Some Brands Thrive Without Advertising

Aug. 23 -- Like urban legends or e-mails that somehow get passed around the world, some consumer brands have thrived simply on buzz generated by word of mouth.

Products like Krispy Kreme doughnuts and the hair and skin care treatments of Kiehl's have been so successful from word-of-mouth publicity that they haven't even needed to advertise.

And even though these companies are growing rapidly — last year saw both the initial public offering of Krispy Kreme and L'Oreal USA's purchase of Kiehl's — don't expect to see television commercials for them any time soon.

That's because for these companies, consumers' experiences with these products have been more valuable in establishing their place in people's hearts than any Pepsi commercial with Britney Spears could achieve, say marketing experts.

No Ads Necessary

"The key is to recognize that in terms of brand equity, all that really matters is that the customer develops a positive image," says Kevin Keller, professor of marketing at Dartmouth's Tuck School of Business. "Experience or word of mouth is probably the best way to do that."

Krispy Kreme has more than doubled its store locations since 1997 to an enthusiastic audience. At every grand opening of a new Krispy Kreme shop, hordes of cult followers line up outside well before the store opens. The approach has apparently paid off — in the latest earnings reported today, revenues rose almost 28 percent in the quarter ended July 29.

Krispy Kreme Earnings

First produced in a shop in Winston-Salem, N.C., in 1937, part of what has made the doughnut chain so popular is buzz from transplanted Southerners, said Stan Parker, the company's senior vice president of marketing.

"For a lot of people, it's an emotional connection with the brand," says Parker.

Much of the doughnut maker's promotional efforts have focused mainly on community involvement, like allowing groups to sell Krispy Kremes as part of their fund-raising efforts. Despite the company's increasing size, Parker doesn't see it straying from that down-home strategy.