Monday, August 31, 2015

It’s All How You Market It: Beer for Breakfast

Remember when you were growing up and they told you to “start your day with a good breakfast?” And then the joke when you were in college, “Beer – it’s not just for breakfast?” Well, here’s what happens when categories weaken and worlds collide!

Wheaties (the “breakfast of champions”) is partnering with a craft brewery to create a limited-edition beer called “HefeWheaties.” That name is a takeoff on a German style of beer called “hefeweizen,” a malt beverage made from – you guessed it – wheat.

It had to happen. All breakfast food cereals have been suffering over the past few years and brands have been losing their snap, crackle, and pop. General Mills hasn’t been immune to shifts in consumer eating habits (moving away from cereal bowls to foods like granola bars and yogurt) and expectations (moves from sit-down to grab-and-go options).

General Mills reported their fiscal 4th quarter numbers in July indicating that their net income of $186.8 million was down from $404.6 million in the year-earlier period. They, and every other cereal brand, are looking for ways to engage customers and increase sales, so why not license the name and logo to a different category – in this case, craft beers – that is growing? Right now the 16-ounce tallboy cans will only be available in the Minneapolis-St. Paul market, appearing at the end of August and, as you might have already guessed, don’t really contain any Wheaties.

Is that important? Well, what years of research and in-market validations have proven, companies can have the financial and production wherewithal to do something like this, but can’t be sure that it will take in the marketplace. A good leading-indicator of that is brand engagement. Not awareness of the brand, but consumers’ engagement with the brand; that is, the degree to which the brand is seen to meet expectations that consumers hold for the category in which the brand competes. In the category of Breakfast Cereal brands, the drivers are: “Tasty Lifestyle,” “Price-Value,” “Nutrition,” and “Healthy Options,” all of which one could judiciously apply to craft beers. They are the same ingredients in many instances. Anyway, brands that have high engagement can help fuel such line-extension efforts, up to six times greater than brands with low engagement.

According to our most current Customer Loyalty Engagement Index, Adult Breakfast Cereal engagement rankings for the top-10 brands are as follows:
  1. Cheerios
  2. Special K
  3. Wheaties
  4. Honey Nut Cheerios
  5. Frosted Mini Wheats
  6. Honey Bunches of Oats
  7. Fiber One
  8. Kellogg’s Corn Flakes
  9. Rice Krispies
  10. Kellogg’s Raisin Bran
Based on primary ingredients and their consumer engagement levels, Cheerios (oat bran) could team with a distillery to offer a craft vodka, another growing category. And, if that engages consumers, does that mean we can look forward to a Special K gin, Honey Bunches of Oats mead, or Rice Krispies rice wine?

With Wheaties at #3, they just might have a better chance than some other breakfast cereal brands that might be considering entering a crafted, alcoholic beverage category. Ryan Petz, the Fulton Brewery’s president acknowledged that this is only a test-market. “If it’s something everybody loves, we’ll obviously consider doing it in a bigger and more widely distributed way in the future.” Obviously.

In closing, it’s worth reminding you to start off each day with a good breakfast. In this particular instance it may be the only six-pack some consumers will ever be able to manage for themselves!

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 23, 2015

McDonald’s To Eliminate Jobs & Stores

If you haven’t heard, McDonald’s hasn’t been doing all that well. They haven’t been doing all that well for some time now, and the company is going to close more U.S. restaurants this year than they open, something that hasn’t happened in 45 years!

McDonald’s announced they’re closing 700 stores worldwide and starting in September they’re eliminating 135 jobs at corporate headquarters in Oak Brook, IL and 90 other management roles in Asia and Europe. The store closings and job eliminations are part of CEO Steve Easterbrook’s reorganizing efforts which, according to McDonald’s spokespersons, is designed to “implement meaningful changes to reset (the) business.” Well, job cuts and store closings might help the bottom line, but it won’t “reset the business.”

To do that you need to do something to help the brand! Demographics and associated core values of generational cohorts are why McDonald’s is dong so badly. Consumers just aren’t as loyal or engaged with the McDonald’s brand anymore. And as loyalty is a leading-indicator of profitability, it isn’t surprising that same store sales and associated profitability is down too.

Baby Boomers want better service, believe they deserve it, and are willing to pay for it! Gen Xers are looking for value-for-dollar but they want stuff fast too, and McDonald’s cluttered, be-all-you-can-be menu has stymied that effort. Kiosks where consumers can move from super-sizing to customizing aren’t likely to help. Yes, yes, Millennials like customized food, but they think about brands like McDonald’s as “dollar food,” the result of McDonald’s long- habituated reliance on the “Dollar Menu.” Deals still abound, and McDonald’s is going to test offering breakfast throughout the day in an effort to boost sales.

Most recent brand engagement ranking of fast-food brands looks like this:
  1. Burger King
  2. Chic-fil-A
  3. Wendy’s
  4. KFC
  5. Taco Bell
  6. Subway
  7. Hardee’s
  8. Popeye’s
  9. McDonald’s
Last month Mr. Easterbrook noted, “We have made meaningful progress since announcing the initial steps of McDonald’s turnaround plan in early May, and while our 2Q results were disappointing, we are seeing early signs of momentum.” Although it was reported that McDonald’s same-store sales were -2% in 2Q’15 and that operating income fell 6%, so perhaps Mr. Easterbrook has a different definition of ‘momentum.’ Anyway, he said that he was “confident that we will create the transformation necessary for McDonald’s to become a modern, progressive burger company delivering a contemporary restaurant experience.”

We think that it’s worth pointing out to Mr. Easterbrook that Panera’s same-store sales were up nearly 5%, which is perhaps a better example of momentum. And there’s a big difference between saying it, doing it, and having consumers believe you and behave positively towards you.

The McDonald’s brand may be all over, and maybe not as all over as in years past, but you can’t be all things to all consumers. You really do have to stand for something in the mind of the consumer. If you don’t, loyalty for your brand is only going to move in one direction.


Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 16, 2015

Whole Foods Makes A Whole Lot of Mistakes

When it comes to emotional brand engagement, one thing for sure is consumers ultimately vote with their wallets. That’s a market truism Whole Foods discovered after being the target of a New York Department of Consumer Affairs investigation last month. The bottom line of that inquiry? Nine Whole Food stores routinely overcharged on pre-packaged products.

Whole Foods’ bottom line? The company reported disappointing quarterly results and cut its sales forecast. Total sales increased 8% but its stock took a nosedive, losing nearly 11%, dropping to $36.39 in after-market trading after posting those results. That noted, in this year’s January Customer Loyalty Engagement Index, natural food stores ranked as follows:
  1. Whole Foods
  2. The Fresh Market
  3. Trader Joe’s
  4. Sprouts Farmers Market
“Trust” turns out to be the second-most important driver for the category. That’s preceded by “Wide Range of Healthy Sustainable, Organic Foods,” and is followed by “A 1st Class Shopping Experience” and “Real Value and Added-Value,” with consumers’ highest expectations for – you guessed it – “Trust.”

The first rule of brand engagement is “don’t disappoint the consumers when it comes to their expectations,” because if you do, it usually shows up on the bottom line, or in this case the check out line. Whole Food same-store sales were + 1.3%, less than half of what Wall Street was expecting.

Walter Robb, co-CEO of Whole Foods, said during an earnings call, “By any measure the audit had a significant impact on our sales. Trust was broken and has to be rebuilt.” Smart. Brands with high engagement are six times more likely to be given the benefit of the doubt by consumers in uncertain circumstances – just like the one here. So it might have just come down to showing some contrition and taking care of the problem.

But co-founder and co-CEO John Mackey apparently saw it differently. He said, “We don’t think our track record is any different from any other supermarket. These were inadvertent errors. It went viral in the media and we feel we were victims.”

Which kind of breaks another couple of rules of brand engagement: “Never disdain differentiation and/or compare your brand to everyone else,” and “Try real hard not to blame your customers for your mistakes!”

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 09, 2015

Millennials’ 20 Most Engaging Brands

That it’s hard to emotionally engage Millennials isn’t a surprise. What does surprise is the way marketers believe that more social networking and entertaining advertising will. But, in the absence of real ROI metrics, counting “shares” and tweets, and views has become the default evaluation for assessments of efficiency for marketers.

Why? Primarily because counting is easy. Marketers do that because they mistakenly equate things like sharing and tweets – usually a direct consequence of entertaining consumers – with actually creating some sort of relationship with Millennials, which are clearly not the same thing.

And measuring engagement isn’t as easy as it was before consumers were born hot-wired to the Internet, but still It’s all about the expectations that 21st century consumers hold for the category in which your particular brands competes, and how well your brand meets those expectations. The most important expectations are usually emotional. And, as most research really doesn’t do a very good job of measuring emotions, counting stuff has become the method of choice.

According to Brand Keys most recent 2015 analysis, the top-20 brands, which best meet Millennial consumers’ expectations and, therefore, to which Millennials are most engaged and loyal, include the following:
  1. Apple 
  2. Nike
  3. Chipotle
  4. Target
  5. Amazon
  6. Samsung
  7. Sephora
  8. Levi’s
  9. PayPal
  10. Old Navy
  11. Under Armour
  12. Beats
  13. Google
  14. Asus
  15. Chevrolet
  16. Converse
  17. Verizon
  18. Victoria’s Secret
  19. Ford
  20. Ralph Lauren 

Brands that stand for the right emotional values maintain relevance and actually create relationships, and the one’s that can better meet higher Millennial expectations show higher degrees of loyalty than any other generational cohort. The fact that most brands exist to be a business and not a hobby notwithstanding, marketers really want to count as many Millennial consumers as customers for some really basic reasons.

First, they’re rapidly becoming the largest age cohort in the marketplace. Secondarily, estimates are that they represent $180 billion in spending power today, so it’s important for marketers to think about how to actually engage them and less time worrying about entertaining them.

One thing that crosses all generational cohorts as regards brand engagement and loyalty is that brands best able to meet consumers’ expectations for emotional values that drive the category will always show up on the top of consumers’ shopping lists. A review of the brand loyalty leaders in the 63 categories included in this analysis revealed that 91% were the category’s leader. QED!

If you’re still into counting, stick with tweets, but you shouldn’t count on that $180 billion dollars just yet. If you started counting right now, it would take you 5,703 years, 303 days, 5 hours, 46 minutes, and 11 seconds to count that much money. Professionally, we prefer emotional engagement metrics because they correlate highly with consumer behavior and brand profitability. They’re available right now, and they’re a metric you can count on anytime!

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.

Sunday, August 02, 2015

The Brand Keys 2015 Back-to-School spending report card is in and households with school-age children (pre-school through 12th grade) do not plan to spend more this year on back-to-school supplies than they did last year, indicating an anticipated average spend of $650.00 (versus 2014’s $652).

According to 8,500 households the average anticipated spending in all major back-to-school categories reflect similar spending levels as last year.

Clothing:                                  $270.00
Shoes (athletic & dress)          $120.00
Supplies                                   $ 80.00
Computers/Electronics/                                                                                                Tablets/Smartphones:             $160.00
Books/Study Aids                    $  22.00

‘Preferred’ retail categories (versus last year’s) indicates an anticipated use of all retail platforms with the biggest increases of where and how to buy in Specialty Apparel Retailers and Department Stores. Catalogs were down again in mentions, although, to be fair some consumer purchases have just shifted from print catalogs to their digital counterparts. Online has, of course, been growing generally, but increased use of mobile outreach and advertising is likely responsible for this year’s growth for that platform specifically.

Discount Stores:          99%  ( --- )
Online                          95% (+ 2%)
Specialty Retailers       55% (+21%)
Department Stores:      55% (+20%)
Office Supply:               35% (+ 5%)
Catalogs                       20% (- 10%)

Top 10 Retailers and E-tailers

This year, the top 10 list of most popular retail brands added Walgreen’s and Sears, with Target moving to the #1 spot just ahead of Walmart. It would appear that their return to a ‘cheap chic’ positioning is working well for them. For e-tail brands, moved up the list from 2014’s #10 spot to #3. moved up, moved down, and eBay did not appear in this year’s top-10, with the following rankings:

  1. Target                                      
  2. Walmart                                    
  3. Macy’s                                      
  4. CVS/Walgreen’s                      
  5. Best Buy                                  
  6. TJ Maxx                                    
  7. Staples                                    
  8. Footlocker                                
  9. Sears                                      
  10. Apple stores                         
While consumer confidence indices have been moving in a positive direction this year, it appears that parents are taking a hard look at what their children really need for back-to-school. There’s always a need to re-stock in some areas because there’s no way to get around children’s growth spurts, which accounts for the 21% increase for Specialty Apparel Retailers and Department Stores sales.

Nearly half the respondents indicated they had already bought and stockpiled necessities and supplies for the first day of school before August. That’s up 15% over last year. Another 30% indicated they would wait for the ‘Summer Sales.’ Retailers have spent more than a decade teaching consumers they can get things cheaper or for better value if they wait a little longer or look a little harder, and consumers have been fast learners, so the remaining 20% are apparently waiting until the last minute.

In addition to the low-lower-lowest pricing marketplace, bigger ticket items, like tablets smartphones and computers, which in years past had traditionally been purchased at the start of the school year, are now purchased throughout the year, so parents aren’t upgrading a mobile device just because classes are starting.

Value, of course, isn’t just about pricing (or shouldn’t be), it’s about brand, brand differentiation, and brand engagement. Retail brands that can emotionally engage consumers are seen as surrogates for added-value, and those will be the brands that benefit most.

Consumers not only believe that, they behave that way in the marketplace, a fundamental lesson all back-to-school retailers need to learn.

Find out more about what makes customer loyalty happen and how Brand Keys metrics is able to predict future consumer behavior: Visit our YouTube channel to learn more about Brand Keys methodology, applications and case studies.