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Brand Success in the Era of Behavioral Economics

Helen ZeitounGlobal HeadBrand and Customer Experience, GfK

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“Running Faster”Improved volume, market

share, click rate…

….Brand Success by creating value through a life time relationship: short term actions also shape future value

“Building Value”Increased customerlifetime value

Business shortterm goal

End goal:Businesssustainablevalue

Business policies

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This resonates well with the lessons

we have from

Behavioral Economics

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Years 4 – 5

A

Lesson 1.

Time matters. Creating value over the consumer journey

Ebb and flow over time, creating value through experiences

lived, and lifetime relationships

Touchpoint

Experiences

Time

Year 3

B

A

Year 2

A

Year 1

B

A

A A

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— KahnemanThinking Fast and Slow

“The remembering self…keeps scores and makes the choices.”

— Diener et alEnd Effects

“Dramatic elements and endings are remembered, not the average over time.”

Lesson 2. The remembering customer dominates the rational customer

The rationalcustomer?

Or, the

rememberingcustomer

Strong memories influence decisions

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And Behavioral Economics

are so relevant to

the new connected world,

the “We” world

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Brand management and communication has changed with the rising age of the WE Marketing World

Example Lufthansa

From PRODUCT SELLING…

towards CUSTOMER

CENTRICITY

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The new value game in the „We“ world: the remembering consumer in action!

HUMAN CENTRICITY

CONSUMERBRANDRELATIONSHIPS

INTERACTIONS INTHE DIGITAL WORLD

BRANDEXPERIENCES

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BRAND EXPERIENCES

„wow“

1. Consumers are experiencing your brands in different ways everyday and these lead to impressions left

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Experiencing a brand that creates „technology wows“...

Weren‘t you „wowed“ the first time when...

You first looked up

a word in Wikipedia

as opposed to your

“reference” Encyclopedia

Britannica?

You first read how a sports

game ended using your Newspaper’s

App on your mobile instead

of waiting the next morning issue?

You first got your Chemical

Laboratory results 24h by

email instead of 2 weeks

after you paid by post?

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„Wow“ impressions can be changing our lives

3D printing will transform lives (the Strati)

http://motherboard.vice.com/read/this-mostly-3d-printed-car-is-about-to-take-its-first-drive

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Beers brands experience, on an app, in your Smart Kitchen, in Millennials events

Bud and Bud Light lost4.3% share in 12 years

“Wowing” via emotions with beer brands

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SOCIALIZATION OF BRANDS

2. The Remembering Consumer interacts in the digital

world, and shares good or bad experiences…

WebBuzz on Twitter

can show negative!

The Remembering Customer may also kill your brand

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CONSUMER

BRAND RELATIONSHIPS

3. These interactions and positive “wow” experiences lead

to increased connection between consumers and brands

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Experiences drive personal relationships with brands

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And relationships with brands evolve over time

Example of a personal relationship story with the brands Twitter and Facebook

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Re-thinking the whatto measure to reflect

this new world

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HARNESSING YOUR HARNESSING YOUR

BRAND FUTUREBRAND FUTURE

In this new game, In this new game,

the paradox of howthe paradox of how

We still work on We still work on

brand success brand success

How do you measure this?How do you measure this?

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Can linear frameworks measure the non-linear reality?

Choice

Consideration

Awareness

Purchase

Loyalty

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RadioCinema

Sponsorship

Smart-

phoneYoutube

Friends

Retail/OfficeOutdoor

Twitter

Hotline

Loyalty

programs

Coupons

Youtube

Facebook

OnlineBanner

TV

Print

Website

Social Media

Shouldn’t we break down the silos?

Product/ Services/ User

experiences also leave feelings, build value

BRAND EXPERIENCE: paid, owned, earned

CUSTOMER EXPERIENCE: tech, service, design

People do not separate

experiencesthey have with

brands

1

2

Brand Communication is only one part of the journey

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Our industry responsibility:

Think.. non-linear, integrated, future oriented brand model

Acknowledge the new world, frame it, quantify it

Brand &

Customer EquityFuture

Behavior

Positive memorable

experiences build future behavior

when they develop

relationships

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The must: quantifying that when relationships

make prefer a brand, this impacts future market share

*Active Brand Equity divided in tertials**Share of Business measured from past 10 purchases, indexed with Average = 100. Source: 128 brands in 20 categories from US Benchmark (2012) and Validation Study (2014)

High

Medium

Low

Active brand equity* strong relationship+ prefer (2012)

Actual Market Share

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Large brands can fail

without “the right”

steering KPIs

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Case study: Puma versus Nike in Sports Apparel

Puma: traditional values

with little direct interaction with

consumers

Nike, in contrast: direct interaction

with consumers across all channels

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Funnel performance shows no differentiation

between Puma and Nike

Relevant setFirst

choice

Price

acceptancePurchaseAwareness Familiarity

100% 98% 90% 61% 17% 32%

100% 97% 88% 44% 7% 27%

100% 97% 87% 45% 7% 26%

99% 93% 79% 27% 2% 21%

99% 96% 82% 49% 14% 33%

89% 77% 63% 26% 3% 26%

73% 62% 45% 13% 1% 27%

100% 97% 88% 44% 7% 27%

100% 97% 87% 45% 7% 26%

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Image Profile

Do not agree Totally agree

Image profile also does not differentiate…

Nike and Puma are the most similar image brands

Purchase Intention

Price Premium

Recommendation

Loyalty

Identification

Likeability

Trust

Superiority

Uniqueness

Quality

1 2 3 4 5 6 7

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Market share tells a different story

Source: Panel data – Textile Panel Germany

Market Share

of Puma decreaseswhile Nike increases

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Brand experience and relationships reveal the true story

Stranger Acquaintance Dissolved Friendship

Guru Social Circle Close Friends &

Family

1%3%

11%

16%

25%

18%

2%

5%

19%

24%

37%

24%����

����

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And this is amplified through social media

Emotional Imprint Signal (Extreme Sentiment analysis)

Nike

58%

Puma

23%

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From Analysts to Detectives:

Re-thinking the how to manage brands

in the connected world,

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The how: Change your practice in brand management…detect and act with agility

Brand

Experience Management:

Detect

immediately

real life performance,

On Demand

Detect

ExplainRespond

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� Let’s challenge

ourselves as an

industry, we are at

a tipping point

� The 7 golden

principles

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Experiences

do matter, they

shape the

Remembering

Consumer

1

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Re-think the

Sustainable

Value of brands:Consumer Centricity

Imposes a Future

Orientation of BrandsCLV, dynamic DVs and IVs

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Re-consider

measures

to capture the future,

sensitive

and ‘life-driven’

3

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Do not get blind with

Data Bases capturing

the past,

not the future

4

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Re-consider analytics

to model the future:

predictive analytics5

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De-Silo brand data

sets, social media

is not a PR only

animal!

6

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Re-think a new

generation of Brand

Insights: detect

immediately, alert,

and predict

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� Re-Think together

on this wonderful

Consumer

Intelligence

Congress!

�Thank you