How customer values are transforming brands today

https://biznology.com/2017/05/customer-values-transforming-brands-today/

Brands are under attack today from many sources, most often triggered by activists on social media. They are demanding brands take a stand on controversial socioeconomic and political issues that are getting more attention with our divisive politics today. Most brands can no longer ignore these trends and remain apolitical. There are always risks of offending some customers and employees so the challenge is to determine what issues to address, and how. The answer should depend on the core values that define the brand equity and image, and related to this the most important values of their primary customers and employees.

Fully understanding the concept of “brand value” is crucial for addressing this dilemma these days. In the 1980s David Aaker described brand equity, which is all about value, as “a set of brand assets and liabilities linked to a brand name and symbol,” and had four dimensions: brand loyalty, awareness, associations, and perceived quality. A more general interpretation is Webster’s definition of value which refers to the “worth, usefulness or importance in comparison with something else.” But value is also relative, and marketers usually determine the level of value (e.g. degrees of good or bad) using a basic formula: the benefit divide by the price.

Today, top-selling consumer brands are becoming more vulnerable from customers who question the true value of their brand offerings, especially among the distrustful millennials. They view many big brands as overpriced and/or overpromising, hence not “good value,” and instead are switching to store brands and less expensive products offered online (e.g. on Amazon). The results are alarming for big consumer goods companies like Procter & Gamble and Pepsi:

  • Overall consumer packaged goods in the U.S. declined 2.5% in the first quarter (source: Nielsen)
  • The sales growth of big brands were flat in 2016, versus smaller brands which grew 2.4%
  • This discouraging performance is more pronounced as most consumers reported an improvement in household financial conditions over the past six months.

Underlying this lackluster sales performance of household staples are key emerging trends associated mainly with millennials–getting married later, shopping more online, not having as many children, eating fresher and healthier foods/beverages, aggressively seeking deals, and cutting back on purchases as they draw down supplies at home.

Concurrent with these disturbing trends facing big brands is an intensifying insistence by customers to learn and judge what such brands stand for today, i.e. their mission and values. The controversies evolving from Trumpism on such issues like immigration, the environment and sustainability, health, partisanship, etc. have further galvanized consumer demands for brands to take a position on such issues, aggravated by an existing, ubiquitous lack of trust in corporate and government institutions.

Here are some examples of how major brands are now taking serious action to demonstrate their support for their core values, in response to what their customers expect from them:

  • GOOGLE: on how it stands behind inclusion, just set up a $2 million crisis fund for nonprofits working with refugees, to be matched by employees. Sergey Brin, Google’s co-founder, recently joined protestors in San Francisco after the immigration ban was signed, saying “this is a debate about fundamental values.”
  • KRAFT-HEINZ: pledged in March a $200 million investment for environmental management and other CSR efforts, including a sustainable supply chain.
  • HEINEKEN: promoting their values on civility, tolerance, and mutual bonding with their controversial ad campaign showing people with diverse backgrounds and opposing views conversing and trying to understand each other.
  • PATAGONIA: a certified B Corporation, founded by climbers and surfers who shared a “love of wild and beautiful places,” took a strong stand against Scott Pruitt, the new head of the EPA, and his skepticism of global warming. Rose Marcario, its CEO, said “we have to stand up for our values…our customers expect it,” i.e. a position that strengthened the loyalty of their core customers.

This is a new world for CEOs and CMOs, as they are grappling with whether or how to address these increasing calls to declare their position on such social issues. The failure to immediately respond to a potential brand challenge can be disastrous for a company, impacting its values, revenue, and reputation, with social media spreading the news faster than ever. A worldwide survey by the law firm, Freshfields Bruckhaus Deringer, reported that 28% of reports on such brand-crisis issues spreads internationally within an hour, and 69% go global within a day.

For brand damage control, there are two critical sides to consider. First, companies must realistically, consistently and more precisely define the key values that make up their brand image. This effort must be authentic and reflect its heritage, to counterbalance the existing cynicism and distrust of so many of its customers. And secondly, marketers must accurately and honestly identify the passionate emotions and values of both their customers and employees. Ideally they should match up, which can provide a timely opportunity for companies to take the initiative with new programs and messaging content. The ultimate goal, and strategic benefit, would be a strengthening of their relationship with customers and employees, which is what branding is all about.


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