Brands and Connectivity

I just attended a talk by Debbie Millman on branding. One idea that I found very interesting from the talk was discussion on the current wave of tribal branding since 2000. Ms. Millman made the point that in this wave of branding, a brand that builds/facilitates connectivity is likely to be successful. She enlisted statistics that show 1 in 3 households in America now consists of a single person, in contrast with only 1 in 10 households as a one-person household in 1950. As traditional communion places like the household downsizes to be a single’s cave, our need for connectivity as human beings has to be channeled through other places and other objects such as brands.

This association between brand and connectivity is very interesting and is consistent with the evolution of contemporary marketing. So I’d like to elaborate on this idea a little further. The marketing discipline is witnessing two interconnected trends: an increasing emphasis on building customer relationships (i.e., relationship marketing) and a perception change of consumers as objects/targets of marketing efforts to consumers as collaborators (see Vargo and Lusch 2004). Both of these are manifestations of connectivity and how marketing may play a role in building connectivity.

So to use some concrete examples to illustrate the concept, a brand can build or contribute to connectivity in two ways: physical or infrastructural connectivity; and psychological connectivity. Brands in the former category build infrastructure for people to connect with each other, such as T-Mobile, MySpace, and Facebook. These brands derive their value not necessarily from consumers’ emotional connection with the brands per se but rather from the value of relationships that are built on these infrastructures. For example, the popularity of a social networking website such as Facebook is dependent on the people that we as users can connect to through the website and how satisfying that connection experience is. Consumer collaboration dominates in this setting as a demonstration of connectivity.

Brands in the second category aim more toward establishing actual psychological connections between consumers and the brand and between consumers and consumers. While the connection between people is still essential to the connected nature of such brands, each individual’s connection with the brand is an essential ingredient to this type of connectivity. For example, Harley Davidson or Apple owners identify among themselves because of a mutual connection with the brand. In this type of situation, rather than functioning as an underlying platform for connectivity to occur, the brand becomes an indispensable bridge in the connection process. Relationship marketing and CRM become key strategies for enhancing connectivity in such cases.

It is possible for brands to crossover between categories. An example of crossover from psychological connectivity to infrastructural connectivity is the online communities that many CPG companies have established, such as Kraft community. Consumer interaction in those communities may no longer be brand-centric and may broaden beyond the brand to other realms of life. An example of crossover in the other direction is Second Life, where devotees who have been able to build meaningful relationships in the virtual world come to love SL as their virtual country, no less than the feeling of patriotism that we feel as citizens of a country. By crossing over or occupying both realms of connectivity, these brand names build a stronger hybrid form of connectivity that is valuable to today’s single-dominant world.

Implications of Instantaneous Coupons

Colloquy’s weekly newsletter reported two stories of new coupon strategies: one is P&G and Korger’s adoption of mobile coupons, and the other is Kroger’s partnership with AOL’s Shortcuts Program, which allows users to download coupons online and have them preloaded on their store cards. Both of these stories represent a fundamental change in coupon usage. Traditionally, the time-consuming process of cutting coupons and the subsequent process of remembering to use the coupons (which I often forget) have made coupons a self-selected promotional tool. Consumers who value their time more are unlikely to spend the time needed to benefit from coupons. But now, with immediate and mobile access to coupons, the cost of coupon usage is going to reduce dramatically. This has both positive and negative implications for a business. On one hand, easy access to coupons means they are going to be more influential in consumers’ real-time decision making. On the hand, universal use of coupons means that the self-selected nature of coupon usage will disappear and the cost of using coupons as a marketing tactic may go up because of the higher redemption rate. What the CPG companies gain, however, is consumer information. With customized coupon service made available by the Internet, it is possible to embed a code in each coupon downloaded and subsequently track the coupon usage of each individual. This should grant CPG companies more power and immediate access to consumer insight, without having to rely on retailers for that information.

Air Travel Delay

Flying back from Puerto Rico, I was pleasantly surprised that both legs of my flight left and arrived on time. Having traveled more than I normally do in the last few months, delays (and subsequently missing the connecting flight) have become an expected frustration in my travel experience. So I did a little search on airlines’ on-time performance. According to the Bureau of Transportation Statistics, the on-time rate for all airlines combined was 64.34% in December 2007 and 72.36% in January 2008. The on-time rate for the major airlines in 2007 are as follows, from top performers to bottom performers:

Southwest Airlines: 80.85%
Delta Airlines: 76.89%
AirTran: 76.81%
Continental Airlines: 74.24%
United Airlines: 70.33%
American Airlines: 68.74%
US Airways: 68.71%

Surprisingly, in the bad month of December 2007, out of 35.66% delayed flights, only 1.39% was caused by weather. National aviation system delay and air carrier delay each accounted for 10.42% and 9.17% of the delays. What these numbers reveal is an outdated air traffic management system that is unable to satisfy the current travel demands. With all the fancy technology today, one would think that managing flights should be done better and faster. But historical data show that airline on-time performance has not improved but rather has slightly declined from an on-time rate of 77.20% in 1998.

It is time for airlines and air traffic controllers to rethink the model of air travel and the hub-and-spoke system. Ironically, I saw a BMW display ad at the Atlanta Airport saying “Miss your flight. But still make it to your meeting on time.” Too bad most people cannot afford a BMW, otherwise, we’ll all switch to the “flying” experience of a BMW, even though no peanuts and beverages are served.