Monday, November 27, 2006

New Strategies on Brand Building - Al & Laura Ries 3 of 4

34. Given that all cameras are going digital and PCs are turning digital, if one looks at Kodak and Kodak is associated with film, in order to save the company one could evaluate keeping Kodak as a film brand and launch a second brand for the digital market. To save the brand one could look at moving the brand name to the digital market. From a marketing perspective it means moving the name from one point in the brain to another which is very difficult. Kodak is associated with film and not the digital market even though it invented digital cameras. Kodak entered the digital market with the brand name Kodak and lost its leadership. One can claim the caterpillar to be a flying caterpillar but actually they are 2 separate entities. Barnes & Noble is the largest bookstore in America. B&N tried to move the name on to the Internet and failed. Amazon a new company succeeded.

35. Brands are built in a blaze of publicity or PR. Botox was built totally on PR over a period of 9 years. It launched its first ad campaign 9 years after its launch. Viagra was built on PR which was followed by an ad plan. PR gets the idea into the mind. It is the nail. Advertising entrenches the idea in the mind. It is like a hammer. Volkswagen was launched in 1950. It was PR that built up the brand. It was only in 1960 that the ad campaign was launched. The ad campaign helped it to reach the 500 mn. unit sale figure. Harry Potter was built by PR. Cheesecake factory is a restaurant which is the no. 1 restaurant chain in America. It never advertised in 28 years.

36. If one wants to make one’s company famous then one can make one’s CEO famous. Jeff Bezos, Steve Ballmer, Michael Dell, Herb Kellegher, Linus Torvalds. Trump is the King of PR.

37. Advertising has little credibility in the mind. What you say about yourself has little credibility. The percentage who think advertising is honest is going down. PR has credibility in the context of ‘Third Party Effect’. Oprah Winfrey picked 48 books. Each one of them made it to the NYT list. There is a book titled ‘East of Eden’ - John Steinbeck. It had sold 50,000 books but then Oprah winfrey picked it and its sales touched 1 mn. copies. What we need is PR oriented advertising. PR establishes credibility of the brand. Advertising reaffirms the brand’s credibility. Advertising Agencies focus on creativity. This is wrong. You can’t have advertising trying to make advertising famous. What advertising industry believes in is PR not advertising. They seem to be interested only in awards.

38. Advertising can be effective if message is right. Find out what’s in the mind and reinforce the idea in the mind. Any advertising that touches an idea or concept that is already embedded in the prospect’s mind is the right message. Especially if that idea or concept contains a motivating reason to buy the brand.

39. Advertising is like a good joke. The best jokes don’t communicate, they just take advantage of what’s already in the mind.

40. Law of Advertising. It maintains your brand. Many established brands don’t spend enough on advertising. Can’t rely on PR forever. The belief can’t be that once a brand is established then its market share is mine forever. So let’s spend our ad dollars on line extensions, new flavours, new market segments. Nothing decays as surely as a brand unsupported by advertising.

41. Law of the Word. Volvo looks at ‘safety’. It invests in ‘safety’. But then it lost its focus and came out with a convertible. Its sales dipped. Owning a word leads to profits. Brands are built in the mind. To find that word and own it one has to sacrifice and give up the rest of the market and focus. Nokia gave up the rest and focused on the cellphone. Movado is a museum watch. Zippo is a wind-proof lighter. Among B-Schools, Northwestern is known for Marketing, Chicago for Quantitative Analysis, Harvard for Management.

Tuesday, November 21, 2006

New Strategies on Brand Building - Al & Laura Ries 2 of 4

16. Today all the hype is about convergence. Nicholas Negroponte predicted convergence. The Wall Street Journal on July 14, 1993 carried the following report : “Shock is a common feeling these days among leaders of five of the world’s biggest industries : computing, communications, consumer electronics, entertainment and publishing. Under a common technological lash – the increasing ability to cheaply convey huge chunks of video, sound, graphics and text in digital form – they are transforming and converging.”

17. Companies never give up. The first interactive TV was launched in 1977. It failed to take off. The first Web TV was launched in 1997. It didn’t take off. Microsoft is now working on a Media center TV. Every time a new technology arrives the shout for convergence goes up.

18. Apple iPod sold 14 mn pcs. And with all the hype around smart phones which are equipped with 3-G networks and have a game player and a TV and a credit card and so on have not been such a hit. ‘Trea’ the brand of such a convergence device has sold just 602,000 pcs.

19. The average life of a cell phone is 18 months. Will one sell off a smart phone so soon ? In a scenario of divergence there will be people who will opt to pay $5000 for a smart phone inasmuch as there will be people who will want a simple cell phone .

20. TVs are getting bigger and PCs are getting smaller and heavier. But everybody is running around trying to combine things. McDonald’s has gone to the extent of opening a hamburgher hotel. As if people who stay in a hotel are interested only in eating hamburghers.

21. Convergence was invented by the Swiss army knife. Convergence can work where convenience is an issue. For instance having a convenience store next to a gas station. It will not take over the grocery market but satisfies the convenience value.

22. George Santayana stated that ‘those who cannot remember the past are condemned to repeat it.’ Sears Roebuck had a catalogue which had convergence products listed in it and they did not take off. One of them was a Food processor and Pleasure vibrator. In sports they have tried to have the same stadium work as a Football stadium and a Baseball stadium. It is good at neither. Single sports stadiums have prospered.

23. Bad ideas never die. Combination of an airplane and a car. Or a combination of a boat and an automobile. The resultant amphicar drives like a boat and floats like a car. It does neither well. A flying car is too light for the road and too heavy for the sky. There are a variety of cats and dogs but no ‘catdog’.

24. Law of Expansion. If a brand name is put on everything it weakens the brand name. Chevrolet is a large, small, cheap, expensive, car or truck. It is everything and yet nothing. Volkswagen, after tasting success through its Beetle, expanded to think big, think fast, think smart and think ahead and came out with different types of cars. It failed. Mercedes moved down the market. And expanded into bringing out a cheaper version, a sports car, mini van, mini truck, mountain bike, and a baby Benz. Initially it sold well but in the long run it has destroyed the brand.

25. Saturn was the only brand with one model, one price. It was very successful. In ’94 it was the no.1 car in terms of vehicles sold per dealer. Then it decided to expand and go upscale. In 2004 it was in 12th position in terms of number of vehicles sold per dealer. One doesn’t buy the same brand of car. When one is young and single then one buys a Saturn. When one gets promoted possibly a BMW. After marriage buy a Volvo and when one gets divorced a Ferrari. One moves according to the ladder of life.

26. Law of Contraction. When a brand focuses it succeeds. Howard Schultz’s Starbucks sells only coffee. Willie’s coffee shop sold everything. Starbucks has succeeded while nobody hears of Willie’s. Narrow the focus. Subway sells only one type of sandwich viz. the submarine sandwich. The conventional way of growing a store is to sell as many things as possible. But Toy r Us sells only toys and is hugely successful. With a few kilowatts of power but converted into a laser beam through narrow focusing can achieve immense power. Rolex means an expensive watch. Zara means just-in-time fashion.

27. The secret of success is if you want to be rich, you have to do what rich people did before they became rich. If you want to have a successful company, you have to do what successful company leaders did before they became successful. Don’t look at them now when they have become successful and do what they are doing now. Do what they did before becoming successful. Emery freight was into everything. Fred Smith narrowed the focus - small packages overnight. The fastest growing city in U.S.A with only one industry is Las Vegas.

28. Law of Opposites. Need to be the opposite of what got in the mind first. Instead of trying do what the leader does and do it better try to do it differently. Red Bull was the first energy drink. Everybody copied Red Bull. There were 37 different brands of energy drinks – all in 8.30 oz. cans. ‘Monster’ came in and launched a 16 oz. can. Today Monster is the no. 2 brand. It took an opposite position to Red Bull. The largest selling pickle is Vlasic. It is sold from shelves. ‘Claussen’ came in and occupied the position of being the ‘crisp’ pickle. And was sold from the refrigerated section of the Mall. Being sold from this section automatically got associated with ‘crispness’. The opposite position. Similarly candy bars are associated with being for kids. ‘Snickers’ is the first candy bar for adults. The leading operating system is Microsoft but it is proprietary. Linux took the opposite position of being a free operating system. Coca Cola was established in 1886. It was associated with the old generation. Pepsi came in and got itself associated with the ‘New Generation’.

29. Along the same lines Listerine was the leading Mouthwash but it was bad tasting. Many other brands were launched which were also ‘bad tasting’. ‘Scalp’ was a brand which took the opposite position of being ‘good tasting’. Wal Mart is cheap. But Target is ‘cheap chic’. New York is the largest city and is on the East Coast. Los Angeles is the 2nd largest and is on the West Coast. Malboro is the no.1 brand. It is Western and Macho. The no.2 brand is ‘Newport’ which is Eastern and Menthol. Hertz is the no.1 car rental for businessmen. So they have their outlets located outside the airport. ‘Enterprise’ took the opposite position of having outlets in the suburbs and serving the common man. Barbie dolls are good looking while Bratz dolls are ugly.

30. Law of the mushy middle. Nature favours the extremes. The perception is that the sweet spot lies in the middle of the market. The reality is that the center is the wrong place to be in. In the airlines industry the extremely expensive airlines are doing well. At the bottom end with absolutely no frills, airlines are doing well. But ‘Delta’ and ‘American Airlines’ in the middle are doing badly. As the market diverges the extremes do well. Wal Mart is cheap, Target is cheap chic. Both are doing well. But K Mart which tried to occupy the middle position failed. Every category diverges to create opportunities at the extreme but not in the middle. There are cheap laptops and expensive full - feature lap tops but no market in the middle.

31. Law of Patience. It takes time to build a brand. Like a plane which slowly gathers speed and takes off. Unlike the rocket launcher. Tylenol was introduced in 1956. In 2000 it became the largest selling single drug in USA and its sales crossed $500 mn. One needs 110 % of power to take off but at 30000 feet one throttles back to 70% of power. It took 17 years to build the Taj Mahal. Rocket launches turn into fads. Cabbage dolls and hula-hoops are examples.

32. Law of Exceptions. There are exceptions to every law. The law will not work 100% of the time. For instance Virgin puts its name on everything. But Virgin is headed by Branson who is a PR genius. If one’s company has such a genius then one can think of branding everything with the same name. Instead of basing strategies on exceptions base them on consensus work.

33. Law of 2nd brands. Introduce another brand for a different category. Toyota introduced a Lexus in an upmarket segment. It became the largest selling luxury brand in America. Customers don’t buy a Lexus because it is made by Toyota but inspite of it being made by Toyota. When Levis wanted to go casual they first created Levis ‘Tailored Classics’ which failed miserably. Levis then launched the range under the name ‘Dockers’. It became a successful $1 bn. Brand. Gillette’s most successful brand is ‘Mach 3’. Now Gillette is coming out with a 5-blade shaving system. It will be branding it with a different name viz. ’Fusion’. Motorola too has now started using a different brand name for its cellphone viz. ‘Razr’.

Wednesday, November 15, 2006

New Strategies on Brand Building - Al & Laura Ries

1. The fundamental law of Marketing is the Law of Leadership. It is better to be first than to be better. Microsoft launched in ’81 while Apple launched in ’84. Apple is better in hardware, software and other areas but has only 3% share while Microsoft has 94% share.

2. Inspite of this law, every company focuses on being better. The best voted Marketing book in America is titled “Simply Better”.

3. If first is perceived to be the best, then automatically the company will attract good people, good distributors and so on. The key is to create the perception in the mind that being first means being the best.

4. To win the battle in the market one needs to win the battle in the mind. Xerox invented the laser printer. But did not enter the market. HP was the first. Red Bull was the first energy drink. Coca cola introduced KMX energy drink. Red Bull outsold KMX 20:1. Last leader brand produced by Coca cola was ‘Sprite’. Their strategy has predominantly to be better.

5. Instead of trying to build a better product win the ‘better perception’.

6. Another Law of Marketing is the Law of the Mind. First in the market is nothing. First in the mind is everything. Duryea was the first car in the market but Ford’s Model T was the first in the mind. Yuengling was the first beer in the market but Budweiser was the first beer in the mind. Similarly the first bookstore on the Net was Powell’ but is the first in the mind.

7. The first search engine was Alta Vista. But the first search engine in the mind is Google. Focus gets one into the mind. Alta Vista turned itself into a portal. It lost its focus and was ultimately sold to Overture and then to Yahoo. Today Google is the leading Search Engine. Not enough to be first but need to be first in the mind.

8. The Law of Leadership is the Law of PR. Building buzz makes news. Being first in a new category makes news. Not being better than your competitors.

9. Law of Profits. You can sell anything if it’s cheap enough. To make money you need a brand.

10. Motorola invented the cell phone. But Motorola put its name on a variety of products. In the last 10 years Motorola has achieved a sales of $ 289 bn. And a net profit margin of less than one half of one percent. It is now in the process of getting focused. It has sold its satellite and other businesses. Nokia too once made everything including paper. But it decided to focus on cell phones and has now dominated this market. Nokia in the last 10 years achieved a sales of $ 193 bn. And a net profit margin of 11%.

11. What makes India successful today ? High intelligence and low wages. Success will turn the low wages into high wages. As a result business will move from India to China. U.S.A. is a country with medium intelligence and high wages. It is successful because it has powerful brands. India will not become powerful if it does not have powerful brands. If Indian brands don’t go global, global brands will come here and take over.

12. The Law of Line Extension. You can’t stand for something if you put your name on everything. In the Japanese electronics market everybody makes everything. It’s a line extension society. Nobody builds a brand. Everybody sells on price. Nobody makes money. The total consumer electronic industry in Japan over the last 10 years has made revenues of $ 3 trillion but its net profit margin has been just 0.2%. Whereas in America the revenues of the top 500 companies in the last 10 years has been $ 7 trillion and net profit margin 6%. The automobile market in Japan is more focused.

13. Japan has everything. Intelligent workforce, worldclass production facilities and so on. But no Marketing. In the last 15 years the Japanese stock market has gone down by 59 % while the American stock market has risen by 378%. The same thing will happen in Korea. They too will put their name on everything and fail to build brands. IBM too put its name on everything. It suffered a mainframe mentality. Did not capture the position in the mind for PCs. In the last 23 years has lost $ 15 bn. on PCs. It has now sold out to Lenovo. The leader in PCs is Dell. Ironically the 2nd year student of the University of Texas was pitted against the world’s largest viz. IBM and the student won because Dell had one product, one market, one distribution channel and has had an outstanding stock market performance.

14. Law of Divergence. As time goes on every category will diverge. Telephones will branch out into becoming regular telephones, cordless telephones, walkie-talkies and cell phones. Similarly television will diverge into Broadcast television, Pay-per-view television, Cable television, and Satellite television. TV sets branch out into becoming Cathode-ray tube (CRT), Liquid - Crystal display (LCD), Liquid crystal on Silicon (LCOS), Digital Light Processing (DLP), Plasma, Organic light-emitting diode (OLED). Hotels will diverge into being Expensive, medium price, low price, motels, low price motels, suite hotels, weekly hotels.

15. Divergence comes from Darwin who has explained the concept in ‘The origin of Species’. The panthera tree has a lion, a jaguar, a tiger, and a leopard. The humanoid tree has the Gorilla, Chimpanzee, Orangutan, and the Human being. Man did not evolve. He diverged. Evolution is gradual change. Divergence is abrupt change.

Tuesday, November 07, 2006

Brand Sense by Martin Lindstrom 5 of 5

61. B to B is the same as B to C. We are all human beings and therefore the principles which apply to B to C need to be applied to B to B.

62. The world’s most boring product ‘Roller Bearings’ produced by SKF whose vision statement is “Reduce friction to move the world forward.”

63. If you want to get ahead you don’t have to follow the leader’s tracks in the snow. One needs to benchmark against companies who are the best in the world and not necessarily in your industry. Optimize every touchpoint and compare with other companies in the world.

64. We need today more and more to look at brand alliances and partnerships. For instance Time-Warner creates content for GM cars. United Airlines serves only Starbucks coffee. DoCoMo the telecom service provider in Japan identifies for instance people and their friends if they happen to be in the same vicinity and invites them to have a tete-a-tete at the nearest Starbucks outlet. This is contextual branding.

65. It has been found that no matter which brands team up viz. whether one brand is strong while the other is weak or both brands are strong and so on, both will win. We need to think complementarity.

66. When products are more generic in nature it becomes essential that they team up with other brands viz. Nutrasweet with Coca Cola. Intel with the PC.

67. Create your own story and make your own presentation.

68. We need to look at the evolution of branding through the following phases viz. USP (Unique Selling Proposition) in the 60s to ESP (Emotional Selling Proposition) in the 70s, to OSP (Organisation Selling Propostiion) in the 80s, to BSP (Brand Selling Proposition) in the 90s, to MSP (Me Selling Proposition) in 2000, to HSP (Holistic Brand Proposition) which is happening now with trying to sensorialize the brand.

69. Brands are being used by parents to name their kids. Today there are 121 kids with the name ‘Nike’, 92 kids with the name ‘Canon’, 12 kids with the name ‘Starbucks’ and 19173 kids with the name ‘Harry’ as a result of the Harry Potter phenomenon. People are getting obsessed with brands. In a research it was found that 18.9% would like to have a tatoo of Harley Davidson, 14.8% Disney, 7.7% Coca-Cola and 6.6% Google.

70. The 10 major elements of ‘religion marketing’ are the following : Sense of belonging, Clear Vision, Power from Enemies, Authenticity, Consistency, Perfection, Symbols, Mystery, Rituals, and Sensory appeal.

71. Let’s see how brands have applied/not applied these elements. Vision creates community. Every brand needs a public enemy no. 1. Coke and Pepsi. When one makes a choice of a brand one is automatically making a clear statement of what one is not. Coca-Cola has not been consistent and has therefore lost the ownership of its red colour. Harley-Davidson stresses perfection to the extent of creating a detailed manual showing how a Harley Davidson is to be cleaned. The Coca Cola formula or 7X has a mystery created around it. Opening the Champagne bottle with a pop is a ritual. It is very easy to replace the cork with an aluminium cap but the whole ritual with the traditional popping sound will be missed. The James Bond ritual of wanting his Vodka Martini ‘Shaken not stirred’. The Olympics are full of rituals which have become more important than the Olympic rings. How to pour beer into a glass is a ritual. Corona beer which has to be drunk with a slice of lemon is a ritual which was created by a bartender in Los Angeles to see how fast a ritual spreads. One can invent one’s own rituals and own them.

72. Today’s kids (Tweens) through research, are seen to be more religious than ever. More than 50% state that having religion is more important to them They are also an Interactive generation. And control $ 1.88 trillion through their influence in the purchase of brands.

73. Today the kids don’t experience ‘information overload’. In multi-tasking kids outscore adults. While kids can handle on an average 5.4 channels at a time, adults can on an average handle just 1.7 channels. They are the instant generation.

74. Kids grow old young (KGOY). 44% prefer Internet. Next is Gaming and then TV. 20% have purchased products online. 20% find new friends online. The computer game titled ‘Everquest’ has 1.1mn. members who spend 28 hours a week playing the game. It needs to be played continuously. So that ‘Avatars’ are created. It takes 6-8 weeks to build an avatar. One can’t take a break for too long. The players earn an adult virtual salary. They then take their avatar and sell it on Ebay. There is an ‘EverQuest’ widows club. Wives divorced because the game engrossed their husbands. Entropia is a game where one purchases real estate with virtual cash. In certain games one finds that one can become a franchisee of McDonald’s and run it earning virtual cash which one can exchange for real cash on Ebay. So a kid of average age 9 years learns how to run an outlet profitably. Contextual branding is becoming more and more important. By 2010 it will be worth $ 1 bn. Hollywood is sourcing its ideas for films from Gaming.

75. The kids today are driven by fear because everything in their world is uncertain. More than half of today’s tweens feel stressed and can’t comprehend their daily life. More than half of the world’s tween population is concerned about terrorism. They find the past secure. They want stability, humour, mastery, fantasy, and love. And that is why sometimes one finds the old fashioned brands becoming popular. The retro effect. They are also continuously into ‘upgrading’.

76. The kids today deliberately distort language. 70% of all tweens change their language on purpose when chatting or texting. 30% of all tweens text several times a day. 15% prefer to text even if they are sitting next to one another.

77. Kids are becoming primary decision makers and therefore Toyota is targeting kids. They have become the primary decision makers in upto 80% of all cases. 60% decide the car brand. 58% decide the clothing brands. 57% decide the mobile phone brand. Kids are likely to become just as influential decision makers in the households as their parents within 5 years because half of the world’s married population are divorced and therefore kids will take on responsibilities earlier. They are substantially more exposed to advertising and the media.

78. Kids are now broadcasters. They have their own website. They have become brands.

Thursday, November 02, 2006

Brand Sense by Martin Lindstrom 4 of 5

46. Vodaphone owns the red colour and not Coca Cola. Coca Cola has not been consistent. Coca Cola’s new colours are green, yellow and many other different shades in different countries of the world.

47. In the area of sound Microsoft Windows has become the owner of its signature tune. 62% are aware of it. Similarly Nokia has patented its own tune which is easily recognizable. It was invented 7and1/2 years ago. It takes approximately 9 seconds to locate one’s mobile phone and therefore on the basis of receiving on an average 500 calls per month, one can say that one is hearing the tune 15 hours per year. And Nokia is making people aware of it without spending any money. Today there is a 41% awareness of the Nokia tune against a 56% awareness of the Intel tune but only after Intel has spent $ 320 mn. on advertising it.

48. Sound generates mood and memories. It promotes brand awareness. Sound also communicates brand quality. For instance the sound of the car doors closing. It builds brand recognition and builds brand familiarity.

49. We now have an advertisement in ‘People’ magazine that sings an Elvis Presley number. Ads on paper are now talking and singing.

50. According to a research done by Millward Brown it was found that sensibility to sight increases as education increases. With High School education it is 30% while with Graduation/Post Graduation it increases to 45%.

51. Sensitivity to smell is higher among women (28%) than among men (19%). But recall data shows that both sexes are equally affected.

52. Memories get activated and drives brand choice. Our memories are like an untidy, overstocked cupboard. Everything is recalled at once. Senses are the keys to unlocking the cupboard. Experience creates and confirms expectations.

53. Positive experience alone is not enough. Distinctiveness and differentiation also matter. Brand success is more than just a great experience. The components of brand success are : Leader, Clarity, Great experience, and business model.

54. Emotion plays a role between senses and the brand effect. Emotion drives attention and brand processing. Taste is most likely to create the feeling of satisfaction. McDonald’s creates a more cheerful feeling than Burger King.

55. Even among regular users there is a huge difference in loyalty. The more all of the senses are associated the more loyalty is experienced.

56. The Structural Path Model is based on the senses interacting and creating Leadership, a great Experience and Clarity which leads to Choice.

57. Each Brand can be mapped on which senses it is strong or weak. For instance Dove has been shown through research to be balanced on all the senses. While Irish Spring depends more on the sense of smell. Research is now attempting to put financial values on the senses and thereby arrive on the total financial value of the brand.

58. Vision is incredibly important for brands. It gives one the mandate to go beyond the normal. To do something which requires true inspiration and guts. Apple’s vision is “ Man is the creator of change in this world. As such he should be above systems and structures and not subordinate to them” The Credit Lyonnaise Bank’s vision is “You can only be a partner with someone you think of as an equal.”. Vision is not enough. If at the end of the vision statement one crosses one’s brand or company name out and puts competition’s name instead and one finds that there is no difference then throw the vision statement out. There needs to be a tangible difference.

59. At the airport one has these racks for ensuring that only bags of a certain size are carried into the plane as hand baggage. On these racks is usually written all the pertinent legal jargon in fine print which the passenger can hardly read and hardly ever does read. Virgin Airlines thought of this as a branding opportunity in keeping with its Vision and Values. What is written on a luggage rack of Virgin Airlines is “You can have a huge ego but only a bag this size.” This is not bland branding. Need to be provocative and add a sense of humour. This becomes branded jargon vs. legal jargon.

60. We should expect enemies and we therefore need to cut off competition. Even if one’s budget is low one can do something innovative to achieve this. There was a pizza owner in Australia who had a budget of just $700. He used this amount to purchase time on a radio station and the radio spot said the following : “Take your Yellow pages book and tear out all the ‘Pizza pages’ and bring them to his outlet and get a pizza free.” Today he is the biggest pizza owner in Australia.