Earlier this summer, many patrons of the International House of Pancakes (IHOP) were perplexed over the seemingly-overnight rebranding of the restaurant chain. Without revealing a reason, IHOP announced it would be changing its name to IHOb. The move garnered a lot of attention, both positive and negative.
After several days of suspense, the chain's CMO Brad Haley made an announcement that "everyone knows that IHOP makes world-famous pancakes so we felt like the best way to convince them that we are as serious about our new line of Ultimate Steakburgers as we are about our pancakes, was to change our name to IHOb." By the 4th of July, everything was back to normal and IHOP had re-branded itself back to its original identity. Executives will have to wait for an official quarterly report before analyzing the success of the marketing ploy, but it is likely that more consumers will continue to associate IHOP with burgers than in the past.
This brief case study highlights the importance of brand identity to customers. In a world of constantly changing consumer attitudes and lifestyles change, company brands must be willing to evolve in order to deliver value to their customers. However, in certain cases, companies forget to evaluate their place in the hearts and minds of their customers. In a recent article by Insights Association, the authors conclude that "in an effort to remain relevant, companies too often hinge their brand identities on current events and passing trends rather than thoughtfully forging a path forward."
One such example cited in the article was McDonald's decision to discontinue the popular Dollar Menu in 2013. Due to pressure from the rising "fast-casual" segment of the market, McDonalds decided that its "fast-and-cheap" model was no longer applicable to their customers. However, this move proved to turn off McDonald's value-seeking customer base who, in turn, switched their loyalty to McDonald's direct competitors - other fast-food brands as opposed to fast-casual dining options.
After learning a valuable lesson, McDonalds reinstated its Value Menu in January 2018 and has seen an increase in sales. The latest offerings of items priced at $1, $2, and $3 is a marketing strategy to entice consumers to buy items at the higher price-points. So far, the strategy is working - McDonalds reported that revenues in the first quarter of 2018 increased 2.9 percent compared to the first quarter of 2017.
All companies must evolve and stay relevant to their customers. However, it is critical to understand the limits your customers will accept while creating value and influence. If your company needs help collecting and analyzing these metrics, please contact us today to discuss further.
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