Entertain me, involve me

Editor’s note: Chris Hubble is CEO of research company Hall and Partners, based in the Los Angeles office. Bill Russo is president of Dallas-based e-Rewards Market Research.

Today’s tough economic environment and rapidly-changing consumer landscape make strong brands more valuable than ever. Only strong brands are able to justify a price premium in difficult economic climates, and as Millennials start to exert greater purchasing power, consumer criteria for what makes a strong brand are changing almost as quickly as media is fragmenting. Reaching today’s youth and understanding brand perceptions continues to challenge many researchers. How important is brand equity to purchasing decisions? What makes a strong brand? Are Millennials really any different from their more mature peers?

Many are pessimistic

Like most of the rest of us, Millennials are pessimistic about the current economy. However, there are approximately 80 years of research showing that during recessions the biggest sales increases occur among brands that invest the most in brand marketing. Most notably, a study conducted by McGraw-Hill Research Laboratory of advertising performance during and after the 1981-82 recession analyzed 600 companies. The findings showed that companies that maintained marketing investment grew sales and outperformed companies that cut marketing investment. Brand, therefore, is important.

As we ride out this crisis, it is important to note that it is the first such cycle for the 100 million Millennials in the U.S. If this generation is purported to be so different from previous generations, what then might their response be when faced with tough economic times?

To learn the true importance of brand in a purchase decision, e-Rewards and Hall and Partners conducted a conjoint analysis of 20 brands in a mix of categories: fast-food, fashion, laptop computer and automotive. Using an online interview approach, e-Rewards recruited 3,000 Millennials (including a test split from the e-Rewards direct youth panel versus parental-permission recruits), Gen Xers and Baby Boomers to be interviewed about brands and multiple product attributes: considered versus impulsive decision-making; utility versus fashion; high-cost versus low-cost, etc.

In each case, brand was a major factor in people’s choices, regardless of generation. There were, of course, certain basic criteria that brands had to meet across all categories (e.g., great product performance and reasonable price), but the role of brand was consistently in the top three or four predictors of choice regardless of category or generation.

There were some generational nuances. Millennials placed greater importance on brand in image-driven categories, especially in the laptop computer category. Conversely, Gen Xers and Boomers placed price as the top concern in every category except automotive. Regarding brand commitment, Millennials seem to be more open to multiple brands and having more than one favorite, while Boomers are much more inclined to have a preferred brand or set purchase habits. On the one hand, this may simply be because Millennials have had less time to establish clear brand relationships or buying habits. On the other, it would also be consistent with much that has been written about them. For instance, a recent Huffington Post article summarizing the book Generation We described Millennials as “post-partisan” and “rebellious against brand loyalty.”

Variety of tools

It’s important to classify who we want to reach. Anyone born after 1982 is considered to be a Millennial. These individuals are usually optimists, team players, open to change, civic-minded, tech savvy and media-saturated. What does this mean for brands? In order to drive youths to their products, they must incorporate a variety of tools to ensure brand loyalty and advocacy.

Brand loyalty primarily results from an outstanding product. Derived-importance analysis showed that Millennials are just like their predecessors and have high expectations for great product experiences. In a world inundated with marketing tools and tactics, people demand products that are genuinely better than other brands. They want products that fit within their lifestyle, are worth the money and are something that they would recommend to others.

Secondly, brand loyalty stems from product innovation and differentiation. Youths consider brands that are evolving and generating a lot of buzz to be the ones that stand out from the rest. Perhaps this says more about the pace of business change and technological advancement than about Millennials. Millennials in particular are early adopters of technology and most things new, so brands will need to work even harder to meet consumer demand for better products moving forward.

An emotional connection has been important since the 1970s, when brands started to employ pull rather than push marketing strategies, but historically this has primarily meant a personal connection or relevance to Gen Xers and Boomers. Millennials, on the other hand, believe products should provide an emotional differentiation or connection that is more altruistic or, as they see it, genuine. They believe their favorite brands should enrich lives by answering a real need that otherwise would not have been addressed. Two-way communication is valued, and Millennials want to know that the brand cares about its customers.

Increasingly, Millennials in particular are also demanding corporate transparency and social responsibility as a result of an emerging importance for brands and companies to commit to the triple bottom line (financial, social and environmental progress). Evolving reasons for loyalty to a brand include a sense that the brand is environmentally conscious, that it embraces a mission that extends beyond profits and that it demonstrates responsible and sincere behavior. For example, in the fashion and laptop categories, Millennials placed a much higher importance than Gen Xers and Boomers on such issues as two-way communication, responsible behavior, fair treatment of employees and a true corporate mission beyond just profits.

A reason to get involved

How do marketers approach this generation of young consumers? Priorities have shifted as marketers strive to keep up with this generation during a time of economic uncertainty. One clear evolving brand priority that we found is the need for a clear reason for the brand “being,” that is, that the brand achieves something that is important to them. Brands, therefore, need to give Millennials a reason to get involved or allow people to feel like they are part of something and possibly connect them to others who are involved, formally or informally.

How? Provide entertainment through interaction. Give them something fun, social, thought-provoking and not-too-taxing to do. Social networking Web sites are a contemporary form of participatory entertainment. Anything that offers some lighthearted interaction with others or with media, through tools such as commenting, voting, personalizing or attending events, satisfies the need for entertainment. Also, provide ego-reinforcement. Give them a sense that they are important and have stature. This can drive participation since introducing friends to something new can provide a rush of energy and authority that is a form of social power.

Evolving priorities

Regression analysis showed the traditionally-recognized drivers of choice remain important, but as shown below, other factors are beginning to become more important due to the evolving priorities of Millennials.

Brands as myth-makers. Ivory is the prototypical example of the brand that behaves like a myth-maker, creating and repeating a clear symbolic story attached to a brand, in this case purity. But, it may be falling behind the times. In fact, as of May 2006, Ivory was one of the least-successful brands in P&G’s soap portfolio. Perhaps people have started to lose interest in commercial mythology.

Brands as game-show hosts. The past five years have ignited a wildfire of new kinds of corporate schemes to compel the customer to do something, anything, related to their brand, such as making a video, customizing an Internet plaything or joining a forum. Sadly, overall it’s not working out as well as hoped. In 2007, U.S. office supply retailer OfficeMax launched its Elf-Yourself holiday e-card toy that allowed you to transform yourself into a singing and dancing elf by uploading a photo to a Web site. It was fantastically successful and catered to a tech-savvy generation - receiving 36 million hits in just a few weeks, a landslide of favorable blog mentions, and perhaps the crowning achievement: a 20 percent increase in holiday traffic to officemax.com. But Ad Age reported that it was tough to say whether this bump in holiday traffic translated to any rise in sales. Furthermore, as some industry bloggers pointed out, what did all this have to do with the OfficeMax brand? And that’s where the disconnect habitually happens between Millennials and game-show-host brands.

In the words of Sarah, a Millennial discussion group participant, “I think it’s an attempt to make consumers feel more empowered about their purchases. But to me, it is a false empowerment, and the real power still lies with the company/advertiser, who is getting more influence than the consumer is getting real choice or power.”

Brands as gardeners. A gardener, first and foremost, works hard to create something of value. A gardener is constantly planting seeds and going for growth. A gardener watches what thrives and what withers; is flexible and pragmatic; and is open to the reality of what he sees each morning when he begins his day’s work.

Gardener brands are all about creating a magnetic, inviting world that people want to take part in. Simply speaking, they are not incentivizing people to act; they are inspiring them. The Method brand behaves as such a gardener because it constantly waters, feeds and prunes the attractive bed of ideas it has seeded. The embodiment of the brand are founders Eric Ryan and Adam Lowry, who hated cleaning in college and wanted to create a better and more interesting way to clean. The substance of their brand is a fantastic and unique product: biodegradable soap, in recycled packaging, with great design. And this rock-solid basis has made people want to get involved with the brand - something that Method has sensitively cultivated through its “people against dirty” mission. The combination of efficacy, environmental friendliness and aesthetics, qualities admired by Millennials, has made it easy for the brand to find passionate activists.

New considerations

So while the same principles exist, there are some new considerations/principles for brands that wish to achieve brand loyalty and create brand advocates among Millennials:

Make room for others. In the broadest sense, Millennials are willing to connect with participatory brands, and participatory brands are those which have created some role for consumers to play beyond making transactional purchases. This is about giving young people a role to play beyond making purchases. For example, the California Milk Processor Board has reached out to high-school students to develop new ad campaigns, and the effort is based on a genuine question: How can high-school students help the Milk Board really understand how to promote health among their age group? The whole exercise is made more meaningful because it’s tied to learning how advertising works and what an ad career would be like.

For some participatory brands, this means that the end goal is to place the consumer at the heart of its innovation or communication processes. This is a particularly useful strategy for brands operating in categories of constant change and which genuinely need people to be a part of their every forward step. To know where to make room for others requires active and constant listening on the brand’s part.

Have a mission, not a mission statement. True missions are not only the realm of small, entrepreneurial challenger brands. Consider Dove’s Campaign for Real Beauty - a single-minded mission to change current definitions of beauty. The Dove team brought this to life in a variety of creative ways, from customer-led self-esteem workshops for girls to viral videos about how makeup and technology create a false image of beauty. However, even a true, deep and enthusiastic mission only works if it is aligned across the entire organization.

Create exceptional products. Aim high and create from the brand’s heart. For example, Target’s commitment to style-for-value comes from this place, and having real contributing designers adds to the sincerity and truth of this program.

Enrich people’s lives. Genuinely seek to add value. In many cases, this means adhering to social and environmental standards, committing to financial, social and environmental progress. That’s why people feel good about brands like American Express, a brand well-known for its philanthropic giving and big-picture view. Their Members’ Project generated enthusiastic participation, with members submitting change-the-world ideas to the AmEx community, which, in turn, voted on which should receive significant funding from AmEx.

Make the inside reflect the outside. Imagine you meet a person who talks about environmentalism all the time and tries to get others to be more environmentally conscious. If you were to then find out she drives an SUV and goes everywhere by chartered plane, what would you think? Brands work the same way. Look at the way Wal-Mart’s back-to-school decorating ideas Web page became a forum to highlight the retailer’s unfair labor practices; or the way Chevy Tahoe’s invitation to create your own ads became an avenue for anti-SUV backlash.

Participation is very tough to navigate if inside doesn’t reflect outside; Millennials live in a culture of exposure, where social networks and celebrity obsession are second nature, and they expect brands to be equally as transparent.

Use meaningful creativity and innovation. Rather than churning out line extensions to capitalize on a brand name and calling it innovation, participatory brands keep themselves interesting and surprising through meaningful creativity, expressed in every aspect of what they do. These are brands like Jones Soda - an old dog in the Gen X world but considered by Millennials as the first interactive soda company - inviting consumers to suggest the flavors they want and take part in designing the bottle by submitting photos that reflect their real lives. Jones is focused on meaningful innovation by offering soda flavors people want, not innovating for the sake of innovating.

By allowing customers’ unique personalities to be the face of the company in package design, it backs up its commitment to making customer tastes a priority. It also stays focused on creating the highest quality product possible.

Remember all four Ps. Finally, with all the changes going on, it’s easy to forget the basics of marketing. All four Ps - product, price, place and promotion - need to be aligned with the brand’s mission. When a brand lives in places that don’t fit with who it is, young consumers sense the dissonance. When Innocent, the well-loved U.K. smoothie brand, decided to offer its product at McDonald’s, it caused uproar among loyalists. Innocent, as a participatory brand, took advantage of its online forum to explain how its choice reflected its values, as one adult to another - but it still left many uneasy with the move.

And it’s just as bad when a brand’s price sends the wrong message; loyalists of Apple (a brand Millennials in particular admire) who bought the iPhone early felt cheated when Apple dropped the price significantly just a couple of months after launch. Luckily, Apple picked up on this quickly and gave its loyal early-adopters rebates!

Stay relevant

Reworking brand strategy to encompass Millennial brand priorities may be what is required to stay relevant in a bad economy and an aging society. Create products and brands that better connect Millennials to others involved, that provide youths with a sense that they are important and that offer entertainment through interaction and you may find an audience ready and willing to promote brands and products through sharing and advocacy with their peers. 

The authors would like to acknowledge the following study contributors: Tal Oren, Shannon Knock, Kristen Kwan, Dru Price and Jeannette Tsuei of Hall and Partners, and Eric Sandberg and Kelly Kitchens of e-Rewards Market Research. Additional article contributions came from Ashley Harlan of e-Rewards Market Research.

Observations about online youth surveying

By and large, youth today are recruited for online research from adult panels, whereby the invitation to participate is sent to the adult panel member who has opted in, and a request is made for him/her to allow his/her teen or young adult to take a survey. The concern has long been how to validate whether the survey is taken by an actual teen or whether the adult simply takes the survey on the teen’s behalf in order to qualify for the incentive.

So, when designing the study profiled in the accompanying article, a separate youth sample was recruited via parental consent. This group was then compared with the youth from the u.talk.back Opinion Panel, who are recruited from specialized youth sites. Youth opt in directly, so they have their own rewards/incentive account in their own name, and the survey invitations go directly to the teens’ e-mail.

When we compared results between the two sample sources (parental-permission versus direct-to-youth), respondents from the u.talk.back Opinion Panel were much more likely to associate with youth brands, such as Urban Outfitters (versus Eddie Bauer among the parental referrals), and there were stark differences in terms of language among one-third of the parental referral “teen interviews,” which suggested a generational gap. For example, take these two open-ended responses:

“SWF seeks long lean pair of soft brushed cotton slacks to spend comfortable weekends walking by the lake and swinging on the front porch.” - parental permission [anonymous]

“Hi, I’m a Senior and I love the color pink! I want to be an AKA [Alpha Kappa Alpha] so it should not come as a surprise that I’m looking for a mint green or pink car!!!” - direct-to-youth panel [anonymous]

Additionally, there were other differences among the two groups:

- Automotive parental-permission Millennials placed a greater priority on safety (perhaps reflecting parental instinct?).

- Parental-permission Millennials are less optimistic about future household finances (45 percent expect to be better off in 12 months versus 54 percent) - in line with Boomers’ expectations (46 percent).

- Youth-panel Millennials are more likely to be involved in purchase decisions.

- Youth-panel Millennials have stronger affinity for youth-oriented brands.

As evidenced above, there is a strong suspicion that a high proportion of parental-permission responses were completed by adults on behalf of their young adults and teens - compromising sample and results. And, at the very least, parental-permission Millennials seem to be not as involved in brand decisions as those opting in to participate directly.