- Posted by: Paul Christ
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.
- Posted by: Paul Christ
The average consumer’s home is filled with products containing complex electronic parts. Of course, most consumers have no idea what is found inside their televisions, appliances, computers and other products. But what consumers do know is if a key internal part stops working, they have little choice but to either get the broken part replaced or dump the whole product and buy something new. For expensive products, customers are especially interested in an option to replace parts. If replacements parts are not available, and a customer’s only option is to shell out big money to purchase another product, customers may not be happy.
A good example of this can be found with an issue now facing KitchenAid, one of several appliance brands sold by Whirlpool. A number of customers, who have purchased refrigerators, are experiencing internal parts failure. For many customers, the failure is associated with an electronic control board that essentially runs the refrigerator. Normally, replacing this control board is not that difficult nor very expensive, especially when compared to the cost of purchasing a new refrigerator. For instance, KitchenAid’s built-in refrigerators sell for over $6,000 while the control board that is failing probably costs KitchenAid less than $100 to manufacture (or more likely acquire from a contract supplier).
So why are customers complaining? Because the replacement control board is not available, and no one at KitchenAid knows if it will ever be produced again. Thus, an expensive appliance, which otherwise is working fine, may need to be disposed of because an inexpensive part is not readily available. As expected, customers are not happy.
The marketing lesson here may seem to be an easy one: to avoid upsetting customers make sure parts are always available. However, in this case, it is unclear if this is a fair statement. Maybe there is a good reason this control board is not available. Unfortunately, KitchenAid is not fully disclosing what is happening with this part. So a better lesson is that companies need to be upfront with customers as to what is happening. For KitchenAid, the people who connect directly with customers (i.e. customer service representatives) need to know what is going on so they can interact honestly with customers. Not being forthright with customers can only lead to a negative image for the brand.
On the brighter side, a problem not addressed by one company can often be a good opportunity for someone else. And that seems to be happening here as several companies are now offering fixes for the control board problem.
Writer’s Comment. For purposes of full disclosure, the reason I am aware of this issue is from personal experience. While I am not happy with the situation, my intent in writing this post is not to release my frustrations but to point out what is amounting to an important marketing lesson.
- Posted by: Paul Christ
Companies that have a leading market share position in their industry often have a tough time when it comes to how they are viewed by customers. For instance, Comcast, McDonalds and America Airlines/US Airways (now one company) are often at the low end of their industry’s customer service rankings. Another company that also finds itself in this unwanted position is one of the biggest on the planet – Walmart.
However, while customers who actually shop at Walmart give the retailer low ratings, many people who are not customers possess an even dimmer view. Some dislike Walmart because it has become too big and dominating, and they believe no business should be this large. Others harbor distaste not just because of Walmart’s size but because they blame it for the demise of many small, local retailers. And still others are turned off by the in-store experience that at times has lead to customer-on-customer altercations.
Whether you are a Walmart supporter or you are fiercely opposed what they do, from a marketing perspective, you have to be at least somewhat impressed with the investment they are making to improve the retail experience. Now this is not to say Walmart is at the cutting edge of retail innovation. In fact, they tend to take a wait-and-see approach before jumping into something new. For example, their entry into online selling did not occur until the early 2000s, more than five years after Amazon started shipping products. But who can blame them for taking innovation somewhat slow considering how many stores they have and that adding something new may involve spending hundreds of millions of dollars. So before they adopt a new marketing method they do what good marketers do – lots of research and testing.
A good example of Walmart researching and testing innovations can be found in this Washington Post story. It reports on several new tools the retailer is developing to assist shoppers. For example, one tool being tested at the company’s Sam’s Club division is aimed at improving online grocery orders that are then picked up at the store. This tool has customers notifying Sam’s Club when they are on their way for pick up, which enables Sam’s Club employees to wait until the customer is near the store before they package frozen product. The other tools include an order storage system, where a customer retrieves their online purchases from a secure bin housed at gas stations that are located on or near main roadways, and a mobile app that shows exactly where a specific product is located in a store.