Wednesday, January 15, 2014

Nostalgic Capital: Money, Memories, & Miller Lite

nostalgic - [no-stal-jik nuh‐], adjective
experiencing or exhibiting nostalgia, a sentimental or wistful yearning for the happiness felt in a former place, time, or situation.

capital - [kap-i-tl], noun

the wealth, whether in money or property, owned or employed in business by an individual, firm, corporation, etc.
an accumulated stock of such wealth.

nostalgic capital - [no-stal-jik kap-i-tl], noun

the stored nostalgic value of some person, place, or thing.
the total amount of nostalgia inspired by some person, place, or thing.
 

SUMMARY


Nostalgia is a bittersweet longing and emotional appreciation for the past. It is often associated with and triggered by a particular concept, product, event, person, or place that we experienced in some personal way, either directly and/or through the prism of media - e.g. through newspapers, television, internet, etc. 
 
The Beatles, Credit: UPI Telephoto via Wikipedia
Most importantly, nostalgic emotions are also a motivator for various actions. We take pictures in the present to meet our nostalgic needs in the future. We listen to an Elvis, The Beatles, Led Zeppelin, Guns N' Roses, or Nirvana album as a way to scratch a nostalgic itch. We select certain brands, follow certain actors, or even live in certain places because of nostalgic impulses. The best nostalgic indulgences are pleasant and fulfilling. Nostalgia is a very powerful emotion.

Capital is stored value. Most often, it refers to resources such as money, land, or various commodities. But it can also represent significantly less tangible concepts - such as human capital, intellectual capital, or even emotional capital. More capital is (nearly) always better than less capital. One form of capital can usually be traded for another form of capital.


Nostalgic Capital is the accumulated nostalgic value of some person, place, or thing - i.e. by the nostalgic asset. It represents the total nostalgic emotion that a nostalgic asset evokes, either from an individual or a group of individuals - e.g. from me, you, the class of 2003 from New York University, the city of Detroit, etc. 


Nostalgic capital can appreciate or depreciate in value. It can be traded for other forms of capital - such as money, time, effort, etc. The concept of nostalgic capital is important for marketers, product developers, producers (music, film, television, etc.), and all others who create something that is meant to be consumed - i.e. it is a vital concept for most modern professionals. Yet it is rarely studied and often misunderstood.

The purpose of this article is to introduce the concept of nostalgic capital - particularly as it relates to how new products are designed, developed, and marketed. The aim is not to depict a comprehensive study or to establish a definitive piece, but to intelligently begin a conversation about this important topic and to present a broad foundational theory.
 

THEORY


The process of nostalgic capital creation and appreciation follows the familiar pattern of the S-Curve. It differs from the traditional technology life-cycle in that the value of nostalgic capital never dips below zero and exhibits a more gradual depreciation in value.

Nostalgic Capital Curve, Credit: Vladimir Vukicevic

The Establishing Event represents the beginning of nostalgic capital creation. It is the first time that a person, place, or thing enters the consciousness of an individual or a group of individuals. An establishing event can be the initial release of a film, the unveiling of a new product, the first visit to a new city, etc. 

The establishing event is rarely one moment in time. It is a range of time during which people absorb the person, place, or thing for the first time - while there is still a level of exciting novelty associated with the nostalgic asset. The establishing range can vary significantly, based on the concept being evaluated. For instance, the establishing event range for The Beatles can be reasonably defined to be up to ten years long (from 1960 to 1970), while the establishing event range for Abbey Road (the 11th studio album by The Beatles) is likely between 6 and 12 months in 1969/1970.

The Gradual Appreciation period begins immediately following the establishing event. As time begins to pass, memory begins to overtake reality. The asset associated with the nostalgic emotion begins to gain nostalgic capital. No matter what the nostalgic asset is - i.e. what its level of perceived quality at the time of establishment is accepted to be - nostalgic capital will begin to accrue. The absolute value of the total nostalgic capital will vary greatly among different concepts - e.g. the first Star Wars movie will have a significantly different absolute level of nostalgic capital from Paris Hilton's mid 2000's TV series, The Simple Life.

Star Wars, Original Poster Design
Rapid Appreciation of the nostalgic capital seems to begin 10 to 15 years following the establishing event and lasts 5 to 10 years. This period often coincides with a shift in social generations - i.e. as a new cohort of people begins to grow and as the previous generations move down the temporal totem pole. Since World War II, this has occurred approximately every 20 years throughout most of the world.

The Nostalgic Apex period occurs about 20 to 30 years following the establishing event and lasts between 10 and 15 years - depending on different variables. This peak period represents the greatest opportunity for marketers, product developers, entrepreneurs, producers, and other creators looking to capitalize on the peak of nostalgic emotion evoked by the nostalgic asset.

The nostalgic apex often represents a comprehensive and renewed embrace of a particular concept. This period tends to highlight the positive aspects of the nostalgic asset. It is nostalgia at its grandest.

The Depreciation Period immediately follows the nostalgic apex. It is the gradual de-emphasis of the particular concept. It is a slow cultural decline in significance and nostalgic value. This period often sees other persons, places, or things having a larger and more prevalent nostalgic role in society. It also coincides with the gradual death of the generation which experienced the initial establishing event in the most personal and direct way. It is a period of memory decline and the physics of decay.

As more people no longer have any direct connection to the establishing event, the Historical Period begins. Nostalgia becomes history. Emotion is slowly removed as a more objective perspective is applied. Past concepts are cemented into archives and consistent narratives.

CASE STUDIES


Miller Lite - The Superficial Approach

Miller Lite is one of the first mainstream light beer brands to be widely sold in the United States. The brand was introduced in 1975 and was widely promoted upon launch by numerous celebrities and notable athletes. As the brand has evolved, so has its packaging and overall presentation.


New/Old Miller Lite Can
Since the widespread acceptance of light beers, the market for alcoholic beverages has significantly evolved. New competition within light beers, in addition to a massive surge of other options - including craft beers, spirits, wines, etc. - has made differentiation more difficult. As a new marketing and product differentiation strategy, Miller Lite has re-introduced its original packaging as part of a limited-time "The Original" campaign. 

This obvious attempt to leverage peaking nostalgic capital is relatively simple and superficial. But it represents a potentially lucrative marketing opportunity for many long-established consumer brands such as Miller Lite.

Instagram - The Integral Approach

Instagram is an extremely popular photo-creation, photo-filtering, and photo-sharing application that represents a powerful example of the value of nostalgic capital in product design. Launched in 2010, Instagram quickly gained users (over 100 million by 2012) in a crowded marketplace of established and emerging photo-based applications.

Instagram's key point of differentiation is seen in its photo-sizing and photo-filtering features. The application confines photos to a square shape - reminiscent of classic and highly popular Kodak and Polaroid formats from the 1970's and 1980's. In addition, Instagram offers numerous evocative photo filters that can easily be applied to personal images. The filters enable users to age the look-and-feel of images through color distortion, sharpness adjustment, and other neat changes.

The Instagram Difference, Credit: I, Sailko via Wikipedia
Instagram brilliantly incorporated the concept of nostalgia as an integral component into its product design and key features. A large part of the application's rapid adoption is due to the utilization of nostalgic assets (the look-and-feel of photos) during their nostalgic apex (25-35 years following original adoption of that look-and-feel). Instagram was sold to Facebook (its largest competitor) in April 2012 for around $1 Billion in cash and stock - well in advance of the depreciation period for its nostalgic assets, i.e. its product differentiation features.

River West Brands - The Complete Approach

Specialty brand and marketing agencies are emerging that focus purely on acquiring and monetizing no-longer active brands. One such company, River West Brands, purchases dead brands purely for their nostalgic capital value. River West's founder, Paul Earle, has explicitly based the company's complete strategy on the powerful concept of nostalgia.

As quoted from the New York Times: "...when Earle talks about consumer memory, he is factoring in something curious: the faultiness of consumer memory. There is opportunity, he says, not just in what we remember but also in what we misremember." From this, it is evident that Earle derives the financial valuation for the brands he purchases from nostalgic capital value.

The Coleco Vision Console, Credit: Evan-Amos via Wikipedia
River West Brands has purchased numerous brands, including Brim Coffee and Coleco Games. Some of these brands have been successfully relaunched, leveraging the nostalgic apex period to generate new profit from old, seemingly-dead assets.

CONCLUSION


Nostalgic capital is a valuable concept that is important for marketers, product developers, producers, and all those who create. Both individuals and organizations can benefit from understanding the principles of nostalgic capital. 

The theory of nostalgic capital can be applied in different ways - from the superficial to the integral to the complete approach. Businesses can leverage nostalgic capital and the nostalgic capital curve in order to boost sales, introduce new products, or even as the foundation for strategic positioning.

Nostalgic capital and the nostalgic capital curve represent an emerging theory that should be studied further. Nostalgic capital may offer us the opportunity to unlock significant economic value via an approach that leverages a generally positive reservoir of emotions.



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OPEN QUESTIONS


How can nostalgic capital be objectively measured?

What variables determine the peak of nostalgic capital? 

What variables determine the length of the nostalgic apex period? 

How does new technology and the proliferation of the internet impact the nostalgic capital curve?

How does the concept of fauxstalgia fit within this theory?

How can we encourage the positive application of nostalgic capital concepts?
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