The Homa Files

Excerpted from Brandchannel, “Get Back to Basics. Win Back the Trust” by Ted Mininni, March 30, 2009

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We’ve seen a number of instances where high-profile brands have violated the trust of consumers lately, eroding confidence and resulting in disastrous consequences. Even if a brand hasn’t violated consumer confidence, if it isn’t actively building trust, it’s likely losing customers. Let’s face it: without trust, there is no consumer loyalty—and, ultimately, there is no business.

Consumers are hungry for values they can put their trust in. Not hype. True value doesn’t just equate to price, mind you. While important to consumers who are tightening their belts, price isn’t the only component of value. These are the values consumers care about: fair pricing, innovation, authenticity, honesty, transparency, customer service and connectivity.

After years of overconsumption, people are learning some hard lessons about debt and economic reversal. Smart marketers understand that if customers are going to part with their hard-earned money now, they’re going to have to be given a reason to believe—a reason to trust in their brands.

Fair Pricing.
With McDonald’s launch of its McCafé ads, the company capitalized on the current consumer mood. Their business proposition: offering quality lattes and cappuccinos without high prices in order to appeal to a large swath of consumers.

Lest anyone think Starbucks can afford to stay above the fray, guess again. A recent Wall Street Journal article dubbed “Starbucks Plays Common Joe” notes a move to “counter the widespread perception that Starbucks is the home of the $4 cup of coffee.” According to the article, “To retrench, (Starbucks) executives began plotting a new strategy to portray the company as offering value.” To prove they’re not too pricey, Starbucks recently launched value-priced breakfasts at US$ 3.95 each.

The move shows how premium brands are trying to reposition themselves for a prolonged economic downturn. “I strongly believe we are going to be in this environment for years,” Howard Schultz, chief executive at Starbucks, said in an interview. “It is a reset of both economic and social behavior.”

Innovation and Service.
Down economy or not, consumers will pony up some of their hard-earned cash for specific brands that “own” innovation. Nintendo, for example, has accomplished what no other game company has: the brand has created acceptance among all age groups and both sexes in a phenomenal way with Wii and its other properties. By finding innovative ways to engage people of all ages, Nintendo defined a new genre of home entertainment at exactly the right time; people are looking for ways to be entertained at home rather than spending a lot of money going out.

In spite of intense competition in the mobile phone category, Nokia continues to take on all comers, owning a staggering global market share—38 percent of the entire category— despite intense competition. By constantly launching new-generation mobile devices, Nokia continues to raise the bar for mobile phones. Other notable brands that continue to win by focusing on quality, innovation, good design and value: IKEA, Samsung, L’Oréal, Volkswagen, Apple, Nike.

When confronted by tough challenges, Hewlett-Packard responded by putting its customers front and center in its product design development. This allowed the company to make service and innovation the focus of its brand revitalization efforts. Its interactive approach, resulting in the kinds of products consumers want, has reinvigorated the brand. And how about total reincarnations? IBM’s transformation from hardware purveyor to customized “business solutions provider” is a great B2B success story.

Trader Joe’s and Wegmans supermarkets excel in customer service, offer quality products and real value, and never shy away from innovation. Both companies have a loyal cadre of shoppers as a result. Let’s hear it for innovation with service…values that customers long for and rarely receive.

Authenticity, Transparency, Honesty.
Take a look at the recent downfall of notable companies, and you’ll find some venerable brands that left these virtues behind. They ran into problems and chose not to be upfront and transparent about it. Rather than stave off bad opinion, their actions had the opposite effect. Unfortunately, it’s easy to find examples everywhere these days, especially in the financial sector. How about AIG? Merrill Lynch? Citibank? When the truth did emerge, badly calculated choices by company management actually made the situation worse.

For the companies that manage to survive, customer perception is greatly diminished since their trust has been abused. Proof once again that when problems crop up, companies need to own up, speak up and take steps to rectify them, or they risk breaking trust with the customer.

On the flip side, over 25 years ago, Stonyfield Farm yogurt took a stand. Working with local farmers, the company pledged itself to support organic milk farming and implement environmentally responsible policies in every aspect of its business. The trust the company has built with its customers is legendary. Stonyfield Farm doesn’t talk about environmentalism in an era of greenwashing; the company walks the walk. Stonyfield Farm went “carbon neutral” in the mid-1990s, produces 100 percent organic products and gives 10 percent of its profits to organizations that “help protect and restore the environment.” It also collects used product packaging so that TerraCycle can “upcycle” it—that is, turn it into new consumer products.

Connectivity.
When Dell launched its Idea Storm social media site recently, the company’s intention was to solicit ideas from consumers and, in the process, foster closer relationships with its customers. “These conversations are going to occur whether you like it or not…do you want to be part of that or not? My argument is you absolutely do. You can learn from that. You can improve your reaction time. And you can be a better company by listening and being involved in that conversation,” Michael Dell said in a BusinessWeek discussion with Jeff Jarvis. Exactly.

Reaching out to customers and allowing them to express themselves in direct conversation with the company might yield some surprising results. Product innovations, valuable dialogue and being able to deal with problems quickly and effectively are no less important. Too many consumers feel as though their ideas and concerns go unheeded; the companies that engage their customers will win.

Positioning brands in alignment with the basic core values that resonate with consumers to build trust is job #1. Smart marketers must prove their brands’ worth and value to increasingly disenfranchised consumers. Win back the trust—and reap the rewards.

Edit by NRV
Full article:
http://www.brandchannel.com/brand_speak.asp?bs_id=215

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This entry was posted on April 14, 2009 at 7:12 am and is filed under Mktg - Brands, Mktg - Pricing, Value Mapping. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.