All posts filed under: Strategy

How real is the value of reality brands?

By Mark Di Somma

Last night I sat down and watched Inception. Today I spied this article on the Kardashians – and I couldn’t help but wonder whether the dream states of the film mirror the “reality” of the brand value of reality brands. The Kardashians appear to be a retail success story, for now, and we’re told they have raked in millions. What’s the business model? Their “real” lives? And those millions of followers – what are they following? The real Kardashians or three levels down? Does the Kardashians’ show and product portfolio add up to a brand, souvenir merchandise or fashion? Does that become stronger, or more real, when it diversifies? Why all the questions? Well, because if I was Sears, and I was looking at setting up a Kardashian shop within my shop, it might hugely influence my decision to know what exactly I was partnering with. Of all the celebrities in the world, why them? What’s the connection between what they are and what Sears represents? And, as I say, is what Sears are seeing …

Everyone expects to be rewarded

By Mark Di Somma

According to this post in the NY Times, Americans racked up about $48 billion of rewards via fly miles, hotel rewards, credit card points and other programmes in 2010. The average household it seems has 18 loyalty programmes and earns $622 a year in miles and points. So, roughly $35 value per programme per year. And yet nearly one-third of that amount will go unclaimed. You can read this as proof of the ubiquity of rewards systems, but what fascinates me is the clear expectation of consumers that they will now receive rewards in some form for so much of what they do, whether they cash them in or not. Once loyalty was. It existed out of convenience or preference, habit, range or relationships. Now, for many brands, loyalty costs. Sure, you get to keep the customer, but you keep them on retainer. You keep them by pumping incentives at them whenever they buy. And the irony of those incentives, looking at the stats above, is that such generosity doesn’t count for anything up to …

Upsizing the impact

By Mark Di Somma

Interesting isn’t it how we perceive messages. 50,000 jobs on offer at McDonald’s sounds huge, but it actually averages out at around 3 – 4 positions at every restaurant in the U.S., which suddenly doesn’t seem anywhere near as impressive. I have no doubt that McDonalds could have quietly filled those positions by advertising locally. But that would have significantly pixelised the effect. Instead they chose to offer all those tens of thousands of positions on one day across the nation. All that hope, all at once. A dollop instead of a glimmer. A chance for the applicants themselves to be part of something that felt so much bigger, so much more powerful, so much more universal. A chance for McDonalds to make its presence felt and to reinforce its credibility as an employer brand. An event big enough to set social media abuzz. The next time you’re planning to a “soft” release, maybe ask yourself this: What could we do to upsize this? And how big would we have to make it to get …

The difference between less and off

By Mark Di Somma

If I buy something on sale, what should I get? 40% less – or 40% off? They are very different things. If I purchase something for 40% off, that means I get what I would have got if I’d paid full price but I get a 40% reduction on the asking price for the very same goods or services. The result, as we’ve discussed many times, is that the brand’s perceived value deteriorates and, if enough retailers participate, the actual market value of the brand also drops. 40% less on the other hand means I pay a lesser price but I get less for that price. How can that be? Surely a pair of shoes is a pair of shoes, right? Not necessarily. One of the first rules we were all taught in direct marketing is that it is much more economical to give than to take away. In other words, it is much more economically sensible to add services to a product in order to make it more valuable than it is to discount …

What would you Like?

By Mark Di Somma

In this discussion on whether Liking a brand on Facebook makes you more inclined to be positive about that brand, writer Gregory Ferenstein says that rationalisation theory suggests “our actions secretly influence our opinions”. I’m sure that’s right. We do something and we justify that action to ourselves. When we “like” a brand, we tell ourselves it’s a better brand than we might have thought it was otherwise. We make a public endorsement and we stand behind it. When we pay for something that makes us feel good, we feel better about that brand. And when we buy something alongside many others, we feel more secure because we are not alone. The dealmaker or breaker though is that we do get what we thought we were getting – and this is where brands need to be so careful in framing expectations. If I take an action, and the action turns out to be better than I expected, I will be pleasantly surprised and I will naturally carry that through to my view of the brand. …

Take a chance

By Mark Di Somma

Why do consumers go out and buy a Lotto ticket or take part in brand-run promotions when they know that their chances of winning are so very small? According to Kelly Goldsmith in this article in the Time blogs, it’s not because of what they stand to win, it’s actually because of where consumers focus. Most people it seems focus on the outlay – it’s just a dollar or two. And when they connect that outlay to the potential reward, then they basically believe they have nothing to lose. Involvement appeals directly to the universal love of curiosity, surprise and of course winning. But, ask people to think about the problem the other way round, in terms of their chances of winning, and interest wanes substantially. In other words, where something is portrayed as hopeless, we find it much harder to justify even a small amount of money. We’re hugely inclined to chase a dream if the price to do so seems small enough, but that interest declines rapidly when we’re reminded that we’re unlikely …

Little jewels

By Mark Di Somma

Last night I attended the launch of my latest “book” – this one, the story of the Victoria Cross with particular emphasis on the 22 New Zealanders who have been awarded the country’s highest military commendation. It was a commission for New Zealand Post, one of a number I’ve done for them over the years on a range of subjects. In fact, last year was a bit of a year for these larger writing projects because I was also involved in a beautifully-finished corporate history of the Pryde Group, a Hong Kong based company which owns the world’s largest windsurfing and kitesurfing brands. People have asked me over the years why I get such a kick out of this kind of work. It seems such a long way from the strategic and communications work that Audacity does. And I think it’s because projects of this scale require you to be so curious, to look for the smallest humanity in even the broadest story. You need to find a structure that is robust enough to hold …

Every price point needs a story

By Mark Di Somma

The temptation is to see story as a luxury item: something that brands implement to lift their margin. There’s nothing wrong with that of course – it’s powerful and it works. But I don’t think that story is just a top-end nice-to-have. My view is that most brands, no matter where they are priced in the marketplace, need a storyline. To understand why, first let’s think about the alternative. Without a storyline, a product is just that. It has everything it needs (hopefully) to do what it’s being bought for but that also means it’s just another detergent, car oil, computer, whatever …That makes it highly vulnerable to house brands and to cheaper versions of what amounts to ‘the same thing’. It also means markets get packed very quickly with variants of the same idea that rapidly diminish the value equation: we talked about Groupon and its 425 competitors a couple of days ago. This problem of course only becomes more acute as you move down the value chain – meaning that at the very …

The Feynman principle

By Mark Di Somma

A review of a review about scientist Richard Feynman in the Freakonomics blog caught my eye this morning because it also provides a simple but telling thought for every brand owner. The author of the blog post, Sanjoy Mahajan, comments “It’s not quite true that Feynman could not accept an idea until he had torn it apart. Rather, the idea could not yet be part of his way of thinking and looking at the world. Before an idea could contribute to that worldview, Feynman wanted to turn over the idea, to see why it was true, from any angle that he could find.” We don’t have to look far to see what Feynman was fighting against. Once something has been widely accepted as fact, the temptation is to absorb it unquestioned and to work with it on that assumption. What Feynman did though was to say “you may very well think that, but before I can think that, before I can actually absorb any thought into my worldview, I need to prove it to myself”. …

Going, going, Groupon …

By Mark Di Somma

You know what you think you’re worth. But what are you really worth? Some great points about company du jour Groupon in this article originally posted on Forbes. Most interesting perhaps because the article helps explain why and how value can so rapidly commoditise. Here’s what I got out of it: Success quickly generates a wolf pack – 425 competitors and counting have simply copied Groupon’s model. They did so because they could. There doesn’t seem to be any specific IP here that prevents duplication. After the rain comes the flood. Lots and lots of competing sites in turn could well create “deal fatigue” – once customers have too much of a good thing, they quickly start to feel glutted, effectiveness drops and with it market share. Why get married? Big businesses can probably replicate this process themselves rather than go via Groupon – or as close as makes no difference to the consumer. Time for the big fish. Bigger opportunities attract bigger players. As you succeed, your competition also scales. In this case, Facebook …