Archive for March, 2009

What are Extreme Sheep?

Sometimes a company does something so very cool with their technology that you just have to sit back and say, “Wow, that was cool.  Can I see it again?”

The Diet Coke and Mentos Experiment was one of those. Except it wasn’t done by Coca-Cola or Mentos.  

This time it’s done by Samsung.  And it’s all about Extreme Sheep.  If you haven’t seen the video yet, you should.  And if you’ve seen it once, it’s worth seeing a second time.

What does any of this have to do with branding?  These storylines contribute to the larger narrative of the brands.  That narrative is literally co-created by people who love sticking Mentos into Diet Coke bottles.  And when people see the Extreme Sheep video they are seeing a whole new side of Samsung that adds richer dimensions to the brand.  

Besides, it’s a cool video.

Are all insights really insightful, part 2

Some further thoughts on why companies often miss the best insights:

Our friend Erich Joachimsthaler has thought a lot about this issue.  One of his observations from his book “Hidden in Plain Sight“.

“The problem is that growth naturally brings with it the need for changed organization, hierarchy, structure, processes, systems, and the policies that also can inch the company further from the very people the company has been serving.  A kind of smokescreen develops that makes it very difficult to see the biggest opportunities for innovation and growth even though they are right there, hidden in plain sight.”

I like to think of it as the Galapagos Syndrome.  Why was it that Darwin was able to see the differences in the tortoises that were there for anyone to see?

In the words of Paul Simon, “Still a man sees what he wants to see. And disregards the rest.”

Are all insights really insightful

Sometimes it seems that market research is on an endless quest in search of the perfect insight.  All in all that sounds to me like a pretty good use of market research.

So why do some companies come up with better insights than others?

Is it because they have better techniques?  Is it because they have an internal culture that makes more effective use of insights? Or is it just luck? (Never underestimate the role that chance plays in business success).

The answer is some combination of all the above.  Getting the research right is the first step.  That means designing research that digs into the co-creation process with your audience. That requires getting away from the typical focus group and going for more intensive one-on-one sessions with new techniques.

Our friends at Olson-Zaltman have been giving this some thought in their newest newsletter called deepdives_spring09.  Or you can download it from their website.

Is marketing optional?

Usually I read the NY Times or WSJ while riding the subway to work each morning.  But yesterday the paper was stolen so I picked up the nearest magazine I could find.  (No, I don’t read my Kindle on the subway). It just happened to be the  newest issue of the Harvard Business Review.

This issue contains an excellent article by John Quelch and Katherine Jocz, “How to Market in a Downturn.”  I strongly recommend it.

Here is one key passage:

During recessions it’s more important than ever to remember that loyal customers are the primary, enduring source of cash flow and organic growth.  Marketing isn’t optional — it’s a “good cost,” essential to bringing in revenues from these key customers and others.

Still, company budget cuts often affect marketing disproportionately.  Marketing communications costs can be trimmed more quickly than production costs — and without letting people go.  In managing their marketing expenses, however, businesses must take care to distinguish between the necessary and the wasteful.  Building and maintaining strong brands — ones that customers recognize and trust — remains one of the best ways to reduce business risk.” [emphasis added]

There are lots of good recommendations and tactics in the article. 

Quelch and Jocz emphasize the importance of staying in touch with your audience as their psychology changes.  Research that was done even one or two years ago may now be completely out of date. It’s a strong argument for doing deep dives into subconscious of your audience.  

The article points to a larger issue which is alluded to but never quite directly stated — this is the time for companies to reinvent marketing.  The risks of changing the marketing methods and strategies is now far lower than the risk of continuing with the same models developed 10 or 20 years ago.

Making marketing more effective doesn’t mean spending more money.  It means questioning old assumptions and taking a fresh look at every aspect including how marketing works with the rest of the organization and the tools and techniques of marketing.

All of this good stuff from a chain of coincidences — stolen paper, picking up HBR.  This post would be very different if I had picked up Vanity Fair or People instead!

Can a marketing book be fiction?

Mike Prentice sent along an AdAge article about the Top 10 Marketing and Media Books of All Time. There was that moment of anticipation while I waited for the page to load, sort of like when waiting for Tom Hanks to open the envelope at the Oscars.

Right up there in the #4 slot was the novel “e” by Mark Beaumont.  That’s right, a novel.  Now don’t get me wrong, I love novels.  I even have my graduate degree in Creative Writing. But does one belong in a list of Top 10 Marketing Books?

It worries me when a profession needs to look to fiction for guidance.  

It also worries me that the number 1 book is Positioning by Mr. Trout and Mr. Ries.  But it does not surprise me.  The Positioning method is so widely adopted that it’s validity is not even questioned.  Or is it?  

Truth is that the majority of marketers are looking for a breakthrough method that is more effective than brand positioning.  That is what we heard in our survey of over CMOs at over 100 corporations.  

The alternative methods of marketing are not well known, which explains why brand positioning continues to be so dominant.  This blog is one way of contributing to the marketing conversation by sharing how Narrative Branding is one of those alternative methods of marketing. Marc Gobe’s Emotional Branding and Doug Holt’s Iconic Branding are also well thought through alternatives to brand positioning.

Now back to that AdAge list…Can we at least substitute “Waiting for Godot” in place of “e”?  Or the brilliant movie “Putney Swope”?  I know, I know, a play and a movie ain’t a book…

The brand formerly known as AIG

Over the past few days we’ve all been hearing about AIG dropping the AIG brand.  In fact I think this may be the first rebranding program to have been announced in a congressional hearing room. 

And the new brand to replace AIG?  AIU.

Conventional wisdom says that the AIG brand is tarnished beyond all recognition.  

What if conventional wisdom is wrong?  After all, the new name will always be tagged with, “Formerly known as AIG” 

Here are some reasons NOT to abandon the AIG brand:

1. The reputation will overshadow any rebranding.  Changing the name and logo won’t solve anything.

2. The cost of rebranding will become a lightening rod just like the bonuses.

3. What needs to be changed is the method of marketing that AIG uses, not their name.  After all, people do change their minds about brands.  Just as they change their minds about other people.  

4. If conventional wisdom is correct, then the new names should be as far away from AIG as possible.  AIU is a timid move.

My counsel to Mr. Liddy and the senior management at AIG?  Change your marketing.  Develop powerful metaphors to shift your reputation. But is not the time to change your brand.

Brand Valuation and the Stock Market

A couple of days ago I was making some observations about the way brand valuations seem to be disconnected from the values of companies.

In response we received a comment from a member of Interbrand saying,

Firstly, let’s be clear that there is no link to stock market prices and brand valuation. As you know, stock markets set a price on a company based on investors’ perceptions of whether share price will go up or down. 

However Interbrand does make an argument that there is a connection between the valuation of a brand and the stock price based on their own study with JP Morgan.

Several studies have tried to estimate the contribution that brands make to shareholder value. A study by Interbrand in association with JP Morgan (see Table 2.1) concluded that on average brands account for more than one-third of shareholder value. The study reveals that brands create significant value either as consumer or corporate brands or as a combination of both.

Table 2.1 shows how big the economic contribution made by brands to companies can be. The McDonald’s brand accounts for more than 70 percent of shareholder value. The Coca-Cola brand alone accounts for 51 percent of the stock market value of the Coca-Cola Company. This is despite the fact that the company owns a large portfolio of other drinks brands such as Sprite and Fanta.

 

 

 

 

This is an interesting connundrum.  

If there is no connection between stock prices and brand valuation, then the Interbrand/JP Morgan study is wrong.  But if there is a connection, then there is a tremendous disconnect between the valuations put on brands by Interbrand and others and the market valuations of the companies.  

I do not mean to single out Interbrand.  Brand Finance and others have similar measures. It is just that Interbrand is the most public in their efforts with BusinessWeek.

It is well established by this time that brands have value (sometimes a negative value!).  No disagreement there.  So how does a company place a value on that?  It has been and will continue to be debated for quite some time.  The brand valuation method of Interbrand is among the best in the market.  Even so — there is a commonsense logic that the brand valuations published in BusinessWeek are highly inflated.  

The relative values of one brand to another probably hold true.  But the actual numbers?  Unlikely. Is the Cit brand really worth $20 billion?

…is like New Coke

A whole generation has been born, lost their baby teeth, learned to drive and graduated from college since New Coke was introduced in the mid-1980s.  Yet the “x is like New Coke” analogy is still going strong.  When a company makes a mis-step it is seen as their New Coke moment.

Tropicana is having its New Coke moment.

Windows Vista is like New Coke.

New Facebook layout is like New Coke.

Even Fox News is using the analogy to say that Obama like the New Coke of politics.  A bit of a stretch in that analogy.

All of which show the power of metaphors an analogies.  I now don’t have to hyperventilate in my complaints about a product improvement, I can simply say it is “New Coke” all over again.  The irony of the Tropicana packaging misstep is how the New Coke analogy has great force when used on PepsiCo.

Can a brand be valued by the stock price?

Back in the dark ages of 1987 I was working at an ad agency where my clients were The Prudential and its stockbrokerage, Prudential Bache.  Our offices were on the 20th floor of 1515 Broadway, overlooking Times Square itself.  It was a glorious view from there, particularly at night.  The military recruiting station was still there.  The seedy parts of the neighborhood were still in ascendance. While we didn’t have the internet we had something even better — the news ticker on the side of the One Times Square.

One Times Square, perhaps a little before 1987

One day my boss called me over the windows looking out on the square.  On the news ticker was the announcement of the stock market crashing, dropping hundreds of points.  By the end of trading the market was down about 508 points — over 22%.  It was stunning.

When we could pull ourselves away from the windows, we turned to the business of setting up a market research study for our clients to assess the impact of this drop on willingness for people to buy stocks, mutual funds and universal life insurance. Back then, a relatively small percentage of people actually owned stocks or even mutual funds.

The agency quickly rushed out new Prudential Bache advertising to reassure investors with the tagline, “Rock solid.  Market wise.”

No one was particularly thinking that the stock market collapse would have any bearing on the strength, equity and value of brands in general.  What did the stock market have to do with brand valuation?

Flash forward to 2008 when the stock market tanks.  By this time there are well established measures and indexes of brand value tied directly to stock values.  For more than a decade brand consulting companies such as Interbrand have been selling brand valuation studies showing how many billions of dollars this or that brand is worth.  This listing is published every year in a the top global brands in Business Week.

In this past 2008 ranking Citi was valued at $20 billion.  The stock market valuation of Citi today is about $14 billion.

Does that mean if you took the Citi brand away that the rest of the company is worth negative $6 billion?  

Or that the Citi brand itself is now worth a negative $6 billion?  In other words, the bank would be better off without the Citi name attached to it.  Certainly in Wednesday’s testimony the head of AIG indicated that they would be better off without their brand.  At Citi the recent advertising campaign of “Live Richly” have contributed to making the company a target.  And the same is true for Bank of America’s “Bank of Opportunity” campaign.

The standard approach to marketing, the Brand Positioning approach, would say that you cannot change the minds of people about these brands.  You need to change the brands since you cannot change minds.

So we now see two standard marketing tools failing companies today.  Brand valuation is setting up the wrong benchmark.  And Brand Positioning is directing companies to dump their brands instead of changing their marketing approach.

Rather than changing the brands, it would be more effective for the banks to change their approach to marketing.  If they reinvent marketing so that it is better integrate and aligned with the rest of the organization, then they would begin to see a change in how people perceive them.  It would not solve the underlying financial problems.  But it would go a long way to creating public sympathy instead of the current anger.

Dell vs. Apple

The myth of the silver bullet lives on.  It’s that magic bullet which kills Vampires and other undead.

Today’s silver bullet comes from Dell with their introduction of the Adamo.  It is a high end laptop targeting the consumer.  In other words, this is Dell’s answer to the Apple’s MacBook Air.  Only I don’t think it will work because of the branding.  

Consumers will willingly pay a premium for a MacBook because of the cool factor associated with all things Apple.  (Since I’m using a MacBook Pro, I suppose that means me, too.)

But pay a premium for a Dell?  

Among consumers, the Dell brand has been tarnished for several years.  In 2005 Dell began a series of cost-cutting measures including reducing the quality of customer service. This led directly to a decrease in customer satisfaction and a decline in sales.  Even recent investments in customer service have failed to turn around the brand. 

Simply launching a very cool product is not a silver bullet — it will not revive the Dell brand.  They need to do some heavy work on the narrative of their brand.  That means developing a core metaphor, a compelling story and making the customer experience into a Dell branded experience.  

In this case, the Dell brand is getting in the way of a very cool product.

Oh, and by the way, Adamo is a little too close to Alamo both as a word and as an association.


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