The Brand Man Speaks

Spirit Airlines continues to use sexual play on words to promote fares, now adds branding attire

Spirit Airlines is continuing to use what some feel are sexually charged ad campaigns twisted with humor to promote their lower fares. They have been using the expressions "DDs" and "MILF" for over a year. Spirit says the campaigns are just fun and generate good revenue and do not insult anyone despite the double meanings.

Now comes word that flight attendants will have to wear aprons promoting Budweiser Beer...the first time, at least in my memory, that a brand is being promoted on the attire of airplane personnel. (Remember "coffee tea or me?").

Some employees and the flight attendants' union are complaining about the beer promotion. Flight attendants see their primary role as safety experts on flights (just think about the recent US Air Hudson River crash) not hawkers of alcohol products. Second, the promotion of alcohol brands on board so openly can be a duel edged sword. Bud sales may go up noticeably but drunk passengers on board may become a bigger issue causing difficult in-flight situations and dangers.

Doesn't sound like a good idea to me but in these recessionary times every business is looking for ways to keep revenue coming in.

Watching out for you everyday.

Eli

New CLT inductee, John Thain, Former CEO of Merrill Lynch

We have a new member of my CLT Club, (Cheaters, Liars and Thieves), and it is now ex-CEO of Merrill Lynch, John Thain.

When he joined Merrill to help it out of its major financial mess, he was praised for being a very smart guy who many felt including Merrill's top executives and brokers could guide the investment bank out of its abyss.

He was fired this week because he wasn't so smart after all. His sense of "entitlement" despite the billions in losses at Merrill under his watch led to a $1.2 Million office renovation including an $88,000 toilet. It also included handing out BILLIONS in bonuses to his top brass despite the fact that the entity was bleeding to death just before it was bought by Bank of America.

One of the biggest problems in this country right now is GREED especially among the top executives of the investment banking world. Different than traditional bankers, these CLTs have long thought they were so self-important that lavish living was part of the reward for ascending the investment banking ladder and the company's performance was irrelevant.

In the case of Thain, I believe he should have to pay back the cost of his office re-do and his cronies who received billions in bonuses should have to return this money as well. NO ONE should be paid a bonus if their work leads to billions of dollars in losses affecting millions of people.

So welcome Mr. John Thain to that increasingly less elite club called CLT.

Watching out for you everyday.

Eli

LA's Better Business Bureau undermining its own brand with unclear actions

Many consumers rely on the Better Business Bureau in their community to gage the quality and reliability of a business before patronizing it. The private organization has provided seemingly honest and independent information and reports about companies from plumbers to restaurants that help distinguish top rated no complaint ones from less honorable ones.

Now comes word from the LA Times that the BBB has instituted a new rating system based on letter grades from A-plus to F but with an apparent flaw that undermines the Bureau's integrity.

The LA Times calls it a case of "pay for play" where good companies can get higher ratings if they pay a yearly fee (nearly $400) to the Bureau as an "accredited" BBB business.

The case discussed highlights Spago, Wolfgang Puck's unblemished restaurant with only a B minus rating and a small relatively unknown restaurant in Pasadena with an A-plus. Both seem to be on the same level for grading but the Pasadena restaurant paid to be accredited and received the top grade. Spago doesn't pay for such a listing and now alerted feels slighted by the BBB for no rational reason.

The investigation by the LA Times showed consistently that "accredited" businesses who pay for that designation get higher grades than those that do not. Selling the accreditation is how the BBB makes its money. The seemingly "independent" voice is certainly compromised by this "pay for play" perception and undermines the brand's image and value.

The LA BBB should reevaluate its grading system or it is in danger of losing its credibility and its brand will become nearly meaningless.

Watching out for you everyday.

Eli

Brand California may price itself out of the marketplace

The recession economy has played havoc on nearly every business, individual and entity in the United States including states and cities.

California is one of the most hard hit by the economic down-turn. The state's comptroller recently announced that it would not be able to pay tax refunds to consumers this year instead sending out IOUs for repayment sometime in the future. (Can you imagine that?)

The state benefited greatly from skyrocketing real estate values but that money was spent and short-lived. Now with housing prices and values collapsing by over 50% in some parts of the state the resulting real estate taxes can't possible cover the commitments made for that money.

Governator Arnold Schwarzenegger plans to raise taxes and fees everywhere including the state's sales tax which may soon cross the 10% mark in Los Angeles making it the highest in the land. Additionally, Arnold is planning increases in state levies like a higher alcohol tax from 4 cents to nearly 30 per 750ML bottle.

In one case this alcohol levy will change a notable brand "Two-buck Chuck", a wine sold by Trader Joe's from Charles Shaw for under $2.00 and a big favorite in Los Angeles. The tax increase will make it impossible for the brand to stay under $2 completely undermining its brand strategy. Wine industry folks would rather have the tax be part of the increased sales tax so the increase doesn't impact their marketing efforts. Even though the wine will still be a bargain at say $2.29, it's raison d'etre will change somewhat. This is akin to the fact that 99 cents stores are moving to over $1.00 with most items and now calling the stores in some cases 99.9 cents stores. The idea that a 99 cent store goes over the $1 mark markedly undermines the brand in the mind of the consumers even if it is only 1 cent more.

California may end up pricing itself out of the marketplace by making the state too expensive to live in or even visit. I believe for the first time in decades more people are leaving California than moving in...primarily because of high unemployment and the extremely high cost of living.

As dire a circumstance as this difficult economy is, it is important for brands of all kinds to be mindful of how short-term changes in their strategies may forever impact consumer perception and loyalty to those brands. This is not something to be done quickly or impulsively and requires careful thought and planning. It does not appear that California has done this homework or if they have, they haven't come up with a viable solution that does not undermine the brand.

Watching out for you everyday.

Eli

Original iPhone owners hurt a third time; AT&T making phones useless

Opinion leaders, new product adopters who jumped on the Apple iPhone bagwaggon early are being hurt a third time.

First, Apple reduced the price on the iPhone just months after it was launched by nearly half leaving the original buyers very angry. Apple offered a meager $100 credit towards other Apple products but few were satisfied and felt betrayed for being early adopters of the new multi-tasking device.

Second, Apple introduced a second generation iPhone that was far more powerful than the original with its 3G technology for a bargain price. They also stopped selling accessories for the original phone trying to encourage original buyers to upgrade and spend more money.

Third, and just announced, AT&T will be cutting back service on the original iPhone. They will weaken the Edge system to virtually worthless making Internet access almost impossible. This will force many original iPhone owners who haven't already upgraded to do so within the next few months.

This is simply a case of greed by both Apple and AT&T and comes at a time when Americans are cash strapped and the economy in a major recession.

Ideally consumers should boycott Apple products and AT&T and get the media to promote this effort to bring attention to a blatant effort to rip-off original iPhone owners. Additionally, this continues to tell consumers of Apple products NOT to buy early but to sit back and wait since they will be punished for buying early.

At least Apple should exchange the original iPhone for the new 3G phones or heavily discount them to the early adopters as a token of appreciation for their loyalty and support of new products. If they do nothing it will tacitly tell consumers Apple does not care about their customers or reward loyalty.

This is a really bad move in my opinion. Given the economic climate, it would be far better for companies to make efforts to keep consumers loyal rather than alienate them so thoroughly as both Apple and AT&T are now doing.

Watching out for you everyday.

Eli