The Changing Nature of Luxury in China

Previously published on the Luxury Society.

China’s luxury consumption trends are changing fast. High-end brands need insights on how to grow a presence and prosper in the world’s largest luxury market.

China is a challenging market for luxury brands – it is a major source of revenue but it is also a complex and unpredictable partner (from fake products and restrictive legislation to the uncertainties of the boom/bust cycle). Chinese consumers with spending power no longer assume ‘west is best’ and look to brands that offer the best of tradition and modernity. For both new and established luxury brands it is a challenge to find solid ground in these changing times.

Here we outline the core elements and building blocks that are required to grow presence and meaning in the world’s biggest luxury market.

The Chinese luxury market is forecast to hit $1 trillion by 2025 but brands need to take a new approach if they are to keep consumers interested. After a 10 or 15-year period in which most luxury brands have invested heavily in China, the Chinese perspective on luxury consumption is evolving fast.

Once luxury consumption in China was all about the ‘bling’ factor – showing off to friends and establishing people’s place in the social pecking order. Now the appeal of luxury has become more sophisticated. Out goes the ‘bling thing’, in comes a more refined appreciation and sense of connoisseurship, as well as a growing interest in the ethics of how things are made. This is partly a consequence of strict government regulations on luxury spending but more importantly it is a sign of a market that is becoming more mature, with a more ‘grown-up’ attitude towards brands, philosophies and consumer lifestyles.

As a result there is now a shift of emphasis away from extravagance and celebrity endorsement of luxury items towards subtlety in colour and design, understated branding and a new-found sense of personal sophistication. Traditional luxury cues such a a predominance of gold, conspicuous logos and celebrity endorsement have been replaced by understated branding and subtlety in colour, design and scale. Celebrity endorsement does not have the power it once was.

All of this reflects how consumers have become more demanding, defining themselves not just by what they buy but what they do.

Trends
Brands have to do more to meet these new expectations. It is no longer enough to show consumers how bright and sparkly their products are, brands have to immerse themselves in the social and cultural conversations of their consumers.

Here are four ways in which brands can prosper in the new China.

Minimalism

Less is more and brands that choose to speak in an understated way suggest confidence in the superiority and sophistication of their products.

In a world which is increasingly complex and loud with a seemingly never-ending supply of new products and services, brands which take a more simplified approach become associated with thoughtfulness and care to attention. Simple product and packaging design, subtle colours and and minimal visual compositions and motifs suggest attention to detail which is second to none. If the image of ‘bling’ is gaudy, extravagant, over the top (and ultimately, a bit cheap looking) then minimalism is a sign of extraordinary craftsmanship, restraint and true luxury.

Brands such as Cartier and Van Cleef & Arpels use simple layouts with a minimum of clutter and decoration in both their retail space and across all media.

Lifestyle

‘Exclusivity’ has always been synonymous with luxury goods and services but it is now turning towards a broader, more real-world manifestation where architecture, cultural events and the sporting arena are used as vehicles to convey this idea.

Burberry launched its Beijing store with a show that projected a choreographed holographic fashion show followed by a concert by Keane on the Great Wall of China. Hennessy and Chivas associated themselves with high end sports – such as sailing and polo – putting luxury goods in the same bracket as cultural refinement and an aspirational lifestyle. Other brands have used stunning architectural images to associate themselves with a sense of aesthetic elegance.

Naturalness

People’s perception of nature has been changed by environmental damage and pollution and this is particularly evident in China where human impact on the world has been ignored for centuries. As a result, the natural world has become associated with something that is rare and exclusive. It is something to be treasured and is an opportunity for luxury brands to associate themselves with something that connotes sophistication and wisdom.

Johnnie Walker tapped into this new-found enthusiasm for the ‘real world’ with a campaign that highlighted the personal journeys of 12 business people and creatives. It was indicative of a shift away from ‘success and status’ to ‘real and lived’. It is a trend that has also been reflected on images of the natural world in advertising and the design of retail space and shopping malls which are inspired by the environment.

Brands can borrow from nature to transform their own attributes. The natural world provides ideas and themes in which brands can immerse themselves using natural shapes and materials, earthy tones and the environment. In other words, luxury at one with nature, not at the expense of it, and a celebration of the world around us.

Local cultural confidence

As China has opened up to the world and its international standing has increased, its reliance on imitating the west has begun to fade away. A period of financial growth is followed by a blossoming of cultural confidence and pride, and this is now the case for China.

The past is seen in a new liberated light, acknowledged and respected for its value and contribution to the world. Brand philosophies become sophisticated statements drawing on both the past and present.

Products and the communications around them need to reflect this, combining traditional ideas and techniques with contemporary context and aesthetics, pride in the past with confidence for the future. Traditional motifs, elements and patterns re-emerge and are ‘re-imagined’ for the digital era, new materials and fresh combinations giving brands a sense of historical continuity and eternal, classical value while remaining absolutely up to date. Both local and Western luxury brands such as Mercedes and JW Blue have reimagined traditional motifs and symbols for their communications and product design.

Shang Xia, the ultimate in brand localisation, is a Hermes funded Chinese luxury brand selling fashion and homeware. It has a blueprint that translates the Hermes model into Chinese culture by connecting their common heritage in craftsmanship.

Written by Laura Hurst, Associate Director Brand UK and Panos Dimitropoulos Director Cultural Strategy China, Kantar Added Value.

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Serving The Squeezed Middle

From a global perspective it appears that we have never had it so good.

The world is becoming more affluent; in two to three years we will reach a remarkable tipping point where the majority of its 7 billion inhabitants will live in ‘middle class’ or ‘rich’ households. It is estimated this worldwide income bracket, with its increasingly discretionary spending, will contribute $10 trillion to the global GDP by 2020.

So far, so rosy, and yet closer reveals a different picture: Just as we see emerging markets rise out of poverty, we are also witnessing a more complex phenomenon in the US and large parts of Europe where the middle class has actually been dwindling. 2015 was the first year on record where Americans in the middle-income bracket didn’t make up the majority of the US. The difference between the average income of the richest and the poorest 10% has increased significantly over the past 25 years. And while some people are doing better, many others are faring less well.

In the US, ‘Generation Z’ is expected to be the first do be less well off than its parents. Burdened with student loan debt, suffering lower wages and facing poor job prospects, a record number (49%) of young Americans identify with the working or lower class.

A similar phenomenon exists in Spain and Italy and in the UK, where the middle class remains one of the smallest and poorest in Europe.

The political implications of this shift have been discussed ad nauseam; less so the implications for brands and businesses, some of whom are marketing more accessible and affordable products to help make ends meet. We have seen the rise of private label retailers like Aldi, Lidl and Trader Joes. We also see brands like Warby Parker and Casper creating new business models to make expensive wearables and durables more accessible.

Other pioneering initiatives seeking to bridge the growing socio-economic divide across four core pillars of access, are worth highlighting. They represent significant opportunities to help the emerging and middle classes, in both developed and new markets, move up the ladder and improve their quality of life.

Some of the strategies that have been designed for developing countries are now taking root in developed markets. Others, leveraging start up thinking and capital in the US, are having their greatest impacts in the small villages and sprawling cities of the global south.

 

1. TECHNOLOGY

You may have seen the joke about the new base of Maslow’s hierarchy, more fundamental than food and clothing: it’s Wi-Fi. Of course the joke makes us smile because there is so much truth in it. Access to technology has become the gateway to opportunity. Without it, populations can easily be left behind as they struggle to stay up to date and connect. Yet there are millions of people, even in New York City, who don’t have access to high-speed Internet.

LinkNYC helps fill this gap by installing superfast, free Wi-Fi, device charging and phone call portals throughout New York City. Gone are people camped out in old-style telephone booths; replaced by people plugged into, searching or calling friends from these sleek new stations.

 

2. EDUCATION

Education has always been the stepping stone to progress and the digital revolution has only reinforced its importance. Five years ago, computer giant Dell launched Youth Learning, a global computer hardware and literacy program that  today, directly impacts more than 560,000 underserved youths, providing them access to technology and education across 15 countries.

GE and Microsoft have just announced their commitment to support Massachusetts-based not-for-profit edX with the goal of helping students to fast track their careers by gaining knowledge in the most cutting edge fields including Data Science, Cybersecurity and Artificial Intelligence. edX, a collaboration between MIT and Harvard, provides global access to quality education by connecting learners to the world’s best universities and institutions, with pricing based on income to ensure their programmes are accessible to all.

Tech companies are not the only ones getting in on the education game. Starbucks’ College Achievement Plan, launched in 2015 with Arizona State University, offers qualifying employees full tuition coverage to earn their bachelor’s degree while providing the company with a steady stream of young talent. Their more recently launched Pathway to Admission programme helps employees who don’t yet have the qualifications for admission to college, fill in their gaps, all tuition free.

 

3. FINANCE

There is a lack of financial literacy and proper access to credit in both emerging and developed countries. Vodafone has been tackling this issue in developing countries in the global south with M-Pesa, offering financing services with more competitive loan rates and a phone-based money transfer service. Heralded as the doorway to a formal financial system, M-Pesa has strengthened the flow of income to developing nations and their people.

Financial start-up So-Fi was launched recently to help US students who often gradute college with little financial know-how and large amounts of debt and consequently struggle to get loans. So-Fi bases its loans on education, employment trajectory, and spending habits and history. This affords well-deserving young professionals the chance to receive loans where they otherwise would have been denied at a bank with more traditional lending requirements.

 

4. HEALTH

Providing affordable access to health care services has always been challenging; yet new waves of innovation are beginning to find solutions.

Shift Labs recently secured FDA approval for their DripAssist Infusion Rate Monitor which radically reduces the cost and complexity of correctly administering IV infusions. The AA battery-powered device is portable and has been used in more 24 countries.

The newly launched Nurx app is giving women in the US greater control over their family planning choices by allowing them to get free or affordable and stigma-free birth control, with or without insurance, delivered straight to their door without a visit to the doctor.

 

The recession of the last decade has meant many people who were accustomed to a comfortable standard of living are having to cope with living on less.

As the gap between the rich and the poor continues to widen, the most ingenious brands have an ever-increasing role to play in making the complex more accessible and the costly more affordable.  In so doing they can carve out an important place in the market while improving the day to day reality and quality of people’s lives.

Written by Leslie Pascaud, Executive Vice President Branding and Sustainable Innovation, Kantar Added Value.

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Olivier Auroy

Olivier graduated from Sciences-Po Paris and La Sorbonne CELSA.
He started his career as a naming expert and to date, he is the father of more than 100 brand names all around the globe.

He has been working in the WPP group for the last 17 years, bringing his international experience (2 years in Italy, 9 years in the Middle East) to prestigious branding companies such as Landor, CBA Design and FITCH.
He has rebranded companies and organizations such as HEC Paris, Orange, Selecta, BFGoodrich, the World Anti Doping Agency, PMU and Royal Air Maroc.

He joined Kantar Added Value in May 2017 as Joint Managing Director.
Olivier won bronze at Cannes Lion Awards in 2009 in the retail category. He also won gold at WPPED cream creative award in 2010 in the product category, for the celebrated BQ sunglasses project.

Olivier is a writer. He published three novels with Éditions Intervalles.

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Purpose Driven Brands

1. Tesco is helping to combat harmful pesticide residues

One of the world’s largest supermarket chains is launching safety bags that use photocatalysis to destroy toxic chemicals found on many fruits and vegetables. The bags, initially introduced in China due to the food safety scandals, have a safe inner coating that uses the power of light to trigger the breaking down of toxic elements before dispersing them naturally into the air.

2. Everytable makes healthy food affordable

This casual fast food chain was started in Los Angeles to combat the growing issue of food deserts in low income neighborhoods. Everytable’s business model drastically reduces production costs; while their economically diverse venues allow them to price meals according to the average income of the neighborhoods they serve.

3. Starbucks boosts employee opportunities for higher education

The coffee giant already made headlines by offering deeply discounted tuition coverage to ASU for qualified candidates. Early this year, they went a step further: In partnership with Arizona State University, Starbucks is offering qualifying employees the chance to fill in the gaps in their academic history, while providing guidance, coaching and tuition-free freshman classes to help them qualify for admission into ASU.

4. Nurx: disrupting Birth Control

As women’s reproductive health becomes increasingly politicized in the U.S, Nurx blows birth-control access wide open! A time-saving app called Nurx (pronounced “New Rx”) makes getting birth control as easy as a few taps on your phone. Women register for a free account online, fill out a questionnaire, exchange a few instant messages with a licensed doctor, and receive a package in the mail containing their birth-control method of choice, with or without insurance for as little as $15/month.

5. Whirlpool is increasing school attendance through clean clothes

While having clean clothes is something that many of us take for granted, the reality is that one in every five students struggle with access to clean clothes. And when students don’t have clean clothes to wear, they often skip school. Whirlpool saw this as an opportunity and created the Care Counts laundry program, which installs washers and dryers in schools for kids to use. Now Whirlpool is partnering with Teach For America to expand the Care Counts program to over 60 schools.

 

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Social Good Innovations

1. Straw-style filter makes any water clean water

The original ultra-light straw style filter lets you drink directly from streams, lakes, and any water source, turning up to 1,000 liters of contaminated water into safe drinking water. Every purchase also contributes to providing water purifiers to schools in developing countries as well as regions devastated by recent hurricanes.

2. Goodbye pay phone, hello Link

LinkNYC is a first-of-its-kind communications network that is replacing over 7,500 pay phones across the five boroughs with “Links” that provide superfast, free public Wi-Fi, phone calls, device charging and a tablet for access to city services, maps and directions.

3. Floating trash wheel helps clean up Baltimore’s Harbor

The world’s first sustainably-powered trash collector, or “Mr. Trash Wheel” to locals, is using the power of water and sunlight to clean Baltimore’s Harbor. So far the trash wheel has collected almost 600k plastic bottles, 500k plastic bags, and nearly 10 million cigarette butts. Collected trash is incinerated to generate electricity for nearby homes.

4. GoSun Stoves: fuel-free cooking on the go

The portable solar cooker allows you to use the power of the sun to cook almost anything in in about 30 minutes. 4x more efficient than solar panels, this clever cooker cuts CO2 emissions along with harmful smoke from charcoal or wood. Portable and versatile, Go Sun is delivering fuel free cooking to bellies across the world.

5. Designing fashion to save lives

Adiff, a humanitarian fashion brand launched by a Parsons design student, seeks to build awareness for and aid globally displaced populations through creative design innovation. Launched in response to the current refugee crisis, their durable, waterproof multi-functional garments double as tents for shelter and incorporate highly reflective silver to be seen at night.

 

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Social Good Innovations - March 2017

Tarjimly connects refugees with translators
One of the biggest barriers to helping the globally displaced is language. Tarjimly is a Facebook Messenger bot that connects volunteer translators with refugees & immigrants in dire need of translation services. Whether they seek to speak with legal representatives, doctors, or aid workers, Tarjimly is making it easier for refugees to seek and connect with the services they so desperately need. Click here to read more…

 

 

Impossible Foods plant burgers take on the meat industry
Impossible Foods is partnering with Bareburgers to convince the meat-loving masses that they can ditch carbon-intensive meat without giving up their favorite comfort foods. With investors including Khosla Ventures, Google Ventures and Bill Gates, Impossible Foods raised $108m in 2015 to build a new factory in Oakland, California, that the company plans to open later this month. The burgers, which apparently taste just like the real thing, are made of potato and wheat proteins, coconut oil, Japanese yam and a soy-based protein called leghemoglobin.

 

 

Buy one give one office space
A new project brings the buy one give one concept to property. Buy Give Work allows businesses to subsidise and share their office space. For every space purchased, one will be given away to a non-profit serving the local area, an early stage start-up, or for an experimental community-led idea. The advantages for non-profits are clear. But the idea also offers clear benefits to businesses who, along with a greater sense of purpose, can gain insight from the diversity the relationship brings.

 

 

Jornaler@ protects day laborers
Day laborers are among the most vulnerable members of the workforce. They can experience labor violations on a daily basis. Jornaler@ is a mobile phone app created to help prevent and report occurrences of wage theft through personal data collection and labor rights education. The app allows workers to keep track of their hours, report an event of wage theft, – including necessary documentation to begin complaint and proceedings – and alert other workers of bad employers or non-paying jobs.

 

 

Poppits: the end of the toothpaste tube?
Empty toothpaste tubes collect at a rate of 1.3 billion per year and can sit in landfill for up to 500 years. Poppits are individual pods of toothpaste that dissolve in your mouth as you brush your teeth. There is no waste, no mess, and no plastic tubes that need to be thrown out.

 

 

Curated by the Branding for Good team.

Image credits:  Tarjimly, Impossible Food, Buy Give Work, Jornaler@, Poppits

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Branding for Good - Issue 47: Behavioral Economics

This month we will talk about how brands are leveraging the principles behind Behavioral Economics to drive change for the better. Download the Behavioral Economics report here.

Moving into 2017, we will continue to observe, comment and consult on brands’ evolution towards purpose …and we would love your thoughts on topics that you’d like to see covered. Please reach out to us at brandingforgood@added-value.com with any ideas or interesting content you’d like to share.

“How wonderful it is that nobody need wait a single moment before starting to improve the world.”
― Anne Frank, Anne Frank’s Tales from the Secret Annex

Brands nudge their way towards goodness
Behavioral economics is a buzzword in marketing. But it is in fact the public sector that has been most proactive in leveraging this emerging field to drive positive behaviour change in the health, finance and other sectors. Brands are now catching on… conducting research and developing creative strategies that ‘mine the gap’ between what people say and do in order to design effective behaviour change initiatives. Click here to read what our experts have to say.

Social Good Innovations
From recyclable newspaper to a spoon that changes tastebuds, click here to discover five intriguing social good innovations…

Purpose-Driven Brands
Raise a glass to organic
Patagonia Provisions, the hugely exciting, of-course-this-is-happening-this-makes-so-much-sense spin off from longtime purpose-driven brand Patagonia, launched a new organic beer called Long Root Ale. Organic regenerative agriculture can help fight climate change, and is a tried-and-true method for soil-carbon sequestration…we’ll drink to that. Read more here.

Airbnb launches anti-discrimination pledge
Following a rash of incidents involving apparent acts of discrimination against minorities and LGBT persons, Airbnb launched a new anti-discrimination commitment that will require all of its hosts and guests to sign in order to continue using the service. More here.

CoverGirl announces the first CoverBoy
James Charles, a 17 year-old high school senior and internet-famous makeup artist, was chosen as CoverGirl’s first CoverBoy. The choice is being praised as broader questions of traditional gender boundaries are being raised by advocacy groups and fashion labels. Read more about the announcement and an interview with James here.

TripAdvisor phasing out tickets to animal exhibits
After launching their in-site ticket purchasing option, TripAdvisor announced last month their aim to remove bookings for animal-based attractions – specifically, exhibits that invite close contact (riding, petting, swimming) with wild animals. The decision comes after consultation from both PETA and World Animal Protection (WAP). Read on, here.

A new flavor of justice
Ben&Jerry’s – a longstanding brand activist, announced their vocal support for the Black Lives Matter movement. An online statement, with links to a page on their website, explored the realities of systemic racism in America. Read about their announcement (and the subsequent reaction) here.

If you’d like to get in touch with us, please email brandingforgood@added-value.com

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Brands nudge their way towards goodness

Economics has long been based on the assumption that, as humans, we make rational decisions, purposefully thought out, that are in our best interest. For a long time, we marketers have known better: the reality is that we’re more emotional, messier, and infinitely more complicated than that. Yet much of marketing research has chosen to ignore this reality, despite the fact that some patterns of behavior just don’t make sense. Behavioral economics is a relatively new field that seeks to recognize and integrate cognitive, social, and emotional influences on people’s observable “economic” behavior and thereby more accurately reflect and predict what they may do in the future.

The public sphere is positioned at the cutting edge of this work, having created ‘Nudge Units’: groups of behavioral specialists who try to get people to change for the benefit of society at large. These Units seek out the triggers that can get us to pay our taxes on time, reduce our driving speed, find a job more quickly, make us vote and even help us lose weight. Some of these programs have been remarkably successful and have spawned greater interest in using similar techniques in the private sector. But what does this mean for brands and market research? How does knowledge of behavioral economics influence the research we undertake? And how can this more accurate understanding of certain consumer behaviors help brands to help us change in socially beneficial ways?
Let’s take a look at 5 psychological factors that drive many of the gaps between what human beings say and do and see how brands are seeking to ‘mine the gap’ between the two.

Heuristics
Heuristics are mental shortcuts that ease the cognitive load of making decisions. These short cuts enable us to get things done without having to think. In many cases, this can be quite helpful. But when we’re tired or stressed, we can unwillingly default to what Daniel Kahneman calls System 1 (or non-) thinking. From a research perspective, this is problematic because as questionnaire length increases, people are more likely to tick ‘don’t know.’ It therefore behooves us to design surveys that limit the effect of weariness by asking more focused questions and making the experience more enjoyable for the respondent.
System 1 thinking affects a lot more than just surveys. Supermarkets strategically place their confectionary near checkouts because they know that people will be more likely to buy such things when tired and waiting to ring up their groceries. Rather than play into this reflex, forward-thinking retailers like Aldi are replacing candy at checkout with healthier alternatives like trail mix, granola bars and dried fruit to make it easier for shoppers to make the right choices.

Habits
Humans often fall into routines or ‘habit loops’. One important way to drive change is to break these habit loops down into their component parts and then inject a new variable. This could be by interrupting the trigger, changing the routine or switching out the reward that motivates a habit. As researchers, we can play a key role in this process by asking questions about specific occasions, digging deep to understand the specifics: (what trigger and what motivations elicit which response?) rather than accepting sweeping statements about ‘usual’ behavior that often don’t reflect reality.
Many brands have successfully used research to understand and alter habit loops. Kantar Added Value worked with AT&T on its ‘Don’t text and drive’ strategy, conducting deprivation exercises to observe and understand people’s Pavlovian reactions to text notifications when behind the wheel. The results of that work were used to mind map possible solutions, like the Drive Mode app that people can activate to stop text notifications whilst driving. Vittel, a French brand of bottled water has translated their understanding of habit loops into the Refresh Cap: a screw-on cap with mechanical timer that pops up a flag to remind people to drink every hour.

Cognitive and emotional biases
Psychologists have identified more than ninety forms of bias that affect behavior. We’re all biased in ways we don’t even realize. We’re over-optimistic about the risk of certain behaviors like smoking or driving under the influence and we trust our own judgement more than we should. But marketers and innovators can compensate for many of these biases. Take Equinox, the fitness company. They were aware that people have ‘impact bias’: they make faulty assumptions about the frequency with which they will use their new gym membership. So they designed a program where people were given a conditional rebate of $100 up front when they joined. If they visited twelve times in the first month, they got to keep the money. The program, which applies the behavioral economics principle of loss aversion, was found to be significantly more effective at getting people to go the gym than offering them the reward at the end of the month. This is because people will make more effort to avoid losing money than they will to win the same amount.

Context
Situational elements can also have a significant impact on our behaviors. We’re more influenced by circumstance, other people and the environment than we realize. A comment from a family member, bad weather or even what you eat for breakfast can influence how you react in a given situation. A sobering example of this is can be found in a study conducted in 2011 on extraneous factors in judicial decisions . According to the findings, judges gave 65% favorable parole judgments in the morning, but this number was down to 0 before lunch and again at the end of the day. Not good news for the pre-meal defendants! But context can be a very positive thing as well. When Unilever’s Lifebuoy brand launched its program to promote handwashing in India, it chose schools as the primary vehicle to do so because this context was favorable to teaching as well as to habit development. The results of the first trial conducted in 2009 showed a clear increase in soap consumption (+10% in Uttar Pradesh) and an even more impressive decrease in the spread of diarrheal and other diseases. Lifebuoy has more recently used another context, the annual Kumbh Mela festival, to distribute roti (a flatbread) imprinted with the message, “Did you wash your hands with Lifebuoy today?” The company claims 2.5 million of those rotis were handed out. Unilever Hindustan is deploying such programs on a mass scale, with the intention of reaching a billion people by 2020.

Social Norming
We’re much more likely to behave in a certain way if we perceive others doing the same. Peer pressure has long had negative connotations, but the effects of social norming can drive many positive behaviors as well. Opower, recently acquired by Oracle, is perhaps the most talked-about case of a brand’s successful leveraging of social norming to drive behavior change. Opower’s bills, delivered with smiley faces to those who consume less energy than their neighbors, has succeeded in reducing energy consumption by 2% in certain parts of the world. Another more ‘extreme’ example of the positive use of social norming is that of an organ-donor campaign created by Ogilvy and Mather in Brazil: “Immortal Fans“. This campaign targeted supporters of Sport Club Recife with messages from real patients on actual transplant waiting lists making their appeal to fans directly that their donated eyes or hearts would keep on watching or beating for Sport Club Recife. This positive social norming lead 51,000 fans to declare themselves donors—more than could fit into the team’s stadium—and increased donations by 54 percent in a year, according to Ogilvy. The brand Under Armour is seeking to redefine the social norms around women and sports with their ‘I Will What I Want’ campaign, showcasing determined female celebrities who illustrate that ‘the space between woman and athlete is no space at all.’
The field of behavioral economics and its application to marketing is still a work in progress. Each year brings new illustrations of how a deeper understanding of our ‘predictable irrationality’ as Dan Ariely, coined it, can lead to more positive outcomes for both brands and society.

Written By Leslie Pascaud, Executive VP Purpose Branding and Innovation, and Francesca Baker, Insight Project Director, Kantar Added Value.

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Edits: Cultural Value

This month, we revisit the fundamental reason brands are here in the first place – to create value – and explore how the way they do this must change in the face of seismic shifts. Commercial and social value remain central, but in today’s world – against the backdrop of the ever-intensifying scramble for growth – a new, third form of value is rapidly becoming the new currency in marketing and innovation: Cultural Value.

How Smart Brands Harness Culture to Create Growth
Commercial Value and Social Value are still of paramount importance. But a new, third form of value is rapidly gaining ground – Cultural Value. Brands are vehicles to create meaning beyond their categories. This is where culture comes in. Meaning is created through shared culture –things we use to create our identities and express ourselves. This is why brands must deliver cultural value. They need to champion an area of culture that gives meaning to their actions and expressions over and above anything they could say about themselves. Our study into Creating Cultural Value study has highlighted 3 key challenges faced by brands today. Click here to read what Helen Firth, Senior Vice President of Kantar Added Value, has to say…

Creating Cultural Value: 3 Ways to Win
The issue of how brands deepen meaning for consumers by creating Cultural Value is gaining ground among the marketing community. We asked: can we establish some key best-practice principles? Click here to read Kantar Added Value’s three how-tos

Global study findings
Connecting with culture is crucial to grow your business – 83% of the senior marketers that we surveyed are convinced. But what does that mean exactly? Brands that connect with culture are brands that understand and interact with their world, which helps them provide meaning and utility to consumers. To achieve this, companies must follow three steps: identifying the role they want their brand to play in culture; creating a brand experience that is culturally relevant; and cultivating a “curious” mindset in their organization. Click here to read more about Kantar Added Value’s study.

Consumerism has peaked
Earlier this year, a study from the British Office for National Statistics showed how consumption has dramatically shrunk over the last decade in the UK. Compared to 15 tons in 2001, people were only using 10 tons of materials in 2013. As an alternative to the purchase of resource-intensive goods such as CDs and video recorders, the rise of digital consumption has been a major factor in the decline. A more circular economy has emerged, along with various sharing and leasing business models.

Airbnb found its relevance in Belonging
Airbnb is not a mere provider of short stay housing solutions – it is a “community of individuals”. Humans are at the core of the company’s business model, and the brand identity was revamped accordingly in 2014. It now revolves around the concept of belonging. Traveling with Airbnb does not just allow people to visit a place: it helps them belong there, right away, anywhere on the planet. This resonates strongly with Millennials, who typically reject the classic tourist experience.

By standing up, Lush stands out
Lush is a brand whose purpose is at the core of everything, from product development to retail and communications strategies. Not only does the brand position itself as “cruelty-free” – it also occupies a powerful space in the related social and cultural conversations. The company uses its stores as platforms allowing them to spread messages against animal testing. They also take non-product-related actions, such as the implementation of the annual LUSH Prize and the launch of the #makefurhistory campaign. Discover here how a brand balances ethics with profits.

Hello disrupts oral care
Hello is a young brand that launched in a category where customer loyalty is very low – oral care. The brand was built around the “naturally friendly” philosophy, which translates into both the way the products are made and the way they are experienced by users. Hello is disrupting its category by fighting commoditization, while responding to growing consumer expectations for more “humane” brands. They take it even further by allowing anyone to have a Skype conversation with Craig Dubitsky, CEO and founder.

Under Armour shifts the female empowerment conversation
The “I will what I want” campaign by Under Armour was built around a powerful cultural insight – women are constantly exposed to supposedly supportive messages that are in reality contradictory and disempowering. They put pressure on women by stating what their aspirations should be. Under Armour decided to shift the cultural conversation by encouraging women to define and achieve success on their own terms. Sales have increased by 28%.

How Gatorade moved from beverage to sports brand
In 2009, Gatorade was struggling with slow results and a weak brand identity. PepsiCo marketers figured the brand needed to stand for something more than a product: it should embody a lifestyle, and become a fully-fledged sports brand. This change of paradigm meant that Gatorade competitors were no longer VitaminWater and Red Bull, but Nike and Adidas. This not only impacted communications, but also led Gatorade to shift focus towards sports nutrition and technologies.

Authentic brand expression in cultural conversations
With the rise of digital communities and social media, marketers saw the opportunity to develop content strategies that would make branding efforts easier. To Douglas Holt’s point, this was a pipe dream: people no longer want to hear what brands have to say. Companies need to understand what customers actually care about, and what their brand can stand for in that cultural context. The more they contribute and shape the conversations that are happening, the more relevant brands remain. Click here to read why Izzy Pugh, Director of Cultural Insight & Semiotics Kantar Added Value thinks that creating a cultural vibrancy is an essential element to drive meaningful brand growth.

Get in touch if you’d like to hear how Kantar Added Value can help you drive the Cultural Value of your business and brands.

Jonathan Hall, Global Chief Innovation Officer, Kantar Added Value
@HallCJonathan

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FragmentNation 2016: Think big. Execute small

Today, brand marketers have access to hundreds of millions of customer profiles and 40,000 data attributes that allow them to target audiences with a high degree of precision. Today, the challenge isn’t so much about how to reach them. The issue is that micro-targeting alone won’t ensure that people are listening…they need to want to hear what you have to say. A recent study by the McCarthy Group suggests that 84 percent of millennials don’t trust traditional advertising. The fact that this massive potential audience who is entering its prime earning years doesn’t trust what remains a key communications channel for reaching them is a big problem for big brands.

So what’s a big legacy brand to do? How can it earn back that trust and engage with diverse audiences in a way that resonates? We posit that to succeed in this fragmented marketing landscape, brands must Think Big and Act Small.

Thinking big and acting small isn’t about being muddled in the middle. It is about standing for something singular and unifying while adapting and nuancing one’s message and actions to meaningfully reach different audiences.

Added Value and Kantar Media have defined a roadmap with 3 key principles that a brand must embrace to successfully Think Big, Act Small.

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1. Have a bold intentional purpose
The first thing that brands need to do is to ensure that they have a bold, intentional purpose.

Purpose is the North Star that makes clear what the brand stands for, what it cares about and why this matters. It’s the driving force that mobilizes the brand to action and delivers value, above its products and services. Today, brands need to stand for something meaningful that gives them the right to move beyond share of market—to share of life.

Campbell’s Soup is a brand that is successfully leveraging its purpose. Faced with a challenging market landscape, in which their consumers have an almost a limitless number of quick meal options, they have recognized the need for their flagship brand to stand out and speak up. With the knowledge that people love Campbell’s because it’s real food that fits into real lives, they have developed a corporate purpose: ‘real food that matters for life’s moments’. Their powerful new campaign, ‘Real food for real life’ taps into the changing face of the American family, showcasing a mosaic of families with different cultures and configurations engaging in no-filter, relatable depictions of life and the meals that are a part of it.

Campbell’s campaign idea is an example of thinking big. While their executional strategy acts small – with ads that run the gamut of family situations and lifestyles and a digital media buy that more effectively targets these audiences.

2. Be attuned to culture
The second key to thinking big and acting small is to be attuned to culture. An understanding of culture is essential to ensuring the right expression of a brand’s purpose.

Brands need to have a mastery of both slow-moving and quick-evolving culture to ensure that their purpose is expressed in a way that will have resonance for their audience.

GE provides a great example of a brand that is thinking big and acting small, using geek culture as a guidepost. The brand’s image as a stodgy industrial giant was in conflict with their desire to position themselves as the inventors of the next industrial era. So GE set about redefining themselves as a cool ‘digital industrial’ company, championing science and innovation for a younger generation that they consider to be future customers, potential investors and employees. Their quirky television campaign, run during the Olympics, held the attention of viewers longer than almost any other spot, conveying that GE is as good a place as any Silicon Valley start-up for a skilled technician to build a career. And their cutting edge media strategy leveraged unexpected communication vehicles like Snapchat and ‘Message,’ a sci-fi storytelling pod cast that climbed to the top of the iTunes podcast charts. This 120-year old conglomerate has proven that a nuanced understanding of culture can help to deliver brand purpose in a truly stand out way.

3. Speak meaningfully with data
The third key to success in thinking big and acting small is the ability to speak meaningfully with data.

Axe Brazil does this in exemplary fashion with their Romeo Reboot campaign which reframes Shakespeare’s famous tragedy into four personas based on an analysis of target psychographic data and passion points. Axe programmatically served up 25,000 video content permutations to each of these four segments, modifying the music, the story setting and the characters to mirror the viewers’ programmatically derived preferences, all reinforcing the brand’s new purpose of helping men to embrace their own unique expression of masculinity.

When brands understand and effectively execute the Think Big Act Small strategy, they are able to stand for something singular and unifying rather than being muddled in the middle.

They can then adapt and nuance their messages and their actions to meaningfully reach different audiences, showing how the universal can be made unique and personal.

Written by Leslie Pascaud, Executive VP Purpose Branding and Innovation, Kantar Added Value.

This article was originally published on Kantar Insights US.

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