Thanks to Seth Godin and New York Magazine, over the weekend I discovered the Lululemon brand of yoga clothing and accessories. It’s a remarkable business that seems to be sweeping the nation and broadening interest in a 2,000-year exercise ritual. One of Lululemon’s main marketing strategies is to host free, public yoga sessions weekly, such as the photo above in New York City’s Bryant Park. It’s a terrific example of Marketing with Meaning, but this case study and Seth’s post suggest to me that the evolution to this new marketing model might favor new brands over the old.
Let me first establish that Lululemon has a killer idea with its free yoga classes. Strategically, there are a few business challenges that make this idea smart. First, the classes help people who are intrigued by the idea of yoga get a feel for the concept in a low-risk way. The classes are free, and because there are many people around you there is less pressure to look good and perform well. Lululemon understands that it needs to get more people engaged in yoga to grow its sales. Give away the class, and people will keep buying the refill clothing.
Second, because the classes are large and in a very public place, they become one giant advertisement for yoga and the Lululemon brand. Actually, it’s almost insulting to call this an “advertisement”—rather, it’s a living, breathing example of how yoga makes a lot of people feel really good and stay in shape. Passersby see that this is a very socially acceptable exercise, which helps break down some people’s concern that yoga is for hippies and gurus.
So it’s confirmed: This is very meaningful marketing. But Godin uses this case study to suggest something more. He says, “I think it’s dangerous and often fatal to put free on top of an existing business model. Things fall apart.” Seth believes that businesses that have been charging for services won’t be able to adapt to the world of giving away value and hoping to be repaid in sales, loyalty, and word of mouth.
I think Seth is getting close to a very big issue but misses the mark a bit. He says that big companies are not used to giving away valuable “stuff” for free. But this is not accurate. After all, one of the most common marketing tactics in the history of commerce is the free sample. By people taking a taste of food or trying a new razor at no cost, many end up buying the product or service either because they like it or they have generated feelings of reciprocity and are compelled to repay the marketer with sales.
But the much bigger picture that Seth is raising is this: Can big companies shift from interruptive advertising to marketing that actually adds value to people’s lives—what we call Marketing with Meaning? Right now, I believe the future might belong to new brands, which rise to strength with a meaning-based approach from the beginning, while large brands might be unable to make the shift in time.
Looking at the hottest new brands in the world, many have risen to power with a more meaning-based approach. Red Bull came out of nowhere with a marketing strategy focused on events. Zappos rose thanks to social-media-powered customer service. Google became the most valuable, most loved brand in the world by continuing to roll out great, free services—and hasn’t run a single TV commercial. These brands show us that a completely new marketing approach, centered on adding value, can win.
Meanwhile, the odds seem staked against big brands despite their big budgets and historic leadership. The best model to pose their challenge is The Innovator’s Dilemma. Put simply, big, leading companies rise to success by getting better and better at one way of doing business. But when the world changes, they just don’t understand how to understand how to shift, and all of their existing processes, people, and incentives support the old way.
Traditional, interruptive, impression-based marketing is one of those existing models that a lot of big brands have gotten very good at mastering. They can tweak that commercial to perfection, squeeze out more efficiency in a media buy, and even find new ways to gauge consumer reaction to an ad (such as brain scanning) and new places to put an ad (airplane trays, anyone?). But those skills are all spent in polishing a model that has decreasing marginal returns—and with the revolution in consumer power and media options, these actions might be leading to decreasing returns, or at least widening opportunity costs from not embracing meaningful marketing.
Lululemon went from zero to a $1 billion market cap thanks to marketing with meaning. But it did so because it had zero to start with. This challenge forced Lululemon to think differently from the start. But big brands have the disadvantage of lots of money and existing equity. This mirrors the evolution of life on earth—the specialties that made plants and animals successful in one era can become weaknesses when the climate shifts.
But hope is not lost! In my new book, The Next Evolution of Marketing: Connect with Your Customers by Marketing with Meaning, I share the case studies of four very big brands that have made the shift: Dove, Burger King, Nike, and The Partnership for a Drug-Free America. And, in order to practice some free-sample meaningful marketing myself, you can download the chapter that includes these case studies here.
Time will tell which brands are able to make the leap. I believe thousands of small brands will rise from the chaos, and a good number of big brands that quickly admit the challenges and commit to a new path will make the journey as well.