Starbucks closed more than 8,000 stores for a few hours for racial bias training – Nightly Business Report

Starbucks (NASDAQ:SBUX) closed more than 8,000 stores today for a
few hours for racial bias training. As we reported, the training comes
more than a month after a Starbucks (NASDAQ:SBUX) manager called police on
two black men who had been waiting in the store for a friend before buying
something. Analysts say the store closures could cost Starbucks
(NASDAQ:SBUX) $12 million in lost sales.

GRIFFETH: Now, Starbucks (NASDAQ:SBUX) chose to conduct this racial bias
training in a very public way, and as Sue just mentioned, at a financial
cost as well to the company. Other companies do similar training but they
do tend to not draw attention to it.

So, is this a good strategy, not just for Starbucks (NASDAQ:SBUX) but for
other brands as well?

Joining us tonight, Dean Crutchfield. He`s a brand expert who runs his own
company, Dean Crutchfield Company.

Good to see you again. Welcome back.


GRIFFETH: Are there risks to this kind of public display of teaching your
employees racial bias?

CRUTCHFIELD: Well, it`s really a question of delivering it. You know,
purpose builds profits or at least that`s the strategy. So, really, it`s a
question of can you actually deliver it? That`s really what we`re
questioning with Starbucks (NASDAQ:SBUX) today.

You know, they`re under pressure to show their leadership and their impact
on these very sensitive issues of gender and race, and it really is a
question of, you know, what they deliver once they actually do this. The
most important thing is they are saying they`re prepared to take a hit in
their business to actually do something right. So, in a sense, that shows
the goodwill of their intent.

HERERA: Does it match up with their pledge of social responsibility? It
seems as though it does.

CRUTCHFIELD: It really aligns very well, actually, with the core strategy
at Starbucks (NASDAQ:SBUX). In fact, part of their vision statement wraps
around inspiring and nurturing the human spirit. So, I can`t think of two
better subjects than gender and race to actually answer that as a strategy
and show that it really delivers what it means.

So, it`s not so much your ability as a business, it`s more about the
choices you make that define who you are and Starbucks (NASDAQ:SBUX) is
making a very deliberate choice here in terms of their strategy to, as it
were, train away implicit bias. And I think to your point, this has been
going on for decades. Many companies, police departments have all been
trying to train away implicit bias.


CRUTCHFIELD: And really the question is, does it work? I think that`s a
big question here.

GRIFFETH: And because it was so public, the closing of the stores and
everything, obviously, they`re trying to spur the national conversation in
that regard.

Do you see other companies then maybe following their lead in this?

CRUTCHFIELD: Well, I think, you know, a leader has to lead. I think
that`s what Starbucks (NASDAQ:SBUX) is doing.

You know, there`s massive disruption happening in the market out there.
Customers want to know about the brand value. They want to know if those
values align with them. They want to know where you stand on race, and
gender, and environment. They want to know what your leadership is and
what your impact is on those issues.

It`s very different from what it was before. So, I think what we`re seeing
here is Starbucks (NASDAQ:SBUX) leading the charge of something we`ll be
seeing more and more, which is about purpose-driven brands.

GRIFFETH: Dean, always good to see you. Thank you for your thoughts


The Growing Potential of Chinese Brands

Brands liberate markets and China has much to celebrate with their brands. President Xi has talked about the Chinese Dream. Can its brands supply the aspiration and inspiration to its people?

As I said on China Global TN, we should applaud Chinese brands success. In 2014 the brand value of the top 100 Chinese brands was $380B today it’s $680B! It’s added more value than the US stock market!

However, rising stars can burn out fast, Just consider the potential plight of ZTE in the face of American vitriol. What’s clear is that China is propelling to a consumption-based economy from a production based economy. It’s no longer the copier but the copied. In this segment, with China Global TN we discuss the implications.

WSJ – What’s Next for Facebook’s Ad Model?

From CMO Today:

Here are some thoughts I shared with Lara at WSJ:

Now that we’ve had time to digest Mark Zuckerberg’s trip to Capitol Hill, how are advertisers reacting as the Cambridge Analytica scandal continues to unravel? We heard last month that a handful of brands suspended advertising on Facebook. Ad Age reported 20th Century Fox also canceled a planned Facebook Messenger Chatbot launch for its “Deadpool” brand, fearing users may be concerned about the data they were sharing in light of recent headlines. Despite the smattering of small holdouts, overall, advertisers aren’t pulling back. Data from media planning and buying platform 4C suggests ad spend on Facebook increased 7.2% week-on-week from March 17 (when the Guardian’s first Cambridge Analytica article dropped) to March 23. Facebook ad spend from March 24 to March 30 rose 14.5% week-on-week. “As long as ROI (return on investment) is there, advertisers won’t stop investing in Facebook altogether,” 4C Chief Marketing Officer Aaron Goldman said. Indeed, Facebook Vice President of Global Marketing Solutions Carolyn Everson said Thursday at The Wall Street Journal CEO Council in London, “We are not anticipating major changes to our overall revenue and business model.”

—Open Heart Surgery—

But might the Cambridge Analytica fallout cause Facebook ad revenue pain in the long term? Dean Crutchfield, a New York-based independent branding consultant, likened the Capitol Hill hearings to “open heart surgery:” While the patient (Facebook) will be closed up and there might not be an immediate impact on its business, there will still be a scar, which eventually could find its form in regulation or a dent in perception of the company among consumers. One of the biggest issues for the advertising community is that the data-driven business model of digital advertising has become a dinner-table conversation and some consumers are now actively checking and reducing the amount of data they share, Mr. Crutchfield said. (Ms. Everson said Thursday that users largely haven’t changed their privacy settings in the past four weeks.) One senior ad buyer, speaking to CMO Today’s Alex Bruell, said questions still remain around whether lawmakers pass restrictive regulations on tech companies, “If indeed the U.S. adopts a Euro-like law, that’s bad news for advertisers with limited information about their own customers. No more shortcuts via third-party data. Advertisers who have invested a lot in CRM (customer-relationship management) efforts will fare best.”

Sears Stopped Buying National TV Ads in Critical Holiday Season

Here’s my main concern about this strategy that I shared with Suzanne Vranica @ WSJ

The holiday season is typically a time for retailers to blanket the airwaves with commercials. This year, one company was noticeably absent: Sears Holdings Corp.

The struggling parent of the Sears and Kmart stores hasn’t run paid national television commercials since late November, according to ad research firm iSpot and a person familiar with the situation. The Kmart brand has been absent from national TV networks since Nov. 24, iSpot said, while Sears hasn’t run a paid national TV spot since Nov. 25 — the Friday and Saturday after Thanksgiving.

That compares with about $8.4 million the Sears brand spent on national TV ads in December last year, while the Kmart brand shelled out roughly $6.5 million during the same period, according to iSpot estimates.

Sears Holdings Chief Executive Edward Lampert has championed the use of digital marketing over traditional TV and print advertising, arguing that digital is more cost-effective and quantifiable, according to people familiar with the situation. And at first, other Sears executives agreed the company needed to rebalance its marketing to focus more on digital, these people said.

But many executives have come to believe the company has gone too far and the retreat from traditional forms of advertising is hurting the business, these people said.

Sears said in a statement that it is always “evaluating the effectiveness” of its marketing channels. “This ongoing evaluation has meant we have made significant shifts over the past few years in where we’ve allocated our resources, including less traditional print and television, and more digital and social channels,” the statement continued. It pointed to recent marketing efforts including having its Kmart brand integrated into the late-night talk show “Jimmy Kimmel Live.”

For a retailer to back off of TV ads during the holidays is a highly unusual move, ad experts said. “Retailers establish their value and relevance with consumers during key shopping times,” said Dean Crutchfield, a corporate branding expert.

Indeed, retail rivals such as Macy’s Inc. and J.C. Penney Co. spent tens of millions of dollars during the final month of 2017. Macy’s shelled out some $32 million on national TV ads during the first 29 days of December while Penney spent roughly some $27 million during the period, iSpot estimates indicate.

Struggling Toys “R” Us Inc., which filed for Chapter 11 bankruptcy protection in September, spent about $13.3 million on TV ads during the period,according to iSpot.

Sears Holdings, of Hoffman Estates, Ill., has been slashing expenses as it struggles to turn its business around.

Sears lost $565 million in the nine months ended Oct. 28, bringing cumulative losses since 2011 to $11 billion. Revenue for the period fell 23% to $12.33 billion as the company closed stores and sold less from existing locations. As of the end of October, it operated 1,100 Sears and Kmart stores,down from 1,500 a year ago.

In December, the cash-strapped retailer extended the terms of a $400 million loan and announced new planned borrowings to cover pension contributions.

As its business has shrunk, Sears has scaled back spending on measured media. Sears spent $285.1 million on paid advertising in 2016, down from $664.2 million in 2011, according to estimates from Kantar Media, an ad-tracking company owned by WPP Plc; the estimates don’t include some forms of digital advertising.

While Sears cut its spending on TV and newspaper ads by roughly two-thirds during the period, it ramped up spending on digital marketing. By 2016, digital had surpassed newspapers and was second only to TV in terms of Sears’s spending ,according to Kantar.

In meetings over the past year or two with Mr. Lampert, Sears executives produced data showing that the deep cuts to TV and newspaper advertising had hurt sales, particularly since the majority of Sears’s revenue still comes from brick-and-mortar stores where commercials and circulars are particularly effective at driving foot traffic. According to retail research firm eMarketer,11% of Sears sales come from e-commerce.

But the executives were overruled, these people said.

Consumer Distrust Cost US Brands $756B

..Did you switch brands last year? 41% of consumers did costing U.S. brands $756 billion! The main reasons were poor personalization and lack of trust. 

According to this study by Accenture, it’s catch-22 because consumers 
are frustrated when brands fail to deliver relevant shopping experiences but are also concerned about personal data privacy.

Here’s the article in Mediapost.


What Should Be On CMOs Minds?

Do you ever wonder what your CMO is thinking about? What issues and trends are keeping your marketing leader up at night? We know CMOs play a big, powerful role, leading the company’s efforts to win market share, boost revenues and gain profits. The job sounds exciting but the top marketing job in the business is a minefield with the highest turnover in the C-suite.

Talented executives crash and burn unless they look at the CMO role in a bigger picture. CMOs need to have strong beliefs, be an exceptional expert in matters that are important and a visionary obsessed with pragmatic outcomes. Apart from the obvious areas of focus including marketing budgets, ROI, rising responsibilities, the dearth of talent, ever-increasing capability needs and the shift to digital, there are other areas to understand that are critical to success for the CMO. I think these stand out:

  • The importance of establishing a passion early
  • Dealing with competing in an “always” on era
  • Directing the story of the brand
  • How to learn from traveling the world
  • Enjoying family as a place for creativity at work
  • How to determine where people fit on a team
  • How to get your people to buy into a larger vision
  • How to inspire Millennials
  • How do you get your game face on when a marketing campaign tanks.

The customer is changing, which in turn is driving changes to marketing itself, and to the role of the CMO who needs to be remarkable, measurable and distinguished with unique value. Hell has no fury than the second rate. Hold on.

Brands are not owned they’re borrowed from the customer