Every Strong Brand is a Niche Brand

by Tom Asacker

Think about it: Brand value is all about distinction and scarcity. The brand appeals, in a particular way, to a particular group of people. And that’s why those people will:

1. Pay a premium for it (which results in increased margins);

2. Go out of their way for it (which results in increased margins; and/or

3. Talk about it and show it off to their family and friends (which results in increased margins).

So this struck me as ill-informed (from Adweek, 8/31/2009):

“Explaining that it was embarking on a search for a new advertising agency, VW vp of marketing Tim Ellis said, ‘Our goal of rapidly increasing our volume in a mature market requires the Volkswagen brand to evolve into a more relevant mainstream choice.’”

“The Volkswagen brand needs to inspire our base of enthusiasts as well as reach out and captivate those in mainstream America.”

Sorry Tim, but that’s an oxymoronic statement. Enthusiasts are not the same as mainstream. Pursuing that goal is a commodity strategy destined for low margin, GM-like performance. Instead, inspire your base of brand enthusiasts, and then empower and motivate them to inspire the mainstream. See the difference?

This article has been republished from A Clear Eye, a great branding blog by Tom Asacker. It is licensed under the Creative Commons 2.0 license.

Claim Your Personal Brand Online

Facebook and Linked In can be a way to build relationships and help people get to know, like, and trust you. Paul Travis from Marketing 2020 describes some ways that you can claim your personal brand on the main social networks.

I don’t normally “tweet” about a new feature in a given company’s product or service. But I know how much our “collateral” affects our personal brand!

For example, when I meet someone whose business card says “Get YOUR free business cards at VistaPrint.com”, I take them less seriously. Business cards ARE your “leave-behind”, and have such impact on making and supporting the first impression you’ve made — that it makes no sense to skimp here.

Same goes if I read the email address on the card is “SmithFamily@comcast.net”. It is so inexpensive these days to get your own domain name (I have one for my family as well as multiple business domains) and forward your email that it absolutely makes sense. Your domain registrar will understand this, even if you don’t.

Similarly, if you are on LinkedIn, I highly recommend that you get a personal link. That way, whether you refer to it in your email signature — or more likely, people point to your LI public profile when making an introduction — it shows as

http://www.linkedin.com/in/paultravis

rather than something like

http://www.linkedin.com/pub/ptravis/2/3b/241.

FaceBook just implemented usernames as well (last night!) So especially if you are an occasional FB user, I recommend you take a moment to see if your proper name or favorite nickname is available.

It’s all about taking the time to plan (and then execute) that thing many people struggle with — your personal brand.

Top Brands Staying Strong in Downturn

According to Millward Brown’s Top 100 Most Valuable Global Brands of 2009 Report, the top 100 global brands have increased in value by 2% to $2 Trillion over the past year. Despite the global financial downturn, the top brands seem to be immune to the economic turmoil, if you trust Millward Brown’s analysis. Some top brands seem to be excelling in the downturn like Apple and Amazon, while others have tumbled like Disney and Starbucks.

One of the biggest surprises is Apple’s success despite the economic environment. Despite smaller wallets, consumers are still managing to pay for relatively expensive iPods and iPhones which sometimes require expensive AT&T data plans. This supports Millward Brown’s analysis that the top brands are striving. This may be because consumers are looking for the most value for their money. They may sacrifice going to Starbucks for a month and make their coffee at home so that they can afford a new iPhone.

According to the report:

“Customers are not holding their breath during this economic volatility. They are adjusting their coping strategies, while remaining determined to purchase brands that contribute to the pleasure, quality, purpose, and security of their lives.”

One of the biggest questions companies want to know, is whether the recession will cause a lasting change in the way consumers buy. One noticable change is the avoidance of conspicuous consumption as people try not to appear insensitive or greedy. Luxury brands still grew 10% in value, although this can be largely accounted for by growth in demand in China.

“Consumers are not in the mood for greed. And greed is not required for success. Once we are on the other side of the economic slowdown, consumer spending will pick up. But perhaps slowly, as people internalize the lessons of our recent boom and bust history. They will want quality, intelligently created, well-designed products. But they may not want one in every color.”

The study suggests that even when money is tight, consumers will still spend on the strongest brands. Consumers know what they can expect from strong brands and are still willing to pay premiums for this assurance. The exception are brands that are perceived as unnecessary luxuries like a trip to Disneyland or a 4 dollar coffee.

Jim Fisher Discusses Utilizing Areas of Expertise of OneAccord Interim Executives

My background is multi-unit retail chain marketing with a lot of brand building mixed in. I think the benefit [of OneAccord], for instance, the first proposal I worked on was really a manufacturing company and I’ve had no experience with manufacturing in a direct way. I’ve been more with companies like Pizza Hut or Cracker Barrel, etc. With the manufacturing company I worked with Greg Wilk in Dallas and he has a strong sales background. So between the two of us we created a 4 phase consulting plan that we could work through with the company and build the brand, build the strategy, build the business plan, which I’m strong on and with Greg’s experience in sales, we could really build that. It was a great combination between the two of us.

The other aspect, I’m working with a major 11 billion dollar software company. We’re not working with them now but we’re having preliminary discussions. Frankly I know nothing about high tech but
I can rely on other partners within OneAccord to fill that void. I can go in, I can talk to them about what their needs are, what their pain points are, what their challenges and opportunities are, and I can help build that strategy and respond to it and deal with the marketing issues but I can also bring in very relevant OneAccord partners who know about high tech who know about buzz marketing, things like that, that they’re really looking for.

Jim Fisher, is an enterprising senior marketing executive with a record of designing innovative programs that result in significant revenue growth and a strong market presence. He has held executive marketing positions at Pizza Hut and Cracker Barrel. Mr. Fisher can be reached at 781.449.4333 or boston(at)oneaccordpartners.com.

Salience and Sales

by John Moore of Brand Autopsy

In January, Hyundai did a major ZAG. Other car companies decided to play the “Zero Down. Zero % Financing.” card as well as the “Employee Discount for Everyone” card to rescue drowning sales. Hyundai didn’t. Hyundai zagged while others zigged.

Hyundai introduced an alternative marketing program that didn’t rely on the same easy credit, wallet-stretching gimmickry that got us in this current dismal economic mess.

Understanding the lack of confidence consumers have with their job stability, Hyundai created a marketing program to reduce the risk in buying a car. The program was called the Hyundai Assurance plan. Its mechanics were simple: if you lost your job after buying a new Hyundai, you could walk away from your loan or lease and return the car to Hyundai.

In marketing, salience occurs when a business designs a marketing program that connects emotionally and rationally with consumers. In business, sales occur when people buy stuff.

The beauty of the Hyundai Assurance marketing plan is in its salience and its sales. With a 10.0% unemployment rate on the horizon, it’s no secret people lack confidence about when their next paycheck is coming. Sales results of the Hyundai Assurance marketing plan are astounding.

Overall car sales in the United States have declined about 40% from the same time last year. (Yikes!) Hyundai car sales aren’t in decline. Nope. So far this year, Hyundai has recorded an increase of nearly 5.0% from the year prior.

As marketers, we must applaud Hyundai for designing an effective marketing program that drives both salience and sales.

SOURCE:New York Times Magazine article (Rob Walker) | March 22, 2009

Photo by mbaylor

This article was originally posted on Brand Autopsy and is licensed under the Creative Commons 2.5 license.

The McDonaldization of Starbucks

by Charles Sipe

I once jokingly made the comment, “Starbucks is going to become the McDonald’s of coffee”. I don’t think that is too far from the truth now based on recent events. Starbucks recently started promoting “value meals”, a breakfast sandwich and a small latte for $3.95. They also started selling the instant coffee packets called Via for 3 for about $3. This may be part of a strategy to grow sales in response to the economic recession, but at what point does it become commoditization of the brand? You can now get a cup of coffee for less than a dollar, if you buy the Via instant coffee and mix it yourself. Has Starbucks lost sight of their vision to bring the experience of a Italian coffee house to the masses, and sacrificed it to maximize sales? I would argue that Starbucks has been on this path for some time, ever since they replaced hand ground coffee with automatic espresso machines and started with the drive-throughs which made their service more convenient but took away from the experience. That was the turning point where it because less about the Star and more about Bucks. However when you focus too strongly on the bottom line and not enough on customer experience, the brand starts to die and you start looking more like a commodity.

Has Starbucks become a value brand like a WalMart or a McDonald’s? This may not be such a bad strategy when you consider the millions of Americans who have become accustomed (or addicted) to picking up a cup of coffee at the drive through on the way to work. Having a prepared cup of coffee every morning has become more of a need than a want. Starbucks will probably have tons of customers who need their services for many years to come. But, when you sacrifice the quality associated with your brand by becoming ubiquitous or selling your product in a powdered form, you open yourself up to be easily substituted. Is Starbucks that much better than the corner espresso stand where the barista still knows your name? If a Starbucks clone, such as a Caribou Coffee or a Tully’s is convenient, will people still go the extra mile to have Starbucks? One of the major problems with a value focus, rather than a brand focus, is that $4 dollar coffee is rarely a value. Now it’s McDonald’s that is trying to be different from Starbucks with a recent billboard that read “4 Bucks is Dumb”.

Photo by Robert Couse Baker

Are Brands Becoming Less Relevant?

Over on the Customer Experience Matters blog, Bruce Temkin explains why he has declared the death of brands.

“It’s simple: Companies have let profits replace purpose. As firms optimize left-brain management techniques for squeezing out additional profits, they’ve lost something very important — their raison d’être. True brands are more than just marketing slogans, they’re the fabric that aligns all employees with customers in the pursuit of a common cause.”

While I think it’s a far stretch to say brands are going to die, I do think that brands have become less relevant in the current environment. The DVR and the internet have changed the way people are consuming television media which has traditionally been the main brand builder for large cap companies. According to MediaPost: “In 2008, Nielsen estimated penetration of DVRs at 25% of U.S. households. This percentage is expected to climb to 41% of homes by 2012, according to research conducted by MAGNA Global Research.” The internet has also changed how people find information on products. Consumer’s don’t have to rely as much on brands to estimate value before they buy.  They can read comprehensive reviews online or find out the aggregate customer ratings of a product.

In addition the emergence of social media like Facebook, blogs, and Twitter, has accelerated the spread of word of mouth. A brand’s reputation is much more volatile, as bad PR or rave reviews can spread through online communities like wildfire.

One of the most successful brands of late is Zappos which has been able to grow to a billion dollars in sales with no television advertising. Instead they have used social media like Twitter to help spread of the word of their world class service. Like Seth Godin likes to say, the TV Industrial Complex, in which companies like P&G would rely on television ads to build a brand, is no longer a viable strategy. Companies that are best able to adapt to the new media landscape will have the best chance of sustaining their brands and stay relevant with consumers.

Interim Marketing Fits Perfectly for the New Work Model

The Did You Know presentation on You Tube illustrates the rapid and radical changes going on in the world. One aspect of life that is shifting is the nature of work. Here are some interesting facts from the video:

• The US Department of Labor estimates that today’s learner has 10-14 jobs by the age of 38.

• 1 in 4 workers has been with their current employer for less than a year. 1 in 2 has been there less than 5 years.

The trend of shorter job durations has a huge impact on how business will operate. Companies of the future will rely less and less on permanent workers and more on the specialized temporary worker who can accomplish a specific task with great effectiveness, even at the executive level. This is how interim executives can really help an organization who needs an effective leader to set a new direction for marketing, reinvigorate a sales force, or a myriad of other important jobs in marketing or sales. A interim marketing executives does not require a huge annual salary with an expensive benefits package. They can accomplish a goal by coming in a couple days a week or working a couple months to roll out a new product or execute a new national marketing campaign. Once the job is done, they can go away until you need them again.

Interim Marketing Executive Question: Assessing Brand Value

by Patrick Smyth

Question: In addition to understanding the cost of poor execution, how can companies assess the value of their brand?

The Service-Profit Chain developed by Heskett, Sasser and Schlesinger from Harvard Business School establishes relationships between profitability, customer loyalty, and employee satisfaction, loyalty, and productivity. The Service-Profit Chain is made up several key linkages: profit and growth are stimulated primarily by customer loyalty. Customer loyalty is a direct result of customer satisfaction. Satisfaction is greatly influenced by the value of service provided to customers. Satisfied, loyal, and productive employees create value. Employee satisfaction, in turn, results primarily from high quality support services and policies that enable employees to deliver results to customers. Let’s say that you have high quality support services and polices, and your employee satisfaction surveys suggest your employees are happy. Does that mean your customers are in fact experiencing results that match or exceed you brand promise? Do satisfactory results really help you accomplish your goals of being the leader in your industry? What if the predominant culture of your employee base demonstrates a set of values that are not consistent with the values of your brand promise? What if different parts of your employee population that come into contact with customers have quite different cultures and values? Does your sales force demonstrate the same behaviors and in the same manner and style as your customer service organization? Such inconsistent behaviors between employee groups, and between employees and the brand promise, create disjointed experiences for customers who will find that they are constantly adjusting to your company’s different styles, behaviors, standards of performance, and promises. The customer will quickly conclude they don’t know what you stand for, and they won’t know how to describe their experience with you – perhaps other than “clumsy”. This makes it very difficult to develop a sense of affinity and loyalty with your company. While the Service-Profit Chain model provides an essential foundation to assure that your employees are delivering results to customers, a focus simply on employee support services and policies will not result in employees delighting the customer and delivering on your brand promise. You need a defined employee culture, measurements, and reward and recognition system that aligns behaviors consistent with the brand promise of your business. This strong link and consistent behaviors will strengthen the bond of loyalty with your customers, lower the cost of support service, and accelerate brand efficiency and sustained profitability.

In financial terms, the value of a brand can be a significant component of the value of the company. The price paid for acquired businesses is frequently substantially higher than the appraised value determined from the tangible assets of the company.

Assessments of the actual brand value of a business to business services company should include the internal business processes and communications systems to determine how effectively the various functions and people are aligned to deliver performance consistent with the brand promise of the company. Unrealistic prices can be paid for brand value that may be more tied to market awareness and market share, than any real capability of the company to underpin its brand equity with real sustained performance. Brand value should be discounted by elements that fail to deliver effectively, or where significant inconsistencies exist between the company and its customers’ expectations for the future.

Consider the case of Philip Morris: “In 1989, Philip Morris paid $12.9 billion for Kraft, six times its net asset value. According to Philip Morris CEO Hamish Maxwell, his company needed a portfolio of brands that had strong brand loyalty [i.e., customer relationships] that could be leveraged to enable the tobacco company to diversify [i.e., financial relationships], especially in the retail food industry [i.e., trade relationships].”2 Philip Morris paid billions for a set of relationships and the expectations that those relationships would enable Philip Morris to conduct business in entirely new ways in the future.

In addition to significantly affecting the purchase price of a company, the value of the brand and brand equity directly affects stock price of the company. A Cap Gemini Ernst & Young report issued in 2000 concluded “brand power can account for 5 to 7 percent of the change in a company’s stock price.” 2 A study of 220 companies identified that corporate brand image could be quantified with the following components:

Advertising spending 30%
Size of company 23%
Low dividend 10%
Earnings volatility 7%
Stock price growth 8%
Other factors* 22%

*(including [other marketing components such as] events and publicity, industry affiliation, product categories, message quality, etc.)3 Thus 52% of the factors influencing the brand image are those associated with ensuring that your brand message and promise are effectively defined and articulated through all the transmission systems in your company.

Through this brief analysis we can easily conclude that effectively developing and executing a comprehensive company-wide brand strategy will contribute directly to the value of the company. The steps that can be taken to accomplish this are defined and uniquely adaptable to any business. The results will be measured in the improved performance of every function of the company, leading to improved sustained profitable growth and continuing growth in stock equity.

1 Tom Duncan, Driving Brand Value, pg. 4.
2 “Name Brand Calculus or Imaginary Numbers?” US Banker, Volume 113, Number 6, Page 26, June 2003.
3 Ad Value, Leslie Butterfield, ed., Butterworth Heinemann, Oxford, 2003, “How advertising impacts on share price,” James Gregory, pgs. 17-25.

Photo by Scelera

Interim Executive Question: Can the Costs of Poor Brand Performance be Measured?

Question:  Can the costs of poor brand performance be measured?

The cost of poor brand performance is real and it can be measured.  The elements of cost are tangible and often already measured by companies, including: rework, error correction, concessions, lost opportunities, and customer attrition.   Each one of these elements increases your cost of service, selling, support, and overhead as remedies are implemented to correct them.  These costs can have an exponential impact across the transmission systems:  that is, each element or system that fails, or any inconsistency between them or against the brand promise tends to compound the noise in the communication and impact the perception of the customer.  Why is there such a compounding effect?  Remember that for business to business customers, the sum of all of their experiences and all the communications with your entire firm over time serve to create their perception of your brand.  When one element disappoints the customer, it is automatically compounded by another element – even though they may seem totally unconnected from inside your company.  Left unchecked, the customer’s disappointment will grow and negative perceptions will expand beyond simply the issues at hand to become a general perception of your whole business.

While the cost of negative brand efficiency may be difficult to measure precisely, the direct impact of poor performance and quality on each of the communications systems can be measured.  Many businesses have sophisticated processes, software and even six sigma quality improvement programs designed to measure and improve that performance and increase profitability.  These initiatives do not often measure systems across the enterprise and rarely, if ever, do they measure the effectiveness and consistency of communication and performance of all of these systems with the intended brand strategy of the business.  Managing each one of those issues in isolation and not in a holistic manner aligned with the brand strategy will result in an exponential drain on energy and resources required to deliver sustained profitable growth.

Photo via flickr

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