The Brand Man Speaks

Wall Street Journal declares "Branding" is more important than ever

In a recent WSJ article entitled, "The Wrap: consumers do spend on innovative goods" the newspaper declares that consumer spending is not dead in this recession, rather it is becoming more selective as money is tight and waste cannot continue in this new paradigm.

I was surprised by this revelation, as it is not really anything new. Consumers have always made selections of goods based on what fulfills their needs, desires and emotions.

What seems to have changed is that consumer products' companies are waking up to the fact that just creating tons of "me-too" products that do not provide meaningful reasons for being in consumers' minds no longer works. These companies got lazy finding the robust economy would absorb many useless products and services that did not provide any differentiation from what was already available.

Differentiation and uniqueness along with tapping into consumers' emotional needs has always been key to successful products and services. Many of us call this "Branding": creating a core reason for being for any product. Too many companies cut back on R and D in the last recession and failed to bring to market anything very interesting and innovative to consumers. Sony Electronics is a prime example of this. A company once known for innovation, it became almost an afterthought in the past decade.

A few companies have always understood the need for meaningful differentiation. Apple tops the list in my mind and in many ways they have replaced Sony as the master electronics innovator. Actually, left them in the dust like the endless line of useless jets airlines no longer use that sit in the desert somewhere in the US west.

Contrary to the WSJ piece, we are not entering a new era of marketing. Rather, we are experiencing a re-awakening of marketers brains to the fact that "old school" marketing is still important...more than important...mandatory for success in the world of consumer products. I am relieved to hear this news. Faux branding is dead. Real branding is about to take its rightful place at the top of the marketing world again. Consumers rejoice.

Watching out for you everyday.

Eli

Abercrombie and Fitch CEO, Jeffries, the most OVERPAID exec in survey

Teen, young adult retailer Abercrombie and Fitch had been one of America's most successful apparel companies. Despite premium prices, its targets...young men and women (who wanted to aspire to the brand's young, good looking and sexy image) bought its clothing in large numbers. Even older men who kept fit were avid buyers of A and F.

Then the recession hit and it hit A and F big time. The publicly traded company refused to discount its products or have big periodic sales to drive business. Instead, the brand (under its CEO Michael Jeffries) insisted in could withstand the weak economy (and a major drop in sales and profits) by staying the course with its premium pricing and lifestyle positioning.

I generally have been a proponent of consistent branding and NOT falling into the hole of going the discount pricing route to generate traffic and business---it is hard to recover from that move. However, this recession is unlike any we have seen before and with any significant paradigm shift, long held beliefs and business strategies get tested. Evolution of one's brand strategy is the appropriate course these days.

It does appear in today's new economy ( and it will continue I believe even with a recovery) consumers are demanding value and a strategically sound pricing plan (whether its Prada or Levi's or A and F) has to become a part of any brand strategy.

A and F's refusal to alter their business model seems to be causing the brand some major harm. It is no longer the darling of its prime target...on a recent shopping trip across the US, I found A an F stores consistently empty while other competitors for the young market were busy like H and M and Forever 21.

What is amazing is that CEO Michael Jeffries was paid in excess of $71 Million in total compensation last year despite the company's terrible financial performance...he was paid higher than virtually all of his industry peers again despite the brand's significantly declining sales and profits. Why? I'm not sure, but The Corporate Library, a research entity that tracks CEO compensation, has identified Mr. Jeffries as the one of the MOST overpaid CEOs.

Mind you this is NOT a privately held company but a publicly traded one...and one would think and hope that stockholders and Board members would significantly adjust Mr. Jeffries compensation given the company's very poor performance. If I was a stockholder in this company I would be screaming at the board...to take some of his compensation and plow it back into the company's marketing effort. I also find it hard to believe that ethically and morally Mr. Jeffries can justify his compensation. Where are the CEO's who do the right thing and voluntarily reduce their compensation when their companies are doing poorly? I wonder how may employees have lost their jobs and A and F because of the weak economy while Mr. Jeffries still gets paid top dollar?

Watching out for you everyday.

Eli

Corporate Group Travel down dramatically; Will the word "Resort" be dropped from hospitality brand names?

The economy has had an enormous negative impact on bookings at hotels and resorts throughout the US. Especially hard hit have been hotels that cater to corporate groups as business travel has been reduced dramatically across the board.

A recent report indicates this may not be the only or primary reason that hotels that live off corporate business are sufferings so much. Blame the AIG fiasco last year at the St. Regis Hotel in Dana Point, CA. While banks were being bailed out to the tune of billions, AIG executives were partying like it was "1999" at the St. Regis, running up a nearly $500,000 bill. Needless to say the negative publicity this event generated was unprecedented in corporate travel circles.

Since that time the St. Regis Hotel and Resort filed bankruptcy as bookings dropped to such low levels that the facility could not pay its creditors. But the mess hasn't just impacted the St. Regis.

It turns out the word "Resort" in a hotel's brand name or in the parent company's name may now be a kiss of death to that hospitality operation. Apparently, due to the AIG backlash, corporate travel groups are told to avoid bookings at ANY facility that uses the name "Resort" to avoid the possibility of communicating corporate partying vs. real work.

This has hit the top end hotels mostly but even properties with few frills are feeling the impact if their corporate parent's name includes the "Resort" word.

Hotels in South Florida, which has been a popular US destination for corporate retreats and meetings in the past, are complaining heavily that because so many of them are called resorts or affiliated with resorts they are no longer being considered by corporate travel planners.

Will this lead to the dropping of the word "Resorts" from hotel brands? It could if this AIG backlash continues for much longer. One travel planner indicated he was told he couldn't book any meetings with an organization that had the word "resort"  in its brand name--- indefinitely. Wow! If that is true for lots of other travel planners that is very bad news for "resorts" and the hospitality industry in general.

Watching out for you everyday.

Eli

Lack of Civility cuts across occupation, race and political affiliation...is the end of the empire near?

I just felt compelled to write a short piece on what appears to me and many others to be an rapidly approaching end of any type of civility in this country....maybe the world....that reminds one of the decline of the Roman Empire....

Between Serena's  unsportsmanlike/unladylike behavior at the US Open that cost her the match, Kanye West's selfish and inflated ego stage stealing from Taylor Swift at the MTV Video Awards to Congressman Joe Wilson's outrageous outburst during a Presidential speech to congress, ("You lie")....what has become of us, our cultural...more importantly our future? We are in deep trouble and it doesn't look too promising for things to get better.

Watching out for you everyday.

Eli

Starbucks testing new retail concept without Starbucks' brand name

The recession has impacted many industries and businesses that might historically not have been hurt by a weakened economy. Starbucks which re-defined an entire industry around coffee has seen sales and profits plummet unexpectedly over the past two years along with much stiffer competition from fast food brands like McDonald's and Dunkin' Donuts.

In addition, Starbucks has made many strategic missteps even before the recession in an effort to expand their business beyond coffee and the local gathering spot strategy. Music, movies, casual dining food are among the various "products" the brand has tried to add to its offerings....with mixed results. Most importantly, some of these elements worked to undermine the core brand strategy adding more problems beyond the recession's impact.

Now comes word that Starbucks is exploring new retail ideas but without the Starbucks name attached. Some industry experts think this is a mistake and another strategic blunder. I do not agree.

I have recommended to clients many times over the years the idea of establishing a new sub-brand to introduce ideas and concepts that might undermine the core brand and give an entity the opportunity to reach different/new audiences. The new Starbucks concept is called 15th Avenue Coffee and Tea and will serve food and wine and beer beyond the coffee offerings. 15th Avenue will not have any Starbucks IDs on-site and will appear to be a completely independent concept giving even the most ardent anti-Starbucks consumer an opportunity to experience this brand's new ideas.

Starbucks can use its existing marketing muscle and savvy to successfully launch the new brand quickly if the idea is well received. The initial store is in the home market of Seattle replacing an existing Starbucks location. The company says additional locations will be in new real estate and not re-furbished existing Starbucks.

Success will depend on the actual concept itself, its appeal to consumers and uniqueness as well as how well the concept is executed in its test form.

I look forward to seeing this concept first hand soon.

Watching out for you everyday.

Eli

Sears Tower to be called Willis Tower; will brand change undermine iconic skyscraper?

When Chicago became home to the tallest building in the world (now eclipsed by buildings in Asia) it was an important milestone for the windy city giving it great cache and bragging rights over New York. Retail giant Sears was the building's primary tenant and since the 70s when the huge building was opened it instantly became a notable US landmark: The Sears Tower.

Now the building's owners are changing its name to Willis Tower to reflect its new largest tenant, Willis Insurance out of London. And a great debate has ensued.

Ballparks, stadiums and notable buildings make a bundle when they sell rights to name their structures to high paying sponsors or building tenants. Names change often in this world as one company's fortunes decline another takes up the helm with new naming rights and signage.

In the case of the Sears Tower, the brand ID for this impressive structure that just opened an observation deck of glass hanging off the top of the building, is key to its stature. It has been called the Sears Tower since day one and changing it now seems a bad move. The Sears Tower is more than a sponsorship or important tenant name (Sears has NOT been a tenant for over a decade or more). It is a name tied to the building itself; its Brand ID. Sears is still based in the Chicago area and although not the major retailer of the past, it still is a important retail player US wide and closely tied to its Chicago area roots.

Additionally, the name Willis just seems flat doesn't roll off the tongue and somehow in my mind will diminish the iconic nature of the "Sears" Tower.

I have read the name change is a done deal but does that mean it is a good idea when it comes to tourists and Chicago's brand? It will take a long time for people to "forget" the Sears Tower brand and ask to be taken to the Willis Tower. Further, naming the building after an obscure English insurance company no one in the US knows about or cares about also seems foolhardy and anti-American, no?

Fans of the Sears Tower are taking their case to the world via Facebook and other social media to try to generate enough negative support for the new name to try to force the building's owners to not change the name. They also are seeking landmark status for the building and its name (although the building is not old enough for such a status as those things go), hoping a government decree will make it impossible for Sears to be replaced with Willis.

Some have said changing the name of the Sears Tower would be like changing the name of the Empire State Building or Eiffel Tower...it just wouldn't be done no matter how much money was put up for the rights. What do you think?

Watching out for you everyday.

Eli

Tide testing Tide basic; less expensive version of original brand to offset sales loss

P & G, the most well known consumer products company and one of the world's largest, producer of brands like Tide and Crest is facing a major challenge. After strategically going up-market during robust times with many of their brands, the prolonged weakened economy is hurting the bottom line big time.

Tide, a premium priced laundry detergent, has seen some of the biggest declines in sales in anyone's memory. So much so the brand is testing a lower priced Tide called Tide Basic in powder form. The idea? To keep the franchise's market-share and loyal consumers as best as possible without losing too many to other price oriented brands.

The problem? The Tide brand was built on the premise it was a superior performing product, one that was used by grandmothers and passed down to mothers and their daughters. It has had strong emotional loyalty unlike any other laundry detergent brand. However, in this new economy consumer buying behavior is changing dramatically in ways most consumer product companies are not accustomed to. Price is the factor even for affluent consumers and product performance and efficacy seem to be less important. The paradigm shift has not been completed making it even harder to gage what steps are best to keep consumers loyal and which to avoid that might cause damage that cannot be undone when the economy improves. Thus, we are in uncharted territory.

With Tide Basic P & G definitely runs the risk of losing its loyalists who have bought the liquid original brand for years. The lower priced brand that has reduced some of the benefits of the original can both undermine the original more so than has already occurred and, more importantly, question the entire brand premise. If you can buy a cheaper version and it is almost as good why then ever buy the original?

When price becomes the brand purchase driver and all other brand elements are not sustained or emphasized the brand becomes a commodity brand and its competition becomes broader and more dangerous.

Let's see how the test does in various cities and we shall revisit this discussion in a number of months. It may prove to be a noteworthy case-study of how to successfully or not successfully handle the new consuming world we have entered.

Watching out for you everyday.

Eli

Michael Jackson: a small personal memory

As the world prepares to mourn and celebrate the death of musical talent extraordinaire, Michael Jackson, millions of people have started to share how he impacted their lives and the lives of a generation. Me included. Not since Elvis does the world have an entertainment legacy brand that will be much greater after death than during life...as long as it is managed well, (let's hope, since so many people have had their hands in his life I imagine more will want a piece of him in death).

I grew up with the gloved-one's music finding it irresistible and mesmerizing...finding it impossible not to learn nearly all the words while marveling at his dance skills...(which I sadly tried to but unsuccessfully mimic). I along with millions got to know Michael from a far until I had a short very personal experience a few years back.

Before Lionel Richie became a client, I had the opportunity to meet him for the first time with some friends over brunch at the celeb packed restaurant The Ivy. Lionel arrived very late to our small gathering on the cell phone intently listening to "someone" at great length. Even after Lionel sat down with us...some 15 minutes later...we still hadn't been formally introduced because he was still on the phone.

Noticing our growing discomfort with what appeared to be the "rudeness" of staying on the phone as food arrived, Lionel put the phone on mute and handled it towards me...but saying first..."it's Michael he wants my advice and I have to listen". Michael? I inquired. Michael Jackson he responded. And with that Lionel handed me the phone for a very brief time. I listened as the King of Pop sadly and soulfully expressed his love for people and how he was misunderstood. This was the time of his first court case for child molestation and those close to Michael like Lionel were making themselves available to be there for him in his time of need....as many wouldn't listen to him as the world began to shift their opinion of the K.O.P. from honor and worship to disdain and disgust.

Lionel, who had co-written and produced "We are the World" the hugely successful charity song with Michael,  was very worried about him self-destructing at that time, understandably. There were so many people in his life trying to tell him what to do, we all talked about how difficult it might be for him to get out of this situation unscathed. He settled out of court with his accuser but public opinion was not favorable.

After that time Michael seemed to become a Howard Hughes type and the world became further confused by his behaviors and his popularity waned. Additional litigation and money woes didn't help his image either.

But alas on the eve of his highly touted come-back tour he leaves us for good. Now, despite his many behavioral and money issues, which will never go completely away, the world has shifted its opinion and now is taking the time to celebrate the genius that he was and the impact his work has had on the world for the past 50 years.

Thank you to Lionel Richie for giving me a memory like no other.

Watching out for you everyday.

Eli

Lexus dumps brand's signature voice over talent; picked up by Mitsubishi

In a surprise branding move, Lexus has dumped its voice over pitchman of 20 years in favor of younger talent. Although changing voice overs is usually not a big deal in television advertising, the actor who launched the Lexus brand and its "relentless pursuit of perfection" slogan had become a key element of the brand and its identity.

James Sloyan's soothing, elegant, but firm voice became as recognizable as the Lexus car itself. You didn't have to see the ad to know it was for Lexus.

Then imagine my surprise the other day when I heard that same famous voice saying the words, "Lancer by Mitsubishi". I was incredulous. How could that be? I wondered if Sloyan wanted too much money during contract renewals or someone at Lexus had lost their mind? I even wondered if the voice for the Mitsubishi ad was a close copy and not the real thing, but after repeated hearings it was clearly Sloyan's.

Building instantly recognizable brands that transcend the actual media in which they are promoted is not an easy task to achieve and Lexus had made that happen.

So what gives here?

Here's what I learned today from an online automotive industry forum.

February 10, 2009 - A fresh voice narrates the latest commercials for Lexus. Continuing on that path of "The Pursuit of Perfection", Lexus has made that change, most recently with the latest blitz of new commercials for the 2010 RX. There is a new voice in town and like the previous voice over actor, his name happens to be James too.

Who is this new James you may ask? His name is James Remar. Some of you may know him as one of Samantha Jones (Kim Cattrall) boyfriends on the popular HBO show, Sex and the City. He was also casted in movies such as 48 Hours, The Phantom and also 2 Fast 2 Furious. Remar has narrated the latest commercial ads for the new RX spots. He will also be the voice for future Lexus ads.

For 20 years since the inception of Lexus, we have seen, heard and lived the many "Relentless" and "Passionate" evolutions featuring that distinct voice. That distinct voice belongs to actor James Sloyan. Although we will miss the original Lexus voice, we will never forget those original Lexus benchmark commercials and the regal narration that Sloyan established for the industry. Think LS400 commercials and the infamous champagne glass smoothness test. Thank you Mr. Sloyan for all the years of Lexus pursuits.

"Thank you Mr. Sloyan for all the years of Lexus pursuits"?......wait a minute. This might have been a major mistake for the Lexus brand and a smart move for Mitsubishi. Now, the Mitsu brand gets instant attention for the confusion and increases  awareness of its new sportier Lancer model. Yet, Lexus loses a valuable asset especially since this automaker isn't about radical changes it is about evolutionary improvements to a great automobile...staying the course...consistently delivering...so why would one risk undermining the brand strategy by dumping a brand component as golden as the product itself?

I plan to investigate further, but believe this was not a smart branding move.

Watching out for you everyday.

Eli

WalMart trying (again) to go upscale with offerings to keep more affluent consumers

WalMart has been one of the few bright spots in the retail industry over the past two years since the recession began. Its strong value proposition has reinforced its relationship with lower income Americans and has brought in more middle class consumers and some upper middle class folks as well. Everyone seems to be looking for a bargain or at least the lowest price on the items they need for everyday living.

Empirical evidence does show that more middle income consumers are willing to go to WalMart instead of Target and the other higher image stores they frequented in the past. The question remains can WalMart again try to win over these more affluent consumers for the long term and if they can, do they risk once again alienating their core customer?

Not more than a few years ago, WalMart in more robust times, was upgrading their stores, bringing in higher margin goods and "better" brand names. The plan failed simply because the more affluent consumer didn't become a regular consumer and the core customer felt that WalMart had forgotten them raised prices everywhere and drove these people to dollar stores.

WalMart, after a number of reporting periods with declining sales when others were doing well, figured it out...they did NOT belong in the more affluent consumer chase. They refocused their marketing and ad efforts back at savings and value and business began to boom again.

Along comes the recession and WalMart is perfectly positioned to benefit...and has...from this difficult economic environment. Yes, not unexpectedly given the extent of this near depression economy, more middle class shoppers (who now see themselves a lower middle income) have turned to WalMart. Some upper middle class shoppers (who now see themselves as more middle class) have also sought out savings at the big W. WalMart is benefiting greatly.

Now comes word that the retail giant is not satisfied and is hell-bent on figuring out a way to keep the higher income more status conscious shopper long term. They are already back bringing in higher margin goods, better brands and more "service". The stores are getting major overalls to look more like Targets (again). Will it work this time?

Yes and No.

To some extent the answer is YES because we have seen a significant buying behavioral change among middle and upper middle income consumers. They are giving up their need for status consumption (they can't afford it) and going for the basics with an occasional indulgence. They are acting more like lower income consumers than ever before. I do see a lot of these people continuing to shop for bargains and value over image and prestige long term. This recession has had a profound effect on millions of Americans. They like saving money and the stigma of shopping at WalMart is fading because saving money is more important than where something is purchased.

Will these consumers spend more at WalMart? They already are buying more than commodity items there. But, there does remain a major risk. Going too upscale with goods and brands may again backfire because consumers are in general doing without stuff they do not need regardless of store. Thus, WalMart could get stuck with inventory they shouldn't have added in the first place. I also believe some portion of the upper middle income consumer who now is willing to shop at WalMart will choose to go elsewhere when conditions improve why?

Simple. People still have a tendency to gravitate to people like themselves or those of a higher income level (if they can get into that club). I do not see that psychological element changing long term. Shopping at WalMart is still a stigma for many not just because it is WalMart but because of the fact that it still attracts the kind of lower income folks upper middle income people really rather not shop around.

In research my firm has conducted, we found upper middle income consumers still wary of unemployed young people loitering around the WalMart stores, especially in their parking lots. They find the stores unattractive (even the upgraded ones) and the service extremely poor (despite efforts to improve it). Finally, even though buying cheap is chic, upper middle income consumers still need to feel good about where they shop and indications are most will abandon WalMart when the economy turns upwards or sooner if other more image oriented retailers lure them back with better pricing and values.

Research also shows that lower income shoppers are having a harder time making ends meet at all and feel that WalMart is still charging more than they should for basics. Further, as before, when lower income shopper see (empirical evidence) more well-heeled folks in "their" store, they become suspicious that prices are going up further and feel maybe it's time to go elsewhere for better prices. Finally, research shows that prices are good at WalMart but many times not the lowest. Surprisingly, more upscale retailers and sundry/drug stores are competing with WalMart prices and in cases beating them. Consumers are more savvy than ever and will seek out the "best" prices. WalMart is trying to deal with this new competition by advertising they are constantly researching other stores prices to "ensure" the best prices in their stores....they clearly are aware their value positioning is being challenged by a whole new set of competitors.

Interest times. Interesting stuff. I will continue to monitor the WalMart strategy shift and report back as new information and findings surface. Until then....

Watching out for you everyday.

Eli