As CMO of both Yum! Brands and its Collider Lab, Ken Muench is at the intersection of top-of-mind marketing trends. In this interview for WARC’s Marketer’s Toolkit 2022, Muench talks with US Commissioning Editor Cathy Taylor about cultural and social relevance, balancing branding with e-commerce, and whether sustainability efforts should be marketed.
This interview is part of WARC's Marketer's Toolkit 2022. Read more.
- As marketers continue to operate in an unpredictable world, their agility is going to be the only trend that matters over the next five years; Yum! Brands has developed a playbook to make being agile easier for its restaurants.
- The company breaks the power of its brands into different components: cultural and social relevance, the ease with which consumers can interact with them, and distinctiveness.
- Cultural and social relevance are distinct from one another; social relevance is about buzz and fun activations, while cultural relevance is about what a brand stands for.
- Brands have to be careful as to where and how sustainability should be mentioned in marketing. It doesn’t drive sales because it doesn’t tap into consumers’ existing memory structures about a brand, but can have a role in-store, where issues like packaging coming into play.
- In balancing brand and e-commerce, Yum! filters it through the concept of “SOBO”, (Sales Overnight/Brand Over time), which makes fame a long-term emphasis so that Sales Overnight can activate that awareness.
We’re not out of the pandemic yet, but what is changing permanently?
The name of the game is going to be agility. The only trend that matters over the next five years is: “How agile of a marketer are you?” We used to pride ourselves on having a 24-month calendar. Now, the markets that are winning are the ones that can adapt the most. It’s the era of agility in marketing.
How have you changed your approach to scenario planning to bring that agility to market?
First, by refocusing a lot of our business back on our core product and our core business, it's allowed us to be more flexible. Pre-pandemic, when everything was so focused on innovation and things like limited time offers, then you're very niche and into that moment. “Oh, you've got this crazy late-night taco.” Well, that's basically all you can do with that. Well, we've moved away from that focus back onto the core, and then figured out how to make [that] core more flexible. That's a really big dramatic shift in our business.
We also have a playbook [focused on agility], that is very detailed on – “This is what happens when you shut down.” “This is what happens when you have a partial shutdown.” “This is what happens when you're fully open.” Here are the protocols, here's the messaging. Here are the type of products that do well, and the advertising that does well during each one of these moments.
We have a division called Collider, that focuses on long-term strategy. We still have that going, but we've tilted a lot of that to use real-time data. We literally have trillions of individual transactions, and we're watching very, very carefully, as consumer behavior starts changing, and we adapt very fast.
Sustainability is again spiking in interest. What role does that play in your business and how consumers consider your brands?
We have a bunch of different programs, and a lot of them are going to be growing pretty substantially over the next several months. We were probably getting ready to roll out a bunch of sustainability initiatives right before COVID, and obviously we had to redirect a lot of those efforts to people. We have a $100 million fund to fight inequality and we're doing super cool programs, but we're tilting back pretty heavily to sustainability. I think everybody in the organization is completely committed to it. We all see that there is no potential future in the world where sustainability is not one of your central pillars. It's going to affect everything from packaging to sourcing.
How do you measure the effectiveness of your sustainability efforts?
[On a high level], we break things down into, “How do you make your brand culturally relevant versus socially relevant?” “How do you make your brand easy to notice and access?” and “How do you make your brand distinctive?”
Cultural relevance – which is what is primarily affected by messaging and products around sustainability – is like you're essentially becoming less irrelevant to a newer generation that's emerging by being more sustainable, obviously.
But that's not the primary reason we're doing it – just to maintain the brand's cultural relevance. We know sustainability is mandatory. In some markets, we've done a huge investment in either sustainability and/or people or something, and it makes no difference to consumers. It doesn't have the impact you thought it might have on the brand. In those cases, we have to be cautious that we're doing the right thing because it is the right thing, versus greenwashing. That's the other extreme where this thing goes. Now, we're looking at what sort of foundational changes you need to make to your business to make it more sustainable and to make your footprint lighter on the world, period, Let's start from there. Mandatory. No questions asked.
Then, does it play into a role for marketing or not? It won't be messaging surrounding sustainability, unless – and the one area that we do think is different – you become an advocate when you are trying to nudge consumers in the right direction. That feels a little bit more genuine, and you're not just tooting your own horn because you switched to bamboo straws or something.
Is it ever worthwhile to make it part of your messaging?
It varies by market, of course, but my gut so far is it makes sense on the packaging, and it makes sense in the store, but it makes less sense in the marketing itself. It's just not the way consumers make decisions. Consumers make decisions because you're refreshing existing memory structures that they have in their mind. To have a TV ad about the 20 different [sustainability] changes that you're making doesn't refresh any existing memory structures.
It does belong on the store experience, I do believe it belongs on the product experience, because then you do walk in the store, you see the recycling containers, or you see the straws or you see that the packaging is compostable.
Are we different now as consumers?
Absolutely. You're more different in that respect. [Consumers are] more demanding: “How are you treating your employees?” “What's your impact on the world?” Frankly it’s great. It's how we're going to move forward.
One of the Toolkit themes this year is the collision of branding and e-commerce. How are you balancing them?
We have a thing called SOBO, which is Sales Overnight/Brand Over time, and we firmly believe in that. We think it's incredibly beneficial to build your Brand Over time, and to make that a big portion of your efforts, and then the way we look at it is that Sales Overnight activates that awareness. Brand Over time makes you famous, and then Sales Overnight is that activation of that fame, so we always try to explain it to our franchisees around the world as “If you get a sale on some crazy Zingo. [if the consumer has] never heard of it, who cares that it's on sale?” So you have to make that Zingo famous first -- that's brand.
The natural inclination of every marketer when sales are down is to rush to activate, activate, activate, and what we see very clearly is that activation becomes less efficient every single cycle. So if you focus on activation, maybe the first time you have basically 100% efficiency on that activation that you would have had in the past. Then you're not working on your brand, so you do another activation, and now it goes to 80% efficiency, and we see that fall off a cliff to the point where you're desperately chasing seeing sales and you're just in this – whatever the opposite of a virtuous cycle is – just desperately activating, activating on less and less fame.
We have refocused and we're pushing very dramatically around the world to have brand as a central piece because the countries that are focused on brand, brand, brand with some activation interspersed, have done much better than the ones that have just done activation. That obviously has a big impact on e-commerce.
How has the balance changed over time, especially during the COVID era?
When we look at the overall, what ended up happening is we did a lot more activation, and then we've had to work very hard to bring back the brand piece. It went from, in the best markets, probably 40% activation, 60% brand, and then it went to 80% activation, even 90% activation. Now we've tilted it back and are bringing it slowly but surely back to a more balanced approach. It varies by market.
Yum!’s brands have had some fun with creator economy elements like NFTs. What is the role of that in marketing? And how do you measure it?
Like I mentioned earlier, we divide everything up into cultural relevance, social relevance, ease, and distinctiveness, and so that's 100% what we call social relevance, which is how much buzz you're getting online. We call it ‘party talk’ – how party-talk worthy are your activations and fun things you're doing? Taco Bell was the first brand to do NFT. That sort of stuff allows us, one – to just have fun with consumers – but what it really does from a branding perspective is increases your social relevance.
What that does for us is it just simply increases the acceptability of the product, or the likelihood that the product is going to get used. We measure that very carefully through social buzz, and impressions online and that sort of stuff. But we expect to see a sales bump in most cases because of the increased awareness and increased top of mind.
We keep social relevance distinctly away from cultural relevance, because we see that's not going to build your cultural relevance. Cultural relevance is: what does your brand stand for? What does it mean to consumers when they pick up a bucket of KFC? Are they picking up something that they're proud of, that helps build their identity, or are they picking up something they're ashamed of and that they would rather their neighbors not see?
Doing something with NFT or some fun stunt is not going to change that. We try not to mix those two because then what ends up happening is that people do some viral stunt, and they think that's what they need to do from a branding perspective.
Taco Bell hired a culture agency, Cashmere. What's its remit?
I can’t talk specifically about their role, but it signals a renewed commitment to a new generation of Americans – that Taco Bell is part of how the world is changing. Cashmere excels at being part of culture, not just on stunts. They're more in the cultural relevance space, not just in “Here's this fun little activation.”