I came across the following article this morning and found it very interesting so I re-blogged it. David Bell brings up some very important points about branding and relationships. I hope you find the article useful as well.
Thanks for stopping by – notthefakeptp
Red Lobster and the Brand Envy Dilemma
by David Bell / www.hbr.org
Last month the Darden Group announced the spinoff of its $2.6 billion Red Lobster chain. Darden also owns Olive Garden together with more up and coming brands such as Capital Grille and Longhorn Steakhouse. Red Lobster is in the middle of a multi-year makeover to turn it from a rather tired all-the-seafood-you-can-eat kind of place to a more hip mood and alcohol destination that can attract the better heeled set.
Red Lobster got its start bringing fresh seafood to landlocked parts of the US. It developed an outstanding supply chain for fish and became a dining out routine for millions of Americans, especially on its famous “endless shrimp” days. But in recent years, as cold chains became more prevalent, almost all restaurants now serve fish, and Red Lobster’s comparative advantage has dwindled. (Check out my 2010 case study of the brand for more background.)
In response, Red Lobster undertook a renovation of its restaurants and of its brand. Now there is a “fresh” menu and a grill master standing ready to cook to order. The gleaming wood and softer lighting is designed to attract “experientials”: people looking for a fun night out, rather than an opportunity to stock up on affordable protein.
And it’s working. Average check size was up 2.4% in 2012, with 2% more guests. But — and I know you see this coming — the new look doesn’t sit well with many of their traditional customers. “Why, God, why?” screamed one blogger. Even one of my students — a Red Lobster regular from the Midwest — lamented the change: “we distrust any place that puts lemon on everything” she said.
Successful retail concepts always peak at some point. They saturate their market, expand to all possible geographies, watch copycats invade their space. Then what? Like Red Lobster they often get brand envy: if only we could get some better customers while not alienating our existing customers. The problem is as old as infidelity, with similar results. You can be satisfied with what you have, or switch (with unpredictable results), but you can rarely have both.
The value of a brand is twofold: it communicates about the product offering: the category (shoes), quality (middling), service (none), price (affordable), but in addition it also stands for the target market it serves. “What to Whom” as I call it. It’s easier to change the “what” than it is to change the “whom”. Revamping the stores, changing the prices, advertising during the Super Bowl, all it takes is money and commitment. But the point of a brand is to create an indelible image in the minds of consumers of what you stand for. To change it is to throw it away. The traditional Red Lobster customer arrives with her family of five for endless shrimp only to discover a fancy fresh fish menu and soft lighting. The new target market of experiential thirty-year-olds get to sit next to a disgruntled family of five.
So what’s to be done if you have brand envy? Step one is to put those thoughts on hold and think more about how to serve your existing customers as well as possible within the bounds of profitability. Step two is to ask if there is a way to attract the more profitable customers without detracting from the experience of the existing customers. If step two is not possible, maybe you need a new brand, not a stretched one.
To be fair to the management at Red Lobster, their customer base was changing to experientials even before they embraced them, and so this change was not entirely of their own making. But for the rest of you, don’t flirt with someone better unless you are prepared for the prospect of divorce.