SCHMITTblog

Lots of Creativity, Little Innovation

Carlo Fei, as he dropped me off with his Audi back at my hotel, after a dinner and ride through Milan, made a great off-the-cuff remark, “There’s lots of creativity here, but little innovation.” He’s so right about this distinction between creativity and innovation, and Milan this week is a perfect showcase.

I had been giving a couple of presentations at Bocconi, the business school, to students and executives on experience. I had also stopped by briefly at parts of the Salone Internationale del Mobile, perhaps the most important design and furniture trade show in the world (http://www.cosmit.it). Lots of creativity there, especially outside the big trade location at the cutting-edge Zona Tortona, or in the inner city where fabulous projects happened between retailing and designers. Creativity, yes. Installations, thought pieces, animations of ideas – really weird, sweet, stylish stuff; but little innovation in actual furniture design.

I also stopped by, as I always do when in Milan, in the retail fashion district (Via Monte Napoleone, Via della Spiga, you know). Still all branding, and little customer experience! Moreover, luxury brands have extended their lines into furniture (stores), and flowers (stores), and chocolates (stores), and hotels, and some have done all of it (see Armani). There are brand accessories stores (see Ferrari), flagship stores, pop-up stores. But they are all stores (or, alright, hotels) plastered with the brand name, designed by this-and-that designer—yet, with the usual opening hours and salespeople and merchandise. Frankly, there has been far more innovation in customer service, customer interactivity, and in merchandising by mass-market retailers than luxuryretailers. Think of some of the classics: Apple Store, Whole Foods, American Girls Place. Luxury brands have been, sadly, followers of mass-market brands; shouldn’t they be leading? Not surprisingly, the research that Carlo conducted with his firm on the retail experience shows that many luxury stores in key cities (not just Milan) fall short of providing a great customer experience.

Obama-Clinton: Battle of the Brands

For years, political campaigns have taken the best ideas of consumer marketing and put them to work in the battle for voters’ preference. Just as marketing has evolved from the traditional focus on unique selling propositions to brands and customer experiences, political campaigning has kept pace.

The ongoing battle for the Democratic nomination illustrates the three keys to brand success today: a great experience, consistent messaging, and an emotional appeal.

Just like the bottled water and tissue paper categories, there is little differentiation to be found among the candidates’ product features (tax policy, education, the economy, etc).  So, experiential qualities will hold sway:  leadership, consistency, inspiration. As the race continues across the country, voters are enjoying the ride – not only showing up in throngs to vote, but to take part, live, in the experience.  (The voting booth as destination store!)

Barack Obama had to build a new brand from scratch, so he was forced to be extremely disciplined in his message (commentators have even commented on the consistent use of his signature font). Hillary Clinton started with high brand awareness, but in trying to modify her established image, she had to deploy a variety of messages, which her critics took to be brand confusion (e.g. a New York Times op-ed listed “Soft Hillary, Hard Hillary, Misty Hillary… Let’s-Get-Down-in-the-Dirt-and-Fight-Like-Dogs Hillary”).

Clinton’s latest comeback shows that her brand has done best when it’s had an emotional appeal – whether her coffee-shop moment in New Hampshire, or her Ohio advertisement that set her familiar argument of foreign-policy credentials in starkly emotional terms (the sleeping child straight out of a Nyquil commercial).  Obama’s brand has generated strong emotional resonance by tapping into voters’ dreams and aspirations.

Where is this battle of the brands headed?  Possibly to an eventual co-branded merger, with the dominant brand at the top of the ticket.  Which brings up a classic question of brand architecture: would the consumer be swayed by the synergy of two brands?  Or opt for the purity of an un-diluted brand: John McCain?

- Bernd Schmitt and David Rogers

New Schmitt website launched

The recent design of my flagship web site meetschmitt.com dates back eight years. Now, with the launch of my new book “Big Think Strategy,” it is time for a change. Big Think Strategy is a break in my writing -- moving from work on the customer experience to full-fledged work on business strategy.

The new web site reflects this transition. In addition, you will find a much fresher look. Of course, I will keep some of the classics (yes, the video “Schmitt gets a haircut” will still be there), but there will also be lots of new information. Take a look!

McDonald’s Euro Chic

While celebrity chefs have discovered the appeal of mass market food (case in point: foie gras hamburgers) some fast food makers have decided to go upscale.  And successfully so: In Europe, McDonald’s Golden Arches have received a stylish design make-over. I just visited one in Munich, although purely as a “design excursion.” (I still don’t trust the food.)  American readers can see a slideshow of these new stores at NYTimes.com.  The refurbished stores have rejuvenated European sales, which surpassed the US for the first six months of the year.

That’s why I am puzzled by some of the comments by the brand experts. “If you stretch the brand too much it can snap,” one is being quoted in the New York Times article.  As a general statement that may be right.  But stretching McDonald’s too far?  Should we really be concerned that a future battle in the stadium arenas of “Iron Chef” will be fought between Daniel Boulud and Ronald McDonald?

No Risk Taking

On the way back to New York from Denver where I conducted a seminar for a cable company, I was stuck for 5 hours at the airport.  There was little rain in Denver and only a half an hour shower in New York.  I wasn't stuck on the runway, though. In fact, it seems that airlines are taking no risk these days -- still remembering the Valentine's Day disaster.  Not  getting people on the plane, though, can mean even longer delays at the terminal and a bad customer experience, it seems.

Plunging into Experiential Marketing

Garrett McDonough here. I’ve just survived a month as the newest member of the SCHMITTteam (book projects, research, symposia).  As part of my initiation, I was invited to share a few thoughts as a guest SCHMITTblog author. Here goes:

All the talk here about “Experiential Marketing” sends me back to last December, when Charmin rented out a giant two-story space next to the Virgin Megastore in Times Square (a stunning example of experiential marketing in of itself) and converted it into “The Charmin Restrooms.” They set up giant speakers on the street blasting the Charmin theme song (an eerie, Jimmy Buffet-esque tune professing the extreme fun it is to “wiggle” while using Charmin-brand toilet paper) and had people in Charmin Bear costumes urging passersby to come on in and test drive their TP. How could I resist?

After ascending their giant escalator, and passing underneath ten overhead flat screen TV’s broadcasting the cartoon music video of the Charmin theme song (which, in my journey to the porcelain throne I would hear about 37 times), I reached the main floor of the restrooms. Every inch of the walls, floor, and ceiling was painted with the Charmin blue and white logo. In the corner was a stage underneath a disco ball with a man in a Charmin bear costume dancing to the theme song and juggling rolls of toilet paper. About ten workers with headsets (I’m still not sure why) mingled with the crowd, asking where they’re from, if it’s their first time in New York, etc. Other workers dealt with the line, directing restroom-goers to particular stalls, waiting outside, then giving the seat a quick scrub after every use.

I waited in line for about fifteen minutes before it was my turn to try out the product firsthand. The inside of the stall was painted with cartoon images of clouds and the ubiquitous Charmin bear, and it was a big step up from the basement of the Port Authority, which I usually resort to for pit-stops in Times Square. I had my choice of six different rolls of paper, but soon found it impossible to try them all in one, um, sitting. Was this over-abundance of product Charmin’s way of encouraging a return visit?

On the way out a young woman with a clipboard asked for my email to sign up for the Charmin newsletter. I declined, and she handed me something wrapped in plastic that I at first thought was a Pez dispenser. It turned out to be a toilet roll-extender, to enable my bathroom roll-holder to fit Charmin’s giant sized rolls of TP.

“Hey,” I said, “you know I actually am running low on toilet paper. How much for a four-pack?”

“I don’t know. I think there’s a Duane Reade down the block.”

And there, SCHMITTreaders, was the ultimate example of experiential marketing. Not only did Charmin spend a massive amount of money and manpower to provide the consumer with a direct, fun experience of their product, but they didn’t even sell the product at the site! And, I’ve got to say, it worked. Next time I went to the drug store and saw the Charmin logo on the shelf, that annoying theme song popped into my head, and I felt my hand reaching out for the toilet paper that promised to make going to the bathroom fun again.

A New York Times article about the Charmin Restrooms: http://select.nytimes.com/search/restricted/article?res=FA0F1FFA3C5A0C768DDDA80994DE404482

Pictures of the fun! http://nymag.com/daily/intel/2006/11/daily_intel_exclusive_charmin.html

But best of all, from YOUTUBE... The Naked Cowboy sums it all up as he uses the Charmin Restrooms:

http://www.youtube.com/watch?v=Iz5JnAY0V1Y

Experiential Pricing Nonsense

Some luxury hotels have found a new way to charge you double for (roughly) the same thing: they simply rename their offer.  When I stayed in a Hyatt on my latest Asia trip, I discovered that the hotel had recently built a spa area next to the fitness center.  They now offer massages in two places – the quiet massage room adjacent to the fitness center, and the “spa room”; both are virtually identical but the massage in the spa costs twice as much (more than USD160).

How can you justify that price premium?  I guess you could call it “segmentation”: let the the zen-desperate pay for their “spa experience” massage with a scented candle added.  Even more preposterous, they are charged another USD 30 if they want to stay in the same room after the massage, to “meditate.”  Serenity-seeking couples can pay a USD 50 markup if they want to enjoy their massages next to each other in the same room.  They really charge you big for "experience." But I guess I may be to blame, in part, for this sort of experiential pricing nonsense.  Didn’t I write in my books over and over again that “experiences have value”?

Video: Experience Marketing Seminar

I was thrilled to hear that thousands and thousands of executives watched the online seminar I produced last month for Financial Times' FT.com -- based on my 3-day executive program in New York on "Experience Marketing."

The Financial Times is now offering the online class to all, available without registration!  For those who missed it, click here to experience all 5 sessions of the class:

• Day 1: Why experiential marketing?

• Day 2: Key concepts in experiential marketing

• Day 3: The framework for managing customer experience

• Day 4: Implementing the customer experience

• Day 5: Using experience to drive bottom line growth

Or just click below to SEE THE VIDEOS without all the class material. (The sound is a little quiet, so TURN UP THE VOLUME.)

Awards for Asia’s Experiential Brands

Western brand managers – watch out!  The rising economic powers of Asia are no longer just competing on manufacturing.  They’re moving fast to develop competencies in building experiential brands – the kind that compete on the world stage.

I just heard news of the winners of the new Experiential Marketing Awards in Indonesia.  They were presented this month as part of the annual Marketing Awards, alongside prior industry awards for best marketing campaign, best market driver, and most innovative (presented by Marketing Magazine).

I was flattered to hear that the 50 nominee companies were evaluated on criteria based on the CEM framework from my own books:  Judges looked at (1) how companies gather information concerning customer experience (2) positioning strategy relating to 5 modules (Sense, Feel, Think, Act, and Relate) (3) experiential providers both brand experience and customer interface  (4) innovation and continuous improvement in developing new customer experience.  Each criteria was evaluated for 3 parameters: strategy, implementation and results.

Without further ado, the winners, as reported to me by Handi Irawan of Frontier Consulting Group:

Polygon has been doing well marketing lifestyle bicycles for the premium market. It is a local company that produces high-quality products and exports to many countries.  They are very good in building brand communities (Relate element) and have a national event gathering their customers.  Basically, they drive and educate markets through new customer experiences. 

Timezone Indonesia, a Australian firm, has been very successful in Indonesia.  In fact, they have more than 100 entertainment centers. They are good in bulding FEEL and ACT elements. They also show strong a commitment to innovating new customer experiences.  TimeZone is the clear market leader, having high levels of satisfied customers related to experience. 

Bogasari is in a B2B commodity business, producing flour for bakeries.  However, many experiential strategies have been pursued by this company.  They have a Baking Center, for its buyers to learn how to make bread, noodle, biscuit, etc.  They also have special TV program educating small enterprise on how to produce bread, etc.  Basically, with many touchpoints, they have built SENSE and ACT elements through business solutions.

Yamaha Indonesia has been doing very well over the past year.  Its market share for motorcycles is still behind Honda, but it is a strong challenger. Their approach for Exp Mark is considered holistic. The web is excellent, and its TV ads were very effective, conveying the THINK element. They have been successful when introducing motorcycles for women, offering a better experience for this market. 

Samsung Indonesia has conducted many below the line activities, providing SENSE and FEEL elements.  They have unique stores and exhibitions, offering customers a chance to try and feel their products. 

Basically, all winners have included customer experience in developing their positioning strategies. 

I was asked to certify the winners of the awards, and am very pleased to see so many strong brands in Indonesia focusing on delivering an exceptional customer experience.

"Living the Brand" or "Just Marketing"?

As one part of this week's executive program in "Experience Marketing" taught by Schmitt at Columbia, we led the group of managers on a tour of experiential retail spaces in midtown, from 57th & Madison to the Time Warner complex at Columbus Circle.

The truly stand-out experiences were at the new Apple Store (submerged underground, but luminous with light, with an open lay-out that draws you into an experience of how each product line fits into your lifestyle) and the Abercrombie & Fitch store (a throbbing nightclub of dark lighting, half-naked boy toys, giant moose heads, and fashionable clothes, with a few beatiful women recently added to blunt the homoerotic touch for the less sexually confident tourists).  Other excellent benchmarks were found, and new ideas generated, for Whole Foods, Victoria's Secret, Samsung, and others. 

The one experiential store that everyone agreed was a dud was the NikeTown, amazing since Nike had helped to pioneer the whole "experiential store" movement.  But where once it was exciting and full of energy, this NikeTown was boring, dated in design, and lackluster in its sales staff. 

The worst was the entrance.  The ground floor was given over to a huge display about world soccer (the only striking floor of the store really).  We walked in, in the middle of World Cup play, and found a giant screen showing nothing but ads (even the Sony Style store was showing the game).  No game, no live ticker, nothing. So Schmitt asked one of the staff, "What's the score for France & Switzerland right now?"  He said he would check and put in a call on his walkie-talkie.  No response.  A few minutes later, the staff member asked someone else "Hey, do you know the score of the US soccer game?"  US??  America wasn't even playing that day.  Here was a retail design that proclaimed Nike's new slogan "Joga Bonita!" and a love of all things soccer -- and yet, in the midst of the World Cup, noone in the store even knew who was playing.

Said Schmitt bitterly, "All this soccer, this whole store -- this is not living the brand.  This is just marketing."

-David Rogers