BRAND MANAGEMENT
SPECIAL Marketing to Digital Natives: How Brand Loyalty Is Changing
Wharton's Americus Reed and
Erik Gordon of the University of Michigan discuss reviving old brands for
millennials and Gen Z.
Brand loyalty used to be something companies could rely on to
grow and retain their customer base. It was driven in part by cool commercials
on network TV and catchy jingles that consumers couldn’t get out of their
heads. But younger people, specifically millennials and the Gen Z cohort,
aren’t looking at the same media or ads that their parents did. Companies that
were popular in past generations are quickly discovering that they need new
strategies if they want their brand to appeal to the next generation of
shoppers who can easily click and choose from millions of products from around
the globe.
The Knowledge@Wharton radio show on SiriusXM invited two
professors to talk about marketing to digital natives and what it means for
companies. Americus Reed is a marketing professor at Wharton, and Erik
Gordon is a professor at the University of Michigan’s Ross School of
Business. The following are five key points from their conversation.
Fans Are Fickle
Gordon wonders whether brand loyalty ever really existed, or if
companies simply mistook loyalty for laziness. Perhaps consumers stuck with a
brand out of habit, even if the brand wasn’t adding much value to their lives.
In the past, that purchasing pattern created a tenuous sense of loyalty.
Now, companies are realizing that the speed of modern
communication means their image can change within a matter of hours, along with
the public’s perception of the brand. Papa John’s Pizza is a recent, powerful
example. Sales dropped about 10% in July and August after reports that founder
John Schnatter used a racial slur during a conference call.
“How we relate to the brand can change very quickly,” Gordon
said. “One comment from the CEO of a pizza company, and how we relate to the
brand instantly changes.”
Reed agreed that companies often think customers are coming back
again and again out of loyalty when their purchasing patterns are nothing more
than habit. And habits can change.
“Erik’s touching on something that I talk about a lot in my
classes, which is the idea of not being fooled into thinking that repeat
purchase is the same as loyalty,” Reed said. “Habit is a very different
proposition from describing a situation where a loyal consumer feels like their
values, generationally speaking or not, somehow align with the brand and then
connect them in a deeper way.”
Age Is Just a Number
The professors caution against using the catch-all term
“millennial” to define youth. From a marketing perspective, each of the younger
generations is distinct and segmented. Millennials, roughly defined as those
born between 1980 and 1996, hold different values, beliefs and desires from Generation
Z behind them. Marketers must figure out what resonates with different age
groups if they want their products to be enticing to them.
“This word ‘millennials’
gets thrown around a lot, and marketers seem super-hot on this word,” Reed
said. “I think the real analysis comes into diving into what are the cultural,
what are the political, what are the value-based … kind of ideologies that
exist within these generational groups that we can then potentially tap into,
and try to make some statement with respect to our brand?”
Gordon said it “drives [him] crazy” when companies use data in
unsophisticated ways, such as breaking down customers into the age category of
18 to 35. There’s a lot of variation within that group, he said.
“We used it because that’s
the data we had on hand, but it’s also very superficial,” he said. “Is it
really that they’re 23? Or is it that their life, their values, their social
sense of self is the same? And if you’re an advertiser, if you’re a retailer,
what you want to tap into is not that they’re 23, because they’re not going to
be 23 five years from now. It’s enduring values or at least more enduring
values.”
Repackage, Revitalize, Rebrand
Many legacy brands find themselves in the tough position of
having to repackage their products to appeal to the next generation of
consumers. Some have done so with spectacular success; others have
belly-flopped into failure.
Oldsmobile, which is now defunct, is an example of that kind
failure on a grand scale. Oldsmobile was a well-known brand of mostly large
sedans that were popular with baby boomers who saw the cars as an affordable
luxury. By the late 1980s, the manufacturer embarked on a quest to capture Gen
Xers who were interested in smaller, sleeker cars. It debuted a commercial in 1989
with the tagline, “This is not your father’s Oldsmobile.”
The problem, Gordon said, is that the first commercials featured
older-generation celebrities Ringo Starr and William Shatner. Younger consumers
just didn’t get it.
“[The company was] deliberately trying to get folks to see
Oldsmobile differently. It didn’t work at all, for a variety of reasons. One,
it was ill-thought out,” he said. “This idea of revitalizing a brand —
sometimes it works. Cadillac got revitalized, Marlboro got revitalized. Snickers
revitalized. But it sure is not easy to do.”
Campbell’s Soup is another example of failure to re-launch. At
the height of its popularity, canned soup was presented as a nutritious,
economical and caring option for a parent to serve a
child. The product motto was “Mmm, mmm good.” But subsequent
generations are far more health-conscious and
question why anyone would even want to eat soup out of a can.
“Think about it now,” Gordon said. “It’s still convenient, it’s
still frugal. But functionally, is it nourishing or is it just a can of
high-fructose corn syrup?”
Reed said re-branding is always a double-edged sword. When done
well, it can reap untold rewards in customer loyalty. But it’s tricky. “The
better that you’re able to create a very strong, clear image to people means
that you have the likelihood of really connecting with them. However, changing
that is very hard because now you’re asking them to believe something different
that they have not believed, necessarily, for a very long time. That’s a hard
proposition, but all great companies have to do that.”
Taking Up Space
Another challenge with rebranding is the ability for a product
to take up mental space in the heads of consumers. Companies need consumers to
have strong, positive associations with a product, like a comforting can of
Campbell’s soup warming on the stove during a cold winter afternoon. A Gen Xer
may have that memory, but the imagery doesn’t connect with a millennial or a
member of Gen Z.
“A younger consumer is like, ‘I don’t have any of that in my
brain. What now? If you’re going to tell me soup, I may not even believe that
soup should be in a can.’ Now, you have a big problem,” Reed said.
Gordon said it’s helpful to think about brands as the space they
take up in the mind. Consumers may not allow IHOP, for example, to
take up space in the hamburger category if
the restaurant has always been associated with pancakes. It’s the same
reason why Toyota, Honda and Hyundai gave entirely different names to their
luxury lines, creating a disassociation with their lower-priced cars.
But there is a way brands can push a modern mindset shift:
social media. With the right kind of messaging, a brand can gain street
credibility with younger audiences. Wendy’s Twitter account is a good example,
the professors say. The messaging is humorous and engaging, sometimes
satirical, which builds a fan base on social media. People want to be
mentioned, recognized and even roasted by Wendy’s online.
“I think what social media does is potentially a nice mitigating
factor for what Erik is pointing out here,” Reed said. “If we can be on these
platforms and be relevant and be authentic and interesting and not gimmicky,
maybe that’s a way that we can make [customers] feel that we can occupy that
space in their minds, because we’re speaking their language in terms of them
being digital natives.”
Authenticity is key, however.
“If you do it and you’re
phony, it’s discovered in about 30 seconds and disseminated to every corner of
the Earth,” Gordon said. “So, if you think you’re going to control the message,
even if it’s kind of a semi-phony message, social media is going to kill you.
But if you actually are doing what you claim you’re doing, and you can get a
few influencers on social media to believe that and propagate it, then it’s
much more powerful than any ads you can run.”
Stop, Collaborate and Listen
The professor said marketers need to pay closer attention to
what’s important to younger consumers and pivot accordingly. That means
listening and adapting rather than dictating trends and hoping they catch on.
Reed said if companies want to connect with next-generation
consumers, they must respect their role as brand collaborators.
“Consumers see themselves now as co-creators of the brand, not
just active listeners who are told something, and that something is either believed
or not,” he said. “Now, they are part of creating what that brand stands for in
terms of how they reinforce those sorts of things over social media, etc. They
expect to be kind of in the C-suite with you and giving you feedback,
reinforcing what you’re doing, helping you understand where you should
course-correct and where you should keep doing things well. It’s going to be
kind of a collaboration more than an end-consumer sort of relationship.”
Gordon thinks that’s a smart strategy because a consumer who
identifies as a co-creator will defend the brand, making the company’s effort
to build loyalty much easier.
“A co-owner of the brand will set you straight early on because
they want the brand to succeed, and that’s what you want,” he said. “Contrast
it to the ‘Mad Men’ days, where folks ran focus groups and they brought people
in for an afternoon and talked to them and debated about stuff, and they
thought they understood the customers. Now, we have this endless, 24/7 focus
group. And it’s even better because we don’t control it with our notebook full
of agenda and questions. To get the people to co-create things with us and to
co-own it with us, that’s wonderful. That’s how you create something that’s
really powerful and really enduring.”
http://knowledge.wharton.upenn.edu/article/marketing-to-digital-natives/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2018-09-20
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