Brand Keys Update
by Robert Passikoff

Holiday 2004 Trends Predictions (December, 2004)

Holiday Spending
Despite a less than stellar economy, consumers indicated that they intended to spend more this year than they did last year. An on-going psychographic trend Brand Keys has observed is that while consumers are willing to spend a bit more, they still want to be perceived as "wise shoppers."

They'll spend money, but they want it spent well, and will spend time searching for the best deals, most of which will be done online.

Q. Do you think you'll spend more, less, or the same this holiday season as you did last year? More 8% Same 67% Less 25%

How Much Will They Spend?
On average, about $760.00, or about 7 percent more than last year (but down 2 percent from the 9 percent increase in 2003).

Where Will They Spend Their Money?
As might be expected, consumers have indicated that they will use the full range of retail formats and channels. However, only one of these channels reflects a substantial percent-change over last year. More shoppers say they'll go online to shop this holiday season, pushing "On-Line" into the mainstream.

Discount Department Stores 75%
Traditional Department Stores 55%
Online 60%
Catalogue 45%
Specialty Stores 38%

This trend is confirmed by increased holiday online sales.

To What Degree?
An increase of 30 percent over last year, or $26.5 billion.

Holiday USA Online Retail Sales Trends (in billions of dollars)

4Q '04 = 26.52
3Q '04 = 20.41

On What Will All This Money Be Spent?
Just what might be expected, and similar to last years' declared purchases. There is, however a slight "bump" in the electronics/computers/mobile phone category, up 3 percent from last year and gift cards, up 4 percent from 2003. What is new is a significant number of consumers indicating that they will travel/purchase trips as holiday gifts, at 10 percent, the first time this "gift" has shown up in the survey.

Clothing & Accessories 51%
Electronics/Computers/Phones 48%
Gift Cards 45%
CDs/DVDs/Video Games 33%
Books 30%
Home Décor 21%
Travel 10%

Which Channels and Brands Will Benefit Most?
Customer loyalty assessments are the best leading-indicator of profitability. The following 5 categories are tracked in the Brand Keys Customer Loyalty Index survey and reflect the ranking of brands and channels (according to their customer loyalty assessments) that will be the beneficiaries of the identified 2004 holiday trends.

Search for Products/Deals
1. Google.com 2. Yahoo.com 3. MSN.com 4. AOL.com 5. Excite.com

Online Retailers
1. Amazon.com 2. BN.com 3. CDnow 4. Buy.com

Discount Stores
1. Wal-Mart 2. Sears 3. Target 4. Kmart 5. JC Penney

Clothing Catalogues
1. L.L. Bean 2. Sears 3. J. Crew/Macy's 4. Lands' End 5. Nordstrom

On-Line Travel Sites
1. Expedia.com 2. CheapTickets.com 3. Travelocity.com 4. Fodors.com 5. Priceline.com

Twice a year, as one of its leading-indicator measurement tools, Brand Keys, a New York City-based brand and customer loyalty research consultancy, conducts its Customer Loyalty Index. In the most recent wave of research, 16,000 interviews, in the nine US census regions, were conducted with adult consumers regarding 32 industry categories (from airlines to computers, websites to coffee shops) and 202 specific brands within these categories. In addition to specific category and brand loyalty evaluations, consumers are asked about a variety of timely market and brand issues. This included anticipated behavior in the 2004 holiday marketplace.

Some Closure Helps Martha Stewart Brand (October, 2004)

On March 6, 2004 a grand jury indicted Martha Stewart on federal charges of securities fraud and obstruction of justice in an insider stock trading scandal. And the real effects showed up dramatically in the negative impact that this decision had to Martha Stewart (the businesswoman) and Martha Stewart (the brand).

Brand Keys, Inc. has been tracking the Martha Stewart brand for nearly 4 years. In May of 2002, the brand was one of the strongest in its category. But what has happened since is a perfect example of the fragility of all brands that are invested mainly in a human being.

We often see how impermanent these brands can be, how dependent upon public whim; how sudden and irreversible their disappearance can be. Politicians and sports figures learned this lesson years ago, and it is even more true for the human consumer product brand. Any sudden change in public perception of that “human brand” has an immediate – and potentially devastating – effect on the brand’s equity, and soon after, its profitability.

Want real proof beyond the stories in the supermarket tabloids? Take a look at Martha Stewart Omnimedia’s profit statements. Up until the ‘guilty’ verdict there were no changes in the product and services offered by MSO. There were no changes in their pricing strategy. There was no change in brand awareness or distribution. The only change was the status of the actual human brand and in the way consumers thought about the brand. And that wasn’t good.

That’s because any brand – and what it stands for – is based on the customer values inherent in the brand. Invariably the really important, lasting values turn out to be not image items, but customer loyalty values. They are usually the leading indicator values that built the brand’s success in the first place. This is true whether it’s a giant oil company or a Perfect Woman Doing Perfect Things, a brand’s life force flows directly from the core values its customers hold dear.

More often than not, these values are not “sexy.” In her glory years, even Martha Stewart’s detractors had to agree that she (the brand) was “chic” or “creative” or “elegant” or even “a style I would like to see in my home” given the environment and the available competitive set. But in harsher, warier times, and under the baleful eye of the SEC and the broadcast media and the press, having just been indicted, image items tend to count for very little. There were issues of trust in question – how much could you actually trust this brand? – and consumers were waiting for something that would renew (or at least, repair, that trust).

The really meaningful values always turn out to be ones like “trust” and “confidence.” Let’s take a value example relevant to the Stewart case: Maintaining ethical business standards. This value is currently in the spotlight, suddenly a more crucial loyalty value than it was mere months ago. In fact, back in 1997, “ethical business standards” contributed only about 8% to loyalty. In recent months that figure has more than doubled, to a 20% contribution. Another value: A brand I trust – a perennial favorite – always hovered around a 5% contribution to loyalty (and therefore, profitability). That’s now up to a 11% contribution. Integrity? Up from 2% to a 6% contribution. There are other “hard” values at work as well. But just removing that 37% from the brand equation leaves an awful lot of shoring up for relatively less important items like “is really cultivated” or “has elegant table settings” or “knows how to turn a gourd into a soup tureen” to do!

What were consumers were really waiting for? Well, it wasn’t the details of a strategy for a legal appeal. They wanted to hear what we call the 2C’s: contrition and closure. What they got was half the recipe for restoring the brand.

What they got was Martha Stewart’s announcement that she wants to forgo an appeal and start serving her prison sentence as soon as possible (six months after the indictment), so she can put her "nightmare" behind her. So her most recent decision provides only one half of the brand-aid needed for the faded lifestyle brand: an approach to closure.

Accepting her 10-month sentence and not dragging out things any further with an appeal is the beginning of the brand healing process, and while a terrible thing for Martha Stewart the woman, is exactly what Martha Stewart the brand needs right now. The only thing missing is an elegantly designed apology.

Internet and Cable TV - More Effective Vehicles for Fashion Advertising (September, 2004)

Internet advertising may be more effective for fashion brands than traditional fashion magazines, is a key discovery of a study conducted by Brand Keys, Inc. We've found that brands can be helped or hurt by the media in which they choose to advertise, no matter how accurate the demographics. What will work well for one brand can be destructive for another.

If you are a fashion brand marketer, if you rely on demographic information and CPM calculations, and your gut, you're partly right. But given the extraordinary number of 21st century media options and the way consumers are bombarded with advertising messages, if you rely solely on traditional planning, you'll be mostly wrong.

The study relies on a methodology developed by Brand Keys, called Brand-to-Media Consonance. The assessment allows an advertiser to actually 'insert' the brand's values into the media planning process.

Companies have invested countless dollars into brand development and it's about time they leverage those values for more effective media planning.Brands can either have their values enhanced, or degraded, by their appearance in one vehicle versus another. Where the brand's values are enhanced we see increased an level of attention paid to the ad, increased positive brand imagery, and, most importantly, increased level of propensity to purchase. Where image degraded, you can actually hurt the brand.

Media vehicles are classified into three categories:

High Consonance Brand Enhancers - a media vehicle that enhances brand awareness, image and purchase propensity, by the very act of appearing in that media vehicle.

Negative Consonance Brand Detractors - a media vehicle that actually detracts from awareness, imagery, and purchase propensity, by its appearance in that particular media vehicle.

Neutral Consonance - a media vehicle that neither enhances nor detracts from the brand's awareness and image or consumer's purchase propensity, but can be utilized when audience reach and frequency levels are at issue.

Seven brands were included in the study: Armani, Brooks Brothers, Calvin Klein, Chanel, Donna Karan, Gap, and Ralph Lauren. The study, which was conducted among 1,500 females, 21 to 59 years of age, examined a general range of media options for the "Ideal Fashion Brand," as well as a specific range of media vehicles to determine which worked harder for the eight fashion brands.

For the Ideal Fashion Brand, the 12 media vehicles included in the study were assessed as follows:

High Consonance Brand Enhancer Vehicles
· Cinema Advertising
· Cable TV
· Internet

Neutral Consonance Vehicles
· Fashion Magazines
· Lifestyle Magazines
· Billboard/Outdoor
· Network TV
· Catalog

Negative Consonance Brand Detractor Vehicles
· Newspapers
· Transit Advertising
· Direct Mail
· Kiosk

This provides a good overview for the category generally, but different brands can benefit or suffer, depending on the specific media selection. What works for one fashion brand, does not necessarily work for another.

For the magazine category, Brand Keys examined 24 specific titles. We know that all the brands would not have considered all the vehicles we examined, but we wanted to see how their brand values would be helped or hurt. So we included the 'usual suspects' as well as a few we threw into the mix just to see effects to the brands. Results for three brands follow.

Chanel Gap Ralph Lauren
HIGH B2MC Esquire
New Yorker
Vogue
Bazaar
Allure
NY Magazine
People
Allure
Inside
Cosmopolitan
Newsweek
Playboy
Enter. Weekly
New Yorker
Redbook
Vanity Fair
Elle
O
GQ
NY Magazine
New Yorker
     
NEUTRAL B2MC Redbook
O
Glamour
Elle
Vanity Fair
GQ
Playboy
NY Magazine
Marie Claire
Glamour
O
Elle
Vanity Fair
Lucky
Marie Claire
InStyle
Time
Maxim
GQ
Inside
Esquire
Allure
Cosmopolitan
Glamour
Vogue
Time
Newsweek
People
Enter. Weekly
Marie Claire
InStyle
     
NEGATIVE B2MC Cosmopolitan
Inside
Lucky
Stuff
InStyle
Time
Newsweek
People
Enter. Weekly
Maxim
Bazaar
Vogue
Esquire
Stuff
Redbook
Stuff
Lucky
Playboy
Bazaar
Maxim

More in 'High" or 'Neutral' categories is not necessarily better. Budget still counts. There are more media options than most budgets can accommodate, especially in the fashion category, but the Brand-to-Media-Consonance assessments allow you optimize your brand and increase sales.

Luxury Brands are Like Other Brands, Only More So (August, 2004)

A simple answer to the question of "what is a luxury brand? It's something beyond the necessary, beyond the usual, beyond the commonplace. In essence, luxury means 'better' than ordinary brands. But the consumer, not the industry or marketer, defines what 'better' is. In other words, those attributes of a luxury brand defined by luxury marketers, such as craftsmanship, limited production, exclusivity, uniqueness, etc., may not necessarily translate into 'better' in the consumers' view and so may not necessarily warrant consumers paying a premium for them.

Brand loyalty is the measure of brand success
Ever since 1997 Brand Keys has given the 'Brand Keys Customer Loyalty Award' to brands that create and sustain the strongest connection with their customers. Based upon surveys among consumers, Brand Keys measures 182 brands in 31 categories, including airlines, beer, car rentals, coffee and doughnuts, major sports leagues, mobile phones, office copier, soft drinks, retail store and wireless phone service.

The result of this work is a list of the 'best in class' brands that come closest to meeting or exceeding the consumers' ideal for that category. So in car rentals Avis gets the nod, in coffee Starbucks, and in hotels the honor goes to Marriott.

Measuring consumer loyalty all boils down to understanding consumers' expectations, first for the product category, then for the brand. We start first with the product category. We study the value components that consumers' bring to the category - the attributes, benefits, values including both rational and emotional components - and that define the category from the consumers' perspective. Then the magic occurs when they analyze these components with a sophisticated computer modeling program that identifies the four key drivers that define the category from the point of view of the consumer.

Consumers bring higher expectations to luxury brands
For luxury brands the category drivers are the same as for more mass brands. The key distinction is that consumers bring higher expectations when they buy the luxury brand. "If you are Bulova, you have the same quartz movement as everybody else so your watch is going to be accurate. But if you add gold and diamonds to that watch, it won't turn it into a Rolex.

The level of expectation for a luxury watch on style and looks is nearly 25 percent higher than for a normal watch. The question is whether the luxury brand can withstand the demands, both spoken and unspoken, that are made for the entire category and then making sure you meet them better than anybody else. Brand Keys' consumer loyalty methodology aims to overcome the weakness of traditional research, which yields "statistically reliable and valid answers to meaningless questions." Traditional research provides only a rear-view picture of what people have done, but it doesn't tell anything about what people are going to do.

In the realm of luxury where brand purchases may be a once in a lifetime event, customer loyalty doesn't connote only repeat purchase, but the brands one considers for any purchase. We use the term 'customer loyalty metrics' as a leading indicator of what people will do in the marketplace. So it's not just 'are they going to buy it ten more times?' Rather it is 'are they going to buy it at all?

The dangers to brand companies that fail to measure their consumers' loyalty expectations accurately are clear - examples like IBM, which mistook customer satisfaction for brand loyalty and lost a major portion of market share as satisfied IBM personal computer owners drifted to other suppliers when buying again. Or McDonalds that trusted consumers who said they would eat at the 'golden arches' only to discover that they didn't really mean it. Or to so many failed dot.coms who put millions into awareness advertising only to discover that awareness doesn't translate into sales.

The place for luxury brands to start is to understand the real consumer drivers that apply within the category. The drivers for luxury jewelry will be entirely different than those for a luxury hotel. Recognizing that each product and service category is different, luxury brand companies can measure accurately what drives people to buy within the category, then make sure the brand measures up to consumers' expectations for those key drivers.

Mother's Day: Traditions vs. Traditional (April 2004)

Since 1914, when President Woodrow Wilson made it a national holiday, Mother's Day has become a tradition. But, "tradition" is no longer "traditional."

Today, Mother's Day involves a broader spectrum of relationships, embracing step-moms, female relatives and friends. Add to that changing family dynamics, including divorced and single-parent households, and the fact that it crosses ethnic, cultural, and religious boundaries, and it's no surprise that more than eight of 10 consumers (83 percent) plan to celebrate Mother's Day.

Mother's Day celebrants intend to spend an average of $123.00 this year. Men intend to spend more than women, indicating an average "spend" for celebrating Mother's Day of $149. Women intend to spend $97.

As part of their Customer Loyalty Index, Brand Keys, Inc. (www.brandkeys.com), a New York City-based brand and customer loyalty research consultancy, polled 1,000 men and women 18-65 years of age and asked them whether, and how, they were planning to celebrate Mother's Day. Here's what they found.

What They're Buying

 
Total
Men
Women
 
1,000
500
500
Cards
90%
85%
95%
Flowers
65%
70%
60%
Brunch/Lunch/Dinner
50%
60%
40%
Gift Cards/Certificates
40%
50%
30%
Clothing
39%
30%
48%
Jewelry
21%
24%
17%
Books/CDs
15%
20%
10%
Candy
9%
12%
6%

Where Are They Shopping?

Specialty Stores 35 %
Department Stores 27%
Discount Stores 14%
On-line Stores 14%
Catalog 10%

But whatever they buy and wherever they buy it, folks intend to "connect" with Mom on Mother's Day. Here's how:

 
Total
Men
Women
Phone
52%
63%
41%
Personal Visits
30%
29%
31%
Cards
12%
12%
12%
On-line
6%
4%
8%

The modes of connection and communication may be new, but references to Mother's Day can be traced back to celebrations in ancient Greece in honor of Rhea, Mother of the Gods. In the 1600s, England celebrated a day called "Mothering Sunday." In 1872, in the United States, Julia Ward Howe first suggested a Mother's Day dedicated to peace.

In 1907, Ana Jarvis began a campaign to establish a national Mother's Day and persuaded her mother's church in Grafton, West Virginia, to celebrate Mother's Day on the second anniversary of her mother's death, the 2nd Sunday of May. Ms. Jarvis and her supporters began a letter writing campaign to establish a national Mother's Day and by 1911 the holiday was celebrated in virtually every state. In 1914, President Woodrow Wilson made Mother's Day an annual national holiday celebrated on the second Sunday in May.

Coffee Sales Perking Up (March 2004)

While coffee consumption around the country has hit a record high it's most notable in latte and espresso-based beverages where sales have increased 12 percent since 1997. This is due in large part to product availability outside the well-known but more expensive, "coffeehouse" chains.

Consumers can now get flavored lattes at Dunkin' Donuts (which recently announced the coming of a new line of espresso beverages).

So while you can get a latte virtually anywhere these days, how do consumers rate the major chains for variety, location and value, quality, taste, and service? Brand Keys, Inc., a New York-based brand and customer loyalty research consultancy interviewed 600 coffee drinkers and found the following.

Coffee Consumers Customer Loyalty Index (Percentages are the number of consumers satisfied at each coffee outlet)

  Dunkin'
Donuts
Krispy
Kreme
Starbucks
Variety 83 percent 76 percent 93 percent
Location, Value 93 percent 78 percent 98 percent
Quality, Taste 81 percent 81 percent 94 percent
Service 84 percent 80 percent 90 percent

Brand Keys Valentine's Day Index 2004 (February 2004)

As legend goes, it all started with a letter from a prisoner ­ Valentine ­ to his beloved, his jailer's daughter. Now, every February, gifts are exchanged between sweethearts in the name of St. Valentine.

Valentine's Day has become a major retail holiday, and it gets bigger every year. So much so that Brand Keys decided to find out how, and to what extent, men and women intend to celebrate Valentine's Day 2004.

As part of Brand Keys' bi-annual Customer Loyalty Index, 1,000 men and 1,000 women (21-59 years of age) throughout United States were asked what they were going to do; what they were going to buy; and how they were going to celebrate this Valentine's Day Some facts:

  • Consumers expect to spend over $1.1 billion dollars on candy, coming in 4th in the holiday "sweetstakes" behind Halloween, Easter, and Christmas.

  • It's the 2nd largest greeting card holiday just behind Christmas, with estimated Valentine sales of $940 million in 2004.

  • Valentine's Day accounts for nearly 33 percent of holiday sales of all cut flowers, more than any other holiday.

Turns out folks are going to celebrate more than last year! Men and women intend to exchange gifts this February 14th to the tune of an average of $120 (a 33 percent increase over 2003) spent by men, and $65 spent by women, (an 8 percent decrease over 2003.)

There are demographic differences in gift-giving. The 21-34 year olds plan to spend an average of $135, 35-49 year olds plan to spend $55, and the 50+ group plans to spend an average of $40.

What are they going to spend their money on?

Gift-giving will be slightly different this year. Anticipated dinners and entertainment events are up 37 percent over last year. Expected gifts of flowers are also up by nearly 15 percent. Other gift categories remain essentially the same. But gift cards have nearly doubled, proving that sometimes you can put a price on love.

The top-10 gifts for 2004 include:

  1. Cards 76%
  2. Dinner/Entertainment Events 50%
  3. Flowers 37%
  4. Candy 33%
  5. Gift Certificate/Card 32%
  6. Jewelry 20%
  7. Stuffed Animals/Balloons 14%
  8. Perfume/Cologne 9%
  9. Lingerie/Clothes 8%
  10. Books 7%

It may be accurate to note that men are usually from Mars and women are usually from Venus, but they seem to pretty much think the same way when it come to how they'll celebrate the holiday.

What they expect to actually do to celebrate doesn't seem to vary all that much. Top Five responses included:

  1. Dinner 35%
  2. Movie 30%
  3. Sex 25%
  4. Stay at home 11%
  5. Dancing 6%

As "movie" came up slightly higher than "sex" as a holiday event, respondents were asked what was their favorite Valentine's Day movie? Their replies:

Women

1. An Affair to Remember
2. Sleepless In Seattle
3. Titanic
4. Love Actually
5. Romeo & Juliet
6. Something's Gotta Give
7. Somewhere in Time
8. Love Story
9. Princess Bride
10. While You Were Sleeping

Men

1. Sleepless in Seattle
2. When Harry Met Sally
3. My Best Friend's Wedding
4. Pretty Woman
5. Ghost
6. Casablanca
7. Annie Hall
8. Something's Gotta Give
9. Officer and a Gentleman
10. Bull Durham

Do you have a dream date? Everyone was asked, next to your very own sweetheart, whom would you like to celebrate Valentine's Day with?

Women

1. Ashton Kutcher
2. Richard Gere
3. Tom Cruise
4. George Cloony
5. Keanu Reeves
6. Justin Timberlake
7. Hugh Jackman
8. Will Smith
9. Johnny Depp
10. Sean Connery

Men

1. Nicole Kidman
2. Cameron Diaz
3. Jennifer Lopez
4. Jennifer Garner
5. Jennifer Anston
6. Hillary Duff
7. Halle Berry
8. Diane Keaton
9. Jessica Simpson
10. Kate Hudson

How Super is the Super Bowl for Your Brand? (January, 2004)

You know the old quote, “I know that half my ad dollars are being wasted, I just don't know which half.” Sadly, that refrain is still true. At least half the industry’s advertising dollars (probably more in the 24/7 Internet-driven 21st Century) are being squandered with no provable return.

Traditional media buys have always been based on an identifiable reach and frequency. Companies pay for the time or space, run the ad, and that's that. But when all is said and done, what did the companies that ran the advertising really get?

Well, they can prove they got the time or space they paid for; they can check the affidavits. And they know their ad was directed at the audience defined by the reach. But in terms of real-world accountability, companies get no proof that anyone, no matter how well defined demographically, actually saw/read their ad. There’s no guarantee the viewer didn't zap the commercial. No warranty that the audience will remember it, or think well of the advertised brand - let alone buy the product!

Further, once the ad’s been run, the media have no obligation to provide any evidence that their service correlates with the brand's success, the company’s profits or increased shareholder value.

Nothing. Nada. Niente. Rien. Nichts. Zip.

One would think that, at a time when brand managers, CEOs and CFOs are howling for greater accountability and profitability, there’d be more trackability built into media deals? Especially when brands regularly cough up on average $2.5 million dollars for 30-seconds on the Super Bowl.

Brand Keys, Inc., a New York City-based brand and customer loyalty research consultancy, believes that in exchange for their millions, advertisers deserve more peace of mind than just knowing their commercial ran. So we developed a new research model that integrates brand values into the media planning process. This unique proprietary methodology can actually identify (a) increased levels of advertising awareness and attention paid to the commercial; (b) increased levels of the advertised brand’s image ratings; and (c) potential product purchase. These measures are all based upon R.O.E. – Return-On-Equity.

The Brand Keys insight: any brand’s values are reinforced by the media vehicle’s values. If a brand’s strength is reinforced, viewers will pay more attention to the commercial and will think better of the brand. On the other side of the coin, if a brand’s values are reduced, viewers won’t pay much attention to the commercial, and may actually think less of the brand. This is true no matter how “creative” the commercial, or which “compensated celebrity endorser” is featured.

The Super Bowl media survey:

The Super Bowl media survey is, like the Brand Keys Customer Loyalty measures, created expressly to tease out respondents’ true opinions. Because the survey slips behind respondents’ unconscious defenses, it is virtually impossible to outwit. This means it delivers results that correlate tightly with respondents’ true attitudinal and behavioral patterns, and are more reliable predictors of future behavior.

These insights are based upon an R.O.E. model, Return-On-Equity, a system that measures how the potential target audience will react to advertising on, for example, the Super Bowl. That process begins by documenting and quantifying the equity increase (or decrease) that results from an advertising effort of this nature and reports the “return” or “loss” gained from the advertising effort. It covers most, but not all, of the brand’s advertising “on the Super Bowl,” “the Super Bowl Pre-Game,” or “the Super Bowl Post-Game,” of the various brands tested in these positions based upon advertiser rosters that appeared in industry publications prior to the survey being fielded.

An increase in brand equity always results in an increase in loyalty and, ultimately, drives profits. The results are quantitative and generalizable at the 95 percent confidence level.

Advertiser R.O.E. from “Super Bowl”

American Legacy Foundation -5
AOL +4
Bud Light +6
Budweiser +10
Cadillac -2
Chevrolet +10
Cialis -5
Columbia Pictures +8
Dodge +9
FedEx -0-
Frito-Lay +12
Gillette +14
H&R Block -5
Levitra -2
MLB +4
Mitsubishi -0-
Monster.com -3
NFL/United Way +8
Pepsi-Cola +12
Sony Pictures +4
Staples -3
Touchstone Pictures +4
20th Century Fox +3
Universal Pictures +6
Visa +11
Warner Brothers +9
White House Office of National Drug Control Policy -6

Advertiser R.O.E. from “Super Bowl Pre-Game”

Pizza Hut +16
Cadillac +3
GMC +9
Saturn +8

Advertiser R.O.E. from “Super Bowl Post-Game”

Subway +8
Cadillac +1

Advertisers have always known which audiences they want to reach. They may even have been using televised events to showcase some truly creative advertising. But all TV spots, no matter how terrific, are ultimately judged by how well they drive sales and build the advertiser's brand. The Brand Keys R.O.E. media assessment is a "reality check" that lets advertisers have more confidence in their media buys.

The Indictment of a Brand (June, 2003)

A grand jury just indicted Martha Stewart on federal charges of securities fraud and obstruction of justice in an insider stock trading scandal. Ms. Stewart has denied wrongdoing in her December 2001 sale of shares of ImClone Systems Inc. But a US Attorney has been quoted saying that "this criminal case is about lying - lying to the FBI, lying to the SEC and investors.'' That may be true, but the real effects are showing up dramatically in the negative impact this is having on Martha Stewart, the brand.

Brand Keys has been tracking the Martha Stewart brand for nearly 3 years. "In May of 2002, the brand was one of the strongest in it's category," said Robert Passikoff, President of Brand Keys, Inc., a New York-based brand and customer loyalty research consultancy. "This is a perfect example of the fragility of all brands that are invested mainly in a human being. We often see how impermanent their brands can be, how dependent upon public whim; how sudden and irreversible their disappearance can be. Any sudden change in public perception of that "human brand" has an immediate ­ and potentially devastating ­ effect on the brand's equity, and soon after, its profitability."

That's because any brand ­ and what it stands for ­ is based on the customer values inherent in the brand. Invariably the really important, lasting values turn out to be not image items, but customer loyalty values. They are usually the leading indicator values that built the brand's success in the first place. This is true whether it's a giant oil company or a Perfect Woman Doing Perfect Things, a brand's life force flows directly from the core values its customers hold dear.

More often than not, these values are not "sexy." "In her glory years, even Martha Stewart's detractors had to agree that she (the brand) was "chic" or "creative" or "elegant" or even "a style I would like to see in my home" given the environment and the available competitive set," said Passikoff. But in harsher, warier times, and under the baleful eye of the SEC and having just been indited, the broadcast media and the press, image items tend to count for very little. In today's economy, brand survival and profitability is more and more reliant upon leveraging customer values.

The difficulty is this: non-imagery values usually get examined only in retrospect, once the subpoena has been served. And even then it's a rush to discover which of these values the PR folks should spin and the advertising should address.

The really meaningful values always turn out to be ones like "trust" and "confidence." Let's take a value example relevant to the Stewart case: Maintaining ethical business standards. This value is currently in the spotlight, suddenly a more crucial loyalty value than it was mere months ago. In fact, back in 1997, "ethical business standards" contributed only about 8% to loyalty. In recent months that figure has more than doubled, to a 20% contribution. Another value: A brand I trust ­ a perennial favorite ­ always hovered around a 5% contribution to loyalty (and therefore, profitability). That's now up to a 11% contribution. Integrity? Up from 2% to a 6% contribution. There are other "hard" values at work as well. But just removing that 37% from the brand equation leaves an awful lot of shoring up for relatively less important image items like "cultivated" or "elegant" to do!

For many years, brands that were invested in a single person and were legitimately seen to be "elegant" or "creative" or "having a wide range of colors and patterns to fit my home" were anchored in values like "trust," "integrity," and in many cases real "ethics." Not any more! Values have shifted dramatically. Now brands have to work to earn those values. "If you don't know where your brand's core customer values lie, you risk losing everything ­ your brand, your customers, and your profits," noted Passikoff.

New Brands Show Up on Customers' Shopping Lists (May, 2003)

The sixth annual Brand Keys Customer Loyalty Awards recorded a record number of first-time winners. The survey also identified more young and emerging companies showing up for the first time in 2003 than in all previous five years the survey has been conducted.

First time winners for 2003 included Bud Light, CNN's American Morning, FedEx, Gateway computers, JetBlue, L.L. Bean, Marriott, Miller Genuine Draft, New York Life, Pizza Hut, Southwest Airlines, Starbucks, Subway, Texaco, Vanguard Mutual Funds, and Verizon.

Companies showing up for the first time on the customer loyalty radar screen in 2003 included: JetBlue, Subway, Arby's, Hardee's, Jack In the Box, White Castle, Siemens, Nextel, and Mountain Dew.

"The list of 'acceptable' brands that customers are including on their shopping lists ­ has expanded dramatically. Additional brands customers are willing to seriously consider are showing up on customers' loyalty radar screens," said Dr. Robert Passikoff, president of Brand Keys, Inc. (www.brandkeys.com), in announcing the sixth annual Brand Keys Customer Loyalty Award winners.

The Brand Keys Customer Loyalty Awards are based on survey assessments conducted in the first quarter of the year. The current evaluations probe customers' relationships with 181 brands in 31 categories. 2003 Brand Keys Customer Loyalty Awards Winners:

  • JetBlue/Southwest (tie) - Airline
  • Adidas/New Balance (tie) - Athletic Footwear
  • First Union - Consumer Bank
  • Bud Light - Beer (Light)
  • Miller Genuine Draft - Beer (Regular)
  • Avis - Car Rental Company
  • L. L. Bean - Clothing Catalogue*
  • Starbucks - Coffee & Doughnuts*
  • Gateway - Computer*
  • Discover - Credit Card
  • KeySpan - Energy Provider
  • Texaco - Gasoline
  • Marriott - Hotel
  • New York Life - Insurance Company
  • Sprint/Verizon (tie) - Long Distance Carrier
  • MLB - Major Sports League
  • American Morning (CNN)/Today (NBC) (tie) - Morning TV News Show
  • T. Rowe Price/Vanguard (tie) - Mutual Fund
  • Canon - Office Copiers
  • Amazon.com - Online Books/Music
  • CharlesSchwab.com - Online Brokerage
  • Expedia.com - Online Travel
  • Airborne Express/FedEx (tie) - Parcel Delivery
  • Pizza Hut - Pizza
  • Subway - Quick-Serve Food
  • Wal-Mart - Retail Store
  • Google.com - Search Engine
  • Pepsi - Soft Drink (Regular)
  • Diet Pepsi - Soft Drink (Diet)
  • Verizon - Wireless Service Provider
  • Samsung - Mobile Phone

* new category for 2003

The critical re-configuration of the playing field for the sixth annual awards confirm that the competitive landscape in virtually every product and service category is expanding at an unprecedented rate. "When the shopping list, the consideration set, gets longer competition increases and marketing life gets tougher. Many companies have marketing mindsets stuck back in the mid-twentieth century. They are unable to measure real customer values and real expectations used to define the category," noted Passikoff. "They have market presence, but no real meaningful differentiation. If you can't even identify meaningful customer values, you can't be expected to address those values in the marketplace."

The real-world proof of these findings is reflected by the fact that over the past two decades many brands and companies, including some of the world's largest, have experienced increasing difficulty in differentiating their products and services. "Or exhibiting real profitability," added Passikoff.

Brand Keys, the only research consultancy to specialize in customer loyalty metrics, uses data generated by its bi-annual surveys to paint a detailed picture of the "drivers" that bond customers with their "ideal" brand in each category. Traditional consumer research reports what people say about previous purchases, Brand Keys predicts future behavior, determining (at the 95 percent confidence level) which products and services people will buy over the next 18 to 24 months.

"The brands whose set of drivers comes closest to meeting (or exceeding) the ideal are the ones whose customers will demonstrate higher levels of customer loyalty to over the coming months," said Dr. Passikoff, "and it's proven to result in increased profits."

Brands that ranked number one in their categories are those whose customers felt were best able to meet or exceed their expectations. "The fact that so many new brands are showing up is just another indication how difficult the marketplace is for older, established brands," noted Passikoff.

But the Brand Keys survey also indicates that customer expectations are increasing faster than most brands are able to keep up with. Brand Keys surveys have found categories where expectations have increased as much as 60 percent, while brand perceptions have only grown an average of 8 percent. "That kind of gap presents an awfully large opportunity for your competitor," said Passikoff.

Three new categories were added for 2003: Computers, Clothing Catalogues, and Coffee and Doughnuts. For the 2003 awards, researchers conducted nearly 16,000 brand assessments among adult Americans who use the brands in question. Brand rankings for all 31 categories and 181 brands assessed can be found at www.brandkeys.com.

2003 Brand Survivability Ratings (April 2003)

A review of the top 50 most highly-rated brands indicates that consumers will stick with the basics, with or without flag-waving. "It's not the 'bunker' mentality of September 11th," said Robert Passikoff, President of Brand Keys, a New York City-based customer loyalty research consultancy. "It's a real return to basic and unadorned American values."

It's back to "brand basics," according to the 15,400 adult Americans (ages 21-59) who participated in the Brand Keys (www.brandkeys.com) Customer Loyalty Index Brand Survivability Assessment. Actual brand consumers rated 180 brands in 32 categories on the following three attributes.

  1. The degree to which the brand is robust enough to withstand the pressures of a wartime economy.
  2. Does the brand represent lasting and solidly American values?
  3. The level of confidence the consumer has for the brand.

Where Retailers Stand

For retailers (on - and off-line and catalogs), consumers chose Wal-Mart (#3), Sears (#9-- Sears Catalogue #14), Amazon.com (#10), JC Penney Store (#18), and the L. L. Bean Catalogue (#15). Apparently, they're going to "Buy American," with New Balance (#30), the only athletic shoe in the top 50.

Comfort food seems to be the rule of the day. Nearly all soft drinks (diet and regular) show up with Coca-Cola (#1) and Pepsi (#6) leading the list.

Food brands include: Dunkin' Donuts (#31), Pizza Hut (#35), and Domino's Pizza (#38).

Alcoholic preferences included: Coors Light (#25), Miller Genuine Draft (#44), Budweiser (#46), and Bud Light (#47). Imports suffered, showing up in the bottom five rated brands.

For information needs, American Morning on CNN (#42) and The Today Show (#49) were the most highly-rated brands.

Sports preferences leaned towards Major League Baseball (#8) and the NFL (#17).

The war with Iraq is sure to curtail travel. That said, Avis (#2) and Hertz Car Rental (#11) were the car rental brands to show up on the top of the list.

When they gas up, it's Texaco Gasoline (#40), the only gasoline brand in the top 50.

Risking flight? Southwest Airlines (#21) was the only airline brand to make the top 50.

People will value communications even more. For mobile and long distance telecommunications, the leading brands were AT & T Long Distance(#7), Verizon Wireless (#13), and Sprint PCS Wireless (#23). Motorola (#41) was the phone brand of choice.

Going on-line? IBM (#24) and Apple Computers (#27) rated highest, with consumers using the following on-line services: AOL.com (#5), Google.com (#19), Yahoo.com (#22), and Netscape.com (#26).

Fedex (#28), Airborne Express Delivery (#33), and UPS (#34) beat out the U.S. Postal Service (#123).

How to pay for all this basic buying? American Express credit card (#20) is the only financial brand in the top 50. (Visa was #93, Discover Card #137, and MasterCard was #156.)

"The 'survivability' assessments are a good yardstick to use to see which brands and categories will do better than others. Think of it as an extra bit of brand equity, at a time when that will really count," said Dr. Passikoff. "Consumers will be looking for continuity and reassurance. Brands that are visible and viable -- even in the face of war -- will thrive. If there ever was a time to advertise, it's now."

Store Credit Cards, Their Day Has Passed (March 2003)

From a historical perspective, store credit cards were the "modern" thing when they were introduced as new and convenient. They provided an additional touch point for stores with consumers, and some actual continuity early on too. And, when consumers paid their bills, it could be highly profitable.

But in light of the introduction of more broadly used (and promoted) cards, like VISA, Discover, and MasterCard they have become anachronisms. (AMEX plays a part too, but the dynamics of use of that card are quite different than store cards.) All credit card companies face annual charge-offs, but Store cards tend to be the first cards consumers will let go unpaid, so the risk today is substantially higher.

Most consumers carry an average of three credit cards in their wallets. From a share-of-wallet and frequency-of-use basis, store cards tend to be less used because they generally do not meet or exceed customer expectations of the drivers of loyalty, and therefore profitability, in the credit card category.

In fact, of the four category drivers ("Fees & Rates," "Value-Added Tie-Ins," "Broad Acceptance," and "Purchase Protection") Store cards do not substantively exceed any of the standards set by the consumer for these drivers. That said, consumers tend to see store cards as having less relevance and utility, and the behavioral aspect of "things-are-tough-so-I'll-pay-some-of-my-VISA-but-none-of-my-Spiegel-card" kicks in.

Source: Since 1998, Brand Keys has conducted a national bi-annual Customer Loyalty Index survey on the leading brands, currently assessing 32 product and service categories. This is a telephone survey conducted each wave among a total sample of 16,000 men and women throughout the United States. All respondents are between 21 and 59 years of age.

It's All In the Cards (February 2003)

U.S. retailers are crying about the 2002 holiday shopping period. Their hoped-for sales bulge never really happened. This in part disappointed the major credit card companies, who stood to gain from a northward tick in counter sales. The bad news is that consumer spending was down - but only in the actual stores. Not so online. Internet-based sales are up again this year.

But whatever the season, it's been decades since folks forked over wads of banknotes for any item beyond a tuna on rye or a double latte. And if it's on-line, it's all credit card business. But whether it's spending in the mall or on computer, it's no longer a matter of whether to use a credit card, but which card to use. To find out, Brand Keys, took a harder look.

Physically there's no difference in the quality of its plastic, attractive embossed graphics or clever "electronics. Credit cards come in only one size. They're all widely accepted to buy nearly anything - books, plane rides, costly jewelry, even that tuna on rye. But credit cards are on the cusp of commoditization, literally interchangeable. Still, the Brand Keys Customer Loyalty Index survey of the five dominant card services revealed that there are some interesting brand distinctions - once you know where to look.

The four category loyalty drivers, in order of importance, are: Fees & Rates; Value-Added Tie-Ins; Customer Service & Purchase Protection, and Broad Acceptance. The big five stack up very closely, none very far below the Consumer Ideal - one surpassing it. Topping the list and best overall was Discover, followed by the Capital One, Visa, American Express and finally Master Card. But how they do on the individual category loyalty drivers tells the story.

Fees and Rates has been the traditional area of card differentiation. No more. But interest rates are low enough to make that very nearly meaningless. Discover exceeds the Ideal because they actually give money back; Capital One pushes a fixed APR. But can relying on fees and rates build long term loyalty? Probably not. Time to look elsewhere for loyalty. But where?

Value-Added Tie-Ins is an interesting driver. As cards become more commoditized, issuers try to differentiate themselves via borrowed equity and halo effects. But all five brands are seen to be pretty much the same in this regard. Value-Added Tie-Ins offer an opportunity to differentiate. But tie-ins are essentially promotions and are limited by the imagination and the bargaining power of the card brand managers. The catch: Most of these card brand managers (like most business executives) don't have a real fix on which customers' values can be effectively leveraged to their advantage.

Visa does well on Broad Acceptance, the only card that scores higher than the Ideal. They really are perceived as being 'everywhere you want to be'. Maybe advertising - and extensive distribution - do work! Clearly as card usage shifts more and more from traditional retail outlets, to the on-line sales to . . . whatever is the next distribution source, Broad Acceptance - real or perceived - will become even more importance.

Nobody tops the Ideal in Customer Service & Purchase Protection. "It's a dead heat and suggests that 20th Century process engineering and purchase protection programs have become a commodity value in the 21st. Customers don't appear to feel either well-served or protected. Maybe that's because "service" and "protection" have taken on new meanings given the shifts in consumer shopping values."

This leads us to the sad conclusion that credit cards are in danger of joining telecommunications companies as the latest entry into the 'Eminent Generics Hall of Fame.' There seems to be little room for innovation in the categories Fees & Services or Customer Service & Purchase Protection. You can charge people just so much, and - even if they understand the small print - offer them just so much protection," said Passikoff. Broad Acceptance suggests that customers still want more places and more ways to use their cards. Whoever delivers more and better places, with higher degrees of service and protection will ultimately prevail.


Robert Passikoff is founder of Brand Keys Inc. (New York), a brand and customer loyalty consultancy. He can be reached at 212-532-6028, x12, or robertp@brandkeys.com. Visit www.brandkeys.com for more.

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