Global 100 Cross Category Trends
Consumers expect brands to keep their promises. Some categories have disappointed. Coming out of the global financial crisis, many banks strengthened capitalization, sharpened their business focus, revised codes of ethics and improved communication with customers. But with the revelation of new and past misdeeds trust cracked like a fragile shell. Lost trust damages brands, as apparel maker Lululemon discovered when the stretch fabric of some of its products performed poorly and the company initially blamed customers for the fault. GM and Toyota sustained public rebuke when they failed to maintain safety standards. The price of lost trust varies. Bank reputations declined, but the difficulty in switching helped limit the business impact. Not all categories are so protected by customer inertia. Strong brands are better able to sustain fluctuations in trust.
Share of life
Brands aim to gain greater share of wallet. But many forward thinking brands are now looking to achieve that goal by increasing share of life, being present in more ways to make a customer’s life better or simpler. The major ecosystems – Apple, Google and Amazon – serve as models for surrounding consumers with product, services and content. But brands in diverse categories are engaged with customers, in useful and brand relevant ways, across many aspects of their lives. The Home Depot and Lowe’s provide home improvement financing. Walmart offers financial services. The Chinese Internet brand leaders, Tencent, Baidu and Alibaba, are building online banking centers and mobile payment systems. Tesco and the Latin American retailer Falabella are MVNOs (Mobile Virtual Network Operators), renting capacity from telecoms and branding a mobile service to gain a greater customer share of life. Share of life helps broaden and deepen the bond between customer and brand. This relationship potentially benefits the customer with improved service and the brand with additional sales.
Shopping was multi-channel. Then it was omni-channel. Now it needs to be a seamless, consistent experience whenever and wherever the consumer is dreaming about purchasing, exploring possibilities or transacting business. Accomplishing this goal may be challenging and complicated. But by definition, seamlessness means that the brand makes the transitions between physical and virtual invisible to the consumer who’s interested in the results not the process. And seamlessness centers on the customer.
Too ubiquitous, designer logos no longer validate how the consumer sees herself or wants to be seen. Self-expression is in. In the luxury category, popularity increased for interesting jewelry, not simply the traditional precious gems, but other colorful, distinctive stones that consumers chose for their uniqueness. The celebration of uniqueness was evident in the extensive personal care product ranges for hair and skin types serving a more inclusive ideal of beauty.
Grande soy iced vanilla latte may summarize customization, but the trend doesn’t end with Starbucks. McDonald’s plans to simplify and customize its menu for the mealtime preferences of various consumer groups, such as Millennials and families. In soft drinks, a category driven by CSDs (carbonated soft drinks), consumption is declining and Coke is customizing. It’s going beyond its Freestyle vending machine that enables customers to mix ingredients and make about 100 varieties of soft drink. In an arrangement with Green Mountain Coffee, the company that makes single-serve coffee pods, Coke is developing a machine for customizing soda at home. Technology to make driving safer or more enjoyable adds more customizing options in a category known for customization.
Conditioned by the economic slowdown and their experience with in-store and online shopping, consumers expected everything – the range available online with the immediacy of physical stores and the best possible price. Many European hypermarkets and other retailers evolved their click and collect models for ordering online and picking up in-store. In the latest iteration, shoppers order online and pick up items, often on the way home from work, at conveniently located drive-thru warehouses.
Sometimes the most compelling aspect of a brand is the product itself. To accrue economies of scale the major brewers generally produce beer near where it’s consumed rather than where the brand originated. But sometimes the brewers balance this business imperative with the need for brand authenticity. The major global brewer SABMiller makes Peroni, its Italian brand, in Italy, charging a premium to cover the additional cost. Heineken sold in the US is brewed in Denmark. Luxury brands stressed provenance as part of what makes them authentic and exclusive.
The importance of multi-functionality reflects the multi-tasking way many people live their lives. SUVs (Sport Utility Vehicles) combine basic transportation with room for cargo. Soft drinks quench thirst but often while adding a functional benefit, an energy boost or vitamin supplement. Apparel provides protection but it can also monitor metabolism.
Like the yin-yang of high tech and high touch, global and local are complementary influences for brands to balance. Certain categories, such as fast food, soft drinks and beer, build global scale and consistency, adjusting for local tastes. Local is gaining in importance. It implies quality and reliability along with originality and attention to detail not associated with mass production. The rise of craft beer and the resurgence of ale in the UK reflect this trend. Local food sourcing is another example.
Consumer concern with health both challenges and propels brands. In soft drinks, CSDs (Carbonated Soft Drinks) consumption continued to decline. In fast foods, McDonald’s added healthier items, while Chipotle made higher quality food its brand positioning and Subway emphasized freshness. Chipotle rose 48 percent in brand value. Since the inception of the BrandZ™ Top 100 Most Valuable Global Brands in 2006, the Subway brand has experienced the greatest percentage increase in brand value, 7,338 percent. Retailer Whole Foods, which stresses its sourcing of organic and sustainable products, rose 37 percent in brand value in 2014 BrandZ™ Global Top 100. During the national conversation about health care in the US, the drug store brand CVS renounced its $2 billion tobacco business as incompatible with its brand purpose as a health provider.
Technology impacted every category with innovation or disruption or both. Retailers reduced real estate portfolios of stores and explored technologies to make the experience in the physical and online stores unique, useful and seamless. Wearables, like Google glasses, signaled the early days of the convergence of technology with apparel. Telematic devices that monitor driving habits potentially can disrupt the insurance category. Carmakers loaded cars with technology to improve safety and driving enjoyment. Car buyers viewed the latest technology as standard not luxury. Technology disrupted the technology category itself as business-to-business brands, built around PCs, struggled to adjust to the intensified competition and a world of mobile devices.
Payment in several categories shifted to a disruptive pay-as-you-use model. Amazon and other Cloud providers sold access on an as-needed basis, replacing the licensing arrangements that enterprise customers maintained with business-to-business technology companies. In the US, T-Mobile introduced a pay-as-you-use arrangement to a market where telecom providers traditionally locked in customers for two-year contracts. Among the trends impacting car ownership is the growing popularity of pay-as-you-use car sharing schemes that make vehicles available for hire by the hour.
Men had confined their luxury purchases to watches and cars. Today they’re interested in well-tailored shirts and suits. Men’s grooming is one of the fastest growing segments of the personal care category. Retail shelves once devoted to razors and shave cream in aerosol cans now include facial creams and other pampering products. The packaging in dark colors signifies masculinity and differentiates from the women’s products. Among the drivers of this trend are cultural habits coming from Asia. In Korea, for example, men are fine with wearing makeup. Luxury brands such as Gucci, Prada and Burberry are opening stores devoted exclusively to men.