The Brand Man Speaks

Netflix brand evolving while unexpected competition grows from Redbox

I have been a fan of Netflix since its inception. The idea of ordering online, sitting back and having the movies come to your home and just mailing them back (at your leisure) when you're finished transformed how I watched movies. I hated going back and forth to Blockbuster stores incurring late fees and always wishing I had some DVD at home to watch on that unexpected rainy day or "special' evening.

Many didn't believe Netflix would survive. My mom's investment adviser said not to buy the stock despite my strong marketing intuition about the company and its future. To his surprise, but not mine, Netflix has done extremely well in this recession with its stock price doubling.

Netflix is actively competing with itself by offering more downloadable movies directly from the internet to laptop or home TV and smartly understands technology based entertainment is a rapidly moving target. I have yet to download a movie from them, although I have three free movies that are available to me to do so, because I think watching movies on my laptop is disappointing (size and impact-wise) and I have not bought the requisite equipment to send downloable movies directly to my big flat-screen TV....yet.

Despite their success, Netflix has strong competition from an unlikely source, Redbox. Redbox is a vending machine DVD rental business that was started by McDonald's during a time when McDonald's like Starbucks was looking for new revenue streams from ideas inconsistent with their core brands. McDonald's had some success with Redbox but sold the concept to Coinstar this past year after they started investing in the business in 2005.

I understand why Redbox can be successful. $1 rentals of recent releases sold like buying Coke from a vending machine in thousands of locations. However, it doesn't work for me. I hate the idea of having to take the DVD back to some place especially if I am not going that way and find dropping the DVD in the mail so easy and effortless. But I am obviously increasingly part of the minority. Redbox's old fashioned delivery system is growing fast even as movie downloads (on the other side of the technology spectrum) are also developing steam. I suspect I will go the download path far sooner than renting from a Redbox, but that's just me.

Watching out for you everyday.

Eli

Apple Launches new iPhone 3GS today but not without problems

Despite best efforts based on previous iPhone launches where Apple was ill-prepared, Apple faced few but in some cases major meltdowns today.

One horrific example took place at Apple's Lincoln Rd. Miami Beach location at which computer systems died within minutes of serving the first customer around 6:AM, 15 minutes earlier than planned. The early opening was to be a surprise to those who waited in lines from last evening or very early this morning.

The Miami Beach location was unable to take care of any of the people waiting for phones despite a long line of buyers many of whom had preregistered online to buy the phone being assured they would only need a few minutes to set up and pay for the phone and be on their way.

The wait was over three and half hours for many, more for those on line without pre-reserved phone reservations. Management at the local store miss handled their problem during the first two hours by failing to communicate honestly with those waiting. The store was the only one in Florida, possibly the US experiencing major technical difficulties but store personnel initially tried to explain the delay as system wide until people phoning into their friends in line told a different story. Apple Miami Beach ended up with egg on its face for its cover-up.

Even the local AT&T store three blocks away had no problems and no waiting time for the new phone however die hard Apple fans were afraid to leave the line in fear that the information about AT&T's South Beach store would prove faulty.

What still is clear is that despite all the problems Apple may encounter, it has built a brand with great loyalty to the point its fans will be made miserable and unhappy yet remain committed to the brand and its products.

Watching out for you everyday.

Eli

IBM becoming UNAMERICAN brand?

Reports indicate that IBM has offered employees who are likely to be laid off shortly by Big Blue the "opportunity" to move to India and become part of the company's out-sourced work groups. IBM will help with relocation. (How nice of them...)

Various organizations have condemned this news...although IBM will not confirm it but does acknowledge they will be laying off workers shortly.

Imagine, IBM once thought to be a stalwart American brand thinks offering thousands of employees the opportunity to leave the US to stay employed is a good thing....I haven't heard anything so ANTI-AMERICAN in a long time.

Maybe if IBM's top executives would take a pay cut many of these folks could not only keep their jobs but also keep them here in the United States.

Let's hope this doesn't really materialize as a result of pressure from Americans and our new President.

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

Toshiba's "green" recycling effort is flawed

In an effort to help consumers dispose and recycle old electronics safely Toshiba has introduced a program that actually pays consumers for this effort.

On the surface the electronics brand is offering consumers an important opportunity that is also profitable while helping to establish Toshiba as an important environment-friendly brand.

After reading about the program in various media sources I went to the company's website to see how easy and green the process would be.

The good news is one can dispose/recycle a large variety of electronics from old DVD players and laptops to cell phones. The process to determine the value of your product is also easy although not all items you wish to get rid of will bring you cash back. Mostly items that still have some use or interest among consumers.

Once you have created your collection of returnables, you can set up your account and print postage-paid labels to use to send back your items. Upon receipt (and confirmation you sent back what you said you did and in the condition specified) you will get paid.

The problem and conflict with being truly "green"? Each item must be packaged (with very explicit instructions on how to do this) separately even if the mailing address is the same. You will not be able to bundle your items (say a bunch of your family's old cell phones) in one box to save on packaging waste. You must package each item in a separate container with its specific return information inside and on the outside of the box. Each must have its own label--which you print at home (more waste).

I think Toshiba's idea to encourage recycling of old electronics is a very good one and good for their brand but I do believe they need to revisit the return process and come up with a more environmentally friendly and efficient way to handle it.

Watching out for you everyday.

Eli

Apple leverages iPod brand identity components to new levels

Apple is noted for its uniquely designed and innovative products. Now they are getting notice for pushing trademark protection of all elements of their brand identity to new levels.

The introduction of the iPod line of products changed the way people all over the world listened to music. The streamlined design of the various iPod units were as important as the product itself.

That is why Apple has gone to great lengths to protect not only the product line's name but also the product's distinctive shape with two and three dimensional graphic design elements used to promote the product.

The advertising campaign--the dancing silhouette--- used to promote the product line was an innovation as well but it also served to highlight the uniquely shaped device. Apple was very careful and methodical in its approach to protecting its cool product by also creating support graphics for iPod related components made by other vendors and applying and receiving trademark protection for those graphics as well.

In total three graphic designs have become protected. The two-dimensional iPod line art, a two-dimensional iPod line art accompanied by the words, "Made for iPod", and a three-dimensional drawing of the iPod.

What is important is the trademark protection can remain in place forever versus the historical use of design patents which only last a set number of years. With the iPod shape trademark Apple can keep its competition in the M3 player segment at bay more easily.

Look for more companies to follow Apple's trailblazing path in this legal-branding arena.

Watching out for you everyday.

Eli

 

New TV series "Scarlet" a hoax; Marketing gimic by LG electronics

The flat screen television business has become intensely competitive with manufacturers like Sony, Toshiba, Pioneer, Samsung and LG fighting bitter battles to increase marketshare.

Price has become the primary purchase decision driver among consumers who find it difficult to assess the much ballyhooed point of technical difference between products and brands.

Most brands are relying on their existing reputations and image to [hopefully] entice consumers to their products.

To break away from the fray and attempt to distinguish itself from all other brands, LG took a long shot. The South Korean electronics company created a phony new television series trailer for a TV pilot called "Scarlett". The shows action-packed promotional footage made it seem like the series would be a version of the poorly received re-make of the Bionic Woman.

In reality the trailer is a TV commercial teaser for what will be a new line of flat screen televisions to be called "Scarlett"; the sets will be distinguished by having red back panels.

LG and its agency, Agency.com, carried out the hoax in grand style. They had private screening parties and had the stars appear at important Hollywood red-carpets and at New York fashion shows. They even got IMDb, the entertainment industry internet movie and tv database site to list the show as an upcoming new series.

Now the details are out--the hoax is uncovered--- and the question is will the game work?

Certainly, the effort obtained tons of free PR for LG whose marketing budgets pale by comparison with rivals Sony and Samsung. But will the PR make any difference and translate into sales?

The brand LG will get some heightened attention for sure but ultimately price will dictate purchase unless some brand comes up with something demonstrable and meaningful to consumers to entice them to pay a premium for a given brand. Further, there is information that consumers were searching the internet looking for more details about the show and many may be greatly angered by the hoax turning it into a backlash against the LG brand.

Admittedly, I saw the ads for Scarlett was briefly intrigued and drawn into the hoax. However, upon finding out it was a LG PR stunt I wasn't disappointed and I am not anymore inclined to buy an LG over a Sony....I already own one of each..... and I made my decisions strictly on price.

Watching out for you everyday.

Eli

Grammy Awards 2008 and CBS discriminate against West Coast viewers

In what I believe is the ultimate irony in the entertainment industry, West Coast television viewers routinely, except for the Oscars, see award events three hours after they air live. Although this has been occurring for years the use of interactive programming is changing the playing field....for the worse.

In tonight's "live"  50th Anniversary Grammy Awards viewers were asked to vote to select one of three classical musicians to play later on in the evening with the Foo Fighters. Unfortunately, West Coast viewers were informed with an on-screen message that "voting is closed" because what they were watching was pre-recorded. Nothing says "you're unimportant" than being told you don't have a vote because you live closer to the Pacific than the Atlantic.

As all traditional media tries to find ways to incorporate new technology and the internet into their programming to reach younger audiences, viewer involved activities that determine the course of a show are becoming more and more popular. American Idol thrives on viewer participation. However, because the show counts votes from all over the country before announcing a decision on a following night, all who wish to participate can.

The exclusion of West Coast viewers tonight should galvanize the left coast into demanding that all networks that air award shows show them live in all time zones. Or a possible alternative option for viewers who subscribe to DirecTV and other cable-like services would be to be allowed to access East Coast feeds during these events. I have been told the reason this doesn't happen is that advertisers who pay to reach West Coast viewers would object to this fact. (It's always about money, isn't it?)

I think it is time for a change as many politicians are espousing.....stop discriminating against West Coast viewers and show us some love!--that's what John Lennon would have wanted.

Watching out for you everyday.

Eli

Cingular Wireless brand: dead or alive?

An avid reader of the Brand Man Speaks has emailed me with an interesting question: Is the Cingular Wireless brand dead or alive? After an extended multi-year effort to change the wireless brand Cingular to AT&T the company is running ads on the web (and possibly elsewhere) that seem to indicate the Cingular brand is still alive and well and being promoted despite information to the contrary.

Case in point. This web ad found this past week on MSNBC.com

The ad promotes Cingular's value for making international calls in the center of the ad, but then seemingly contradicts this message with the more frequently seen Cingular now AT&T message at the bottom. Confusing and not good for the overall re-branding effort. This is especially true given the audience AT& T (or Cingular?) is trying to reach on MSNBC.com...a sophisticated, business and travel oriented consumer.

It is small mistakes like this that can undermine major re-branding programs. Yes, you must sweat the details to be successful.

Watching out for you everyday.

Eli

Holiday Shopping Season likely to be worst in recent years-by Eli

With the consumer confidence index dropping to its lowest level in two years, inflation fears combined with indications of a pending recession on the horizon...the 2007/8 holiday shopping season is poised to be one of the worst in recent years.

Gas prices are rising rapidly daily, housing sales and prices are dropping, home heating prices are expected to skyrocket shortly leaving consumers very uncertain about their financial future.

Preliminary consumer feedback shows a mindset focused on buying fewer items but high quality ones that last.

Electronics likely will still be an important part of this year's better selling products' list with a shift towards computers from flat screen televisions which were strong last season. The new DVD player technology at discounted prices will also give consumers incentive to upgrade this season. Low-cost in-home entertainment will become increasingly important as the recession develops and "going out" and travelling will be greatly reduced.

At the same time consumers will see prices for everyday commodity consumer products from companies like P&G going up. P&G just announced plans to raise prices on soap, cosmetics, diapers and toilet paper to address increasing raw material costs. Expect other consumer product companies to follow suit shortly.

The picture isn't a good one. Brace yourselves.

Watching out for you everyday.

Eli