for your organization’s brand to read “died of trust-related causes.”

Li Ning: First Global Chinese Brand?

According to Fast Company, Chinese Olympian Li Ning wants to build the first truly global brand to emanate from China.

In an in-depth article, the magazine touts how Li Ning (the company) is China’s largest domestic manufacturer of athletic footwear and sports apparel, with revenues over $1 billion from 6300 outlets.

While Fast Company focuses on the design of the Li Ning product line, the article fails to convince how this company is likely to take on Nike, adidas, Puma and others in the international arena.

I can think of only one athlete who has ever successfully launched a brand with their own name (Michael Jordan’s Air Jordans footwear line in partnership with Nike).

Can Li Ning build an entire global brand spectrum around his own name? Time will tell, but I have my doubts.

What do you think?

China Now 5th Largest Consumer Market

China has become the world’s fifth largest consumer market, according to an online Advertising Age article.

With consumer spending at $890 billion, the Chinese consumer market trails only the U.S., Japan, the U.K., and Germany. China reportedly now also has a larger car market than the USA. McKinsey & Company, the global consultancy, predicts that China will become the third largest consumer market by 2020, moving ahead of both the U.K. and Germany, with an estimated consumer expenditure of $2.5 trillion.

With personal consumer consumption currently accounting for only 36% of China’s GDP, which is half the U.S. figure and approximately two-thirds of the ratio for the other top four consumer markets, it is obvious that consumer spending in China has tremendous growth potential.

With the World Bank recently upgrading China’s 2009 economic growth forecast from 7.2 percent to 8.4 percent and predicting an enhanced 8.7 growth rate for 2010, China is expected to surpass Japan as early as next year to become the world’s second largest economy.

In another measure of the strength of the Chinese economy, China became the world’s largest exporter for the first time, surpassing previous leader Germany in the first half of 2009.

If you are not doing business in China, you need to ask yourself why not.

The Green Marketing Landscape: Ratings, Labels, and Certifications

GreenBiz.com is hosting a free webinar on October 15th featuring a panel of experts covering the topic The Green Marketing Landscape: Ratings, Labels, and Certificates.

With the field of Green Marketing in constant flux, many marketers are confused on how their organizations’ “green” marketing messages need to comply with changing customer expectations and legal requirements.

Moderated by GreenBiz.com executive editor Joel Makower, this webinar is designed to address “how to navigate the ins and outs of green marketing effectively and  legally in today’s world.”

Topics to be discussed include:

* How to avoid issues surrounding false or deceptive advertising allegations related to environmental or green messages.
* How to motivate mainstream consumers to make sustainable choices.
* The latest developments in green claims validation and product certification.

While this webinar will undoubtedly come from a U.S.-centric perspective, it should nevertheless be informative and useful to marketers around the globe.

For more details and to register for this free webinar, click here.

If you attend and want to share your thoughts, please add your comments below for all to read.

Is Brand Loyalty BS?

Brand loyalty is still alive, though declining, at the supermarket according to a survey just conducted by Tim Manners and The Hub Magazine.
Most interestingly, this survey was conducted online with over marketing 200 practitioners, who reported that their loyalty for ten or more brands has dropped in the past year from 61% to 54%.

Over half the 200 respondents claimed that there is such a thing as brand loyalty, even if their own loyalty buying habits have changed in the past year. Another 31% said their loyalties had remained unchanged. Only 9% of these marketing professionals said there was no such thing as brand loyalty.

Surprisingly, the split in loyalty between brands and supermarkets was almost equal, with 45.8% saying they are generally more loyal to the supermarkets where they shopped and 54.2% agreeing they are generally more loyal to the brands they purchased than to the stores where these are bought.

The key factors in supermarket store loyalty would appear to be convenience and seeking savings from sales, based on the comments submitted by a quarter of those who took part in the survey.

Most interestingly, almost two-thirds of the respondents (64%) said that their supermarkets’ loyalty or charge card program did not make them more loyal to the store. In fact, some indicated that these so-called loyalty programs infuriated them and caused them to shop elsewhere.

In terms of category responses, 68% said that they usually purchase more than one breakfast cereal brand and more than one bread brand. What isn’t clear from the responses is whether these purchases are due to the different likes of household family members (which could indicate strong brand loyalty to multiple brands) or if these purchases are a sign of little entrenched brand loyalty in these two categories.

For instance, in my household, we regularly purchase four breakfast cereal brands, due to different taste buds between our adult members and our two teenage boys. However, as we almost always purchase the same four breakfast cereal brands, ours would be a very brand loyal family for this category, albeit across four different brands.

Speaking of brand loyalty, is there such a thing according to these marketing professionals? Not surprisingly, they feel there is. A full 85% responded “no” to the question “is brand loyalty BS.”

However, the current state of play in loyalty may be best summed up by one respondent who wrote regarding brand loyalty:  “for certain brands and categories yes, for the vast majority no.”

Brand loyalty may not be dead, but it is certainly being applied to fewer brands and fewer product categories.

Of the 200+ respondents to this online survey, 30% were from consulting and marketing services firms, 16% from agencies and four percent from media.  The remainder were from manufacturers, the service industry, academia, and a handful of other industries. Over half (55%) of the respondents have more than 15 years in marketing, with another 17% having 10 to 15 years of marketing experience.

A full report of these survey results is promised for the November issue of The Hub Magazine, which will be devoted to the subject of loyalty.

Here’s a questions I hope Tim and his team cover: if marketing professionals, such as the ones in this survey, have declining brand loyalty despite their firm beliefs in the concept of brand loyalty, how can we expect the general consumer and populace to become more brand loyal?

After all, if marketing people do not “walk the talk” about brand loyalty in their own purchasing patterns, do we really expect the general public to listen to our marketing messages and “do as we say, not as we do?”

Which Way Is Internet Advertising Headed?

A pair of expenditure reports on Internet Advertising has us wondering in which direction is this headed?

First, Britain became the first major market in which advertisers spent more on Internet advertising than on TV ads, with a record £1.8 billion (US$3.2 billion) invested online in the first six months of the year. Earlier this year Denmark became the first country where Internet ad spending overtook TV advertising spend.

Internet advertising now accounts for 23.5% of all advertising in the UK, with TV ads (down 17% in actual spend from the first half of last year) at just 21.9% market share.

Then, about a week after this report from the Internet Advertising Bureau (IAB) and auditor PricewaterhouseCoopers, the pair released a report stating Internet advertising in the U.S. dropped 5.3% to $10.9 billion in the first half of this year. Of course, that’s not as bad as the 15.4% decline in total advertising expenditure in the first six months of the year according to Nielsen figures.

Even more concerning (for those selling online advertising), IAB and PwC predict that total online advertising expenditure this year will fall in the $21 billion to $22 billion range, a significant drop from the $23.4 billion recorded last year.

So why has Internet advertising become the biggest advertising sector in the UK with a 4.6% year-on-year increase, while at the same time Internet advertising expenditures have dropped 5.3% in the U.S.?

And what’s happening in other major advertising markets, such as Australia, France, Germany and Japan?

Anyone have any insights on this?

Slapping on the Fees

As a result of our previous post on Eliminate Stupid Rules & Fees, we were interviewed by Phil Dobbie recently for a BNET podcast.

You can listen here to the discussion in which I warn companies against slapping on fees to drive new revenue sources as I believe doing so risks increased customer churn and reductions in overall spend. Finding new ways to add fees to customers is a critical mistake made by inexperienced marketers.

Oh no….the American Marketing Association Has Done It Again!

The American Marketing Association has released a new definition of marketing, a mere three-plus years after their last one!
Supposedly to reflect marketing’s broader role in society the new definition reads:

Marketing is the activity, set of institutions, and processes for creating, communicating, and exchanging offerings that have value for customers, clients,partners and society at large.

One of the most important changes to the AMA’s new definition of marketing is that marketing is presented as a broader activity,states Nancy Costopulos,CMO of the American Marketing Association.Marketing is no longer a function — it is an educational process.

I think the folks who need educating on this is the AMA. This definition has the inherent look and feel of a committee decision trying to please too many self-interested members. I shudder at the thought that this will now be the official definition of marketing in books and taught in universities across the USA as AMA claims.

And what’s the value to society at large that comes from marketing bubble gum, handguns, child pornography, religious fanaticism, Japanese whaling expeditions in the name of science, and xenophobia? Whether the AMA likes it or not the proponents of all these use marketing processes and techniques.

I wonder which set of institutions are now part and parcel of the definition of marketing. Only those who join the AMA? Every organization that has customers is engaged in marketing. My motto: if it touches the customer, it’s a marketing issue. You don’t need to be an intitution, or use one, to engage in marketing.

The last time AMA came up with a new definition of marketing was way back in 2004! That definition read:

Marketing is an organizational function and a set of processes for creating , communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

At least the 2004 changes were a huge improvement on the previous one (created in 1985) which read: marketing is the process of planning and executing conception, pricing, promotion and distribution of goods, ideas and services to create exchanges that satisfy individual and organizational goals.

If the AMA felt a need to improve on its three-year old definition, I would have personally recommended the following:

Marketing is an organization-wide function, activity and set of process to create and keep good customers by creating, communicating, and deliverying value to customers to the benefit of its customers, the organization and its stakeholders.

Now that’s a definition that wouldn’t need updating and amending any time soon.

10 New Rules of Branding

I came across the following list of so-called new rules of branding in a recent issue of Marketing magazine here in Australia. The list was developed by the folks at www.BrandingStrategyInsider.com.

Personally, I’d say the list is more valuable as a set of new considerations to be taken into account for marketing strategy, not just branding. But that’s just my opinion!

Anyway, here’s the list:

1. Brands that influence culture sell more; culture is the new catalyst for growth.

2. A brand with no point of view has no point; full-flavor branding is in, vanilla is out.

3. Today’s consumer is leading from the front; this is the most well-informed generation to have ever walked the planet.

4. Customize wherever and whenever you can.

5. Forget the transaction, just give me an experience.

6. Deliver clarity at point of purchase; be obsessive about presentation.

7. You are only as good as your weakest link; do you know where you’re vulnerable?

8. Social responsibility is no longer an option; what’s your cause, what’s your contribution?

9. Pulse, pace and passion really make a difference; has your heartbeat been checked recently?

10. Innovation is the new boardroom favorite.

Can’t say I agree with all of these….but it’s a good way to start a dialogue. Any comments?

Welcome to The Steven Howard Marketing Blog

We are pleased to announce The Steven Howard Marketing Blog, which will contain our thoughts and musings on marketing, customer retention, branding, corporate image, and other marketing-related matters.

I am a Melbourne, Australia based marketing consultant, author, and keynote speaker whose 25-year marketing and sales career in Asia/Pacific has covered a wide variety of fields, ranging from consumer electronics to publishing and from a national airline to personal financial products. I consult on a regular basis to companies in the financial services, industrial products, consumer products, restaurants, petroleum, publishing, and hospitality fields.

For more information, please visit our web site at www.howard-marketing.com, where you may also subscribe to our free weekly electronic newsletter, the Monday Morning Marketing Memo.

This blog will get fully underway in the next couple of days and we look forward to your active participation in our discussions.

Regards,

Steven Howard

steven@howard-marketing.com

s and musings on marketing, customer retention, branding, corporate image and more.ughts and musings on marketing, customer retention, branding, corporate image and more.