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Annie Wilson: I think AI could be a
useful way of testing whether there's a likelihood of
conflict. First, it's a great
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way to measure and test the
values different segments get from your brand, which segments
exist, what values do they care
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about? How are they talking
about you on social media? You could pick up on conflict
sooner, do scenario planning
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with it, create separate
messaging with it for different segments. I think it could be a
really useful tool for
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preventing and managing conflict
if it does occur, for sure. Welcome to
<i>The Ripple Effect</i>,
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the podcast
that takes you on a journey through the minds of Wharton
faculty. I'm your host, Dan
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Loney, and in each episode,
we'll be diving deep into the inspiration behind the
groundbreaking research that
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Wharton professors have
conducted and exploring how their findings resonate with the
world today.
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There has been an increasing
importance on brand companies are thinking about more and more these days. And
part of that focus comes from a
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wide range of needs by
consumers. That means that different people are wanting
different things from their
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brands. So how do you ensure the
necessary level of growth as a company, with so many kind of
chefs in the kitchen? Pleasure
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to be joined right now by Annie
Wilson. She is a co-author of a new book about this topic. The
book is titled <i>The Growth</i>
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<i>Dilemma: Managing Your Brand
When Different Customers Want</i> <i>Different Things</i>. Annie, along
with her colleague Ryan
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Hamilton, wrote this book.
Annie is a Senior Lecturer in Marketing here at the Wharton
School. Annie, great to talk to
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you today. How are you? I'm good. Thank you so much for
having me. How are you?
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I'm doing very well. And I've kind
of sensed this change and felt more of a greater focus on brand as
well, with some of the things
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that we've seen go on. But you
take it from a very unique perspective of how companies are
trying to assess a lot of this
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because of what the consumers
want. Give us more. Yeah, absolutely. I mean, I think the—
the sort of conversation
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between, should we focus on
brand or sales or performance marketing, as it's sometimes
called, has been a long
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conversation in marketing and in
business in general. But I think recently, we've seen this
greater imperative to focus on
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brand because of how big brands
are struggling as a result of kind of taking their focus off
of brand for a while. We see
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this with Nike. We see this with
Starbucks. Kohl's might be another recent example. And so
the approach we're taking is
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also focusing on brand at the
segment level. So not just thinking of your brand as this
monolithic thing that all
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consumers are going to want the
same thing from it and think of it in the same way, but that
actually, different segments
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might care about different
things from the brand, and that might be one of the drivers of
fragmentation or brand dilution.
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So what are these specific segments?
Because you have four of them, I
believe, in the book.
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So the segments are different
for every brand. But we talk about four different
relationships between segments.
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So segments can relate to each
other by what we refer to as separate communities. So they
want different things from the
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brand, but they're fine with the
other community also using the brand. If you think about
Timberlands, for example, you
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have hip-hop fans and you have
workers. They both know that each other uses Timberlands, and
they're totally fine coexisting
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in the Tim space. You could have
an example at— - at Wharton. You have students who
go to Wharton and students who
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go to the college
in various majors. They know about each other, they don't
care about each other. They
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coexist, even though they want
different things from the university. We then have
connected communities. So this
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is when segments rely on each
other to create value, but they don't really care about who each
other are. So think about if
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you're on LinkedIn, there may be
people from different industries. There are different
people on LinkedIn that you're
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not connected to. You don't
necessarily care about. They use it for different purposes, but
the fact that more people are on
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it is still better for you. So
you're connected in this interdependent way. You then
have leader-follower. So which
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is, one segment uses the brand,
which attracts another segment to it. So the fact that this
cooler, smarter, more athletic,
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professional, wealthier segment
uses the brand makes everybody else who wants to be like them
use it. This happens a lot in
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luxury and in sports, too. And
then you have incompatible segments, which is the fact that
one segment's using the brand
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doesn't work with another one.
They either want to use it in a different way. They think of the
brand differently. There's
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something that— they cannot
coexist within the brand ecosystem. And that's where that
growth dilemma happens, when
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there's that incompatibility. And so for the companies that are
dealing with this, I don't think
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this is a relatively new concept
that they've had to deal with, but obviously there's a great
deal more focus on a lot of
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these components, correct?
- Absolutely. and it's— you're right. It's not
a new concept. But you see, as
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the pressures to grow and grow
quickly are increasing, that the problem is presenting itself
sooner in the— in the corporate
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history. And because consumers
come and go between brands a lot faster than ever before, and
there's more and more
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competition, there's lower
barriers to entry across virtually all industries, it
makes the problems more
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consequential for brands. So you mentioned about
Timberland, where you can have a
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product where two totally
different segments will use the product, and they'll get along,
and there's really not a
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competition. There are instances
where there are— there is competition within the brand,
and maybe the two sides don't
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like it, that one side is using
it over the other, correct? Yeah, absolutely. And that can be
for different reasons. So one of the
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most famous examples is with
Starbucks, with the "third placers" and the "on-the-go's", or
the commuters. If I use
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Starbucks because I want coffee
quickly and I want to place my mobile order and get in and out,
that doesn't create a nice
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environment for the third
placers. So they have to find a way for them to coexist. Another
example, sort of like Tim's,
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could be Supreme, where if
skaters want to use Supreme to signal their skater identity,
and then all of a sudden, a
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bunch of wannabe hypebeasts and
fashion followers use it, that erodes the brand for the skater
community. So it actually takes
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something away from them for
them to use it. So how does a company then balance
all of these things going on
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when that level of growth, that
bottom line growth, is the most important thing that the company
is looking for, and obviously
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the board of directors and in
many cases the investors is looking for?
- Yeah. I mean, that's— that's the big
challenge. And I think you see
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that with these big companies
now that are struggling with this, is that, in all
likelihood, it's going to take
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some stepping back to move
forward. I actually see—what I've observed is the companies
that handle the growth dilemma
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very well are those that are not
under this intense pressure to grow quickly. Berkshire Hathaway
companies, for example, do a
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great job of growing within kind
of a latitude of acceptance slowly over time to attract
different types of customers.
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For those who do want to grow
more quickly, it's about being more selective about the
segments you grow to, knowing
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your brand, understanding what
customers value and whether those values are compatible with
each other or not, and being
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smart of knowing when to attract
a customer and when to let them go in terms of segments. Or
orchestrating them in creative
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ways. So with Timberlands, they
keep the different groups separate from each other. They
have different social media
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handles, different marketing,
different product lines. You see that with Starbucks and the— you
know, the drive-throughs and
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then the roastery or reserve
coffee shops designed for the third placers. You're sort of
separating them. Or you create
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hierarchy. So you say, "This
segment is wealthier and higher status, so they're going to have
access to certain products that
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this segment doesn't." And then
that makes— keeps everybody kind of happy when those segments
come in.
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So it sounds like the recognition
of a lot of these dynamics is one of the important keys to try
and find that growth longer term.
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Absolutely. And I think
the problem has many origins, but
one of the common origins is just not engaging in
proper segmentation as a brand,
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or not using value-based
segmentation. So thinking, "Okay, we're going to target Gen Z," and
then not foreseeing how they
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might conflict with another
segment, because that's not a useful way to think about the
segment. Because it's really
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about whether the values or what
they want from the brand are compatible or not.
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You mentioned the leader-
follower, which caught my attention. I wanted to bring
that up as well. And I guess to
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a dynamic, is that part and
parcel with what we're seeing kind of in our world right now,
with kind of the influencer
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community? Influencers are
obviously connecting with different products. Then their
followers see it, and that's
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where you're seeing some of that
growth come from. So it's interesting, because
influencers are— can be a leader
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segment or not. So if someone is
clearly paid to endorse or use a product, or they're really
representing just themselves,
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they usually don't represent a
full leader segment. But when it feels like a segment of
celebrities or athletes or
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wealthy people use a brand—so
Beats headphones is a good example. Yes, some of the
athletes are paid to use Beats,
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but it also is a whole segment
of professional athletes that love Beats, which makes people
like me, who want to feel like
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Tom Brady before I go into
teach, want to use Beats headphones. And so it does have
to feel like a true segment. It
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can't just be, "Oh, Tom Brady was
paid to tell me he likes these."
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How does a company then deal
with the scenario you also lay out where you have incompatible
segments? That— I would think that
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would be the— that would be the
largest challenge for them. Yes, always better— you know, an
ounce of prevention is worth a
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pound of cure. That's true in
marketing too. I think, yeah, in that case, you have to find ways
to separate them, create that
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hierarchy, or potentially fire a
customer segment. Which can feel scary, but sometimes the best
thing to do is say "We have to
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choose the segment we're for and
the segment we're not for." A big mistake I see brands make over
and over again is they find
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themselves in conflict, and so
they try to just serve both. You saw this with Bud Light a couple
years ago. You see this with
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Target right now, where they got
themselves in a political conflict between segments, and
they responded with a— sort
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of, "Well, we don't know which
side we're gonna pick." So then
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both segments said, "Okay, well,
you're not for us." And then they're— they're leaving in droves.
Usually you have to pick one.
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But seemingly this is a new
norm, then, larger scale, for a lot of companies as we move
forward. This is not something
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that is kind of in this moment
in time. This is kind of here. Companies are going to have to
continue to work with it in
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order to find that growth. We're
not going to go back, you know, maybe several decades, to before
we saw a lot of these segments
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coming— coming to the forefront.
- Absolutely, and that's driven by a few
things. I mean, first is the
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information channels we use are
more porous than ever. So you can't put something in a special
interest magazine and assume no
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other segment will see it. If
you put it on social media, it could surface in anyone's
algorithm, and then it can be
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reposted and shared and, you
know, made into a bigger deal much more easily. We use brands
and products more as identity
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signals than ever before,
whether it's to reflect my skater identity or my, you know,
cool athlete identity or my
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political affiliation, so that's
going to increase the risk of incompatibilities. And as I
said, the barriers to entry are
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pretty low across a lot of
industries now, which means one brand's conflict could be
another brand's opportunity. I
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see you're ignoring a segment,
or you've done something that's bothering one. Well, I'm going to
then pick them off, because I
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can actually serve them better
and more clearly. Does artificial intelligence start to
come into the conversation here
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with this because of— I mean,
certainly AI is in so many different things right now. But
you would think about the
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influence that it could
potentially have with potentially having a connection
with the consumer or not as we
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move forward.
- Yeah, absolutely. I think AI could be
a useful way of testing whether
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there's a likelihood of
conflict. First, it's a great way to measure and test the
values different segments get
00:12:11
from your brand. Which segments
exist? What values do they care about? How are they talking
about you on social media? You
00:12:16
could pick up on conflict
sooner. Do scenario planning with it. Create separate
messaging with it for different
00:12:24
segments. I think it could be a
really useful tool for preventing and managing conflict
if it does occur, for sure.
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What do you hope that— that will
come forward from this book that you and Ryan have put to— put
forward? What's the message that
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you would like to send out? Our hope is that brand managers
will focus more specifically on
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managing brands at the segment
level, rather than across the whole customer ecosystem, or
thinking about the brand and the
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customer relationship, but also
recognizing that customer groups relate to each other in unique
ways, and those dynamics between
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customers are essential to pay
attention to. That's been a pretty overlooked gap in a lot
of marketing research, and it's
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something we're hoping to draw
more attention to. And to offer the tools to do it.
- Which becomes
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important because of how much
there has been a focus on the relationship with the customer,
especially in the last several years.
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Yeah, absolutely. And so part of
that customer relationship management is— we call it segment
relationship management. So you
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have to manage the relationship
between the brand and the customer, but also between the
customers as well.
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Annie, great to have
you with us today. Thanks very much for your time. Thank you.
- Annie Wilson,
00:13:38
who is a co-author of the new book <i>The Growth Dilemma,
Managing Your Brand When</i>
00:13:42
<i>Different Customers Want
Different Things.</i> Thank you for listening to
<i>The Ripple Effect</i>.
00:13:47
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