Trading Up Fuels Pet Business Results…

By Robert Wheatley

This just out from Packaged Facts: pet product and service sales are up 5% in 2009 to $53 billion. And the forecast going forward is rosier yet, despite the lingering impact of the economic downturn. According to Don Montouri of Packaged Facts, a reason for this stellar industry performance is, “the human/animal bond… and ‘pet parent’ sentiment has never been higher.”

The upper end of the pet food market was once the province of pet specialty retail stores. Now the larger chains like Petco and PetSmart have added natural and organic brand aisles to take advantage of the upswing as consumers continue to pursue higher quality diets. The super premium business is about 8% of the pet food overall and is growing at double digits.

What is the underlying condition that shores up and protects the pet products business while others reel from consumer spending cutbacks? For one it’s the rise of pets to family member status. The emotional bonds continue to grow stronger and take on added importance to consumers. This over-arching condition seems to get lost, however, at the shelf and in some super premium brand communications.

I’m Natural… Oh Yeah, Well I’m More Natural!!!

Despite the laudable fundamental conditions in the pet food market, pet brand competition these days is focused in many cases on a form of natural and organic one-upmanship. You can see the tell-tale signs of ingredient story specsmanship and analytical selling propositions, made especially evident in package communications and other forms of outreach at shelf, as well as what appears in consumer-facing media.

Seems logical enough if you have the high quality proteins, fruits and vegetables, and it is food after all, shouldn’t you be taking credit for bringing “human grade” nutrition to Fido’s bowl? On the one hand you can understand why this becomes the center of brand/pet parent communication especially via product packaging at the store level. But the decision isn’t in the tapioca or the real chicken meat, it’s in the feelings consumers have about the brand and about the relationship they have with their animal.

Bottom line: brand decisions are made based on feelings more than facts. For sure strong brand value propositions are holistic combinations of financial and functional benefits — and certainly nutritional excellence and food quality factor in. But the most powerful tool of all is in the emotional bonds that can be created when pet brands start examining how they can enable pet parenting experiences and communities.

Consumers are not fact-based analytical decision making machines.

Pet parents, if anything, are driven by their emotional relationship with their pets and the desire to express their love for the animal by providing a better quality of life (diet is absolutely connected to this goal).

So the call to action: high quality nutrition is important but it doesn’t super-cede the need to meet consumers where their hearts are invested. The brands that dial this in will create opportunities to accelerate their growth in what is already a favorable business environment.

Those that get this right will be the big winners as the pet food business continues to gain momentum in the year ahead.

Economy turns attention to other values…

By Robert Wheatley

We have a weekend place in southwest Michigan, about 90 miles from downtown Chicago. It sits in an apple orchard with a small lake in the middle. Above is the view from the end of my dock. It’s serene. Quiet. Every form of wildlife abounds. Eagle, deer, wild turkeys and fox roam the area. The family loves it. We’re spending more down time there these days… It is in some ways a metaphor for how the marketing world is evolving.

In the era of conspicuous consumption people get caught up in things – buying them. They become badges and definers of personal outlook, status and self-image. Consumers morph over time into a form of professional acquirer – homo-shopperoticus — who reaps emotional rewards from adding to the ever-growing stable of goods and services.

You worked hard to play hard, or so the theory goes. The system fed itself and many continued merrily down the path of leveraged prosperity. Then came the crash and things changed – out of necessity the economic collapse forced a reevaluation of what matters. People recognized once again the importance of relationships, families and time together. Our homes have reemerged as havens in the storm. The retrenching on expensive vacations has ushered in an era more about shared family activities than bold-faced travel exotica.

Here is the Michigan house. On weekends inside you’ll find our family playing games together. Talking. Cooking. Reading. Entertaining friends. When the weather cooperates we’re outside rowing on the lake, walking on trails that surround the property. Heading to our neighbors. We’re in a rural area surrounded by farms and vineyards. So small town community celebrations become low-key additions to the entertainment line-up.

Interesting that divorces are on the down stroke now, fueled perhaps by budget realities that make financing separate households less feasible. In the adult beverage business, off-premise distribution (supermarkets, liquor stores) is gaining momentum while on-premise (bars and clubs) slows a bit. People currently consume at social occasions with friends in the home more so than out on the town. Cookbook sales are skyrocketing. Hmmmm?

In the midst of fiscal chaos people look for calm, security, certainty, substance and as a result place more value on tradition and meaning. Brands that recognize this sea-change have an extraordinary opportunity to connect in a new and powerful way with consumers.

Can you facilitate and enable family events and interactions? What language are you using in your messaging strategies? Does it tap into the reservoir of desire for substance, human interaction, authenticity and shared experience? Can you play a role in family traditions? Facilitate communication? People are more grounded now in the understanding that human relationships are an impressive emotional anchor.

Brand relevance is a curious thing because it is so directly tied to acute understanding and insight into the consumer’s needs, wants and passions. As for me I place great priority on my daughters. Brynne (who is about to turn three) and I enjoy some quality time together while having breakfast on the deck. She helped me “cook.” This is where the action is.

Brands that matter do so by acquiring a higher purpose, one built on recognizing people have an intense desire to be a part of something larger than themselves. This is the path to a brand related bond. Now is the time to mine communications pathways that acknowledge and build on this emotional tether.

What do you think?

Never underestimate the need for equity-building efforts

By Robert Wheatley

I love my car. It’s a 2003 Mercedes G 500. If you’ve seen one it’s a retro looking angular box on wheels. Mercedes version of a Hummer-esque off roader gussied up with amenities (best auto sound system I’ve ever had). It’s a truck and drives like one but I really enjoy it. In my advanced age I prefer using Kiehl’s skin care products because they work and I like the story behind the brand. At the end of a rough day (I have plenty of those) I re-orient with a cold Corona beer (yes they’re a client but I liked the product before hand). The vacation-in-a-bottle beach thing is a mental aspiration.

As a passionate home cook I have standards about what I will use. It’s Barilla pasta or I’m not making the recipe. If you put a bag of Cheetos in front of me, it’s gone. Same with Blue Diamond Smokehouse almonds – can’t live without ‘em. My dentist was forever lecturing me about my teeth. He persuaded me to get a Sonic Care toothbrush. Wow, what a difference in the check-ups. I’m sold. I’m a pet fanatic, and have been my entire life. And I’m brand loyal — I have a Newfoundland dog, here he is.

His name is Goliath – appropriate don’t you think, given he weighs 170 pounds? I have been a Newf fan for 15 years. Best dog breed on the planet. I could talk for hours about them. My soup is Campbell’s, and my tissue is Kleenex . My computer is an Apple and I’ve been a diehard for over 20 years. Honestly the Apple reflects my non-conforming outlook on life and career devotion to a creative business. I appreciate design esthetics so Apple gets major props for that.

Sure the economy has created trade-offs for my family and me. We do less of some things like travel. We’ve cut way back on home improvements. We’re not replacing things that are getting a little shop worn. But brands that matter still do and they’re not falling off the menu. Why? Because so much of how we define ourselves is expressed in our likes and interests, and brands play a real big role there.

A recent Harris Interactive Equi-Trend study suggests that in the current economic hurricane, as Warren Buffet describes it, we tighten our grip around brands we enjoy. Marketing Daily ran a piece about the study. Says Harris: “Brand equity does not lose potency when money is tight.” Interestingly comfort foods and staples got the highest brand equity scores – Hershey’s, Crayola, even Arm & Hammer baking soda. In categories like airlines, Southwest got high marks. It was Sony in electronics and Grey Goose in spirits.

The prevailing view is that brand loyalty goes out the window with the budget bath water in a recession. NOT SO. It is entirely conditional. Loyalty’s core essence is grounded in value to the user. Wes brown, an analyst with Iceology in LA says people tend to stick with what they know and while a cheaper alternative may exist, they are hesitant to risk failure from something they don’t know as well.

So for any organization considering cutbacks and diminished investments in brand building, think twice. And for those who in a state of panic reach for steep price reductions, be careful lest you dilute your equity. Remember that people love their brands and investments in building those relationships are not playing fast and loose with available assets. If anything its vital to your future. Brands that plow ahead in the storm, by far and away, come out healthier than their conservative brethren.

I’m “gripping,” are you? What do you think?

Restaurant brands on hunt for fresh territory…

By Robert Wheatley

If ever there was a subject relevant to brands today, elasticity has to be in the top 10 as businesses work overtime to uncover new markets, segments and business opportunities while consumers remain choosy and conservative in their spending habits.

The question marketers must ask themselves – how far can you go from the center of what your brand stands for? Is there a place along the path of stretching where a brand’s core equity is diluted? How do you decide where fresh business opportunities can be cultivated without risking your franchise in the process?

USA Today has an interesting story by Bruce Horovitz that chronicles the wide array of menu moves by top restaurant chain brands to attract new customers. You start to see a sort of food form encroachment begin to develop as brands add new products, adjust mainstays and expand menus to lure in more diners.

KFC goes grilling
Pizza Hut rolls pasta
McDonald’s pours espresso drinks
Boston Market tries crispy chicken
Arby’s re-casts beef sandwiches as burgers
Dominos hits subs and pasta-filled bread bowls

Horovitz wonders aloud, “could sushi at Taco Bell be next?

Marketers may agree what distinguishes brands from one another is their category leadership and distinctiveness in the restaurant trade with a particular menu item as Starbucks is to gourmet coffee. McDonald’s believes they can be effective in this space because the brand pioneer Starbucks has sufficiently elevated the espresso experience. The democratization of gourmet coffee arrives at a moment where broad market tastes have expanded far enough to embrace the richer espresso brew.

This is tricky territory. The annals of marketing are filled with attempts by brands to expand their markets that have eventually led to various forms of implosion. Once thought to be the grand experiment in the automobile industry, Saturn – a new kind of car company – makes the error of trying to trade up from its core competency as an inexpensive entry level auto brand and thus dilutes what made it famous in the first place.

Owning the reference standard for your category…

Al and Laura Ries excellent book, “War in the Boardroom” reminds us of the fundamentals of successful positioning and the goal to own key words or a concept in the consumers mind.

Energy drink = Red Bull
Driving machine = BMW
Heavy motorcycle = Harley
Search = Google
Books = Amazon
Never loses suction = Dyson
Athletic shoe = Nike

When brands in the name of innovation move too far afield of what thy stand for, the consumer gets confused, the core equity is diluted, the brand becomes less meaningful to its devoted fans.

Navigating the call for stretch…

The starting point in this conversation begins with asking this question: what do you stand for? And within that conversation remaining clear that all things to all people is a proven recipe for trouble. The consumer world today appreciates expertise, craftsmanship and uniqueness more than they desire predictability and uniformity.

Short-term gains should never be bought by mortgaging the legacy of a strong brand. So in this conversation less will always be more. Stretches must be handled with care and once on that path great discipline will be required to steer around further moves that go beyond the arena you own in the consumer’s mind. If your path remains emotionally relevant to your core competency then consumers are more likely to accept your ability to deliver well in the new business you’re entering.

The second level of assessment has to do with credibility and believability in terms of what you do best. Will the consumer accept your playing in a new segment naturally? If it feels forced or you’re treading into waters owned by another that gives question to your adjacent category competence, it may be best to forgo the potential balance sheet pluses in favor of longer term franchise building.

The preeminent goal for all successful brands – being highly differentiated. Will your plans support that objective or detract from it over time?

What’s your view on stretching?

By Robert Wheatley

Let’s Get Going….

It’s spring break and we ventured down to Puerto Vallarta for some R&R with the kids. The flight was full but not packed. The lines long at Customs but not too long. The restaurants in PV have business but there are a few empty tables. The beach areas are busy but not over-crowded.

We’re staying in a beautiful condominium nestled on a quiet sandy cove in the Conchas Chinas area. A close friend of ours developed the site and building. He is currently trying to sell the six units. Five star views, sandy beach, infinity pool, stone floors and counters, Viking kitchen and impeccably furnished. Yesterday they sold the unit we are in at a substantial discount to asking price with warnings from the agent that the market is tough — and getting tougher so a new offer might not appear for a very ling time. The deal is done amid an undercurrent of concern about sitting for months on the just-finished product. The mood about the sale is subdued.

In the market areas away from the tourist center people go about their day selling their wares, fruits and seafood. In their eyes you can see the lingering questions about their own welfare. But their overhead is low – the distance between life’s simple pleasures and the hard obligations of managing your bills isn’t too great. Sort of like when a child learns to ski and the inevitable crashes aren’t such a big deal because the distance between standing up and falling down is less than a yardstick.

So the weather in PV is still 82 degrees each day. Perfect. And the palm trees are no shorter. But you can tell the issues for people in every walk of life are real and compelling. The paralysis is partly supported by the facts of submerged 401ks and declining home values, tight credit and other asset-reducing conditions. The other half is fueled by the hall talk and informal conversation that helps supply the fear and anxiety of what may or may not lie around the corner.

It is human nature to reign in, pull up the drawbridge and head to the root cellar hoping the bad news above will pass over us without much effect. I ask this: are we any less creative or innovative than we were a year ago? Has there been a collective draw down on brainpower that has sapped the ability to invent, lead, manage and build our businesses? Is the central move to add-value and compelling benefit that lies at the core of most entrepreneurial success stories somehow vaporized in the face of bad economic publicity?

No.

Instead I believe we collectively feel a bit chastened by the revelations that perhaps our consumption habits were a tad unbridled in the days of escalating home values, equity loans, cash outs, easy credit and other assorted sources of wealth we could and did tap into.

But for the most part I also think most of us did not run around like drunken sailors running up credit limits for sport. Many of us bought real estate, made investments, fixed up our homes and invested in our children’s futures. So with limited apologies for the occasional indiscretion most of us should be able to sleep easily at night.

It’s time now to refocus our energies and attention on the never-ending business of value creation. The engine that drives the economy, mostly from consumer spending, is an outcome of remarkable, interesting, useful, beautifully designed and delivered products and services that improve our lives and loves. So lets get to it. We’ve done it before. Now is not the time to reign in and wait out the storm above. Now is the time to fire up the engines of invention and work like crazy to improve lifestyles and reignite the passions of both want and need that come from our in-grained ability to recognize and invest in a great idea when we see one.

What do you think?

View from the pool…

By Robert Wheatley

Her priorities are changing — are you following the shift?

Ok, this is no great new discovery – mom’s control 85 to 90 percent of the household spending. However it stands to reason that what moms do and how they do it will have some bearing on the brand winners and losers his year.

Of course there’s the emotional thrill now available from an astonishingly wide array of product categories centered on getting something formerly expensive for a relative song. I bought a very nice Andrew Marc coat the other day from Neiman Marcus at 75 percent off its original sticker. I felt good. And so it goes with the feelings about saving. Lowering price, however, should not be the only answer in these challenging times.

Now more than ever it pays to listen. Investments in insight research rise quickly to the top as a critical jumping off point when making key decisions on your go-to-market strategy. As we know, in the absence of relevance and value to her lifestyle, the only thrill available is how low the price can go.

So for savvy brands wishing to grow their business while not diluting their equity by giving away the proverbial store, you must accurately assess her needs, wants and concerns.

Purchase behaviors are changing…

A recent AdAge column written by Sarah Moore and Betsy Westhoff of the MomWise consulting firm, had a few salient points on what mom will be doing this year. Among their observations:

Moms’ top priority forever and always will be the kids. So their needs will come first and she will make trade-offs to accommodate that. She will continue to look for rewards for herself, but they will be “simple indulgences” that fall after the kids’ requirements have been addressed. What sensible rewards can you place in her path?

There’s significant evidence from quantitative studies that out of home eating and entertainment are dialing backwards while in-home versions of the same are gaining momentum. Such as home made or frozen pizza vs. delivery? How can she enjoy and use your brand as part of her nesting experience?

Shopping is still a priority, but its scope and priority makes a change as we already know. How can you help assure the shopping experience remains as interesting, positive and entertaining as possible? She may be less likely to tolerate negative experiences or service lapses.

In-sourcing. One of the stalwart trends of the service economy was letting others do it for you from beauty treatments to household cleaning chores. In these leaner times what was once accomplished by outside suppliers may go in-house — literally. How can you help her take control and succeed with these tasks?

She’s not walking away from the emerging trend to go green and be environmentally conscious. But all of this will now be examined within the context of affordability. So when it comes to a proactive opportunity to win her allegiance, your ability to be an affordable option that is also eco-conscious may help sway the purchase decision.

By Robert Wheatley

Brands can help relieve the anxiety

Fact: Consumer spending accounts for a whopping 70% of the US economy, according to Standard & Poor’s Equity Research. So if consumers don’t spend, well, you get the picture.

The mechanisms that work to bring consumers closer to brands are founded on emotional cues and not analytical evaluation. So it makes sense that the economic crisis we face in some respects is an outcome of a pervasive gloominess that has infected the nation as a whole. Sure there are facts arrayed around us about bad judgment in financial markets and an outsized balloon in home values that needed a correction. But the “we’re-in-no-mood-to-spend” behavior is the thing that’s sending a chill through all levels of the economy.

The recent ABC News story ‘A Crisis of Consumer Confidence’ quotes Mark Zandi, chief economist for Moody’s Economy.com, about this enveloping sense of apprehension. He says: “Consumer’s have been spending beyond their income for 25 years, and they could do it because they could borrow.” He goes on to talk about the steamroll effect of consumer insecurity, “If you lose faith you’re in a recession. And if you panic you’re in a depression. And we’re somewhere in between recession and depression at this point – and that’s why it’s so important for policymakers to act very aggressively, boldly, consistently to shore up confidence.”

What can brands do to help replace uncertainty and uneasiness with something else that more closely resembles the pillars of warmth and happiness? Here are some ideas on relevant ways to reassess your current strategies:

Generally, what can your brand do to make life easier, better, more meaningful, secure and fulfilling? Is this a centerpiece of your communications platform?

Is this a time to help enable family time and interaction?

Should you focus on hearth and home as a welcome respite from the other “outside” concerns?

Is there a role for humor? Can laughter provide a form of emotional antidote?

Are you putting a focus on the things in life consumers can control?

Is it time to align your brand communications with a higher purpose, a strategic mission that works beyond the simple message of product feature and benefit?

Are you supporting the consumers’ desire to believe in, participate in activities and passions beyond the obvious elements of commerce?

What can you convey that says you understand the misgivings and want to help? Can you offer help in tangible, specific ways?

Should we honor helping others in the spirit of “we’re all in this together”?

Are there stories to tell of courage and perseverance that serve as a guide and reminder that the current condition will pass?

By Robert Wheatley

Working with the collective jitters

People are more media aware than at any other time in history. Our exposure to news and information, immediately, on platforms we sit in front of or use on a minute-to-minute basis means nothing escapes us. And as media have a habit of following the lead of other media, well, you can see that stories and messages get repeated in all corners. And what’s the news of the moment? It’s hell out there…

The collective din of reporting on the fix we’re in economically is pervasive and unrelenting. So it’s no surprise if the consumer community holds back and digs in. We are together, as a whole, uneasy. Just one look at the IRA or 401k-account statement and you understand personally the scope of the problem. Compounded also by our inability to control these events or stop what appears to be unstoppable. Thus the consumer jitters spreads like a viral epidemic.

Worry about jobs, the future, business results, et al sits on top of the more everyday versions of nervousness around minor relationship struggles, disobedient children, or the housepainter who botched the job and suddenly won’t return your call. It’s a consistent low hum of stress that is always there, prompting us to reign in our more free-spending behaviors. So people trade down, channel shift to discount outlets, cut out the indulgences and watch the pennies. It feels good, or at least better, to do this.

We buy emotionally not rationally. We can’t possibly examine all products and services available to us in a rationale manner anyway. So emotions become the shortcut to decision by operating just below the more taxing cognitive level. Knowing this and that fear is a destabilizing emotion, what can marketers do to better align themselves in the frozen state of consumer queasiness?

Here comes Hyundai with a moment of brilliance. You can return the car if you lose your job. That says, we know how you’re feeling, we understand the jitters and how the news around us gives everyone pause. So, we want to help you with an offer that heads right to the heart of the matter – your ability to deal with a car payment should misfortune hand you a pink slip. Wow. Unusual. Unexpected. Friendly.

Where is our center, our happy place where control, stability and meaning reside in steadfast manner? It is perceptibly within our personal relationships (family) as well as the home and hearth (place). How can your brand align itself effectively and tangibly with ways to help us exercise our need for frugal? How can the emotions of worry be alleviated in some fashion through a unique offering and subsequent communications of same? How can we bring the feeling of family, home and hearth and the sense of comfort it represents to our conversations with consumers?

What is your marketing “thaw” strategy to take the “q” out of queasy and replace it with “you get me, understand me”? There are creative, innovative ways to do this.

Does this storm presage the return of the family meal? (Yes!!) Can brands play a role in family activities and burrowing that may take place when the world outside seems uncertain? (Yes, again). If consumers are eating and gathering more often at home rather than going out, what can you do to help make this time fun, interesting and satisfying? What do you think?

Or if not, you can just keep doing what you’re doing and let the chips fall. Now that’s heartburn material…

By Robert Wheatley

It Feels Right to Trade Down?

In a November story by Ellen Byron the Wall Street Journal tracks what they characterize as the triumph of frugality over brand loyalty. And there’s plenty of evidence that indeed consumers are swapping out popular brands for equivalent private labels. The Journal profiled a recent Mintel survey of 3,000 consumers that found 40 percent of household shoppers saying they’ve started to purchase store brands, “because they’re cheaper.” Mintel indicated on average store brands cost about 46 percent less than their national brand brethren.

And not just among middle income households: Information Resources’ “Shopper In Crisis” report determined households with incomes above $100,000 are not immune: 41 percent are cutting back on their spending for non-essential groceries and nearly a third saying they’re buying more private label products while foregoing some of their “favorite” brands. According to Nielsen Co. store brand sales of soap and bath products are up 23 percent and skin care items rose 16 percent through early September.

Habit on Hold

Habit has been a mainstay defense for brands in this era of over-choice and too many products chasing pocketbooks. Consumers have shown a remarkable ability to resist change once a brand is selected and, assuming it meets the buyer’s expectations for performance, the relationship can go on undisturbed for many years (assuming nothing dramatic comes along to dilute and marginalize the brand’s value proposition). We simply don’t want to invest the brain time to assess if a replacement is warranted. Yet the economy has quite clearly ridden roughshod over entrenched habit

The Mental Economy

Certainly there are real and justified fears over job losses, credit squeeze, the drop in home values and the tanking of retirement and 401k accounts. Regardless of how close these events get to individuals in various walks of life, what is becoming patently clear is the power and pervasiveness of uneasiness and fear that is impacting behavior in remarkable ways. We are collectively on notice that all is not well in the economy and we have internalized this point of view. The lack of confidence is now showing up in purchase decisions — even among those who can continue to afford more expensive options. We are emotional creatures and our emotions, at the core of brand selection decisions, are now telling us to stop, reassess and cut down. We feel better through frugal acts.

The Branded Pathway Ahead…

Here are some observations about the way forward.

Can your brand align itself with the consumer’s overwhelming desire for home, family and social interaction that acts as a buffer to the uneasiness around us?

Can your brand acquire a mission or purpose that transcends the functional conversation and creates new meaning and depth in your relationship with consumers?

The action is increasingly at the store shelf. What can you do to better tell your story at retail?

Have you given your brand a “compelling value proposition” review to determine if the functional, financial, intangible and emotional values are strong enough to keep your best users in the fold?

Can you segment your product portfolio to cover the price pressures coming from retailer’s increased emphasis and investment in their store brand programs? Are you in a position to help them with their private label needs?

Are you participating in social media platforms where you can a) start a two-way conversation with your consumers and b) listen to them about their needs and concerns?

For that matter talking “at” consumers is dead or dying. How can you build a better relationship based on authenticity, honesty and reciprocity?

What do you think the solutions look like?

New world order for brand building

By Robert Wheatley

We really appreciate and enjoy reading Patrick Scanlon’s think pieces and articles. His latest published in AdAge entitled ‘Winning in the Pick Economy’ charts the changes in dynamics between marketer and consumer in an age of the latter’s over-arching control.

Says Scanlon: “In today’s world, media are fragmented, markets are fragmented. Skews of race, sexual orientation, work life, digital experience, marriage and child status, plus other sociological forces crosscut markets even further. We have micro-trends, micro-markets and micro-meals. Only in rare cases can products, like oil and toilet paper, claim to be (both) ubiquitous and necessary. These days’ consumers choose from miles of aisles of cars, clothing, electronic equipment, food, beverages and other staples. To push is dangerous. To pull is difficult. We are engaged in a revolutionary new marketing model not driven by manufacturers or their marketing partners.”
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