Chipotle Crows for Cause Marketing

June 9, 2014

Have you ever considered that viral videos might tickle your taste buds, say for a burrito? Well, Chipotle thinks they do.

Chipotle elegantly combines the art of storytelling, and the branding imperative of cause marketing to communicate its quest for wholesome, sustainable food. With over 12 million views on Youtube since it was posted in September 2013, Chipotle’s “The Scarecrow” has created quite a buzz. So what are the critics saying? As expected, much of the reactions spawned by the video’s release have been mixed; some fault it for misrepresentation of sustainable farming, some regard it a triumph, and others perhaps as a misstep in brand recognition. Chipotle’s first messaging on sustainable practices, “Back to the Start,” and more recently a four part series on Hulu, “Farmed and Dangerous“, also stoked both praise and controversy.

From a marketing perspective, one of the most intriguing of the critiques suggests that the lack of explicit branding or brand placement is harming the video’s effect on sales. This decision, however, may have very well been deliberate; done in order to appeal to a vital consumer demographic: Millennials – 86 million strong and $1.3 trillion in direct annual spending. Like Chipotle’s mission statement – “food with integrity” — The Scarecrow film aligns to the company’s sentiment that food (and ultimately the brand itself) should be simple and unadulterated. This messaging resonates with Millennials who gravitate to companies that take a genuine and holistic branding approach to making the world a better place. Through digital storytelling and minimal focus on Chipotle itself (and rather our food system), the film ultimately motivates purchasing behavior of Millennials who want to actively contribute to a brand with a strong purpose as opposed to the company’s bottom line. “Millennials view the lack of TV as more authentic,” said Carol Phillips, adjunct marketing and branding instructor at University of Notre Dame. “Millennials are likely to dismiss a lot of claims. They’re responding to everything the brand does and says.”

Plus sales growth doesn’t seem to be an issue, as Chipotle announced first quarter results on April 17th, with revenues of $904.2million, an increase of 24.4% from its prior year period and 7% from the fourth quarter of 2013. With numbers like these, it’s hard to make the case that the Scarecrow video produced a negative ROI.

Over the last six years, the role of social responsibility tied to purchasing decisions – and an awareness of which companies have joined the movement and which have not — has been a growing trend across consumer groups. Millennials are no exception. What’s more is that they expect what is called the reciprocity principle; a two-way mutual relationship with companies and brands. As a result of this engagement, Millennials are influential consumers and marketers in their own right and are significant indicators in consumer trends and behaviors.

Millennials are one of the most socially conscious generations and the most active on social media accounting for 47% of Facebook users, 68% YouTube, 34% Instagram, and 31% Twitter. Products or services that fail hit a high note with Millennials can quickly become a subject of negative feedback reverberating within the realm of social media. However, the risk/reward is huge for any company that embraces this new environment and leverages Millennials who are likely to project via social media their purchasing decisions and brand affiliations. In a recent article published by the Boston Consulting Group, the point is made that, “companies need to make marketing to Millennials a top strategic priority” and “move from push communications to two-way open dialogue.” Since 2009, Chipotle has taken this strategy to heart and sought to demonstrate that when you buy their burritos, you are “doing good” and acting as an agent of change.

Despite individual opinions of Chipotle and its videos, Crimson Hexagon, a leading social media data intelligence company conducted a study of the Twitter conversations following the video’s launch and found that 98% were positive, with 12% claiming the ad revolutionary and having set the standard for value-based advertising. But some may wonder if the championing of sustainable farming is a sustainable strategy for the Chipotle brand. When considering a brand holistically, it is important to remember that some of the most iconic brands, Coca-Cola and Apple, were not built in a day. Cause marketing takes time to become part of a brand’s DNA because consumers need not only to believe in the cause, but believe that the brand itself is actually putting its burrito where its money is.

BY JENNIE MILLER ’15


Enhancing Consumer Performance in Idea Generation

April 28, 2014

Toubia_IdeaGenerationIt can be argued that there is a science to ideation and innovation; it’s not “strictly” about creative inspiration and throwing caution to the wind. More and more, companies in a variety of industries are looking to consumers for fresh ideas (i.e. My Starbucks Idea).

Columbia Business School’s Olivier Toubia and Marshall School of Business’ Lan Luo found that for effective consumer ideation, the research process cannot be a one-size-fits-all approach. Their study, Fostering Consumer Performance in Idea Generation, offers research to help marketers and research and development teams to extract “better quality ideas from consumers and to identify their needs to inform new product and service development.”

Toubia and Luo write, “As firms… increasingly seek out consumers’ ideas in various domains, they will encounter individuals with different levels of domain-specific knowledge.” They segmented such individuals as low-knowledge and high-knowledge with regards to a particular area of interest. But with consumer segments at different ends of the knowledge spectrum come challenges in extracting insights. “The performance of low-knowledge consumers is likely to be hindered by their lack of relevant knowledge in the problem domain…,” note Toubia and Luo. “[High-knowledge] consumers often do not perform in accordance with their full potential (due to factors such as shallow processing and inattention).”

Despite the discrepancy in depth of knowledge, each segment provides valuable insights on said domain. The study examines the interplay and outlines a process for creating customized ways to mitigate such obstacles, so companies may experience enhanced consumer performance in idea generation. Further, their research explores ways to apply this customized task system to open innovation platforms conducted online, a practice many brands currently use.

Download Fostering Consumer Performance in Idea Generation to learn more about taking a strategic approach to consumer ideation.

BY ALLIE ABODEELY


CMO insights from IBM’s Global C-suite Study

April 28, 2014

IBM-Infographic-2014

For more than a decade, IBM has built upon research to produce its C-suite Studies series, one of the largest collections of C-level executive insights. Its latest research Stepping Up to the Challenge: CMO Insights from the Global C-Suite Study focuses on how CMOs “are helping their enterprises become more ‘customer-activated.’”

IBM Institute for Business Value found that employing a revenue-generating, customer-centric strategy can stem from digital marketing capabilities. But despite digital being a current area of focus for CMOs, it’s a world many still struggle with. Specifically, less than 20% of CMOs interviewed for the study “have integrated their company’s interactions with customers across different channels, installed analytical programs to mine customer data and created digitally enabled supply changes to respond rapidly to changes in customer demand….” Such CMOs are segmented as “Digital Pacesetters” in the report.

The issue isn’t that the other +80% are fire-walling technology, but rather they grapple with maneuvering through the explosion of data, and tethering digital media to bottom line numbers. As one CMO (anon.) in the study explains, “We know what we want to do. Our biggest challenge is creating the data infrastructure.”

This translates into potential missed opportunities. IBM Institute for Business Value reports, “There’s a close link between the degree of digital acumen CMOs display and the financial performance of the enterprises for which they work.” The research revealed that many CMOs have de-prioritized monetizing social media. They are “presumably finding it too difficult or see social mainly as a tool for building awareness and forging connections.”

While CMOs are becoming a stronger force when it comes to influencing CEOs on strategy, second only to CFOs, it’s the CMOs’ relationships with Chief Innovation Officers that generate results. IBM Institute for Business Value reports that businesses are 76% more likely to outperform in terms of revenues and profitability when CMOs and CIOs effectively work together.

According to the study, analytics are top priority for CIOs. IBM Institute for Business Value suggests partnering with CIOs to create an infrastructure for scalable cognitive analytics that produce actionable customer insights. It cautions not to be “all things to all people,” but rather concentrate analytics on those customer lifecycle phases that will be of utmost importance to your business in the next few years.

IBM Analytics InvestmentDigital Pacesetters, notes IBM Institute for Business Value, are “actively investing in the later phases of the customer lifecycle, where digital channels make the biggest difference.” While traditional phases end with the transaction, Pacesetters look at the bigger picture – focusing resources on long-term relationships and cross-channel experiences to turn customers into loyalists and collaborators and encouraging them to share these experiences. Such companies, per the study, “are 59 percent more likely to be outperformers.”

Download the complete study to learn more about IBM’s findings and strategizing digital.

BY ALLIE ABODEELY


Retail as a Media Channel: Rachel Shechtman’s STORY

April 23, 2014

STORY_Color-STORYRachel Shechtman is redefining the way we measure success in brick and mortar retail. Her 2000 square foot store in New York City–STORY–has the point of view of a magazine, changes decor like an art gallery, and sells products like a store. Against the odds, Shechtman’s innovative concept and business model drove STORY to be profitable by the end of its first year–physical retailers usually break even by year three.

STORY is intended to create unique experiences meant for the physical world and offers the type of in-person interactions that stimulate emotional brand associations which lead to word-of-mouth publicity. Shechtman explained during the BRITE ’14 conference that while digital retail has considerably progressed in the past twenty years, stores have remained in many ways static and, “judged only by their sales per square foot.”

Shechtman is redefining how to build a successful retail store in two main ways: by using brands as sponsors that contribute to the store’s concept, content, and revenue, and by monitoring the impact of the store experience, as much as its sales per square foot.

Like a magazine, STORY has an editorial perspective, releasing a new “issue” every few weeks. It engages shoppers by partnering with brands to rotate its design and merchandise around carefully curated content and experiences. Like an art gallery, the team behind STORY creates immersive experiences that encourage participation from store visitors, transforming every aspect of the environment: from wall color and textures to merchandise and fixtures.

STORY’s model of innovation through brand sponsorship helps bring a different source of revenue and provides unique encounters that cannot be experienced anywhere else. The Making Things STORY edition –sponsored by GE– used 75% of the space for “pure experiences,” with laser cutters and injection molding machines available for customers to make plastic robots, jewelry, sunglasses, and customized MetroCard holders.

In 2012, STORY partnered with Benjamin Moore to create the Color STORY, where Benjamin Moore got to showcase its newest collection, Color Stories, and present a session, “The Power of Color & its De-Stressing Benefits,” led by a Benjamin Moore senior designer and a color marketing expert. They taught attendees how to use color in small living spaces with the purpose of detoxing and de-stressing. Shechtman pointed out that not only does this provide a second revenue stream for STORY, but it enables the brand to be their own storyteller. As she explains, “Benjamin Moore knows a lot more about color than Rachel Shechtman or the STORY team.”

The current issue, Good STORY, features a combination of brands including TOMS, Uncharted Play, ROMA boots, and Bombas socks, focusing on the stories behind the products, their missions and their vision for social change. As explained on STORY’s website, “each product tells a story that matters because it’s a story of people joining together to do something good.”

BY GABRIELA TORRES PATIÑO


Warby Parker: Oversharing as a Business Strategy

April 2, 2014

Neil Blumenthal and his business partners – David Gilboa, Andrew Hunt, and Jeffrey Raider – believed the eyewear industry wasn’t responding to customer needs and found an innovative solution to meet those needs. Blumenthal, who recently spoke at the BRITE ’14 conference, explained, “[We] didn’t like the process of buying glasses. . . [or] that glasses cost as much as an iPhone.” As a result, they founded Warby Parker, a company with “a lofty objective: to create boutique-quality, classically crafted eyewear at a revolutionary price point.”

Warby Parker effectively disrupted the eyewear industry in two ways: First, by using a direct, e-commerce model -cutting out the middle man- and by building a new brand –thus not having to pay licensing fees-, they significantly lowered the price of stylish eyewear; their frames, with premium lenses included, start at $95, that’s 25% of the market price. And second, by creating their “home try-on program,” sending customers, free of charge, a test package of frames they select to try on at home before they commit to buy. As a spin-off benefit, the home try-on experience is a shared customer experience, inherently accessible to family, friends, and even co-workers. The program, then, turned in to a marketing tool itself.

Blumenthal described Warby Parker as a lifestyle brand that offers value and service with a social mission at its core. With every pair of glasses purchased, Warby Parker gives a pair of glasses to someone in need. “Even at $95, there are still about a billion people in the planet that don’t have access to glasses and we think that that’s just crazy,” he said. At the end of each month, the Warby Parker team tally up the number of glasses sold and makes a financial contribution to Vision Spring; an organization that uses glasses to create jobs, making a more sustainable impact. In terms of their own business, Blumenthal believes that having a social mission helps increase customer loyalty and referrals, but does not drive the decision of making the first purchase.

According to Blumenthal, what has helped build strong relationships with customers and ultimately increase sales is a culture of transparency. “The more vulnerable we are, the more that we put ourselves out there, the deeper those relationships and the more valuable they become from an economic standpoint,” he added. In just four years, Warby Parker has sold over 500,000 frames and has grown from an apartment-based startup in Philadelphia, to a 350-employee business with a flagship store in SoHo.

“The public and your customers [are] participating more and near dictating what your brand is…you need to give people the tools to have it the way you want them to have it,” Blumenthal explained. Warby Parker focuses on creating experiences that are meant to spark conversations both online and offline. “It’s all about customer experience and constant innovation.”

When asked about a seemingly counter-intuitive expansion into the realm of brick-and-mortar stores – Warby Parker now has stores in New York, LA, and Boston, and has showrooms within boutiques in five additional states- Blumenthal explained, “[The] medium doesn’t matter. It’s the experience that matters and we need to design those experiences [holistically] from the moment they hear about the brand.”

Sharing is a fundamental element of the Warby Parker strategy – internally with staff and externally with consumers. As the majority of Warby Parker employees are millennials who want instant feedback on their performance, the leadership team has instituted monthly informal reviews and quarterly 360° reviews.

Moreover, as Ross Crooks explains in Forbes, “Business is becoming increasingly personal…; we crave more personal connection in a web-based world.” Customers want to relate to the people behind the brands they support, they want to know “that employees are people they might hang out with.” The Warby Parker team constantly keeps their fans abreast of “what [Warby Parker is] doing, how and why”, which, Blumenthal says “pays in spades.” According to a recent Mintel study, millennials are more likely to overshare than their Baby Boomer parents.

Warby Parker’s annual report is a perfect example of how the company creatively engages stakeholders. The uniWarby Parker 2013 Annual Reportque feeling of its annual report has proved to be a successful marketing tool, leading to the highest sales days and traffic after releasing it each year and gaining free publicity for the brand; with fans sharing the report in social media, and getting mentions in press outlets such as Forbes, AdAge, Bloomberg BusinessWeek and Business Insider. This year’s infographic annual report is laid out as an illustrated calendar with an update for each day of the year, is described by Business Insider as “a shareable page of organized chaos inspired by internet culture.” One tidbit of transparency it shares in this year’s report is the fact that half the inventory of their new collection was delivered to the wrong address.

In today’s world, Blumenthal said, “brands are able to rise faster than ever before, but they’re also able to collapse faster than ever before.” Warby Parker has found that the best way to maintain momentum is by strengthening its connections with its customers through the sharing of relevant, personal, and entertaining content and the creation of experiences, regardless of the platform.

Watch Neil Blumenthal’s BRITE ’14 talk to learn more about how Warby Parker incorporates innovation into customer experience.

BY GABRIELA TORRES PATIÑO, EDITED BY ALLIE ABODEELY


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