Case Study – Florida versus Maker’s Mark

Ed BurghardSometimes a lesson in effective branding comes along and it is hard to not take notice. Recently, two brands I love faced similar challenges and made different choices on how to respond. I believe one got it right, and one may not have.

The purpose of this post is twofold. First, to illustrate that as economic development professionals we can learn a lot about branding our communities by studying and reapplying the principles used in the private sector. That is one of the foundational tenets of this website. Second, I would really like to know what your reaction is to these two different approaches to essentially the same challenge.

Makers Mark

In the spirit of full disclosure, I am a Maker’s Mark Ambassador and my favorite bourbon drink is a Marker’s on the rocks. In fact, I am sipping one while writing this post.

The folks at Maker’s Mark did a poor job forecasting sales. Ina business where product ages in the barrel for 5.75 to 6.5 years, under forecasting demand can be extremely problematic.

Marker’s Mark bourbon is bottled at 90 proof (45%) alcohol. One way to stretch a limited supply of drinking ready product is to add water (effectively reducing the alcohol content).

Over the February 9 – 10, 2013 weekend, Maker’s Mark announced a 3% alcohol per batch reduction to stretch their supply and meet the faster than planned demand for their brand.

The Company conducted market research to determine if taste was affected. Consumers and in-house experts involved in the taste test concluded there was no noticeable impact on taste.

“The distillery made up different batches that Rob and I tested every evening over the course of a month. Every batch at 42% ABV (versus the formula specification of 45% ABV) had the same taste profile that we’ve always had,” said Bill Samuels Jr..

[Parenthetical thought – I know, it is a tough job, but somebody’s got to do it.]

As soon as word of the decision got out, on February 11th at 10:05AM Matthew Yglesias published a blog post entitled “The Economics of Watering Down Maker’s Mark”. He questioned the business sense of watering down the bourbon rather than raising the price. He said “If you can alter the formula that much without people caring, you’re just saying your customers aren’t really paying attention to the flavor of the drink.”

On February 17th, Makers’s Mark decided to listen to their consumers and reversed their decision to dilute their burbon. The media applauded the decision.

The Company issues an email to its Ambassadors explaining their decision. Here is the content of the email I received.

Dear Ambassador,

Since we announced our decision last week to reduce the alcohol content (ABV) of Maker’s Mark in response to supply constraints, we have heard many concerns and questions from our ambassadors and brand fans. We’re humbled by your overwhelming response and passion for Maker’s Mark. While we thought we were doing what’s right, this is your brand – and you told us in large numbers to change our decision.

You spoke. We listened. And we’re sincerely sorry we let you down.

So effective immediately, we are reversing our decision to lower the ABV of Maker’s Mark, and resuming production at 45% alcohol by volume (90 proof). Just like we’ve made it since the very beginning.

The unanticipated dramatic growth rate of Maker’s Mark is a good problem to have, and we appreciate some of you telling us you’d even put up with occasional shortages. We promise we’ll deal with them as best we can, as we work to expand capacity at the distillery.

Your trust, loyalty and passion are what’s most important. We realize we can’t lose sight of that. Thanks for your honesty and for reminding us what makes Maker’s Mark, and its fans, so special.

We’ll set about getting back to bottling the handcrafted bourbon that our father/grandfather, Bill Samuels, Sr. created. Same recipe. Same production process. Same product.

As always, we will continue to let you know first about developments at the distillery. In the meantime please keep telling us what’s on your mind and come down and visit us at the distillery. It means a lot to us.

Sincerely,

Rob Samuels, Chief Operating Officer

Bill Samuels, Jr., Chairman Emeritus

Enterprise Florida

In the spirit of full disclosure, I have visited Florida and had a great time. I also posted on this story when the news was first broke.

The folks at Enterprise Florida made a strategic decision to strengthen the state’s brand within the business community as a way to generate increased capital investment. They did market research to try and uncover insights into what the current impression of Florida was in the business community, and used the results of that research to guide creation of a new logo and tagline.

Governor Rick Scott unveiled the new logo and tagline in Tallahasee. He explained “We’re working aggressively to get businesses to Florida, so Florida families have more opportunities to pursue the American Dream.”

[Parenthetical thought – If you want to see where Florida ranks nationally in enabling people who live there to achieve the American Dream, simply click HERE.]

It was reported that Enterprise Florida sought $3 million from the state and $1.5 million from private donations to underwrite the campaign.

On February 5th, Kate Stanton raised the question of whether Florida’s logo was sexist in her blog post. Other groups jumped in on the discussion. Pamela Rogan, president of the Central Florida Chapter of the National Association of Women Business Owners, said “I thought immediately that it set us back.”

The negative backlash made national news, and like Maker’s Mark, Enterprise Florida’s Management was faced with a difficult challenge.

But, unlike the folks at Maker’s Mark, leadership at Enterprise Florida decided to minimize the objections and press on with their planned course of action.

Enterprise Florida’s Chief Marketing Officer said “We’re going to move forward with this campaign.” “The tie is iconic to mean business, it has nothing to do with gender roles. It’s just a cartoon.”

Discussion

Clearly, the response of Marker’s Mark and Enterprise Florida to criticism from their customer base was diametrically opposite. In the case of Maker’s Mark it was mea culpa, we care about what you think. In the case of Enterprise Florida, I think the phrase “It is just a cartoon” summarizes their response.  Both had market research results they felt supported their initial decisions.

What can we learn from these two cases? What are the risks in each response? Which response do you believe will build brand equity and why? Please leave a comment with your thoughts.

Where Does Your State Rank in Enabling People Who Live There To Achieve The American Dream?

To view the complete set of State rankings based on the ADCI and five explanatory sub-indexes, simply click this button

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For additional information on the ADCI click HERE.

 

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6 Comments so far

  1. […]   […]

  2. Filiberto

    February 20, 2013

    I think this is a great example of how things go wrong when your forget about the consumers. The truth to the matter is that ABV changes happen all the time in liquor industry. And firms tend to either not to publicly disclose it, or to justify them with an organolectic reason. In addition to that bourbon must be distilled at 160 proof, must be aged at no more then 130 proof and can be bottled at no lower then 80 proof. All of the proof changed are achieved by diluting with water. So what Maker’s Mark was planning to do, is not at all bizzarre: they should not have justified it as driven by sales growth. I would have probably raised the price of the Original Maker’s Mark, and launched a more affordable lower proof product as an entry point. But I guess now that is not really an option. I am also curious what they will do to regain trust with their consumers

  3. Greg Fullington

    February 20, 2013

    Ed –
    A dramatic contrast for sure. Maker’s Mark has long operated one of the very best outreach programs in the world for it’s loyalists. Point being, there’s already some serious linkage to it’s customers in place and it should have been utilized. Instead, this was a self-inflicted wound and completely avoidable.

    I would only criticize MM for not using that same network to share the dilemma and crowd-source the solution PRIOR to taking their misstep in the first place. Should’ve thought it through more thoroughly and effectively and never made this mistake. Other than that, their follow up response was perfect and should placate the loyalists.

    Regarding Florida’s work, you can lead a horse to water, but you can’t make him (or her) think. Paraphrasing Ogilvy, clients do get the work they deserve. This is certainly not the end of the world, but it is a great example of another ill-equipped and ignorant client sanctioning work that could’ve been so much more. Also, ignoring even a hint of sexism is just idiotic and very telling.

  4. Micael Perry

    February 20, 2013

    Ed –

    A definite contrast in styles and strategies. Both are PR issues, and are reminiscent of the Tylenol problem many years ago (with the exception that MM announced their intentions). To me the outcomes demonstrate the power of an honest mea culpa. Consumers (business and customers) are people, and as such inherently understand our suppliers will make mistakes. As much as we individually would want a heartfelt and honest apology accepted, we accept the same. We trust that eventually the right thing will be done. In the case of Makers Mark it was; Enterprise Florida dropped the ball.

    What’s interesting to me is looking at the board of directors for EF there are three out of fifteen directors with a direct connection to the State; while I’m sure Gov. Scott was involved, I would say there was little in the way of stakeholder focus at decision time. Obviously they kept ineffective counsel. . .

  5. Ken Evans

    February 20, 2013

    This a great example of how a good PR strategy can turn around a bad situation. Owning your mistakes is part of building / protecting your brand and responding to your audience has a positive impact far beyond just your loyal customers. The PR and branding world will be talking about how Markers avoided their Coke Classic moment as a shining example of turning your mea culpa into mega bucka.

    It does not appear that Enterprise Florida has that same level of humility. Charging ahead with their dead on arrival strategy for economic development, they just continue to make a bad decision worse.

    http://twitter.com/StartupMonkey/status/304337477265657856/photo/1

    Remember, it’s only a cartoon.

  6. R.

    March 3, 2013

    As a resident of Florida and a woman, I think the small minority that complained about the tie need to get a life and focus on more important issues like how bad the economy is along with the jobless, homeless, and foreclosure rates in Florida while they’re busy trying to lure people here. The women that jump to the pulpit and cry the loudest while beating on their chests and wailing their war cries of sexism appear insecure with WAY too much time on their hands — it’s a tie, for God’s sake, not a stick-figure depiction of a barefoot woman chained to a stove with a child on her hip. For men and women both, like it or not, ties have inextricably become intertwined with the notion of “business” in our society, and that’s all it was intended to signify, period. I looked at it and thought business, not what a setback it was to women’s causes. That NEVER ENTERED MY MIND even for an instant! Sure, visual association is hugely important with any brand, but must we search for hidden meaning in everything we insist on reading between the lines for, and where do we draw the line with trying to please everyone? These temporary rumblings by the few in this state worried about what image we’re projecting to arriving families is ludicrous and will hopefully soon be forgotten. It’s these tiresome kinds of dialogues that distract us from proceeding with almost everything in this country anymore and accomplishing anything at all. When did we all become such over-sensitive ninnies?

    As far as MM, it is a brand I have enjoyed for nearly 20 years and, though I am glad to see the integrity and consistency of the product remain, the course insisted upon by purists is a double-edged sword. We all know what limited quantities can do for any product. In many cases it’s a downright brilliant marketing strategy, because countless idiots must feel a sense of elitism and apparently have more money than sense. It’s never ceased to amaze me how many dullards will gladly pay double and triple for the same product packaged differently just so they can brag about it. It’s truly mind boggling! Though this is a great way to drive sales in healthier economic times, in the current recession it could backfire by pricing many of its loyalists out of the market and turn them to other more affordable brands that they may not come back from months or years down the road. I’ve seen it happen with cigarettes. All in all, it’s a gamble, and only time will tell whether it was a risk worth taking in the long run. Traditionally, in solid economies, charging outrageous prices on non-staple goods in order to make people think they’re getting something better or that only a few can afford has worked well — think Vodkas introduced back in the late ’90s and early 2000s — but these are strange times we’re living in. It will be interesting to see how MM fairs when it’s all said and done.

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