Biggest Brand Winner & Loser of 2004

With the start of a New Year only days away, I thought I would join the many who look back at 2004 and pick the winners and losers of the year. So after much thought I would like to honor two brands with the distinction of Biggest Brand Winner and Biggest Brand Loser of 2004.

BIGGEST BRAND WINNER of 2004: Apple iPod

The brilliantly branded, designed, and advertised iPod is my clear choice for Brand Winner of the year. The product is brand divergence at its best. A single focused device that was conceived to be the very best music player period. It also helped pioneer the hard-disk-drive-music player category. Today’s music player of choice, thanks to Apple, is the iPod.

Through the third quarter of 2004, Apple has sold 6 million iPods, since they were introduced in 2001. The last quarter alone, they moved two million units. Estimates indicate that Apple could sell up to 3 million iPod in the fourth quarter of 2004. And the number would be higher if Apple could just make the hot-selling Apple Mini fast enough. Currently, 65% of all MP3 players are iPods, while 92% of all hard-disk-drive players are iPods.

Why did Apple succeed music players where so many others failed in?

In a word focus.

You know I don’t favor advertising for brand building. And when advertising is used, it should reinforce the brand message. And that is exactly what Apple did. They first used PR and a slow roll out of the iPod brand. Then Apple used advertising to accelerate the wild success of the iPod. The campaign was brilliant in its simplicity. Just silhouettes of people and an iPod. Over and over again in print and television advertising. There is nothing more to say. Except here is the iPod. People already knew what it was and how cool it was from word of mouth and PR. The advertising just reminded people. Perfect!

What should Apple do in 2005. Well they might consider getting out of the PC business and focus the whole company on iPod.

BIGGEST BRAND LOSER of 2004: Coca-Cola’s C2

What were they thinking? Second only to the lunacy of launching New Coke back in 1986 was this year’s introduction of C2. C2 is a mid-calorie soda which has half the sugar and calories as regular Coke, C2 was Coca-Cola’s major new product of the year. The thinking goes that there are some people who enjoy a regular Coke sometimes, but also are trying to lose weight on low-carb diets, and don’t really like the taste of Diet Coke. So Coke makes a half-and-half product called C2. Mix one part real Coke with one part Diet Coke and there you have it.

What must have seemed like a bright idea in the boardroom has fizzled on the market. Consumers didn’t get it, didn’t want it, didn’t need it and rejected the whole idea. Note too, that Pepsi is not immune from stupidity and this year introduced Pepsi Edge, their mid-calorie soda to the same dismal results. According to recent statistics from Beverage Digest, C2’s share of supermarket soft drink sales was 0.4 percent though early October. Pepsi Edge was 0.3 percent.

But it’s Coke that deserves the title of Biggest Brand Loser of 2004. The most valuable brand in the world (according to Interbrand.com) should know better. Coke is a company in trouble. They have line extended Coke to death and have not had a successful new brand launch in 40 years since the introduction on Sprite. They have been line extending and introducing me-too products that have been unable to compete with the first and leading brand in the category:

Dr Pepper, the first spicy soda, is a success, Mr. Pibb from Coke is not.

Mountain Dew, the first high-caffeine citrus soda, is a success, Surge from Coke is not.

Gatorade, the first sports drink, is a success, PowerAde from Coke is not.

Snapple, the first all-natural beverage, is a success, Fruitopia from Coke is not.

Red Bull, the first energy drink, is a success, KMX is not.

So goodbye to 2004, thanks for the memories. I look forward to seeing what’s in store for branding in 2005.

Comments

[Markus]

Laura,

I've read The 22 Immutable Laws of Branding, and wanted to know if you'd clarify your position on Apple's strategy.

I'm becoming a convert to Apple after using their iPod Mini and will getting a Mac Mini soon. Do you still think it's a mistake for Apple to have a hand in both software and hardware? It seems to result in better integration and a far less buggy OS.

Also, what are your thoughts on the Mac Mini?

[DIAO]

Yes, actually. It can be sensible to consolidate in areas which are strong, thus focusing resources. Such action should not leave weak areas which might allow conpetitors access to key markets.

[ela oktul]

what makes a great brand?

[Dan Kalinowski]

A breath-taking execution of a marketing fundamental: product = desired feeling. I can't dance like that, but I FEEL my music like that. iPod. Brilliant. Before then, even graphic designers were reluctant to buy the high-priced iPod, even with the utlility of a portable firewire hard drive.

[Dan Kalinowski]

A breath-taking execution of a marketing fundamental: product = desired feeling. I can't dance like that, but I FEEL my music like that. iPod. Brilliant. Before then, even graphic designers were reluctant to buy the high-priced iPod, even with the utlility of a portable firewire hard drive.

[Ray Daly]

Razors and razorblades. ipod and itunes. All the focus on the hardware (ipod) is missing the fun (itunes). Sometimes you have to keep making shavers to sell blades. Apple is singing a happy tune.

[Patrick Rea]

I agree with Stephen - Apple and iPod are different brands in two distinctly different market. My son and other teen owners of iPods don't even know that there IS an Apple and that it makes computers.

There will continue to be a market for the Apple - so long as they continue to box clever, appealing to a niche/ specialist audience: the No.2 in the category. They should stay in there - markets change, look at the power-play in the Search Engine market: MS lost out to Google - who appeared insuperable and are looking distinctly vulnerable to Yahoo now.

[Sebastian Ware]

"What should Apple do in 2005. Well they might consider getting out of the PC business and focus the whole company on iPod."

Suggesting Apple to focus entirely on the iPod brand is a very bad idea out of a branding point of view. Apples core asset is the creative tech and design teams behind their products. These could never be sustained on the iPod alone.

You need the competition and influence of other product development teams such as the team behind the Powerbook, the Xserve etc. And also software development teams behind Quicktime, Macosx, Final Cut Pro etc.

Apple is using the iPod to teach the customers about user experience. Thus developing a demand for great products, for which the consumers will be prepared to pay (at least a slight) premium.

They are also leveraging the iPod for building an intellectual rights economy around the iTunes music store.

Spinning off the Powerbook, Macosx and Xserve brands in favour of focusing on the iPod? Sounds a bit business school "lets-focus-on-core-business-only-I-dont-really-know-what-our-core-assets-are" preppy for me;-)

Regards Sebastian Ware

[Stephen Macklin]

Jakub,

I do not have access to Apple's marketing plans. (Which is good because I'd probably post them and then they would sue me!) This is my interpretation of Apple's strategy based on observation and probably some wishful thinking.

Apple is still trying to win the desktop war.

Their lower priced high-design systems like the eMac, iMac and now the mini are designed and priced to get the MAC into the home.

The iPod is designed to get the brand into the hands of as many users as possible. This is done to help in the effort to dominate the home computer market.

Apple's strategy is based on its belief in the superiority of its systems. That if they can get people to use them at home, they are going to want to use them at work.

[Jakub Petrina]

Interesting to follow this discussion, especially in light of the recently announced divestment by IBM.

IBM have been known for computers, but really profiting from servers. I couldn't believe they had the guts to get rid of desktops and notebooks. Re-focusing will buy them huge credit in the industry, I am sure.

It's hard to sacrifice but it seems like a very clean and bold move.

However, I must admit I certainly do not have too much info about the background of this move - what I mean is that I don't know how much of this was financially inevitable and how much was bold marketing future thinking.

Did you folks follow this and what did you think? I do see a few parallels with Apple marketing you mentioned (focusing on graphics, become more specialized rather than fight everywhere...).

Have a great new year, hope it's not too late :)

Jakub

[Sean Naden]

Apple make really good computers and really good user interfaces, that's what the ipod is only really small. They got lucky with the ipod, its making them a lot of money but it seems risky to focus on the ipod. What happens when it's no longer cool?

[Laura]

Sean, I totally agree with your comments. I think we will see Apple in 2005 damage the iPod brand with convergence line extensions like iphoto and iphone. Leaving itself vulerable to competition. Eventually other companies will copy Apple's great design and feautures. Just like other companies copied Apple computers in the 80's.

And actually I think Apple should spin off the computer division and focus on iPod. If the iPod brand remains focused and is managed right it could be a huge winner in the long term. There is no doubt that digital music is the future.

[Gabriel Salcido]

Going back to Coca-Cola, their Chief Marketing Officer, Mr. Benito Santiago, is leaving the company. I'll not speculate if this had something to do with C2's performance in the market.

[Stephen Macklin]

While most people probably do not call it an Apple iPod they understand that it is an Apple product, an Apple Brand. Just like the iMac, the iBook and iTunes.

Apple would not spin off a brand that is so valuable to the company. It would be like Ford spinning off Mustang.

[Sean Naden]

"What should Apple do in 2005. Well they might consider getting out of the PC business and focus the whole company on iPod."

Apple and iPod are two different brands, its only really Apple that calls it the "Apple iPod" - iPod should cut the cord and become a separate company. Unfortunately that won't happen, instead watch in 2005 as apple systematically destroys their MP3 player market dominance with convergent device nonsense like the iphoto and iphone.

As for Apple, it is a high performance computer, always will be.

[Stephen Macklin]

Rumors are flying that next month Apple will launch a $500 iMac aimed at PC owners of iPod.

I'll save the debate of MAC vs PC in business for another time though!

Happy New Year.

[Laura Ries]

Do I think that Apple will actually get out of the PC business? No. I too am willingly to bet that they won't.

But what Apple should have done a long time ago was focus their PC business. Perhaps on the graphics market. More artists, graphic designers, photographers and publishers perfer Mac. Apple has a great advantage in that market. And by focusing and specializing the brand I think they could have had a much more powerful PC brand. Instead of a weak general PC brand.

Hey, Apple is a great brand. And there are many Mac people devoted to the brand and company. But they also have been losing market share for years. I myself was once a loyal Mac user. But in the business world it is much easier to use a PC machine like everyone else.

As for Nokia, you are right. They made a brilliant decision to focus the whole company on an up and coming market the cellphone and they became the world's leading cellphone maker.

Happy New Year!

[Gabriel Salcido]

The people at Coca-Cola now fully understand the meaning of the song they used in the C2 TV commercials: "You Can't Always Get What You Want" by the Rolling Stones.

Apple getting out of the PC business? Well, not in 2005 at least... I would bet (a six-pack of C2 cola) that a spinoff of the iPod/iTunes business is more likely.

[Stephen Macklin]

But for those of us who make their living on the MAC its a much more pleasant thought that the success if the iPod will grow the Apple/MAC brand and strengthen their position in the PC market.

[Alan 'Brand' Williamson]

That's what Finland's Nokia did. And re-focused the entire company on mobile telephony (cellphones) and became the world's biggest mobile brand!

[Stephen Macklin]

"What should Apple do in 2005. Well they might consider getting out of the PC business and focus the whole company on iPod."

Scariest suggestion I've read all year!!