00:00:00
Annie Wilson: I think AI could be a
useful way of testing whether
00:00:03
there's a likelihood of
conflict. First, it's a great
00:00:06
way to measure and test the
values different segments get
00:00:09
from your brand, which segments
exist, what values do they care
00:00:12
about? How are they talking
about you on social media? You
00:00:14
could pick up on conflict
sooner, do scenario planning
00:00:18
with it, create separate
messaging with it for different
00:00:22
segments. I think it could be a
really useful tool for
00:00:26
preventing and managing conflict
if it does occur, for sure.
00:00:30
Welcome to
<i>The Ripple Effect</i>,
00:00:31
the podcast
that takes you on a journey
00:00:34
through the minds of Wharton
faculty. I'm your host, Dan
00:00:36
Loney, and in each episode,
we'll be diving deep into the
00:00:39
inspiration behind the
groundbreaking research that
00:00:43
Wharton professors have
conducted and exploring how
00:00:46
their findings resonate with the
world today.
00:00:49
There has been an increasing
importance on brand
00:00:53
companies are thinking about
00:00:54
more and more these days. And
part of that focus comes from a
00:00:58
wide range of needs by
consumers. That means that
00:01:01
different people are wanting
different things from their
00:01:04
brands. So how do you ensure the
necessary level of growth as a
00:01:09
company, with so many kind of
chefs in the kitchen? Pleasure
00:01:13
to be joined right now by Annie
Wilson. She is a co-author of a
00:01:17
new book about this topic. The
book is titled <i>The Growth</i>
00:01:20
<i>Dilemma: Managing Your Brand
When Different Customers Want</i>
00:01:24
<i>Different Things</i>. Annie, along
with her colleague Ryan
00:01:27
Hamilton, wrote this book.
Annie is a Senior Lecturer in
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Marketing here at the Wharton
School. Annie, great to talk to
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you today. How are you?
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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
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of a greater focus on brand as
well, with some of the things
00:01:45
that we've seen go on. But you
take it from a very unique
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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.
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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
00:02:03
marketing, as it's sometimes
called, has been a long
00:02:06
conversation in marketing and in
business in general. But I think
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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
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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
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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
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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
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it in the same way, but that
actually, different segments
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might care about different
things from the brand, and that
00:02:45
might be one of the drivers of
fragmentation or brand dilution.
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So what are these specific segments?
Because you have
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four of them, I
believe, in the book.
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So the segments are different
for every brand. But we talk
00:02:55
about four different
relationships between segments.
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So segments can relate to each
other by what we refer to as
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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
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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
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each other uses Timberlands, and
they're totally fine coexisting
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in the Tim space. You could have
an example at—
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- 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
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about each other, they don't
care about each other. They
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coexist, even though they want
different things from the
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university. We then have
connected communities. So this
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is when segments rely on each
other to create value, but they
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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
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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
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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
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interdependent way. You then
have leader-follower. So which
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is, one segment uses the brand,
which attracts another segment
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to it. So the fact that this
cooler, smarter, more athletic,
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professional, wealthier segment
uses the brand makes everybody
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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
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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
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different way. They think of the
brand differently. There's
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something that— they cannot
coexist within the brand
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ecosystem. And that's where that
growth dilemma happens, when
00:04:29
there's that incompatibility.
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And so for the companies that are
dealing with this, I don't think
00:04:35
this is a relatively new concept
that they've had to deal with,
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but obviously there's a great
deal more focus on a lot of
00:04:41
these components, correct?
- Absolutely.
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and it's— you're right. It's not
a new concept. But you see, as
00:04:48
the pressures to grow and grow
quickly are increasing, that the
00:04:53
problem is presenting itself
sooner in the— in the corporate
00:04:56
history. And because consumers
come and go between brands a lot
00:05:01
faster than ever before, and
there's more and more
00:05:03
competition, there's lower
barriers to entry across
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virtually all industries, it
makes the problems more
00:05:10
consequential for brands.
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So you mentioned about
Timberland, where you can have a
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product where two totally
different segments will use the
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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
00:05:27
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?
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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
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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
00:05:47
mobile order and get in and out,
that doesn't create a nice
00:05:50
environment for the third
placers. So they have to find a
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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
00:06:01
signal their skater identity,
and then all of a sudden, a
00:06:04
bunch of wannabe hypebeasts and
fashion followers use it, that
00:06:08
erodes the brand for the skater
community. So it actually takes
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something away from them for
them to use it.
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So how does a company then balance
all of these things going on
00:06:18
when that level of growth, that
bottom line growth, is the most
00:06:22
important thing that the company
is looking for, and obviously
00:06:26
the board of directors and in
many cases the investors is
00:06:28
looking for?
- Yeah.
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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
00:06:36
this, is that, in all
likelihood, it's going to take
00:06:39
some stepping back to move
forward. I actually see—what
00:06:43
I've observed is the companies
that handle the growth dilemma
00:06:45
very well are those that are not
under this intense pressure to
00:06:48
grow quickly. Berkshire Hathaway
companies, for example, do a
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great job of growing within kind
of a latitude of acceptance
00:06:55
slowly over time to attract
different types of customers.
00:06:59
For those who do want to grow
more quickly, it's about being
00:07:01
more selective about the
segments you grow to, knowing
00:07:04
your brand, understanding what
customers value and whether
00:07:07
those values are compatible with
each other or not, and being
00:07:11
smart of knowing when to attract
a customer and when to let them
00:07:14
go in terms of segments. Or
orchestrating them in creative
00:07:18
ways. So with Timberlands, they
keep the different groups
00:07:21
separate from each other. They
have different social media
00:07:23
handles, different marketing,
different product lines. You see
00:07:27
that with Starbucks and the— you
know, the drive-throughs and
00:07:29
then the roastery or reserve
coffee shops designed for the
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third placers. You're sort of
separating them. Or you create
00:07:36
hierarchy. So you say, "This
segment is wealthier and higher
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status, so they're going to have
access to certain products that
00:07:43
this segment doesn't." And then
that makes— keeps everybody kind
00:07:46
of happy when those segments
come in.
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So it sounds like the recognition
of a lot of these dynamics is
00:07:52
one of the important keys to try
and find that growth longer term.
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Absolutely. And I think
the problem
00:07:59
has many origins, but
one of the common
00:08:02
origins is just not engaging in
proper segmentation as a brand,
00:08:07
or not using value-based
segmentation. So thinking, "Okay,
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we're going to target Gen Z," and
then not foreseeing how they
00:08:13
might conflict with another
segment, because that's not a
00:08:15
useful way to think about the
segment. Because it's really
00:08:18
about whether the values or what
they want from the brand are
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compatible or not.
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You mentioned the leader-
follower, which caught my
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attention. I wanted to bring
that up as well. And I guess to
00:08:29
a dynamic, is that part and
parcel with what we're seeing
00:08:32
kind of in our world right now,
with kind of the influencer
00:08:35
community? Influencers are
obviously connecting with
00:08:38
different products. Then their
followers see it, and that's
00:08:42
where you're seeing some of that
growth come from.
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So it's interesting, because
influencers are— can be a leader
00:08:49
segment or not. So if someone is
clearly paid to endorse or use a
00:08:52
product, or they're really
representing just themselves,
00:08:56
they usually don't represent a
full leader segment. But when it
00:09:00
feels like a segment of
celebrities or athletes or
00:09:03
wealthy people use a brand—so
Beats headphones is a good
00:09:07
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
00:09:12
love Beats, which makes people
like me, who want to feel like
00:09:15
Tom Brady before I go into
teach, want to use Beats
00:09:18
headphones. And so it does have
to feel like a true segment. It
00:09:22
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
00:09:30
where you have incompatible
segments? That— I would think that
00:09:34
would be the— that would be the
largest challenge for them.
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Yes, always better— you know, an
ounce of prevention is worth a
00:09:41
pound of cure. That's true in
marketing too. I think, yeah, in
00:09:45
that case, you have to find ways
to separate them, create that
00:09:48
hierarchy, or potentially fire a
customer segment. Which can feel
00:09:51
scary, but sometimes the best
thing to do is say "We have to
00:09:55
choose the segment we're for and
the segment we're not for." A big
00:10:00
mistake I see brands make over
and over again is they find
00:10:02
themselves in conflict, and so
they try to just serve both. You
00:10:06
saw this with Bud Light a couple
years ago. You see this with
00:10:08
Target right now, where they got
themselves in a political
00:10:13
conflict between segments, and
they responded with a— sort
00:10:16
of, "Well, we don't know which
side we're gonna pick." So then
00:10:19
both segments said, "Okay, well,
you're not for us." And then
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they're— they're leaving in droves.
Usually you have to pick one.
00:10:26
But seemingly this is a new
norm, then, larger scale, for a
00:10:29
lot of companies as we move
forward. This is not something
00:10:32
that is kind of in this moment
in time. This is kind of here.
00:10:36
Companies are going to have to
continue to work with it in
00:10:39
order to find that growth. We're
not going to go back, you know,
00:10:42
maybe several decades, to before
we saw a lot of these segments
00:10:47
coming— coming to the forefront.
- Absolutely,
00:10:50
and that's driven by a few
things. I mean, first is the
00:10:54
information channels we use are
more porous than ever. So you
00:10:57
can't put something in a special
interest magazine and assume no
00:11:00
other segment will see it. If
you put it on social media, it
00:11:03
could surface in anyone's
algorithm, and then it can be
00:11:05
reposted and shared and, you
know, made into a bigger deal
00:11:09
much more easily. We use brands
and products more as identity
00:11:13
signals than ever before,
whether it's to reflect my
00:11:16
skater identity or my, you know,
cool athlete identity or my
00:11:20
political affiliation, so that's
going to increase the risk of
00:11:23
incompatibilities. And as I
said, the barriers to entry are
00:11:28
pretty low across a lot of
industries now, which means one
00:11:31
brand's conflict could be
another brand's opportunity. I
00:11:34
see you're ignoring a segment,
or you've done something that's
00:11:37
bothering one. Well, I'm going to
then pick them off, because I
00:11:39
can actually serve them better
and more clearly.
00:11:42
Does artificial intelligence start to
come into the conversation here
00:11:46
with this because of— I mean,
certainly AI is in so many
00:11:50
different things right now. But
you would think about the
00:11:53
influence that it could
potentially have with
00:11:55
potentially having a connection
with the consumer or not as we
00:11:59
move forward.
- Yeah,
00:12:00
absolutely. I think AI could be
a useful way of testing whether
00:12:05
there's a likelihood of
conflict. First, it's a great
00:12:08
way to measure and test the
values different segments get
00:12:11
from your brand. Which segments
exist? What values do they care
00:12:13
about? How are they talking
about you on social media? You
00:12:16
could pick up on conflict
sooner. Do scenario planning
00:12:20
with it. Create separate
messaging with it for different
00:12:24
segments. I think it could be a
really useful tool for
00:12:27
preventing and managing conflict
if it does occur, for sure.
00:12:32
What do you hope that— that will
come forward from this book that
00:12:36
you and Ryan have put to— put
forward? What's the message that
00:12:39
you would like to send out?
00:12:41
Our hope is that brand managers
will focus more specifically on
00:12:46
managing brands at the segment
level, rather than across the
00:12:50
whole customer ecosystem, or
thinking about the brand and the
00:12:54
customer relationship, but also
recognizing that customer groups
00:12:58
relate to each other in unique
ways, and those dynamics between
00:13:02
customers are essential to pay
attention to. That's been a
00:13:05
pretty overlooked gap in a lot
of marketing research, and it's
00:13:09
something we're hoping to draw
more attention to. And to offer
00:13:12
the tools to do it.
- Which becomes
00:13:14
important because of how much
there has been a focus on the
00:13:17
relationship with the customer,
especially in the last several years.
00:13:20
Yeah, absolutely. And so part of
that customer relationship
00:13:24
management is— we call it segment
relationship management. So you
00:13:27
have to manage the relationship
between the brand and the
00:13:29
customer, but also between the
customers as well.
00:13:33
Annie, great to have
you with us today.
00:13:34
Thanks very much for your time.
00:13:36
Thank you.
- Annie Wilson,
00:13:38
who is a co-author of the new
00:13:39
book <i>The Growth Dilemma,
Managing Your Brand When</i>
00:13:42
<i>Different Customers Want
Different Things.</i>
00:13:45
Thank you for listening to
<i>The Ripple Effect</i>.
00:13:47
If you enjoyed this episode, you
00:13:49
can find more insightful
conversations by subscribing to
00:13:52
the Wharton School's <i>Ripple
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00:13:55
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