business news in context, analysis with attitude

MNB had a piece yesterday about an Advertising Age story saying that in a recent survey, consumers identified as the brands names with the greatest equity the following, in order: 1) Reynolds Wrap, 2) Ziploc Food, Bags, 3) Hershey Bars, 4) Kleenex Tissues, 5) Clorox Bleach, 6) WD-40 lubricant, 7) Heinz Ketchup, 8) Ziploc containers, 9) Windex, and 10) Campbell’s Soup.

Not Coke. Not Pepsi. Not Kraft. Not McDonald’s. Not even Mercedes, Lexus or Apple and its iPod.

We commented that the “only thing that we can see linking all these products is that they all seem extremely utilitarian, mainstream, functional and relevant – which is maybe what consumers really are looking for in a trusted brand.”

MNB user Lin Lauve responded:

I believe there is at least one other commonality among the Top 10 equity brands. I'd guess each one would have an overwhelming advantage in top-of-mind awareness within its product segment. How many aluminum foil users could even name another brand, except for private labels? Hershey may not dominate candy, but probably the narrower category of chocolate bars. How many consumers would name Del Monte or Hunt's ketchup ahead of Heinz, or Progresso before Campbell's?

A few of the brands have achieved "generic" status, where their name is often substituted for the category name: "We're out of Ziploc bags!" "I need a Kleenex." "Where's the Windex?" Puffs is a good brand, but nobody ever says, "I need a Puffs."

Here's what I think is at least a plausible partial explanation for who made the Top 10, and who did not. The Top 10 brands are all blessed with relatively weak (or even non-existent) branded competitors, who are not in a position to expose or exploit the Top 10's weaknesses.

In contrast, think of the negative impact Pepsi has had on Coke. If nothing else, the Pepsi challenge proved that a lot of people can't really taste the difference between the two colas. The Pepsi Challenge set in motion a series of events that eventually led to the New Coke disaster, which positioned Coca-Cola to the public as a company that didn't understand its own brand's equity.

Now consider how Burger King and Wendy's have magnified McDonalds' shortcomings. Burger King and Wendy's serve to remind consumers that McDonalds does not offer much in the way of old-time, traditional hamburgers. A traditional burger can usually be customized to your liking. Burger King and Wendy's do that easily and well. But years ago Burger King's "have it your way" campaign featured an ad showing how difficult and painful it was to try to get a customized burger at McDonalds. "Hold the pickle, hold the lettuce, special orders don't upset us" sang the Burger King counter staff.

There is a cause and effect issue with the Top 10. Are they rated so highly because they have no strong competition, or do they have no strong competition because they are so highly rated? I would say that in the brands' early days it was the latter, but ever since the brands reached maturity the former has taken precedence.

All excellent points.

Another MNB user made a similar point:

The reason those items made the list is because they offer the consumer a differentiable product. Consumers have tried the generic foil wraps only to be disappointed by a bad edge or poor box design. Who makes a chocolate kiss like Hershey’s – perfect size, good chocolate and excellent “melt in the mouthability” – try generic and you get a mouthful of wax…as a rule, the more flash the less substance…these products have the goods, they don’t need to spend on the flash.

And MNB user Clay P. Dockery chimed in:

As I looked at the top ten list of brands, quite a few commonalities exist. First, many of the brands have become synonymous with the product (Clorox, Kleenex, Windex, WD40) and the brand name is used for their product or competitive items. Second, distribution of many items is ubiquitous...think Heinz ketchup packets with branding in virtually every fast food location and WD40 on every mechanics workstation. Third, each of the brands effectively pioneered the category in which they compete.

MNB user Mark J Funderburk had another thought:

I would love to see the demographics of the respondents. At the risk of sounding sexist, these brands all relate to household management, which in most households is managed by women.

1 – Reynolds Wrap
2 – Ziploc Food Bags.
7 – Heinz Ketchup
8 – Ziploc containers
10 – Campbell’s Soup

4 - Kleenex Tissues.
5 – Clorox Bleach
6 – WD-40 lubricant
9 – Windex

3 – Hershey Bars.

Also true. We actually can’t imagine that any of these brand names would have made the list if we’d been asked…but then again, it may depend on how the question was posed.

And another MNB user wrote:

Caution with these rankings. Like J D Power rankings, there is one for every type of claim!

We got the following email from MNB user Joel Scott:

I read with interest the comments “Carrefour was going to be much more conscious of the convergence of industries and technologies”. As the number 2 retailer in the world, they are leaps and bounds ahead of US retailers who provide POS data to their vendors. The 2 companies in the US who lead in providing POS data are Target and Wal-Mart (with Info Retriever and Retail Link systems respectively) and CPG companies that deploy POS business intelligence software to exploit the opportunities with those two systems are years ahead of companies who are trading without decision support software. Retailers and CPG’s must exploit emerging technologies to keep their companies agile and innovative, and if the retailer is providing POS data in near real time, why wouldn’t you exploit it?

On the subject of Sobey’s struggles with Sunday opening laws in Canada, MNB user John T. Anderson wrote:

Sobeys has been working on this for years now and to the detriment of their customers, employees and the provincial economy, the Sunday shopping laws remain unchanged. I spent 10 years with Sobeys (in Nova Scotia and New Brunswick) and being originally from the US, I was always a little mystified by the strict ban on Sunday shopping in Nova Scotia. As a customer, it was inconvenient but I gradually got used to it; as an hourly employee, having every Sunday as a day off was nice but being part time, it cost me a few hours of work each week. While working in Nova Scotia in the 80’s, the Sunday shopping ban was temporarily lifted – I think for the holiday season and then again for a trial period. If memory serves, we discovered in our store that the 7th day of business provided a slight lift in overall sales but somewhat cannibalized Saturday and Monday sales, and came at the cost of an additional day of operating costs – chief among these, of course, being wages and benefits for the store workforce.

I think it can be argued that the key to successful retailing is effectively balancing the needs of business, customer, and employee. From the perspective of the business this means providing a consistent customer experience (that will deliver on the brand promise and drive top-line growth) while controlling variable costs, e.g., wages and benefits. For the customer, obviously it’s all about product availability, value, service and convenience.

No less important are the needs of the employee where a consistent balance of individual work/life preferences leads to greater employee satisfaction, which reduces absenteeism and turnover and increases productivity and quality of customer service. Often overlooked but critical to this argument is that employee work/life balance is not just about preferences for availability and days-off, it’s also very much about providing part-time employees – the majority of the retail workforce in North America – with enough hours and opportunity to feed their families and grow their careers.

So I remain mystified: given the high levels of unemployment in Nova Scotia, Sobeys status as one of the largest and most successful employers in the province (their business started as a single horse-drawn cart in the early 1900’s), their willingness to bear the costs of operating a 7-day/week business, and their long history of providing their customers with value, service and convenience, why should they have to come up with creative ways to circumvent the law? Exactly who loses if these laws are changed?

And we got several emails about the new Chicago proposal that would require big box stores to pay higher wages and provide greater benefits to employees:

History teaches us that there was a time in our country when companies operating with a lack of competition took advantage of workers; a time in our country when capitalism was young and the impact of competition for share of market, or for that matter competition for employees was unknown, so the government and newly formed unions forced changes in how workers were treated by their employers. Looking back, one can’t help but think that interference was necessary during the early stages of industry growth in our country. Of course that is the only history we have to study. History has also shown us that Capitalism can overcome union and government interference. Just look at what Capitalism has done for our country today.

Over time of course we have had the opportunity to see how well Socialism, Fascism, Communism, and other totalitarian forms of government have worked. We have had grandstand seats to view the Soviet Union and the eastern block countries during the cold war. Is there anyone out there that would rather be in Cuba, France, China, Mexico, or any other number of countries today that have not embraced capitalism in total?

It absolutely amazes me that in today’s world we have government officials at all levels that do not understand the power of Capitalism and the freedoms necessary for capitalism to work effectively. These City Council members need to get a grip and do a little history research. They are Socialists and don’t even know it, or worse, the folks in Chicago have a city council trying to move them to a Socialist form of government and THEY don’t know it. If you google socialism you will find this description: “The general goal of Socialism is to maximize wealth and opportunity, or to minimize human suffering, through public control of industry and social services; Socialism is an alternative to Capitalism”. Now when the people of Chicago look at what the morons that make up a majority of their city council want to do; they should be scared, or better yet; MAD. If the city council in Chicago wants the power to manage businesses, they should move to China, or better yet, France.

Hey, let’s not pick on the French. At least not this week…

And MNB user Joe Fraioli wrote:

I am not a Wal-Mart fan by any means but there is something really wrong with doing this. Next thing you know the government will require all stores with more than 200 employees to have a company gym that employees and their families can use. A nice idea but not fair or legal in my opinion.

And MNB user Philip Herr wasn’t impressed with Wal-Mart’s plan to develop health and environmental education Programs for its workers:

Another sip of the Kool Aid.

I have been watching Wal-Mart to see how much of their actions are "spin" and how much substantive. More and more of what they do is designed as actions to combat their bad publicity. It has meat. The question of course, is whether they can remain as competitive without the "cut-throat" tactics that made them so successful in the first place.

We don’t know the answer. But it gives us something to write about…
KC's View: