STRENGTHENING YOUR BRAND’S

A Breakthrough in Understanding Brand Equity

You track Brand Loyalty because you know it impacts your brand’s financial success. You track Price Sensitivity because you know it impacts your brand’s financial success. Starting today, you can add Culture Muscle™ to the metrics you need to track, because it’s finally been empirically demonstrated that your brand’s cultural relevance also impacts your brand’s financial success — and more than you might think. Brands that keep tabs on and are connected to cultural and societal movements are the most valuable brands in the world. These companies don’t opportunistically hop onto a fad or pivot their marketing tactics to suit the latest trend. Rather, they’re true students of culture. They listen, think and anticipate defining societal shifts. Then, they adapt their in-market behavior. Such brands — Apple, Coca-Cola, Nike, Red Bull to name a few — have a strong Culture Muscle. They have a mission and a purpose that resonates with consumers. They are viewed as modern, relevant companies. And more importantly, they’re part of a broader cultural conversation that transcends their product or service’s particular category. How big is your brand’s Culture Muscle? Through J. Walter Thompson’s research, for the first time, it’s possible to actually measure how powerful or weak a brand’s cultural awareness is — and the power or weakness of your competitors. In short, the Culture Muscle tool is a pioneering solution that will help marketers build business value. Developing and exercising a company’s level of cultural awareness using the Culture Muscle tool is a valuable new weapon in a brand’s arsenal, helping to edge out competitors and stimulate growth. It’s a particular opportunity for marketers who are working hard to maintain share in low-growth categories and are uncertain of their next strategic move — save for the battleground of competing claims and for brands that are under pressure to find innovative ways to drive sustained growth. Understanding your brand’s connectedness to culture is critical because the reality of consumer purchase decisions is that they’re often different from the ways marketers think. To a consumer, differentiated messaging matters when they’re thinking about your category, but how often are they doing that? More often, consumers are attuned to conversations that connect to their daily lives, are highly relevant to them and matter in their world — from sustainable manufacturing to marriage equality — a world beyond your product category. In short, knowing how and when to flex your Culture Muscle can be a game-changer for brands, both reputationally and for the bottom line. When it’s an authentic extension of a corporate philosophy or brand image perception, the positive long-term effects can be huge. So whether you have an underdeveloped or strong level of cultural awareness, knowing your Culture Muscle score is critical to your business, as critical as knowing your awareness, brand equity, loyalty and price elasticity.

2

Background + Research Objectives This research tackled a subject that has been theorized and discussed in the strategy community for some time. Cultural thought leaders such as Malcolm Gladwell and Grant McCracken, along with a select group of academics, have also paid attention to the link between culture and business. Published a decade ago by Harvard Business School professor Douglas Holt, the book How Brands Become Icons studies the role culture plays in helping certain companies make the transformation to being iconic brands. With this project, J. Walter Thompson set out to do something that’s never been done before. “Over the years, we’ve seen example after example of brands that have done a great job building their brands by being relevant culturally. For this research, we didn’t want to just study or talk about the impact of culture on business. We wanted to quantify it,” explains Adrian Barrow, global planning director, J. Walter Thompson North America. “We knew that having such a measure would be really valuable to clients, who’ve in the past expressed to us that they would invest more in sharpening their cultural prowess if they had validation that there’s a positive correlation between culture and business success, and a metric that they could use to compare their current cultural position and progress to that of their competitors.” For the past year, a small team at J. Walter Thompson has taken on this task of proving the link and developing just such a metric. “We defined culture, designed a study that measures its connection to consumer perception of brands and dug into the link between our findings and brand value,” explains Mark Truss, J. Walter Thompson’s global director of brand intelligence. Defining Culture The team’s research approach centered on the discovery that “culture” is not so much a static representation of our collective knowledge and values, but a constantly shifting force revealing countless observable gaps and tensions. “We discovered that it’s these shifts, gaps and tensions that consumers really notice,” Truss notes. “The rest of culture is largely blind to consumers simply as a function of them living within it every day.” For instance, imagine you just bought a new coffee table book, which you proudly display on an end table in your living room. In the beginning, you notice the book every time you pass by. After a few months, you stop noticing the book — it just becomes part of your living room. But if one day the book suddenly disappeared, then you’d notice it was missing. It’s these observable shifts that are measurable and apply to every aspect of culture, from language to cuisine, politics to technology.

3

Method of Data Collection and Analysis J. Walter Thompson fielded the study between July 28th and August 1st of 2014. A total of 2,000 consumers were surveyed; all were aged 18 and over. The data are representative of the U.S. population by age, gender and income. The study was conducted based on a cross-section of brands from BrandZ Optimor’s 2014 top 100 brands. Special attention was given to ensure the brands selected for study were:

• National products and services of scale (avoiding highly niche brands) • Spanned as many industries and categories as possible • Included a mix of upscale and mass-market brands

That yielded a mix of brands that included Amazon, American Express, Apple, Budweiser, BMW, Coca-Cola, Colgate, Disney, ExxonMobil, Ford, GE, Gillette, The Home Depot, KFC, L’Oreal, MasterCard, McDonald’s, Microsoft, Nike, Pampers, Pepsi, Prada, Red Bull, Samsung, Starbucks, Subway, Verizon, Visa and Walmart. As part of the survey, consumers were shown cultural shifts as they pertain to social norms, politics, pop culture, technology, the economy, the arts, the media, religion, food and more. Then they were asked to rate both the prevalence of the cultural shifts and how relevant the shifts were to their personal lives. They pinpointed the brands they deemed most closely associated with those shifts. The extent to which consumers stated that the shifts were happening and also relevant to them, multiplied by the extent they associated certain brands with those shifts, allowed the J. Walter Thompson team to generate a Culture Muscle score for each brand.

Summary of Findings Among the brands studied, the companies with the top five Culture Muscle scores — those leaning most strongly into cultural shifts the most (the Champs) — were Apple, Starbucks, Microsoft, Amazon and Disney. Some of the brands that ranked near the bottom of our list included Colgate, Gillette, Pampers and L’Oreal. It’s important to note that the aforementioned rankings should be considered in the context of these brands’ overall status as large, financially strong brands. The intention of assigning a Culture Muscle score is not meant to be an indictment of certain brands and praise of others, but instead highlights potential untapped opportunities for already well-performing brands.

CULTURE MUSCLE™ CHAMPS

1. 2. 3. 4. 5. 4

A high Culture Muscle score serves as a tool in a CMO or brand manager’s arsenal for enhancing awareness, likeability and future financial success. Having a lower Culture Muscle score provides brand managers with another avenue towards achieving growth, beyond traditional branding strategies. The J. Walter Thompson research team noted that brands in consumer packaged goods categories tended to rank at the bottom of the Culture Muscle list (Colgate and Gillette, for example). But this finding is by no means a rule, as packaged goods brands such as Red Bull and Coca-Cola score significantly higher on the list, largely because they’ve invested heavily in a mix of product attribute marketing and cultural marketing. Brands with lower Culture Muscle scores can also use the tool to identify cultural white space areas to communicate with consumers in novel ways and join conversations already happening outside their product category. So which culture shifts are brands paying attention to? The team discovered that the top cultural shifts associated with brands revolve around increased social media usage and the resulting impact on written communication, as well as declining interest in the political divide apparent today. Additionally, the brands with the highest scores were often observed leaning into more than one cultural shift simultaneously. Among the cultural shifts respondents cited as associated with brands:

• • • • •

Starbucks and Ethical Business Practices Red Bull and the notion of You Only Live Once (YOLO) McDonald’s and the Informality Of Language (e.g. “I’m Lovin’ It”) Nike and Immersive Experiences GE and Sustainability

The team was surprised to see Walmart in the top five brands for leaning into the cultural shift of Ethical Business Practices, given past scrutiny around the company’s corporate social responsibility and supply chain practices. That association signals that consumers may indeed be paying attention to Walmart’s efforts to change the tide. Subway, as a fast feeder, surprisingly ranked last among the brands studied for the Age of Impatience. However, subway did rank highly for the Healthier Living shift, which they’ve leaned into heavily in their business and communications to differentiate from other fast feeders. The team was also surprised to see MasterCard, given the enduring nature of the “Priceless” campaign focused around unique experiences in the consumer consciousness, rank low on the shift of You Only Live Once (YOLO). This is likely due to an important finding in the study results; that the relationship between brands and cultural movements transcends ads; it’s about how a company behaves, the utility they provide consumers and the overall values embedded in the company’s DNA. The types of cultural shifts that brands associate themselves with above all must be authentic, otherwise they won’t resonate with consumers. 5

It’s also interesting to observe what some brands “lean away” from. Disney ranks last among the brands studied on the shift of the Beta Mindset — placing speed and being “good enough” over perfection. The J. Walter Thompson team interprets that finding to be about Disney’s placing importance on actually being perfect for consumers, delivering perfect experiences, not just “good enough” experiences. What a brand leans away from can be as important as what a brand leans into. Implications: Culture Muscle™ Linked to Brand Value So what do these findings mean for building brand value and financial success? The study results revealed a surprisingly strong statistical link between the two — a 0.540 correlation between a brand’s Culture Muscle score and their brand value. That’s good news for CMOs and brand managers. It offers them the chance to align themselves with the most important shifts taking place in society today, increasing their relevance to consumers and thereby generating greater financial results. “The strength of the correlation further underpinned our hunch going into the study that brands that know how to tap into the cultural realities of the day can win big,” said Barrow. “Our results told us that cultural relevance is another path to financial success, which is an especially important finding for brands locked in slow-growth categories or intra-category battles with largely parity offerings where product-attribute skirmishes are growing a bit long in the tooth,” Truss added. And of course, there’s the added benefit to matter, in the world beyond the functional benefits of your product. Developing and Exercising a Culture Muscle™ The research tells us that the Culture Muscle score isn’t set in stone, rather it is something that’s supported and nurtured in companies: developing and exercising a company’s level of cultural awareness can be learned. “If your brand isn’t already there, hope is not lost. If made a priority, it’s possible to develop and strengthen a Culture Muscle,” said Truss. “In fact, we’ve laid out the entire process for how a brand would approach measuring their cultural awareness and strategize about which cultural shifts might be the most appropriate to attach to.” Of course, embarking on such a process will require time and financial investment as CMOs, brand managers and C-suiters need to put a brand under the microscope in order to understand its cultural positioning and relevance in the broader world — along with how the brand is perceived by consumers. But the effort could yield far bigger share gains in the long term than a PR or marketing strategy alone.

6

Who’s Responsible? Who in an organization is responsible for developing the Culture Muscle? “Our findings tell us that the CMO is a logical place to start, especially since we now know that developing higher Culture Muscle scores will often require leverage across multiple departments,” added Barrow. Starbucks, for example, prioritizes technology as part of store design and even as part of barista customer service too. The aim is to make a Culture Muscle truly a part of a brand’s DNA — which points to the idea that everyone in the company, from front-end salespeople to the CEO, has a role to play. Getting Started If you’re planning to embark on a hard look at improving your brand’s Culture Muscle score, the first step is to determine the motivation. Hopefully it’s not as a “bolt-on” strategy, following on a competitor’s action; ideally you are looking for a fresh and authentic approach to growth. Here are five questions to ask before getting started: 1. Have you ever leaned into culture as a strategy and, if so, what have you already done in this vein? 2. What are your competitors doing culturally? 3. If you were to associate your brand with the latest cultural shift, could you ensure it is authentic to your brand’s DNA? 4. Beyond communications, how might you express your brand’s connection to a cultural shift? 5. Would you need to change any aspects of your business management, strategy, training, communications or customer experience in order to realize this effort?

The 2014 Culture Muscle™ Study is a pioneering research project by JWT Intelligence.

For more information, please contact Mark Truss at [email protected] or Adrian Barrow at [email protected].

7