Mark Vandegrift
Welcome to the latest episode of the Brand Shorthand Podcast. I'm your host, Mark Vandegrift, and with me is the monarch of marketing, Lorraine Kessler.

Lorraine Kessler
Oh my... You have to have a list of all these. I really, I need to see a list of all these.

Mark Vandegrift
I do have a list of them and I'm working through them slowly but surely. 

Lorraine Kessler
Are you using AI?

Mark Vandegrift
No, no, they would never come up with such great things.
 
Well, we are back again to talk about our 50th anniversary and all that's happened in advertising since 1974, our first year in business. For those who missed our last two episodes, go check them out. Dr. Scott Powell from Grove City College was with us to discuss the great things he's doing at Grove City to educate a future generation on the principles of positioning. We've had a lot of great feedback on those episodes, so check them out today.

Lorraine, you know I never like to dive straight into our topic. So there's some brand news that's worth discussing. And that's this idea of surge pricing. Have you heard about the fiasco that Wendy's has on their hands?

Lorraine Kessler
Oh, how can you not hear them?

Mark Vandegrift
Well, the social media backlash has been traumatic to say the least. Even Elizabeth Warren got involved with a tweet.

Lorraine Kessler
Oh, that's really something. Well, she needs something to get her back into the foray, I guess.

Mark Vandegrift
Well, here's what she wrote. “Wendy's is planning to try out surge pricing. That means you could pay more for your lunch even if the cost of Wendy's stays exactly the same. It's price gouging, plain and simple, and American families have had enough.”

Lorraine Kessler
Well, she's right about it. You know, there is, there's predatory pricing, there's price gouging, and this definitely fits in that bucket.

Mark Vandegrift
Well, I like this other tweet. It was by someone much less famous, not me, but he wrote, “Wendy's has no idea how easy it is not to go to Wendy's.” 

But let me back up and share how this story unfolded. So Wendy's issues a news release, and this is how the release was picked up. I'm quoting now, “American fast food chain Wendy's is planning to test dynamic pricing and AI menu features in 2025, reports Nations Restaurant news and Food and Wine. This means that prices for food items will automatically change throughout the day, depending on demand, similar to surge pricing in rideshare apps like Uber and Lyft. The initiative was disclosed by Kirk Tanner, the CEO and president of Wendy's in a recent discussion with analysts. According to Tanner, Wendy's plans to invest approximately $20 million to install digital menu boards capable of displaying these real-time variable prices across all of its company-operated locations in the United States. An additional $10 million is earmarked over two years to enhance Wendy's global system, which aims to improve order accuracy and upsell other menu items.” So...

Only hours after that release, they had to issue another statement. Here's from the CEO, “Wendy's will not implement surge pricing, which is the practice of raising prices when demand is highest. We didn't use that phrase, nor do we plan to implement that practice. The company said in a prepared statement, the CEO claimed that its new digital menus would not raise prices when our customers are visiting us the most but would allow restaurants to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.” 

Lorraine, this is PR 101. Share with us how this might have been avoided with a better PR strategy and then how it could have been better responded to with a good crisis communication strategy after things back-fired.

Lorraine Kessler
Well, we all know what their intention was when they were talking with the analysts, right? It was to test dynamic pricing, which is surge pricing. And that was the, that's the, so first of all, don't leak to analysts, right? This kind of strategy without really thinking about the consuming public.

The last person in their mind is the consumer. And particularly the consumer today, when we're going into a political presidential, political campaign and across all the news feeds is this concern for grocery prices. They've increased maybe 15% over the last two years. So, families are feeling the pinch. Fast food has a great opportunity to capitalize on that, right, by offering discounts and value meals at different times in the day. That's what their message should have been. It allows us to do value-based pricing in a dynamic way that really serves the American families today and gives them an option. So, they were totally ignorant of the context in which this came. They certainly didn't do anything to protect the release. Was this Restaurant News that you read from?

Mark Vandegrift
…and Food & Wine, both of them.

Lorraine Kessler
and food and wine, which really flags their, I think, their real intention. And, you know, so they undermined the consuming public. They did not give enough credit to what's going on in the greater context in terms of food costs. And this really reads as a predatory pricing stance, one where they want to take advantage of people who are their most loyal customers? Right. 

The third part of this, uh, a, the meeting… letting it leak out. The context is as I think that one quote you read, uh, States really nicely. Competition. I mean, they just handed to their competitors. And I think there's a Burger King take on this, right? They just handed to them on a plate away to really go after Wendy's hard and Burger King does. You can't blame them because that's the game. There's so many, the fast food market is so competitive. 

Now I read somewhere that this was, and maybe you even read it, I think just a minute ago, that something about the surge pricing comes from Lyft and Uber. You can't just lift, L-I-F-T, strategies from one category and transplant them into another without a full understanding of the context of where the consumer is, what amount of competition you have and competitive moves and how they're likely to come after you for whatever you do. And that's what a competitor will do. They'll attack because that's how they get market share. So, you know, I think this miscalculation is pretty egregious. You asked me, how do you remedy it?

You know, it's a self-inflicted wound. It's a little different than the Tylenol case that we've always talked about, in which they did all the right things. But they weren't to blame in any regard to what happened. 

For those who are too young, they might not know that pill bottles within, I think it was the Chicago market, were tampered with by a consumer who wanted to murder his wife, but planted poison in several bottles so that it didn't seem like the target was his wife. Tylenol didn't miss a beat, came out, and the reason we have all these safety seals now is because of that case. So, what now? Well, I think the best thing is just kind of be quiet and start acting and start doing things that are about the value meals, the value promotions.

And I'd even go so far as to be dramatic and do kind of a free lunch Monday kind of promotion. Buy a drink, get a free lunch. And not just one Monday, but maybe do that for a while. Yeah, it's going to hurt a little, but that's what happens when you have these kinds of things happen. They're going to hurt you either forever, or you can start to remedy that situation by establishing some customer integrity which I think they've lost an enormous amount about during this.

Mark Vandegrift
Well, strategically, don't you think that, think about restaurants. When is a discount time that's most common? Happy hour, right? Even most fast food restaurants have adopted this where they'll say, you know, stop in between two and five and get a free fry or something like that. So, if you really meant that you wanted to pass along discounted pricing, you could have couched it like that and said, the great thing is we're going to have discounted pricing at various times throughout the day that won't just be two to five or whatever it is. It'll be at our slow times. And never indicate that there was anything to do with surge pricing or taking the model from Uber or Lyft. But like you said, they stole the idea in a way that made people think, “oh, well, Uber and Lyft call it surge pricing, so that's what Wendy's is trying.”

So strategically, to me, it might not have been the execution of the PR that was so bad, although like you said, testing it out with analysts is never a good idea because what are the analysts thinking of? How are you going to make more money, right?

Lorraine Kessler
Well, and how did they present it to the analysts? I mean, someone was there to report it, right? And I don't think they made this up in what they heard. So how they presented it, to your point, from the beginning to the analysts, should be: “We're a leader in fast food. We recognize the context of Americans today who are concerned about food costs. We are going to a dynamic value-based menu whereby we can expand the market of Wendy's people by bringing more Wendy's customers in who find sometimes our pricing might be a deterrent [because Wendy's is higher priced.] And we're going to have value times that are dynamic based on different slower periods. And that will hopefully bring the Wendy's value to more customers in a way they can afford and seeing it as a benefit to the customer.” 

But you know, even the one apology I saw was even all about how they're just going to use data. It's all about them falling in love with data in order to do this dynamic or surge pricing. So, it was a really poor or early response. The first response was like kind of a quip. So again, authenticity is so important. And once you bruise that, it doesn't heal quickly.

Mark Vandegrift
Well, I need to take that clip and send it to Wendy's headquarters because you just said that in such an eloquent way that if I had been an analyst, I would have been, I love that, what a great idea. And I would have never picked up surge pricing from what you said either.

Lorraine Kessler
And like I said, I don't think the editors and the reporters invented that. They may have made the, they may have made the connection between  what they were hearing in dynamic pricing and surge pricing, but I don't think they were filling in the pieces. I think they actually heard the intention that, and I could see how this would happen. Um, you're in a closed room, you're CEO, you're talking about them to investors and analysts, right?

And guess who you forget that is listening? The consumer. Nothing is enclosed doors anymore and they completely went deaf and blind at that moment.

Mark Vandegrift
Well, Burger King did a great job and I've never given Burger King credit when I'm not a big fan of their food, but I don't eat a lot of fast food, so don't take. Yeah, yeah, they got back. Yeah, getting back to what they've done here with You Rule. What they did is they came out and said, “the only thing surging here are flames and we're cooking more whoppers than anyone, so we're giving away a free whopper.” So huge kudos to picking up on that and doing something with it, because they're going to win a lot of customers.

Lorraine Kessler
And this is a lesson for positioning. We've often talked about positioning as a competitive strategy first. Like you really, the battle for perception is about differentiation. And so you have to map what ideas are available. Like, can we have this idea? Is someone own it? Then we can have it. How do we find an idea that's unique and has value with a certain target audience? That's one, but you also have to be asking yourself the question, “What is the competition's ability to respond?” All right. And can they respond with greater force? 

So, you know, this reminds me kind of as a weird analog, but the day trail Tylenol story, and I don't know if you know this one, but, you know, Tylenol came out in the 70s with acetaminophen, which was gentle on pain, and they commanded the market, and they squashed all the aspirin-based.. Buffer, Bayer, you know, Anicin, all those guys, and they were in a field of their own, as we love to say, category of their own. 

So, Datril comes along from Bristol-Meyer, and they come up with a strategy of, well, I think they said we're just as good as Tylenol, only cheaper, all right? So, which is actually a very good position for number two, because you can, if you want to grab Market Share, and probably grab more Market Share from that aspirin group of brands I mentioned. Not a bad strategy, except for they miscalculated on two fronts, which is similar here. One is they test marketed the idea, so they didn't launch it nationally, which is like the enigma in World War II gave Tylenol the ability to say, wait, something's going on here. We're going to be attacked. What does a leader do? You shoot. The only one that can play offense aggressively is the leader. So now you've just alerted Tylenol to this. Then by the time Datril did launch their campaign nationally, Tylenol, within a weekend, lowered their prices, used all their media power to tell all the TV programs running their ads, the Datril ads, that now their lower price is false. So, the ads had to be cut.

It is, I hate to say it, it is warfare and it's not always pretty, but that is a classic, and this reminds me of Wendy's. Premature launch, premature statement, not well thought out, allows others to attack your position.

Mark Vandegrift
Yep, yep, wow. Well, crazy, these large corporations just keep making blunder after blunder. Maybe one of these days they'll call us for some real help.

Lorraine Kessler
I think in part because I don't think they have a lot of history. And, you know, one of the things that the study of positioning gives us is that we can look at case studies like Datril and Tylenol, or we can look back and say, what went right, what went wrong. And the principles seem to be immutable. The brands change and why people's tastes change and fads change. Well, what doesn't is the basic principle. And I just think we have, you know, as we do in politics and everything. There's just a loss of history. There's a loss of that historical knowledge that would be very beneficial.

Mark Vandegrift
Well, let's get to our final category here or next to final category. And that is the growing importance of branding. So, I'll put on the screen again, our list of the major changes that we've seen in the last 50 years by category. We've covered media proliferation, technological changes, targeting and personalization capabilities, transactional media, and B2B advertising.

Today's going to be the growing importance of branding, and then next week we'll finish out with experiential marketing, which also relates to the growing importance of branding. So today we'll tackle our favoritest of favorite topics, the growing importance of branding. Lorraine, I know you have some insightful opinions on this matter, and how this has evolved. I mean, that's the critical thing. You just said you have history.

And that's the critical thing on this topic. It's not that we just believe branding is important today more than ever, but it has grown over the past 50 years. So, Lorraine, go ahead and kick this topic off.

Lorraine Kessler
Yeah, well, let me start with a paradox that you wouldn't expect, right? Is that not everyone needs branding to sell stuff. Right? Yeah. Everyone, everyone has a brand, whether they know it or not. So, it's a kind of a paradox. We all can name things we bought that we have no idea what the brand is. Particularly if you're buying on Amazon or one of the e-commerce.

I just bought not inexpensively lounge chairs for our deck at the lake. I couldn't tell you the name of the brand if you put it on the list. So, it doesn't really matter because I was looking at features, benefits and kind of price and all those things that you can do on Amazon. So, in a way, Amazon kind of became anti-branding or devalues many brands and we need to remember that. But for most companies and particularly in the US,

Yes, branding has evolved to be extremely important in decision. Any brand who has as its objective to command market share against strong competitors in its category, who wants to desensitize the customer's natural sensitivity to price to deliver a higher margin and higher profit, who wants a sustainable business that they can either hand over to another generation if they're private or can take from startup to IPO or even if they're already public, you know return a sustainable investor return that makes sense for a long time. 

These companies need brands and they … where it's evolved I think first of all, just look at the number of books that have been written in the last week Right. You want to know if there's a wind on something on any category, just look at who's publishing and how much is being published. But in the beginning days when I was working with companies, it was mainly about, we need to advertise this. We need to advertise this service. We're a hospital. We're going to advertise this service and put our logo at the bottom. And there was a sense that the logo and the name, that was enough, right? And the service was the king. That's kind of flip-flopped.

You can still do that kind of marketing, certainly if you have a unique service or something that is a profit generator or revenue generator, you want to focus on that. I'm not saying that that's wrong. I'm just saying more is needed. Name awareness has to be attached to a meaning. Make meaning, make money is what Guy Kawasaki always says, and I believe in that. 

When we look at a time, particularly in the US, maybe in some other markets, but the US is really atypical in this regard. We are so moneyed as a nation and have so many categories that are just filled with competitors that your hope of doing any of the things I mentioned mean that you have to build a strong brand meaning. You have to stand for something that sets you apart as simply as it can be said. And the emphasis on that piece has become much more important as it's attached to your name. It's not like forget the name, I have to attach that meaning to a name. So it's now a two-for game, you have to do both. 

And we know because we've seen that features and benefits are commoditized, right? You can look at, you know, we have this kind of, we have Teflon or we have titanium, well, everybody does. So it's just not enough. And then the thing that's really changed, I think in branding, as we move is this idea of a brand trying to go, and we're going to talk a little bit more about this, I think, later about experiential level. And there's many ways to talk about that, but one of the key ingredients is, how does this brand meaning connect with my own self-identity, or what I want to project about my self-identity, that I'm athletic, that I'm rich, that I'm smart, that I'm educated, that I'm a beer drinking football fan, whatever image someone wants to connect, that is part of the brand experience. And so, I think there's been a lot more conversation around that experience. And you know, what people are looking for is me and mine, right? Me and mine. I mean, it's the output of what was called the me generation. I think that was Gen Z.

It's just intensified in this area. And we see this in all sorts of ways where people proudly wear their logo merchandise, walk around with their Stanley Cup, the new hip thing. All of that is about me first.

Mark Vandegrift
Well, what's interesting, you started out with the fact that some of the brands you've purchased on Amazon, you don't even know what they are. And I want to connect some dots here for our listeners because a while back, I read an article, and guess what it was titled Lorraine? “Branding is dead,” right? If you ever want to get readers, just put something is dead and you'll read it. So branding is dead, and guess who the primary contributor to the article was? Amazon. And their point was, was basically what you just said. You'll buy something and you won't know what the brand is. 

But let me make another connection. So if you listened to Scott Powell last week, he was talking about his book business, or I guess it would have been two weeks ago in the first part of his interview. He did the book business and he moved 1.3 million books in a year period. He brought in about 200… I think he said $285,000 maybe is what it was. And what did he end up netting out of that?

Lorraine Kessler
Was it like a thousand dollars or something?

Mark Vandegrift
$4,000. Okay? So here's the point, is you can either go and brand or build a brand. And as we know, the greater the brand, the greater the margin, right? Make meaning, make money. But if you're going to give your soul over to the Amazons of the world, the Etsies of the world, et cetera, then you better have volume that's unheard of because your margin's going to be so little that you have to ask yourself, is it really worth being in business? 

Because it's more about just saying, well, I have a brand. It's about, I want to create something. I want to create a business that's contributing to people's lives and making meaning in the community and et cetera, et cetera. All the wonderful things that we talk about for why you want to either start or build and have a great business. And so, to me, what you stated was I bought lounge chairs and I wonder how little bit of margin they made on those lounge chairs because it costs so much money to be on Amazon. 

And do you need a brand? No, but you're giving away all of the margin that you might've made and would've spent less building a brand, you're giving that all up and handing it over to Amazon.

And of course we know Amazon is one of the magnificent seven, along with Apple and Nvidia and Meta and Tesla and another one I can't remember, Google. And they're, I mean, they're the big seven. So all you're doing is making the rich richer when you decide to sell your soul through Amazon.

Lorraine Kessler
Yeah, it ultimately comes down to control, right? Do you want to control what you're building, and do you want it to end up giving you greater return on the investment or do you want to keep pushing, you know, keep pushing that wheelbarrow uphill and then having to reload it with new firewood? And I think there's a great, you know, I love analogies, but there's a great visual analogy in the book, Good to Great, is branding is like a flywheel, right? You start pushing it, but eventually it goes on its own. It takes on its own momentum, and that's a happy place to be.

Mark Vandegrift
Yeah. Well, I'm going to mix something in here to just make this all a little interesting. We're going to work in a little Mark Ritson today. Yeah. So for those who don't know Mark Ritson, just Google him. He's a… you like to use the word provocateur Lorraine. I think he's a provocateur to the extreme. He might be the dictionary definition of provocateur. And I apologize ahead of time if you do Google him and if you don't like four-letter words in your ears, then just don't Google him, because that's what you're going to get.

Lorraine Kessler
Yeah, if that makes you stop listening, then don't listen to him.

Mark Vandegrift
Yeah, yeah, then don't listen to him. So you'll see more in Googling him than you care to find out. So Mark Ritson was recently interviewed for an article published on mumbrella.com, which is an Australian publication. It was an article that came out February 20th. And the article lede, L-E-D-E, is a bit misleading because it focuses on radio advertising, but when you dive into the article, it's basically about whether there is a balance in brand advertising, meaning they actually ask the question, can you do too much? And of course, we already know the answer, can you do too little? I think most clients do too little. But they discuss a study that tested what is known through the acronym ESOV, which stands for excessive share of voice, E-S-O-V.

Lorraine Kessler
I thought you said SOB. I was going to say, already we're starting with you. Yeah.

Mark Vandegrift
Well, it is Mark Ritson, so that probably comes out of his mouth much more than ESOV. The theory is that a brand can overspend on advertising. So let me ask you a few questions and we'll start from the top down from kind of a general question, Lorraine, to specific. He answers these, but I want to hear how you answer him. And here's a quote that introduces the first question. This is a quote from Ritson.

“The nature of marketing means it is reflexive. It deals with human behavior. It's not geology. It's not physics. So there are some principles, but they're principles for bending.” 

Do you buy, Lorraine, I'm asking, do you buy into Ritzen's theory that marketing is not scientific for the most part?

Lorraine Kessler
Yeah, 100%, I agree. Now, what can be more scientific is the measurement of what works and what doesn't work. How many people saw an ad and how many impressions you made and how many click-throughs, those are empiricals. But that doesn't even prove that you're building great brand value, right? I mean, all that, that's the whole thing. It could build a bridge to nowhere-land. And meanwhile, you still are wondering why you're not number one or you're not even number two. So...


Mark Vandegrift
He says the fact that marketing is science, he believes that is a four-letter word. So...

Lorraine Kessler
Yeah, well, that's fine. And I'm very taken with the Nobel Prize winner who wrote the book. His name is Daniel Kahneman. I don't know if it's pronounced Kahn-man or Kahn-man or whatever, but in his book, and this jibes with everything else we know and have read about why people buy what they buy, he talks about two systems. We have system one and system two thinking, right? 

So, system one is the system that operates automatically and quickly. It's really the system for recognition. I walk into a room, I immediately recognize you, Mark. I want to call you and I know your phone number. I overhear a conversation, I know it's negative or positive, right? I know how to get from point A to point B and tell people what strings you. This is all system one. System one is always active. It's not voluntary. It's involuntary.

But it really rules. And this is the system where emotion resides, and we do things intuitively. And it's kind of sad that people feel, well, that must not be, that must be the weaker part of the brain. No, that is absolutely, without system one, you would be brains on a plate, okay? You'd be brains on a plate. System one actually convinces system two of what it needs or what it should want. Now that's kind of a problem because system one's going to make very snap judgments, right? You know, we have the old bat and ball riddle. I don't know if you remember that. And people will immediately answer it incorrectly. They'll say the bat and the ball were $1.10. That bat is a dollar more than the ball. How much is the ball? Almost immediately, most people will say, well, the ball's 10 cents. And the true answer is it's five cents. 

But it takes system two, the calculator, to figure that out because sometimes the automatic is wrong and that's where we get confirmation bias. But the true thing that he's talking about is we don't know why people buy for real because these decisions are made intuitively and emotionally. And I think that a really good book on this was by Mark Lindstrom, Biology, you know, truth and lies and why we buy what we buy kind of thing. That's the name of the book. But it's a good book because there's proof, positive with tests that we lie about why we buy what we buy, and we're looking to satisfy something in our own ego, 90% of the time, 100% of the time, and then we convince system two, or the rational side of the brain, why it needs this. And one of the more interesting studies was, is system two, if I were doing math calculations, which I know, Mark, would be a rarity, but, yeah.

But if I were doing math calculations, that would engage system two, which requires a lot more energy than system one. And if I were doing that and I got a blurb about a sweet, guess what? I would have that, my chance of eating that sweet at that time would be higher when system two is overloaded. 

So, it's just a really interesting study. I didn't want to get too deep in it, but I agree with him for a lot of reasons that are backed by, ironically studies and evidence, maybe not science, and the psychology of the brain as we know it is a soft science, right? So, I like his word that it's reflexive and that it bends. Yeah.

Mark Vandegrift
Human behavior. So, to summarize your answer then, we're basically saying that marketing has to deal with the irrational side of the brain. So, you can't take rational scientific side input and impact the irrational side. It has to be creative so that the creative side of the brain is responding to it.

Lorraine Kessler
Yes. Right.

The intuitive inside where impressions are made. And I would say system one, like for example, people pay a fortune for a Rolex watch. They know it's a Swiss watch. That's about all they know. Do they know how it's made? What kind of parts it's in it? What kind of metals? Who's making it? How many do they make? They don't know any of that stuff. That's all rational. That's all system two fulfilling. And we don't know any of that. And yet people buy Rolexes.

Mark Vandegrift
Well, let's go to the next question you already hinted at. So of the science he says he does believe in, which is this ESOV theory, do you buy into his agreement there is a brand marketing equilibrium that you can achieve? And just so our listeners understand, there's overspending or excessive share of voice and there's underspending. And he believes somewhere in between that there's an equilibrium where if you don't spend a penny more, it's not going to impact how much your brand is purchased.

Lorraine Kessler
This relates to something in the 80s we used to call advertising wear out. Now, having worked in this business for decades plus.

99% of advertisers spend too little. So, we're arguing from the extreme. It's like when people say, I want to do what Nike did, with just do it. And then we say, well, what's your budget? And they say, $10,000. Oh, is that for a month? No, that's a year. 

So, it's arguing from the extreme. That's an extreme success about an extreme company who invested heavily over with constancy and consistency over time. So, it's bothersome for us as agency people when I hear that this is somehow a problem and we got to, you know, because what our clients hear that we have is who don't really want to spend money on marketing. They'd rather spend marketing money on product invention as if it's just going to move itself to the marketplace. That this is like music to their ears. Oh, I don't have to spend a lot. So, I always think there's a danger there.

But what he's talking about, there's one brand that I wondered, and we've talked about this before, that has, who's overspending in my opinion. 
Mark Vandegrift
Farmer’s Dog, right?

Lorraine Kessler
It's unbelievable. But you know what? I finally Googled them because I think there has to be a rationale, a rationale to this madness of this. John just yesterday, we have two separate TVs. He had like three ads. And I'm like, I don't get this.

Apparently they want to go to IPO. So they are doing, I still think they're overspending and I call this parasitic advertising. It's creating your own parasite to eat your own brand value. It's at some point you are annoying the customer beyond belief. And that's not a good thing, but the rarity of that is great. I mean, it's not a big problem to be addressed. Most, and I want those who are listening to know, most companies are not spending a lot.

Mark Vandegrift
Yep. Okay. Another opinion of his is that the bigger the brand, the less share of voice you need. Here's his quote. “If you have a 20% share of a market, you don't need 20% of the share of voice to maintain it. It can be 15% and you'll be fine.” This to me is a maintenance question, Lorraine, should we ever think about a brand going into maintenance mode?

Lorraine Kessler
Yeah, absolutely. I mean, in every category, there's a top share percentage you can get. It can be 20, it can be 40. It rarely is above that. It becomes monopoly. 

And maintenance mode, I don't think is so much about the brand meaning or value as it is about allocation of spending dollars. So, you and I know because we've read David Aker's book, Brand Portfolio Strategy, that most of these brands that we're spending at this level have a portfolio of multi-brands, right? 

So, one of the things that you have to do is manage those brands strategically from a resource allocation, principally money. So, if you have a cash cow, to keep investing in that cash cow, particularly if that cash cow is, let's say, an old generation product, and invest in it commensurate to the revenue means that you're going to starve energizer brands or future brands or brands that have a hope or acquisitions that could really jumpstart your whole portfolio. I wouldn't do that. 

So, do you keep advertising Hilton hotels or Hilton rewards, which are as a loyalty program? So, I think this is an allocation problem. And I think that David Aker's book, Brand Portfolio Strategy, is great for people to kind of think about what is the role that each brand plays in the portfolio and how they should be funded and the reason this is so important if you have an Energizer brand or let's say a future brand Something you're investing in that you think is going to be the next big thing in your beverage portfolio, and it's not soda or cola, but it's something totally different that has no revenue. So, how are you going to support that? You've got to take that from the cash cow and bring it over. And so, it takes a little bit of, it takes strategy, but it takes a little bit of calculated risk to do that.

Mark Vandegrift
Yeah. Well, and we've always talked about the idea that you do take a break from advertising for very short period of times to allow the mind to rest, if you will, of seeing your ads. But the one thing that sticks out to me is that if you ever think you're going into maintenance mode on your marketing, you're probably going into maintenance mode on your business. And the one thing that a business needs to do is keep innovating because our favorite business strategist, Peter Drucker says, there's only two things that a business is responsible to do, right? Innovate and, or only two things that produce a customer, innovation and marketing.

Lorraine Kessler
And that's why it's important to starve, not starve, but go into maintenance mode on brands like cash cow, or those that have achieved a certain level of market share, you don't think you're going to get much more, to invest in innovation.

Mark Vandegrift
Yeah. Well, they give the example of Coke in this article. They asked Ritson and what if Coke just stopped advertising for two to three years and how long would it take for sales to drop? And they said it would take two to three years before there's a dip in sales, but it would take another two to three years before the sales would recover if they started advertising again. 

So, this speaks to the power of brand advertising in the first place. It shows that brand advertising corresponds to sales, but the mind necessarily is slow to react. So if my advertising is like this, the mind's following it and advertising drops off, the mind keeps going for a while. And then might finally go, oh, you know what? I haven't seen a Coke ad in years. Oh, you know what? I'm not even buying Coke anymore. I never thought, you know. So...

What's your take on this observation from the article?

Lorraine Kessler
Again, I go back to the flywheel, right? You build up so much momentum and it does, and one of the things, and I don't remember the brands now, I should have, because we just did this, but when we did the Super Bowl, I was really surprised at the number of ads that said they had a two, three year hiatus and they were returning. And I thought they were there last year or the year before. I had no idea they stepped out. So, there is this residual value and it continues and you just got to monitor it.

Right? You've just got to monitor it. And because every now and then that flywheel is going to need a little push to either.

Mark Vandegrift
Well, I think Doritos, your favorite commercial there, the Dinamita, I think Doritos was one of those brands that had not advertised, done brand advertising. They had done transactional, but they had not done any major brand advertising in at least a year, if I remember correctly.

Lorraine Kessler
Right. So it was really, to me, interesting because there were a number of brands, car brands and things like that, that I thought for sure were in last year. And they'd say, oh, returning after a two-year hiatus. 

So, they didn't lose anything. They really didn't lose anything. But it is a calculated risk. It's a calculated guess, I guess. Right. And Coca-Cola is an interesting example because it kind of goes to the portfolio strategy. Right. The traditional cola category has been declining for many years as health concerns and tastes have changed and there's all sorts of new drinks and everything from energy drinks to fruit drinks to health drinks. And then you even mentioned, and we mentioned that we thought one of the best Super Bowl ads that we didn't even see coming was this Poppy, right, which is

Mark Vandegrift
Mm-hmm. Have you seen any ads since then though? I haven't either. I even went to their website and I didn't get any retargeting messages or anything. This is where it like I just see of syncing all your money into a Super Bowl spot and then you stop. Now, maybe I'm just missing it, but the fact that I've gone to their website, at least with retargeting, I should see something.

Lorraine Kessler
Yeah. Well, it's interesting because they promoted themselves as, A, we're a soda with none of the bad stuff, very effectively. I had heard, did you tell me that someone was looking to buy them? Was it Pepsi? Okay. Well, that's a perfect example of allocation of money. One of the things Dick Maggiore has always said is when a category is going down and your product's going down with it, not just your product, but the category too… Do you want to throw good money after bad? And I think that's the position that Coke and Pepsi are in. Um, so what do they want? They innovate and they don't innovate. They acquire. So, uh, Poppy is that new innovation that could give Pepsi a little bit of a jolt and I'd rather spend my money on that. And maybe that's all Poppy thought was maybe that was their target audience. We don't know. You know.

Mark Vandegrift
Well, now that I'm thinking about it, it might have even been Coke, but I'm still curious on the Pepsi-Poppy thing, where it's so close, category that it was an interesting move to name there, if there was any intentionality behind naming it Poppy to be close to Pepsi. But we'll see down the road. So, well, anything else you want to share about the rise of branding in the past 50 years before we close up this episode?

Lorraine Kessler
Yeah, talk about the good and the bad, okay? I think the good is, for most part, people have a deeper understanding of brand meaning and what that, it's a gut impression that I have to attach to the brand that has value to me specifically. And then that creates kind of a cluster of people who share those like values. You're not going to get everybody. I think we've evolved, hopefully, to that understanding. And that's the good.

The bad is, I still think there's a hangover from the 80s, right, where everything about brand was just image as decided by design. Now, design's really important, but because design, it's really hard to separate the words from the... words, in fact, are images. People don't realize that, but that's how we... When we translate English, we actually are thinking in terms of images.

But I'm talking about the 80s when we used to get into these formulaic templated ads, where we confused, I think, uniformity with unity. So, a brand can really stretch and still have unity and still be connected to the core, design-wise. You don't need these rigid templates, or the logo only has to be shown one way or this way or no way. That actually kind of kills the energy of the brand. And I still think we have some hangovers from that time period that need to kind of go away. And that part of the advertising to me is like, you know, Elton John is Elton John, right? But he can wear a lot of different costumes. And when you think about creating the ads themselves, they should be like the costumes, the outfits, and still speak Elton John and I think more brands need to get kind of that going.

Mark Vandegrift
Yep, I mean, without positioning, all that branding is just, to me, it's just aesthetics. If we don't make meaning, we're not going to make money. So going back to Guy there to close out our quotes. But thanks for joining us, Lorraine, as usual, and thank you to our listeners for joining us. If you haven't liked, shared, subscribed, or told your friends about the Brand Shorthand podcast, please do. And until next time, have an amazing day.