Brands and Reputation

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2010-08-30T12:16:00.000-04:00

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2010-08-28T10:48:00.001-04:00

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2010-08-11T18:00:00.002-04:00

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Rebranding Atlantic City--Good Luck!

2010-08-10T11:02:00.003-04:00

The government of New Jersey plans to take over Atlantic City and run it as a "tourist zone". The city, according to Gov. Christie, "is dying". Having just been in Atlantic City for the first time in many years, I can attest to the governor's perception. This is a terrible city. Gambling has not helped.

Atlantic City was once called "America's Playground". It was where the World War II generation went on vacation. The boardwalk had grand hotels. People got dressed up to "walk the boards". Clubs boasted concerts by Frank Sinatra, Tony Bennet, and other great entertainers. The 1960s and later were not kind to Atlantic City. The "baby boomers" abandoned the resort for other, more attractive places. Political corruption was rampant. The city decayed and the poverty and crime levels increased.

When gambling was introduced to AC in 1978, it was designed to save a dying city. It also was expected to generate needed tax dollars for the state. At the time, AC and Nevada's cities were the only legalized gambling centers in the US. Slowly, gambling was introduced on American Indian lands. Next came slot machines, which many states introduced. Recently, a number of states, particularly Delaware and Pennsylvania, which border New Jersey passed legislation to allow table games. Even the slot machines were taking business from AC. Now, with table games, the competition is head-on and AC will likely be further hurt by those who no longer have to go to this awful city to gamble.

Now, from a brand perspective, let's understand what Atlantic City's primary attributes are: gambling, entertainment and the ocean. The boardwalk was a major attraction, but it is so seedy that few really want to walk it very far. Each of these attributes can easily be duplicated in other locations. Gov. Christie wants AC to attract families who want to come to the beach and also have the other things available. But, the entire coast of NJ is comprised of beach towns, most far more attractive for families than AC.

So, where does this leave Atlantic City? While Gov. Christie, a Republican, decries government run enterprises, he has put in place a government take over of a community--ergo the gaming business. This may be unavoidable given how far AC has fallen, but it likely will prove to be a major failure. To revive a dying brand requires a number of things to be in place: 1) that at least a few of the attributes that once made the brand attractive need to still resonate with the target; 2) that there is still a competitive space available; and 3) that the infrastructure is capable of handling the brand. I do not see where AC has the ability to be revived. The attributes of attraction have been lost on at least a generation. Those who recall AC fondly are those 60+years of age. They may be drawn once, but I cannot imagine regular returns. The infrastructure of the city is broken and corrupt. I cannot imagine the state offering better management. And, as noted, the competitive space has shrunk.

Brands are easier to build than they are to change. AC has gained a solid, negative reputation, long entrenched as a dirty, crime-filled community not attractive to most people. Getting people to change their views of AC would be one thing if there were few alternatives. With a growing number of alternatives, the attractiveness needs to be overwhelming. I can imagine lots of specials and a wonderful ad campaign--lots of money to be spent. All I can say is "good luck".

Strategic Planning and Brand Management Must Align

2010-08-05T12:20:00.006-04:00

I have always believed that brand management is an outgrowth of strategic planning. Too often, a so-called brand company--usually a firm focused primarily on design, or a PR or advertising agency--comes in to an organization and goes through a brand audit and proposal. Far too often, the recommendations of these firms have no connection with the overall strategy of the company. They do not look at the mission. They do not understand if the company has the internal culture to meet the brand promise. All they seem interested in is a creative solution in terms of design or messages. These activities are doomed to failure and are very costly to the organization in more ways than one.

The costs are not just monetary. Organizations that engage in superficial brand activities actually create a division between their brand promise and its actualization, both internal and external to the organization. Employees look at the brand as being disconnected to the reality they know, and customers learn that the organization makes promises it cannot keep. This creates additional cost in terms of diminished reputation. In one study by Majken Schultz and Mary Jo Hatch (the Expressive Organisation), it was found that some 70% of employees at companies the researchers studied, did not understand and were not committed to the brand strategy of the company. Considering that it is impossible to have a corporate brand if the organization cannot live it, what the authors found is a typical recipe for disaster.

Because of these problems, I developed a process called DIFFERS, which starts with strategy before getting organizations into branding, organizational engagement, and marketing communications activities. It forces companies to think strategically and not jump to the more creative aspects of branding.

Recently, I had the opportunity to work with a strategic planning company, Ambler Growth Strategy Consultants, on a brand process for an organization. While strategy should be done before branding, the organization had actually engaged my firm first. We had developed a great positioning, tagline and new name for the organization. It was based upon the best available information we had. Then, the organization began working on its strategy for the future and we realized that everything we had done had to be changed. We developed a new positioning and tagline for the organization. The strategy consultant expressed happy surprise that we were so willing to change our direction and admit that we needed a new positioning since the target markets had changed. She indicated that many brand and advertising firms she had worked with would have remained committed to their original work. While this was nice praise, it was a poor statement on the brand industry. Most branding firms I have worked with in the past are more committed to the "artistic" aspects of what they do rather than the strategy.

Most organizations are suffering from a "trust deficit". Is it any wonder trust is diminished? Stakeholders have come to expect that companies care more about what they say rather than what they do. This is the fault of bad management, but it also is the fault of a marketing and communications industry that is not doing its job correctly.

The Association with AT&T Is Hurting Apple. So Why Would Blackberry Choose Them for the Blackberry Pad?

2010-08-01T18:10:00.004-04:00

Talk to anyone who carries an I-Phone and one gets two reactions: 1) they love the phone, and 2) they hate AT&T, the telecom carrier that Apple chose as a partner for its phone. Verizon had been approached early on but would not accept the conditions that Apple imposed. AT&T, needing a major success, accepted Apple's conditions and gave itself significant revenue and prominence. A large portion of its customers are with AT&T only because it is the only carrier for the I-Phone.

If an when Apple gives the I-Phone to other carriers, AT&T will likely loose customers. They may not depart for T-Mobile, which may get the I-Phone, but if and when Verizon gets the I-Phone, the exodus of customers will be by the thousands, if not millions.

Brand associations are important. Partners are important. As our mother's always told us, "we will be known by the company we keep". The I-Phone is negatively impacted by its association with AT&T. It is a true testament to the brand strength of Apple and the quality of the I-Phone that customers are willing to put up with dropped calls and poor customer service to stay with Apple.

Now comes word that Research in Motion, the maker of Blackberry has a competitor to the I-Pad ready for shipment in the fall. To be known as Blackberry Pad ( or at least that is the name that Blackberry has licensed), the device is supposed to offer improvements over the I-Pad, including a front and rear camera to offer Skype conferencing. Obviously this is something that Apple can offer in its next generation I-Pad, but Blackberry has owned the corporate market and will further secure that position. So, why is Blackberry ready to give its "pad" to AT&T? Can the deal be that good from AT&T that it is worth damaging the Blackberry brand?

AT&T offers Blackberry, but so does Verizon. Those I know who have their Blackberry with Verizon seem much more pleased with the quality of calls and the lack of dropped calls compared with those who have their phones with AT&T.

Verizon may not be as willing to compromise and deal as is AT&T, but I hope that Blackberry's marketing team realizes that its brand will be partially associated with the carrier it chooses. If it really wants to establish clear differentiation from Apple, it should select Verizon and demonstrate the full value of its new product, and not allow the problems at AT&T to diminish its offering.

What Has Happened to the Great J&J Culture?

2010-07-29T18:13:00.004-04:00

For many, many years, Johnson & Johnson was the most admired company in the world on virtually every survey. It built its reputation as an honest, trusted maker of pharmaceuticals, diagnostics and consumer products. Its trusted position was secured in 1982 when it suffered a devastating crisis in which Tyleno, laced with cyanid killed 7 people in the Chicago area. The reaction from J&J, whose McNeil Labs makes Tylenol, is perhaps THE case study for both corporate values and crisis management.

J&J has had a Credo since 1948. It was written by General Johnson at that time to let potential investors know how he was running the company. If they agreed with his direction, they were welcomed to invest. He set expectations, which, as I have mentioned on many occasions, are the basis of reputation. There was to be no surprise for how the company would operate. The Credo has only four paragraphs which discuss J&J's "responsibilities". The responsibilities are, in the following order of importance: to customers, employees, communities and shareholders. J&J was clear that if it were true to meeting its responsibilities to customers, employees and society, shareholders would be well served. Its Credo is the inverse of the way most companies operate, putting shareholders #1 above all others.

When the Tylenol crisis hit, Jim Burke, the then Chairman of J&J asked his team to read the Credo and decide from it what course of action was appropriate. It was clear that J&J had to pull Tylenol from shelves. It also stopped all J&J advertising. Within two-weeks of the crisis, J&J introduced a new, triple-sealed Tylenol--an enormous R&D and manufacturing accomplishment. The company did not look at this as a crisis of one product, but rather a crisis for the entire company. Tylenol regained its previous market share within four-months, despite the predictions from many who said that the product was dead. J&J went on to be admired for its actions. Its trustworthy actions built trust amongst stakeholders.

J&J's culture, as captured in the Credo, was tested during that crisis and was reinforced as being its guiding set of values. Whenever something was in question, the company could return to the Credo.

So, it comes as a major shock to most observers that the same plant that made Tylenol--the Ft. Washington, PA--plant, is now shut down and is being investigated for the lack of adequate safety precautions. It was making Tylenol that exceeded proper dosage--a potentially deadly situation. The Federal Drug Administration has said that it was following the problems at the plant. J&J officials appear to have known about the lax safety and quality programs there and turned a "blind eye" to them.

This is not the same J&J company. This is not the company of the Credo. This is a company that seems to have focused so much on cost containment that the message got people moving in the wrong direction. The entire management team should be held to account for this. I can't even imagine what this has done to the "psychy" of former J&J executives who are looking at a company that is a far cry from the one they used to work for. J&J has slipped mightily and with that slip has tarnished one of the brightest stars in the corporate horizon. Let's hope that this shocks J&J management back to their senses and that they renew their faith in and focus on the Credo. It is even more important today than it was when written some 60-years ago.

Changing CEOs Will Not Improve BP's Reputation

2010-07-28T18:29:00.002-04:00

BP announced that it was changing CEOs--not now though, but in October. The Board was supposed to show that it was fed up with the leadership or lack of it from its CEO and move the company forward. Why October? Why not now?

It seems clear that BP has a flawed culture. This is a company that does not seem to really get it. Even Dudley, the new CEO, suggested that he has never seen evidence of problems in his career with BP. He indicated that the Gulf accident was a total anomaly for the company. This assertion despite the fact that BP has more federal violations for its drilling operations than almost any other company. Something is wrong and replacing Hayworth--the seemingly arrogant CEO who never seemed to express anything other than the fact that this was just a big bother for him--with Dudley will not fix it.

The rest of the oil industry has now turned on BP. The others have indicated that they would never have run their drilling operations the way BP had done. Everything that has been learned shows that BP had little real regard for safety. The fire alarm on the platform had been turned off; it rejected warnings from those working on the platform that the drilling was not going well; it did not plan for a true disaster. All of these things add up to a company that has an internal culture with little regard for doing things right. The fact that Dudley has never seen this likely means that he is too blind to see things the way an outsider would. He is a BP "lifer". We can just expect more of the same--amazement that anything has gone wrong.

BPs disaster has impacted the entire oil industry and has put a moratorium on deep water drilling. Their cavalier attitude and denial of what went wrong just makes things worse for all. It is really time that shareholders change this board and get them serious about changing the culture at BP.

Companies Should Avoid Political Advertising, Despite New Rules

2010-07-24T12:22:00.004-04:00

I gave an interview to a reporter in Minneapolis yesterday about an advertising campaign in Minnesota by Target, Medtronic, and other companies that supported Republican-backed proposals. The U.S. Supreme Court gave its approval in the past year to company political advocacy. Critics have contended that this gives corporations too much influence over politics; supporters argue that companies enjoy free speech, as do individuals and should not be barred from exercising their rights to express their opinions. The Court agreed with the latter argument.

Just because someone is allowed by law to do something does not mean that they need to do it. Minnesota has had a long history of company involvement in the community. For many years, the Twin Cities companies pledged to contribute 5% of revenues to local community initiatives. Many communities around the country have had company involvement in the local community, including building of opera houses, public art displays, etc. Communities and companies have been intertwined for generations. Some applaud this, some are concerned. While many people may separate contributions to local causes from political advertising, they are very closely aligned in that they are aimed at integrating the company into the community. When it benefits the larger community (e.g., art, social needs, etc.), most people applaud it. When it is aimed at influencing the outcome of political debate in favor of the company, it becomes more problematic to the company's reputation.

Companies, in my opinion, should avoid politically-based advertising. There is a general distrust of corporations currently and too transparent an involvement in trying to influence the political dialog is not in the long-term best interests of the company. Companies deal with a multitude of stakeholders, all of whom have expectations of the company--that is what forms reputation. The relationship with stakeholders is a delicate one that requires balance. By getting too aggressive in a political debate, companies can throw this delicate balance off. While they may be within their rights, according to the Court, they should think long and hard before exercising that right.

Target in one company that has decided to get involved actively in advertising on behalf of Republican causes. Its CEO is a major supporter and donor to the Republican party. However, the corporation speaks for its stakeholders, including its employees, who likely are not so clearly in support of one party's view over another. It jeopardizes its relationships by these political actions.

Companies have incredible access to power and incredible influence. A major company can call on any member of Congress it wants. It represents a significant constituency for the member of Congress. Companies have more access and more power than the average person. This power should be used judiciously. It should avoid outright political advertising.

As Predicted, Jobs Gets "Smacked" for Comments

2010-07-19T12:15:00.003-04:00

As predicted in my last post, the comments by Steve Jobs about other smart phones and their equally problematic design generated a lot of negative backlash from competitors. Blackberry and Samsung, among others, were quick to point out that their phones do not have the problem with the antenna and dropped calls that Jobs claimed to be common amongst smart phones. The others were likely irritated, but also delighted that Jobs gave them an opening to make comparisons against I-Phone.

This was a dumb statement by Jobs. Regardless of whether others have the same problem, it was tantamount to a kid coming home from school accused of cheating and who defends him/herself by saying that everyone does the same thing. Leaders are expected to live to higher standards and take responsibility for their actions and problems, not blame others. A quick news story has become a continuing investigation. Jobs stepped into this. He should not have and didn't have to. He acted like the class brain who when found to have made a mistake cannot take the criticism.

Apple is a leader and a leader should remain on the offense. It does not need to be defensive. Leaders have two moves; followers have just one. Apple had the ability to apologize, correct the problem, and stress the value of the I-Phone. Let competitors attempt to criticize the design. What Apple did was awful, because it "broke into jail" by allowing competitors an opening and a sense of parity. Apple simply needed to apologize, offer the casing to protect phones and eliminate the problem, and move on. Let competitors squeal about Apple's faults. Leaders move on.

Apple needs to mature. By that, I mean that Jobs needs to mature. He doesn't have to prove that he is the smartest kid in the class. He has shown that he is the most innovative and that customers love what he produces. All technology has problems. It is inevitable. Correct the problem and move on. Remain the leader. This is a far cry from what we would expect of a leading brand.

Is the Sheen Coming off Apple?

2010-07-17T18:02:00.005-04:00

Apple is in the midst of controversy concerning its I-Phone4. It seems that if someone holds the phone in a certain way, it drops calls. The problem is that the antenna is housed under a small fissure in the side of the case. It is fairly easy to inadvertently cover the antenna with ones hand.

Apple acknowledges that it knew about the problem before the I-Phone4 was released, but that Steve Jobs liked the design and authorized shipment. Following the controversy, Jobs said that it was not "big deal" because all smart phones have the same design flaw.

Regardless of whether or not other smart phones have a similar design flaw, we have come to expect more of Apple than the rest of the industry. Apple's products cost considerably more than comparable products. They sell at higher price because their are perceived to be of higher value. Apple diminished their perceived value by arguing that they are no different from others. If they are just like others, then their cost advantage disappears. Perceived value is a ceiling on price. If one were to plot a Kano Model analysis or perceptual map, it would show that Apple was--in Kano language--"a delighter", that constantly exceeds the expectations of its customers. Other phones would be fairly similar in their perceived qualities, and fall along a line of expectations--that is, they meet expected standards. Is Apple suggesting that it is no longer a "delighter"? Is it suggesting that it is now at parity rather than differentiated from others? I doubt that was what was meant. The argument by Jobs was a lousy one for any company, let alone Apple.

The solution Apple offered was admirable. They have offered a special casing to all I-Phone4 purchasers free. The casing will cover the fissure and eliminate the problem. That is a good solution, but it was not handled well at all. Apple should have apologized, noted that the design flaw was below the expectations of customers and not up to Apple standards, and then given the protective casing. There is nothing wrong with an apology. Those who apologize are forgiven and respected if they also offer a solution, which Apple did.

This incident shows that while Apple is an outstanding innovator--perhaps the very best--it remains arrogant and a bit immature. I have read articles suggesting that Apple's reputation has been tarnished. I don't think so. This was, as someone I used to work with called "a drop of water on a piece of granite". It doesn't cause much of a problem, unless the water drops continue and start to erode the granite.

There will be critics, fueled in part by a dislike for Apple or Jobs, or fueled by competitors who would love to knock Apple off its pinnacle. However, I doubt that customers will be bothered by the situation, considering that there was a quick solution. I was at an Apple store recently. The crowds were just as large and sales of the I-Phone4 seemed brisk.

This situation was a warning to Apple, though, that it needs to recognize and live up to the standards by which it expects to be judged. It has raised expectations of stakeholders above that of peers and competitors. It is now the most admired company, according to Fortune magazine. It must continue to meet or exceed the high expectations it has created, or it will risk damaging its brand and reputation.

Brand and Reputation are Critical for Non-Profits

2010-07-13T14:41:00.003-04:00

Brand and reputation management are often focused on corporations, but there is tremendous upside for non-profits to focus on their brand and reputation.

Non-profits exist on the basis of support of their donors. Without public support, the non-profit ceases to exist. In the current economic downturn, non-profits have had particularly trouble in two areas: 1) fewer dollars from donors; and 2) fewer dollars from corporation. The two are interrelated. The latter--support from corporations--is more problematic for many non-profits since the dollars were larger and there was an expectation of continuing support, which has dwindled, if not gone away entirely.

Let's start with the idea that people have less disposable income. That means that there are fewer dollars for them to give to their favorite organizations, including universities, religious institutions, hospitals, etc. The "pie" is shrinking, but the same number of organizations are looking for support. Add to this, the added pressure that has come from disasters, including the Gulf Coast, Haiti, and others that have sought public and corporate donations. So, the market has become more competitive.

Whether or not they like to admit it, non-profits have historically operated on a principle of "noblesse oblige". That is, that those with wealth will feel an obligation to help those less fortunate. That underlying motivation may still be there, but people must choose more carefully than ever where the money should go. And, there have been a lot of abuses by non-profits of the money they have received and a lot of scams. So, trust is eroding as well, leading to some people simply unwilling to give for fear that their money will not reach its intended objective.

When competition heats up, brands predominate. Brands create the attributes and associations that cause people to see differentiation. If the pie is shrinking, non-profits need to get very serious about differentiating from other organizations and having a compelling value proposition for the donor, whether it be a person or a company.

The brand and reputation also are important for companies. Donations are changing from philanthropy to strategic social responsibility programs at many companies. This means that a non-profit needs to be very attuned to the objectives of corporations around them and match themselves to the strategy of the company. Gone are the days when they can simply expect a company to give them money with no expectations. Social responsibility programs should be tied to the company's strategy and toward the interests of the company's stakeholders. Non-profits need to understand the goals of the company and match themselves appropriately.

My last few consulting engagements have been with non-profits. They have been the most successful projects I have done in some time because we have enabled the organization to think more broadly and become more "corporate" in their thinking, which has benefited them in the way they have approached their sources of revenue and made themselves more competitive in the market.

Will North America Ever Understand Soccer?

2010-07-12T21:00:00.002-04:00

I used to live in Toronto, the most multinational city on the planet according to the United Nations. Whenever the World Cup was played, the streets were filled with blaring horns and people running through the streets with the flags of their native countries, all of whom were represented in the World Cup. Very few native-vorn Canadians were amongst the crowds. They, like their souther neighbors in the U.S., seem to be two of the only countries that are not completely caught up in soccer fever.

I went to the 1994 World Cup opener in Chicago with my son, Adam, who was 10-years old at the time. We watched Germany defeat Bolivia. I must admit it was a great spectacle, but I sat there less than absorbed by the game. This year, however, I watched a lot of soccer. I have to admit that I started to realize what a great game this is. I also started to understand why the game has not caught on in North America.

Some analysts claim that Americans rejected soccer because it was played by the British soldiers during the Revolutionary War. That may be the case, but that would not explain why Canada is not a soccer country. Canada is still part of the British Commonwealth and the Queen is still Canada's official head of state.

I think the differences are in North American life style, which is faster than life in the rest of the world. As one of my former colleagues explained, "soccer is like chess; American sports are like checkers". Americans do not like the slow pace of chess, a game that is based upon ancient European war strategy. The favorite sports in the US are "in your face". They are about size and power. US football (and the Canadian version as well) is played by huge men who are smashing each other. Hockey is fast and furious and, once again, is about smashing ones opponents. Baseball was a slow game until it got "juiced" (players, ball and bats) and the game become one of "long ball". Baseball aficionados may love a 1-0 "pitchers dual", but most of the crowd yawns and wishes for a home-run derby.

Soccer requires patience--something we do not have. It requires thinking--something we do not like to do. It requires us to watch opponents out-finesse each other for nearly 2-hours to score, perhaps, only one goal. That may be "beautiful", but it can also appear boring to a society that is used to speed and smash. It is interesting that many countries (Netherlands, Brazil, etc.) were lamenting the change in the way soccer is being played. There is more emphasis on defense. There are more "yellow cards" being given for rough play. Soccer was to be beautiful--like a ballet.

One has to love the interviews with the Dutch today, however. They were admitting that Spain was a better team; that Spain deserved to win They did not curse the Spanish. They did not blame refs or their own team. They accepted defeat. One Dutch fan summed it up: "oh, well, we came in 2nd. That's better than most countries". Imagine that? Someone accepting defeat. Americans are used to seeing t-shirts that announce "second place is first loser". Everyone wants to be #1 or nothing.

The World Cup was a great example of great sport and great sportsmanship. It should be a great point to reflect on why we see things so differently in North America. It likely would explain a lot about why we are so different from the rest of the world.

Is it the Media or We Who Are at Fault?

2010-07-10T13:25:00.004-04:00

The LeBron James situation seems to have more people asking whether it is society or the media who are at fault in following the exploits of a 25-year old basketball phenom. There are many people who are blaming the media for following James' every move.

The media are reflections of society. I know that there are those who believe that the media shape the discourse of society; that they have an "agenda setting" function. They may have had at one time. I think we are giving them far too much credit today. The media, particularly the mass media and cable outlets, are struggling to attract viewers. They are also struggling to keep costs down. As a result, we have had a seemingly endless steam of "reality TV" shows. These are cheeper to produce and seem to attract large numbers of viewers. How many more "Bachelors", "Bachelorets", "Last Comic Standing", "America's Got Talent", etc, etc, can we possibly watch. Yet every time we think we've saturated the concepts, along comes "Biggest Loser", "Iron Chef", and more and more. Every conceivable interest is pursued by the media. And, yes, we keep watching. More people vote for candidates on "American Idol" than vote for candidates in real elections. We seem to care more about who has the best voice or best dance steps than who runs the country.

So, is there any wonder that the media saw the opportunity to follow every step LeBron James made? He was the latest reality TV star of the week. His exploits were discussed everywhere. The night of James' announcement on ESPN, I was walking by a high-end restaurant when a man came out of the restaurant on his cell phone asking his friend to watch ESPN and text him LeBron James' decision as soon as it was known. I could tell by his face that he was probably dismayed that he had to have dinner with his wife on such an important night and during prime time.

LeBron has learned to be a master marketer--or he has hired people around him who are good at marketing him. He knows how to milk our interests. But, it doesn't take a great marketer to get the media interested. This week there has been more coverage of what Lindsay Lohan had printed on her nail during her trial than about the debates in Congress over a new financial bill. The media don't care if you have talent; you just have to be of interest to large numbers of people.

There are many excuses for how bad the media have become. They have to contend with 24-hour headline news, the Internet, blogs, etc. The normal media are competing for attention. So, most have become entertainment services rather than news services. Watch local TV in most markets in the US and one wonders where the news is.

So, who is at fault? The media or society? Both are at fault. American society (and I keep this to US society because there still are good news services in many other countries like Canada and the UK in which there are deep discussions of important issues on the normal, nightly news shows, both local and national). American society has become dumbed down to a point that it is all sound-bites and personality. Following LeBron becomes no different from following Sarah Palin or Lindsay Lohan or the President's latest run to get a hamburger, or Bill Clinton at the World Cup. We loose sight of whose personality is important to us and whose is really unimportant in the grant scheme of things.

To quote Pogo: "we have met the enemy and they are us"

Misbranding By Progressives Leave Them Vulnerable

2010-07-09T14:18:00.003-04:00

As I sweated through temperatures that approached 100 degrees Fahrenheit (40 degrees Celsius), I kept thinking about the debates over "Global Warming". Following the last winter when the east coast of the US got more snow than usual, the percentage of people believing that environmental change was man-made dropped by some 20 percentage points. I'm sure that after an early and very hot start to the summer, those numbers are changing again.

The term should have been "Climate Change", or "Man Made Climate Change", not "Global Warming". While the considerable snow this past winter was likely due to warming temperatures in the atmosphere, that is way too difficult a concept for many people. Warm is warm and cold is cold. The right wing used some errant e-mails from scientists to claim that all of the hoopla over "Global Warming" was trumped up, biased science. They actually claimed a conspiracy, imagining that most of the world's scientists would or could actually create a conspiracy. Anyone who has ever worked in academia or in a science-based company knows that it is difficult to get even a few scientists to agree to anything, let along create a conspiracy

It was the terminology, or branding of the problem that was wrong. People need to understand that the climate is changing and much of it is due to decisions we humans make or do not make.

Misbranding also can be found in the debate over abortion. Women's rights groups chose the slogan "Pro Choice", while the anti-abortion movement selected "Pro Life". Imagine two product--pro-life versus pro-choice. Which one would engender more emotional appeal? Clearly, pro-life is more emotional. How many people would claim to be anti-life, but that is what the brand "Pro-Life" suggests about those who appose them. On the other hand, the opposite of "Pro-Choice" is "anti-choice". This is hardly as problematic for people to accept. The bumper stickers that declare "it's a child, not a choice", become the nature advertising campaign, but it further obfuscates the real and honest differences amongst people about when life begins and the rights of women to choose for themselves.

We need healthy, open discussion and debate about such serious issues as climate change and abortion, but the branding puts everyone on the defensive. It would be wonderful if we could get all the branding and advertising hype out of these serious issues so that we can really discuss them as grown-ups.

Don't Blame ESPN for Our Craziness over LeBron

2010-07-08T20:10:00.003-04:00

I have been reading a number of sports commentators who are blaming ESPN for showcasing the LeBron James announcement of where he intends to play next year. If we can blame ESPN for this, let's blame the rest of the media for giving any attention to the Jersey group or Lindsay Lohan. They are providing the public with the coverage they covet. As the saying goes: "don't blame the player, blame the game".

ESPN is a network that has a brand promise that it covers all sports all the time. They have moved from TV to every conceivable form of media to meet that brand promise. So, when a legitimate sports story--where LeBron James will play--comes up, who can blame them for covering it fully. They must; it's their primary job and expressed responsibility.

Now, don't get me wrong. I think the whole LeBron situation is beyond over-hype. This is a ball player who is looking to find a new home and we all talk about it in every forum available. Even the Daily Show with John Stewart took up most of its conversation with Julliane Moore by talking about whether LeBron would join the Knicks. Both Stewart and Moore are Knick's fans. This is a show that usually focuses on important things. Moore was on the show to plug her new movie. Bet the movie studio was not too happy that she spent 90% of the time fretting about basketball. They never got time to show a clip from the movie, but they did spent about 60 seconds mentioning it.

Americans have developed an unbelievable interest in sports figures--even more than the sport itself. We focus on individuals. Perhaps we are all taken with their huge salaries and life styles that seem almost "other worldly". They live like movie stars, while fans are loosing jobs. Their salaries help push ticket prices to the breaking point for most fans. But, attendance and viewership keeps increasing, so we obviously do not object to already overpriced talent taking advantage of our support. Imagine what will happen to ticket prices in Miami to support the salaries of Dwayne Wade, Chris Bosh and LeBron James!

So, why would sports commentators complain that ESPN should not have given time to LeBron's "people" to air an hour-long show for him to announce his decision? Perhaps the writers are concerned that their purview is being undermined by ESPN. They should wake up and realize that it already has been The never ending talking heads on ESPN make reading sports commentators superfluous. The writer's only purpose now is to focus on local teams.

The media are whores to the athletes. I may not like ESPN's decision, but I think it was the right thing to do. If they refused to air the LeBron announcement, they would not have been true to their basic brand promise.

US Postal Service--Stranger than Fiction

2010-07-06T19:07:00.005-04:00

The scenario is a typical one for many companies in the current economy: demand has fallen, people are using alternative products and services. The questions is what to do? For most companies, the answer would be to drop prices to stimulate demand and at the same time to reposition to attract customers back or create new ones. What about raising prices? That would defy all logic in business. What would be the sense of raising prices when customers already are not interested in the product? Wouldn't that just cut the demand still further?

Well, none of these scenarios make a bit of sense when we're talking about the government or agencies of the government. The demand for postal services has gone down, replaced by the Internet. The answer Postal Officials have come up with is to raise prices by 9%. Think about this increase--inflation is running flat, prices on everything are falling. But, the Postal Service raises prices by 9%. The Postmaster General estimated that this increase would cover the losses of the service and maintain service. The estimates are undoubtedly based on current demand, which will likely dip still further given the increases and further erosion of the traditional mail system by technology. So, there will clearly be another short fall due to continuing drop in demand with a call for more increases next year. This should not even be legal. It almost sounds like the Mafia: "we'll make you an offer you can't refuse".

We can be assured that when the USPS goes to Congress for permission, it will get the go-ahead. What would the alternatives be if they were turned down? My goodness, it would be to cut their costs to the bone; lay off workers, cut back on hours, cut prices of their products, etc. This is what one would expect from any business manager with a brain facing a similar situation. But, once again, this is the government. So, rather than cutting costs or laying off more workers or cutting hours or cutting the price of stamps to attempt to get more people to buy and use stamps, they will go in the opposite direction.

This is all stanger than fiction. It is beyond the logic of any first year business student. The whole country is suffering from the effects of the Great Recession, and the Postal Service decides to raise prices. Will this decision reverse the decline in demand for services? No. So, what will the Postal Service do next year when demand falls still farther? Well, it will raise prices again. This is the height of audacity--we'll do it because we can. If you don't like it, don't use the mail. Oh wait, you already don't use the mail? So what, then we'll raise prices again next year on those who do.

It will continue to work this way until the legal profession finally accepts documents as legal that are faxed or e-amiled. Companies are the ones forced to use the mail system. But, wait a minute, that would take a change of the law which means that it would entail governmental decisions made by lawyers to change things from which they benefit. Fat chance. So, the illogical and almost criminal decision by the USPS will impact businesses most, especially mid-sized and small businesses (who else usually suffers?).

To quote the wicked witch in the Wizard of Oz when she was melting: "what a world, what a world"!

Netflix is Ruining its Great Reputation

2010-06-30T12:28:00.002-04:00

I have always admired Netflix. Who wouldn't? Here is a company that was created by Reed Hastings because he had a $40 late fee at Blockbuster. He created a company with a unique customer algorithm, similar to that used by Amazon, that matches customer preferences, and with the ability to source materials for the most niche of movie interests. At the same time, Blockbuster was focused on major hits and keeping an inventory in its many stores.

Netflix was able to see the future and adapt to video-on-demand and downloadable movies, even doing deals with video game makers and DVD player makers.

All of this was admirable. I use Netflix as a case study in my MBA and Executive MBA classes. Now, Netflix has decided that it makes sense to move into pop-up ads on websites. Instead of keeping awareness high, they are becoming a nuisance. Instead of remaining an admired brand, they are ruining their reputation. They are becoming the equivalent of being stuck in a room with a life insurance salesman who just won't stop talking.

I don't know who is advising Netflix, but I wish they would step back and remind themselves of what made them such a valuable brand and return to their roots. Stop the interruption, pop-up ads. Those are for lesser companies.

BP's Independent Gas Stations are Hurt by the Spill

2010-06-29T18:41:00.004-04:00

Business is reported to be down about 20% at some BP stations. This is even more severe than after the Exxon Valdez accident when Exxon lost about 5% of its business, some of which it has never regained. As a result, reputation experts began to estimate that reputation was worth about 5% of revenues on an annualized basis. It actually could be worth more, depending on the severity of the reputation damage that is done.

Among the victims of the BP disaster are the owners of BP gas stations. In the US,virtually all of the dealers are independent owners and operators--they have no relationship to BP other than selling gas under the BP brand. They are suffering and taking flack from consumers. Gas stations are being picketed.

A consumer has only three ways to show their disgust with BP: 1) they can urge their member of Congress or Senator to punish the company, 2) they can boycott BP gas, or 3) they can divest themselves of BP stock, if they hold it or urge their company to divest the stock from its portfolio.

This is a situation in which there is no upside for the dealers. They have a business relationship with a bad actor. As a result, the diminished brand equity and reputation of BP will continue to hurt them. They can scream and explain themselves all they want, and we can all feel sorry for them, but they are collateral damage. If consumers continued to buy BP gas they would not only be supporting the gas station owner, but also directly benefiting BP. I feel sorry for the station owners, but there is no way I am going into a BP station.

We've seen this situation in other markets. Toyota dealers are independent of the company, yet they were suffered great damage during the Toyota recalls for acceleration and brake problems. Most car dealers are independent. What can they argue? "Buy a car from me because I have nothing to do with making this lousy car"? Sorry, but brand associations are what lead you to make your purchase of the dealership in the first place. You linked yourself to the brand, for good and for bad. You are now suffering the impact of that brand association. We need to remember that there is truth in what our Mother's always told us: "we will be judged by the company we keep".

So, we can feel sorry for the independent BP dealers, but they benefited from the great reputation that BP had for so long--I'm sure that is why many of them wanted to own BP stations. They chose wrong brand association. Life is not fair.

Endorsed Brands Take a New Twist

2010-06-29T00:37:00.005-04:00

Endorsed brands have always been an important brand strategy. Endorsements take on different variations. We continue to see people with lab coats acting as doctors to endorse the efficacy of a product or demonstrate what a "talk with a doctor" might look like. There are Ralph Lauren and Eddie Bauer interior in cars. Reebok sponsors work-out rooms in hotels. Martha Stewart is an endorser of towels, pillow cases, dishes, and other home products. Her name provides a risk reduction for those who are not certain they know how to properly decorate their homes. Oprah's endorsements can drive book sales, generate traffic at stores, and create new celebrities (Dr. Phil, Dr. Oz, etc. were all created by Oprah and have now become their own celebrities and are now endorsers).

Endorsements are designed to lower fear, uncertainty and doubt in the purchase. Endorsements are not designed to attract everyone. They are designed to attract the target. They connect the target with people who are admired or looked up to. They are a reference group--someone we aspire to be like or be associated with. A Nike shoe is a brand, but an Air Jordan takes on a whole new dimension because Michael Jordan is behind it. His endorsement was so strong that LeBron James actually said one time that he thought he could jump higher when he was young because he was wearing Air Jordans.

As a result of social media, consumers have become even more skeptical or celebrity endorsements, so a new twist has occurred. Celebrities like Ashton Kutcher and Lady Gaga are now taking a piece of the company and taking on management roles within the company so that their endorsements are not only more believable, but so that they share in the success or failure of the company (actually, there is little downside for the celebrity from a monetary standpoint since they get paid as well as a getting equity). Kutcher, for example, is going to be the head of social media for Popchips, a line of potato chips that are baked rather than fried. He is considered a social media expert because he has more Twitter followers than almost anyone on earth. He may not really know social media, but his Tweats about Popchips will likely lead to increased sales--at least amongst people who like Kutcher.

We saw how intimately tied companies and products are to their endorsers during the Tiger Woods problems. Accenture dropped Tiger immediately because his endorsement was no longer appropriate for a consulting firm. At the same time, Nike continued to support Tiger since he was responsible for the rise of Nike Golf. His personal issues could be separated from his athletic prowess. Tiger may not have had a piece of the equity at Nike, but he has a lot to say about design, similar to the input and responsibilities that Michael Jordan had at Nike.

Nike better watch closely what is happening. If Tiger or Jordan wanted an equity stake in the company, they would command a lot a hefty amount of stock--more than shareholders might be willing to tolerate, but the negotiations and calculations would be very interesting.

Developing a Good Positioning is Critical

2010-06-28T09:31:00.004-04:00

I have seen and read so many positioning statements that sound like wonderful features or wish lists from the organization. They are often written by people inside who want those on the outside to believe the fantasy--that they are what they claim in the positioning. Words like "best", "exclusive", etc., find their way into the positioning without any sense of internal challenge as to whether or not they can be defended or supported. Too often, outside firms that are brought in to help with the positioning only hurt the process further when they think of positioning as trying to influence the market rather than explaining choices form the market perspective.

Positioning solves a number of issues for an organization: it identifies the target, it establishes the point of differentiation, it frames a promise, and its offers a reason to buy, invest, join, etc. In other words, solving the positioning puzzle is one of the the most important steps in the strategic process.

There are a number of must haves in a positioning:

--First, it must have a target. The target can be stated in demographic terms, or psychological terms, or behavioral terms, or any other way that we normally segment a market and identify a target. It doesn't have to say that the product or service is intended for men or women or craftsmen or some other group, but it should say who the product or service is intended for.

--Second, the positioning must create a frame of reference. All brands create a promise of performance and positioning helps, as a major part of the branding process, to state the promise that the target will receive

--Third, the positioning needs to offer a point of differentiation

--Finally, the positioning should give a reason to buy. In other words, what does the target get out of this experience, investment, etc.?

Companies need to recognize that positioning is a competitive endeavor. In other words, one is not just positioning ones own company, but one is juxtaposing the company against competition. Everyone in an industry group has similar offerings. The question is why you are different? Why should I give you my time, money, etc. versus someone else? This is a zero-sum game. We need to assume that when one buys us they do not buy someone else, or the corollary, that when they buy our competition, they are excluding us. It is called positioning because we are trying to establish our position in the market. Our customers and other key stakeholders will determine where they position us. Hopefully, our desired position will resonate with stakeholders.

So, positioning is critical in marketing strategy and branding. Good positioning should create a bit of angst internally. It is a mirror to the company from the client or customer perspective. If it is universally liked it is, like works of art, probably not that good. Great brands are not universally liked, but they are absolutely loved by some-- enough people to make them valuable. We want to differentiate, not be universally loved in our positioning. If we are for everyone, we likely don't have much to offer. We need to figure out who really needs us and why and make that clear in our positioning.

There is a Huge Need to Integrate Strategy and Execution

2010-06-25T17:51:00.008-04:00

The July-August issue of Harvard Business Review has another excellent article by Roger Martin, Dean of the Rotman School of Management at the University of Toronto. In the piece, he argues that strategy and execution must be linked, but that they are not in most strategy courses in business schools, nor by consulting firms. It should be noted that Martin used to be a partner in a consulting firm prior to becoming Dean at Rotman.

It is clear that most people separate strategy and execution. How many times have we heard about a company engaging a strategy firm and then finding it difficult to implement the strategy once the firm is finished. I used to have a CEO who was fond of saying: "strategy is fine, but 90% of success is in execution". As Martin notes, one cannot be successful in execution independent of a good strategy, and one cannot have a good strategy independent of good execution.

It is interesting that in the brand and reputation world, most of the firms operating are execution-type firms. The brand firms do brand audits and then develop a new logo and set of identity guidelines. The advertising firms do advertising; the PR firms do PR. On the strategy side, McKinsey, Boston Consulting Group, and others are doing some brand strategy, but this is a very small part of their overall offering. There is a gap where Martin sees one. And, it is a wide gap that needs to be bridged.

Execution is becoming more and more commoditized in the brand world. Strategy is where the money is. So, implementation firms are typically staffed with junior people who do not really understand strategy; and the strategy firms are staffed with senior people who do not want to be bothered with implementation. When the strategy is done, it is "handed off" to the company which typically hands it off to a PR or advertising firm. The latter are typically not involved in the strategy discussions so they often implement against a strategy that they do not fully understand, unless they are briefed directly by the strategy firm or unusually well by the client. Advertising and PR firms say they do strategy, but they don't. They do advertising or communications strategy, not the type of strategy taught in an MBA program.

The difficulty is often with billing. Strategy firms bill thousands of dollars per day for even middle-ranked people; execution firms bill a fraction of this. So, when strategy and execution firms have tried to talk about mergers or working together, they often get stymied with billing. Clients who hire advertising or PR firms are usually not willing to pay $5,000-$10,000 per day for strategy; an strategy firms do not see the need to have an implementation group on the pay-roll.

In my own consulting practice at Brand and Reputation Management, I focus on linking strategy, brand management with employee engagement. I try to lay out implementation plans for the client, but I do not do the execution. I usually ask the client if I can help them brief the implementation firm so that there is a smooth transition to execution. But, this request is not always accepted. So, I have not connected all the dots, as Martin has pointed out, and could be serving my clients better if I were to connect with an implementation firm.

I have said to many people that there is a huge need for a brand and reputation management firm that has business and marketing strategy people, brand experts, researchers and implementation staff. There is nothing like that right now. Perhaps a first step would be to connect a few good firms together in common practice.

The McChrystal Flap Shows a Problem with His Team's Value Set

2010-06-23T09:18:00.004-04:00

President Obama is being forced to decide what to do with renegade General McChrystal. The General and his advisors gave an interview to Rolling Stone in which they ridiculed many of the officials in the "chain of command". Now, Obama is forced to decide whether to accept the resignation that McChrystal is certain to offer (military culture demands that he tender his resignation). This is a President with so many problems confronting him that one has to wonder whether the fates have aligned against him.

When I read about McChrystal and his band of merry, arrogant, men, I see a poisonous culture that is highly problematic. We have seen the same culture at Enron. I saw it first-hand at Nortel. It is a culture of personality in which the boss is so revered or feared (I'll leave it to psychologists to figure that one out) that they become an arrogant, totally self-confident group that feeds off of one another. Everyone who "gets it", in the language Enron executives used to use, is part of the team. Anyone who doesn't agree and live the same life "doesn't get it" and needs to be ridiculed and purged. It is a test of purity. This may build a strong team, but the team is more akin to what the Communists referred to as the "cult of personality" than to a culture of ideas and thought leadership that characterizes most great leaders.

Great leaders surround themselves with people who think and are encouraged to share their ideas, even if they conflict with the prevailing ideas. When thoughts are closed off, there is only one way of thinking. The team gets, what a former professor at West Point I knew called "the spirit of the opposition". That is, a single-minded passion; almost mindless. But, McChrystal is a person who sleeps only a few hours a night; eats only one meal a day; refuses to take water and food while walking around in the harsh climate and heat; and will not nap on the plane. He sees his wife of 33-years only 30-days a year and celebrated their anniversary at a pub in Paris, along with his inner circle. Think about that personality. He is a military guy and we want him to win the war, but he clearly has psychological problems and he has selected a team of advisors that share his problems.

The McChrystal group calls itself "Team America" and believes that they are the only ones who know how to fight the war. Others who disagree are ridiculed, as was on wide display in the Rolling Stone interview. Many of the worst comments were not made by General McChrystal, but rather by unnamed staff. He may not have been in the room when they made those comments, but he clearly gave his team the feeling that they had the right to ridicule the Vice President and others in the Administration.

The military has prided itself on becoming more entrepreneurial and more akin to a corporation than to the hierarchical structure of the past. The success of the military can be found in people like General Petraeus, who appears to be not only bright a brilliant military mind, but also a great leader. Great leaders gain their ideas by having others challenge them. This is what leadership is all about. Not about giving orders, but rather about inspiring a team to internalize the outcome and help the organization succeed.

I recall Jack Welch, former CEO of GE, noting that the most problematic leaders are those who are successful in making their financial numbers, but at the same time destroy the lives of those around them. They are poison to an organization and need to be coached for change or fired if they cannot change. They can too quickly become the "exemplars" of the organization--those others aspire to become. It seems that McChrystal is that kind of leader. He is successful on the one hand, but he also seems to be poison.

BP's Internal Communications Becomes Theatre of the Absurd

2010-06-22T21:56:00.003-04:00

The following was reported by NBC News and the Wall Street Journal. Just when we thought that Tony Hayward's yachting trip was the height of absurdity, BP's internal PR people go off on a tangent that can only be dubbed "what the hell were they thinking...or smoking?"
_____________________________________________________________________________________

In-house corporate magazines are supposed to make the company look good, but The Wall Street Journal is asking whether Planet BP, the oil company's organ, is smoking something:

[I]n Planet BP — a BP online, in-house magazine — a "BP reporter" dispatched to Louisiana managed to paint an even rosier picture of the disaster. "There is no reason to hate BP," one local seafood entrepreneur is quoted as saying, as the region relies on the oil industry for work.

Indeed, the April 20 spill on the Deepwater Horizon is being reinvented in Planet BP as a strike of luck.

"Much of the region's [nonfishing boat] businesses — particularly the hotels — have been prospering because so many people have come here from BP and other oil emergency response teams," another report says. Indeed, one tourist official in a local town makes it clear that "BP has always been a very great partner of ours here…We have always valued the business that BP sent us."

_______________________________________________________________________________

We know that BP has to try to maintain the internal morale of the company's employees, but this is beyond absurdity. One has to wonder whether BP has manufactured its own reality and cannot quite live in the real world that they have thrust us all into with their destructiveness.

Because it was BP, the Reputation Damage to the Rest of the Oil Industry is Even Worse

2010-06-22T09:49:00.007-04:00

I have said before that reputation is the expectations that stakeholders have of a company vis-a-vis its peers and competitors. There is no better example of that than BP and the rest of the oil industry. BP spent a decade or more trying to convince us that they were "Beyond Petroleum". They redid their logo to make it look like a green flower--a symbol of its environmental commitment--and they invested in alternative energy sources. We all thought that they were the best of an otherwise bad industry. In fact, in an industry in reputation last year stood at about a -57%, according to Ipsos, (more people disliked the industry than liked the industry), BP had a positive reputation (about 11%). In other words, people thought that BP was vastly different from the rest of the industry. BP differentiated itself with a brand promise that enhanced expectations. Over the years, they seemed like the good actor. All along, they actually were like the nice neighbor who turns out to be a serial killer in waiting. BP lived one way publicly while having a very different culture internally.

So, is it any wonder that members of Congress were not impressed when the executives of the other oil companies came before them arguing that they would never have drilled the area the way BP had done. "You can trust us", they said. We would have done it better. The problem is that no one believed them. Why would they? As I noted before, they collectively are the -57% reputation of the oil industry. If the perceived best of the group did what BP did, then what would one expect of the others?

I know that there are many in the Gulf who make their living in the oil industry and that the moratorium on drilling that the President put into effect is of concern to them. There are those who claim that it is illogical to penalize an entire industry because one company made a mistake; or that others are following the rules and regulations in drilling. I can understand the angst of these folks who are connected with the oil industry. But, there is no trust. There was no trust before for anyone other than BP. That trust has been totally eroded and with that it has put the rest of the industry in even worse shape. If this had been another oil company other than BP with this accident, the impact on the others would not have been so severe. But, expectations were set by one major player. For better or worse, the rest of the industry is now living with that situation.

What's Wrong with BP's CEO Attending a Yacht Race? Nothing and Everything

2010-06-21T17:48:00.006-04:00

Tony Hayward, the CEO of BP, was supposedly removed from his daily job overseeing the oil spill in the Gulf. I say supposedly, because after the announcement, BPs press office offered contradictory explanations for what was happening. An American executives was said to be taking over the front line control, but the timing of this was unsure. One suspects that BP did not really think this out. They had to remove Hayward, who gave an awful performance before Congress. They replaced him with an American CEO with a southern accent. The real removal was not to change things, but once again to make us think that things had changed. It seems that BP is very good at manufacturing an image, but not very good at living up to its desired image. They undoubtedly thought that having a fellow with a southern drawl in front of TV cameras was preferable to having one with a British accent. Probably right, but for all the wrong reasons.

Within a day after leaving Washington, Hayward was in England at a yacht race with his son. This was the same man who had declared a few weeks ago the "I will not leave the Gulf until the oil leak is stopped". I guess the leak just went on too long and he felt he needed a break.

Fury grew among both members of Congress, the general public and fisherman in the Gulf who likely will never see their livelihood return. BPs response was that Hayward was having a family day. "He deserves that. We would think everyone would agree", said the PR spokesperson. Problem is, that statement showed the same tone deafness that BP seems to have been suffering from all along. Most would agree he deserves time with his family. But, few would agree that a public outing at a yacht race is good for his or BPs image.

Hayward had said weeks ago that "I want my life back". Poor guy! He has to suffer, likely for several months, every night taken away by private jet or limo, returning to a luxury hotel or suite rented for him. He has truly suffered!! His multi-million pension will cushion his blow. Those who are damaged, including the so-called "little people" that BP said they are worried about (still sounds like a company run by British aristocrats worrying aloud about the poor little people who might go hungry--tsk, tsk. Where is that butler with my tea and biscuits?").

What is wrong with Hayward going off to the yacht race (his 50-foot yacht, I might add) with his son? Nothing and everything. It is nothing, because this is a good father-son bonding moment. Hayward is a hard working CEO who deserves time off to see his family. At the same time, however, there is everything wrong with this. This is a guy whose company has ruined the environment for generations to come. He has wiped out the livelihood of an entire group of people in the Gulf. He has further ruined the city of New Orleans and the rest of the Gulf Coast. He may not have designed the rig that exploded, but it was his company and he bears the burden. That's the responsibility of CEOs. As they used to say in my corporate days, "that's why you're paid the big bucks".

To go off and visit a yacht race is optically wrong. It shows a total lack of character and morale fiber on his part. He just doesn't get it. He has not fully internalized the real damage done. It further demonstrates that he is as out-of-the-loop on the way the real world lives as we feared. He looked and sounded like a member of the British House of Lords when he sat before Congress. His poor performance continued.

I know that there will be some who will argue that there is nothing more that he could do to clean up the Gulf, and that his day away at his yachting adventure did not detract from the clean-up. That is all true, but it also is mute. Until the leak is stopped, he does not deserve a life. He has to show that he cares, that he is damaged mentally by what his company has done. I really don't care if he doesn't feel that way, but his victims in the Gulf deserve to see him suffering a bit.

His lack of good sense has not only hurt his image, but it has further damaged the reputation of BP.

French Laundry--Talk About Perceived Value!!

2010-06-17T11:00:00.004-04:00

The French Laundry is a Yountville, CA restaurant that is widely regarded as the best restaurant in the United States. It is one of only a few restaurants in the U.S. that has received the prestigious Michelin 3-stars, the highest rating for a restaurant.

The French Laundry serves only a prix fixe menu with a price of $250 per person, exclusive of wines. When all is said and done, a meal for two people is about $900. The restaurant has 60 tables.

Reservations can be made 60-days in advance, to the date. It takes about 2-hours for the entire restaurant to be reserved on the day the reservations are open. In other words, this is a tough table to get. I have heard of people trying for over a year to get a reservation.

Now, let's consider that the world is in one of the worst economic downturns since the Great Depression. Still, there are enough people willing and able to spend $400+ on a meal to fill the restaurant. This, despite the fact that fine restaurants around the world have been failing at a record pace due the poor economy.

What is the secret to the French Laundry? It is all about perceived value of the brand. In this case there are two--the restaurant name and the chef's name, Thomas Keller. He is the endorsed brand. His name adds value. Witness his bakery, Bouchon, that has lines at all hours wanting to sample a bit of his magic.

What makes a Keller/French Laundry meal worth this much money? Well, it is damn good. But, at some point, most of us if we are not food critics or chefs (let's be honest here) cannot distinguish the quality of food. So, it is all about the perceived value, the prestige, the ego boost, etc. We are swept up in the brand. We fight to get the ability to give over a lot of money to eat a meal that few people can afford--it makes us feel special. What makes a Picasso painting worth so much? What makes an Apple computer worth so much more than a PC?

This is the thing about prestige brands. We spend because we believe it is worth it--we must have the experience. The brand becomes our mark of distinction. I have now eaten at the French Laundry. I now join a rare breed of people who can make the same claim. I have paid for one meal what it would take me to spend for 3-4 meals at what would be considered outstanding restaurants.

I mentioned to someone the other day that I had eaten at the French Laundry. They looked at me in amazement and asked how I was lucky enough to get a reservation. My perceived value seemed to grow as a result of having gotten a reservation--who ddid I know? Who was I anyway? Talk about the perceived value of a brand and what it does for those who are associated with it!!

USAirways Continue to Shock with Poor Service

2010-06-17T00:55:00.003-04:00

Just returned from a trip to San Francisco on USAir. I continue to be shocked by how much this airline has just given up on the concept of service. I wrote a blog recently about one flight in which the attendants seemed to be mimicking Southwest. I thought that perhaps USAir was trying to be friendlier and more customer friendly. Sorry to say, I was mistaken. This was a one-time experience due to the individual attendant, not the airline.

On this most recent trip, my wife and I flew 1st class. We did it because we were celebrating our 40th wedding anniversary and wanted a great experience. What a waste of money!! First, the airplane on the flight out was in very bad need of refurbishing internally--seats were torn, the seat in front of us wouldn't stay up, and there was precious little leg room for a 1st class cabin. The flight attendant worked hard to make our experience as pleasurable as possible. On the way back from San Francisco, we were informed that we had two bags too many (one is allowed to check two bags per person free in 1st class). The price quoted was $200 to pay to check two bags. $200 dollars for bags--after paying more than $1500 per ticket for 1st class. Unbelievable!!

Anyone who understands airline pricing models recognizes that the airlines only make money when they fill seats. When an airplane takes off with an empty seat, it is no different than a super market that has broken eggs or spoiled milk. It is wasted inventory. As a result, the airline is willing to price seats at differentiated prices. So, there is tremendous variance amongst the passengers in terms of what each person paid. Most of the 1st class cabin is comprised of people with upgrade coupons, or they have paid about $100 at the last minute to upgrade because there was an empty 1st class seat. Few, if any in the 1st class cabin have paid full fare, as we did. Few corporations are allowing their executives to fly 1st class anymore, so the full fee passengers are few and far between.

Given this background, it was absolutely shocking that USAir wanted to charge us $200 for two extra bags after we paid full 1st class fare. It was not shocking, given how poorly this airline is run, that they would not bend their bag fee policy for full fare passengers. Our fee more than made up the cost of extra bags--the airline got its money.

In addition, this was a 5+-hour flight and there was no entertainment. We weren't even offered headsets to listen to music. Our kids just flew Air Canada across country--an airline that has gotten a lot of flack of late for poor service--and economy class had individual entertainment systems in the seat backs. Yet, USAir offers no entertainment, even in 1st class. The only other airline like that is Southwest, but that is expected and promised--one doesn't pay for bags and the airline has no first class. They make a promise and stick to it. Is USAir trying to be a no-frills airline and high priced fares? That would be an interesting play. Not wise, but interesting.

USAir is a damaged brand with little redeeming value other than a fairly decent safety record. Its planes are old, its attendants do not seem to care, its fees are high, particularly at airports where it has a commanding market share (e.g., Charlotte, Philadelphia, Pittsburgh).

Recently, USAir wanted to merge with United. Continental moved in a did the merger, knocking USAir out. The fact that United went quickly for a different suitor is good demonstration of the poor brand equity of USAir. Now, the question is who wants to merge with USAir, since the airline needs a partner. One analyst suggested JetBlue. I cannot even imagine that JetBlue would want to be tainted with the USAir brand. The only way they would consider a deal is if--a big if--they wanted the routes USAir has, and if JetBlue wanted to become a major airline.

The only way USAir is surviving is because it provides a needed service that right now cannot be duplicated--flying to cities from certain cities that no other airline serves. As other airlines, like Southwest, move in to challenge USAir, they take market share and further damage USAir. Instead of beefing itself up and improving its brand, USAir acts like a company run by accountants or hedge fund managers--cutting costs and with it further eroding perceived value.

Stick a fork in USAir already. The airline is cooked. Please someone put it out of its misery.

BP Nees Less PR and More Operational Correction

2010-06-15T02:38:00.005-04:00

A recent USA Today article provided insight into the advise that a number of PR executives would give BP on ways to build back its reputation. Among the suggestions are: 1) to become a "green company"; 2) to highlight and celebrate the contributions of those who are cleaning the Gulf; 3) to be more transparent and honest in its communications; 4) to admit its mistakes; etc.

As one can see, all of the suggestions are superficial to the problem that BP created and the reasons for it. They are what one might consider the worst PR spin on a very bad and complex problem. The suggestions sound more like those from a group of undergrads rather than from those who profess to be corporate counselors.

BP got into this mess because it spun its reputation rather than really living it. It got into this mess because its former CEO, Lord Browne, wanted to establish BP as a leader in environmental activism, yet he cut costs to an extent that BP could not live up to its hype. BP did not put into practice what it preached. It lived one way and talked another.

What these PR executives are advocating is to talk more and not to really change. What BP does not need is more PR. It needs operational change. It needs to get back to basics and discover if its values are really environmental leadership, safety and sustainability, or are they to articulate these values because it helps them look different in the perspective of key stakeholders.

But, while we're talking about PR, let's try to get BP to at least get its PR activities in line with what it claims it is trying to do. BP claims it is being transparent, yet at the same time it blocks reporters from covering the spill. It is taking out advertisements touting its actions to correct the problem while at the same time short-changing the payments to Gulf residents.

Enough is enough. This is a disaster of unprecedented proportions. I understand that British investors are concerned with the future of BP and, as a result, the future of their pensions. Screw their pensions. An entire region has been destroyed for at least another generation. Why should we worry about pensions when a company does such damage? It would be akin to being asked to not send to jail a known killer because he/she gives such large amounts to charity and the good of society.

David Gergen Shares His Views on Crisis Management

2010-06-10T17:11:00.004-04:00

David Gergen, who has served several presidents, both Democrats and Republicans, has offered his advise to crisis managing the BP disaster in the Gulf. Gergen is now a Harvard professor and television commentator--one of the best in the business because his views are so balanced and intelligent.

The following comes from Gergen's own blog post.

1. Set up a daily command center in Washington where a presidentially appointed leader runs the show, calls the shots, coordinates the overall effort, briefs the president and briefs the country.
2. Have two deputies, one to direct the leak-stoppage and the other to direct the clean-up. Ex-CEOs and generals would be excellent candidates.
3. Summon all the major oil and drilling companies to the White House for emergency efforts to get the hole plugged.
4. Get BP out of the picture for clean-up; just send it the bill. If it is still needed for hole-plugging, okay, but ensure that it answers every day to directions from the government. If BP needs new internal leadership, figure out how to get that done.
5. Employ the U.S. military for organizational coordination and where needed, for anything else such as clean-up.
6. Make more aggressive efforts to tap the best minds in the world for help.
7. Provide the country with the kind of daily briefings that the military has mastered for wartime — bring in people who are smart, straight and tough.
8. Ensure that economic assistance is provided to families, small businesses and communities that need it with dispatch and generosity.
9. Call off the finger pointing until we get out of this mess.
10. And finally, very importantly, exercise the powers of leadership every day from the Oval Office.

Is Reputation About Delivering on Expectations, or Just the Expectations?

2010-06-03T00:11:00.005-04:00

I recently heard a presentation by Charles Fombrun, perhaps the most widely published academic in reputation management. He defined brand as the promise that sets expectations and reputation as the delivery on expectations.

I have the utmost respect for Fombrun, but I disagree with him. I believe that reputation is related to expectations, not to the delivery on expectations. Brands do indeed create expectations. Reputation, then, is related to the branding effort--does the promise meet the desired expectations of stakeholders? If it does, our reputation will rise; if not, it will lag. Expectations can come from the company's efforts, from touch points at which the stakeholder meets the company, from one's peers, or from 3rd party influentials, such as the media or others.

Expectations run on a continuum. One can have negative expectations of a company. What would it mean if we delivered on those expectations, as Fombrun argues? Would we build reputation? Of course not, we would simply reinforce the negative perceptions of value. For example, it could be argued that for many stakeholders the BP oil leak in the Gulf reinforced their negative expectations of the oil industry. BP, then, delivered on those expectations.

On the other hand, let's take the current situation of J&J's crises related to Tylenol for children in which there were quality problems in the plant. J&J had one of the best reputations in the world. Most people had high expectations of the company. Their actions were below expectations. In this case, J&J would suffer some reputation damage, although the high expectations prior to the crises would likely buffer it compared to a company with lower reputation (lower expectations of its value).

If a company with a bad reputation attempts to invest in social responsibility efforts to improve its reputation in order to meet stakeholder expectations, according to Fombrun, we would expect that the company's reputation would improve. However, research has found that the opposite can in fact occur. Companies with poor reputations that attempt to build their reputations too quickly run into stakeholder disbelief. The expectations of stakeholders is that the company is a bad actor. If it tries to do something that it thinks would deliver on the value stakeholders would like to see, it risks further alienating stakeholders. Its actions are questioned--stakeholders assume that the company must be trying to buy a good reputation.

Companies with poor reputations need to build an organizational culture that allows them to act reputably and do so for some time before trying to engage in a program to convince stakeholders that it is reputable. In other words, reset expectations.

So, reputation is the expectations of value perceived by stakeholders. We manage reputation against those expectations, we do not deliver on them.

C.B. Bhattacharya Defines Good vs. Bad Corporate Social Responsibility

2010-05-23T15:22:00.003-04:00

C.B. Bhattacharya is the foremost scholar in corporate social responsibility (CSR). He defines CSR is "a commitment by a company to maximize society or environmental well-being through business practices, policies and resources".

In other words, CSR is related as much to how one operates the company as it is to the programs one chooses to invest in.

C.B. notes that there is a process that consumers or stakeholders use in judging CSR. It involves three criteria:
1. Understanding: Many companies invest in CSR but do not do enough to make people aware of what they are doing.
2. Usefulness: The CSR program must be seen by stakeholders as being of benefit to them. Companies spend a lot of time talking about the money they spend in CSR. Stakeholders care about the usefulness, not the amount.
3. Unity: the CSR program must be integrated with the strategy of the company.

C.B. has said that philanthropy is not CSR and I completely agree with him. Philanthropy is giving away money or in-kind services to something of importance to society without regard for the value it creates for the company. CSR, on the other hand is not only related to doing good, but also to doing well. It should build the company's value as it builds value for others. It is symbiotic.

When companies contemplate CSR, they must make it part of their overall brand or reputation strategy. It is part of it, not an add-on program. If companies can relate the program to the needs and interests of the stakeholder the program is intended to serve, it will have a greater chance of success. Consider, for example, the great success of the J&J "Campaign for America's Nursing Future", and investment of J&J resources to build the image and attract people to the nursing profession--one of the key customer groups of J&J. The company did well by doing good. On the other hand, consider many of the pharmaceutical companies that report spending $25M on CSR, yet cannot build their reputations because the programs are often not related to the overall strategy of the company, they are not of importance to stakeholders, and few people know about the particular programs. The amount spent might as well be written off as philanthropy--all well and good, but do not expect anything in return.

A Proposal to Change Corporate Social Responsibility to Corporate Engagement

2010-05-21T17:28:00.003-04:00

The entire aspect of corporate social responsibility (CSR) has always troubled me. I believe firmly that companies should do good as well as doing well. However, CSR has always been treated as a tactic rather than as part of the overall strategy of the firm. As such, it is more akin to philanthropy rather than a program that is part of the overall brand or reputation management of the company.

With the advent of social media, stakeholder engagement is becoming more prevalent. Stakeholders are gaining more and more knowledge which used to be contained only at the center of the corporation. This is changing the way we talk with, market to and interact with our employees, customers and others.

I think it is time that we change the name of CSR to Corporate Engagement or Stakeholder Engagement. This is not just a name change, but a reflection of what I would hope would be a different mindset. CSR is still about a company doing something to someone else--a community. Engagement is much more active. To engage, we must listen, respect and have a dialog with others. Engagement is a change of mindset and a better reflection, I believe, of where we should be with stakeholders.

I know that some companies think that they are making progress by calling CSR Corporate Citizenship. I still do not like that term. Citizenship is a term that is designed to make a company feel good. Citizens vote. They do not need to be involved in politics. Similarly, corporate citizenship is no more involving than CSR. Engagement, on the other hand suggests that the CEO and others must think about the outside and bring it in. They must be involved. They need to work with others, not do things to or for others.

Apple is the New Reputation Leader in Fortune Study

2010-05-18T17:09:00.004-04:00

Apple is the new #1 in the Fortune Magazine study of "Most Admired Companies". It seems that Apple continues to delight us and operate above the line of expectations associated with most other electronics companies.

Consider that Apple has so much reservoir of reputation capital that it created lines waiting for the chance to plunk down US$500 to buy the new I-Pod, something few people really understood. In other words, lines were waiting for the chance to pay to see what this new product was. At the same time, no one bothered to pay far less to try out the much touted (by Palm; not by many others) Palm Pre.

Reputations are built by what others say, not what the company says. We are very immune to all the hype companies can generate. It's when other like us get excited that we get excited.

Apple has been so successful that it has managed to commoditize the entire PC industry. It is no longer Apple against HP or Lenovo or Dell. It is now Apple vs. PC. The others seem to lack differentiation. So much so that Apple is able to be priced at twice that of a PC.

Apple will likely disappoint us at some time, but as we have seen with other companies that have excessive amounts of reputation capital stored (J&J and Toyota come to mind), the damage from a mistake will not be as dire as it would be if the company were less admired.

Reputation capital matters. It can carry a company a long way. The I-Pod might not be Apple's finest hour, but go tell that to the consumer of electronics. They still see Apple as king.

Manage Expectations to Manage Reputation

2010-05-17T10:45:00.005-04:00

My colleagues at Drexel, Dan Korschun and Trina Larsent Andras, and I are discovering that expectations are where reputations are built, maintained or destroyed. Stakeholders have expectations of both companies and industries that are shaped by their own experiences or by the experiences of others. We used to believe that expectations were related to brands and experience was related to reputation. However, social media has changed that. We are getting more and more of our perspective of companies and brands through social media (more than 85% according to a Razorfish study). "People like us" are our primary influencers. Their views not only shape expectations but can influence whether or not we allow ourselves to actually experience the company or brand directly.

The Kano Model is a good way of observing the influence of expectations. According to Kano, there are standards that customers expect to receive in order to be satisfied. These standards are constantly changing. Above the "line of expectation" are those products and services and companies that "delight" us. Those are the ones with outstanding reputations. Those falling below the line of expectations fall short of our expectations, as does their reputation.

The key to reputation management is to manage the line of expectations. We know that some company will attempt to differentiate. When it does, it could delight stakeholders. This will then change the line of expectations and shift the reputation standards for the category.

Consider that at one time a radio in a car was not expected. It was a delight factor. Now, all cars are expected to have radios. Think about the expectations we have for cell phones and other items we buy. Many of the things we expect were unusual and delighters in the past.

Reputation management, then, is similar to marketing and communications strategy and brand management in that it is competitive and category based. For example, Apple continues to operate above the line of expectations--it continues to delight. BP has fallen far short of expectations for envrionmental and safety issues, thereby dragging its reputation down. In doing this, it also likely has changed the slope of the line of expectations for the entire industry down. Some player in the industry has the ability to delight us by exceeding expectations. Hopefully, it will not need to be after another environmental disaster.

Can BP Find More Ways to Ruin the Reputation of the Entire Oil Industry?

2010-05-15T13:06:00.003-04:00

There is enough finger pointing going on following the Gulf Oil disaster to make everyone cringe. President Obama has finally had it; the public has had it. BP, which at first minimized the situation, has been pointing fingers at the company that operated the platform and at Halliburton, a company whose reputation can not possibly get much worse. No one is taking responsibility, likely because the lawyers have told them not to in an attempt to minimize the legal ramifications.

The problem is that BP is not following the standards of "Crisis 101". They continue to make promises they cannot keep, to talk as if this is not one of the greatest environmental disasters the world has seen, and to shirk responsibility. The CEO even said that BP would take responsibility for "all things that are proven to have been caused by BP". In other words, "read the fine print". The platform--someone else's problem; the pipe--someone else's problem. So, what exactly is BP taking responsibility for?

When a company outsources to others, it still owns the responsibility for the end product. It cannot shirk that. It's partners are its responsibility--perhaps not legally, put certainly in the court of public opinion.

BP is damaging not only itself but also the entire oil industry. The industry has been unbelievably silent during this crisis. When they have spoken it is to suggest that drilling still is needed. They have not seemed to take this disaster to heart and to understand the emotions. They are reinforcing the worst perceptions of the industry.

BP once wanted to be a shining star. Its star has not only dimmed but has gone out and perhaps turned the shine out of the entire sector.

Johnson and Johnson's McNeil Labs Tarnishes its Reputation

2010-05-11T00:44:00.003-04:00

Johnson & Johnson has been my poster-child for a company with a solid reputation. Since 1982 when it managed itself out of the Tylenol crisis by using its Credo as a guide to doing the right thing, J&J has been my top pick for reputation leader. It lived by its values. Until now.

We are now learning that McNeil Labs, a J&J subsidiary based in Ft. Washington, PA, just outside of Philadelphia, has been under investigation for some time by the FDA for safety violations. Following complaints by customers, McNeil withdrew its consumer products. It has been disclosed that Children's Liquid Tylenol was improperly mixed at the manufacturing level and that kids could have receive more Tylenol than is legally and medically indicated.

Why did it take customers to bring McNeil to action? Why did the FDA not take stronger action sooner?

The second question is the interesting one. J&J has built such a deep reservoir of goodwill and trust over the years that almost no one who knew the company believed that it would do knowingly and willingly do anything wrong. The FDA probably thought that it was following a bad lead--J&J could not be knowingly violating safety regulations. But, it seems that they might have been. Even the stock market continued to vote for J&J. Despite the news, its stock increased in value.

The first question is the shocking one. The fact that McNeil did not alert customers, those who according to its Credo are their #1 responsibility, is absolutely shocking. J&J has let everyone down.

I spoke recently with an employee of J&J who expressed shock and disbelief that the company would not live up to the standards that it had always maintained. The calls to J&J are coming in at a rate of 3,000 per hour and the Internet contacts are just as heavy. All employees are being asked to pitch in to help "man" the phones to answer questions.

One can only wonder what has happened to J&J. Has the company joined those who have cut costs so deep that it has now impacted its ability to function at the level it once did? Has the economy made J&J less focused on the values that made it great and distinct from other healthcare companies in the first place?

As a great fan of J&J, I am thoroughly disappointed. I hope we will learn what went wrong and that we also will see the real J&J emerge. I fear, however, that the company that lived by its Credo in 1982 no longer has the same culture.

Does GM Really Believe that their Main Problem is Marketing?

2010-05-06T15:06:00.003-04:00

GM has been the subject of many business school cases focused on their inability to recognize market changes and adapt their company to meet the challenge of both a new consumer and foreign imports. But, it seems that the new CEO, Ed Whitacre thinks the problems can be fixed with a new marketing chief. He removed chief marketing officer Susan Docherty, who had been put in the position only 5-months ago, and hired Joel Ewanick, who lead a very clever marketing campaign for Hyundai.

GM has been increasing sales but losing market share and Whitacre seems intend to build share back for the company. A great goal. However, I am not sure that I have found anyone who has backed off of buying a GM car because someone else had a more clever ad campaign. Whitacre, who grew up in the telecom industry, seems to think that people choose cars the way they choose wireless plans. This is a guy who continues to live in Texas and has little or no knowledge or understanding of GM or the car industry. He is impatient. Impatience with a company like GM could be expected, but change at GM is hard--it's a huge "battleship" that has been built and reinforced over generations. Change is difficult.

One of the things we always warn students and clients is to not look at other companies and try to imitate their marketing efforts. Imitation is not a strategy. Differentiation is strategy. Ewanick did wonders with Hyundai, but he had a lot to work with. He will have far less to work with at GM. I don't know Docherty and do not know what she did or did not do to warrant this removal, but can you really expect marketing to help sell a car that few people really believe in?

Marketing and branding can do a lot, but the prerequisite is a good product with a value proposition that resonates with the needs and interests of customers. GM does not measure up on either of these counts. Good luck to the new head of marketing. My advice while working for Whitacre--rent, don't buy.

United-Continental:The Merger Might Not Be Great for Travelers, but they Got the Branding Right

2010-05-04T11:17:00.003-04:00

The announced merger of Continental and United may or may not be great for travelers. Eliminating an airline will certainly not help to lower fares, but it makes good business sense for both airlines.

What I found interesting was the brand strategy employed and I think they got it right. The new airline will be called United, but the logo will be that of Continental. This is a smart move from a number of perspectives. First, it unites (no pun intended) the two organizations and shows everyone that they are united--take the name from one and the logo from the other. Second, the United name is better from a number of perspectives--it stands for unity, which is what the two airlines were after; it is the better known airlines with the more important hub (Chicago versus Newark), and finally, the logo (the Continental world) demonstrates the global nature of the new airline as well as reminding people that Continental was part of the deal. This is important as well, not only for employees but also for customers since Continental has had a better reputation than United.

It is interesting that the new airline has decided to move to be based in Chicago with the CEO of Continental and the new CEO and the CEO of United moving to Chairman. Again, a compromise that works well for both organizations.

About 60-70% of mergers do not work as intended due to culture conflicts between the parties. I am not sure if this will be the case for the new United. Their new ads suggest that things got better for travelers. That I doubt. However, from a branding perspective, I think they got it right.

Arizona Hurts Brand USA

2010-05-02T18:46:00.007-04:00

The United States had been building its reputation around the world during the past year that we were back to being a world leader and not a country that would go it alone without regard for the views of other countries. After years of thumbing our noses at what other countries wanted or thought, we returned to recognize the interconnectedness of the world and also the fact that countries like China, India and Brazil were becoming major players on the world stage and had to be given respect.

With the election of Barack Obama, much of the world stood in awe of the US again. We were a country that elected a black man as president. A country with a history of slavery and bigotry had elected someone who would not have been allowed to eat at a lunch counter or sit in a movie theater 50 years ago. Even in advanced democracies like the UK or Canada or France or Germany, it is virtually unthinkable that a visible minority would win the popular vote for leader. The US was back to being seen as "the shining city on the hill", as Ronald Reagan used to claim. Even our worst critics had to give the US its due. Perhaps the US was a welcoming, pluralistic society that all could admire.

That all came to a screeching halt with the move by Arizona to pass a draconian immigration law that will certainly lead to racial profiling--it is impossible for it not to lead to that since it was aimed exclusively at one group of immigrants--Mexicans. While the law could eventually be struck down by the courts for being unconstitutional on the grounds that it permits improper search and seizure, it has done its damage already.

The Arizona bill sealed the deal. The rest of the world is now convinced that our bout with sanity was an anomaly. We are once again being seen as a bit of a crazy, gun-wielding group of semi-literates. Everyone knew that parts of the US had this tendency, but we always seemed to rebound with people like Lincoln and Roosevelt and Kennedy and even Reagan to convince the world that we were really pretty decent. While I never liked Reagan's politics, I admired the fact that he sought friends on the other-side of the "aisle" and always liked compromise rather than ideology.

The Arizona vote reinforces the most negative views of the US. It breaks the positive brand image we had been creating and pushes us back to a point where much of the world now looks at us as being less democratic than other countries--we are not the leader; we are a "used to be". Our hatred and fear of outsiders could actually ruin this country. Already, Mayor Bloomberg of NY is warning that our immigration laws are not allowing foreign college grads to remain in the US. In the past, we educated foreigners and they remained to build some of the great companies of the world and to discover new scientific breakthroughs that benefit the US first. Now, we are denying visas to these grads, so they are returning to India and China to create great companies there.

America was always great for what it created, but it was even greater because of its intangibles. That's the way with all great brands; the promise of future performance seems unlimited. We want more of it.

We are now seeing stop signs put in front of large segments of the population. This was our history with blacks, but we had tried to put that behind us. This is not the way the modern US was supposed to develop. We were supposed to be the country that welcomed all those who wanted a better life. This was not and should not be our brand image. But, Arizona--and I'm sure a number of other states to follow--is showing the world that we are just as bad as our worst critics feared. I pray that we can find some good soon to trump the bad.

Is a Hyundai Really Comparable to a BMW or Mercedes?

2010-04-30T22:28:00.003-04:00

Hyundai has a new car that many analysts believe is equal to BMW, Mercedes and Lexus. It is a real tribute to Hyundai that they have been able to develop such a high quality car.

Hyundai has bought KIA, its Korean rival and seems intent on making KIA the low-price car and Hyundai the higher priced car. Problem is, Hyundai has earned a reputation as a low priced, decent quality car. They have been on the market long enough that this reputation has become crystalized in people's minds. In fact, Hyundai owned the low price-quality category.

To take a car from that category and now convince us that it should be considered a highly differentiated, high price car is a big stretch. Toyota faced this challenge and decided to create Lexus since the Toyota brand could not stretch enough to be considered in the high priced, luxury category. Honda created the Acura and Nissan created the Infiniti for that same reason. Audi, BMW, Mercedes have all expanded their lines downward.

Hyundai is taking a real gamble by trying to stretch so far. It would be far better, in my opinion, for them to create a new brand for the luxury market. However, if they are taking a long-term view (up to 5-years) perhaps they are content to slowly reposition themselves. It seems to be an expensive proposition that could be leap-froged by creating a new brand to go along with the new, highly refined car they have developed.

GM, Ford, Chrysler, Toyota, Oh My!!

2010-04-30T22:09:00.003-04:00

GM announced this week that they were paying back the government's load early. It almost sounded like they have made so much money lately that they have enough cash on hand to give back the money. Problem is, this was just a major public relations stunt by the company. The money given back is our money that was never used. It was kept in reserves. One has to wonder whether or not GM really was that desperate for money or that they did not know how to operate without the money for all the luxuries they were used to in their executive suit. I still think this is a loser company with limited brand value and no credibility. Their recent move to try to scam the public proves it. Senator Durbin even said that this was tantamount to a shell game. GM claims to be making a profit, which is likely is. They have cut so much cost from their system that any sales now will add profits.

Ford, on the other hand, seems to be doing well. Their sales are up in real terms and they are gaining market share--not just getting back what they had. Ford took a gamble several years ago to move toward environmentally friendly cars. William Ford was the CEO at the time and the board actually threatened him to back off the "environmental nonsense". Detroit has never really understood or appreciated more environmentally friendly cars. They always seem to serve the market and never try to lead or hit the leading edge of change--they have left that to the Japanese and Germans.

Ford has well designed cars, they are operating efficiently and they are also the only US car company that did not take government money, which I believe has endeared them to many consumers.

Chrysler is done--stick a fork in it. This is a company with no focus, no brand value and no strategy. They are sucking up cash and losing market share while the other companies have their best months in years. When you loose 8% share while others are increasing sales by 15-18% in a given month, something is very wrong. Say goodbye to our loan. Chrysler will be a footnote in history, alongside Studabaker, DeSota, and other companies that have failed in the past.

Toyota is having great sales, thanks to 0% interest for 5-years. They have to move 2010 inventory and also stimulate the 2011 sales since inventory has started piling up on the dealer lots. Some people have joked that we now know what it takes to convince someone to drive a "death trap". I don't see it that way. The sales incentives were expected, given the situation and the need to clear inventory. I think what we are seeing is deep loyalty and belief in Toyota. The company has lead for so long in price-quality that it has build some inertia in its brand. If there are new problems in new cars being bought, then we will see real brand erosion and long-term problems for the company

Phillies Prove that CEOs are Not Overpaid

2010-04-28T17:52:00.003-04:00

This past week, the Philadelphia Phillies baseball team rewarded Ryan Howard with a new contract worth $25 million per year. That's right, $25 million a year to play baseball. Whether they wanted to or not, the Phillies proved that corporate CEOs are not overpaid. Perhaps, if judged by sports salaries, they are actually underpaid.

I recently wrote about the ridiculousness of so-called "Main Street" hysteria over CEO salaries when newly minted football players make CEOs look like low-paid hourly workers. Now, we have another example in Ryan Howard.

Now, don't get me wrong. I am a Phillies fan. I love Ryan Howard, but I do not believe in my wildest dreams that he is worth $25 million. Also, to bring everyone into the world of baseball, let's understand that a year ago--just one year ago, Howard was making $10 million and asking for $14 million, which he got. Now, a year later he gets a $10 million raise. If this were a story about a CEO there would likely be public outcry and a Senate hearing. But, fans pat each other on the back and thank the Phillies for signing Howard for life.

If Ryan Howard is worth $25 million, what are people like Albert Pujols of St. Louis worth? What is Derek Jeter worth? Name any future Hall of Famer. This is ridiculous and just proves that we have lost our collective minds in this country.

To all the fans out there who applaud baseball executives paying this high salaries, I ask you to promise me that you will never, ever complain again about the high salaries of top executives who actually attempt to create real value for society.

Is US Airways Trying to Ape Southwest Airlines' Style?

2010-04-25T00:15:00.006-04:00

I recently flew two US Airways flight segments, two/from Philadelphia to Ft. Lauderdale, Florida. On both of them, the flight attendants and the pilot tried to be humorous, almost in what might be called "Southwest Airlines" style? I wonder if this is a new trend?

As those who fly Southwest know, the pilot and flight attendants often crack jokes and try to maintain a "light air" (no pun intended) on the flights. It is all supposed to make the customers enjoy the flight a bit more. It has been an unusual style, juxtaposed against the normal from the major airlines where flight attendants hardly smile or look as if they are enjoying themselves.

If US Airways is trying to lighten things up, I applaud them. They could be learning that part of the Southwest appeal is fairly free--smile and enjoy oneself and maybe it will start to become a bit more enjoyable for the passenger who is trapped in a small box at 30,000 feet.

I am not sure that my experience is a real sign of change or an anomaly. While it involved two different flight crews, it might not be a pattern. However, I would urge US Airways to try to move this throughout their system. Southwest has taken a low cost strategy into a high priced market. But rather than just maintaining the low cost approach, they added in other changes to really provide points of differentiation against the major carriers. Most of the low cost airlines in the world keep their fees low but charge for bags. Not Southwest. Most low cost airlines feel like they are low cost--the equivalent of a flying Costco (everything almost seems to be on pallets). Southwest has offered a different approach. Cut costs to lower fares, but also offer value--no baggage fees, drinks and snacks (remember snacks on the major airlines? The airlines actually once gave us peanuts and for free!!). But, Southwest really offered differentiation when it made us feel as if they were happy to have us on board and that they were happy to be working for us. This was such a radical change that it actually became a differentiator.

USAirways is stuck. It has a high cost structure that is difficult to change, unless they chose to "blow up" the airline and start over. They have union contracts and hubs and lots of different types of planes--all of the things that Southwest does not have to live with. These things add costs and inefficiencies, while Southwest flies only one type of plane and has much less stringent contracts.

What I am hoping is that the people at US Airways decided that they could be different from the other major airlines and more like Southwest in areas in which they still had control--like smiling and being customer oriented. If that is happening, I am delighted. I live in Philadelphia, and while I can fly Southwest, it is hard to avoid US Airways. If they are changing, I say thank you. If this was an anomaly, I ask them to consider extending these "experiments" to all of their flights. If they were spontaneous expressions by the crews on those flights, then find those people and get them involved in helping others at the airline to change. They have something positive brewing. While they may not beat Southwest, they can carve out clear differentiation from United, Delta, American, and all the other large, impersonal carriers.

The More We Hear About Goldman, the Worse it Sounds

2010-04-24T17:24:00.003-04:00

We now are seeing e-mails from Goldman Sachs executives in which they bragged about their smarts in shorting the housing market--the same market they and their colleagues on Wall Street helped fuel with their financial incentives.

Is there any wonder that people are worried about a "double dip" in the current economic recovery? Does anyone doubt that there are some investors trying to drive down the economic recovery so that they can make money?

One really has to wonder about the moral compass of most of the financial market executives. If all they are concerned about is making money, we are all in trouble. These are money managers. They have not made anything of tangible value for society. They have not bettered our lives in any way. They simply manage money--actually paper. They have no connection in their minds between that paper and a real person who is impacted by their decisions. It is all about bragging rights, the next yacht, the next house in the Hamptons.

This is an industry operating by a set of values and morals that are separate from the rest of the society. We should stop coupling Wall Street with the rest of corporate America. People often talk about the "sharks" in the business world. Most companies are not comprised of sharks, but rather large wales. Wall Street contains some sharks, but we have seen that they can be worse. Some can be can pyranha. They will attack and eat anything they see. They seem motivated only by their own hunger for more and not by any sense of contribution to the larger society.

CEOs Take Heat on Salaries While Athletes Are Applauded

2010-04-24T16:47:00.004-04:00

The NFL is having it college draft this week. It is interesting that while the public seems overly focused on CEO pay, the amount of money paid to 22-year old college kids seems to keep escalating with no qualms.

The Wall Street Journal did a ranking this week of the salaries of the top draft picks compared to the top salaries of CEOs. Ray Irani of Occidental Petroleum leads all in take home pay at $52 million, including salary, bonuses and stock options. However, after Irani, the next highest paid CEO, Bob Iger of Disney, is paid less than the top 8 draft picks. That's right. Iger, who runs a global enterprise with thousands of employees makes less than 8 college kids whose primary skill is their ability to play football. They have never been in the pros, no one is absolutely certain how they will do, but the money is paid nonetheless. Interestingly as well, only one banking CEO appears on the top 20 list (John Stumpf of Wells Fargo) and he falls in at number 20 overall and well behind the 10 top draft picks.

There seems to be so much concern with the pay of CEOs. These concerns are heightened during a recession with so many people out of work. So many people seem to be concerned with how much CEOs make, and the difference between their salaries and that of the average worker. Somehow, we believe, that if these CEOs were not paid so much there would be a bit more justice in the world.

I worked most of my career in the corporate world. I was paid well and the CEO was paid infinitely better. I saw the jobs they had to do. I would not want to do it. They were under constant pressure from the board, from employees, from the press, from the community, from investors, from everyone. Every move has consequences in real terms. People's livelihoods rest in their hands. They create wealth, they create jobs, they move the economy.

Compare this pressure with the lives of 22-year old athletes. A football player runs plays, makes tackles and entertains us. Whether their teams win or loose has zero consequence in the lives of people around the world. Certainly, they have to perform, but they are guaranteed their salaries even if they break their leg the first day of practice and do not get into a game. How do we justify athlete salary but raise concerns over the salaries of CEOs?

I have rarely heard the business community compare the salaries of athletes and executives. Somehow they have deemed this an inappropriate comparison. I think it is very relevant. We pay people to entertain us better than those who are vested with running our economy. These salaries result in higher ticket prices and higher costs of everything at the stadium to pay these salaries. If the cost of goods escalated as quickly as the cost of sporting events in the past few decades we likely would have a consumer revolution.

Somehow this seems to me to be totally out of wack. If we are to be concerned with the salaries of those who run major companies, let's at least start to question what we pay those who entertain us, and what this says about us as a society.

Goldman-Sachs is Learning that Expectations Influence Reputation

2010-04-21T17:49:00.002-04:00

Goldman-Sachs is now defending its reputation against accusations that it mislead clients about the risk in some of its derivative programs. First, they argued that the investors--other companies--were sophisticated and should have understood the risks. Second, they argued that they would never knowingly defraud a client. Finally, they argued that it was perhaps and individual who might have been involved, although they are now claiming that the individual was not the final decision-maker in the offering.

Goldman may or may not have done anything wrong in its opinion, but the perceptions of regulators and the public are quite different. Expectations have now been reinforced that Wall Street cared only for itself and its own sense of right and wrong. In fact, an editorial cartoon in the Philadelphia Inquirer of April 21 showed a ship entitled Wall Street bombarding a coast line entitled Main Street with canon shells, destroying the city. That is the view that most people have today. That a bunch of people with over-the-top salaries did whatever they wanted to do to fatten those salaries even more.

What is lost on all of this is what is not being denied. Goldman made its money, whether or not they duped anyone or did anything illegal, by coming up with a plan to short the housing market. In other words, to bet that housing would collapse. They made billions on the misfortune of those who lost their housing values. This was also a company that made money by floating some of the money to inflate the housing market. Sounds like Catch 22. They could not loose. Sell the airplanes and then sell the anti-aircraft guns. We all thought this was a novel. We are now learning that this was standard operating procedure for Wall Street. This is an industry with no soul and no real conscience. It cares only for money and nothing else. Let the public judge them for what they really are.

Spirit Airlines is Polluting the Low Price Category

2010-04-19T13:16:00.005-04:00

Spirit Airlines is under attack. It announced a few weeks ago that it would begin charging passengers $45 to carry a bag onto the plane that could not fit under the seat. In other words, the overhead bins are now no longer free. Under increasing pressure from travelers, several members of Congress sent inquiries to the other airlines to determine if they would follow suit. Those who responded, pledged that they would not initiate such a charge.

Spirit is standing by its decision. Its CEO, Ben Baldanza, tried to sell this decision as one being made to help passengers speed their way through security. He noted that many passengers were being held up due to others who chose to bring bags on the airplane. Besides, he noted, Sprint had cut its ticket prices so passengers should be happy with the overall cost of travel. If Disney fantasies were real, Mr. Baldanza would be distinguished by the nose he grew as he read this load of nonsense to the media. This was not about speeding passengers. This was about finding new ways to tax the passenger to make more money in a business that has historically lost money.

This would not be quite as bad if Spirit were to drop the charges for its checked bags. But, those fees also remain. Of course they dropped the price of tickets. The real price is when all costs are factored in. Stop trying to sell crap as being beneficial to the passenger!! This is a bundled price tactic that plays to the business traveler.

What should be done about this? Nothing. Please keep Congress out of this. Let the market become the jury. I believe that Spirit has every right to conduct their business as they see fit (or unfit). This is not a major airline that has passengers in hubs at their mercy. This is a minor player who is trying to gain share by selling low. However, because they have not been as efficient as some other carriers, like Southwest or JetBlue, they are trying to make up the difference with fees. I guess a day-trip business passenger with just a brief case might find this "deal" worthwhile. The traveler who needs to bring clothes along is footing the bill.

Brands, like Spirit, that want to be low-cost alternatives need to cut their expenses and become more efficient so that they can be truly low-cost alternatives. Spirit is the US equivalent to Ryan Air in Ireland that wants to charge for using the bathroom on board.

I believe that every company has the right to manage itself well or to destroy itself if it so chooses. Spirit has not done anything illegal; they have done something stupid. Let the market judge their stupidity. Hopefully, they will be taught a lesson. If not...well, as PT Barnum said: "there's a sucker born every minute".

Marketing and Branding Are More About Being Than Doing

2010-04-17T10:53:00.000-04:00

I just was working with a manufacturing company that announced to me before we began that they were a manufacturing company that knew nothing about marketing or branding. What we discovered over the course of a few days is that they were not far off from becoming a true marketing company with a great brand--one they could live rather than talk about, which makes it all the more powerful.

This is a company with great products. But, they looked at their products as what they were selling. We refocused their thinking on the customer and what benefits they were getting from those products. In other words, we turned this from product push to customer pull; from a bunch of product features to targeted customer benefits. We focused on all the touch points that customers meet the company, including the plants, trade shows, customer service, etc. All of these needed to be handled consistently. What they found was that they had work to do, but that it was not as massive as they had feared. We worked on positioning statements for both the various businesses and the company as a whole. We worked on attributes and associations that the company would want to be known for vs what it currently is known for. All of a sudden, all of these production-oriented managers started to think about the customer and other stakeholders and how they could get employees engaged in living their desired brand. They got excited; they got energized; they got committed.

The CEO and top management met with the group and committed to them that they would focus on building a solid brand for the company which they discovered could be a differentiator in the market. They went from thinking of themselves as a commodity maker, playing price games with their customers to understanding value and what value can do to drive down concerns about price.

I had promised this group that they would leave the two days with enough knowledge of marketing and branding to "be dangerous". They are very dangerous right now. I'm excited for them. If they continue with this their competitors better watch out.

New Book, "Trade Off" Makes Branding Seem All Too Simple

2010-04-12T12:05:00.000-04:00

There is a new book out called "Trade Off" by Kevin Maney, that tries to explain why some things catch on and others do not. It is an easy read, but also a very simplistic view of the world of brand management. Maney, a journalist, chalks it all up to what he calls "fidelity and convenience". He explains all brand successes through this lens.

Convenience we can understand. Regis McKenna had many years ago identified "access" as a critical component of successful marketing. Access, convenience, ease are things that are important to customers as they balance the trade off between benefits and costs of a product or service.

Fidelity, according to Maney is all of the things that make the brand delight the customer. Now, isn't that helpful to brand managers everywhere? Just make the brand high on fidelity, or make it what the customer wants and needs and you'll succeed. If that were that easy, we'd have a lot more highly successful products. The key is to find all of the attributes and associations that comprise "fidelity". As the saying goes, "the devil is in the details" (the Germans say "Gott steckt im Detail" or God is in the details). I guess it depends on whether you look at details as God's work or that of the devil, but it must be done.

I can just imagine the CEOs and others who read the Maney book and call on their marketing, branding or communications group and tell them that they need to find their brand's "fidelity", thinking that this must be fairly simple since there are so many examples in the book. One could only dream that it would be so simple.fidelity means.

Fidelity consists of the symbols, attributes and associations that brands work diligently to determine and instill in their brands. It means all of the actions that companies take to live their brand and build their reputations with their various stakeholders. It means connecting all of the touch points at which customers and others meet the brand or company. To call this simply "fidelity" is to take a news writer's approach to a very complex process.

The Recession has Changed Consumers--Perhaps Forever

2010-04-06T20:46:00.000-04:00

This recession has been the first time since the WWII-Depression generation that we have felt totally vulnerable financially. My parents, perhaps your grandparents, felt very vulnerable. They lived through war, rationing of food and goods, and a depression that wiped many of them out. They never forgot these hard lessons. They always had an aversion to risk--they knew that things could change quickly.

The "Baby Boom" generation that I am part of and the generations that followed, were raised on affluence. We bought houses that we thought would always appreciate in value; we bought things we didn't really need but which made us feel better or made us look better to others; we spent and spent. We never believed that things could go any other way but up. We had minor recessionary setbacks and inflation and even "stag-flation", but we always knew things would get better.

This recession has hit everyone hard. It had impacted ever sector of the economy. Virtually no one is unaffected. We all know someone who has lost something--money, a job, etc. It is the first time that we realized that everything we had could disappear quickly. Even if we have regained our wealth in the stock market, we feel reluctant to spend since "conspicuous consumption" is being frowned on. There is actually a new cottage industry of personal shoppers who buy the expensive things that the wealthy want so that the actual consumer will not be seen shopping "inappropriately".

While this has not been as severe as the Great Depression, it is a Great, Worldwide Recession. It will leave us scarred in a similar way the 1930s and 40s left that generation scarred.

McKinsey & Co, did a study and found that perceived value is changing. If we were to develop a matrix with one axis being perceived price and the other axis being perceived customer value, we always knew that those who exceeded perceived value relative to perceived price would win--price would become less of a factor. This recession, though, has caused a lot of people to start to question their own buying patterns and they are trying the brands they by-passed previously. Those brands that were just nice-to-have and do not have the solid, binding, necessary attributes of value, are losing perceived value.

Companies, not only those in the consumer packaged goods business, need to reassess their attributes and positioning and assure themselves that they are part of the needs-based set for customers. Those who sold on exclusivity or "show" of wealth or taste, are finding themselves undercut by a climate that questions these values. People are "settling", something we never have done in the past 50-years. True, there will be BMW and Mercedes buyers; there will be those staying in the Ritz Carlton; there will be those buying the latest and most expensive fashions. There has always been a segment that wanted and was willing to pay for the "best". But, these people are shrinking in numbers as more ask the question of themselves: "do I really need this?" More people are asking this question than ever before.

There are many businesses banking on the fact that the consumer will return to the way they were before the recession. Read the McKinsey report or the work of John Quelch at Harvard Business School. I do not believe we will return to the way we were. We are a mini-version now of the generation that proceeded us. They never returned to previous buying behaviors and will not either. As risk increases in people's minds and buying decisions, more and more people back off decisions and "settle". We will be in this mind-set for the long haul.

Three Key Questions to Ask About Your Reputation

2010-04-03T10:19:00.000-04:00

Those doing reputation research often turn to opinion polling data which tells them how well they are liked or admired compared to others in the same sector. This is interesting, but it does not give us much to work on. Research needs to be applied--be prescriptive, not just descriptive.

I believe that there are three key questions that those looking at reputation need to address:

1. How important are the attributes that we are building our reputation on to the stakeholders for whom they are intended?

2. How do we compare in terms of expectations versus the experience that stakeholders believe they actually have received from us?

3. How do we compare vs. the "ideal" that stakeholders have for a company in our sector?

Getting at these three questions will not be done by normative, survey research. These generate normative or ordinal data. Interesting to observe but offering little understanding of how intense stakeholders feel about us or what we can do to close gaps or improve on our current programs.

In terms of reputation research, surveys of what people think of a company at a certain point in time are akin to a professor giving a student a grade and not telling them why the grade was given. The "A" student does not know how to replicate; the "F" student doesn't know how to improve.

By employing research methodology that lends itself to linear data analysis, we can get not only the answers to the above questions, but we also can see the gaps between ourselves and others.

Fortune magazine's survey of the "Most Admired Corporations" is liked by a lot of corporations, not only because it tells them where they are relative to their competition, but the data also gives them information on each of the 9 attributes analyzed. So, we get an overall set of aggregate data as well as the information on the attributes. This research is linear--it is done through factor analysis. The real problem with the Fortune data, in my opinion, is that I could never tell how important the attributes were to the respondent. The researchers argue that as one ranks, one gives a perspective of importance, but much of Fortune's study is also a popularity contest because companies within the industry are voting for themselves and for others.

The "ideal" question is an important one. We need to know where we and others in our peer and competitive set are relative to an "ideal". The closer we get to the ideal, the more likely we are to exceed stakeholder expectation, create differentiation, and enhance our reputation.

Asking the Right Question Might Change Branding Decisions

2010-03-30T11:57:00.001-04:00

I have talked to a number of companies recently that might be candidates for changing their company names to get rid of the baggage of past problems and start anew. The reason these companies give for not changing is that research found that their corporate names had a lot of awareness and they felt it would be difficult to duplicate that awareness with a new name.

Bernie Madoff's name has a lot of awareness, but I would not want to launch the Bernie Madoff School of Management. We need to understand not only awareness, but also the attributes and associations that are imbued in the name that have become so crystalized that we cannot change them.

I lived through an example of bad research that lead to bad branding decisions. Before I arrived at Nortel, the name of the company had been Northern Telecom. Prior to my arrival, the company decided to change its name to Nortel to modernize it and because too many customers around the world thought the company was a telecom service provider rather than an infrastructure developer. The branding firm did research and asked customers whether it was clear to them that Nortel was the same as Northern Telecom (Nortel was the stock market notation for the company). About 50% recognized the connection. The brand firm went on to develop a new name (Nortel) and logo that completely dropped the Northern Telecom name.

When I arrived I started asking questions about the research. Think about it--50% did not recognize the connection, and this was with aided research. That means that a vast majority did not recognize the name Nortel unaided. One would likely only do this if one were trying to distance the company from past problems, which we did not have. It made no sense. The only way to build the brand and its connection to the past was to invest tens of millions in advertising, which we likely could not afford to do. So, I had the logo changed with a lock-up of Northern Telecom written below the Nortel, to bring the past equity to the new logo and name. This was bad brand strategy based upon bad research. We needed the name Northern Telecom during our transition.

Some companies could use a clean break from the past (think Altria, which became the parent name for Philip Morris; or Airtran, which had been Value Jet). These were names that were changed to give the company a new lease on life--not to bury the past, since all things are transparent, but to allow the company to build new attributes and associations and not be saddled with so much baggage its messages cannot break through all the noise. There are many such companies that are living with tremendous baggage (e.g., AIG).

Ask good questions and you will get good answers. Ask bad questions and you might end up making some terrible brand decisions.

Sprint and 4G Need to be Repositioned and Rebranded

2010-03-26T16:25:00.000-04:00

Sprint has developed a 4G network, one that runs more than 10-times faster than 3G. But, more than that, 4G offers the bandwidth needed to handle all of the data that is now clogging the mobile networks and interfering with voice calls.

There is a new commercial from Sprint by their CEO, Dan Hesse that comes close to defining 4G, but still falls short. He talks about how other phone companies charge you for all of the data used, which is why most of us buy the phone in the first place. Voice is a "throw in". It is the right of entry for anyone in the mobile business. But, most of us are increasingly using our phones for data.

This situation is akin to what happened on the public phone networks in the late 1990s when data started increasing relative to voice. This is the time that Cisco blew away Nortel (where I worked), Lucent and others, who were focused primarily on voice. Cisco not only had routers that handled data better, they also understood and articulated the new value proposition of the Internet.

Mobile is now at that same point in time. Data is not quite 50% of the mobile network traffic, but it will be in the near future. All of this data clogs the network and makes it difficult to make a simple telephone call. 4G is the answer. It has the bandwidth to handle both voice and data.

Currently we have a "Coke vs. Pepsi" ware going on between Verizon and AT&T concerning who has better 3G coverage. Meanwhile, Sprint has built a 4G network that it has deployed. But, if one were to draw a perceptual map of the mobile phone companies based upon price and features, one would see Sprint gathered near Verizon and AT&T, which is a dangerous place for them to be. If they do not move into a new positioning, they could go out of business.

They are not going to get there with a CEO as a talking head in a commercial. I know that the CEO is intended to invoke trust and confidence, but Dan Hesse is not Steve Jobs and Eric Schmidt--he doesn't evoke images of high-tech prowess or innovation. While he has a background in data networks before joining Sprint, he comes across as just another CEO--nice and open, but not cutting-edge. He speaks slowly and precisely about an exciting new technology. It doesn't work to capture the listener and help them to emotionally connect with the technology so that they have a reason to change.

Sprint needs to redefine 4G around bandwidth and make it an emotional connection for customers. There is so much value in 4G and so little perceived value currently. A good play could be with the new mini-computers like I-Pod, Kindle, and others that will need greater bandwidth to realize their potential. The advertising needs to be refocused on products in use and greater use of social media needs to create and build buzz around what 4G could mean.

It's a shame that Sprint hasn't recognized this. They even have priced 4G comparable to 3G, thereby killing its perceived value. The only reason to take this pricing strategy is to attempt to siphon customers from Verizon and AT&T. I don't think that will happen. Palm found out that despite its features, the mobile world has become defined as I-Phone vs. Blackberry. Even Droid is having a tough time making inroads. Perhaps Google will do better, but if I were Sprint I would want to stay clear of a market in which Google and Apple want to do battle with Verizon.

At work, also, is the so-called "Market of Three" phenomena in which markets, when they mature, devolve into 3 major players. The #3 (in this case Sprint) has problems when it tries to be as broad and deep as the #1 and #2 players. The #3 needs to focus and find its niche.

Sprint might be better to rebrand itself as a technology, data company with voice as a plus rather than to continue to sell itself as a voice company with better data. Take the data plus route rather than the voice plus route and move into a different perceptual space with greater value than its competitors. It they do not reposition and rebrand themselves and 4G, they may find themselves either a take-over target or they will continue to be the 7-Up in the Coke-Pepsi war--a marginalized, afterthought of a brand.

Right Wing Branding Can't Hide the Facts

2010-03-24T19:24:00.000-04:00

The right wing in the US has been very good at branding. They branded the anti-abortion movement as Pro-Life and now has branded its new movement as the Tea Party, using symbols and flags from the Revolutionary War period. Today, after the vote on healthcare legislation, we saw evidence of violence against legislators who had voted for the bill by those who said they were opposing "tyranny" and standing for "freedom and liberty".

While the so-called Tea Party might want to brand themselves in a way that links them to the leaders of Colonial freedom from England, they are really the reincarnation of John Wilkes Booth, George Wallace and others who have opposed federal law over states rights. These are the successors of those who argued for slavery and against laws allowing multi-racial marriages. They are not Tea Party revolutionary. They are not seeking to advance freedom, but rather to stop the country from progress.

What they are very good at is branding and fear-mongering. We have heard that the next election will be between "Americans and Europeans", or those who favor American ideals against those who want the US to become a European socialized state. If these people only knew something about Europe or socialism, this might make sense. But, once again, it is all about spin over facts.

The new US healthcare legislation would never be acceptable in Canada or any of the European countries. It does not provide for universal care. It is not government healthcare. But, for millions who know nothing about the world outside, these statements about socialism and European-style healthcare, strike fear, as they are intended to do. It is not fact-based arguments; it is, rather, an attempt at the worst sort of branding-pure spin over substance.

This brand management effort by the right-wing did not start with any actions by President Obama as they would have one believe. It started when Obama was a candidate. Remember Sarah Palin invoking "Joe the Plumber" and claiming that Obama was a socialist? Newt Gingrich continues to label Obama as a "secular socialist". I'm not sure Gingrich believes this, but the words incite people to fear, which is what he wants. The right has believed, just like right-wing regimes in other countries, that you label your opponent and continue to label until it sticks. This is dangerous stuff. They are not too far from inciting violence. Characterizing ones opponents with a quick label can translates into anger and it stirs up rage in many unbalanced people, especially in a country full of guns. There are plenty of "wing-nuts" who may actually believe that they are defending freedom and liberty through violent acts against Democrats. Remember that John Wilkes Booth shouted "death to tyrants" when he jumped to the stage of Ford Theatre after shooting President Lincoln. The anger the Republican leadership is inciting among the right-wing may go beyond the ballot box to the streets. Remember what happened in the South during the Civil Rights actions in the 1960s? We are getting close to this now.

There are many thoughtful Republicans, but they are afraid to speak up against the rising right-wing lest they loose their seats. Scott Brown learned his lesson pretty quickly. He voted with Obama on one small issue and was put on notice that the Tea Party would run someone against him if he didn't straighten out. This is not a "spontaneous organization", as some would have us believe. This is the creation of the right-wing of the Republican party designed to destroy the President and any progressive ideas that might stand in the way of their ideological orthodoxy. It is a "take no prisoners; no compromise" style of politics. They see no shades of gray, only black or white.

The US is fragmenting. It is getting as close to the divisions that it saw in the 1860s during the debates over slavery and states rights. That lead to the Civil War. One wonders if the right really wants to keep the union together or if it is trying to reverse the course of history and bring the North and progressives to their knees in the same way they believe their ancestors were forced to bend to the will of the nation. This is not a movement trumpeting "The South will Rise Again", but it is damn close to that sentiment and closer to that than it is to the intellectual spirit that fueled the Revolution of the colonies from England. That revolution was lead by intellectuals. The Tea Party is lead by anti-intellectual thugs who claim not to want government interference, but at the same time want Constitutional amendments against abortion, gay marriage and anything else they don't like.

It is time that people begin to see this for what it really is--a mass of angry people; not political--just angry, uninformed and easily swayed by rhetoric and false labels.

Navigating Social Media for Brand and Reputation

2010-03-16T08:14:00.000-04:00

The Internet has transformed virtually every company, empowering consumers, increasing the threat of new entrants, and creating new competitive opportunities or risks. In his Nobel Prize winning paper, The Nature of the Firm (1937), Ronald Coase noted that the primary economic rationale for integrated corporations was the lowering of search and transaction costs. The Internet has stripped these advantages from many companies. As a result, a “Long Tail” has developed (Anderson, 2004), allowing many businesses to use the Internet to realize significant profit from selling to niche rather than mass markets.

The term social media relates to those web-based activities that allow individuals to publish, share or network with others. Social media are like a big cocktail party. Markets are the conversations taking place. How one handles these conversations becomes more critical. It also changes marketing since relationships are more difficult to monetize than transaction. As a result, we are seeing a convergence of marketing, advertising and public relations.

Research by Razorfish and eMarketer have found that a majority of customers are influenced in their perceptions of brands by social media. These findings support the Edelman Trust Barometer findings that “a person like me” has become the primary influencer of perceptions.

There are still many who are confused as to whether they should have a strategic plan, a social media plan or a “Twitter” or “Facebook” plan. I would offer the following recommendations:

Technology will continue to evolve and change. Focus on strategy & reputation objectives, not on the technology.
Understand that social media are not all the same. Some are good for listening; some for sharing; some for networking; and others for publishing. Engage in all appropriately.
Become a real member of the community—once you have built credibility as a legitimate member of the social community, you might be asked for some suggestions and information.
Focus on your organization’s values—they must be honest and transparent. Values are the foundation of reputation. Clarify your values and hold people responsible for upholding them—they are now on full display.
Engage your employees and help them to understand their role in living your strategy, brand attributes and reputation objectives. Make certain that you have clear guidelines for employee use of social media.
Build Relationships. As Jim Grunig has noted, this may be the core competency of public relations. Relationships build value and multiple stakeholder relationships may well build value exponentially.
Monitor, listen and remain calm. Not everything said will be positive. You do not have to defend every criticism. Stop thinking of yourself as a corporate messenger and focus on being a relationship manager.

Hyundai Needs to Create a new Brand for its High-End Car

2010-03-14T21:08:00.000-04:00

The votes from Consumer Reports and others are in. Hyundai has introduced a new high-end car that is the equal of BMW and Mercedes. The problem, I believe, is that they intend to sell it as a Hyundai.

Hyundai is a successful South Korean car company. It recently bought KIA, another Korean company. The plan, it seems, is to position KIA at the lower price end and Hyndai at the higher end. That would be find if these were new cars in the market. The problem is that both cars--Hyundai more than KIA--have been well positioned as inexpensive, quality cars. If one draws a perceptual map for the auto industry with two axes: price and quality, Hyundai would be in the prime position of low price, high quality car. It is lower priced than Toyota or Honda or Chevy or Subaru. It has done an excellent job in this category. In fact, if one were to ask consumers to name the top low priced car with good quality, Hyndai would likely be top-of-mind for many.

It is a given that it is easier to build a brand image than to change one. Once attributes and associations start to crystalize, they are more difficult to change. Hyndai has been on the market for some time and has done a great job in branding its cars. Now, it wants to change and reposition what a Hyundai means.

Toyota faced this issue and decided that the parameters of attributes and associations of the Toyota brand would not extend to a high-priced, luxury car. It introduced Lexus. Honda faced the same challenge and introduced Acura. I am a bit mystified that Hyundai believes that it can reposition their car and get people to spend $50,000 plus. Think about the scenario. You drive home in your new luxury Hyundai and park it in the driveway. Your neighbor comes over and admires it and asks what it cost--$55,000 you say. He responds: "for a Hyndai? are you crazy, you could have bought a Lexus or BMW or Mercedes for that money". And the post-purchase dissonance would begin. I don't think enough people will get to that point. They will think about their neighbors, their egos, their resale values, etc.

The old consumer purchase steps we used to think about (need, alternatives, evaluation, purchase, post-purchase) was conceived to parallel the sales funnel that ran from awareness to familiarity to favorability to consideration to purchase. We now know that with the proliferation of alternatives in the market and all of the media and social media exposure, most consumers begin to eliminate brands before they even begin shopping; they focus on a few brands. We are not living in a world of mass advertising anymore. Hyundai has more avenues to reposition itself within, but a more fragmented market in which to do so. It will take the company a lot more time, money and other resources to reposition Hyundai than it would to introduce a new brand of car with a shadow endorsement from Hyundai.

Comcast Drops the Ball in Launch of XFinity

2010-03-14T20:13:00.000-04:00

Comcast did not show a lot of marketing prowess in its recent launch of its new Xfinity brand. Instead of having a launch plan that framed understanding and expectation of Xfinity, the announcement was made during a conference call with financial analysts. Letting the investor relations folks handle brand announcements is a new strategy, but it is not one that I would recommend to other companies.

Comcast should not be faulted for developing the Xfinity brand. It is a cable company and the Comcast name is saddled with all of the attributes of a cable company, none of which are typically positive, progressive, or exciting. This is not only true for Comcast, but also for Time Warner and other cable companies. Cable companies are thought of as public utilities--pipes that bring other people's talents into ones home.

Comcast is competing head-on with Verizon and its high-speed Fios. While Verizon does not develop its own technology, it is perceived to be far ahead of Comcast in technological prowess, principally due to its association with high-tech devices such a smart phones. Verizon has been battling AT&T on 3G network coverage, and that also has made it seem like a technology leader, at least in comparison with Comcast.

So, Comcast looked at its attributes and the attributes of Verizon's Fios, and determined that it needed a new brand. Xfinity was a combination of two ideas that had been at play at Comcast for some time. It had been talking about cross-platforms and also about its infinite capabilities in the entertainment and connectivity space. By combining the two ideas, Xfinity was born. This was to be the brand for Comcast's here-to-fore "triple play" of cable, computer, telephone--matching Verizon in terms of speed, security and price.

I used to work for a CEO who used to say that "execution is 90% of the determination of success". So, the strategy behind Xfinity was good; the execution was not so good. In fact, really poor.

Xfinity gave Comcast the chance to reframe the discussion and expectations of customers, to talk about the new Comcast--the one focused on customer service and the one poised to buy NBC Universal. It could talk about its high-speed competition to Fios, what it was doing in the telecom and wireless spaces, etc., etc.

Comcast blew it big time. When one doesn't frame the brand or discussion about the brand, it allows others, primarily competitors, to frame the discussion. Customers now believe that Comcast is changing its name to Xfinity, which it is not; Verizon is running ads making fun of the change as being nothing more than "window dressing" and also suggesting that Comcast has changed its name.

In the meantime, the Xfinity ads that Comcast started to run after the "non-announcement announcement" look very much like ads that were supposed to run as teasers before the announcement. So, there were no teasers, no public relations build-up with the press, not heightened sense of excitement, no framing of technology discussions about fiber optics (Verizon) against high speed alternatives from Comcast. There was no discussion of how Xfinity will be Fios without the dirty work of tearing up property to bring fiber optics to the home. All of these opportunities were lost and now the discussion is being framed by those who either dislike Comcast or by its competitors. Companies have held successful press conferences for brands with less vitality and possibility than Xfinity.

I guess trying to get a company like Comcast to think and act like a major marketing company will take some time. It seems like a Spanish procession--one step forward, two steps back. In its customer service activities, Comcast has taken a major step forward. With the Xfinity announcement, Comcast took at least two steps back.

Google Stays True to Its Brand Promise

2010-03-13T12:58:00.000-05:00

Google continues to be in disputes with the Chinese over what content should be restricted. This dispute started many years ago. How Google has handled it shows their differentiation versus Yahoo! and others.

Google has a mission to "do no evil". Its founders wanted to attempt to do well by doing good. The company was wise early on when it brought on CEO Eric Schmidt, one of the best CEOs in Silicon Valley--adult supervision that Yahoo! could have used.

About 10 years ago, California wanted the search engines to provide the names of anyone who did a search that might be related to child pornography, in hopes of entrapping pedophiles. Yahoo!, MSN, AOL and others quickly complied; Google refused, saying that those who used its search engine did so with the guarantee of anonymity. Identifying someone as a pedophile from a search was a "slippery slope" that would open the Internet to censorship. While pedophilia is a horrific crime, how might one differentiate a student or journalist doing research on the subject from a true pedophile. It could become a new "McCarthy era" witch-hunt, with people being judged guilty until they could prove themselves innocent, but tainted nonetheless. Google judged that agreeing with California authorities would not be true to their brand promise. They incurred the wrath of California authorities and others who questioned their morals and ethics.

Fast forward, and Google ran into trouble with the Chinese government that wanted the names of anyone in China who searched for information about banned subjects (e.g.,Tiananmen Square, or Falun Gong, a banned religious group, or the Dalai Lama). Yahoo! complied, turning over the names of journalists which lead to their arrest and incarceration. Google stayed consistent. It refused to turn over names of those doing searches. Instead, it agreed to put up a notice blocking the information and telling the searcher that they were complying with Chinese law. While the government did not like this, it was accepted.

Google's actions at the time were not applauded by all. Many members of Congress, including the late Cong. Lantos of California, wanted Google and all other companies to abandon China until the country agreed to improve its human rights. Lantos had been a holocaust survivor and had tremendous sensitivities to country abuses of human rights. He had wanted a "Sullivan Principle" (the principles that were introduced by Rev. Leon Sullivan that kept U.S. companies from doing business in South Africa during the time of apartheid) for countries like China.

The dispute in China has continued. Now, Google believes that not only has China been the source of international hacking, but that the Chinese authorities might be behind the hacking of Google and other companies. While the Chinese say that they are not responsible, they do not deny that they want to block Internet and search access that they deem "disruptive to the state and its people". They also have the motive and the ability to get back at Google for its unwillingness to comply with their desire to hunt down offensive searches and searchers. The dispute might drive Google out of China.

Lest anyone think this is easy for Google to stand its ground, they should recognize that China is the largest potential Internet market in the world. The future development of that country's Internet will be enormously profitable. Google could find itself pushed out of operations in China and may make the decision to abandon the country. If Google is not in China, it gives the Chinese the motivation to create a competitor that could challenge Google not only in China, but also around the world. I can image that this will be a difficult situation for Google and its board, given the profits it would be foregoing.

While this may seem like a dispute amongst competing governments and philosophies of government, it is a demonstration of the difficulty companies have globally. Many times, companies argue that they must adapt to the whims and cultures of their different world markets. While adaptation to local customs is a correct action, a company still must maintain a core set of brand attributes that it will keep immutable. This is what Google has been trying to do. I applaud them! They have earned my respect and admiration.

Brands Need to Be Part of the Strategy, not Spin

2010-03-12T23:01:00.000-05:00

One of the cases I love teaching in my classes is the Rosewood Hotels case from Harvard Business Review. The case outlines a situation when the CEO and chairman of the board both decide that they want to transform themselves from a House of Brands into a Branded House in hopes of increasing cross-property stays and increase lifetime customer retention. At the time of the case, the name Rosewood in not known, but the individual Rosewood properties (Mansion at Turtle Creek, the Carlyle, Inn at Little Dix Bay, and others) are highly regarded, individualized properties loved by their clientele. When studies are done, it is found that the hotel managers and clients do not see any value in touting the Rosewood name.

Students often move quickly to a sensible solution of a sub-brand strategy, linking all the hotels to the Rosewood name, similar to the architecture used by Marriott, e.g., Fairfield Inn by Marriott. However, then the fun starts because I start to push the students to consider what the damage could be and how this strategy, without the proper understanding of the corporate strategy, could backfire.

For example, consider the the type of hotel managers Rosewood had hired would likely be entrepreneurs who love running their own high quality hotel. Ritz Carlton, Four Seasons and other hotel chains the Rosewood CEO covet would likely hire corporate types who want to be part of a large, "cookie cutter" hotel chain. Consider also the promise made by the individual brand properties--to be individualistic, tailored to the local community and culture. Could linking these to Rosewood damage the brand promise and loose customers? Think about travel agents who had not incentive to push the Rosewood name and whose help would be needed if the masterbrand or branded house plan was implemented.

The case illustrates that branding is not about spin, but rather about making certain that a company maintains its brand promise at all touch points. If changes are made, there also need to be structural or process changes. For example financial incentives for the hotel managers to cross-sell properties rather than relying purely on the marketing and advertising of the Rosewood name. Or, incentives for travel agents to push more Rosewood properties. What about getting more hotel employees to the other Rosewood properties so that they can help sell the virtues of the other Rosewood hotels? What about software like CRM that would help each hotel to know more about the customer so that they have knowledge of the visitors Rosewood property visitations.

The case is a great one for use to highlight that brand management is not as easy as it seems. They has to be an infrastructure and strategy that supports the brand and its promise. The case is great for students in brand management classes. I also use it in MBA and Executive MBA classes so that general managers and future general managers understand the complexities of brand--it is not about a logo or slapping a name on a sign.

Customer Service is a Major Driver of Reputation

2010-03-10T20:17:00.000-05:00

There has always been a debate about the extent to which reputation really matters to investors. On the one hand, there has been research showing a positive correlation between positive financial results and reputation. On the other hand, some hard-nosed quantitative types argue that investors only care about getting rich and are willing to forgo reputation when they are getting favorable returns.

However, we often fail to step back and consider what reputation does to the sell-side analysts who influence the market value of the stocks we buy. In an October 2009 Journal of Marketing Research article, Eugene Anderseon and Sattar Mansi looked at the impact of customer satisfaction on bond ratings. They found that customer satisfaction by those handling the bond does influence the ratings of the bond.

Customer satisfaction is a major driver of reputation. It is interesting, though, that it often does not show up in the literature as a focus of reputation. Most of the reputation literature and many of the people who profess to be reputation experts, focus instead on good public relations or corporate advertising or corporate social responsibility. They seem to neglect the fact that reputations, like brands, are built, enhanced and destroyed at all of the "touch points" a company meets its various stakeholders.

Step out of the bond market for a moment, since it may be a bit too esoteric for many readers. Consider the reputation of a hotel. Where does a hotel's reputation rest? To a large extent, it rests on customer service. We determine if we are going to like a hotel before we enter the room--how are we greeted, how long are the check-in lines, is our room ready, does the bell-hop let us carry our own bags if we wish to? By the time we get to the room, we are already predisposed to either enjoy or not enjoy our stay. This is customer service. But, where do hotels spend their so-called reputation dollars? On advertising, websites, public relations, and social media. Why is customer service not considered part of reputation management?

It is a waste of time and energy to attempt to "spin" a reputation. There is too much transparency today. Expectations of performance are low. That's the good news. Companies that care can exceed expectations more easily than ever. But, what is happening in many companies is that they look to their competitors and see them cutting costs for customer service and figure that they can also cut costs. Sounds like a bunch of kids saying: "all the kids in school are doing it so I want to do it". Let the rest of the "kids" do what they want to follow one another--be an adult. By doing so, you may actually differentiate and not only increase reputation but also customer attraction and retention, which means greater profits.

Tiffany--An Amazing Brand

2010-03-09T15:29:00.000-05:00

One of the groups in my brand management class did a brand audit of Tiffany that highlighted up some amazing information.

First, the Tiffany blue box was first introduced in 1837 by the founder of the firm. It is amazing to think that he was such a brand genius at a time when few people thought about such things. He determined the color blue that would be associated with Tiffany and introduced the box, knowing that he could differentiate gifts from his store that were presented in the distinctive box. To this day, the blue box is one of the most coveted and most protected brand attributes of Tiffany. Without the box, it is just a piece of jewelry. With the box, it becomes a true piece of differentiated luxury.

Second, the brand value of Tiffany is estimated to be $4 billion. The company itself has a market cap of a bit over $5 billion. This means that the inventory, if sold by someone else, would have less value than it does when sold in a Tiffany store. Also, once again, without the blue box the jewelry looses perceived value.

Third, if one looks at year-over-year sales, one can see the impact of the recession on all luxury, non-essential goods. All of the jewelry chains had declining sales. Even thought Tiffany is at the highest end, it only had a modest decrease in sales versus other major jewelry chains. In terms of return on assets, Tiffany continues to exceed the industry average.

Tiffany shows that a brand can maintain its relevance in a competitive market over more than 150 years by being consistent in its brand attributes and associations. Tiffany retains a differentiation strategy of high perceived value--incremental costs of their jewelry might not be that much higher than competitors, but the perceived worth to customers is much higher and they are willing to pay more to get a Tiffany item.

In the brand exploratory, the student group talked to a few people who felt that Tiffany was over-valued and too expensive--that other stores offer equally high quality and better priced merchandise. If the decision to buy is based on fair price vs. quality, then Tiffany looses. They know they do. The decision must be based upon exclusivity and high differentiation--it's not just jewelry, it's Tiffany. Exclusivity is not for everyone.

Tiffany's ads focus on the giving of a box, not the gift inside. All it takes is the box to drive the familiarity and key attributes. Can anyone else think of another company that has become so intertwined with its packaging that the gift inside becomes almost irrelevant compared to where it was purchased? This is almost a reverse ingredient brand. I had never heard of a packaging brand, but perhaps Tiffany represents one.

Canada Defines its National Brand for Itself and the World

2010-03-07T12:47:00.000-05:00

The recent Olympics gave both Vancouver and Canada a chance to define themselves for the world. Both suffer from lack of clear definition for many. Canada borders the U.S. and many in the U.S. and around the world cannot quite determine what differentiates Canada from its southern neighbor. Vancouver has a reputation for being beautiful, but most people have never had the chance to see it or experience it.

Canadian Olympic organizers went to great lengths to define their country's attributes during the opening and closing ceremonies. In showing off the attributes of the country in the opening statements, Canada found many in the U.S. confused. The major reason is that the vast majority of Americans have virtually no knowledge of Canada. This has been a real problem for Canada--it has not invested in shaping its own image. When one doesn't shape ones own image, it is shaped by others. In the case of Canada, it became thought of as a small version of the U.S., which it is not. Canada is more like a North American enclave of the European Community than it is like a mini-USA.

What happens when an organization or nation has not invested and then has the chance--given during the Olympics--to define itself? It must shape images that are fuzzy. In the process, it can cause confusion, because others already have an image that they believe is correct. It also must help focus internally, helping those inside the organization or nation to understand the key differentiating attributes, and talk to them as well as to outsiders. It is a tough task. We saw that during the Olympics. The opening ceremonies were aimed as much at Canadians as they were at the outside world. Canadians were defining themselves to one another as they defined themselves to outsiders. For those, like myself, who have lived in Canada for some time and understand the country, it was a beautiful display. To others outside of Canada, it might have seemed uninvolving--sort of like being an outsider as a group of friends regale themselves with past memories. Outsiders saw the vast patchwork of Canada but likely found themselves a bit confused. This was especially true for Americans who see everything as a reflection of themselves. It was likely strange to most Americans to see Canada invite the First Nations and Aboriginal peoples to be equal sponsors. Inside Canada, there was a lot of criticism from Quebec that there was not enough French. I also thought that the opening ceremonies did not focus enough on Quebec--a very unique, French-speaking province within a mostly English-speaking country. It is difficult to find the right balance when one has just so much time and has not engaged in framing a brand for some time.

I have read a number of articles in the U.S. papers that were amazed and even irritated by the demonstrations of Canadian patriotism--wearing red, waving the Maple Leaf, and the loud singing of "Oh, Canada". The most recent was from a write in Texas, of all places, one of the most xenophobic states in the U.S. The writer seemed irritated, perhaps because many Americans cannot fathom that Canadians love their country as much as Americans love theirs and prefer living in Canada. The writer actually compared the Canadian shows of patriotism with rallies during Nazi Germany!! The Canadian displays were no different from a sports team encouraging its fans to where all white (Penn State) or orange (Philadelphia Flyers), etc. "Wear red and show your Canadian pride"--what is wrong with that? Customers respond well to companies in which employees love to work or to communities with lots of citizen pride.

I just saw a commercial on Baltimore television for a tour to British Columbia to see Vancouver and Whistler-Blackcome--the settings of the Olympics. Perhaps that branding helped, at least for the west coast of Canada. I would not be surprised at all to see the Olympics lift the image of the rest of Canada as well.

Could Toyota Damage Other Japanese Brands?

2010-03-04T00:23:00.000-05:00

Kelly Blue Book Market Intelligence indicates that Toyota owners are shifting their car-buying interest to Ford and Korean automakers Kia and Hyundai, and away from not only Toyota, but also from other Japanese brands, including Honda and Nissan. This suggests that Toyota was not only a brand in and of itself, but also was the "Japanese car category".

Category is more important than individual brands. We think category before product brand. The leader in the category sets the standards against which all others in the category are judged. A funny thing happens, according to research. When competitors attack the category leader, it often helps to reinforce all the good things that led to its leadership position in the first place. But, when the category leader fails, it can damage others without clear brand preference attributes other than they are members of a desired category.

We are now seeing a very interesting situation arise. Since Toyota was the first and most prominent brand amongst the Japanese car manufacturers, it became not only a brand, but also the standard-barer for all Japanese made cars. All other Japanese cars--Nissan, Honda, Mazda, etc.--were judged against Toyota, but also were defined by it. They lived under Toyota's umbrella. When Toyota's metaphorical umbrella began to fold, the other Japanese car makers started to get wet. In other words, a significant number of Honda buyers select that car because it is a Japanese brand. Toyota build the Japanese brand, defined and lead in its key attributes of quality and reliability, and may be helping to damage the category now.

We are still seeing sales of other Japanese cars increase, but that is because there is market share to be gained by everyone at the expense of Toyota. But, the Blue Book analysis shows that Toyota's aura was big and may have encompassed the entire category of Japanese cars. So, Toyota's problems created a crack for all cars from that country--they were somehow lumped together, just like consumers got used to talking about the problems in "Detroit". Ford is still trying to distance itself from that category. It helped itself when it did not take federal bail-out money. GM and Ford have shown good increases in sales recently. People may be reconsidering a US-car category and Ford's success could be lifting even GM, even though the public is still not sold yet on GM's future.

We are witnessing an interesting situation of demand elasticity that is not related to price as much as it is related to perceived value of a category. Market demand for cars has a lot segmentation appeal and category attributes. Some people look for a car, but most people decide they want to look at European cars, or Japanese cars, or US cars. One might think that other Japanese makers would benefit, but they are getting hurt by category linkage.

At the same time, we see stories that Toyota is succeeding in getting its loyal customers to friend the company's Facebook site and to tout the car brand in social media. These are attempts by advertising and PR firms to drum up support and hopefully create a ground-swell--sort of like a political campaign. The problem is that Toyota is leading what happened in the last election. No Republican could win because Bush had damaged the brand and category. A similar situation could be at work in the market, with other Japanese manufacturers getting hurt for things that had nothing to do with. Toyota is rapidly becoming the Japanese car category George Bush.

Toyota Fix Falls Short

2010-03-03T23:59:00.000-05:00

This story just broke in the news:

Ten Toyota owners have told federal safety officials that the recall repairs didn't work and that their cars still accelerate when they're not supposed to.

That's enough to trigger a robust response from the National Highway Traffic Safety Administration, which was bashed in congressional hearings for not moving faster on years of Toyota unintended acceleration complaints.

"NHTSA has already started contacting consumers about these complaints to get to the bottom of the problem and to make sure Toyota is doing everything possible to make its vehicles safe," NHTSA Administrator David Strickland said in a statement Wednesday.

"Toyota is aware of the complaints filed with NHTSA and has been working to obtain access to the vehicles," said Brian Lyons, Toyota's spokesman.

Federal law would allow NHTSA to make Toyota replace or buy back the models if it can't repair them. The agency can give an automaker several chances to make repairs, says former NHTSA enforcement chief Bill Boehly.

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As unbelievable as it might sound and beyond my comprehension a few weeks ago, Toyota could be on the cusp of a major failure in the US market, the kind that will be talked about for years and years in business schools. The US government is being pushed into action, and when pushed, governments usually react irrationally. When a foreign company is involved and US regulators want to show that they are protecting citizens against the "evils" of foreign products, the reaction could get downright ugly, egged on by Detroit manufacturers. We are even hearing from those still angry at Japan for barring US beef a few years ago who want to strike back by barring Japanese cars until the problem is fix--never mind that all of the affected cars were made in the US. As I said, governments act irrationally, and when the current US Congress is involved, one can imagine that it could act like a "crazy uncle".

Toyota is in deep, deep trouble. The lawsuits have not even begun to surface. The company's 2010 cars are sitting on lots with no buyers; while the 2011 season has begun. How will Toyota clear all of the inventory it has sitting in the US? This could be a problem that will impact the company for many, many years.

When Toyota first built its reputation in the US, it had fewer competitors. The US car industry was producing shoddy cars and Toyota emerged as a company whose cars delighted customers--the best in terms of price vs. quality. It's a truism in competitive markets that those who differentiate will cause others to follow suit to close the gap and the differentiation becomes more difficult. Not only has Ford closed the gap, but the market now has high quality brand names like Honda, Acura, Infiniti, Hyundai, Nissan, and others. When people decide to buy a car, the alternatives now are plentiful. The category of high quality, high reliability cars with good price has grown. Toyota now will fall from consideration for at least a full cycle. How will it get back into consideration? What will it have to do in terms of price cuts and credit offers? What will that cost the company? What will all the law suits cost?

This is just an amazing unraveling of a great company. Of course, we also are seeing the failures of the Japanese mindset and management style. In Japan, auto design engineers are revered. They have felt almost above reproach. It seems likely that they could not accept responsibility for what they heard was happening and stayed deaf to the problems. The culture that made Toyota great may have been the same culture that could lead to its downfall.

Gatorade Drops Tiger--Only Nike is Left

2010-02-27T11:54:00.000-05:00

Gatorade, a Pepsi brand, announced that it was discontinuing its relationship with Tiger Woods, leaving only Nike as a major sponsor. Actually, the announcement was most surprising in that most people didn't know that Tiger endorsed Gatorade. Pepsi has so mismanaged the brand that it is becoming a shadow of its former self in the category. The CEO of Pepsi, Indra Nooyi, even was on TV and said that Gatorade is for athletes so they expected a bit of a drop in their market share. Okay, so you want to further narrow the market for your already withering brand?? Surprising, but, okay, if you insist, I will not consider this is the future because you have told me it is not for me. Guess I'll go for Powerade or some other brand. You're told me the brand is not for me. Hope you make up the difference in volume with athletes. I imagine that Pepsi will be supplying lots of Gatorade to the teams it sponsors in hopes of getting a bump from their association.

PepsiCo Inc. first announced it was partnering with Tiger in October of 2007, to develop a branded drink for its Gatorade line called Gatorade Tiger. The drink, which launched in March, 2008, came in three flavors “inspired and selected by Tiger.”

Since that time, Gatorade has changed a great deal. We do not really know if Tiger has changed or has always been a "skirt-chaser". Gatorade certainly cannot claim to be hurt by Tiger's off-the-course problems. The brand, which has since rebranded itself "G" to get more street-cred with the athletic types Pepsi wants, is certainly not looked at or positioned as being pristine. Look at the ads for Gatorade. They look like they are trying to win over the street ball and skate-board crowd. They want to be edgy and urban in their appeal. Few people would believe that the athletes Gatorade touts as being associated with them are pure and simple folk. Tiger certainly is not. I believe that Gatorade dropped Tiger because he is not actively playing golf and so has no monetary value for them. It has, I believe, nothing to do with values. Gatorade said it would continue to support Tiger's foundation--probably a loop-hole in getting out of its contract or a way for Gatorade to protect itself if is consumers balk.

Nike will likely continue to support Tiger. There would not be Nike Golf if it were not for Tiger. Nike defines its brand as being for athletes, and if you have a body, you are an athlete. In other words, unlike Gatorade, Nike is for everyone who wants to be active and do better at what they do--run, play basketball, golf, etc. Their brand is defined "between the lines", so to speak. It occurs on the playing field one chooses. So Tiger's indiscretions do not impact the Nike brand quite like they have other brands that borrowed his persona to equate with their own (e.g., Accenture). Nike sponsored John McEnroe, even though at the time he was considered the "bad boy" of tennis. His on-court performances, though, were outstanding and that's what Nike cared about. Accenture, on the other hand used the phrase: "Come on, be a Tiger", suggesting that it was his total package that the firm would help one emulate. When the chuckling from clients began, Accenture was out.

Brands are about symbols, attributes and associations. The associations with Tiger's private life were too much for Accenture; the attributes are what matter for Nike. Who knows what matters to Gatorade anymore?!

A Once Great Brand is Suffering a Death by a Thousand Cuts

2010-02-24T11:56:00.000-05:00

If you have followed my blogs, you will recall that about a month ago I praised Toyota for recalling all of their cars and indicated that they were demonstrating a commitment to the customer by putting their brand and reputation ahead of short-term profits. It turns out that I may have been wrong. We are seeing inexorable damage to a once great brand and it seems to be their short-term focus that killed it.

The hearings in Washington with the CEO of Toyota USA were awful to watch. Toyota is not up to the challenge in dealing with this crisis. Their CEO seemed clueless, like a salesman trying to explain what happened at headquarters--but, that is exactly what is happening. Jim Lentz is a super salesman, a country representative, not a real CEO. Decisions at Toyota seem to be made in Toyota City, Japan. It is now becoming public that the management style of Mr. Toyoda, the CEO, was not conducive to open discussion and contradiction. He is, after all, a direct descendant of the founder and is referred to as "the Prince". We will see what type of person he is when he faces the furor of the US Congress that is both angry and grand-standing over this, egged on not only by scared and angry Toyota owners, but also I'm sure by plaintiffs attorneys, Detroit car makers, and their own reelections in 2010. It will be a circus.

It now appears that Toyota may have focused more on becoming the #1 car maker in the world than maintaining their quality and reliability. They now appear to have known about this situation far longer than they might have wanted to admit. They bragged about making a deal with the US government that saved them $100 million in recalls.

Now, this is my view of what they face from a brand perspective. Draw a perceptual map of the car industry before this crisis, one with two axes: price and quality. Toyota was in virtually everyone's upper right hand quadrant--the best perceived value for the money in terms of quality. Now, draw a second perceptual map and plot Toyota today. They are now judged as being worse than the other car makers. I'm not certain that anyone will be able to claim the quality and reliability differentiation that Toyota once could claim. Quality and reliability have no longer become differentiators, but are now points of parity. Ford has been improving on this perceptual map. I do not believe that GM has moved, but now Toyota is moving back toward them. They have taken a great brand, highly distinguished, and relegated it to the "all others" category--commodity status meaning that price will now become more of a factor than it ever was before.

Pedro, one of the followers of this blog, pointed out that Toyota resale values are already suffering. Who wants to buy a Toyota right now? Not many. How many want to get rid of their Toyota? A lot. The math is not good. When someone considers a car--new or used--they will consider alternatives. Toyota will be out of the alternatives list for at least the next cycle and it will be difficult for them to convince many buyers to consider them again. Loyal Toyota buyers are questioning their perceptions of the company and having their perceptions questioned by others.

That is how bad this is becoming. We may be witnessing the crippling of a once great brand. They may not die, but they could if they do not right the ship quickly. We may see Toyota need to pull back considerably from the US market for a while to regain its confidence and quality before it can come back. This happened to Audi when it had its acceleration problems in the 1990s. They handled the situation terribly, blaming drivers and not accepting responsibility. They virtually withdrew from the US for many years and then reentered once the "dust had settled". I was considering a Lexus next year when the lease on my current car expires. I will not longer be looking at Lexus.

Toyota has created a lot of "dust". It will take a long time for it to settle. I cannot believe how wrong I was about the company in my original assessment. It seems that the company may have "overshot its own headlights", a very dangerous situation when a company becomes so focused on success and its own hype that they keep moving quickly without refocusing the organizational capabilities that made them great and are needed to keep them great. They were a company of substance; they became a company of hype.

Do Ethical Ranking Translate to Sales?

2010-02-22T15:31:00.001-05:00

Do companies that are ranked high on ethics get more sales as a result. The answer is yes, but it is a bit more complicated that that. Studies have shown that companies that are ranked highly on reputation do better financially than companies with poor reputations. Ethics and reputation are quite different. Ethics means acting on a "higher order". Reputation means exceeding stakeholder expectations and being distinguished from ones peers and competitors. Reputation can be measure; ethics are much harder to measure and often depend on the perspective of the person doing the assessment.

For example, I have seen a number of so-called ethics rankings that will not include pharmaceutical companies because they engage in animal testing. This is an ideological perspective on ethics. The FDA and other health organizations globally require that drugs be tested on animals and they often specify the animal. It is far better, in my opinion, to test a drug on an animal than on a human before releasing. But, that is not the opinion of PETA and other such organizations. They have a different perspective on what is an what is not ethical.

To me, corporate ethics is the perspective that guides an organization to respect and balance the needs and interests of its multiple stakeholders. It is a facet of reputation, not the same.

Business ethics do translate into more sales, but in an indirect way. People often say that they want to do business with more ethical companies, but it usually means "all things being equal", which they rarely are. Actual behavior is much more difficult to track. Will someone actually not do business with a company that they judge to be unethical? Many people believe that the oil companies are unethical, but they continue to fill their cars with gas. There is no alternative. Some people may hate their local cable companies and think that they are unethical, but they continue to watch TV--once again, there is little choice. When choice becomes greater, we look for reasons to buy and not to buy.

While we know that reputation can translate into greater sales, lowered cost of capital, etc., ethics is a bit more difficult to track. Heinz was the first company to take a position of "dolphin free tuna", requiring that fisherman catching tuna for its Starkist brand not kill dolphins in the process. They were applauded, but there was no increase in tuna sales. Unilver's Dove brand soap created the "Campaign for Inner Beauty" to help talk to young girls whose body image was being shaped by standards of Hollywood and Madison Avenue. They were applauded but the campaign did not increase sales of Dove. The campaigns, however, spoke volumes about the philosophy of business of these brands and increased their value longer-term in the eyes of many.

Sales may be the wrong measure of what companies are looking for. The real measure is perceived value, and that will translate into higher prices, not necessarily more sales. Sales tracks volume; perceived value can move based upon an appeal to a niche market that, if it is a "bell-weather", could increase the overall value of the product or organization. We will see the results in better recruiting, greater support from outside interest groups, retention of top talent, etc.

There is a great and compelling reason for companies to act ethically and to build their reputations. Asking if this will result in direct contribution to sales is a short-term question to a longer-term process. The key, though, is to be ethical, not to brag about it. Once again, we find that if one lives their brand, they will build their reputation.

Tiger Could Have Just Run an Ad

2010-02-20T18:18:00.001-05:00

The tightly scripted Tiger apology session was a complete farce. He could have just taken out an ad in newspapers and said the same thing. The whole thing took a page from the former Bush rallies in which only friendlies are invited. It is supposed to give the appearance of being open and honest in a supportive atmosphere.

Tiger needed to appear before the public and apologize, but he also needed to answer questions, as distasteful as that may have seemed to him. Alex Rodriquez went through the Q&A session and came out stronger for it. Without the Q&A, this seemed to contrite, too scripted. One even has to wonder is there was a script that called for Mom to go up afterward and hug him. The photo released to the wires showed three women (none being his wife--she did not choose to "stand by her man"). The three were the head of the Tiger Woods Foundation, his mother and a representative of Nike, the sponsor that has stood by him. Nike can weather this storm. Tiger made Nike Golf. Unlike Accenture, their brand will likely not be damaged. Accenture has ordered all images of Tiger taken out of all offices worldwide. "Go on, be a Tiger" is not something Accenture wants to people to be reminded of.

Tiger is taking more than a few hits from fellow golfers as well. He chose a Friday during the Accenture Match Play Championship to make his announcement, taking attention away from that tournament for a bit. It is interesting that he chose to do it to a tournament bearing the name of one of his former sponsors and elected to do it to some of his friends on the tour. Talk about selfish! Tiger apologizes for being selfish in a way that demonstrates his selfishness and claims that he was wrong to believe he could play by different rules than the rest of us using a forum that shows that he believes he does play by different rules.

It is interesting that the tables have turned a bit between men and women. Women were down on Tiger and men were continuing to support him. After his apology, woman were more quick to forgive; men seemed to find it difficult to take. This was not, as the saying goes "a stand up" performance. A "stand up" guy would have gone public, perhaps on Oprah or in front of the cameras as Mark McGuire did, and show how sorry he was and taken his "lumps". Taking hits is an important part of both the healing and forgiveness process.

What is most disturbing in all of this is that it sends a wrong message about how to handle a crisis. This flies directly in the face of all best practices. Let's just hope that the same agents advising Tiger, including Ari Fleisher, former press secretary to President Bush, are never hired to handle a real corporate crisis. What a minute, could they be working for Toyota?

Philadelphia Brand is Inside-Out

2010-02-18T20:16:00.000-05:00

Philadelphia has a new branding campaign, designed to inspire citizens and win over tourists. It's "Spread the Love". A play on Philadelphia being the so-called "City of Brotherly Love". That has never really been the city's key attribute, but it is the Latin translation of the name Philadelphia.

I have a real problem with brand campaigns of this type. Brands should be about the consumer and be built outside-in. The focus should be on the benefits to the consumer of the brand. Philadelphia's campaign, like many other cities and states, is inside-out--all about features that the city wants people to associate with the city but which have no real benefit to the visitor or developer of commerce. Maybe the campaign is designed to have the citizens of Philadelphia be nicer and more "loving" toward one another and toward visitors? Well, that hasn't quite happened. In every Travel and Leisure poll in recent years, Philadelphia has ranked near the bottom of the 25 cities rated on "kindness and friendliness". The benefit to visitors seems to be to visit the history and culture. Dealings with locals seems not to have impressed too many, if the Travel and Leisure poll is to be believed.
So, with that background, perhaps the city wanted citizens to be nicer.

"Share the Love" seems to suggest that the city has some to spare. Walk the streets of Philadelphia and one will notice that love is in short supply. The streets are not friendly or loving toward citizen or visitor alike. Trying to suggest that a city that is viewed by outsiders as snarly and tough is loving just through a campaign is wasted money.

In all seriousness, the campaign in Philadelphia is backward. It should have started with the benefits that visitors will received by visiting the city and should have been designed in that way. "I Love NY" is all about me--I can find so many ways to love NY and the campaign gives everyone an opportunity to see themselves in the ad.

Philadelphia's campaign is not much better or worse than Baltimore declaring itself "Charm City" or Cincinnati claiming to be the "Queen City" or Pittsburgh trying to reposition itself as "City of Bridges" rather than "Steel City". Philadelphia's snarly attitude and toughness could have actually been turned into a trait that people would want to see and experience--the city built its character over a long time--it is America personified. It could be positioned that it has always been the heart and soul of America. It is the toughness that gave rise to the revolution. Well, hopefully you can see where I am going with this.

Cities are behind the times in terms of branding. They continue to believe that they can spin a brand and image rather than trying to see themselves from the outside-in and sell the benefits of coming. The worst offender is Delaware, which states "It's Good Being First", as if anyone outside of Delaware knew that it refers to Delaware being the first to ratify the Constitution. Talk about insular thinking!!

It's time that cities start working with brand agencies that understand the new world of branding and begin looking at benefits. Philadelphia has one campaign that is right on the mark. It was one of the first cities to embark on a campaign to attract gay men and women as tourists. The theme: "Get Your History Straight and Your Nightlife Gay". Now that's a reason to visit Philadelphia! Great campaign. If they could only come up with something for other segments of the tourist population equally as good.

Stakeholder Value Can Multiply Exponentially

2010-02-16T22:24:00.000-05:00

Every organization has three key stakeholders with whom they need to create value if they are to succeed-- employees, customers and investors. However, all organizations also are part of an environment with multiple stakeholders who also have needs and interests. Every stakeholder has the potential to derive, create or destroy value for the organization, particularly when we think of value in perceived value terms.

Marketers are finding that focusing only on customers is limiting. A customer increasingly turns to information in social media to make decisions of what to buy. Someone in cyber space can influence, enhance or destroy the perceived value. Employees, often the forgotten link to value creation, can destroy good marketing and PR efforts through their own lack of willingness or ability to support the company. A bad investor report can keep not only investors but also customers away and can hurt employee recruiting efforts.

The companies that excel will be those who not only manage stakeholder relations well--meaning that they exceed the expectations of stakeholders--but that they also focus on creating value with various stakeholders. The value creation with one group can influence another. Perceived value, then, can increase exponentially, not just arithmatically. Network effects take over. When this occurs, the organization is perceived as being differentiated and distinguished from its peers.

We have always looked at innovation as a key element in value creation. I believe that we will find that truly great companies will have core competencies in innovation and stakeholder engagement.

Customer Service Becomes the New Brand Differentiator

2010-02-16T22:08:00.000-05:00

Brand managers have always sought a point of differentiation for their brands. Typically, these were unique selling propositions or technical points that would convince a customer that the brand was different and worth more than competition. The field has typically followed the traditional marketing and PR formulas for finding differentiation, but what we should be realizing is that customer service is rising as a key point of differentiation and most companies do not do well.

If we look at ways that companies can differentiate, we have basically three choices: product innovation, operational innovation or customer innovation (we actually should think of this as stakeholder innovation since all stakeholders can derive, create or destroy value). The real winners differentiate in all three areas. Southwest Airlines gained customer favor by cutting costs through operational efficiencies while at the same time increasing customer service beyond the level found on most other commercial airlines. WalMart has been an expert in operational innovation, gaining its leverage through supply chain management that shifted the inventory burden from WalMart to its suppliers. This helped them to further cut costs and free up resources for customer service beyond the typical discount operation. Apple has been an expert in product innovation and customer innovation. The list goes on.

Increasingly, companies are finding that it is difficult to sustain differentiation in product and operations. These are fairly easy to mimic. There are many consulting firms that will help a company copy its best competitors. The really difficult task is excelling in customer service. And, increasingly this is separating the good from the also-ran companies.

While companies say they care about customer service, they really don't. Most customer service operations are looked at as being a cost center and a burden. Customer service people are not well paid. Often, customer service is outsourced and forgotten. Too often, companies do not know what it happening in customer service and actually reward people for getting in as many calls as possible--not solving the problem, but rather handling them.

A few companies, like Comcast, Southwest, IBM and others are excelling at customer service through the use of social media. They are listening and responding to problems and actually getting involved in helping people with their concerns.

For marketers who think in transaction terms of price, quality and service, it is time to shirt the emphasis to the latter. Price and quality can quickly come to parity, but customer service, which seems easy, is not and actually creates distinct advantage since it often exceeds expectations, which helps build loyalty.

It's time to take customer service out of the "back office" and make it front of the house.

Philadelphia Orchestra Sounds a Sour Note with New Brand Campaign

2010-02-13T19:59:00.000-05:00

The Philadelphia Orchestra, long considered one of the greatest orchestras in the world, is nearly bankrupt. It is little wonder. Costs continue to escalate but the audience has not. Attend a symphony performance in almost any American city and you will feel young if you are under the age of 70. The audience is graying and dying and donations are dwindling and orchestras are having a difficult time finding new devotees.

To make themselves more relevant to a younger audience, the Philadelphia Orchestra has embarked on a new campaign with the tag line--ready for this-- "Unexpect Yourself". That's right, the symphony, the bastion of high culture, has gotten so desperate that it has gone low culture, bastardizing the English language in hopes of drawing in younger people who think that it must be a pretty hip place. If letters to the editor and blogs can be a measure of reaction, the current symphony membership base is not too enthralled with the campaign.

The creators of this disaster is a firm called Annodyne. According to their own press release, Annodyne "utilized its strengths in digital marketing to create a campaign that cultivates and engages a growing and diverse audience that may be unaware of the Orchestra as an entertainment option. Annodyne’s creative strategy focused on communicating the extrasensory experience of attending the Orchestra with a unique positioning aimed at competing against the growing entertainment market that now includes options both in and outside of the home".

As someone who has worked in the brand and reputation business for a long time, the only thing I can respond to this is: "Huh?? I can't even imagine what my reaction would have been had this plan been presented to me. I likely would still be laughing or walking out of the room.

The orchestra is a brand. Yes, the brand needs to be revitalized, but not against the growing media options inside and outside the home. One does not choose a symphony against playing video games. One chooses a symphony against other cultural activities. Our selectivity process is more narrow than that. Has this firm really every heard of customer segmentation analysis and perceptual mapping? The symphony is not competing against all other activities. It is competing against "in-kind" activities within the same cultural category. That's how people make choices--not from a huge arrangement, but from smaller categories of choice. I would really suggest that Annodyne read some of the more current work on customer choice, selection and segmentation. No wonder they went for a "street cred" slogan--they really think that they are up against a wider selection of choices than they really are. The problem is the symphonic music, as a category, is no longer within the alternative selection criteria of most baby-boomers, let alone Gen X and Y and Millenials. You have to recapture the category, not try to sell against entertainment alternatives.

Annodyne suggests on their website that the Internet is a channel that has become essential. It is not a channel. It is a technology that has created and will continue to create social and cultural upheaval and change, as fundamental and the advent of the printing press. So, a group of orchestra leaders--most who have little or no understanding of the Internet--listened to a group that told them they they must communicate to the web-based generation on their terms. This was a disaster compounding itself.

Needless to say, the campaign has become the fodder of countless news media commentaries deriding it. How could a board of a symphony allow an ad agency to sell them on something like this? That, of course, is a rhetorical question because it appears that a desperate board turned to an agency that likely had some board connections that sold them on a poorly conceived campaign. It makes me embarrassed for the Philadelphia Orchestra. If this is the best that the orchestra board could come up with, they may soon be considering a new theme: "Stick a Fork in Us... We're Done!"

Why Universities Need Brand and Reputation Management

2010-02-10T16:07:00.001-05:00

A friend of mine is heading to Italy to meet with a group of European communications heads. The topic is why universities need branding. Since I work in a university and actually have done brand and reputation management for a university in Canada, I thought it was an interesting question.

Academia has always thought that it was above commercial enterprise. However, as costs for an education have increased and as universities compete for the best talent in faculty and students, the brand or reputation of the university has become more important. This has become fairly common-place in the U.S., but she was heading to Italy, so I thought that the experience in Canada might be closer to the issues in Europe.

Canadian universities always considered themselves to be on a fairly equal basis. There are no public universities in Canada--it is not allowed by government. The Minister of Education has responsibility for universities, as well as public primary and secondary schools, and Catholic schools (this was an arrangement with Quebec). There is relative consistency in the cost of a university education across the country--relatively inexpensive by US standards. A Canadian university education costs about $4500 for tuition per year compared to about $15,000-20,000 for a state university in the US. While we have had wide variations in the quality of colleges and universities in the US, Canadian education is consistent in its quality, although there are some places more equal than others in terms of quality and students, faculty and parents know it.

Every year, McLean's magazine in Canada runs a ranking of the best universities. Educators pretended not to notice. Then, Canadian business schools started showing up in the list of best business schools outside the US. As the Canadian schools moved up the ranking, the percentage and quality of applicants from outside of Canada started to grow. There was a recognition that reputation of the school made a difference in the quantity and quality of applications. In fact, I talked to a few Chinese students who said that they could not get government grants to study abroad at a university that dropped below the top 100 mark in the FT ranking of best business schools.

What typically occurs when there is a tight status-quo competitive environment in a sector began to happen. First one school then another started to advertise and create branding campaigns. Money started to flow to the schools considered the best from private donors. Soon, most of the schools started to differentiate.

Universities are big business. The cost is high and the prestige or lack of it makes the degree and important benefit or liability to the holder. Schools that drop in rankings often find it harder and more expensive to attract top faculty.

Symphonies, museums and other institutions that always considered themselves above the pedestrian commercial interests are now branding and building reputation campaigns. It is more difficult in a university to deliver the experience commensurate with the promise since it all depends on the department, college, etc. University experience is personal and individual and no administrator can engage faculty member in "living the brand". However, it is every bit as important to a university as it is to any other organization in a competitive environment.

Cultural Differences Impacting Toyota's Handling of Its Crisis

2010-02-08T23:58:00.000-05:00

I believe that I overestimated how well Toyota would handle its crisis. When they made the decision to withdraw cars from the market, I applauded. They took the right decision to shore up the confidence of their customers and potential customers.

However, I did not foresee an organization that seems paralyzed to say and do the right thing in a timely manner. The Japanese culture may be holding the company back from meeting the needs and interests of US customers who are the ones impacted by the sticking accelerator problems. The Japanese are not expected to admit mistakes publicly as readily as are Americans. Their companies do not practice transparency in the same way expected of US companies. The Japanese have built their success on the art of imitation; not the art of innovation. They have taken watches and made them better than the Swiss. They have taken cars and made them better than the Germans. They take inventions or innovations from others and make them better. Public criticism is difficult, if not impossible, in Japanese culture. This holds back invention and innovation--the risk of failure is too great.

I think that the complexities of the Toyota corporation has gotten in the way of effectively dealing with this crisis. They centralized this problem, but that meant taking it to the other side of the world from where the issues are the greatest. Mr. Toyota has apologized publicly--finally! However, the US CEO, Lentz, has been used more like super salesman on TV talk shows than as a CEO of a company. Lentz's background is sales and he has looked like the company salesman rather than the company leader. He has shown little contrition and has been more focused on rebuilding sales. All the while, rumors, innuendos, new stories, and plantiff attorneys cases are all building. Frustration and fear are also building. Competitors are offering incentives to Toyota customers to change cars. The clock keeps ticking and Toyota seems to treat this as a manufacturing problem. This is a crisis of confidence in the qualities that made Toyota great--quality and reliability. Take those away and it is just another car company.

I had thought that Toyota would not be inexorably hurt by this crisis since I had assumed that their withdraw of product from the market would be followed quickly by communications with its owners and the public of what it was doing, day-by-day. That hasn't happened. I have been surprised and dismayed. They may be hurting their brand and reputation inexorably.

An indication of how poorly they are communicating are the ads they have been running. An open letter from Lentz to the American consumers reads like a recall letter. The logo on-top is "Toyota: Moving Forward". Isn't "moving forward" the problem that started this crisis?? Did anyone think that maybe the logo lock-up with the tag line might be dropped while they dealt with this issue? During the Super Bowl, several commercials were run with a voice over that sounded like a government assurance that things were being done to protect the consumer. The end slide--the same logo lock-up.

Note to Toyota--get your ad agencies out of this and start dealing with this as a major crisis of confidence. When a crisis hits, do not let ad agencies take the lead. Their MO is to sell, not to communicate. They don't listen, they talk. Stop trying to sell the next car and start trying to stop your current owners from fearing death from their current car. You have a lot of owners who are counting the days until their leases are up and many others who will try to unload the car, even if they loose money, just to feel safer. When humans are fearful, they return to animalistic tendencies. Reason and rationale take a back-seat to emotions. Stop trying to tell the public what wonderful cars Toyota makes and how they will be returned to their greatness and talk to Toyota owners in the fear-instilled "caves" they are now living in.

More Commonality and Less Functionality is Needed

2010-02-07T23:46:00.000-05:00

As a result of the Internet and social media, marketing, branding and corporate communications are converging. All all looking at a multi-stakeholder world in which relationships become king. Each of these disciplines has begun arguing that they deserve to have prominence in the management of social media.

Social media are surrounding companies and pulling knowledge that was once held inside the company to the "edge of the network". Companies can no longer push information at a stakeholder. Conversations and relationships are what predominate in the social media world. Consumers and other stakeholders have gained power of information and the ability to create and destroy value. They expect to be dealt with in a respectful dialogue, not as passive consumers of old.

So, who should own social media? Marketing argues that social media is part of the marketing mix. Brand management argues that people are talking about brands in social media and they should be the owners. Corporate communications (public relations) argues that they have always been relationship-driven and so they are best prepared to own social media.

The correct answer, I believe, is that none of them should own social media. Social media are not new channels, but rather conversations happening in cyberspace that involve the organization in one way or another. The Internet is fundamentally changing society and all organizations. The best way to deal with social media is to organize horizontally, not delegate social media to a vertical function within the organization. The reputation of the company depends on the organization's ability to manage all "touch points", and since no one function owns all the touch points, they should be managed in a coordinated, integrated fashion. However, this is not happening in most organization.

The old way of thinking is that a function within the company was given prominence or ownership over an activity. They could decide whether or not to partner with anyone else. It made for a very ineffective way of dealing with various stakeholders. Investors heard one message; customers heard another; employees still another. Things have gotten better, but improvements are still needed to keep pace with changes in the market environment.

Social media is a disorganized set of relationships and conversations. The best way to deal with social media is through the integration of marketing, branding and communications, along with employee engagement and sales management. Companies should be trying to create networks within their own organizations that mirror the networks on the outside. It's the best way to enhance the effectiveness of all of these functions and the perceived value of the company.

CEOs Should Study President Obama

2010-01-31T11:23:00.001-05:00

President Obama went into the proverbial "lions den", attending the gathering of the Republican Congressional Caucus in Baltimore last week.

The Democrats have a majority in the House and now 59 votes in the Senate. Obama is having problems with the Republicans, who have decided that it is good policy to simply attempt to block everything the Democrats propose--dividing the country along political and philosophical lines. Many on the left have been urging the President to forget about reaching out to the Republicans and use his mandate to push things through (remember when President Bush won his second term by a fairly slim margin and talked about all the "political capital" he had acquired and would use?). Vice President Cheney had noted that elections have consequences and that Bush had a mandate to move things forward. Funny how a larger margin of victory last year somehow did not give Obama a mandate, according to these same Republicans.

Anyway, what CEOs can learn is what Obama did by visiting the Republicans. Obama knew that he had to reset his own reputation and that of his party. He reached out to the GOP, talked to them, debated them, scolded them, and listened to them. He played the role of leader listening to his opponents. We have not seen this much previously, nor do we see it much in the corporate world. When confronted with ribald critics, companies tend to push back hard, to attempt to marginalize the opponent or vilify them.

Obama could have done the same thing, but it wasn't working, just as that tactic does not work in the corporate world. Instead, he met with his critics and showed them what dialogue looks like. By taping the proceedings, he also showed the country what leadership and true bipartisanship can look like.

There will be many who will attempt to spin this to their advantage. I'm sure that Limbaugh and Hannity will talk about the PR spin Obama is attempting or that he is trying to make us like England and its "question period" (a clear attempt to make us a European socialist society, they likely will argue). The left is likely spinning it their way demonstrating that Obama is in the right and the Republicans are always in the wrong. Some on the left will likely criticize Obama for not moving to the left rather than to the middle. However, most people know that the truth usually lies somewhere in between. The Republicans (at least the non-ideologues) have some good ideas, just as the non-ideologue Democrats do. The country is better off when we govern from the middle. At least that's my opinion.

CEOs and corporations can learn from this as well. They are not always right and their critics wrong. Meeting critics, talking with them (not at them, but with them), and listening to them can work wonders. One will learn quickly who can and cannot be talked with in a civil way and who is so ideologically driven that they have no room for compromise. But, by meeting with critics, you in effect nullify one of their primary strengths, which is their ability to characterize you.

Watch the tapes of the meeting between Obama and the Republicans. It could be used as a training manual for CEOs. The Republicans are now saying that they are sorry they allowed the meeting to be taped. They wished now they could continue to characterize the President, but now he has shown himself as a man of compromise, not the radical they have tried to show him as. He has made it more difficult for them to resist dialogue. Some on the far right and far left will not bend, but lets hope that there are enough clear-thinkers in the GOP and on the Democratic side to begin to talk. The country needs such dialog dearly, and it will show the way for others who are dealing with critics.

Leno's Interview with Oprah Opens Up Ways NBC Could Have Avoided the Fiasco

2010-01-29T14:43:00.001-05:00

I watched an interview by Jay Leno with Oprah. It was very enlightening and put the whole NBC fiasco into greater clarity.

Some key issues that came out during the interview:
1) Leno was canceled because of poor ratings at 10PM
2) NBC wanted to cancel Conan because his ratings were down 49% since Leno had run the show
3) Leno was told that Conan would go along with the changes proposed

Granted, there is a lot of "he said, she said" in this. However, it is becoming more clear that the executives at NBC are the real jerks here. Leno is being blamed for coming back to the Tonight Show. He did not ask to come back; NBC suggested making the changes.

As I have noted in a previous blog, I am not a big fan of Jay Leno. That, however, is inconsequential here. Leno might have said no to NBC and quit. It was the second time they had fired him (he was removed from the Tonight Show--he did not volunteer). He could have gone someplace else. However, he wanted to go back to the Tonight Show--the show he never wanted to leave in the first place,

What NBC did was to allow two of its stars to battle it out in the public eye, thereby damaging everything around. It was like a drive-by shooting--innocent by-standers were killed.

NBC could have come out and explained that Conan's ratings were below expectations and that the networks and affiliates were not happy with either the Leno Show or the Tonight Show ratings. They could have said that it was their decision and that it was a business decision, not one based upon personal preferences. They could have done many things that would be expected by a good management team. However, the NBC executives are not good executives; that seems clear. Instead of stepping in after the shooting between Leno and Conan started to assume the responsibility, they started calling Conan names. They thought he made them look bad. There is no way Conan could make the NBC execs looks any worse than they made themselves appear.

Brian Roberts, the CEO of Comcast, said in the Philadelphia Inquirer this week that he is frustrated by his inability to do anything about this. All he can do is watch a future asset being hollowed out by lousy management. I hope that he can extract a better price during the acquisition and that he has the good sense to fire the NBC executives in charge of this situation immediately.

Will the Recall Damage Toyota's Brand?

2010-01-29T12:55:00.000-05:00

I just did several interviews with news channels in the US and Canada on the Toyota recall. One reporter said that he had talked to several "experts" who suggested that the Toyota problems would "inexorably damage their reputation". I could not disagree more. He also said that this same "expert" thought that Lexus would be damaged by this.

First, I am questioning the use of the term "expert" with this person the reporter referenced. Does this person know anything about brand and reputation? Sounds to me like a PR "expert" working for a competitive brand.

If Toyota were a new product, fairly unknown to the public, then damage of this type might do in the brand. However, Toyota has been on the market for a long time and has built expectations amongst consumers that it makes cars with the highest quality and reliability. Certainly, the recall puts a dent in those claims, but it does not damage the brand completely.

When a company continues to exceed expectations, as Toyota has done over the years, it builds up inertia in its brand--what some people call a "halo effect". Problems are judged against this experience level. Usually, in such cases consumers are more forgiving because things like this are extraordinary, not the usual.

What would have inexorably damaged the brand would have been had Toyota refused to withdraw the cars, arguing that the problem was not a problem for most people. Think about what happened with the Bridgestone/Firestone tire problems. The company continued to argue that the problem was not real, despite evidence to the contrary. There was even a lot of finger pointing between Ford and the tire company, since many of the problems occurred on Ford cars, the heaviest user of the tires.

Toyota could have pulled a "Jacques Nasser" (the former CEO of Ford at the time of the Bridgestone/Firestone crisis) and blamed the supplier. It is taking the hit, both reputationally and financially. One must give them kudos for this.

They are taking the first major step toward protecting their brand longer-term. They are demonstrating their commitment to consumer confidence and trust. They also are doing what crisis experts always suggest--get out in front of the issue. I would suspect that they will rebuild their brand upon return to market. Will their entire market share return? Time will tell. Things like this damage the perceived value of claims of quality and reliability and allow competitors to close the gap in those attributes. But, Toyota is a smart company and I would hope that they will come back with something special for their installed base as well as incentives for new potential buyers.

Toyota Recall a Correct Decision

2010-01-27T22:44:00.000-05:00

Toyota's decision to stop the sale of all cars affected or potentially affected by the acceleration problem should be applauded. It is an unprecedented move by an automobile manufacturer. In making this decision, Toyota took a short-term financial hit to save its reputation long-term. The decision reminds me of the decision by J&J in 1982 to recall all Tylenol from the market after 7 people died from cyanide-laced Tylenol in the Chicago area.

Toyota has built its reputation on quality and reliability of its cars. Those attributes have been put into question. Toyota's perceived leadership on quality and reliability will be tainted for many and the troubles will be a competitive lift to other car manufacturers. However, what Toyota told the public by its action is that they put safety and reliability over revenues and profits. Their recall may open them to even more litigation since it likely will be interpreted by the courts as being an admission of guilt. However, trust is built by trustworthy behaviors, not by words, and they have demonstrated by their action that they can be trusted.

All of these downsides were obviously weighed by the management team in Tokyo before making this decision. A recall of all affected cars was the first step and that is what most other car companies would have done, but most would have stopped there. Toyota, however, went further, pulling all affected cars from the market and also stopping the rentals of these cars from rental car agencies. By taking this action, Toyota also preempted regulatory withdraw of its cars. Within days they would likely have been forced to pull their cars, which would have been much worse of the company. They chose to get in-front of the crisis.

In the competitive world of auto sales and especially in our tough economic times, Toyota is pulling themselves out of consideration for many car buyers, loosing sales for a long period of time since auto buyers typically do not return for years. That is why anyone who believes in brand management or reputation management should applaud Toyota's action. They took the tough but right decision.

I have been asked whether I believe that they will regain market share after this is behind them. I believe that they have the potential to do that. It will take time because of the car buying cycle--it's years, not days or months like Tylenol. But, consumers now know for sure that Toyota is concerned with the quality of its cars and the safety of its consumers. We know that when those cars come back on the market, they will be engineered to the highest standards. Remember that Southwest Airlines was found to have cracks in its planes that were overlooked by negligent maintenance. It pulled its planes and when it began flying again, the public lined up again. Loyalty rebounded.

I suspect that loyal Toyota customers, those who have been their customers for years, will return. Those who bought a Toyota for the first time might find themselves looking elsewhere. They are what are called "passive loyalists", easily swayed by other offers.

I wish Toyota well. I do not own one of their cars, but I admire them for recognizing the importance of reputation in their long-term corporate health.

NBC is Destroying Their Valuable Brand

2010-01-25T21:38:00.000-05:00

Imagine if you were at Comcast and were planning to buy NBC-Universal. Then, the fiasco between Conan O'Brien and Jay Leno begins. You have to sit on the sideline, unable to do anything about it, but knowing that the value of the brand you are about to buy is being hollowed out.

NBC demonstrated brain-dead management style in recent weeks. It made a deal in 2004 with Conan to assume the Tonight Show five years later. Leno was fine with it. Then, in 2009 Leno decided that things were going well and he wished he had never agreed to give up the Tonight Show. But, the deal was done so Leno was set up with a 10PM Show. The deal was a good one for NBC because doing a talk show at 10PM is a lot less expensive than developing a sit-com or drama for the time slot.

Well, we all know what happened. Leno bombed at 10PM. NBC was faced with a decision. What to do, what to do? Conan never really fit his comedy to middle America--he is a darling of a younger, urban set. The brains decide that they will give Leno a one-half hour show and push the Tonight Show to 12:05am, thereby also pushing the Late Show back and likely killing it. Never mind that the Tonight Show is the most valuable brand in late night TV. The execs at NBC sit back and thing: Leno's happy, NBC is happy. They might have expected that Conan would not be happy, but they likely also never imagined that he would turn his anger into a public vendetta against NBC. How dare Conan...he acted just like a spoiled Hollywood type--just like the NBC execs would act, but not what they expected form someone they thought they could push around. The entire thing becomes a "cause celeb" in the public forum.

This did not have to happen this way. A deal was a deal. It should never have been allowed to be acted out publicly. The new deal costs NBC $32.5 million to buy Conan out of his contract and an untold hit to its reputation and overall perceived value. Conan will likely launch a new program on Fox and NBC will be in even worse shape. Leno comes off as a self-absorbed Hollywood-type, which he likely is but didn't appear until now. He likely has damaged his standing with a good part of his audience and may not be able to get the advertising support needed in his new show. The kicker was when Tom Hanks, one the reportedly nicest people in Hollywood, came on the last Conan show and announced that "in my household you will always be the host of the Tonight Show". Word has it that NBC and Leno were heard whimpering over the slight. Leno will likely work with NBC to line up a blockbuster first week of guests that attempt to regain viewers. He will get a bump in the rating when he returns--people love to slow down to see car wrecks.

All the while, Comcast must sit by and watch this disaster unfold. I hope that Comcast is able to extract a discounted final price on its NBC-Universal deal since the brand has been diminished.

What on Earth Are They Thinking?

2010-01-15T00:21:00.000-05:00

There have been so many corporate decisions recently that mystify me. I just shake my head and wonder "what on earth are they thinking"?

First, Independence Blue Cross in Philadelphia announced that it was either dropping or hiking the premiums by as much as 60% for its best health insurance plans for those who buy their insurance for themselves and their small businesses. This during one of the most hotly contested healthcare debates ever, with growing distrust of insurance companies. Instead of waiting for the legislation to determine their future, the brains at Independence Blue Cross decided to jump into the fray and get into a fight with independent business people. This will only raise the anger level higher and get the government more involved in the insurance business.

Next we have the Wall Street bankers who have decided that they are still due for mammoth bonuses, despite the fact that they led the economy to tank and put our society on the brink of a second depression. Some of the bankers even had the audacity to complain about the bonuses as being too heavily laden with stock rather than cash, leaving them in a cash flow crunch. Stock cannot be converted for a set period of time. Several of the bank chiefs sat before Congress and admitted that they did a lot of wrong things--like hedging or going short on stocks that they were pushing to the public--kind of like a Catch 22 scenario--sell the planes and the anti-aircraft guns. Yet none volunteered to cut the record bonuses. Somehow we are supposed to be concerned about retention of talent. Wasn't this the same talent that helped ruin our economy? And they throw a hissy-fit when the President feels compelled to push through new taxes on the banks because of public anger!

Then there's Mark McGuire, the guy who increased his hat size several fold and likely shrunk his genitals all for the sake of hitting 73 home runs. He finally admitted this week that he had been taking steroids for over 10-years. I am not sure who I am more upset with--McGuire, the St. Louis Cardinals who just hired him as a hitting coach, Major League Baseball that all but encouraged McGuire, Sammy Sosa, Barry Bonds, and others to put on a home run derby to make fans forget about the strike a few years earlier. Tony LaRusso, McGuire's coach while he was "roiding", brings him back as a hitting coach? Am a missing something? Isn't this a reward for bad behavior? Pete Rose gambles and can't get into the Hall of Fame despite being one of the greatest hitters of all time. McGuire cheats the entire game and gets a coaching job. And we wonder why people are angry and jaded!

And, lastly there is the NBC fiasco concerning Jay Leno and Conan O'Brien. NBC moves Leno to 10PM and brings O'Brien into the Tonight Show chair. This wasn't just to give Leno a new venue, but more to save money for NBC who hoped that it would not have to create a new show for that time-slot since talk shows run for a fraction of the price of a series. Leno bombed in that slot, not because there weren't viewers, but rather because his show was terrible. In the meantime, O'Brien brought younger viewers to the Tonight Show and got them ready for Jimmy Fallon, another favorite of younger viewers. So, rather than admit their mistake and buy Leno out or find him another show, NBC decides to make a complete joke out of their decision-making and announces that they will move Leno to 11:30 for a half-hour and then move the Tonight Show--the oldest running brand in late night that has always been at 11:30--to 12:05am. This would further push Fallon back to starting at 1:30am, primarily killing it. They probably thought that Conan would go know his place and go along with it, but he balked and has decided to quit the show rather than being a lacky for the network and Leno. So, NBC looks like Nincompoop Broadcating Company--the bozos of TV. Not a peep has been heard from the NBC brass. Hopefully, Comcast will get rid of this NBC-Universal "brain trust" once they complete their deal.

Tough business decisions must often be made, but these were not tough decisions. They were really bad decisions done with no foresight and seemingly no understanding of stakeholder relations. They were done for short-term gains that please the bottom line and those decisions usually turn out to be disasters.

Chase Building a Brand Community for its Sapphire Card

2010-01-10T12:07:00.000-05:00

I recently got a Chase Sapphire card. It had all of the benefits I was looking for in terms of mileage, no black-out dates, rental car coverage, insurance, etc. In other words, it seemed to have value to me. I got it to replace another card from another company that offered the same benefits, but did not offer much in the way of customer service to go with it.

What has surprised and impressed me is the brand community orientation of Chase. It has recognized that a credit card can be more than a credit card. When you think about the credit card category, it is fairly easy for the cards to differentiate value according to the segment. In other words, those with certain income can get better benefits than others because the risk to the card company is lowered. So, it is difficult for card companies to maintain a differentiation that is sustainable.

I have always believed and keep telling my students that customer service and community can be sustainable differentiators, if done well. Chase is doing this well. It was a surprise to me. I did not know or expect what I would get, but I am really pleased.

The first Chase benefit was before Christmas. Chase worked with a group of Philadelphia downtown retailers along a major shopping street to offer a discount to those using the Sapphire card. To go with it, if you spent $100 or more in total for the day, free parking at several downtown indoor garages was thrown in.

The next benefit came yesterday. I was invited to a dinner and film at a local restaurant with a discussion afterward with the actress Isabella Rosselini. The cost was only $50 per person, less than the price per person at this restaurant.

Chase is now advertising that it is the one card that has real people answering the phone rather than going through "call sequencing hell" (press 1 for new business, 2 for current billing, 3 if you are getting totally frustrated, 4 if you want to strangle someone by now....). Another brand benefit.

What Chase is doing reminds me of what American Express did when it introduced its card as a card with "special benefits". It was the card for the "upper class", a distinguishing mark for those who carried it. It was the card of business. It was serious. It said that you had arrived. It was differentiated on what we might call social image or ego from Mastercard or Visa. Over time, American Express lost that distinctiveness, so it started offering Platinum and Black cards to further differentiate the carrier. But, these came with a cost to those who carried them. You paid to become a member of the "club".

Chase has found an interesting brand positioning. It is a Visa card, which means that it can come with limited or no fee to the user. But, instead of just being another card, it has become a true brand--one that brings its carriers together and offers them a sense of community and special invitation.

Can others do this and cut the differentiation now held by Chase? Of course they can, but with the current credit crisis, most will likely see this as an expensive way to grow their customer base. What they miss is the fact that Chase is doing to the credit card what Apple did to the computer. The selection is not so much between Apple and a PC as it is between a cool, relevant brand and "your father's computer".

My compliments to Chase. They are building a great brand, a community, and growing customer loyalty.

Bad News on the Employee Satisfaction Front

2010-01-06T14:05:00.001-05:00

A new study by the Conference Board found that employee job satisfaction in the U.S. has hit a new low, down to about 45%. While this is not totally surprising since the poor job market means that more people are stuck in jobs they might otherwise have left, but the trend started way before the current economic turmoil and its does not bode well for brands and corporate reputation.

The most important stakeholder for any company is its employees. Employees carry the reputation of the company with them every day. Research has found that a growing percentage of people judge a company's reputation by how they view the company's workplace culture. Most of this is interpreted through hear-say, either from employees or others, or on-line. Also, research has found that the connection between employee and customer satisfaction is extremely strong (about an r=.80). Customer service is a critical part of brand and reputation.

How can we get customers and other stakeholders to see our brands and companies positively if they are dealing with employees who hate where they work? This is a major problem for all companies. Peter Drucker said that the only two areas that add value to a company are innovation and marketing. How do we generate value when those responsible for innovation and marketing are disgruntled?

The real tragedy is that most companies do not understand the connection between their employees and their brands. Somehow they still think that brand is about marketing communications and do not see the connection between brand preference and customer satisfaction. Too many companies still see employees as an after thought in their planning. Employee engagement often gets even worse when the economy gets bad. Think about how much good customer service means in your assessment of brands and reputation. Think about how important it is that the employee you are dealing with seems to want to solve your problem or make your life easier or reduce your concerns, etc. This takes two things from employees--willingness and ability. Many employees are willing to focus on enhancing customer satisfaction but are not trained or given the support or technology to do so properly. That is a problem for the company. Other employees are not able to provide the type of service we expect. That is a different problem that requires change management or changing employees. We need to have employees both willing and able to support the company if we are to be successful.

How do we engage employees? Do we have a culture that threatens them to make them understand that customer service is important. "Smile more and be more friendly", we bark at employees. Do we have a culture that allows people to be loyal to certain managers or divisions but not to the overall company? Or, do we have a culture in which we inspire employees to see the outcomes of the company as their outcomes and make them want to be part of everything we do because they have been included in our discussions and decisions?

Bruce Pillard, a French marketing manager, who I have had the pleasure of communicating with in recent weeks, has a concept of making customers feel like employees, bringing them into co-creation as if they worked with the company. That is a great concept. But, before we make customers partners, perhaps we should make our own employees feel like partners rather than conduits.

Still a Disconnect Between Marketing and Social Media Branding and Reputation Management

2009-12-30T20:52:00.000-05:00

e-Marketer has published a survey of how marketers are using social media for brand and reputation management. The results show that there still is a majority of marketers who see social media as another medium to sell a product or service. They don't understand or appreciate the relationship building aspects of social media, or they are so focused on transactional monetization that they cannot get beyond that.

More than 52% of those surveyed said that they either try to push the offensive comments appearing in social media down on the Google search pages or try to put out a positive press release or pay someone to say something positive about the product or service.

These actions are troublesome on so many fronts. There are still too many people who believe that social media is just another medium or that they can defy the changing nature of customer relationships--somehow feeling that they do not have to abide by the new rules of engagement. They do not seem to understand that social media is about relationships and community and conversation with the customer, not the company, at the center. It's a tough world for those who demand command and control. Intrusions into the community are not welcome and companies do this will lower their brand equity and reputation rather than raise it.

I am also troubled by the fact that 12% are trying to do a reverse SEO to squash negative information that appears about their companies. While nearly 40% said that they were working on improvements in product and service as a result of negative comments about their brands, there are still those who think that they can bury negative news. First, the importance of SEO has diminished as social media has risen. We used to only being able to determine the value of a brand by whether or not it came up on the first page of a Google or Yahoo search. With social media, there are conversations that are more important.

As I mentioned in a previous blog, I am not sure the analytics will work as intended to push the comments down, since so many people know how to manipulate searches these days. Also, it is a demonstration of the worst sort of management. Why not just hire the local "wise guy" to "wack" the offender? It's the same thing. We live in a transparent world. Embrace it or stay out, but don't think you can get rid of problems the way the Mafia gets rid of its problems.

Google vs. Apple--Battle of the Titans

2009-12-29T11:32:00.001-05:00

The new Droid operating system by Google has raised a lot of interest in what this will mean to both Apple's I-Phone and RIM's Blackberry. Everyone keeps looking for the I-Phone "killer" the way people a decade ago looked for the Palm killer. What killed the Palm was the smartphone--a different category. The industry moved from the Palm, which was a PDA, to a smartphone, a convergence technology that combined PDA with mobile technology (phone and e-mail).

So, when people start looking for comparisons with what happened to Palm, they need to be cognizant of the fact that there was a category shift or a new category created. People stay within a category when their needs are being met. They switch only when they determine that the new offering provides greater benefits than they are receiving and the price of those benefits is worth it. In other words, there is value ("worth what's paid for").

Droid is not a new category. It is an operating system. I-Phone has its own operating system, as does Blackberry. However, we are talking about an operating system by Google, the most valuable and respected technology brand in the world--beating even Apple. We now have set up the "Battle of the Titans".

So, who is going to win and who is going to loose? My students have been asking me this since they first heard about Droid. So, here is my prediction and my rationale. I think that Droid will erode Blackberry, not I-Phone. I do not think that I-Phone users will switch, but there will likely be a significant number of Blackberry users who will. Droid is an improvement over Blackberry in many respects, although it will need to improve its e-mail functions to hurt Blackberry significantly.

Why will I-Phone continue to survive? This is no longer a matter of phone, but Apple brand. Apple has a community brand-- a "cult", similar to what we see in brands like Abercrombie and Fitch, Aeropostale, and the like. It is a reference group brand. We know that others are part of our same community because they have the same brand--it is entry into membership.

Google is loved as a search engine and one of the smartest companies around. I believe that Google will eventually use cloud technology to do to the technology space what Wal-Mart did to the retail space--many companies will become suppliers to Google. Google is becoming a brand beyond search engines the way Apple became a brand beyond computers.

Google will soon be selling its own branded mobile phones. It will create its own community. Blackberry has users; Apple and Google have community. Blackberry likely will be in trouble.

What does trouble mean? There are several things happening. First, there is what Boston Consulting Group calls the "market of three". That is, when an industry begins to mature, it devolves into three main players. Others either are squeezed out or become niche players. We also can look at this from a perceptual map and see the variables that drive mobile phone selection and map them. I think that Google and Apple will squeeze Blackberry into the middle, a dangerous place to be in any market--neither here nor there. Blackberry will remain the phone of choice for corporations, but for how long is the question. If Google is an accepted operating system, it will make inroads. To date, the CIOs in companies have resisted I-Phone, preferring Blackberry. How they react to Google and Droid will be interesting to watch. Clearly, there will be pressure coming from users to open the corporate market to another system. Younger users have wanted that to be I-Phone.

This is going to be an interesting battle between two very smart, very rich, very talented giants with incredible brand communities. I have talked with a number of people who are part of the "Apple community" who are starting to dislike Google because it threatens their beloved brand. We are likely to see battles between Google and Apple--the future Coke and Pepsi of the technology industry. Those caught in the middle, like Blackberry will be in a tougher position than ever.

Pricing to the Attributes Perceived to have Value

2009-12-26T14:06:00.000-05:00

There is an interesting article in Harvard Business Review with a little sidebar on how customers respond to different pricing schemes. The researchers manipulated a payment mix between products and labor for car service in a conjoint analysis. In one scenario, customers saw greater value in paying more for products than for labor. However, they rejected a scenario in which they only paid for products and all labor was free, or one in which they paid for labor and all products were free.

The authors concluded that the most important thing to assess is the perceived value of what is being charged for. If customers do not see the value in something, they will resist paying for it. In the conjoint analysis noted, customers saw greater value in paying something for products, but not exclusively for products. They saw less value in paying for labor.

Think about what the airlines have done to their brands by charging for things like bags and food. The airlines have made the value proposition all about them and their profitability rather than having a customer-centric model. So, the airlines decided that paying a large fee for a flight was not enough to make themselves profitable. So, they started charging for extras, like bags, peanuts, cokes, etc. After customer rebellion, they reinstituted beverage service, but they had shown their hand--they had demonstrated to customers that they did not understand customer perceived value. The airlines were being run by accountants and investment bankers, not by marketing managers who understood brand management.Southwest now has a value proposition based upon having bags fly free, demonstrating to customers that they are only paying for what they value--i.e., the flight itself.

We also have the craziness going on at Ryan Air, the Irish-based discounter. They are considering having customers pay to use the toilet on board. The argument from the airline is that customers can use the toilet before boarding and if they want to go in flight, they should pay for it. This is an entirely "ass-backwards" way of thinking. Ryan Air built its brand based upon a basic premise--that a flight could be cheap and that customers would pay for bags, food, etc. Their flights were really cheap--one could get a flight for as low as one British pound. The basic necessities of the flight were included in the low fee. All other things were charged on a use-basis. Customers loved it. The customer understood the value exchange--they were giving up a luxury flight for a basic one. They were not flying to major airports, but rather to secondary ones, in most cases. In exchange, they were going very inexpensively. The question is, when is using the toilet--a biological necessity--considered a luxury like bringing bags and getting food on board? This is stepping over the line and Ryan Air has gone from being an admired brand to one that is now an international joke. Ryan is showing that he is more of an accountant than a brand steward. He should call Sir Richard Branson for some advice.

Money needs to be made, but the point is to charge for things in which the customer perceives value and to discount things that the customer does not value. If something is totally free, there is no value--at least not one we can measure. Customers have to be willing to give something in exchange for something to demonstrate value. We don't want to give things away for free and assume these discounts, but the costs can be absorbed or subsumed into the prices of valued items. We need to be certain that we are pricing appropriately to the customer perceptions and not to our own accounting needs. If we provide value and charge accordingly, we will make more money.

Deciding on the Right Brand Strategy

2009-12-19T18:07:00.001-05:00

Brands are comprised of three components: symbols, attributes and associations. So much attention is focused on symbols--the logo, color and design. I get a bit irritated when someone tells me that their organization has a new brand and then proceeds to show me their new business cards with a new logo and colors. "Anything new about what the company believes in or any engagement with employees in a different brand promise"? I often ask. The answer is typically no, or a blank stare.

The real importance of brands is in their attributes and associations. We judge brands by whether or not the attributes meet our needs. We look at the associations brands have--whether other people "like us" are wearing or using the brand, and who the brand associates with. It is through engagement that brands become powerful, not through art and design. The symbols are there to highlight the attributes of the brand--they are not the brand.

Another mistake that companies make is that they think that the brand is differentiated with a cool name or by making bold claims of difference through marketing communications. You cannot spin a brand. It either has or does not have the desired attributes in the eyes of target customers. It is here that brands get their perceived value--why someone is willing to pay more for the brand vs. another product.

Consumer companies use what is called Unique Selling Proposition (USP) to differentiate what might otherwise be similar products. Toothpaste might all be the same, but some are whiteners, others have mouthwash, some have tarter control, etc. These subtle differences are designed to attract to the product those for whom these USP are important. They are not attracted to the ingredients, but rather to what the differentiated ingredients do for them to reduce risk of bad breath or yellow teeth. The USPs segment on the basis of psychological needs rather than functional ones.

For non-consumer products companies, differentiation can be found in what can be called Value Proposition. That is, the rationale for buying the product over another in the same competitive set. But, companies often mistake why someone buys the product. I was talking with a company that is trying to sell foam mattresses to hospitals. What's the value? They said it was weight, comfort, etc. The real value is that it eliminates bed sores, possibility of bed bugs, etc. Let's understand, though, that the marketplace of non-consumer products is very different from that of consumer products. That is, the needs of the customer are different, the competitive marketplace is different, and the sales engagement is different. Despite these differences, many non-consumer products companies follow consumer products principles in their branding activities. How can you make decisions about your brand strategies?

The best way is to look at the product from the outside-in, the way the customer sees it and to understand the needs and interests that determine the buying decision. I would suggest that there are two basic variables driving buying decisions: 1) the amount of fear, uncertainty and doubt (FUD) that the customer has in making the decision to buy; and 2) the complexity of the buying decision. Consumer products elicit little FUD and there is little complexity in the buying decision. If I want a Coke but the restaurant only sells Pepsi, there is little FUD or complexity. In contrast, if I am the CIO of a company buying 20,000 desktop computers for my company, there is a great deal of FUD and complexity. I could jeopardize or lose my job if my decision is wrong, and the decision may need the input of others who are more expert that I am. It helps for a company to draw a 2x2 matrix, with one axis being FUD and the other complexity, and to determine where their products and company value proposition lie. The more FUD and complexity, the greater the interest in corporate brand. The customer wants to know that the company behind the product is viable and strong. Consumer products have less need for corporate brand and focus on product brands. The same matrix can be used to determine the right marketing communications mix to support the branding decisions. Consumer products can be driven by advertising and marketing public relations. Non-consumer products brands need strong relationship management since they often build their brands at the point of sales.

Breaking Down Silos to Create Greater Value

2009-12-19T10:53:00.000-05:00

Silos exist throughout the organization and they impede the organization in many ways. Organizations were historically set up along the so-called value chain. Each internal group was there to contribute to the overall value of the company. There were support functions --HR, technology, etc.-- and then there were functions that created and sold the products--inbound logistics, R&D, outbound logistics, marketing, sales. The structure of the value chain as it appears in textbooks has virtical bands--silos for each function. They were to do their thing and then hand it off.

Companies do not work this way anymore, at least not the efficient one. It is time to turn the value chain horizontally. Companies should focus on the value they are trying to create externally. They have many stakeholders--customers, employees, investors, and others. Why not ask the internal organization to come up with integrated, consistent plans and actions for each of these stakeholder groups? It would not be appropriate to have a customer program from PR, marketing, sales, etc. They would have to develop it in harmony. Similarly, there would be one organizational plan for investors, employees, government, etc.

If the organization incentivized integration and penalized silos, it would soon find that the traditional silos would begin to break down. Granted, each of these activities would need an expert steward (marketing, communications, finance, etc.), but the concept of “ownership” within an organization would begin to unravel.

What this would mean is that everyone would really need to fully understand what he/she did to add value and stop arguing over small bits of turf that may be intellectually interesting and functionally relevant, but add little value to the organization. Those who knew their stuff the best and had the best ideas would win, not just those who were appointed kings of a function.

When I was at Nortel, I headed both marketing and communications. I had a VP of Advertising who, as one would imagine, wanted to talk about advertising. I changed his title to VP, Customer Relations. His plans almost immediately changed. We gave prominence to those who headed Customer, Employee, Investor and Government activities. We asked all of the other communicators, trade events people, etc., to work with these VPs of major stakeholders to support them. The media were seen by us as being vehicles, not a key stakeholder. It was one small start to what we did throughout the company. Many in my organization argued that I was killing traditional PR; others said I was killing traditional marketing. Clearly I was. That was the intent.

In much of my work now with companies, I attempt this conversion through “Stakeholder Relations Councils”, bringing together all of the relevant functions to work together to integrate strategy with brand to engage the organization and enhance reputation.

University Branding Becomes a Major Topic

2009-12-17T18:34:00.000-05:00

Universities have really gotten into branding in a major way. New firms are forming that focus exclusively on the academic market. Articles are being written in various marketing and academic management journals about the importance of branding.

Why is college/university branding moving into high gear? The cost of an education in the US has become extremely expensive. At the university I teach at, which is a private institution, undergraduate students pay about $47,000 per year when all expenses are included. The MBA costs anywhere from $50,000-85,000 at our university, depending on the program selected (on-line versus full-time or executive MBA). At the same time, there are more students attending colleges and universities. So, the perceived value of the degree takes on greater importance. Companies want to know the value of potential employees have, parents begin to be concerned about where their son or daughter will receive an education that is valued in the market, and universities are concerned with their ability to attract the best and brightest students available. All of this adds up to a major reason for branding. University rankings become extremely important. They put the value of the university into context--allowing it to be assessed against others in the market.

I believe that universities should be talking about their reputations rather than their brands. Brand is focused primarily on consumers. Universities do not have consumers or customers, but rather a host of stakeholders, including, parents, alumni, corporate donors, government (for grants and ,in the case of public institutions, funding, and others). The term reputation is more acceptable to faculty. Everyone wants a good reputation for their schools; not everyone wants the university to think of itself as a brand.

It is difficult to have a university live its brand or reputation. A friend of mine once called a university a "group of anarchists sharing a common parking lot". Faculty do not like to be managed. They see themselves as independent contractors, each vying for their own position and fame. University tenure encourages this. A faculty member who plays as part of the team and serves his/her department and college well but does not publish is less valuable than the faculty member who does little in concert with others but who is a publishing "machine". So, it is difficult, if not impossible for a university to live its brand.

Far too often, universities fall into the trap of thinking that their slogan is their brand. The slogan of my business school is "Learn Here. Lead Anywhere". This is not our brand. Our brand is about attributes, namely co-op education, technology and applied research. Put those together and offer them to students and one has an environment that allows people to learn at Drexel and lead anywhere afterward. Just like in a company, the key is to link the slogan back to attributes that are real to the university.

Reputation Trumps Brand is a Crisis

2009-12-13T18:12:00.000-05:00

The move by Accenture and Gillette to drop Tiger Woods shows the power of reputation and the concern of boards about reputation risk. Brands are important, but they are related primarily to customers. Reputation is related to all stakeholders, and in a crisis, companies look to manage their relationships with all stakeholders and some of these concerns may trump the customer.

Years ago, DuPont had a situation with Benlate, a pesticide that was rumored to be burning cotton crops after a rain. The division argued to maintain control of the situation and keep it between the product management and the customers. By the time the board intervened, the cost had escalated to nearly $500 million. Investors were concerned about the company's insurance protection; lawsuits were pending; employees were questioning DuPont's commitment to environmental safety. The company learned a lesson. It should have made the situation a corporate issue rather than a division one.

In contrast, when Tylenol was tampered with in 1982, J&J didn't allow the crisis to be managed by McNeil, the division that makes Tylenol. They immediately made it a J&J issue. When Kidder Peabody, the investment firm that GE used to own had an scandal involving a broker who stole from his clients, Jack Welsh immediately made it a GE issue, taking responsibility away from K-P to manage it.

Accenture had to act. It is a consulting firm. Its value is entirely intangible. That is, it does not make or sell products, but rather gives advice. Its value is its credibility, its reputation. Anything that impacts that reputation is a threat to the firm's perceived value to clients. Tiger was the association they previously wanted. "Come on, be a Tiger" was the slogan. Tiger's winning, his talent, his aggressiveness, his intelligence, his personality, were the associations Accenture coveted. Tiger is now a tainted set of attributes. His association is no longer positive. He is a joke line on Letterman and Conan. Not the stuff Accenture can tolerate.

Reputations, like brands, are comprised of symbols, attributes and associations. The difference is that reputations are based upon a larger number of stakeholders. Brands are what firms decide they want to be seen as; reputation is how stakeholders see them. The reputation of other companies that Tiger endorses are all watching this. Someone has to be first--that was Gillette. I know that the calls are going on within the management teams and board rooms of AT&T, Nike, Rolex and other companies that "employ" Tiger. They are all asking the same question: "what is the impact on our reputation? Can we take the risk? Do we want to be the last company defending our association with him? What are we hearing from employees, customers, special interest groups, the media, investors and other stakeholders?

Reputation management is the process of balancing the financial interests of the company against the needs and interests of the company's many stakeholders. An endorsement is a brand association. The endorser's attributes help further enhance the performance characteristics of the brand. Tiger is "tainted goods". He may still be the greatest golfer in the world, but his personal character is under question. His attributes no longer are desirable association.

I heard one professor on TV claim that the contracts Tiger has are unbreakable. I am not sure what this fellow knows or doesn't know about the subject of contracts. Typically, companies have a clause in these contracts that allows them to be broken if the endorser does something to create risk to the company. All of the companies that have signed Tiger are intelligent companies. I can't imagine that they do not have clauses that allow them to cancel the contract without further payment.

This is a sad situation all around. But, it is an interesting learning situation showing how not to handle a crisis and also the importance of reputation.

Tiger's Death by a Thousand Cuts

2009-12-13T12:11:00.000-05:00

So now the news is that Gillette has decided to stop its advertising with Tiger Woods. It seems that we are now seeing his death by a thousand cuts. My prediction is that others will hold on but start to back off if things continue to deteriorate. Gillette, a men's brand, spun it that they are giving him the time out of the spotlight he needs. It's the time out of the spotlight they need in association with him. You don't give a winning brand time off; that is reserved for question marks. As of this writing, Accenture just announced that they were ending the sponsorship with Woods saying that he no longer represents the type of person with whom they want to associate.

Let's keep in mind that Gillette is owned by Procter & Gamble. P&G has always been protective of its reputation and the primary focus on P&G, other than Gillette, is woman. They position themselves as a family company. It makes sense that they would back off Tiger until they better know where the "wind is blowing". The postured this as being on his side, but they are playing both sides in this one. They step aside from having Tiger associated with them, and for those who support Tiger they can say that it is done for him. Well played, sir!

Companies are very concerned with their reputations. This has not been a good year for corporate reputation, with all indicators of trust at record lows. Companies do not like controversy or to be caught in situations in which they have to defend the actions of another--they have enough problems defending their own actions. Woods now is a problem.

As I have said before, this did not have to be this way. Tiger still has not stepped in front of the cameras. He continues to speak through his website. Who the hell is giving him PR advice? Whoever it is should be ushered into the PR Hall of Shame. This is one of the worst example of handling a crisis I have seen. Tiger is allowing everyone to control this story other than himself. This is not an age when the news media take a quote from someone. This is an era of 24-hour news outlets that need to manufacture the news they cannot get otherwise to attract interest. They are sharks and Tiger is bleeding.

The first rule of a crisis is to take control of the situation, tell the truth, and take the offense rather than the defense. Admit your mistakes publicly, muster a few tears and look contrite. Do something, but stop hiding behind a manufactured, impersonal website. For those who think this is Tiger speaking to us directly through his site, let's get real. He has an entourage and they are hard at work. They are either terrible at their jobs, or he is the worst client they have ever had and refuses to listen to their advice.

While we're at it, can someone please tell David Letterman to stop with the Tiger jokes. He keeps referencing Tiger's problems and associating them with his own. He has a wife at home as well. Cool it, Dave. You came out of this looking like someone taking the high road. Don't go low road and ruin everything for a few laughs.

Credo Mobile--a New Take on Social Marketing

2009-12-10T17:06:00.000-05:00

I just got mail for a new phone carrier called Credo Mobile. The concept is a really interesting one, combining a product with concepts learned in social activisim and now called social networking when applied to the Internet.

This is a unique and different way to create a community and one with the power in the palm of its hand to influence policies. For some time we have been hearing about social investing. Now, we have a product that focuses on a community that cares about liberal social causes. They are out there. They came out in record numbers to help elect Barack Obama President. They are connected through social networks, just like other communities of interest. There are communities on the right as well.

The CEO is Laura Scher, a social activist from San Francisco. The slogan for the company is "More than a network, a movement". From the literature and website, it seems that Scher was upset by positions taken by AT&T, Verizon and others who decided not to back liberal social positions to avoid potential conflicts in their market. They also were upset by the political contributions from the big phone companies that go to conservative politicians who oppose abortion rights or woman's rights.

So, the idea is that one switches away from their current wireless carrier and contracts through Credo, which runs its own network. They will buy you out of your current wireless contract. A portion one pays each month to Credo goes to organizations like Greenpeace, ACLU, and others.

I'm going to assume that the network is viable and that one will not have problems making and receiving calls or dropping calls in progress. Regardless of commitment, people are not going to stay with a wireless network that does not meet fundamental, function requirements.

I find this concept really interesting because it is once again a use of technology to find and collect a community of like-minded people. While Scher lives in San Francisco where there are many people who will find Credo of interest, I am most happy for the poor liberal who finds him/herself stuck in a conservative community and feels like a complete alien. Now, they can find others to connect with. That's the beauty of technology.

Credo and other such plans serve the niche market. The web has made it possible to create what Christopher Anderson termed the "Long Tail", the ability to serve niche needs that were not economically possible in markets governed by economies of scale. I'm sure we will see others networks like Credo. I would imagine that some conservative group will hear about this on Hannity or Glenn Beck and start a phone service that gives only to those who oppose abortion rights or are against climate change legislation.

What we are seeing again is that brand is an emotional connection between product and consumer. In the past, we had to deal with the mass market, even if we did not identify with the attributes. We had few choices. Laura Scher and her team were put off by the attributes and associations of Verizon and AT&T. In the old days they would have sent letters to the editor and send out fliers to their neighbors. Today, they create a new company to collect people with similar values and beliefs who not only will talk on the telephone, but also can use it to lobby and further build the case for their causes. Very ingenious! While some will be offended by the causes Scher supports, they now have a business model they too can follow for their own community.

Maintaining an Exclusive Brand

2009-12-10T08:49:00.000-05:00

I teach at a university. Every time I give out grades, I am reminded of the value of a brand and how it can be supported or eroded. Grades have been inflated in recent years. During the time I was working on the corporate side, grades began to rise across the board. Students now think they are flunking out of school if they receive a "C", which --to date myself used to be called a "gentleman C". It meant that one performed average in the class. Some people were better, some worse. In undergrad, I was a "B" student. There were a few "A's" sprinkled in, with mostly "B's" and even some "C's" in some courses. I was a good student at the time.

The grade of "A", which is supposed to mean excellent work, now is expected by students for good but not excellent work. Everyone has an excuse why they deserve an "A". They worked really hard, they have scholarships that need to be protected, etc. We now have a generation of students who all got trophies. They were all told they were wonderful. Heaven help the teacher who told a student that they were not excellent!

Let's turn this discussion and think about it from a brand-product perspective. What would someone say if they indicated that they needed Tylenol but because of other circumstances wanted it at generic prices? It would erode the value of the Tylenol. Why support a brand if there is no value perceived in it?

Of all the things I love about returning to teaching, the thing I hate most is grading. The value of the grade (the brand) has been ripped out. If everyone can get it, what value is it to those who truly deserve it? On a larger scale, this is what has happened to the value of a bachelor degree. If everyone can get one, where is the real value? So, that starts a hyped competition for students who want/need to get into so-called elite schools--the Prada or Guicci of universities.

This is a very US phenomena. I recall in the 1960's a discussion a British fellow had with my father who was bragging about the large percentage of American students who go to college. "What will you do when you need a B.A. to run an elevator or sell shoes?" asked the Brit. He was right. He saw that the value of the degree would be eroded. In many countries, there are exams that separate who can attend university and who cannot. This has its downside as well since many students who do not do well on large, standardized tests are excluded from universities in their home countries. The US does allow those who are "late bloomers" or creative types to find their way. It has helped US innovation. However, there has been a cost. In Canada, there has been less delineation amongst the many universities in terms of quality. All universities are government owned and all are deemed to have quality--a bit different in some cases, but quality none the less. So, a degree is a degree. Kind of generic, which also has its downside since people want differentiation when price goes up. They want to know if there is value in their purchase. Students (or their parents) do not suffer depression or stress over whether little Johnny or Joan is getting into University of Toronto vs. Brock. There even is pride in students who go to 2-year colleges because that is where one goes for the education that in the US is reserved for 4-year colleges (nursing, kindergarten teacher, graphic design, public relations, advertising).

Universities are brands. Grades are brands. People are brands. Brands are comprised of attributes and associations and symbols that have meaning. Erode the meaning and the brand begins to erode.

Gatorade Pulls Its Tiger Connection

2009-12-09T11:00:00.000-05:00

Pepsi, the owner of Gatorade, has decided to drop a drink named after Tiger Woods. The timing is curious. Gatorade said it was decided before the whole "Tigergate" incident; many think the timing is more than coincidental.

The truth is likely somewhere in between. Gatorade is a product that is in trouble. It had a good market position and then, like the other Pepsi brands, was rebranded last year. Gatorade became "G", I would imagine to give it "street cred". The ads are harder-edged which supports my contention. Somehow, Pepsi decided it had to make the product more current and hip. The results have not been good. Reports have indicated that "G" has lost market share. This comes on the heels of Tropicana, another Pepsi brand, which had to reintroduce its old packaging after customers strongly objected to the new package design. The logo for the Pepsi product, which changes depending on the product, was criticized for being curiously similar to the Obama campaign logo--Pepsi said it was pure coincidence.

This has been a terrible year for Pepsi brand management. It did not have to be so. In the new world, Pepsi could have co-created the package designs with customers and gotten strong customer buy-in. Pepsi, instead, acted like it was pre-Internet days and did its branding in secret between the chief marketing officer and an outside branding agency.

Companies are not in control anymore. Brands are shared and are part of customer experience. They always have been but now customers can act on their likes and dislikes more aggressively. Pepsi needs to wake up to the new world. It claims to be the brand for a "new generation" but acts like it is managed by the old one.

Back to the question of whether or not the dropping of the Tiger brand was preplanned or is in reaction to his marital infidelities. As noted, I think the truth lies somewhere in between. Gatorade is in trouble and is looking for ways to reconnect with its original customer base which it is loosing. Tiger is an expensive endorsement and likely too expensive for a brand in trouble. The problems Tiger has had likely pushed the decision to the front burner.

Kudos to Comcast

2009-12-08T18:31:00.001-05:00

I had a great luncheon discussion today with Frank Eliason, the head of social media for Comcast. I am a customer of Comcast in Philadelphia. I also am a customer of Mediacom at my beach house in southern Delaware. Comcast looks like the best customer service company in the world and the most advanced technology company in the world compared to Mediacom. The latter gives new meaning to thinking and acting like a public utility--you know the attitude: "if you don't like the electric company, live in the dark". That's a public utility mentality and it typically hits those companies that are monopolies or close to it.

Comcast has historically been a company customers have loved to hate. They had terrible customer service numbers. They were a company featured in a famous YouTube video of a service man falling asleep on a customer's couch.

The business model of Comcast has made for problems. They run cable to a home and bring the home TV. A few years ago they started bringing in computer network and now telephone. They realized that they had to change. Many companies in similar positions do not sense the market forces requiring change and stay the course--think GM, Westinghouse (remember them?), and many others.

Comcast, either due to more competition or just waking up and wanting to be better, has focused on customer service. A few years ago, they hired Frank Eliason to begin blogging, Twittering, etc. to connect with customers. He has helped Comcast listen and respond. With the technology, Comcast has responded so quickly that customers have started to notice. And, what they have started to notice is that Comcast cares more than they thought they did. This is changing opinions and helping Comcast keep its installed customer base and attract back lost customers.

It is interesting that Comcast chose to put is social media group in customer service. Typically, the group is attached to either marketing or corporate communications. All too often, marketing wants to use social media to sell and corporate communications wants to use social media to either listen or "spin" its take on an issue. By putting the social media group in customer service, Comcast put it where it could do the most good.

Social media is becoming an important part of Comcast and a key part of its ability to fulfill its brand promise. I give Comcast lots of credit for recognizing its own problems, dealing with them, and trying to become better. Its use of social media is exemplary.

It's Tough Managing a Brand in Bad Economic Times

2009-12-07T18:19:00.000-05:00

I was moderator today of a panel discussion in Philadelphia on marketing during the economic downturn. That panelists, from companies like QVC, AstraZeneca, Siemens Healthcare, and Digitas Healthcare, were very engaging and thoughtful.

We got into the issue of brand and what has happened to brand during this recession. Every one of the panelists talked about how they have been able to manage their brands through the downturn. It has been tough. Customers are increasingly looking for price reductions and challenging the price differential of the brand.

The key is to establish the brand as either the high-end, differentiated value post or at the opposite end at the cost-savings. The difficult position is to be in the middle. This is a key illustration of what we have learned about strategy from people like Michael Porter and others. Find your point on the value frontier and manage your brand accordingly. Best of all, take a dual action to cut costs and add value in other ways, a la Southwest Airlines. But, recognize that when you respond to requests to lower price you are, in fact, undermining your brand value. If you established price at the appropriate level of value, it should hold, all things being equal. Obviously, all things are not equal, but you do not have to match a discounted price--in fact, it will destroy your value.

Think about what has happened in retail. We have Nordstrom's and Nieman-Marcus at the high-end and Wal-Mart and Target at the low end. These companies know their place and their brand promise. In the middle are companies like Macy's that has become one big sale. Macy's has taught the customer that nothing at their store is of value if it is not on sale. Nordstrom's has held to its yearly sale and has refused to discount. It has risked some market share to maintain its brand. Wal-Mart owns the low-end, discount brand in retail. Target now has been differentiating itself against Wal-Mart and gaining share. But, that share is likely not coming from Wal-Mart, but rather from companies like Macy's.

At one time, companies like Macy's were able to be a brand for all people. Sears had that status in an earlier time. Markets are becoming more segmented. Brands, by their very nature, segment markets--they meet specific needs of certain segments of the population. It is dangerous when people cannot determine what a brand stands for and who it is for--that's the middle ground where companies enter the death spire.

Brands are Alive and Well

2009-12-07T09:47:00.000-05:00

I have read a number of articles and books in recent years suggesting that brands are dead. Don Tapscott, author of all things digital, suggested that young people do not care about brands. Even one of the people I admire most, Regis McKenna, suggested that brands were dead. Nothing can be further from the truth.

I don't really understand these arguments. The Internet has changed branding, from something owned and controlled by the company, to something co-owned and co-created with the customer, but this has not killed brands. In fact,there is evidence that brands are getting stronger. Look, for example, at Apple. The fact that people are willing to pay twice as much to get an Apple computer as a PC is ample evidence of the power of brand. Brands build perceived value and interrupt the natural tendency of markets to move to commoditization. The PC world is filled with brands battling for attention. Their brands may be eroding--the really powerful brand in the PC world is Intel, which is not the PC but which is the most powerful ingredient brand in electronics.

Same thing with the I-Phone. I talked to my students about the new Droid phone being offered by Verizon. It is supposed to be an amazing smart phone that may erode the positions of both Blackberry and I-Phone. Verizon sees it as their I-Phone offering. Most of the students were impressed with the potential of the Droid, but not willing to switch from their I-Phones. Apple has become a brand community--people feel connected to Apple--it seems to "get them". There is a true emotional connection with its customers. Powerful brand.

We can see many examples of where brands are being eroded and I can see where Tapscott and McKenna might have found evidence. AT&T long ago said that brand preference in telecom services was dying. Brands die when the value proposition no longer makes sense to consumers. If the AT&T brand was dying it meant that customers couldn't determine why they would select AT&T over Verizon or Sprint or others.

Brands are far from being dead. Where ever one finds a product or service that commands more attention than another in the same category, one can find the power of brands.

Pharmaceutical Branding Leave Them Vulnerable to Generics

2009-12-05T15:44:00.000-05:00

Pharmaceutical companies have historically been product focused. While the companies might talk about marketing, they are really sales organizations. Sales companies view themselves as product developers who push their products at a market. Drug companies take products from R&D and detail them to doctors. A marketing company would be more focused on customer needs and relationships and would measure themselves not by sales, but rather by customer satisfaction and retention.

Obviously, pharma companies are heavily regulated and the concept of customer attraction and retention might be a bit alien. Some would argue impossible. I would argue the opposite. Because of the way pharma companies see their value, they brand products with no connection to the parent company, which leaves them highly vulnerable when their patents expire and generic companies enter. When that happens, the market immediately becomes commoditized, i.e., dependent on price.

Pharma companies have screamed for years about the fact that they develop the drugs, investing, on average, $800 million and 12-years to bring a drug to market. Those are those that succeed through Phase III. There are many failures along the way. The heavy investments by drug companies in R&D has made the US the leader in pharmaceutical innovation.

Think about the intangible asset value of a research-based pharma company. They have the organization, the people, the resources and the ingenuity to develop life-saving drugs. It bewilders me, then, that these companies do build their corporate reputations and instead focus on product branding. Product branding is typically done because the scope of brands of the company and the number that compete with one another lend themselves to letting the product carry the value. This is a consumer products model. There is little value in the company. The value is with the product.

In more scientific companies, we typically find masterbranding or endorsed branding, where the company associates itself with the product because the customer finds value in the company behind the product. One would think that this would be the case for pharma companies. If there is significant intangible value in Merck, Novartis, Pfizer, Genentech, AstraZeneca, etc., etc., would it not be smart from a branding perspective to utilize that equity in their branding strategy?

This has not been the case in pharma. So, when the patent expires, generic companies can seize more value than they should be able to grab because the value was almost totally within the product. If there were association to the parent, it would be more difficult for the generic company to take as much value. There could be an opportunity by the original manufacturer to differentiate on value rather than price alone. Pharma companies always try to make the claim that they were the original discoverer and distributor of the drug. Why would they not invest in bringing that value to the market more forcefully? It could prove to be a turning point for many companies that creates a barrier to generics. While they would likely still loose the patent to a generic company, they would be able to maintain more of the real value in the drug for a longer period of time.

Tiger is a Actually a Cheetah

2009-12-03T16:15:00.000-05:00

So now we know what we all suspected. Tiger was cheating on his wife with several woman. He's human. What a shock. An attractive, rich guy traveling the world gets hit on by women and give in to temptation. Again, what a shock?

So, why are we still waiting for an appearance from Tiger? Why does he continue to believe that he can manage this through his website? Does he really believe that we believe that he is writing all of this and not having his entourage front for him? Maybe it is a shock to him to learn that he is human. He was raised by a father that developed him to be a robot and that has served him well on the golf course. Maybe he can't quite believe that he has human frailties like the rest of us mortals?

While he has helped by coming out and admitting his mistakes, he still has not done what needs to be done, which is to make an appearance and show his emotions. He has to stop trying to make us feel that the media are wrong for doing their jobs in covering this story. Once again, he is not an ordinary person. If he were, this would never have been a story. He is a brand. He has responsibilities beyond himself. As I said before, he needs to take the David Letterman approach. Admit mistakes and tell people that it is now his responsibility to rebuild his relationship with his wife. He can then ask for some privacy to do that. Spare her--she hasn't done anything wrong, nor have the children.

I am still waiting for Tiger to act like the person we all thought and hoped he was.