Marketers have begun experimenting with AI to improve their brand-management efforts. But unlike other marketing tasks, brand management involves more than just repeatedly executing one specialized function. Long considered the exclusive domain of creative talent, it encompasses multiple activities designed to build the reputation and image of a business-such as crafting and communicating the brand story, ensuring that the product or service and its price reflect the brand's competitive positioning, and managing customer relationships to forge loyalty to the brand. A brand is a promise to customers about the quality, style, reliability, and aspiration of a purchase. AI can't fulfill that promise on its own (at least not anytime soon). But it can shape customers' impressions of a brand at every interaction. And it can automate expensive creative tasks-including product design. To succeed with it, you must understand how it is perceived by stakeholders and what can be done not only to mitigate their concerns but to make them avid supporters. Using examples from Intuit, Caterpillar, and LOOP, along with in-depth scholarly research, the authors propose a framework for thinking about the key roles that AI plays when it comes to managing brands effectively.
21Seeds, a female-founded flavor-infused tequila startup launched in 2019, had made inroads into the alcoholic beverage industry by focusing on an underserved consumer segment in spirits-women, primarily in their 30s and 40s, many of whom were moms-and by following a non-traditional playbook of circumventing the traditional on-premise channel (bars and restaurants) and selling primarily to the off-premise channel (retail stores, such as supermarkets and liquor shops) where their target consumer shopped. The all-female founding team had no background in the alcohol industry, yet had grown annual sales to 66,000 cases within just three years-a highly unusual feat for a new spirits brand. Excited about the new "white space" opportunity that 21Seeds offered, Diageo, the multinational beverage company with a portfolio of other major tequila brands, including Don Julio, Casamigos, and DeLeón, acquired the fledgling brand in March 2022, retaining the co-founders as brand ambassadors. Diageo placed 21Seeds in its new Breakout Growth Brands Division, a select small group of brands to be nurtured for aggressive growth, with a goal of turning 21Seeds into a major player within the super-premium tequila segment. Diageo was considering several strategic initiatives for growing the brand, including product innovations, distribution opportunities, and marketing and branding approaches. 21Seeds had been successful to date by executing on a highly focused sales and marketing approach. Now, as the brand was under pressure to accelerate sales, its identity was being reassessed by Diageo. How important was it, at this stage in the lifecycle, that 21Seeds adhere closely to its founding brand story and brand positioning, or was now the time to evolve the brand en route to becoming a much bigger player in the market? The 21Seeds co-founders had views on how to grow the brand, but recognized that it was now part of a large portfolio of brands and ultimately under Diageo's control.
In early 2018, Eugenia Kuyda, co-founder and CEO of San Francisco-based chatbot Replika AI, was deciding how to monetize the app she had built. Launched in 2017, Replika was a consumer AI "companion app" developed by a team of AI software engineers originally based in Moscow. Replika allowed users to create their own customized AI avatar and then have free-flowing text conversations back and forth with it, like one would with a friend. Replika had a successful initial launch, signing up 2.5 million users in its first year, however, it was struggling to keep users on its app. Replika's research showed that its heavy users tended to be struggling with a bouquet of physical or mental health issues. Two monetization options were being considered: develop a subscription model for the AI companion app or pivot into a mental health app. The subscription model would offer a host of added benefits for subscribers and could be marketed at a broad TAM of lonely people. The mental health app would combine talk therapy (with the chatbot) with clinically proven therapeutic exercises, and would be targeted at people struggling with mental health issues. On the subscription side, investors were concerned that the app's users did not fit the typical profile of paid app subscribers. Yet pursuing the mental health app would mean venturing into a more regulated market and engaging in more carefully scripted responses rather than the freeform texting of the current app. The firm had been through a series of pivots and was hoping to find a clear path before venture funding ran out.
In 2022, Sophie Desormière arrived at French roboshuttle producer Navya, tasked with charting a new course in a challenging sector. The company, which had recently listed on the Paris Stock Exchange, was burning through cash reserves and needed to transform the promise of its technology into a credible business with a solid revenue stream. In the short term, Desormière had to decide whether, and if so under what pricing terms, to accept an opportunity that recently emerged in the U.S. However, the opportunity involved renting, rather than selling, and also required Navya to operate the service. In the medium term, the company had to navigate questions on whether to concentrate on the software technology that enabled driverless mobility or continue to juggle the hardware side of the business at the same time. Furthermore, questions remained around which market was best suited for Navya's product, and which would be ready with the right regulatory environment to turn promising use-cases into mass transit solutions when the technology allowed getting rid of the on board attendant; at that point Navya might consider re-pricing is AV technology. The form factors Navya should focus on was also hotly debated. Some questioned whether the required regulation and consumer buy-in would come too late for Navya, and whether they should therefore switch the business model to transport goods rather than people. Desormière would need to address all these issues, if the business was to arrive at its intended destination.
During the early part of the 2021 Covid-19 pandemic, Hometown Foods, a large seller of flour-based products, thrived as consumers hoarded baked goods and took up baking to pass the time and find comfort. Then, amid growing shortages in commodities, a vaccine arrived, businesses began to re-open, and consumers benefited from federal relief aid. This perfect storm of high demand amid stock shortages generated the highest inflation in 13 years. Commodities accounting for a large percentage of its products, Hometown had to decide whether to increase prices, and if so by how much. Although the industry norm was to wait for the number #1 player in each product category to increase price first, with escalating ingredient costs significantly reducing Hometown's margin and profit, lack of action could result in serious financial distress. A decision to move first would entail several more decisions. Should Hometown price for cost or elasticity, employ component or blended pricing? Given pandemic-induced volatility, how should it prioritize quantitative pricing calculations relative to qualitative considerations? It would also need to anticipate reactions from competitors and stakeholders including its sales force, retailers, and consumers as well as investors and lenders.