The Brilliance of Haagen-Dazs: Made (and Communicated) Like No Other

Recently I have wondered how companies with an environmental focus can effectively differentiate themselves given the increasing numbers of products marketed as “green” and “eco-friendly.” For some products, it seems like an effective marketing strategy could be to choose a value proposition that is closely aligned with customers’ desire for a greener world, yet distinct from it. So many companies for very good reasons choose one of a few terms to describe their environmentally friendly products. Words like “green,” “sustainable,” and “natural,” are loaded with meaning and permeate the market. Because consumers hear these terms applied to so many different products, they have become confused and skeptical. In addition, though many consumers claim a desire for earth-friendly products, other product attributes, including price, quality, and product experience, also drive purchase decisions.

Recently, J. Tyler Johnson, former Chief Marketing Officer of Dryer’s Ice Cream, spoke to my consumer behavior class. After apologizing for coming to campus without samples, he largely discussed the re-launch of the Haagen-Dazs brand. One thing that struck me was how well-aligned H-D’s new brand positioning is with green values, though the brand never uses the words I mentioned above. And, indeed, the intent of management was never to position the brand as eco-friendly. Mr. Johnson briefly mentioned the fact that though H-D ice cream is all natural, its competitor, Ben & Jerry’s had already positioned itself as the socially and environmentally ice cream alternative. Thus, touting the “all-natural” component would not differentiate H-D in the eyes of consumers, and H-D executives searched for a value proposition that would.

How did Haagen-Dazs choose their branding? Market research showed that the H-D brand was viewed as slightly snobby and inaccessible by many consumers. H-D wanted a message that would allow the brand to escape from such negative perceptions. What else did research reveal? Consumers of the premium ice cream segment, those small pints you find in the store, were looking for an ice cream to provide them their moment of indulgence and escape. Based on such insights, H-D and its vendors formulated an incredible advertising campaign. H-D chose to reposition their brand as the simple, pure ice cream alternative. They focused on the quality of ingredients with the tag line, “Made Like No Other.” Later commercials emphasized the indulgent nature of their pure ingredients. How did the Made Like No Other campaign work out for Haagen-Dazs? Mr. Johnson and his team grew a brand previously targeted to just 1.5% of American households into the market leader in its category.

One of the reasons I am so intrigued by this marketing success story is that I can envision the same customer who drives a Prius, shops for organic produce, and uses bio-degradable cleaners, buying H-D ice cream and savoring it at night. The words “simple” and “pure” convey so many positive images, and they have many environmental undertones. I believe an intentional use of terms like these which are aligned with green values could be very effective for some brands.

Check out the H-D re-launch campaign commercial on YouTube:
http://www.youtube.com/watch?v=GEpenoD9-Ts

Later advertisements added indulgence to the value proposition:
http://www.youtube.com/watch?v=VQP0GGjhoOM&NR=1

Wisdom from an Advertising Executive

David Ogilvy, founder of the advertising agency Ogilvy & Mather, had these words of wisdom for us. "Develop your eccentricities early, and no one will think you're going senile later in life." I love it! Words to live by. I believe my late grandfather would have liked it as well. I have fond memories of him eating his cereal out of an enormous 4-cup Pyrex measuring cup, which most people use to measure liquids for cooking. He insisted it was the best way to eat cereal. Of course, that did occur later in his life. Perhaps I should start now?

Confronted by Too Many Eco-Dilemmas? Me Too!

A year or so ago I was at my local supermarket when the bright green cover of a magazine caught my eye. It was San Francisco magazine asking me if I was suffering from anxiety from too many options to live green, shop green, and be green. “Eco-anxiety” I think they called it. I thought to myself, YES this is ME! How did they know?

At the time, among other green initiatives in my life, I had become devoted to finding sustainable meat. I consulted websites, researched brands I found at Whole Foods and a local organic food market near my house, and tried to learn more about “sustainable” farming. After several months of this effort, I read the book Omnivore’s Dilemma, which only strengthened my resolve. But yet, I was overwhelmed with options. Despite all my research I had trouble determining which sources of foods were truly “sustainable.” One favorite brand of eggs proudly claimed “free range” on its packaging, but the myth of its chickens roaming free in a field was later debunked by another source. Neiman Ranch was rumored to treat its animals well, but I later learned its founder split with the organization believing that its organizational policies did not match the marketing hype.

Apparently, I am not alone. American consumers are awash with green marketing messages. When I met Damien Huang, VP of Design at Patagonia, he mentioned that his company assumes its customers are not willing to pay a large premium for sustainable products, and consequently Patagonia aims to price competitively. Other students were amazed by this, but honestly it is no wonder to me that many consumers will not pay a premium for all things “green” and “sustainable.” As more and more companies hop on the eco-friendly bandwagon, it is increasingly difficult to distinguish real claims from fake ones. In addition, assessing whether one product is more sustainable than another is incredibly complex, requires a vast amount of insight into the product’s value chain, and could be a full-time job. Busy Americans do not have time for such research, so it does not surprise me that many consumers are skeptical of the “green” products they encounter.

What happened to my sustainable food initiative, you might wonder? Tiring of my effort to identify the most sustainable meats, I gave up on eating meat all together. I buy beans at the grocery store now for my protein. With beans I no longer have to worry about whether my food was allowed to roam free and was treated humanely. Plus, I save money.

To me, this experience highlights the challenge for companies that want to market their sustainable products. It can safely be assumed that companies don’t intend to scare customers like me away from their product categories entirely. Brands that can make true claims that their products are environmentally friendly must cut through the so-called greenwash clutter to be effective. At last year’s Net Impact conference, I attended a panel on just this topic. Panelists there noted that company advertising, not surprisingly, is the least trusted source of environmental information about the environmental sustainability of products and companies. In addition, in a recent article called “The Green Trust Gap,” I read that only 11% of consumers will rely on product packaging and only 5% on company advertising when determining the eco-friendliness of a product. To successfully convey their green message to consumers, the Net Impact panelists suggested that companies should:

• Advocate for independent environmental certification in their industries.
• Partner with trusted environmental organizations that can lend credibility.
• Create transparency by providing consumers insight in to their supply chains and operational practices, including good with the bad. Supplying such information on the website is beneficial.
• Develop reports on social and environmental responsibility, including targets for improvement and progress against those targets.
• Provide forums for constructive feedback and engagement with consumers.

With that being said, I know that companies will not stop advertising. I wonder how organizations can make their conventional advertising more effective at conveying a message of environmental responsibility. I hope to explore this topic further while at school and with people in my network.

- Lauren

Want to learn more? Click here for: LOHAS "Green Trust Gap"

Entrepreneurship at Home & Abroad

“In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”

--President Barack Obama, Inauguration Speech (January 20, 2009)

Judy Estrin, CEO of Jlabs and self-professed serial entrepreneur, used this quote from President Obama’s inaugural speech to start a discussion on common qualities of entrepreneurs, emphasized the words “risk-takers” and “doers.” At two recent conferences, the Women in Leadership Conference and the Asia Business Conference, I heard entrepreneurs discuss the traits that they believe contributed to their success. I heard many common qualities, including:



Looking at this list, I wonder about the implications of our challenged U.S. educational system on entrepreneurship in this country. If the above are the qualities that contribute to entrepreneurial success, are we building the foundation for future generations of entrepreneurs and innovators in our country? I’ve read how certain school districts are modifying curriculums to better prepare students for standardized achievement tests, by so called “teaching for the test.” Won’t this type of education suppress creativity? I have also read that grade inflation has become rampant in some school districts, which certainly doesn’t build tenacity or commitment in students. Structured curriculums emphasizing math and science at the expense of art, music, history, or literature stifle innovation and creativity as well. Will future generations of Americans exhibit these qualities that today’s entrepreneurs have found key to their success?

I also wonder about the implications for entrepreneurship in other countries. At the Asia Business Conference, speaker Jimmy Hexter touted the importance of China to the international business community, citing Chinese startups that now compete with multi-national companies. However, I would be curious to know what implications the Chinese political system and culture have on entrepreneurship there. For example, I recently read a New York Times article about Chinese citizens subverting the Chinese Government’s rampant censorship by using double-entendres to convey political messages that escape censorship algorithms. How well can entrepreneurs truly thrive in an environment that lacks transparency and true knowledge sharing? In addition, during the entrepreneurship panel in the Asia Business Conference, panelists noted that failure is not acceptable in many Asian cultures. If qualities that American entrepreneurs site as contributing to their success are difficult to find in China, how will Chinese entrepreneurs innovate the way Mr. Hexter proposes?

I feel fortunate to have had the opportunity to hear the thoughts of so many seasoned entrepreneurs at these two events! I don’t have much stake in China, but I do hope that the U.S. continues to provide children with educational experiences that will inspire and grow future generations of entrepreneurs. I believe that the quality of the entrepreneurial environment will be critical to our future success as a nation.

-- Lauren


Here are some links to interesting articles I read recently in the New York Times:

Chinese subversive responses to censorship
President Obama’s Educational Policy
David Brooks Op-Ed Educational Policy

Here are the entrepreneurs I heard speak at these two events:
Women in Leadership Conference: Judy Estrin- CEO Jlabs; Wendye Robbins- President & CEO Limerick BioPharma; Danae Ringelmann- Chief of Finance & Customer Development, IndiGoGo; Ann McCormick- CEO, Learning Friends
Asia Business Conference: Liam Casey, CEO PCH International; Saeed Amidi- CEO Plug and Play Tech Center; Umair Khan- CEO Secret Builders; Yangbin Wang- CEO Vobile; Yumiko Yamaguchi0- US Office Manager, Medical Create

International Business Strategy: Why China?

I had the privilege of hearing Jimmy Hexter, Director of McKinsey & Company, Beijing Office, speak at UC Berkeley’s recent Asia Business Conference. From his extensive experience doing business in Asia, he addressed the audience with a talk on why companies that want to stay competitive in a global marketplace need a strategy for business in China. I found his description of the importance of China to be fascinating. I will definitely keep this information in mind as I enter future business roles.

Why is China so important for global business strategy?

1- Size of the market
650 Million Chinese now live in urban areas. By 2025, China is projected to have 1 Billion urban residents. Each year 20 Million Chinese people either move to cities or are swallowed by them. After a house and a car, the first purchase of a typical Chinese family is a 50” big-screen TV. China is a hotbed of demand, and offers huge opportunities to leverage economies of scale.

2- Local competition
Multi-national companies that sell their products in China now find that local businesses are their biggest competition for market share. When multi-nationals first outsourced manufacturing to China, they relied on inexpensive labor and neglected best practices. Local competitors now understand design and manufacturing best practices so relying on inexpensive labor alone is no longer an option. Companies that fail to leverage industry best practices often face competing Chinese products that offer better value.

3- Emerging Talent
China has 1.3 Million college graduates each year. Multi-national companies are now empowering local R&D to design products in China for its own market, other emerging markets, and for global markets.

Mr. Hexter told the story of a U.S. semi-conductor company who attempted to design and manufacture a chip for the Chinese market. Once their product was launched, they found that a Chinese company was producing better chips at lower cost. In response, the U.S. company improved the design of their chip and lowered their costs and prices. After these changes, the chip was such a resounding success that it was exported to other markets. Today, only 20% of these semi-conductors initially intended for the Chinese market are actually sold in China.

How can companies incorporate China into their strategic plan?
According to Mr. Hexter companies should treat China like a second home market. Few multi-nationals understand Chinese perceptions of their products and tailor their value proposition to Chinese consumers. Companies should appoint board members from China and develop personal relationships with their largest Chinese customers.

To illustrate his point, Mr. Hexter told the audience a statistic about pianos. There are 60 Million piano students in China, he said. Chinese need pianos for small spaces, and they prioritize getting a good value for their money. Who will design and manufacture a piano to satisfy this demand, he asked us? Then, why wouldn’t that piano be well-suited for export to other markets around the globe? How will piano manufacturers in these markets recognize and respond to this competitive threat?

Sustainability: Transparent, Desirable, Invisible

Sustainability can be an elusive concept. At the recent Capitalism Next Sustainable Design panel, Ted Howes, Sustainability Lead at Ideo, challenged us to bring 30 sustainability leaders into a room, ask them to define sustainability, and find less than 30 different definitions. But, one story that Mr. Howes told really resonated with me. One of the legendary success stories at Ideo, which I have heard several times before, is the design of a bestselling child’s tooth brush in 1991. Noticing that children put their whole fist around their toothbrushes, Ideo designed the first big, fat toothbrush so that children could better grip on their toothbrush than with a smaller version of the adult one. Their design was the top selling toothbrush for 18 months and has since been imitated by many other toothbrush manufacturers. For the designer of this toothbrush, however, the concept of sustainability hit home on a vacation in Mexico when during a walk on the beach, a big, round plastic child’s toothbrush washed ashore. While it can be a challenge to define sustainability with words, like the designer of Ideo’s toothbrush, we all have moments where we realize the impact we have on the world around us.

Though a common definition of sustainability may elude us, I heard three words echoed frequently by the panelists as they discussed sustainable design: transparent, desirable, and invisible. Though working for different organizations on a variety of types of products, Damien Huang, VP of Design for Patagonia, Bryant Bainbridge, Director of Nike Considered, and Ted Howes, Sustainability Lead at Ideo, echoed many similar concepts in their discussion of sustainability.

Transparent
First, sustainable design requires transparency. Companies should communicate information about product lifecycles and document the tradeoffs made in its design and production to customers. For example, one way Patagonia creates transparency is through its Footprint Chronicles, an area of the site that tracks the environmental footprint of selected products. Patagonia acknowledges that difficult tradeoffs frequently occur and even highlights areas of its value chain where it lacks sustainability.

The sustainability of a product also involves its entire lifecycle. Mr. Howes gave the example of companies choosing one less harmful component and wanting to brand their entire product with a “green” sticker. Select companies are really just beginning to look at their entire value chains starting with the upstream chemistry of their products. Nike has created tools and metrics to analyze the complex upstream footprint of each product from its multitude of suppliers. Closer partnerships with vendors can help to create this transparency. A large company like Nike and smaller organizations like Patagonia both play critical roles in creating these partnerships. Patagonia is on the front-line bringing up the conversation about new ways to be sustainable with vendors. Nike is large enough to drive big changes with their suppliers. In addition, organizations should not neglect considerations about the end of the product life. Patagonia, for example, has launched the Common Threads, to make its products recyclable, allowing consumers to return used products to their stores for recycling.

Invisible
Secondly, at the same time sustainability must be transparent so that stakeholders can see and understand the value chain, sustainability must also be invisible. Sustainable products must be well designed, performing as well or better than their non-sustainable counterparts. Companies should be able to sell product even if customer did not know it was “sustainable.” At Patagonia, designers assume that the customer will not pay a premium for sustainability, and that its other attributes will sell the product. After the session, I compared the price of an organic cotton dress at Patagonia to a comparable cotton dress at J.Crew without organic cotton and found the dresses to be very similarly priced. (The Patagonia Netty dress is $85, and J.Crew's Cabana dress is $78. J.Crew also sells non-organic cotton dresses for as much as $118.)

Ted Howes gave an example of a sustainable product with poor design, which has received criticism from consumers. Walmart’s new milk carton saves significant energy and resources. However, despite saving money on each gallon, consumers are struggling to be able to pour milk from the new containers. To achieve maximum success, sustainable products should function as well as non-sustainable alternatives. Because good sustainable design must be “invisible,” Ideo even sometimes makes changes to improve sustainability of new products without telling its clients.


Desirable
Finally, when companies communicate the value proposition of sustainability products to consumers they should emphasize desirability rather than fear. Companies should avoid scare tactics, and instead appeal to customers with a value proposition based on the products many attributes, of which sustainability is only one. Companies should even communicate a better value proposition than financial ROI by creating new business or product models to simplify the lives of their customers. After the session, I tried to learn more about how Nike is making their sustainable products desirable to consumers. It seems that they have continued their tradition of athlete sponsorship of with their sustainable products. For example, Steve Nash, All-Star guard of the Phoenix Suns, is wearing Nike’s “Trash Talk” shoe. What sports fan wouldn’t desire a product worn by world-class athletes?


Challenges
Companies and consumers should remember that the pursuit sustainability for consumer goods is a complex and evolving process. Sometimes the choices designers must face in pursuit of sustainability are not black and white. For example, Mr. Bainbridge told a story of a soccer ball factory in Pakistan. When U.S. management learned that minors were employed by this factory, a large fence was installed and employees were more closely screened for age requirements. Because the impoverished families of these children still needed them to work, they found jobs in the only other local employer, a manufacturer of heavy metal parts. Children soon began to lose their hands in metal presses. So it seems in our pursuit of sustainability and social responsibility, the choices are not always so clear.

Towards the end of the session, Mr. Howes said something that really struck me. “The word sustainability has had its day. Let’s use a word like impact- equally powerful, less squishy.” I believe the words transparency, invisibility, and desirability are also powerful. Thank you to our excellent panelists for providing UC Berkeley students with powerful words to us in our pursuit of sustainability.

--Lauren

Sustainable Silicon Valley

Last week I volunteered at a workshop held by Sustainable Silicon Valley, a non-profit that promotes sustainability initiatives at Silicon Valley companies. This event was an opportunity for green team leaders from different organizations to discuss best practices and common challenges. While some of the green team leaders were hired by their employers to lead sustainability initiatives full-time, I was amazed by the number of leaders who were working in non-sustainability roles but because of their passion for the environment took the initiative to develop corporate sustainability initiatives in addition to their regular work.

I had the pleasure of taking notes at a panel led by Mike Lewman of Applied Materials. The session covered his company’s techniques to track and manage the success of its sustainability initiatives. Mr. Lewman and panel participants provided great insights into components of a successful sustainability program.

Organization

• When launching a new program, pick initial programs with impressive financial savings, to demonstrate to management the potential success of sustainable initiative to reduce costs. Executive sponsorship increases motivation of employees throughout the organization.
  
• Create an organizational chart to identify stakeholders, champions, owners, and participants for each sustainability initiative.
• When building green teams, include passionate volunteers as well as organization decision makers.

Metrics

• Set realistic goals and track progress against those goals. Publish goals to shareholders and employees to promote accountability.
• Use visual representations of status to engage all stakeholder groups.
• Create Scorecards to track metrics and targets from each site. Standardize core metrics across sites.
• Tailor the scorecard to use metrics that are already being tracked, rather than ask participating groups to capture all new data, in order to minimize the extra work required to launch a sustainability initiative.
• Hold status meetings between goal setting and target completion date to allow program participants to adjust progress if not on track to meet targets.
  

From my participation in this event, I learned that Silicon Valley organizations faced common challenges, including engaging and educating large employee groups, standardizing metrics across multiple groups and sites, and measuring impacts where data is not easily available. While some of these insights seem basic, I think they form a great template for companies to successfully launch new sustainability initiatives or improve the success of existing ones. I hope that more organizations like Sustainable Silicon Valley are created around the country to promote sustainability best practices.