Yale School of Management

Center for Customer Insights

Advancing the frontiers of consumer understanding

Brand Permission

History is littered with cases of adventurous marketing initiatives that crossed consumers’ limits of acceptance. Often, it is not because these ideas were unwelcome or the firms did not have the capability to deliver on the core benefit. Rather, these cases can be viewed in terms of a lack of permission for the brand to conduct specific initiatives.

While marketers often think of brand permission in a narrow fashion – where a brand can or cannot extend in terms of new product offerings, this article proposes a broadened concept of brand permission to the entire marketing mix. Here we examine how to assess and leverage brand permission without turning off customers.

Two recent cases in the North American market highlight the dangers of ignoring this broader notion of brand permission. The snowball effect of crossing consumer limits was seen with Bank of America and its announcement of its decision to levy a monthly $5 fee for debit cards in late 2011. The charge was initiated to help recoup lost revenue from new legal restrictions on cards and overdraft policies. In retaliation, at least 650,000 people joined credit unions between September 29 - the day Bank of America announced the debit card fee - and the first week of November[i].

And competitors were laughing - all the way to the bank. In response to consumer anger, credit unions initiated “National Bank Transfer Day” on November 11th and big box retailers such as Walmart capitalized on consumer anger to push their own banking services. While $5 is not a large amount in the big picture, it seems customers felt that they were being squeezed by large banks and levying a fee on what was essentially customer’s money was impermissible.  In the final analysis, Bank of America neglected to understand their consumers and what they deemed to be the acceptable norms for bank behavior, all of which determined the permissions they gave the brand.

A second case of not understanding brand permission occurred with the on-demand media company, Netflix. The furor began with its move to separate a single consumer account providing DVD-by-mail and streaming content into two separate accounts. Under the new system, customers would be forced to maintain two accounts, one for DVD-by-mail and another for streaming content, each under a separate brand. Although the product was essentially the same, consumers rebelled against the new channel strategy. They also spoke with their feet. Over the third quarter of 2011, Netflix lost 800,000 accounts. Ultimately, Netflix had to retract the rebranding and revert to the single account system.

In retrospect, both companies had chosen strategies that fit with their existing capabilities and changing market scenarios. Their actions were in line with their brand offerings and their market spaces. But permission was lacking and eventually under pain of public humiliation and lost revenue, the companies had to retract their offers. While it is difficult to navigate and define permission for any given brand, companies don’t have a choice anymore.

Defining brand permission

Brand permission defines the limits of customers’ willingness to accept a familiar brand name in new marketplace situations. To illustrate, consider how consumers would react to an announcement that the Altria group (marketers of Marlboro cigarettes) plans to leverage its insights into people’s health and open Marlboro-branded research and treatment centers that specialize in lung cancer. Now consider how consumers would react to Medtronic, a medical devices maker creating a similar type of center. The negative response to the former is a clear example of a lack of brand permission. In contrast, the latter is a marketing innovation by Medtronic[ii] in Beijing that has been well received by two key stakeholder groups, patients and the medical community. The defining factor of business success here is the presence or lack thereof, of brand permission.

As the two opening examples indicate, brand permission goes beyond product, extensions, encompassing all actions linked to a brand. For example, a product can be well accepted, but some channels or pricing strategies may be taboo to the consumer. Would consumers give permission to Pepsico to sell their unhealthy snacks in schools? How about giving permission to a soft drink company to charge higher prices on a hot summer day? Brand permission is the study of these limits that are rarely understood until they are broached.

A packaging change at Tropicana which led to customer backlash 

Brand permission can even apply to product packaging, a seemingly non-controversial aspect of the brand. An example of a company breaching brand permission in this realm occurred with Pepsico’s Tropicana fruit juice brand and their attempted rebranding of the existing packaging to a more modern look. Customers were having none of it, with sales falling by 20% in the first month of the re-brand. Less than two months after its launch, Tropicana decided to revert to the original design.

To place it in perspective, brand permission is the stage that comes before creating extensions or a new offering. Unlike the commonly heard saying “It is better to ask forgiveness than permission” this is a clear case where it is a good idea to invest in getting consumer insights to understand the comfort zone where the brand resides. A good example of misunderstood brand permission is from 1985, when Coca-Cola replaced its original formula with a newer one. Even in a pre-mass-internet era, the consumer outrage was huge and Coca-Cola had to retract their product.

As a marketing strategist, a clear understanding of brand permission is essential as it provides insight into the limits on a brand’s actions including extensions. Cultural norms, brand history and brand-consumer relationship are some of the factors, to name a few, which vary by market and significantly alter the permission given.

Now we know what it is. How can we get it?           

It’s one thing to say, “My brand doesn’t have permission”, but the real action point is asking “What would give the brand permission?”

Research conducted at the Yale Center for Consumer Insights points to a few key factors that allow brands to gain permission. The primary determinant of brand permission is consumers’ perception of norm violations, that is, their view of what is correct behavior for the brand.  Social norms such as cultural values and marketplace conventions, essentially social factors beyond the control of the brand, also play an important role.

Brand-specific norms are also important.  For example, consumers could desire adult-focused content, but may reject it from a family-friendly brand such as Disney but not from Viacom. Even if an initiative is seen to be socially acceptable, it still needs to be linked to the brand meaning. This requires a clear understanding of perceptions and of how a brand is positioned in the consumer’s mind.

A key lesson from these examples is that the business case for an extension or an action could be strong, but lack of brand permission can result in failure. With growing consumer awareness and the increasing power of online channels to galvanize support, companies need to be careful about the “let’s try it and see” approach to new initiatives. Customers are able to dictate what they will accept from brands, and they do. Ignoring brand permission can and will have disastrous results both for short term performance and long term associations with the brand. The message is clear - ignore brand permission at your own peril.