In our blogs posts, we have repeatedly stressed the importance marketing research plays in an organization’s overall strategy. Our marketing tutorials are even more direct in our emphasis on research as we have mentioned it as being the “foundation of marketing” in several tutorials. While conducting research is a critical component of successful marketing, as we note in the Marketing Research tutorial, the results of research should not be used alone in making decisions because these can rarely be considered 100% accurate.

But what research will do is suggest to marketers a direction they may want to investigate. For instance, broad research may uncover an evolving customer trend. Awareness of this trend may then signal that more narrow research is required to see if there is a new customer need that may be emerging or an old need that may be changing. If there is something emerging or changing, then the marketer may consider addressing these, such as designing new products for the new needs, adjusting current products to changing needs, promoting products in new ways, and many others. But even with this, research still needs to be done to make sure any new ideas are truly viable.

An example of a new marketing idea that has been developed based on what may be an evolving trend can be seen in this Fortune story. It discusses how McDonald's is testing new packaging to appeal to more customers who ride their bikes to place orders in the drive-up order lane. The new package allows customers to peddle away with the package hanging from the handlebar. While the article, and accompanied video, talk about this idea being tested in several countries outside the U.S., it likely will not be too long before it shows up in America. Most likely, it will be within urban areas, where the use of bicycles for regular transportation (as opposed to recreational use) is more prevalent.

At some point in the life of a business, they face tough marketing choices if they want to grow. For some businesses, it is deciding whether to spend big money to grow their distribution network, such as building new warehouses and hiring more employees so they can expand beyond the geographic areas they currently serve. In other cases, the decision is whether to commit to a sizeable promotional campaign, such as the production and placement of expensive advertisements, in an attempt to stand out from competitors. Or maybe, a marketer is considering whether to launch a new product that is very different than what present customers are accustom to seeing.

While these decisions are challenging, possibly the most difficult marketing decision is the one where the marketer decides to shift direction and appeal to an entirely different target market. Unlike spending money on enhancing distribution, creating new ads or developing new products, retargeting a business requires changing all marketing decisions. This is an enormous undertaking and few companies ever get to the point of making such a decision. For those that do decide to target an entirely different market, they often do so by creating new brands while retaining their existing brand. For example, as we noted last week, Whole Foods is targeting a somewhat lower income consumer by creating a new retail model.

But shifting the whole business in a new direction, using the same brand name, is a bold move. An example of a company that decided to change strategies and target a different market can be seen in this Washington Post story. It discusses how home furnishings retailer, Restoration Hardware, made the decision to redirect their marketing away from the middle-income customer they previously served and, instead, repositioned the company to target high-income customers. This move, made during the economic downturn that started in 2008, has not only saved the company, it has catapulted them to record profits. In fact, Restoration Hardware believes so much in this marketing strategy, they are now planning to establish a newly branded retail chain targeting the same customers but with different products.

Now some may wonder whether this strategy can be sustained whenever the next recession comes. Well, if history has told us anything about retailing during a recession, it is this: the retailers that suffer most during an economic downturn are those not perceived as being low cost but also are not viewed as offering high-quality products. Instead, they are stuck in the middle. If this holds true the next time the economy dips, then Restoration Hardware’s repositioning strategy is likely to have been a good decision.

When it comes to promoting a product, many marketing folks are often very myopic in what they believe will work. Instead of thinking creatively, they stick with what they have always believed will work. For conservative marketers, this usually means spending money on the same promotions they have spent money on for years and years. Taking risks with new promotional options is not something they consider, possibly because they are inherently risk-averse marketers.

Yet, spending relatively little money on non-conventional methods can often pay off. For instance, directing a small amount of promotional funds to target a younger demographic may not seem to make much sense if a company’s market is primarily middle-aged (e.g., a financial retirement company). But appealing, in a small way, to a group while they are still young could begin to build a level of brand awareness that will be with this younger group as they grow older. On the other hand, as we note in our Managing the Advertising Campaign tutorial, sometimes companies have no choice but to spend in unusual promotional methods so their message is heard above the clutter that is created by their competition.

A good example of a company experimenting with an unusual method of promotion, at least for its industry, can be seen in this story from NPR. It discusses the newest promotion from the mid-level restaurant chain Olive Garden. The company has created a number of food trucks, a common presence in the downtown streets of big cities and college campuses, to hand out free products. Is this news suggesting Olive Garden is testing out a new distribution channel for eventually selling its products? Not likely, as it appears to be more of a method for generating publicity for their restaurants.

However, it is interesting to contemplate what would happen if customer response to these trucks is overwhelmingly positive. Maybe it would encourage Olive Garden to explore this as another distribution channel. Certainly in large cities, where leasing downtown store space can be extremely expensive, having a fleet of trucks selling Olive Garden meals, albeit a limit selection, could make sense. And if it does, watch for other restaurant chains to take to the road as well.

A few weeks ago we discussed how high-end food retailer, Whole Foods, was planning to roll out a chain of stores selling lower priced products. The company suggested the new chain would be “uniquely-branded” though we wondered whether this meant the name of this chain would not include the Whole Foods brand name. As we noted, doing so was a “bit of a gamble as there are not many examples of retailers that have successfully launched a new retail concept using a name that does not contain the well-known brand name.” We even offered examples of other retailers, including Nordstrom and Target, which have created alternative chains but did so by including the main brand name in the name of the stores (i.e, Nordstrom Rack and TargetExpress).

We now know Whole Foods “uniquely-branded” message is not exactly accurate. According to the title of a story in the Los Angeles Times, the chain will be called 365. However, this is a bit misleading. In actuality, the full name of the new chain is 365 by Whole Foods Market. So their branding strategy, at least in terms of the chain's name, is not quite unique as it contains the the parent company's brand name.

By including the Whole Foods name in the new chain name, the company is following a Family Branding strategy. A key advantage of Family Branding is that including the name of a well-known brand in a new brand name may help build customer awareness more rapidly compared to naming the chain with an entirely new name. Of course, this is the same benefit Nordstrom and Target expected when using their brand name as part of the name of new retail chains.  Now, what Whole Foods is doing that is somewhat different from what Nordstrom and Target have done, is if this new chain takes off it will be easy for Whole Foods to drop the “by Whole Foods Market” portion and eventually just call the chain 365. This could then develop as a stand-alone brand. 

It is also important to understand, that branding is not all about a name. 365 by Whole Foods Market could certainly produce a retail experience that will set it apart from other retailers. Possibly to the point that when customers hear the name, 365 by Whole Foods Market, they instantly associate it with certain desirable marketing elements (e.g., value priced products, colorful interior, etc.) or beneficial shopping experience (e.g., speed of shopping, nice employees, etc.) that are different than what is experience at Whole Foods. If this is the case, the two chains may evolve with completely separate brand images even though they contain the same Whole Foods name.