Nostalgia Powers Brand

Hostess brands has been rescued from bankruptcy by various investors, to the tune of $800m+.  Now I'm sure a portion of that amount values the fixed assets such as the bakery equipment or premises, but most would be in the IP of the recipes for the products and in the value of the brands themselves.  The buyers of these intangible assets no doubt believe that resurrecting Twinkies will yield profits.  They probably can also point to steps to better manage costs, improve distribution, etc.  And they may believe they can do a better job of marketing this collection of snack brands and bakery products to the American consumer.  They may look at the consumer outcry when Hostess stopped production and Twinkies left the grocery shelves as a sign of pent up demand - 'thars gold in them thar hills'.

And here lies the danger.  In the current environment of concerns over escalating youth obesity, are parents likely to flock back to a brand which, until the demise, many had eschewed from their kids lunchboxes anyway?  Will a 'low fat, low carb, low cal' Twinkie appear on the horizon, attempting to get in step with trends towards healthier eating?  Or will the new owners say 'sod it', and like Hardees and other brands stick to their core business plan by producing a high caloric product to sell to the largely health ignorant masses?

Whatever the case, it's interesting when looking at this mix of brands the role of nostalgia in the valuation of the brand.  And how when something is taken away, the nostalgia rises to the surface.  No doubt the re-introduction of Twinkies to the grocery shelf will spark another sales rush as consumers gobble those missing calories in a carb eating frenzy reminiscent of a failed Atkins dieter.  And we'll probably have tweets about how Twinkies taste different, taste better, taste the same.  Yet once the flurry subsides, will these same consumers come flooding back to the brand, on a regular basis, once the product reestablishes itself on the shelves?



I think nostalgia can only carry you so far in the world of branding.  Although venerable brands like Harley or Cheerwine have leveraged the nostalgia card to the hilt, they also recognize that you need to keep in step with consumer demands.  Harley may still have the trademarked 'growl' of the engine as a hallmark to the past, but the models reflect current market desires in performance and styling.  Cheerwine harkens to it's roots in 1917 as the 'Nectar of North Carolina' but also produces a diet version and a caffeine free version which would have never been imagined in the 1920s and 1930s when the brand was gaining traction in the South.

So to the new owners of the Twinkie, Ho Ho, Ding Dong, and Wonder Bread, I wish you well.  Leverage the power of your brand to those who remember it, but look at how it needs added dimensions to appeal to the next generation of consumers.

Lies, Damned Lies, and Big Data

Is Big Data potentially the end of strategy for marketers? I don’t think so yet, but let’s take a look at the argument.

 Let’s start by defining what is a marketing strategy. Here’s how Wikipedia describes marketing strategy:

 Marketing strategy is a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. Marketing strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives.

 We can distil this definition down to a series of functions which make up the marketing strategy process: allocation of resources, optimization of opportunities, analysis of the company or brand’s situation, formulation of sub-strategies (e.g. media, message, etc.) to achieve the objectives, and prioritization of those sub-strategies towards accomplishing the mission and goals of the company/brand. The notion that Big Data might make these functions automated, a ‘M2M created marketing strategy’ with limited need for human involvement, is based on the premise that for each of these processes, Big Data takes the guesswork and inference away from the marketer.

Take allocation of resources, for example. The old adage by Lord Leverhulme (and also credited to John Wanamaker) of ‘"half the money I spend on advertising is wasted; the trouble is I don’t know which half” is rapidly disappearing due to sophisticated analytics, measurable media channels, intelligent testing, and statistical modeling applied to virtually all marketing techniques. Data is at the heart of this change – where marketers used to simply blast messages out and credit/blame the creative or media for success or failure, today’s marketer knows who to send what message to, at the right time, through the right channel and can readily predict success. Or at least, in the case of GoDaddy’s latest Super Bowl ad , who will go ‘eugh’.

Similar arguments can be made for the other functions which make up the marketing strategy process. Increases in the volume and quality of data and data mining tools have changed how marketers prioritize opportunities, analyze their situation, and deploy sub-strategies. For example, where media presentations used to be at the end of the agency agenda well after the creative ‘drama’, it’s now towards the front and far beyond the ‘reach and frequency’ metrics of the last century. Much to the chagrin of the Creative Director, no doubt.

So if Big Data holds all the answers for marketers, surely we need only hire statisticians and techno-geeks as our CMOs? I tend to disagree, and align my views with those of Gord Hotchkiss. In a recent article, Gord made an interesting argument against the notion that Big Data may make strategy obsolete. He uses the analogy of driving a car to an unknown destination. In the pre-GPS days, you’d work out a strategy on how to get there – what major roads to take, the general direction, and how long it should take. Your strategy may involve planning the route, and estimating when you’re likely to arrive. It might have contingencies built in- e.g. suppose the Eisenhower Expressway still has that construction near Wolf Road? – and would rely on adjusting the strategy as you went to ensure you made it to the destination safely. With GPS providing data like turn by turn directions and upcoming road conditions, your need for a driving strategy has diminished – you simply execute the ‘tactic’ without need for a strategy. The role of a strategy is seen as filling in the data gaps for a marketer, where inference is needed. With fewer data gaps, the thinking goes, the less need for strategy. In short, Big Data conquers all. Arguing against this notion, Hotchkiss postulates that strategy is more than simply inference, but also synthesis and interpretation. It is these latter two characteristics that require the human element and experience. Big Data can provide the insights and fill in the gaps, but someone has to decide which of the mountain of insights are most important for the future strategic direction for the company or brand, as well as the impacts of external forces (government, competitors, culture) on that direction. Or to use the driving analogy, while the GPS may provide the optimal route and fastest time to our destination, sometimes the kids need the bathroom and the optimum is unattainable.

A modern strategist needs to rely on the insights from Big Data and deploy some artistic license and creativity in developing a strategy. Just as Apple famously never commissioned focus groups to launch the iPod, partly on the premise that no sane person would have ever wanted or needed 10,000 songs in their pocket, so must modern marketers rely on their experience, intuition, and imagination in developing compelling strategies.

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