Back then when it came to streaming TV shows and movies, the majors were Netflix and Hulu (which was, BTW, a joint venture of NBC Universal/Comcast, Fox/News Corp, and ABC/Walt Disney, who apparently wanted to dip a proverbial corporate toe into the video stream). And there was Veoh and Amazon, and, of course, you have to count YouTube if factoring in anything that can be video-streamed. When we ask consumers about which platforms they use for “video streaming,” they always name “YouTube,” even though they’re not paying for it – yet (more about that below). Then, of course, there’s iTunes. And before you go crazy, yes, we’re aware there are a bunch of others. Today if you can’t find something to watch, you’re probably not really trying very hard!

According to our most recent Brand Keys survey, which correlates very highly with consumer visitation and usage, current video streaming-site engagement rankings look like this:

1.    Netflix
2.    Amazon
3.    Hulu
4.    YouTube
5.    iTunes
6.    Vimeo
7.    Veoh
8.    Vudu
9.    Blockbuster
10.  Redbox

But the course-changes this category has been making are extraordinarily different from the ones that were expected, reminiscent, for those who were there at the introduction of the internet, of when access and e-mail, and a raft of what-you-currently-get-for-free, was being charged for. So fact #1: the video streaming category is getting crowded. And, fact #2, it’s getting more than a little competitive, as media companies are moving into streaming video looking for their own new revenue streams.

Time Warner’s Instant Archive app, for example, provides access to classic TV and movies for consumers willing to fork over $9.99 a month. AMC and CBS have already launched their own apps. Viacom has promised ones for MTV and Comedy Central very soon. Part of all this relates to who has what inventory, with the media companies looking to connect with consumers directly, rather than rent the rights to other streaming services. It raises the question though, as to whether these new network streaming ventures will put a gabillion dollars of advertising and affiliate fees at risk. But all this also means fewer inventories for Netflix, like losing access to a thousand Time Warner titles, including 007 films like “Goldfinger”.

There are rumors about YouTube, #4 on our list, of a plan to let some of their video makers charge a monthly fee for access to their channels. Reports last week were that this might involve dozens of channels. But before you start reviewing your credit card bills, it’s also reported that some will cost less that $2 a month. And while reported to be a subscription for libraries of videos-on-demand and not channels in the traditional TV model, it puts more pressure on the traditional networks to deliver more engaging, cost-effective content.

Now you might think that these eddies in the video stream are causing waves over at Netflix, #1 in our ranking, but, in this case, as the phrase might go, all’s fair in love and war and video streaming. Netflix has had 14 years to become pretty expert at licensing movie and TV content, but their recent moves indicate that they’re looking ahead to become a major player in the content creation arena. With the release of their TV remake of “House of Cards” and their upcoming revival of “Arrested Development,” it positions them not just as licensers of popular TV shows, but as creators/producers of popular content of their own, putting them in direct rivalry with, well, everyone from whom they had previously been licensing.

Netflix’s own, most-recent content creation could be a good launch-spot for their own version of pushing the creative envelope and the promise of what the media world is calling, “premium content.” And also the ability to promise more creative freedom to TV content creators, who perhaps feel manacled by the traditional network system. And as it’s not likely that networks are going to hold on raising licensing costs, content may just be the route for Netflix’s future.

Newton Minow, former-Chairman of the Federal Communications Commission, the guy who once called television a “vast wasteland,” also said, “When TV is good nothing is better. When it’s bad, nothing is worse.” Wonder what he’d say now? But based upon the direction of the current video stream, it appears that consumers will have even more opportunities to decide that for themselves.

It was Bill Gates who foretold the success that digital would create as the fastest growing segments of the online entertainment industry. Gates said it, Google listened then Google announced yesterday it will launch a paid streaming music service – All Access music for $9.99 after a 30-day free trial – in direct competition with the likes of Pandora and Spotify. And others from the retail world and the social networking world.

The new app is designed to work on smartphones, tablets and browsers, so virtually any mobile platform; will allow users to search for music – search being Google’s sweet-spot, of course, so you’d expect that they’d get that part of the service right. But there’s more! Users will also be able to customize selections from different music and performer genres, and then can stream playlists or listen to curated streams. It’s been reported that Google has already to made licensing agreements with Sony, Universal and Warner Music Groups.

Does this new service move Google closer to – or even ahead of –Apple in this burgeoning category? Apple was the brand that pioneered online music sales via iTunes and it’s been rumored that they are looking to create their own subscription service. So, not only are Spotify, Pandora and Rdio pushing to expand their own audiences, but social networking brands like Facebook and retailers

Two years ago, consumers — always feeling good about mom but feeling a little better about the economy — focused Mother’s Day dollars into electronics: smartphones, tablets, and e-readers. This year the consumers’ purchase lists are made up of more traditional, more personal gifts and occasions: cards, brunch or dinner, flowers, and clothing. So it seems fair to say that, like every other consumer purchase, the Mother’s Day decision is part rational and part emotional.

On the rational side of the decision process, no matter how much you love Mom, she really doesn’t need a new phone or tablet every year, no matter how much tech brands wish that was the case. On the emotional side, the leading gift choices tend to be more personal and more emotionally engaging. Which is why this year clothing (+8%) and spa pampering (+10%) outpaced technology gifts.

As to shopping, the consumers will continue to use multiple venues. Discount (45%), Department Stores (36%), and Online (30%) remain generally unchanged fro last year. Catalogs and Specialty Retail were each down 5% again this year (reported at 40% and 10%, respectively).

Mother’s Day is the second-biggest consumer-spending holiday, behind Christmas, Chanukah, and Kwanza, probably because it involves a broader spectrum of relationships, embracing step-moms, female relatives, and friends.  More broad too, linked to changing family dynamics, including divorced, single-parent, and same-sex households. And more universal when you combine all that with the fact it crosses ethnic, cultural, and religious boundaries. And that makes it a real opportunity for retailers.

Emotionally and rationally.

To be honest, the sentence above was a hard title to actually commit to paper. The National Hockey League hasn’t treated fans all that well – at least not when it comes to managing to get teams out on the ice as regularly as fans might desire.

There was the strike back in ’92. Then the lockout of ’94. Another lockout in 2004-05. Oh, and then there was this season’s 2012-13 lockout. Pity the poor hockey fan. If, as Woody Allen suggested, that 80% of life is just showing up, there hasn’t been much life in the league for NHL fans this season.

The newest lockout began last September after the League and Players’ Association couldn’t agree about a lot of stuff. There’s lots of discussion about what and who caused the lockout. But it shortened the season which was scheduled to begin on October 11th,by about 42%, signifying the cancellation of 510 regular season games and the 2013 NHL Winter Classic. So way short of Mr. Allen’s recommendation. But a lot better than 2004, when the entire season was cancelled.

In spite of the significantly shortened season (or perhaps because of it), there are more loyalty ties this year than in preceding years. According to fans in the teams’ own DMAs, the current 2013 NHL top-5 and bottom-5 team loyalty rankings are as follows (numbers in parentheses indicate last season’s standings):

Top-5

1. Vancouver Canucks and New York Rangers                (#2 and #11)

2. Boston Bruins and Chicago Blackhawks                      (#2 and #6)

3. San Jose Sharks                                                                   (#3)

4. Pittsburgh Penguins and St. Louis Blues                      (#6 and #21)

5. Detroit Red Wings and Philadelphia Flyers                (#1 and #4)

Bottom-5

30. New York Islanders                (#26)

29. Columbus Blue Jackets          (#24)

28. Phoenix Coyotes                      (#18)

27. Winnipeg Jets                          (#19)

26. Tampa Bay Lightening          (#20)

And sure, win-loss ratios may be the only thing when it comes to a playoff championship, but when it comes to winning loyalty it’s not the only thing.

Rule-of-thumb is that win-loss ratios can contribute as much as a 20% bump in a team’s loyalty. But to be fair to the NHL Fans, professional hockey is a little different from the other Major League Sports. Winning and losing’s contribution to loyalty is higher for the NHL (calculated to be around 30%) for a number of reasons. First, the sport moves so much faster than the others, there’s a bit more attention paid to the Pure Entertainment driver wherein win and loss stats reside. Second, the protective equipment makes it hard to instantaneously identify individual players, with the possible exception of the goalie, so what is fan bonding in the other sports is a different kind of bonding in hockey, one based on performance (See First reason above).

So while the final scores tend to contribute more to loyalty for professional hockey, there are three other emotionally-based, predictive factors that must also be taken into account. The four emotional drivers of fan loyalty look like this, with slight accommodations for the sports themselves:

Pure Entertainment:

How well a team does, sure, and as noted, a bit more for hockey. But more importantly than win-loss ratios, how exciting is their play? Or in the case of the NHL, do they play at all? 
Authenticity:

How well they play as a team. Again, in the case of the NHL, if they actually get to play. A really abbreviated season

It was Buckminster Fuller who noted, “To change something, build a new model that makes the existing model obsolete.” And so a bunch of innovators did, although it’s was not always planned that way.

And, no, not talking about buggy whips, although, yes, they are pretty much obsolete. We’re talking about more recent totems of our civilization including the following:

1.       Dial-up internet

2.      Dialing 4-1-1 for information

3.      Classified ads in newspapers

4.      Hard-copy encyclopedias

5.      PDAs and Address books

6.      Phone books

7.      Rotary dial phones

8.      Floppy discs

9.      Typewriters

10.   Gas station maps

11.    Long distance charges

12.   Film

Oh, and the iPhone. Not all iPhones, but the first-generation, 2007 original model, which will shortly be labeled “vintage” in the United States and “obsolete” everywhere else in the world.

All this will happen next month when Apple changes the phone-that-revolutionized-mobile’s designation, which they do to products 5 years after they’re discontinued. So the iPhone original, which was discontinued in 2008, is due to fade into obsolescence this June. Just in time for an expected launch of Apple’s 7^thgeneration software, rumored to be more emotionally engaging than the current versions, which would be good news for them.

Apple could certainly use something new. In this year’s Customer Loyalty Engagement Index – after leading the category, well, since they created the category – they slipped to #2, behind Samsung in the Smartphone category (followed by LG, Nokia, Sony, Motorola, HTC, and last, another name that might soon make the list of obsolete items, BlackBerry).

It was Steve Jobs, who noted that, “innovation distinguishes between a leader and a follower.” So it will be really interesting to see where some innovative thinking from Apple leads this time around.

Stay tuned. Or perhaps sticking with our theme and avoiding the obsolete, we should more properly say, “stay connected” for more updates.

It showed up in a lot of categories, mostly CPG, where the importance of emotional brand value has decreased significantly or disappeared entirely. Product evaluations by the brands’ own customers were found to be statistically identical, meaning the products were essentially seen to be interchangeable.

Advertising and promotion can help to drive consumer behavior, of course, but no matter how entertaining the ad, it’s extraordinarily less powerful than being able to leverage emotional aspects of the products themselves. If all you stand for is ‘shampoo,’ you’re a ‘placeholder,’ a name people know but don’t know for anything outside being in the category and, thus, absolutely no (brand) advantage in the marketplace.

Along those lines, it was reported yesterday that P&G indicated that profits would fall more than anticipated, and with its shares down as much as 6%, analysts are asking why the company hasn’t posted better sales growth after more than a year into its promised turnaround.

That, of course, was Wall Street talking. But if you had talked to Main Street (the way we did – via emotionally-based engagement metrics) we could have told them you don’t build your brand or your market share on constant low-lower-lowest pricing strategies, on-going promotions, and the promise of innovation, and expect your offering to be seen as different or better than the competition – who’s doing precisely the same thing.

There was a time mid-last century when the brand engagement ratio that drove sales was more rational than emotional. As brands are finding out – some to their advantage, but many to their detriment – it just doesn’t work that way anymore.

As loyal readers know, the Sports Fan Loyalty Indexwas designed to help sports team management identify precise fan loyalty rankings and insights that enable league and team management to identify areas – particularly emotional ones – that need strategic brand coaching. And as these insights are based upon the fans’ own views of their ideal team, it’s a really good measure of engagement and loyalty yardage gains and losses. Particularly since these rankings correlate very, very highly with viewership and merchandise sales.
Here are the NFL teams that scored best when it comes to fan loyalty, and those that didn’t. For comparative purposes, #’s in parentheses give the team’s ranking for last season:

Top-5

1. New England Patriots               (#1)

2. Green Bay Packers                  (#3)

3. Baltimore Ravens                     (#11)

4. San Francisco 49ers                (#13)

5. Indianapolis Colts                     (#4)

Bottom-5

32. Oakland Raiders                     (#32)

31. Jacksonville Jaguars              (#27)

30. Cleveland Browns                  (#31)

29. Kansas City Chiefs                 (#23)

28. Arizona Cardinals                   (#22)

We know, we know, everybody loves a winner. But before you run off to check the stats on how many games your team won – last season or forever – it’s important to understand that win/loss ratios do not entirely govern fan loyalty, although we will admit that winning the Super Bowl always gets you a little extra loyalty yardage (see the Baltimore Ravens, above). So, OK, winning does matter some – but not entirely as some fans shout, and there are three other powerful and emotionally-based factors that get taken into account, articulated loudly or not. The percentages next to each indicate the contribution they make to overall fan loyalty and engagement:

History and Tradition (35%): Is the game and the team part of fans’ and community rituals, institutions, and beliefs?

Fan Bonding (28%): Are there players on the team that are particularly respected and admired?

Pure Entertainment (20%): How well a team does, wins, losses sure. But even more importantly, how or entertaining is their play?

Authenticity (17%): How well do they play as a team? What’s the offense and defense like? New managers, as they’re seen to be responsible for the genuineness and credibility of the team, can also help lift this driver.

This year the First Round draft picks had teams opting for offensive or defensive linemen. A quarterback wasn’t chosen until the 16^th pick and that was the only quarterback selection of the day, which might cause one to wonder if opting first for players that anchor both sides of the line of scrimmage, isn’t a sign that teams are concentrating on Authenticity this year. Just a thought.

The Brand Keys Sports Fan Loyalty Index measures all the teams in the four Major Leagues and the leagues overall. And overall, the National Football League is currently rated 1^st followed by Major League Baseball. The NBA ranks 3^rd and the National Hockey League comes in last. So right now the survey says. . . fans are most ardent about football. So maybe it’s not surprising that some people think football is a matter of life and death.

And depending on your level of fan loyalty for any sport, it can sometimes get much more serious than that! It can certainly get more profitable for teams!

Tumblr, the microblogging and social networking website, started running ads, aka “sponsored content” yesterday. You had to figure this would eventually come. Even with a reported 102 million blogs and nearly as many posts created each day, all the social networking sites are looking to add revenue streams and increase profitability.

For those of you unfamiliar with Tumblr, most of the website’s features have to be accessed from their dashboard interface. That’s tech jargon for “that where you go to post something or find stuff you’re following or looking for.” Consumers who use mobile apps will get to see the ads – or as Tumblr’s VP of sales blogged, “posts from our partners,” as they scroll through the dashboard, which is apparently what, in simpler times, we used to call “advertisers,” but OK, “partners.”

According to our most recent 2013 Customer Loyalty Engagement Index, customers/users rate Tumblr pretty well as regards, well, loyalty and emotional engagement, with them ending up about the middle of the (consumer-generated) list, having moved up since 2010 when we started tracking Social Networking sites. Evaluations based on emotional engagement always correlate pretty highly with positive behavior towards a brand, in this case visitation and we’ll leave it to you to decide what visitation connotes, beyond the opportunity to “every now and then” see an ad, I mean, a post from one of Tuymblr’s partners. Who – you guessed it – are paying for the opportunity to promote blog posts, aka “sponsored content,” aka “ads,” they’ve created.

Visitation alone notwithstanding, on an emotionally-engaging basis, social networking sites rank as follows. Percentages indicate the degree to which the site meets those very emotional expectations visitors/members of social networking sites expect from their Ideal site:

Facebook                  89%
Twitter                       88%
YouTube/ LinkedIn    86%
Pinterest                    84%
Tumblr                       81%
Instagram                  79%
Yelp                           77%
MySpace/Quora        75%

The way it works is that users will see “sponsored Tumblr content.” The ads will not be disguised and will, in fact, be designated with a “sponsored” label and a dollar sign icon – a $. The operating model is that visitors will go to the sponsored site or after that you’ll “like” the post and share/re-blog it as you might with other non-paid for Tumblr updates. So, basically, a new twist on word-of-mouth.

And while word-of-mouth may sometimes be the best advertising for a brand, advertisers shouldn’t forget, it can also be the worst, and that whether you call it “WOM,” or “sharing,” or “buzz” they all come in two frequencies – good and bad.

Yes, we know that there are differences between a dedicated e-reader and a tablet. And if absolutely forced, consumers will acknowledge the differences too. But ultimately that’s not really what consumers focus upon. In the hearts and minds of consumers it works out to a kind of ‘meet-my-expectations-stupid’ paradigm, and articulated or not, shrinking sizes and prices of ‘full-featured tablets,’ are managing to better meet customer expectations and are, thus, raising questions as to the viability of devices upon which one can only read a book.

One of the key metrics we track in our annual Customer Loyalty Engagement Index are consumer expectations. This year, nearly 40,000 consumers self-classified as participants in categories we track, and then as customers of specific brands in that category. As any researcher can tell you, the customer incidence levels informs you very quickly as to whether a category is growing or shrinking, depending upon the degree of difficulty finding them. When incidence levels get really, really low, we sometimes drop a category, like we did with “cellphones.” Not smartphones, mind you, just plain cellphones. Yes, they’re out there, but in shrinking numbers, because of shrinking prices of increasingly smarter smartphones that have lured consumers from one category into another.

That said, when we first measured the “E-Reader” category in 2008, the iPad didn’t exist. That was two years later. But even in 2010, when it came to “e-readers” we didn’t get enough consumer self-classified mentions of the iPad to include it as a brand in the category. And before you get exasperated with us, yes, the iPad was mentioned (and was rated #1) in the “Tablet” category. But a different category.

But that’s not the case today. Ask about e-readers and consumers now mention their iPads (and other tablets) so the category distinctions are beginning to blur, if they haven’t completely blurred already. And while the number of people who report reading e-books has risen, fewer consumers report using a dedicated e-reader to do so.

OK, not surprising consumers are enamored with compact, multi-functional devices, and expectations – and brands’ abilities to meet and even exceed those expectations – have come to reflect their behavior in the marketplace.

When we look at those expectations across all the electronic categories we track, (with 100% as the highest level consumers can possibly expect and a category might reach), e-readers rate 85% (down 6% from last year). Tablets, on the other hand, rate 92% (up 3% from 2012). You do the math. We’re pretty sure your tablet has a calculator app on it.

To paraphrase the American engineer, Charles Kettering, high achievement, market share, and sales, always takes place in the framework of higher category expectations. That was always true.

The difficult part these days is making sure you read the category correctly!

The National Basketball Association 2013 Playoffs begin next Saturday, April 20th, so we figured that this was a good time to release the loyalty rankings for NBA teams from our 21st annual Brand Keys Sports Fan Loyalty Index.

Those of you who have loyally followed the Brand Keys Sports Fan Loyalty Index will remember that it was designed to help professional sports team management identify what drives fan loyalty in their home and national markets, with insights that enable league and team management to identify areas, particularly the emotional ones, that need strategic brand coaching.

While only 16 of the 30 NBA teams will make the playoffs – eight from each conference – Brand Keys assesses all teams by interviewing fans from the teams’ own DMAs, which provides an apples-to-apples comparison of the intensity with which fans (within a team’s DMA) support the home team versus corresponding loyalty values for fans of other teams or other leagues in that market. Currently the 2013 NBA top-5 and bottom-5 brand standings are as follows:

Top-5- 2013                                     2012

1. Miami Heat                                   (#6)
2. San Antonio Spurs                       (#1)
3. New York Knicks                          (#10)
4. Boston Celtics                              (#2)
5. Oklahoma City Thunder/

Brooklyn Nets                              (#5 and #14)

Bottom-5 2013                               2012

30. Charlotte Bobcats                     (#30)
29. Sacramento Kings                    (#29)
28. Minnesota Timberwolves          (#27)
27. Washington Wizards                 (#26)
26. Cleveland Cavaliers                  (#22)

Win-loss ratios may be the only thing when it comes to a conference or playoff championship, but when it comes to loyalty it’s not the only thing. There are three other emotionally-based factors that must be taken into account.” The four emotional drivers of fan loyalty, and their overall contribution are:

Pure Entertainment:

How well a team does, sure. But even more importantly than a win-loss ratio, how exciting is their play?

Authenticity:
How well they play as a team.

Fan Bonding:
Are there players who are particularly respected and admired? 

History and Tradition:
Is the game and the team part of fans’ and community rituals, institutions and beliefs?

The NBA currently ranks 3rd of the four Major League Sports that Brand Keys tracks. The National Football League is currently 1st followed by Major League Baseball. Perhaps not surprisingly, the National Hockey League comes in last this year. Overall team rankings – no matter which league – correlate with viewership and licensed merchandise sales, and since rankings can be influenced depending upon how loyalty drivers are managed, it’s critical that team marketers act as strategically off the court as the coaches do on the court.

It was NBA great, Phil Jackson, who noted, “Not only is there more to life than basketball, there’s a lot more to basketball than basketball.” The “lot more” he was referring to are what drive teams and what drives real fan loyalty too. For teams with emotional team measures it’s always a win-win.”

Brand Keys is pretty much the world’s expert when it comes to the Martha Stewart brand. This isn’t braggadocio. It’s true. It all came about in 1998.

At the time we weren’t focused on the Stewart brand, but the Kmart brand. Back then we (along with most market analysts) observed that Kmart was having difficulties establishing any real brand equity and differentiation and profits in the marketplace. Competitors like Wal-Mart and Target were putting stress on a Kmart brand structure that pretty much wasn’t up to code in the first place and, the more we looked for something – anything – that Kmart might leverage in the marketplace, what revealed itself was the Martha Stewart brand. And the fact that the Martha Stewart brand was essentially the only thing bolstering the Kmart brand at that time. And that’s when we started tracking the Stewart brand – which was riding very high – seriously and regularly.

In 2002, Ms. Stewart and her brand ran into their own problems that ultimately led to a courtroom and then to a prison term for the human brand, and by then we had tracked the brand through its highs, lows, very, very lows, and its slow return to a reasonable, albeit weaker, brand and financial health.

Ms. Stewart was always creative and entrepreneurial and consumers trusted her opinions and vision. When the legal problems hit the front pages of every newspaper in the world, Ms. Stewart characterized it as a personal problem, separate and apart from the brand. But as Ms. Stewart was the brand, consumers had a hard time separating the two. And when trust in the human brand eroded, so did trust in the products and service that bore her name, and the company ran into financial difficulties of its own.

But that’s marketing history. Today Ms. Stewart and the brand are alive and well.

In fact, we’d go so far as to say that “Martha Stewart” has, in the most positive sense, become a “default brand.” By that we mean that it was imbued with enough meaning and enough value to provide more than an adequate foundation for virtually any product or service that would avail themselves (and pay for) of the use of the Stewart name. And with a default brand it’s easier and more profitable for retailers to rely upon and/or franchise the “Martha Stewart” name than to try and establish a new brand or leverage a store brand for the precisely the same products or services. That is, after all the raison d’etre of brand – to act as a surrogate for added-value and differentiation, either for the product or the retailer, or both, depending upon the circumstances, and the strength of one versus another. All this came to mind as the new lawsuit regarding Ms. Stewart seems to be coming to a head.

Macy’s has accused JCPenney of entering into an illegal licensing agreement with Stewart’s company and wants JCPenney stopped from selling a line of Stewart-designed home goods like linens and kitchenware and bath products, which have already been manufactured and are wending their way to JCPenney shelves as you read this. Now if the case goes against them, JCPenney will have to come up with substitutes for those products. And those substitutes would have to be sold under JCPenney store private labels.

Which brings us back to the issue of brands and added-value. Which would you pay more for, a Martha Stewart set of bedding, or a JCP Home set of bedding? But it’s also been reported that, trying to circumvent any previous licensing agreements with Macy’s, JCPenney has kept the Stewart name off of most of the products and those will be sold under the aegis of JCP Everyday, so how would you know that it’s actually something from Martha Stewart? Doesn’t the label count for something? Given two sets of 400-thread count sheets available in a palate of springtime colors, would you be able to identify which set had been “designed” by Martha Stewart? And if you couldn’t, would it matter?

It was Mark Twain who noted, “He goes by the brand, yet imagines he goes by the flavor.” What flavors do you think Martha Stewart comes in?

We can’t imagine that anyone is surprised. The results of his efforts were dismal. Grim. jcp (Mr. Johnson “modernized” the name and logo) lost $552 million in the 4th Quarter, nearly a billion dollars for the year, and sales fell nearly 29% versus a year ago. Oh, and JCPenney share lost half their value during Mr. Johnson’s tenure. So really, really grim.

Mr. Johnson, got rid of sales, instituted low-price guarantees, got rid of brands, got rid of “fake prices,” negotiated for new brands, brought back sales and coupons, planned to re-design stores, and then brought back “fake prices.” None of which worked. To paraphrase Yogi Berra, who apparently knew as much about Department Store retailing as Mr. Johnson, “if the customers don’t want to come to the store, you can’t stop ‘em.

Nobody would deny that retailing has gotten tougher in the past few years, but equally so, brands have learned that if they can create some degree of emotional engagement (in additional to the rational stuff like Merchandise Range, Fair Pricing Strategies, and Customer Service), they are bound to see positive behavior toward the brand. And yes, it’s gotten harder for retailers to provide meaningful and engaging differentiation as regards their brands.

But equally so, it’s axiomatic that if customers behave more positively towards you, you ought to see positive results to your bottom line. But to do that you need to have something that customers can engage with. We won’t go into all the reasons consumers engage with Apple. That would be preaching to the choir. Mr. Johnson apparently thought JCPenney and Apple were on equal planes when it came to emotional engagement, and boy, was he wrong!

According to our 2013 Customer Loyalty Engagement Index, when it came to Department Stores, overall engagement levels (versus a category Ideal, calculated to be 100%) were pretty close:

Kohl’s: 84%

Macy’s: 82%

Marshall’s: 81%
T.J. Maxx: 80%
Dillard’s/Sears: 79%

But not for JCPenney. Their engagement rating – according to their own customers – was 70%, which is low in any category, but very low in Department Store Retailing.

Anyway, JCPenny announced that Myron Ullman, who had been CEO until Mr. Johnson was brought in will be coming back. In a seven year period when Mr. Ullman was in charge shares were down 15%, so about 2% a year, which is a lot better than 50%.

Talk about cutting your losses!

It was President Eisenhower who famously spoke of “unwarranted influence.” At the time he was talking about the military-industrial complex. But if he were around today, we suspect he would have included the aviation business, specifically passenger airlines, especially in light of the spate of recent mergers.

Mergers are not new, of course, but consumer and economic trends have accelerated those in the airline industry in recent years. We measure airlines in our annual Customer Loyalty Engagement Index, and can’t have helped but notice that there are fewer National carriers showing up in the survey now than a decade ago. Ten years ago there were 10 airline brands, this year there are only six. American Airlines merged with U.S. Airways, Northwest merged with Delta, United merged with Continental, so fewer airlines and, perhaps, consumers fear, “unwarranted influence” on the parts of those that remain.

Along with the normal fears of flying, lost luggage, and cancelled flights, with competition significantly reduced, passengers fear that there is a greater likelihood of fare increases. A decade ago – when it came to the cost of a ticket – the brands shook out pretty much as you might have expected; budget airlines were seen to be low, everyone else was seen to be, well, higher than budget airlines, but certainly not meeting passenger expectations for Ideal Airline brand value. Those expectations haven’t abated. If anything, they’ve increased – along with airline fares and fees. So when it comes to fares being fair, here’s how consumers currently rank airlines:

1. U.S. Airways (this assessment was collected before the merger with American was announced and is extraordinarily interesting, we think, given its consumer ranking)
2. Southwest
3.  JetBlue
4. Delta
5. United
6. American

Anyway, there’s been a lot of attention paid to the case the Supreme Court declined to weigh on Monday having to do with a regulation that requires airlines to advertise the full cost of tickets. Aren’t they doing that, we hear you ask? Well, according to the Department of Transportation, they’re supposed to advertise “the entire price to be paid by the customer.” Meaning they’re not supposed to leave out taxes and government fees and any extra fees. So, basically, the full cost of the ticket to you.

Spirit airlines (joined with Allegiant and Southwest airlines) challenged the regulation, which had been upheld in the U.S. Court of Appeals last July. The airlines – perhaps best known for budget flights – say that the regulation infringes on their rights of free speech. The government POV is this is just part of the Transportation Department’s “longstanding authority to prevent consumer confusion in airfare advertising.” Not being lawyers we can’t comment, but being frequent flyers we believe that the majority of airline passengers would welcome all the facts. Although you know what they say about lawyers? To some lawyers all facts are created equal.

Too cynical? Oscar Wilde noted that a “cynic is a man who knows the price of everything and the value of nothing.”  But airlines should be careful because today, you know that they call a man (or woman) who knows the value of everything? A consumer.

Let’s be clear, we’re talking about glass, not plastic. It’s called “Willow Glass” and it bends. By “it bends,” we mean it’s supple and bendable like plastic. But it’s glass. And it could change the shape and form of how next-generation electronics are ultimately designed.

First, it’s reported to be really, really light. About as thin as a single sheet of paper, so consumers will end up with lighter electronics. Or they’ll end up with bigger AND lighter electronics. And who doesn’t like lighter sleeker electronics? I mean, my laptop weighs a ton. Or seems to these days.

Oh, and did we mention it bends? No, really. It bends. So second, that means that it can be shaped to, well, pretty much anything engineers and designers can imagine. Like curved displays. Or a tablet you can roll up and stick in your pocket or pocketbook. Or wearable computing devices.

James Clappin, the president of Corning Glass Technologies has observed, “People are not accustomed to glass you roll up.” Gee, you think? But given the increased consumer engagement expectations regarding organic design and style and heft (up 23% over last year, according to our Customer Loyalty Engagement Index for all electronic categories), we can’t help but predict that consumers will get accustomed to it real fast. We’re thinking a really steep adoption curve.

Forecasts are that it will take at least three years before flexible Willow Glass becomes a fundamental ingredient in consumer electronics. But that’s OK. A longer-standing reality is that the least flexible component of any system is usually the user.

There’s a wonderful Yiddish reflection that goes, “the difference between genius and stupidity is genius has its limits,” which may explain the difference between Apple stores and JCPenney/jcp. What’s interesting is the strategies for both retailers were set by the same person – Ron Johnson, formerly SVP of Retail Operations for Apple, currently CEO of jcp. It was JCPenney when he joined and announced his long and short-term strategies.

Long term: re-do all of the stores in the 111-year old chain into mini-boutiques-under-one-roof, which sounds really cool, but, alas, to do that you need time and money and jcp is running out of both. Short-term – a plan that was going to reinvigorate the store and restore profitability – stop, what Johnson labeled “fake prices,” and move away from nonstop promotions and coupons with everyday low prices (like Wal-Mart) to “fair-and-square” pricing.

The change didn’t work all that well, but in their defense, the Ellen DeGeneres commercials were fun. Until they cancelled the advertising and strategy, neither of which was working, and the regular sales, that Mr. Johnson had characterized as “simplifying” pricing. If that seems contrary to the previous “fair-and-square” positioning, we think that’s a perfectly acceptable position for you to take, so go ahead.

That was about 6 months ago and Mr. Johnson finally acknowledged that, “it was clear that withdrawing from our promotional model to a more everyday model has been harder than we anticipated.” You think? It wasn’t just harder; it was expensive, coming with a price tag of a $552 million dollar 4Q loss, which is an awful lot of money and pretty much a sign that your strategy isn’t working so well. So what’s a CEO with a chain in a death-spiral of same-store sales to do?

Well, we’re glad you asked, because Mr. Johnson has an answer to that question: go back to the original sales strategy they scrapped last year, and restore sales on a weekly basis. But if you do that, how do you protect your already tiny “fair-and-square” margins, where you’re losing money?

Now you might think that was going to be a really difficult question to answer, but not so much, particularly for someone who came from a company where simplicity and elegance were the watchwords. It’s been reported that Mr. Johnson’s elegant plan is to raise jcp prices to their former, higher levels – the ones before the fair-and-square pricing – and then cut them. Simple, huh?

No, no, you read that right. They’re going to raise the prices and then – wait for it – lower them, figuring that will give them the appearance of having provided consumers with a large discount at a sales “event,” so it will appear even more special and of greater value to customers. So not so fair-and-square and really fake prices.

If you are as dumbfounded as we, join the club. In a century where consumers are more marketer than fool, speak to each other before they speak to the brand, and have access to more digital information each day, how does Mr. Johnson figure this strategy hoax is going to bamboozle consumers? We’d be fascinated to hear Mr. Johnson’s answer to that.

In the meantime, for those of you interested, the phrase “fair and square,” it dates back to the 16th century. “Fair” was spelled “faire,” and meant “aboveboard,” and “square,” meant “honest.” So aboveboard and honest. But given the circumstances, with their new, more modern jcp logo, and more contemporary consumers, perhaps jcp should consider a more recent tagline. One from 1941: Never give a sucker an even break!

The Major League Baseball season opens Sunday with the cry of ‘play ball’ just preceded by the release of the 21st annual fan survey conducted by Brand Keys. The Sports Fan Loyalty Index was designed to help professional sports team management identify precise fan loyalty rankings in their home and national markets with insights that enable league and team management to identify areas, particularly emotional ones, that need strategic brand coaching.

Current 2013 MLB top-5 and bottom-5 brand standings are listed below

(with #’s in parentheses indicating team rankings for 2012):

Top-5 Teams – 2013            2012 Rankings

1. New York Yankees                    (#2)

2. Philadelphia Phillies                  (#1)

3. San Francisco Giants                (#4)

4. St. Louis Cardinals                    (#5)

5. Atlanta Braves                           (#6)

Cellar Dwellers                     2012 Rankings

30. Houston Astros                        (#23)

29. Kansas City Royals                  (#28)

28. Pittsburgh Pirates                    (#30)

27. Seattle Mariners                      (#27)

26. New York Mets                        (#26)

The Sports Fan Loyalty Index, which measures all the teams in the four Major Leagues, provides an apples-to-apples comparison of the intensity with which fans within a team’s MSA support the home team versus corresponding values for fans of other teams in that market, which is important because fan loyalty correlates very highly with broadcast viewership, merchandise purchase, and ticket revenues. Happier fans as well.

Everybody loves a winner, but it’s important to note that win/loss ratios do not entirely govern fan loyalty. Losing may have little to recommend it, but it turns out there are more important things than the final score. – three other emotionally based things, in fact, that really must be taken into account when calculating the loyalty score for a team:

Pure Entertainment: How well a team does, sure. But even more importantly than a win-loss ratio, how exciting is their play? Think St. Louis Cardinals.

Authenticity: How well they play as a team. A new stadium and, often, new managers, can help lift this driver. The Miami Marlins did both!

Fan Bonding: Are players particularly respected and admired? Jeter (even injured)

History and Tradition: Is the game and the team part of fans’ and community rituals, institutions and beliefs? What keeps the Cubs going!

Again, because overall league and team rankings correlate with viewership and merchandise sales, and since rankings can be influenced depending upon how loyalty drivers are managed, it’s critical that team marketers do accurate scouting regarding the strategic ball they intend to pitch to fans. Bobble heads only go so far.

All teams can benefit from increased fan loyalty levels, but as baseball is traditionally called America’s ‘National Pastime,’ there’s a real emotional connection for fans. And it’s worth remembering what Hall of Famer pitcher, Bob Feller, said: ‘every day is a new opportunity. You can build on yesterday’s success or put its failures behind and start over again. That’s the way life is, with a new game every day, and that’s the way baseball is.’

That’s also the way it is when you have emotional metrics, and that’s the way fan loyalty works for sports teams. You can build on successes and put failures behind you.

We’ll be issuing rankings for the NBA just before playoffs, the NHL for the Stanley Cup, and NBA rankings in time for their kickoff in September.

In the meantime, Go (FILL IN YOUR TEAM’S NAME HERE)!

The paltry catch cast a pall over the brand’s headquarters because the company hadn’t netted a monthly decline in global sales for nearly 10 years. Until last October. And this January. And again in February. So whatever strategic bait they think they’re using, it isn’t working as well as the corporation hoped. Their profits have floundered, a situation that must have more than one shareholder carping at McD’s CEO, Don Thompson.

It’s no fluke that McDonald’s did well during the recession, luring customers with their Dollar Menu. But you can’t count on consumers’ counting pennies to guarantee profits in perpetuity. First, from an accounting POV, you keep fishing in that pool and you end up hurting your profit margins. Second, and far more importantly, according to 39,000 consumers who participated in our 2013 Customer Loyalty Engagement Index, consumers are looking for something more from their quick-serve brands than just inexpensive food. No, not tartar sauce. Emotional engagement.

McDonald’s has apparently reached their limit there. They had been the perennial whale in Quick-Serve, but alas, have failed to find that emotional engagement hook that has served competitors like Burger King and Subway, and newer competitors like Panera, Chick-fil-A, Chipotle, and Einstein Bros. If our newest survey has taught us anything, soul works a lot better than sole, no matter how fresh. And the category, via changing customer expectations and a re-cast competitive set is different now than it was even five years ago, so the oppor-tuna-ties are different.

From a promotion and advertising perspective, all the brands are, as the saying goes, “fishing where the fish are.” There are so many platforms and methods of outreach, it can make a planner walleyed. But to net as many as possible, you can’t be koi about it. You need have measures in place that are something more than satisfaction surveys or legacy measures.

So mullet over – then switch over to 21st century engagement metrics. Especially if you’re angling for real success.

The shoe – which was 3 years in development – by the Adidas Innovation Team in partnership with the chemical company BASF, has a cushioning in the sole created with compressed capsules – a kind of athletic shoe Styrofoam – that will have a different, more-appealing feel for runners. According to Adidas, it was designed, “to help you run longer and more comfortably.” And I always thought the “longer” part came from training.

Anyway, it used to be that for more casual runners looks and fit were the two most-important brand engagement drivers. But times have changed and now – along with brand (and what it actually stands for beyond “running shoes”) – emotional engagement in the category is best engendered via innovation. But saying it and doing it, and doing it believably are three vastly different things. You need your target audience to believe you can do it. And to that end, we turned to this year’s Customer Loyalty Engagement index to see how consumers rated athletic shoe brands specifically on innovation. Here’s what we found:

Nike 96%
Skechers  93%
New Balance 90%
Adidas 87%
Reebok 86%
Asics 85%

Adidas is the world’s second largest sporting goods company. Nike is number 1, but Adidas hopes their innovative shoe will not only boost sales but will also help the brand reinforce its reputation as an innovator. There’s certainly some room for them to catch up.

It was Steve Jobs who noted that “innovation is the difference between a leader and a follower,” which, as it turns out, is probably a more important notion if you’re a manufacturer of running shoes!

OK, every family has its problems. Toyota, which started as a division of the Toyota Automatic Loom Works, managed to develop a worldwide presence and reputation, survived a number of seismic recalls and some actual seismic activity is celebrating its 75th anniversary.

They used to be a perennial #1 on our Customer Loyalty Engagement Index, driving away with high levels of engagement, sales, and attendant profits. The recalls did shake them up a bit. Issues of safety and customer care and, well, safety hit them pretty badly and they ended up in the middle of the pack – #10 – three years ago.

Brands that start out with high degrees of loyalty and emotional engagement have something better than high degrees of name awareness, or even high degrees of brand awareness with on-board diagnostics to fall back on. They get the consumer’s benefit of the doubt. To be sure, that well of forgiveness isn’t bottomless, but it’s 6 times deeper than brands without that non-optional extra, which don’t get their tires kicked or taken out for a test-drive, let alone purchased.

But Toyota has moved up the list and has currently driven the brand back to the #2 spot on the 2013 CLEI (just behind Ford and Hyundai, tied for the #1 spot this year), which is something to celebrate in addition to their 75th anniversary.  To honor that, they’ve created an interactive family tree that lets consumers connect information from the company’s history to find out anything they want about any Toyota model or year. It’s a car-guy/gal’s dream, or, if you’re not so into cars, it a really cool piece of interactive design.

Toyota reclaimed the title of world’s largest automaker in 2012 from General Motors (#4 on the 2013 CLEI list, up from #6 last year), has recently posted a rise in earnings, and pretty much leads automakers in having a full range portfolio of passenger, luxury, minivans, and trucks.

All of which may prove the truth of the maxim that the family you come from isn’t as important as the family you’re ultimately going to have.

Samsung – who unseated Apple in the smartphone category in our 2013 Customer Loyalty Engagement Index – is now taking on Apple in the tablet category.

Samsung made an announcement in Barcelona on Sunday, before the start of the Mobile World Congress, that their new Galaxy Note 8.0 will have an 8-inch screen, just a skoosh larger than the iPad’s 7.87-inch Mini. And it’s going to have a pen for writing on the screen, which turns out is an important factor in engaging new customers.

And we suspect that you’re thinking you have your finger, so why do you need a pen? But here’s the thing. This year’s survey found if you wanted to establish real emotional engagement and, thus loyalty, and thus profitability in, well, virtually every category, you actually need something with which to engage consumers emotionally. Snappy and/or funny commercials aren’t going to do it alone, and Samsung’s success has to do a lot with leveraging the emotional aspect regarding personalization.

And what’s more personal than your very own handwriting? Holding the pen in your hand and writing something. OK, it could more accurately be described as a “stylus,” but you can write and draw and highlight with it, so pretty much a pen.  No sorry, not the same thing as poking your finger(s) at a virtual keyboard, no matter how fingerprint-resistant the screen, and no matter how many times the specifications call it “interfacing with the device.”

By the way, size matters, at least a size-range. Amazon’s Kindle was rated #1 in the category this year and it had to do not only with aspects regarding personalization, but the range of sizes available, which is also, as it happens, an aspect of personal choice. We are fans of Apple. Don’t get us wrong. But we would remind you that they didn’t come out with a mini-version until after Amazon came out with theirs. The iPad was great technology if you wanted to carry it under your arm or in a briefcase, but it didn’t fit into a jacket pocket or a pocketbook, and to that end, the new Samsung entry nicely fits with their 5.5-inch Galaxy Note II smartphone and their Galaxy Note 10.1.

Will this be another success for Samsung? We’ll have to wait till the April introduction to see. But one thing’s certain, when it comes to brands creating real emotional engagement, the handwriting’s on the wall. Big, clear, and bold.

Looks as if Office Depot is going to buy OfficeMax. That purchase would combine the #2 and #3 office supply retailers, leaving only the new entity and Staples (currently #1), in an industry that has been pretty much undifferentiated and, in the industry’s terminology, “overstored.”

We’d like to give you some engagement and loyalty facts about these category players, but we can’t. We stopped measuring them as a Retail Category in our annual Customer Loyalty Engagement Index last year. First, because there were only three national chains left, and second, because the expansion into the category of previously non-traditional, now more and more becoming more and more consumers’ default channels, of online retailers. (Amazon) and price clubs (Costco), have created problems for the three (soon-to-be 2) brick-and-mortar chains.

Office Depot, OfficeMax, and Staples – or their category – are not the only victims of big-box shrinkage. It’s a symptom of the slowing of the economy and the quickening of the internet. Four categories we’ve measured in past years have gotten so “compressed” in terms of the actual number of competitors, there’s no longer a reasonable inventory of national brands to examine – which is why the Retail Electronics category disappeared from the Index several years ago. This year, including Retail Office Supplies – Drug Stores, Price Clubs, and Packaged Ice Cream also disappeared from the list.

Like other Big Box stores, all the companies in the Office Supplies category have cut back: closed stores, process re-engineered operations and, like every other sector that was unable to find some level of emotional engagement to hang their brand on, price-promoted, price-promoted, and then did more price-promoting.

But the market and brand realities are that you can’t build your market on constant low-lower-lowest pricing strategies and coupons (traditional or electronic), and expect your offering to be seen as different or better or more highly-engaging than the competition – who’s doing precisely the same thing. If all you stand for are cheap “copy paper” or “paperclips” you’re pretty much a placeholder – a name everyone knows but don’t know for anything in particular. You occupy shelf space – or in the case of Office Depot + Office Max and Staples a lot of shelf space – but have absolutely no (brand) advantage in the marketplace.

It’s been said that evolution is individual and devolution is collective, and there’s a lot of proof for that. Individual brands know how to emotionally engage and evolve. Collections of placeholders, well. . . Is it so hard to picture this migration: Big-box to small-box, to no-box at all?

Seriously, you can’t be buying this venue on the basis of eyeballs alone. Viewership of the award ceremony increases and decreases depending on the slate of Best Picture films (and what demographic they were aimed at) and who the host is (and what demographic he or she is aimed at). This year it’s Seth MacFarland, the irreverent creator of “Family Guy,” so the ‘curiosity factor’ is higher this year than others, but provides no guarantee. Want a guarantee? Here’s one: just having someone laugh or twitter or tweet about your ad is really crappy ROI.

Better ROI: you want your ad to make viewers think better of your brand. Not that you were funny or sad, but that the brand means something more to them now than before you ran the ad. Some degree of attention is, of course, required. And the venue, the editorial environment if you will, sets the stage (no pun intended) for cosmetic and clothing brands, and – from a brand values perspective – things having to do with “design,” and “creation” like cars and computers. Oh, and colas and snack foods, too, ‘cause you’re not just sitting there for the 6 ½ hours this thing runs without sustenance. But ultimately, if you don’t create some real emotional engagement, having someone just stare at the screen – even intently, even for the full event, Red Carpet and all – is an interesting fantasy, but also a waste of money. We know this for sure because we have predictive metrics that prove all this out in the real marketplace.

Speaking of money, every year – also based upon our predictive engagement assessments – we offer up some odds on who’ll win the Academy Awards in the “big” categories. They normally turn out pretty well, but please note – unlike our brand engagement assessments – these are provided for entertainment value only. If you’re looking to make bets on the outcomes, you’re on your own. Just like advertisers without brand engagement metrics.

Best Picture

Argo 1/7

Lincoln 6/1

Silver Linings Playbook 33/1

Les Miserables 50/1

Life of Pi 66/1

Zero Dark Thirty 100/1

Django Unchained 100/1

Amour 100/1

Beasts of the Southern Wild 200/1

Best Director

Stephen Spielberg – Lincoln 1/4

Ang Lee – Life of Pi 4/1

David O. Russell – Silver Linings Playbook 15/1

Michael Haneke – Amour 20/1

Benh Zeitlin – Beasts of the Southern Wild 100/1

Best Actor

Daniel Day Lewis 1/50

Hugh Jackman 16/1

Bradley Cooper 50/1

Joaquin Phoenix 50/1

Denzel Washington 75/1

Best Actress

Jennifer Lawrence 5/7

Emmanuelle Riva 3/1

Jessica Chastain 4/1

Naomi Watts 20/1

Quvenzhane Wallis 75/1

Best Supporting Actor

Tommy Lee Jones 6/5

Christoph Waltz 5/1

Robet De Niro 6/1

Philip Seymour Hoffman 8/1

Alan Arkin 20/1

Best Supporting Actress

Anne Hathaway 1/50

Sally Field 10/1

Helen Hunt 20/1

Amy Adams 50/1

Jacki Weaver 100/1

Brand Keys wishes good luck to all the nominees and advertisers, too. Academy Award winner, Clint Eastwood once noted, “There’s a lot of great movies that have won the Academy Award, and a lot of great movies that haven’t. You just do the best you can.”

With real emotional engagement assessments, advertisers can do better than that.

The biggest finding though, was if you wanted to be successful as a brand generally, and end up high on the loyalty list specifically, which comes with a raft of really good stuff including sales and profitability, you needed to establish a high degree of emotional engagement. What “emotional engagement” is depends upon the category in which your product or service competes. “Emotional engagement” is different category-to-category. You don’t buy a soft drink the same way you buy a smartphone, and emotional engagement relates directly to “brand” and what the brand stands for or is able to stand for in its category.

The other, critical finding was that in many categories “price” had become a more important driver. In some categories, the most important driver. Even more important than brand, and generally those categories found themselves bereft of emotional engagement values, with products being assessed at similar levels, with nothing to differentiate themselves with except. . . you guessed it, price!

Anyway, you need to keep that all in mind, when we tell you that Apple, which had been on the top of the Smartphone category list ever since we added the Smartphone category to the CLEI, isn’t number one anymore. Samsung is. They had been number 2 or 3 on the list (depending upon the vagaries of the BlackBerry brand – now last on the list), but now Samsung is #1.

They did it on the basis of connecting to and/or leveraging two critical emotional engagement values in the smartphone category: digital personal expression and digital identity development which, as you might guess, has to do with how smartphone users view themselves and how they manage that view via their smartphone. You only need to have watched Samsung’s advertising over the past year to appreciate the brand message they were putting out. So, the bottom line is if you possess and leverage emotional engagement values, you don’t have to rely on price.

Which makes a nice segue to the fact that Apple may be planning a cheaper iPhone. Speaking at the Goldman Sachs Technology & Internet Conference Tuesday, Tim Cook, Apple’s CEO, was asked about Apple reaching markets looking for more affordable smartphones and he said, “We wouldn’t do anything that’s not a great product… for people who are more price sensitive, we’ve lowered the price of the iPhone 4 and iPhone 4S,” pointing out that Apple was unable to meet the demand after the price cut, which sounds like pricing cause-and-effect no matter how you position it. Mr. Cook continued, “If you look at Apple’s history, the iPod started out costing $349. Now you can walk into a store and pick up a Shuffle for just $49.”

Now that’s true but you really need to keep in mind that the iPod was introduced in 2001, 12 years ago, so it’s not unfair to think A) there would be new products, and B) the price would come down naturally. BTW, a shuffle (2GB) coming in a palate of 8 colors isn’t really the same thing as 64GB iPod Touch, which costs $399. Just sayin’. But, no matter what, Apple is exploring more affordable options. So a price strategy, not an emotional engagement one.

That said, there’s a rumor out there about Apple and a “watch-like device” with a curved glass design, which just might be the thing to revive Apple’s emotional engagement slump. Design – good design – can be personal and expressive and emotional. And the best design is usually a formal response to a strategic question. So a possible win-win for the Apple brand.

It looks as if US Airways and American Airlines are going to merge very soon. That merger would put them ahead of Delta (that purchased Northeast, then merged with Western, bought Pan Am routes, and finally merged with Northwest) and United (that kept it simple and just merged with Capital with Continental).

This new, combined airline would create the nation’s biggest airline, bringing the number of major airlines down to only 3 main carriers and a handful of budget carriers. And a bunch of regionals. And while the consolidations have resulted in service cuts in certain markets, the airlines have also become more profitable.

According to our 2013 Customer Loyalty Engagement Index, here’s how the airline brands currently rank. FYI, strength relates to how well the brands have managed to create real levels of emotional engagement between themselves their passengers (this is versus a category Ideal, calculated to be 100%). If you think that the percentages posted below are lower than you might expect, try and remember back to your last flight, and conjure up how pleased you were. Just landing safely, close to on-time, doesn’t count.

1. US Airways (86%)
2. Southwest (84%)
3. JetBlue (83%)
4. Delta (82%)
5. United (79%)
6. American (78%)

American is currently the 3rd largest airline (having gotten there by buying Trans Caribbean, Air California, Reno Air, and TWA) and US Airways is the 4th (which used to be All American Aviation who changed their name to Allegheny Airlines, that bought Mohawk, changed their name again to US Air, bought Pacific Southwest and Piedmont, which was bought by American West [who, when they existed, were #1 on our CLEI list] and then officially kept the US Airways brand, so good call there). But while size certainly counts in terms of routes, it’s emotional engagement that counts when it comes to engendering loyalty. Oh and not screwing up the merged reservation systems. You really, really don’t want to do that.

As to the name, it turns out that the merged company would be called “American Airlines” (who spent 2 years and a gabillion dollars on a new logo, so they must figure, why let that go to waste?), would be based in Fort Worth, TX, with 94,000 employees and 950 planes.
Which works out to a lot of people and planes that could take you to an awful lot of places. Although, given the merger talks, the most important – and successful – trip the brands may take, is the one where they actually manage to meet each other halfway.

If you watched the commercials on the Super Bowl this past Sunday it won’t come as a surprise that consumers desperately need greater levels of emotional engagement, if marketers want to – not just entertain – but actually sell products and build real brands. That fact was confirmed by findings from the Brand Keys 17th annual 2013 Customer Loyalty Engagement Index (CLEI).

Yes, consumer empowerment and the Internet and social networking and consumers’ never-ever-ending experiences with price promotions and discounting have finally reached a saturation level, which triggered a tipping point in the branded world, and now emotional engagement is the dominant driver of brand purchase decisions and brand loyalty.

Yes, we know, marketers (on and off the Super Bowl) have been making stabs at trying to understand emotional engagement for a while now, continuing to make the strategic error of confusing “entertainment” with “engagement.” And compounded that by trying to measure it via flavor-of-the moment approaches like neuro-marketing and twitter counts. Brand Keys assessments for the CLEI are based on an independently validated technique that fuses rational and emotional aspects of the categories to identify the real drivers of emotional engagement.

So congratulations to companies who have sustained their brands, and continue to create meaningful differentiation and emotional engagement. Brands (defined as “products and services that consumers do not see as being freely interchangeable”) appearing in the top-10 of this year’s survey with some of the highest emotional engagement levels, include:

• Samsung (taking the #1 spot from Apple in Smartphones),
• Amazon (which took the #1 spot from Apple in Tablets) and kept its #1 ranking for its Kindle E-readers,
• Hyundai and Ford (tied for #1 in Automotive, with Ford moving up in a big way),
• Dunkin’ Donuts (in both Packaged and Out-of-Home Coffee Categories),
• Whole Foods (for Natural Food Stores, a whole new category this year),
• Clinique (for Luxury Cosmetics. See comment below headed “11 Categories No Longer are ‘Brands’” to find out what happened to Mass Merchandiser Cosmetics. And 10 other categories.),
• Subway (in Quick Serve, who served up enough emotional engagement to unseat McDonald’s (now #3), and
• Discover Card and Avis (#1 again this year).

11 Categories Are No Longer “Brands” 
 
No, you read that subhead correctly. Perhaps it would be more accurate to characterize these categories as no longer being “brand-based,” with products and services that consumers used to view as ‘brands’ now regarded as comparable in all key attributes that drive purchase in their categories.  Also, for the 11 categories, which turn out to be mostly CPG, the importance of brand decreased or disappeared altogether for the 1st time in the 17 years we’ve been doing this study.

Which is what happened to 11 categories where customer evaluations for products and services turned out to be statistically identical to one another. Names of products were, of course, known, but consumer choice is, for the most part, not driven by awareness. So it turned out that purely rational aspects ended up driving these categories. Things like – primacy of product (does it do what it says well enough that I don’t complain?), location (is it on the shelves where I shop?), is it selling at a good price (where’s my coupon?) – are “table stakes,” and do not drive emotional engagement or brand loyalty.

If all you stand for is ‘shampoo,’ you’ve become a ‘placeholder’ product, one whose name people know but don’t know for anything in particular. Categories that turned into “placeholders” included OTC Allergy Meds, Mass Merchandise Cosmetics, Facial Moisturizer, Hair Color, Shampoo, Conditioner, Laundry Detergent, OTC Pain Relievers, Paper Towels, Pasta Sauce, and Tooth Whiteners).

It’s Not Denial. Marketers Are Selective About the Reality They Accept

Companies probably should have seen this coming, but denial isn’t only a river in Egypt. You can’t build your marketing on continual low-lower-lowest pricing strategies of persistent discounts and promotions and coupons (traditional, in-store, and/or digital) and expect that your offer will be seen as “different” or “better” than the competition – who’s doing precisely the same thing you are.

Happily for both marketers and consumers, real brands live and thrive – in certain categories. Real brand loyalty and emotional engagement is still the Holy Grail of marketing. Loyalty is still a leading-indicator of consumer behavior and profitability. Brand power is one of the first measures of competitive advantage that investors seek, since companies that can leverage their brand always profit from long-lasting customer loyalty that drives sales.

There’s a great quote from the lyricist Irving Berlin, who had a way with words. He noted, “The toughest thing about success is that you’ve got to keep on being a success.” Today, it turns out, the toughest thing about being a “brand” is to keep on being a brand.

A complete listing of the 54 categories and nearly 400 brand rankings included in the 2013 CLEI can be found at http://brandkeys.com/syndicated-studies/customer-loyalty-engagement-index/2013-customer-loyalty-winners.