Archive for February, 2009

The Amazing Amazon

February 26th, 2009

I just read a Business Week article saying that Amazon is the highest-rated company in any industry when it comes to customer service. As a long-time loyal customer, I couldn’t agree more.

Michael Treacy’s classic business strategy book, “The Discipline of Market Leaders”, holds that an organization must excel in one of three disclplines: product leadership, organizational excellence, or customer intimacy. While Apple is a great example of a company focused on product leadership, and Wal-Mart and Southwest Airlines clearly excel in organizational excellence, Amazon embraces the concept of customer intimacy like no other company I know of. (For what it’s worth, one could make the case that Amazon also excels at organizational excellence.  How many companies can you think of that excel at two disciplines?  Heck, how many can you think of that excel at one discipline?)

When I think of Amazon, I think of a company that knows me inside-out, which makes me feel like I know them inside-out. They have such a great understanding of what I like that they can predict with impressive accuracy what new musicians and authors will appeal to me. Such personalized treatment actually gives me a real warm, fuzzy feeling about Amazon, and what’s truly amazing is that I don’t think I’ve ever spoken to an Amazon employee.  Relying totally on online communications, they have managed to cultivate an extremely intimate relationship with me–and with millions of other loyal customers.

As a result, they have developed extremely powerful brand equity, and they’ve done this with little or no conventional advertising over the years. Because, at the end of the day, your brand image isn’t the result of what you say about yourself, but about what you do. And not many do it better than the amazing Amazon.

When the Going Gets Tough…the Smart Raise Prices!

February 23rd, 2009

Recently Procter & Gamble announced that its response to the weakening economy would be to increase its prices and use its marketing efforts to persuade consumers that its products are a superior value despite the premiums they charge. In other words, P&G–the company that invented the concept of brand management–has decided that our economic woes are no excuse to panic and abandon the long-held value-added marketing strategy that made the company one of the most successful businesses on the planet.

As someone who used to compete against P&G, I have always had tremendous respect for the rigor and consistency of their strategic thinking. (Their creativity sometimes leaves something to be desired, however, but their huge budgets allow them to compensate for that shortcoming.) While their decision to stick to their guns is thus hardly surprising, it is nonetheless refreshing and admirable–particularly when institutions like Saks Fifth Avenue are indulging in marketing myopia and slashing prices left and right.

Early in my career, I was in a meeting in which someone suggested cutting prices in order to stimulate our sales. I’ll never forget the response from the senior manager in the room: “Any business you get because of price you’ll eventually lose because of price.” He directed us to come up with ideas that would increase revenue by adding value rather than subtracting price. And we did.

Perhaps his direction–and P&G’s decision–are not particularly profound, but in an environment in which so many once-esteemed companies are taking the easy way out and abandoning the principles that built their brands, it’s encouraging to see a company respond to a tough market by demonstrating the courage of its convictions.

Own It!

February 20th, 2009

One of the most important tests of a company or brand tagline is to ask this question:  “If I were to replace my brand with my competitor’s brand, would the tagline be as effective?” If the answer is “Yes”, find another tagline.

For years Sony had a truly classic tagline: “Sony. The one and only.” That was a tagline they could own, and they did.  “Panasonic. The one and only.” just doesn’t have the same zing. But several years ago, someone at Sony apparently decided to make his or her mark on the company, and the tagline was changed to “Sony. Like no other.”

Huh? What were they possibly thinking? The literal meaning of the new line was virtually identical to the one it replaced, but it lacked ownability as well as distinction. If you were to insert “Panasonic” in place of “Sony”, the line wouldn’t lose an iota of impact (not that it could afford to). Over the years, whenever I asked people what Sony’s tagline was, not one person ever recalled the new one.

I’m not going to claim that switching taglines is what has caused Sony’s market share and its reputation for innovation to decline over the past several years. But I don’t think these events are a coincidence, either. Rather, I think that when companies make bad decisions regarding taglines–as well as advertising and other communications–it’s often a signal that they are making bad decisions in other areas as well. And the fact is that had I had the wisdom to short Sony’s stock around the time of their tagline change, I would have made a lot of money.

I guess the lesson is: if they don’t own their tagline, don’t own their stock.

Say It Ain’t So, Allen!

February 16th, 2009

As a consumer and a marketing professional, I have always been a big fan of Allen Edmunds. But many newspapers this morning featured their new ad announcing a temporarily lower price with this unfortunate headline: “Even more classic than the shoes is the price.”

I realize that the recent downturn in consumer demand is forcing many companies–even high-end companies like Allen Edmunds–to adjust their short-term marketing tactics. But it’s essential that you not violate your core long-term marketing strategy as you do this. A brand like Allen Edmunds should never suggest that price is more important than quality; all of its communications must  rigorously reinforce the fact that its consumers are loyal to Allen Edmunds because they are the very finest shoes that money can buy–period. 
So instead of responding to a tough economy by claiming that its temporarily lower price is more classic than the shoe itself, perhaps the ad should have proclaimed that this shoe is now a better investment than ever. For example: “Now get an even better return on your investment in quality.”
Tough times demand even successful companies to make course corrections here and there, but that doesn’t mean you can’t remain true to the business and marketing principles that made you successful in the first place.

Who Writes This Stuff?!?!

February 14th, 2009

I just saw a two-page spread for Porsche in a business magazine.  The main visual is a photo of three spectacular vehicles, and the headline is simply the names of the models:  “Cayman. Boxster. 911.” Despite the exciting products featured, however, this sports car ad is fairly pedestrian. 

To make matters worse, the only thing that really grabbed me–and I’m guessing I’m the only one it grabbed–is the first line of the body copy. Appearing directly below the “Cayman. Boxster. 911.” headline is the opening line, “Never before have three words meant so much.”  Now, I’m not against a little hyperbole now and then, particularly if it’s wrapped around a clever idea, but this is just a weak, flatfooted attempt that aimed at profundity and landed on absurdity.  I mean, are these really the most meaningful words ever uttered? Hell, technically, one of them isn’t even a word; it’s a number. I guess the copywriter felt that “Never before have two words and a number meant so much” wouldn’t roll trippingly off the tongue.
A similarly vacuous bit of copywriting is the tagline used in the current TV campaign for Bridgestone tires. Actually, the campaign itself is pretty well designed and well-produced, with the exception of the last line of the ads: “When it comes to tires, it’s Bridgestone, or nothing.” Uh, no, it’s not; it’s Bridgestone, or some other brand of tires. If you’re talking about a discretionary product, such as after-shave (remember the classic Aqua Velva commercials from the 1970s?), nothing might be an alternative, but that’s not the case with tires. Actually, Bridgestone could make its tagline work if showed customers who opt to drive with no tires if they can’t have Bridgestones. Of course, that’s absurd, but it at least could be a humorous and memorable way to convey the loyalty of its customers. But as it is, their tagline adds nothing to their ads, and it might even detract from them if any viewers are actually thinking about what’s being said to them.
Two questions come to mind: “Who’s writing this stuff?”, and “Who’s approving this stuff?”

Bawdy Wash

February 13th, 2009

I recently heard a radio commercial for Dial for Men Body Wash, which bills itself as helping men–presumably young, hip, very macho men–deal with “man-stink” and provide “maintenance for your mansuit”. The product’s container is cleverly shaped like an oil can, and its package graphics and website are full of “manly” images. While all of this is somewhat tongue-in-cheek, there is no question about whom Dial for Men is targeting or the kind of image it’s attempting to cultivate. This brand reeks machismo!

The only thing that doesn’t quite work for me is the name, Dial for Men. The deeply-ingrained image of the company’s flagship brand, family-oriented Dial Soap (“Aren’t you glad you use Dial?”), fights the macho, maverick image Dial for Men is shooting for. It even begs the question, is there a Dial for Women? (There isn’t…at least yet.) And the corporate-looking Dial logo looks stiff and out of place surrounded by the rest of the Dial for Men packaging graphics. I just can’t help think that all of this macho marketing would work much harder if it were supporting a unique and more macho brand, like Bubba Body Wash, or even Mansuit Body Wash.
There’s another liability with the Dial for Men name. If I’m a loyal, older and more conservative consumer of Dial Soap, and I hear the Dial for Men ad spokesman saying “I used to wear a helmet on my melon and a cup over my brat and potatoes”, what’s my reaction going to be? In many cases, I think the Dial Soap consumer may find the Dial for Men ad to be in poor taste, and that has to have a negative impact on Dial Soap’s brand equity.
Many companies decide to treat new products as line extensions of an existing brand rather than creating an entirely new brand. The rationale is generally that it’s more cost-effective to leverage existing brand equity rather than having to build awareness of an entirely new brand from ground zero. But there are hidden costs to this approach: namely, the original brand’s imagery may keep the new brand from soaring as high as it could, and the new brand could have a negative impact on the original brand’s equity.
As a former marketing VP for Dial Corp, I might not be perfectly objective, but in this case I think my former employer dialed a wrong number. Whatever success they’ve had with Dial for Men–and for all I know, it could be a booming success–I suspect they’d be maintaining even more mansuits had they pursued a different branding strategy.

Sink or Swim?

February 7th, 2009

Yesterday cereal giant Kellogg’s ended its endorsement contract with Michael Phelps following the publication of a photo of the swimmer apparently smoking marijuana through a bong at a party several months ago. According to a company spokesperson, Phelps’ behavior “isn’t consistent with our image.” While that may be true, it is also true that Kellogg’s decision will affect its image as well. The question is, will it enhance or detract from that image?

Of course, the answer will be different for different consumers. Some will no doubt applaud the company for its “ethical”, law-abiding stance. Others will criticize the company for its intolerance in abandoning an endorser who made, and has apologized for, a mistake. Still others will question why the company did not make a similar decision when Phelps was arrested for drunken driving–arguably a more serious offense–four years ago.
Interestingly, as of today Kellogg’s (for whom I worked as a Marketing Director in the 1980s) is the only sponsor to drop Phelps.  Clearly, those other sponsors (including Speedo) are also affecting their respective images with their decisions. So who made the right decision? It’s possible they all did. In other words, it could be that demonstrating their support for “ethics” and the law will reinforce Kellogg’s image, while demonstrating tolerance and perhaps even a “maverick” attitude will reinforce Speedo’s image.  On the other hand, perhaps Kellogg’s or the other companies have misread their consumers, which would mean that they don’t understand their brand equity as well as they thought.
It’s a tough call, and one that’s easy to play Monday morning quarterback on. For what it’s worth, I think that the right call for all of Phelps’ sponsors was to stay by him and encourage him to make sure this mistake doesn’t get repeated. However, I would also make it clear to Mr. Phelps that–to borrow a metaphor from another sport–”Three strikes and you’re out.”
What would you have done if you were an executive at one of Phelps’ sponsors?

A Toast to Wine.com!

February 4th, 2009

Yesterday I, along with thousands of other customers, received an email blast from Wine.com promoting a special Valentine’s Day offer.  As with all of the communications I receive from them, it was attractively designed and attractively priced, and I made a mental note to take advantage of the offer within the next day or so.  But before I could do that, I received another email from the company, this time apologizing for the fact that “yesterday…Cupid shot an arrow through our website” and made it impossible to order.  To make it up to their customers–even those, like me, who hadn’t gone to their website yesterday–their email extended an extra 10% discount on the Valentine’s Day offer.

How refreshing is that?  Here’s a company that is willing not only to admit and apologize for a mistake, but to dig into its pockets to make it right.  Granted, Wine.com took this action to protect its brand equity…but that’s exactly the point!  In fact, I’ll bet that their customers have a higher regard for them today than they did before Cupid’s arrow took their website down.
Studies show that a customer who has been made unhappy by a company tells 5 friends about it, while a formerly unhappy customer who has been made happy by a company tells 10 friends about it. I’ll bet there are tens of thousands of friends who are being told about Wine.com’s class act right now.

Meet…Johnny and the Moondogs?

February 3rd, 2009

Do you remember the February 9, 1964 American debut of Johnny and the Moondogs on “The Ed Sullivan Show”? Probably not–either because you’re too young, or because a few years earlier the group changed its name to the Beatles.  (Interestingly, John Lennon made the name change to honor the then recently-deceased Buddy Holly and his band, the Crickets.)

Would the Beatles have been every bit as successful had they kept their original name–their original brand, if you will?  Quite possibly; certainly a band’s name has no effect on its talent or its performance. But does it affect the way the band is perceived? I think it does. As an 8-year-old watching that Ed Sullivan Show, I remember thinking that “The Beatles” was a really cool name; it was a clever play on words (was I a weird 8-year-old, or what?!?), and their logo looked great on Ringo’s bass drum. It was unlike any name I’d ever seen before, which reinforced the fact that the Beatles looked and sounded unlike any group I’d ever seen before.  In contrast, while I like the name “Johnny and the Moondogs” today, I’m not sure how I would have felt about it in 1964.  On the one hand, the “____ and the ____” naming format was pretty ordinary then; on the other hand, “Moondogs” was anything but an ordinary term. If nothing else, the name might have sounded a little less wholesome than “The Beatles”.  And that’s important, as despite their controversial “long hair”, the Beatles had a very wholesome image. (Of course, this changed a bit as the decade wore on.)
More importantly, “Johnny and the Moondogs” suggests one star and a supporting cast (ala “Jay and the Americans” and “Freddy and the Dreamers”), whereas “The Beatles” were perceived as “John, Paul, George and Ringo”–a/k/a the “Fab Four”. While John and Paul wrote and sang virtually all of the songs, each of the band members was comparably popular at the time.  In fact, I can recall fans frequently talking about who was their favorite Beatle.  (I was a John man, not that you asked.) Because of this, “Johnny and the Moondogs” would have been an ill-fitting name for this band.
So, how different would our perceptions, and maybe even our enjoyment, of this incredible band have been had it been branded “Johnny and the Moondogs”?  It’s impossible to say, but I’m pretty sure it would have been different.  After all, I just can’t hear Ed Sullivan saying, “Ladies and gentlemen…Johnny and the Moondogs!!!”

Short These Stocks

February 2nd, 2009

I’ve long had a theory that you could make a lot of money by shorting the stocks of companies that have really bad advertising–especially companies that run really bad advertising on the Super Bowl. My feeling is that if they’re making stupid decisions about something as important as how they present themselves to their potential customers, they’re probably making a lot of other stupid decisions, and sooner or later those decisions will negatively affect their financial performance and their stock price.

It takes a pretty effective commercial to generate enough incremental sales (and incremental gross profit) to justify spending $3 million or more on a 30-second exposure.  Of course, many will argue that an advertiser can reap other benefits from Super Bowl exposure–such as increased brand awareness and perhaps an improved brand image.
But Super Bowl ads are a huge crapshoot.  First of all, a high percentage of the viewers are drinking alcoholic beverages at loud parties that make it hard to hear most of the commercials.  Second, expectations are high from an entertainment standpoint, and if your commercial falls short of the bar, the criticism from both viewers and the media can be brutal.  And, perhaps most important, the premium placed on entertainment often means that the ads forget to communicate why the viewer should purchase the product being advertised. To me, the best (or worst) example of this over the years has been the Bud Light ads, which are usually hysterical but never give you a conscious (or even subconscious) reason to buy Bud Light over any other beer brand.  Sure, Bud Light is the number one light beer, but I suspect that’s driven by the superior quantity–rather than quality–of their advertising.
So what companies should you short based on yesterday’s ads?  My #1 choice would be Teleflora, for a tasteless ad that generated groans from the people I was with and focused on taking a shot at its competition rather than telling us why we should become a customer of Teleflora.  My #2 choice would be Cash4Gold, a sad ad that tried to be clever but missed by a mile. Given the nature of their business and the state of our economy, the company may succeed, but it won’t be because of their advertising.