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ALL YOU NEED IS ENVY


Text and pictures: Simon Silvester simon_silvester@eu.yr.com tel: +44 20 7611 6356 For new business enquiries, please contact: Marcus Brown marcus_brown@eu.yr.com tel: +44 20 7611 6890 James Welch james_welch@eu.yr.com tel: +44 20 7611 6511 For press enquiries, please contact: Bernard Barnett bernard_barnett@eu.yr.com tel: +44 20 7611 6425

The emailable version of this document is at emea.yr.com/envy.pdf


ALL YOU NEED IS ENVY When Napoleon Bonaparte wanted to wow women at dinner parties, he instructed his servants to lay the dining table with very special cutlery. The cutlery looked pretty normal, but when the young ladies picked up their knives and forks, they were astonished. Instead of the heavy weight of steel or silver cutlery, the knives and forks felt as light as air. Bonaparte explained that the cutlery was made from a rare and precious metal. The metal made it more pleasurable to eat, he said, because it did not weigh so much on their hands. Parisian society became captivated with the new cutlery. Courtesans marvelled at its subtle lustre. Aristocrats fought over sets of it at auction. But But over time, the metal became easier to extract from its ore. The precious metal became less precious. And as this happened, its appeal declined.

ALL YOU NEED IS ENVY

‘Oooh’


Today the metal is commonplace. And whilst everyone can now choose to eat with aluminium cutlery, no one does. Envy, and envy alone, was what made aluminium cutlery attractive.

‘Our customers love our coats because they provide excellent levels of warmth in even the coldest of conditions’, says one fur retailer. Yeah, right.

Similarly with fish In the 1950s, if you were invited to a special dinner party, the hostess might serve you a rare treat - salmon. You would marvel at its exquisite flavour and elegant pink colour. You would consider yourself fortunate compared with ordinary people who had to eat cod. No longer. Today salmon is extensively farmed, and is a commonplace fish. No one comments about its colour any more, and no one talks about its taste. Meanwhile cod has been hunted almost to extinction. And diners at the cool eateries of London and Paris delight in its ‘delicious flavour, elegant whiteness and fluffy texture’. Envy, and envy alone, was what made salmon taste exquisite. Envy is fundamental For the past fifty years, the US General Social Survey has been tracking the proportion of Americans who say they are ‘very happy’. Back in 1946, the figure was 32%. It hasn’t risen since. However, what was also true in 1946, and what remains

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If everyone could afford a BMW, who would want one?

If everyone could afford to vacation in Mauritius, who would go there?

If everyone could afford to eat caviar, who would bother?

If Picasso had produced a million paintings, what would be the point of owning one?


For centuries, women, artists and fashion designers prized large breasts. Today, any woman with $3000 in her pocket can have large breasts. And so the fashion emphasis has moved to the waist.

Is it religious guilt that prevents the marketing world talking about envy?

Even under Communism, envy was a powerful driver in Russian society. Most people would do anything to get two weeks on warm Black Sea beaches.


equally true today, is that the richest quarter of Americans were significantly happier than the poorest quarter. So, fifty years of progress, a tripling of average incomes, preTHE AVERAGE AMERICAN IS NO sliced bread, aerosol HAPPIER THAN HE/SHE WAS IN 1946 deodorants, colour TV, mobile % of Americans saying they are ‘very happy’ phones, 24/7 pizza deliveries 100% and DVDs haven’t made the average American any happier. 80% No. But what does make an 60% American happier is the knowledge that their standard 40% of living is envied by their neighbours. 20% The marketing taboo 0% 1946 1956 1966 1976 1986 1996 2005 Yet classical marketing almost completely ignores this basic Source: American Social Attitudes Study, US Government/Lehane est. psychology: • Marketers talk about envy as Sixty years of material progress, and a more than doubling of a mere by-product of benefits, never the root of those GDP per capita have not made benefits. Americans any happier. • Marketers talk of satisfactions coming from benefits – never from being one of the few people on your block able to enjoy those benefits. • Marketers talk about whom they want to buy a product or service – but never about whom they don’t want to buy it. It’s time to break the taboo Since the dawn of time, man’s demand for products and

ALL YOU NEED IS ENVY

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services has been driven by a deep desire to keep up with the Joneses. This desire has made mankind crave certain products and services, and despise others – no matter what the intrinsic value of those products and services. If you want to build a strong, attractive brand in your marketplace, this should be your starting point. Superior product performance and service delivery all help. But all you really need is envy.

...BUT RELATIVELY RICH AMERICANS HAVE ALWAYS BEEN HAPPIER THAN POORER ONES % of Americans saying they are ‘very happy’

41% 26%

Top income quartile

Bottom income quartile

Source: American Social Attitudes Study, US Government, 1976

The richest quarter of Americans was significantly more likely to be ’very happy’ than the poorest quarter in 1976 - and it was the same in 1946 and 2005.

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DETECTING ENVY Mankind has great difficulty in recognising the envy that drives his actions. A woman may remark ‘this area is nice, with leafy greenery, nice houses and good schools.’ She will struggle to admit that what she really means is ‘that’s where the rich people live, and I want to live there too.’ Similarly, a man may discuss engine power, torque and styling of a quality car. He is loathe to admit that he envies people who can afford the higher price. Envy is therefore very difficult to detect in market research. So call in an economist Fortunately, economists have a solution. In economics, a good with a value that depends on who has it and who doesn’t is called a positional good. Economists have developed a quick test to show whether a good is positional.

ALL YOU NEED IS ENVY

HOW MUCH ENVY LIES WITHIN YOU? Y&R psychographic research has identified a personality trait called ‘Aspirer’ which makes a person particularly prone to envy. Find out how much of this trait you have within you by taking our fifteen-minute online test at http://4cs.yr.com/diys 7


MANKIND STRUGGLES TO RECOGNISE HIS BASIC INSTINCTS: ‘One giant leap for mankind’ said Neil Armstrong when he landed on the moon in 1969. There were few at the time who disagreed that this was mankind’s greatest and noblest achievement. But by 1972, mankind’s interest in the moon landings had evaporated, and the Apollo program was cancelled. ‘It wasn’t until the late 1970s that I realised the real significance of the moon landings’, said one scientist. ‘The moon had been of limited scientific value, and we could have spent the money on much worthier scientific causes. Then in 1978, I was watching our neighbour’s dog wandering around our garden, and I realised why mankind had gone to the moon. The dog was marking out its territory, and we had done little more. Mankind had merely flown to the moon, pissed on it and flown back.’


All you have to do is to ask yourself the following: Which world would you choose to live in: a) Where everyone else lives in 50m2 apartments, but you have a 100m2 apartment b) Where you have a 200m2 apartment, but everyone else lives in 300m2 apartments

In tests, most people choose option a). So housing is a positional good. Compare that with the following: Which would you choose: a) A world where you have two weeks’ vacation but everyone else has one week b) A world where you have four weeks’ vacation but everyone else has six weeks

‘A house may be large or small; as long as the surrounding houses are equally small, it satisfies all social demands for a dwelling. But if a palace arises beside the little house, the house shrinks into a hut.’ KARL MARX

Most people would choose option b). So length of vacation time is not a positional good. Economists use this to argue that all types of good are positional: • Nice houses are a positional good. If everyone could have one, no one would think they were nice. • Exotic holidays are a positional good. If everyone could afford to go to Mauritius, who would want to go to Mauritius? • Works of art are positional goods. Who would queue

* The positional goods theory was first popularised by Fred Hirsch, a Vienna born economist (1931-1978). In his 1976 book ‘The Social Limits To Growth’ he argues that mankind’s happiness will always be compromised by a lust for positional goods.

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to see the Mona Lisa if Da Vinci had produced a bulk run of 2000? • The Mercedes SLK is positional. If everyone could afford one, its drivers would desert it. • Even education is positional. If everyone could go to the Harvard Business School, who would want to go to the Harvard Business School? (In Germany, pretty much anyone planning to go to university can choose any university they want. Which means that ‘I went to Heidelberg’ means nothing. And so in Germany, anyone who wants intellectual respect, and a top job at an investment bank has to do something others can’t do: a PhD.) Buy into this thinking on envy and you have to fundamentally reappraise what you are doing in marketing: • No longer do you just have a target market, you also have a group of people you specifically don’t want to buy your product. • You need to ensure that the people who buy and own your product can be seen by the people who don’t. • Price stops being just what you charge for your item. It starts to become a positioning tool. • And you begin to accept that it is not the physical benefits that you promise with your brand that matter - it’s the social kudos that they get from being one of the few people on their block to enjoy them. All of these points should be useful to marketers. But for further insight, it would help if we could quantify things.

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Education has always been an exclusive, positional good.

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FOOD ENVY Back in the 1960s, Sean Connery’s James Bond could impress women and evil geniuses alike by namedropping the foods he had eaten as he crossed the world. To a pre-747 age audience, dishes like Peking Duck, oysters and Russian Vodka were massively aspirational. Today these foods are available in every suburban shopping mall. And if you want to impress people with regional specialities you have a tough time, because multinational food marketers and restauranteurs have brought nearly all of them to main street. The Virgin Upper Class Bento: the world’s best inflight food.

Today, the only way to impress people with food is to namedrop the regional specialities that haven’t made it to the foodcourts of the world because they’re simply not very nice: • In Japanese restaurants, order maguro natto, a mix of fermented soya beans and tuna that few non-Japanese like because it looks like glue and stinks. • In Szechuan restaurants, order the Dish of The Three Squeals. (Not for vegetarians) • In Mexican restaurants, order mole: this tasty mixture of chocolate and garlic doesn’t feature on the menu at Taco Bell. • In Manchester, England, order black pudding. These grilled slices of congealed pig’s blood are not to everyone’s taste. • In Reykjavik, Iceland, order rotten shark: an Icelandic delicacy that produces uncontrollable vomiting.

The Puffa fish: as tasty as it is lethal.


THE ENVY ZONE Creating a quantitative picture of envy. Our research indicates that envy is maximised when a brand: • Gets noticed by everyone. Things that don’t get noticed don’t provoke envy. This means the brand must have a high level of differentiation. • Is not an everyday item. This means that the brand has to have a limited level of relevance in society. Brands like Ariel, Snickers and Opel don’t inspire envy in people, because they are ordinary, everyday brands. • Is polarising: in most countries, envy maximises for the mobile phone category when perhaps a third of people have them, and the rest don’t. Those that have a mobile phone love them; many of those that don’t hate them; typically such people want them banned

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Class war at 10,000 metres?

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‘Did you come here on Concorde?’ the advertising agency head asked the media baron as they opened the pitch meeting. ‘I never use public transport’ snarled the media baron in reply.

from bars and public transport. This means that some of the population esteem phones highly, and others have very little esteem for them. On average therefore, a highly enviable brand should have only middling level of esteem. • Still has an air of mystery about it. People rarely envy brands they are very familiar with – the grass is greener, they say, on the other side. The brands with a low level of knowledge amongst the public are the ones that get envied. If we look at these four measures for brands, we can clearly see those which attract envy and those that do not. (We’ve chosen American examples, as these will be familiar to more of our readers than those of any other individual country. But we have exactly the same data available for Germany, France, UK, Italy, Poland, Spain and many other European and other countries around the world.) A brand like AmEx Blue is low on all four measures, so attracts little envy:

AmEx Blue Source: Y&R/BAV USA Jan-Dec 2004

PERCENTILE RANK

100 -

Differentiation Relevance Esteem Knowledge

ALL YOU NEED IS ENVY

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You’re a young man. You’ve just been let out of jail. A taxi drops you off at your old neighbourhood. You wander the streets in jeans and T-shirt. Rich people in convertibles and SUVs drive past. An elegant young blonde woman in low-rise jeans walks passes you on the pavement. She insults you.

A second young woman passes you on the street. ‘This area has a dress code’ she snarls. ‘You need a shower’ sniffs a third arrogant, unattainable young woman. Envy. Frustration. Lust. That’s what drives a young man to a life of petty crime and mindless violence. And the makers of Grand Theft Auto: San Andreas understand it to perfection.


A big, everyday brand like Coca-Cola is strong on all four measures and therefore attracts little envy:

Coca-Cola Source: Y&R/BAV USA Jan-Dec 2004

PERCENTILE RANK

100 -

Differentiation Relevance Esteem Knowledge

A brand like Greyhound is weak on differentiation, and strong on knowledge, and therefore attracts little envy:

RESEARCH BACKGROUND Brand pillar patterns and PowerGrids in this publication are sourced from Y&R’s BrandAsset Valuator (BAV). Since its inception in 1993, BAV has interviewed 359,000 consumers in 44 countries, and has gathered extensive quantitative data on over 20,000 brands. It is believed to be the largest, and most comprehensive consumer research study ever undertaken.

Greyhound Source: Y&R/BAV USA Jan-Dec 2004

PERCENTILE RANK

100 -

Differentiation Relevance Esteem Knowledge

But a brand like Louis Vuitton, with strong levels of differentiation and esteem, but still low levels of

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relevance and knowledge is a brand that can provoke serious amounts of envy:

Louis Vuitton Source: Y&R/BAV USA Jan-Dec 2004

PERCENTILE RANK

100 -

Differentiation Relevance Esteem Knowledge

To look at brands more graphically using these measures, we can combine differentiation and relevance into a variable called Brand Strength, and esteem and knowledge into another measure called Brand Stature:

DIFFERENTIATION + RELEVANCE = BRAND STRENGTH

ESTEEM + KNOWLEDGE = BRAND STATURE

If we plot one against the other, we can see that all brands that provoke envy lie in an area of our map (called the ‘PowerGrid’) we call the Envy Zone. Clearly, on this PowerGrid for the United States on the page opposite, brands like Prada and Louis Vuitton attract a lot of envy. And brands like Nissan and Malibu do not.

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THE POWERGRID • Coca-Cola • Porsche

• Skyy

• Mini Cooper

THE ENVY ZONE • Louis Vuitton

• iPod • Ferrari • Giorgio Armani

• Visa

• Dolce & Gabbana

BRAND STRENGTH

• Prada • Sony Vaio

• Chevrolet

• Aston Martin • JetBlue • Pierre Cardin

• Nissan

• Ferragamo

• Hermès

• Malibu

• Delta Airlines • Plymouth

BRAND STATURE The PowerGrid, and the Envy Zone marked on it, separates brands that provoke an envy response in consumers from those that don’t.


iPod Source: Y&R/BAV USA Jan-Dec 2004

PERCENTILE RANK

100 -

Differentiation Relevance Esteem Knowledge

A lot of people envy iPods. That’s why many iPod owners don’t dare wear their distinctive white earbuds on public transportation.

It’s also clear from our research that: 1. As a brand becomes bigger, it can slide out of the envy zone And indeed this is what has happened to Starbucks. When Starbucks was new, the people wandering into your office to talk about their tall skinny latte were seen as cool and enviable. Not any more. Starbucks has lost its cachet and has become mainstream. It needs to watch out. 2. Words like ‘leading’ and ‘traditional’ don’t mix with envy Brands in the envy zone rarely have these as core attributes. They smack too much of ubiquity and everyday familiarity. 3. Words like ‘good value’ don’t mix with envy Brands in the envy zone rarely have ‘good value’ as a core attribute. Marketers who try to promote the value aspects of their brands are sacrificing envy as a motivator. You can’t be a prestigious, upscale and a good value brand. This is a contradiction in terms. 4. ‘Caring for your customers’ can be bad news You don’t want to be served by someone nice and homely when you go into the Chanel shop. No. You want someone even more snobby and stuck up than you are.

Want to induce envy in iPod owners? Get an iPod Nano.

So These are all useful general observations. They also provide guidelines for how to manage envy within a brand. But the real power of envy analysis comes when you look at the role of envy in individual markets. Y&R EMEA


Which needs drive your life? Try our online test at http://4cs.yr.com/diys to find out.


If you’re going shopping in Paris’s Avenue Montaigne, don’t forget to take lots of money.


ENVY AND LUXURY GOODS BRANDS Exclusivity, and restricted ownership have always played a vital role within the luxury goods industry. Envy is therefore at its essence. • If every Japanese woman could afford a Prada handbag, Prada handbags would not be in such demand in Japan. • And if the goods on Rodeo Drive were affordable by the ordinary American, they would not be attractive to L.A.’s media aristocracy. Envy also plays a very important role in the market dynamics of luxury goods: 1. Accelerated ageing: All luxury goods brands start as small scale, sexy brands in major cosmopolitan cities. As their fame spreads, their owners push their prices up (a process known as ‘premiumisation’. As this happens, their young and cool cult followers are

ALL YOU NEED IS ENVY

If envy were a religion, this would be its temple.

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BRAND STRENGTH

SOURCE: BRANDASSET VALUATOR JAN-JUN 2005 BASE: US ADULTS 18-74

forced to desert the brand, and it starts LUXURY GOODS POWERGRID to attract a richer, more conservative • Rolex following. Richer people tend to be ENVY • Polo/Ralph Lauren • Timex older people. So the brand rapidly DolceZONE & • Louis Vuitton becomes a style item of the 40-plus Gabbana • • Giorgio Armani • Prada set. As there are many more 40-plus • Donna Karan • Karl Lagerfeld boomers than there are 20-somethings • Fendi in the West and Japan nowadays, the brand starts to look middle aged, loses • Pierre Cardin credibility, and starts to decline. Meanwhile, new brands are adopted by cool 20-somethings. Declining envy due to accelerated ageing can kill a • Hermès luxury goods brand within the space of a few years. 2. Fakeology: In a recent ethnographic survey, people walking down the main BRAND STATURE street of Tunis, North Africa on a weekend afternoon were studied. Over Rolex is one of only a 65% were wearing t-shirts or other items of clothing few brands that have managed to remain in branded with a fake luxury goods logo, from Chanel the envy zone from and Elle to Versace. Is this good or bad for the luxury decade to decade. goods industry? Our research indicates that these fakes create awareness and the beginnings of envy for the luxury goods brands, but because they are worn by people who cannot afford even entry level luxury goods, they do not detract from sales. Indeed, luxury goods brands should worry more if midincome North Africans stop wearing their fake logo. 3. Reality TV: In the distant past, luxury goods brands advertised themselves in conjunction with aristocrats

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In the long term, you can’t be both highfashion and cheap - Zara watch out.

Despite 15 years of economic problems in Japan, Hermès in Ginza just keeps on going.

When Guess expanded out of the US in the 90s, it first did so first in envy-rich Asia, not Europe.

To Japanese women, Italy means handbags more than La Scala.


and other prominent figures in American and European society. Then movie and sports stars took over. Today, the industry debates whether to build alliances with the stars of reality TV shows and other instant celebrities. Our qualitative research indicates that this development is highly dangerous for such brands, as these celebrities have extremely volatile, short-term brand equity. With reality TV stars, envy can soon turn to derision. 4. Teen/older split: The steady ageing of Western societies is causing a real split in the age of luxury goods’ buyers idols and aspirations. In the 50s and 60s, fashion’s iconography worshipped youth, with teen style icons like Jim Morrison and James Dean. Today, there is a split between older buyers who aspire to the thirtysomething values of model/actresses like Jennifer Aniston and Cameron Diaz, and a much younger milieu, as espoused by brands like Diesel, and Guess and its icon, Paris Hilton. Envy research indicates that nowadays brands trying to appeal to everyone will end up appealing to no one. Is masstige effective? However, perhaps the biggest dynamic within the luxury goods industry at the moment is the trend known as masstige. Masstige (mass market + prestige) means the portfolio extension of brands into a set of lower price sub-brands:

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‘With the greater part of rich people, the chief enjoyment of riches consists in the parade of riches.’ ADAM SMITH, 1776


We’re not so sure Our analysis reveals weaknesses in the resulting portfolios: • Y&R’s proprietary BAV brand analysis reveals that many core luxury goods brands are currently declining in Brand Strength, and are thus sliding out of the Envy Zone. • Our qualitative research too indicates a real value struggle within the minds of young, affluent women around the world. If they have grown up on Emporio Armani and Armani Jeans, Armani is unlikely to be the brand they want to upgrade

ALL YOU NEED IS ENVY

PHOTO: ROB DOUGLASS

Giorgio Armani has produced Emporio Armani; Moschino has produced Moschino Cheap and Chic; Dolce and Gabbana have produced D&G. The logic behind masstige is powerful: • It allows younger people into the brand than would otherwise be the case, thus avoiding the issue of premature ageing. • It allows the brand to be more affordable in emerging markets, whose four billion new consumers are vitally important to luxury goods brands. • It allows luxury goods brands to grow volume in countries like Japan and Germany where economic woes have caused their sales to stagnate. The luxury goods companies are convinced that their portfolio-of-brands approach means that they can do this without damaging their core brands.

No Ferrari has ever been seen on the roads of Bali, Indonesia. That doesn’t stop this local farmer treating the Ferrari brand as an object of envy.

‘The primitive man in the wolfpelt was not keeping dry; he was saying: “Look what I killed. Aren't I the best?”’ KATHARINE HAMNETT, DESIGNER

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to when they finally marry their investment banker boyfriend. Solutions to the masstige problem These research concerns are so great that many brands need to take action to defend their franchise against this ‘envy deflation’. Therefore: • Produce the masstige version only in a limited number of thin sizes. People tend to put on weight as they age. They’ll be forced out of the masstige brand and into the expensive variant as they hit thirty, and the masstige variant no longer fits them. • Focus on communications that do not get seen by the target audience of other sectors within the franchise. Modern computer based marketing now allows luxury goods marketers to do things that previous generations of marketers could only dream of. • Do not, repeat do not, offer free clothes and accessories of the masstige brands to reality TV stars. • Employ proper management of your icons: Prada remains one of the strongest luxury goods brands because of the iconic value of the Prada handbag. Similarly Hermès because of its iconic scarf and Kelly bag.

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The DKNY masstige sub-brand dominates the Donna Karan label.

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ENVY AND WINES AND SPIRITS If there is one human activity where having enough is never enough, it is in sexual relationships. All the words human beings use in the area of dating, like ‘attractive’ and ‘sexy’ are comparative words. • ‘Attractive’ means better looking than the other people in the bar. • ‘Charismatic’ means more so than the other people at the party. Sex is the biggest rat race of all. Genes don’t allow humans to be complacent, caring or egalitarian. Drinks are positional too Many of the alcoholic drinks brands served in those bars and parties are also positional goods, and the key driver behind them is envy: • Blind taste tests confirm that few consumers can tell

ALL YOU NEED IS ENVY

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ALCOHOLIC DRINKS POWERGRID

BRAND STRENGTH

SOURCE: BRANDASSET VALUATOR JAN-JUN 2005 BASE: US ADULTS 18-74

the difference between different whiskies. And indeed, blind, many ENVY • Baileys • Skyy cannot tell the difference between ZONE whisky and brandy. Most people don’t • Jack Daniel’s • Grey Goose drink the drinks. They drink the • Absolut premium image. • Our research amongst young women • Smirnoff confirms that their choice of drinks is • Remy Martin • Budweiser driven primarily by what they want to • Knob Creek say about themselves, rather than taste. Jack Daniel’s and Coke signals to the world that’s she’s a bit of a • Malibu • Miller tomboy; a Cosmopolitan indicates that • Cutty Sark she shares the lifestyle aspirations of Samantha in Sex and the City. Envy analysis therefore defines an BRAND STATURE important set of rules for drinks marketing: Bud and Miller, Smirnoff and • Launching a new alcoholic drink? It’s all about where Malibu have moved well you do it rather than about benefits. So seed it first in beyond the envy zone. the coolest bars. Above all, don’t let people see it first in a supermarket. • Your drink will age fast as its user base slips out of being cool 25 year olds into boring 35 year old mums and dads. Work out a way of keeping in with the cool 25 year olds. • Watch out for the feminisation of your user base. A lot of women don’t like drinks that are drunk primarily by women, because it makes them look too frilly and girly. An overt female positioning is slowly killing Archers Peach Schnapps. • Once a brand becomes drunk by everyone, watch out

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for it to be undermined. This applies equally to nonalcoholic beverages. Back in the seventies, cola was drunk primarily by the under thirties. Coke became an icon of youth’s then pacifist values with their iconic ‘Hilltop’ commercial and ‘I’d like to buy the world a Coke’. Today though, everyone drinks Coke, and people who want to show off, or express values do so not through the main cola brands, but through excommunist cola brands in the former East Germany, through Breton nationalist cola in France, and through Mecca Cola in Turkey. • Even beer can be an exclusive, enviable brand. Michelob, for example, effectively established such a position in the US in the 1960s with their ‘the beer for weekends’ line. It can be done again.

This Breton nationalist cola was a surprise hit at smart Parisian parties in 2005.

Alcoholic drinks in emerging markets In Bangkok, a typical 25-year-old male worker makes perhaps three hundred dollars a month. He is also likely to have a taste for whisky he inherited from his father. But he doesn’t drink a brand of local whisky. Each month, he clubs together with his friends, and invests in a prestigious bottle of premium Western whisky. His share of this bottle will cost over $30 – a significant proportion of his monthly income. The benefit? He can’t tell expensive whisky from cheap. What he is paying for is to be able to sit at a table and be respected by his friends. He also gets to attract women. Envy plays a huge role in alcoholic drinks purchasing in emerging markets.

ALL YOU NEED IS ENVY

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People choose alcoholic drinks on the basis of what they say about them, as much as the taste.

Discover a new drink in an exclusive bar, and you may bond with it for life.

Whenever you taste a drink, you will always be influenced by the environment where you first experienced it.

Exclusive hotel group W encourage guests to explore new drinks and premium Bliss toiletries when they stay.


Inverting price elasticity Envy can even invert price elasticity in these markets. In Singapore, whisky is all about men showing off their wealth to their friends and colleagues. Johnnie Walker was brand leader in Singapore. Chivas Regal was number two brand selling at a slightly lower price. Chivas wanted to be brand leader. So they put the price up, not down, and ran full-page, text-only ads like this:

THIS IS AN ADVERTISEMENT FOR CHIVAS REGAL. IF YOU NEED TO SEE THE BOTTLE, YOU OBVIOUSLY DON’T MOVE IN THE RIGHT SOCIAL CIRCLES. IF YOU NEED TO TASTE IT, YOU JUST OBVIOUSLY DON’T HAVE THE EXPERIENCE TO APPRECIATE IT. IF YOU NEED TO KNOW WHAT IT COSTS, TURN THE PAGE YOUNG MAN.

SOURCE: NEIL FRENCH.COM

And Chivas became number one brand. So Alcoholic drinks marketers need to think further about the power of envy: • Most alcoholic drinks marketers dream of their brand becoming mainstream. Most would do better to aim for an exclusive niche. • They would also do well to consider how to limit familiarity with their brand to a small, exclusive circle. Brands that are known to everyone don’t have cachet.

ALL YOU NEED IS ENVY

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ENVY AND TECH BRANDS Tech brands have the appearance of being the ultimate rational purchase, particularly when they are being bought by corporations rather than by consumers. But probe into the purchase process a bit more closely, and research indicates that envy is clearly an underlying purchasing driver of devices and technologies. Indeed, this applies even within corporate procurement: Corporations are pyramids of baboons There have been thousands of tech gadgets available for the past few years. Few have taken off as dramatically and as quickly as the corporate mobile email solution, the BlackBerry. The reason for this was envy. Most gadgets seep into the workplace either because the techies buy them, or because the IT director starts to collect them.

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In the late 90s, research showed that the envy created by having a flat-screen monitor on their desk was worth the equivalent of a 5% pay rise to employees in some corporations. SOURCE: IMIU 2001

Y&R EMEA


Research reveals that the cool lines of Apple’s laptops create a lot of meeting envy.

The Melrose Arch hotel in Johannesburg offers gadget-rich rooms - and breakfast in the swimming pool.

Phone handset makers now track consumer attitudes like ‘a phone I’d like to be seen using.’

The most enviable consumer electronics item of 2006: the PVR (Personal Video Recorder).


TECH BRANDS POWERGRID

• Nikon

SOURCE: BRANDASSET VALUATOR JAN-JUN 2005 BASE: US ADULTS 18-74

• iPod • TiVo

• Panasonic

• Canon • Toshiba

• Bang & Olufsen

Envy and tech pricing One of the big issues in tech marketing is the massive price falls that occur in the months and years after the introduction of a new technology. Moore’s Law* ensures that prices of chip driven devices fall and fall over time. These price falls have a huge impact on the envy that tech devices inspire, and they need careful management. • Back in the 1970s, Roger Moore’s James Bond sported a cool, red LED digital watch in Live and Let Die. At the time of making the film, the watch was cool. But by the time it was released, red LED watches were passé, and by the time the film was premiered on network television, red LED digital watches were $5 on market stalls. • Similarly, talk to any chic woman in Paris or Budapest and ask her what she wants in 2006, and the answer

*

• Sony

ENVY ZONE BRAND STRENGTH

Not so with the BlackBerry. Its makers, R.I.M. Corp. decided to seed them not amongst techies but amongst CEOs. It wasn’t easy. They had to work hard on connecting their devices into a variety of corporate email systems. But the end result was that corporate America first saw a BlackBerry in the hands of their CEO, not in the hands of an IT geek. And they were envious.

• Pentax

BRAND STATURE The PowerGrid reveals the struggle most tech brands face to remain enviable and attractive.

‘Everyone wants a plasma in their salon. And no more wires!’

Moore’s Law, first stated by Gordon Moore of Intel in 1965 states that the number of transistors on a chip, and hence the speed and power of computers doubles roughly every two years. The law has held ever since, and is likely to continue to hold until 2025 at least.

WOMEN 35-45, PARIS, FEBRUARY 2005

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is likely to be a cool 100cm plasma television on her living room wall. At the time of writing, such a screen can cost upwards of Euro 3000. But prices are falling fast. Soon huge plasma TVs may become as redolent of the couch potato lifestyle as big tube TVs have been for the last twenty years. Envy and the tech life cycle Read any marketing textbook and it will tell you about the market life cycle. The theory is as follows: 1. When a new category is invented, there are few brands available on the market. Each one enjoys high margins and grows rapidly in volume. 2. Over time, more and more brands enter the market. Increasing competition squeezes the margins of the early entrants. 3. After a while the market floods with suppliers and reaches maturity. Margins decline still further. 4. Then, as suppliers start to outnumber buyers, a price fight ensues, and margins collapse. But a glance at tech markets shows that this just isn’t the way it works. Consider the digital camera market over the past few years.

‘Television on mobile phones. Try it here!’

Mobile phones that pick up direct-to-air digital TV are already big in Japan. Other technologies may take off in Europe.

SatNav is the enviable accessory du jour.


Even in the very early stages of market growth, there were many, many brands on the market. Margins were high. And since then margins have declined. The market is not driven by the number of brands or models on the market, and it never has been. It’s driven by envy: In 2001, if you took a digital camera to a party, you would be the centre of attention: • Everyone would want to look at their picture in the little monitor • Everyone would want you to email them a JPEG of themselves • Everyone would think you were really cool It doesn’t happen any more. (Unless yours happens to be exceptionally thin, or small.) Everyone has a digital camera, and therefore their envy value is approaching zero. It is this decline in envy value, not an increase in supply that has caused the decline in prices and margins in that market in recent years. iPod envy Similarly, future marketing textbooks will include case histories on the massive growth of the MP3 player market in 2001-5. They will explain that the market had few brands in it in the early days, and was dominated by Apple’s iPod.

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Unlike in the US where mobile phone call quality remains poor, excellent GSM call quality is taken for granted in Europe. And so the European mobile phone market is increasingly driven by handset envy.

‘Without a decent phone, you’re nothing at my school.’ GIRL, 17, JOHANNESBURG

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Then, as time went on, more and more MP3 players entered the market, driving prices down. Eventually, the MP3 player became a commodity. But it’s completely untrue. There were already forty brands of MP3 player on the market when the iPod entered in 2001. The high margins that Apple made were not due to lack of competition. They were due to the fact that the iPod had a value due to envy. Back in 2003: • Many people who travelled to work on public transport chose to wear earplugs other than the distinctive iPod white earplugs. They didn’t want to provoke too much envy in the lowlife on the subway. • Most iPod owners found themselves the centre of attention at dinner parties, as the iPod took centre stage. • People who understood the operation of iTunes were sought after. It doesn’t happen so much any more. And the envy value of iPods, and with it their ability to command premium prices are falling. Also There are many other ways in which tech companies should be using envy as a motivator: • Every tech company nowadays spends fortunes doing segmentation research, and then targeting sub-brands and products at the consumer segments thus revealed. They need to spend a lot more time

ALL YOU NEED IS ENVY

Technology only succeeds if it’s simple enough for consumers to understand. Hence the use of simple icons, like the names of fruits, in tech branding.

With ‘Apple’, ‘Blackberry’ and ‘Orange’ already taken, the number of fruits left for tech companies to use as brand names is declining.

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considering the ‘pecking order’ of the segments. Target nerds with a product and all you get are nerds. Target the popular crowd, and you may get other segments too. • Similarly, tech companies should consider how to seed their products more effectively amongst the urban über-cool elites. The first people to buy iPods were the people who already had state-of-theart Macs on their desks to connect their iPod to: designers, video producers and graphic artists. Now do you realise why, when you first saw an iPod, you thought it was cool?

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Several million executives now have a BlackBerry in the US and UK. But few have yet reached the coveted level seven of its inbuilt BrickBreaker game.

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ENVY AND BANKS Across the world, banks are in weak positions on the PowerGrid – having an account at a particular bank inspires little envy in other people. The reason for this is clear - being a customer of a particular bank means little to people in most countries, as banks slide down the road towards commoditisation. But it needn’t be this way. The banking industry of today is increasingly focused on the mass affluent, the group of consumers with upwards of $50K to invest, but without the $500K of liquid assets necessary to make them high net worth individuals. To this class of people, investment in financial products has one major pitfall against other ways of investing money: it is totally invisible. • Invest your money in a gleaming new Jaguar or

ALL YOU NEED IS ENVY

RICH PEOPLE

MASS AFFLUENT

EVERYONE ELSE

The mass affluent are an elusive target for financial institutions across the world.

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Banks could leverage envy much more in their marketing - simply because they are about pure, unadulterated money.


BRAND STRENGTH

SOURCE: BRANDASSET VALUATOR JAN-JUN 2005 BASE: US ADULTS 18-74

Mercedes, and everyone knows that FINANCIAL SERVICES POWERGRID you have it. • Invest it in a large new home with a ENVY pool, and everyone knows you have ZONE • Visa money. • Mastercard • But invest it in mutual funds, and no • AmEx one will be any the wiser. A more enlightened approach to envy could solve this problem for aspiring investors. At a level or two higher than the mass • Bank of America affluent, private banks are careful to • HSBC • Washington Mutual ensure that their members are visible members of very exclusive clubs. The best • FirstUnion private banks in Frankfurt and Geneva hold frequent cocktail parties for their investors, ensuring that the moneyed rich BRAND STATURE connect with each other and feel part of a club, and their trust-funded kids get to make out with Big financial brands struggle to to make it into each other. the envy zone in the US At the mass affluent level, this completely fails to and Y&R’s BAV research happen. reveals that the picture is even worse in Germany, Mass affluent banking programs could be much France and other parts of improved if they used envy as a tool: the EU. • Most clubs allow you to show the world that you’re a member. Join an exclusive country club and they sell you a t-shirt. Go to a top business school like SDA Bocconi in Milan, and you can choose from a raft of highly visible merchandise from baseball caps to

ALL YOU NEED IS ENVY

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Now that most customers deal with their bank via an ATM, the banks’ brand strengths have weakened.

Private banks should borrow from the retailing skills of luxury goods labels.

Deutsche Bank experimented with a masstige subbrand called Deutsche Bank 24 in 2001/2. Like many masstige brands, it didn’t last.

Visa is the most powerful financial brand in the world. It could be even more so with the judicious use of envy.


pens to folders. Prestigious banks should do the same. • Queen Elizabeth’s bank in the UK, Coutts, used to do extra large retro-styled cheques, that would always get noticed because they wouldn’t fit in supermarket tills. Other banks should consider conspicuous payment mechanics like these. • Cost-cutting at banks currently prevents them from providing little rewards for good customers. Rewarding a customer for hitting a total of $30K of mutual funds bought through the bank with a case of the bank’s ‘private reserve’ claret would cost little, but allow the customer to impress his dinner party guests hugely. Envy and payment systems Meanwhile, payment system brands like Visa, AmEx and MasterCard face a different set of envy-driven issues: Back in the 1960s and 70s, few people had charge and credit cards, and they became a potent symbol of the expense account lifestyle. Brands like Diners and AmEx milked the ‘jet set’ image for all it was worth. They thus inspired a lot of envy. Today though, in many countries credit and charge cards are commonplace. And as the status that used to come with a gold card has been diluted by issuers promising a platinum card to all and sundry, the credit and debit card has become an envy-free form of everyday payment for most. How therefore can credit and debit card issuers use

ALL YOU NEED IS ENVY

His credit card company knows more about his spending habits than anyone else. But it utterly fails to use that information.

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envy yet again to make them the purveyors of status, and key signifiers of wealth? There are after all, few further metals more precious than gold and platinum. (Although focus groups recently told us that a plutonium card for nuclear shopping sprees could be an instant hit.) The answer lies in the increasingly sophisticated level of purchasing information flowing back from retailers to the payment systems: • Your credit card company is the one company that knows exactly what you spend, particularly on highticket discretionary items. • Its computers can thus identify customers who spend a lot on premium hotel accommodation, airline tickets and luxury goods. • This information is nowadays available at an individual-item-purchased level. Credit card companies should use this knowledge to recognise their best customers: • Customers who spend heavily in exclusive restaurants need connoisseur cards, and related merchandise. • Customers who spend heavily on luxury goods brands need visible items reflecting their annual spend level in these areas. • Customers who hit an annual spend of $20K need a ‘$20K shopping spree’ keyring to flash at their friends.

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Why don’t phone banks brand the handsets their customers use to contact them?

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THE 33% RULE Our research shows that envy of a product category is maximised when about a third of a group of people have something, and the rest of society do not. • When about a third of a society has the product, the envy is at its height. It’s at about this stage in the development of mobile phone markets that people who don’t possess them demand train carriages where mobile phones aren’t allowed to be used. Once more than a third of a society have them, the envy drops off. • In Singapore, this rule of thirds is enforced artificially in the car market, where by law only 33% of households are allowed to own and drive a car. No one actually needs a car in Singapore, a small, urban country with the best public transportation in the world. But envy drives the value of licences so high

ALL YOU NEED IS ENVY

HAVE HAVE NOT

Envy is usually optimised when a third of a country have something, and two thirds do not.

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that in the 1990s, it cost a total of over US$150,000 to put a small car on the road there. • This third rule is confirmed by retailers. Most retailers of consumer electronics confirm that demand and margins for products like microwave ovens and plasma screen TVs are at their height when around a third of a population have them. Once most people have them, the envy drops off. • At a dinner party, if three out of the eight people around the table have seen a film, it’s a talking point, no matter how bad. If six of the eight have seen a film, it’s not a talking point, no matter how good. All of which points to an intriguing thought. As a market develops, marketers have two choices: • They can do what most marketers do, and reduce their prices slowly over time as competition intensifies and squeeze the last sale out of the market at marginal profitability. • Or they can restrict ownership to 33%, by progressively pushing prices up. Few marketers dare do this. Those that do either fail, or get rich. This second option is the exact opposite of Malcolm Gladwell’s Tipping Point theory. Crossing the Tipping Point can mean the end of many exclusive, premium brands, not a new beginning for them.

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Mobile phone ownership has passed 33% in Shanghai, and may do so in coming years in Chennai.

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IS THIS BOOK EVIL? Many readers may be taken aback by the analysis in this publication. They may conclude that their urban lives are little more than pointless, superficial rat races, and they would do much better to downshift, move to the country and live happier, less envy-driven lives. But envy is too deep a human drive for that to be a solution to mankind’s woes. All downshifters are doing is moving from where they are an average fish in a rich pool, to a village where they are a relatively rich fish in a poorer pool. And whilst they and their families divest themselves of envy by doing this, they only create more envy for rural families by pushing house prices out of their reach and overtaking their humble pick-ups in their gleaming new Porsche Cayennes. Other readers may think that the solution to all of this is socialism. However, research conducted in East Germany in the 1980s indicates that envy and greed were no less an issue in that equal society than they are today. No. What we must conclude is that envy is a

In English-speaking countries, envy can make you go green. In Germany, you risk going pale.

The Bible isn’t too hot on envy.

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basic human drive, and that we can’t change human nature. On the positive side, this means that: • There never was a rosy rural past where everyone was happy and content with their lot. • And there never will be a utopian future where all of mankind will be happier. In short, you are already living in the best of all worlds. It also means that society can be content with what it has – because no amount of new technology or other material progress will make its average member any happier. And indeed, once you get your 100cm plasma screen, 4G video mobile phone and next-generation cappuccino maker, you too will be no happier. Unless of course, you get yours first.

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‘My husband gave me everything that I wanted. It’s just that it turned out that everything I wanted was wrong.’ EVA LONGORIA DESPERATE HOUSEWIVES

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To hear a Y&R presentation on envy relevant to your market sector, email James Welch at james_welch@eu.yr.com or call him on +44 20 7611 6511

Thanks to: Massimo Costa, James Welch, Simon Atterbury, Jenny Mulcaster BrandAsset Valuator is a registered trademark of Young and Rubicam Brands inc. The emailable version of this document is at emea.yr.com/envy.pdf


Y&R EMEA, GREATER LONDON HOUSE, HAMPSTEAD ROAD, LONDON NW1 7QP


All You Need Is Envy