Branding agency MBLM is finalizing its 2020 Brand Intimacy Study, which it calls "the largest study of brands based on emotion." The research shows that when consumers connect with brands on an emotional level, they develop a strong sense of loyalty to those brands. The companies behind those brands form better, longer-lasting relationships with their customers, with stronger bonds that can turn into repeat business.
The report cites a number of advantages for companies that make these attachments based on emotion. But there's also a clear benefit to investors: According to the report, brands that customers connect with intimately tend to outperform the average company within established financial indexes for both revenue and growth over the past 10 years.
Let's take a look at the five brands that resonate most with millennials in 2020, and some of the reasons for those connections.
In the wake of the Great Recession, many millennials put off major life choices, like becoming homeowners, starting families, and buying cars. This wasn't by choice, but the result of high student-loan debt, a difficult job market, and tight lending standards. Soon after, however, the largest demographic began making up for lost time. They approached life tasks like car shopping using the same digital skills and eye toward value that were second nature to them.
While other automakers had written off millennials, Ford Motor Company (NYSE:F) was busy courting them. In late 2010, the company introduced the value-priced Ford Fiesta subcompact, which was marketed heavily toward these cost-sensitive consumers. The car was packed with technology that millennials could relate to, including its SYNC infotainment system. Ford also used experiential marketing and held contests that encouraged millennials to submit video applications to become "Fiesta agents." Over the coming four years, Ford increased sales to millennials by 80%. As a result, many of those first-time car buyers still relate to Ford.
Nostalgia is just one component of the love affair between millennials and Walt Disney (NYSE:DIS). The House of Mouse had a renaissance of sorts of in the 1990s, capturing the hearts of many young moviegoers. During this period, Disney released such instant classics as The Little Mermaid, Beauty and the Beast, Aladdin, The Lion King, and Mulan; these movies became the soundtrack of a generation for many millennials. Disney has since added Marvel, Pixar, and Lucasfilm to its collection, and each studio has a strong connection to the demographic, increasing the nostalgia factor.
As millennials have grown and begun to have families of their own, they introduce their children to the stories they grew up with. Millennials are also passionate about their values, integrating their beliefs into deciding which companies they do business with. Disney is still highly regarded as one of the most family-friendly companies out there. Millennials can also now get their Disney fix from the company's recently introduced streaming service Disney+.
Many millennials learned firsthand the value of being frugal after the collapse of the economy in 2008 and 2009, which forced many young consumers to return home after college or to stay with their parents longer than planned. A difficult economy instilled a sense of price consciousness in these budding customers. Target's (NYSE:TGT) focus on price and value -- without coming off as cheap -- is a natural fit for millennials.
Target has taken a number of steps to appeal directly to millennial shoppers. The company redesigned its grocery departments to highlight healthier food choices, something that resonates with these younger shoppers. Target has added organic, natural, less-processed, and gluten-free options, and has introduced small-format stores geared toward millennial shoppers. The company has also worked to integrate its e-commerce and brick-and-mortar strategies, a move that appeals to consumers who grew up in the digital age.
E-commerce was born about the same time as the earliest millennials, so digital shopping has been a growing presence in their lives for as long as they can remember. Many in this digitally endowed generation grew up on the internet, and have no doubt become accustomed to frequent deliveries from Amazon.com (NASDAQ:AMZN), following in their parents' footsteps and eventually becoming customers themselves.
Using a mobile app and making online purchases are second nature to this tech-savvy bunch, but other factors make Amazon a natural fit with millennials. The demographic's social approach to shopping involves researching products and reading reviews, and Amazon's fanatical approach to customer service also resonates with them. By some accounts, 97% of millennials use Amazon, and nearly two-thirds make half their purchases via the online retailer.
The first PlayStation debuted in 1994, and it shouldn't be much of a surprise that millennials would forge an emotional attachment to Sony's (NYSE:SNE) iconic console. Millennials embraced technology from a very young age, including when it comes to game play.
Mario Natarelli, managing partner at MBLM, wrote:
PlayStation has been a strong millennial brand in our study for years and in 2020 has emerged as top performer, especially among men.
Similar to our 2019 findings, millennials form strong connections with brands in the media & entertainment industry. The combination of the e-sports phenomenon and impact of hardware platforms has likely fueled PlayStation's rise in the rankings. Impressively, more than 50% of millennials in our survey are in some form of intimacy with the brand.
Results any investor would love
As a group, the stocks of these companies have returned more than 31% over the past year, easily eclipsing the 22% gains of the S&P 500. That's not all -- this group's market-beating performance holds true for the past three-, five-, and 10-year periods as well.
MBLM will publish the full study on Feb. 14, 2020.