Ries' Pieces

Starbucks is Shooting Itself in the Cup

          Starbucks latest offensive isn’t against McDonald’s or Dunkin’ Donuts it is against itself. And if Starbucks weapon is as successful as it says it will be then they could be shooting themselves in the cup.

          Starbucks new weapon is its Via instant coffee, a brand that went nationwide this week after several months of testing in Seattle, Chicago and London. 

          To support the Via launch, Starbucks will be promoting a “taste challenge” in its own stores. The “taste challenge” aims to convince consumers that they cannot tell the difference between a cup of Starbucks instant coffee and a cup of Starbucks store brew.

          Instant coffee as good as store-brewed Starbucks? Sounds impossible.

But Howard Schultz is convinced people won’t be able to tell the difference. He has even been fooling people with Starbucks Via instant coffee for almost a year at home and at his office. Nobody including his wife, according to Schultz, realized it was instant.

          It’s a brilliant idea for a new gourmet instant coffee to set-up a blind taste test against the world leader in high-end coffee. Especially if the instant coffee wins the taste test.

          It’s an insane idea for the world’s leading gourmet coffee chain to set-up a blind taste test in its own stores that it hopes it will lose. Losing a taste test devalues the loser as much as it praises the winner.

          Weaker brands have used blind taste tests for decades to try to take market share from leading brands. The “Pepsi  Challenge” and the companion commercials of the 1980’s pitted Pepsi against Coca-Cola.

          Blind tasters overwhelmingly picked the sweeter taste of Pepsi over Coke. The humiliation of the taste test losses in part led Coca-Cola to launch the disastrous New Coke.  A key factor in the development of New Coke was that it should beat Pepsi in blind taste tests.

          Today, Starbucks is using a taste test that could lead to another disaster. If a cheaper, instant coffee can be easily made at home or work and it tastes as good as the real thing, why waste time and money going to a retail store?

          Starbucks really let the fox  in the hen house by hosting the taste tests in its very own stores. Starbucks is telling consumers exactly what they shouldn’t be telling consumers right in its very own stores.

          In the minds of consumers Starbucks is believed to be expensive but “worth it.” Consumers praise the high-quality of the coffee. Hosting a taste test in your own stores to tell consumers your product is no better than instant coffee is not a good message to send and not a good challenge to lose.

          Starbucks, of course, claims that its instant coffee will not damage its core store brand since “portability” and “value” are the important selling points of Via.

          Apparently, the inconvenience of long lines and extravagance of a high price are things consumers would not give up for a Starbucks instant coffee that tastes the same as the store brand?

          A brand can often be successful by being the opposite of the leading brand. Target vs. Walmart. Scope vs. Listerine. Pepsi vs. Coke. Monster vs. Red Bull. But there is no potential for one brand to do two strategies at once and succeed.

          A high-end brand needs to stay focused no matter what. Introducing cheaper versions of expensive products damage the credibility and power of the core brand.

          In the current economic climate Starbucks has been under intense criticism over its “$4 cup” image. Starbucks needs to flight that by promoting a simple pricing strategy to drive home the message that $2 is really the price of a cup of coffee at Starbucks and that it is worth every penny because it’s Starbucks.

          Suggested headline for a Starbucks ad:

“Two bucks and worth it.”

          Instead they are spending money on ads with this headline
“Instant coffee that tastes as delicious as our brewed.”

          This ad and Via instant coffee at $1 a cup isn’t likely to tempt too many Taster’s Choice drinkers who get a cup of instant for 10 cents.

          What the introduction, advertising and promotion of Starbucks Via is most likely to do is drive people out of Starbucks stores by denigrating the brand in the minds of the consumers.

          It is the law of unintended consequence. Saying that an instant coffee (even an expensive instant coffee) can taste just as good as the Starbucks real thing devalues the brewed high-end coffee category. 

          It is bad enough when your competition knocks your brand, it is worse when you do it to yourself. Yet it happens all the time.

 

The Pitfalls of Misdirected Packaging

Never overlook the power and importance of packaging. It is the last chance for a consumer to say yes or no to your brand. You may have done an excellent job with your brand name, PR, word-of-mouth and advertising, but if that last piece of the puzzle (the package) doesn’t fit into the consumer’s mind, you are out of luck. No sale.

 

Strong brands in leadership positions should also not overlook the power of packaging. Too often instead of reinforcing its core strength a leader tries to use its package to extend its brand.

 

Big mistake. This is type of misdirected message is confusing to consumers who after hearing about a brand, reading about a brand and growing accustomed to a brand are perplexed by the change of message.

 

When consumers get to the shelf, the package should simply, clearly and emphatically reinforce what the brand stands for in the mind. Not doing this is tantamount to brand treason.

 

Nothing exemplifies this better than Cheerios. And no case of packaging misdirection infuriates me more. The entire Cheerios package is completely contradictory to what the brand is all about.

 

What is Cheerios?

 

If you have kids, know people who have kids or were ever a kid yourself then it is clear, Cheerios are a kid’s first food.

 

Cheerios represent simple, wholesome goodness that parents feel proud to serve as their child’s first solid food. Babies happily gobble them up by the fistful. No parent would dare leave the house without a Ziploc bag filled with them.

 

Until they experience crap like Coco Puffs Kids usually love Cheerios. But once kids go Coco, it’s hard to get them back. Which is why parents usually cling to the goodness and innocence of Cheerios as long as they can.

 

I don’t have the numbers, but I would imagine that the majority of heavy Cheerios buyers have children under 8 years old.

 

Yet when you take a look at the package there is no indication that a kid has ever had one. The entire package is devoted to telling you how Cheerios can lower cholesterol.

 

Kids don’t even get tested for cholesterol. Parents want their kids to eat healthy with lots of whole grains but cholesterol isn’t the issue, sugar is. I know our kids are getting fat, come on. Nobody is thinking how to lower their kindergartners cholesterol.

Yet in huge letters on the box, right under the Cheerios name, the Cheerios brand message is:

“helps lower cholesterol”

What!?! Have you gone cuckoo over at Cheerios?

 

First-time parents have been told for generations to feed Cheerios to their babies, yet these moms get to the shelf, they find a box that says: “Helps lower cholesterol, 10% in one month.” Any exhausted mother would shake her head and say, huh. This sounds like grub for grandma not a baby. I’m not buying that!

 

If Cheerios are good for babies, they are good for adults. I get that. And I have been known to eat many handfuls of Cheerios out of my kids bowls and Ziploc bags over the years. But Cheerios is not an adult food, Cheerios is a kid food. Thinking otherwise is foolish. Saying so in big letters on the box is foolish. Ignoring your biggest and best fans is foolish.

 

Not to mention if you really wanted to lower cholesterol there are much better ways of doing it than by eating Cheerios. Cholesterol is not and will never be the main selling point of Cheerios.

 

The arrogance of leadership is that what you have is often overlooked for what you don’t have and mistakenly think you can get. We got the kids, let’s get the adults. We got the women, let’s get the men. We got the high-end, let’s get the low-end. We got the regular market, let’s get the diet market.

 

Never overlook your position in the mind. And always reinforce it right there in on the box. Consumers like husbands, aren’t stupid, but a big reminder on the box and a hit over the head doesn’t hurt.

Why the shoes don't fit at Amazon.com

 

With its purchase of Zappos for $847 million, Amazon will get free shipping but is it the right acquisition for the e-commerce giant?

 

Zappos is a tremendous brand. With its unique and memorable name and its focus on footwear, Zappos has become the #1 seller of shoes on the Internet with sales of $840 million and a 40% one-year sales growth rate, as reported in 2007. Zappos is a classic success story.

 

Founded in 1999, the Las Vegas-based company got into the mind first. Zappos focused on footwear with a simple offer of free shipping and free return shipping on all orders. Much like Amazon did with a focus on books, a memorable name and a discount of 30% on all books.

 

There is a great advantage to being first in the mind. You gain credibility, generate PR and establish authenticity. Amazon did it books. Zappos did it in shoes. eBay did it in auctions. YouTube did it in video.

When you are first in the mind, any company that tries to copy your success faces an uphill battle. The second, third or fourth brand in a category has little news value, little credibility and is never seen as the real thing.

 

For years, Amazon has tried to break into the shoe business with its Endless.com brand with dismal results. A me-too brand launched by even the best company in the world has little chance for success. Just ask Coca-Cola about the failures of its me-too brands like Fruitopia, KMX, Mr. Pibb, and Surge, to name a few.

 

In general, acquisitions can be a great thing for a company that wants to intensity its focus and its domination of a category. Buying another company and then merging its business into your own business results in a stronger brand with greater market share. It’s what happened to Chemical Bank did when it bought Chase. They even changed the merged company’s name to Chase since it was the stronger of the two brands.

 

A company can also buy another brand to give it distinctive multiple brands in one category. Coca-Cola bought Glaceau to get its hands on Smartwater and Vitaminwater to go along with its Dasani brand.

Acquisitions or mergers, on the other hand, can be dangerous when they are used to expand a company into a different industry in which it doesn’t have experience or credibility. Some examples are AOL/TimeWarner and Citicorp/Travelers.

 

I believe the Zappos acquisition is the wrong move for the book giant. Amazon is the Earth’s biggest bookstore, a position it owns in the mind. But since its incredible success in books, Amazon has expanded into many other categories and tried to become Earth’s biggest-anything store. This strategy rarely works with consumers.

 

Consumers buy specific things like books, computers, shoes, drugs and toys. Consumers don’t sit down to buy anything.

Despite expanding to sell everything from auto parts to home furnishings to apparel to drugs and to groceries, Amazon still gets the majority its $19 billion in sales from books/music/movies.

Amazon has had great PR with its Kindle book reader and should continue to pioneer other concepts connected to its core position.

 

The Zappos purchase goes in exactly the opposite direction. Books/electronics are quite different from shoes/fashion. One brand that does both, or one company that tries to conquer both, is likely to have a tough time.

To think Amazon can buy Zappos and leave it alone so that it remains vibrant, cutting edge and whimsical is foolish. It will never happen. Amazon might keep the Zappos name, but they will fold it into the Amazon way and system thereby losing that special Zapponess. Did Toys R Us feel like Toys R Us under Amazon? I think not.

Amazon should keep both its feet books and electronics. Too many feet in too many shoes isn’t a good thing for any brand.

The Classic Mistake

Pizza Hut is now selling chicken wings and pasta as well as pizza.

Kentucky Fried Chicken is now selling grilled chicken as well as fried chicken.

Boston Chicken was once focused on rotisserie chicken, but then they wanted to expand, so they added turkey, meatloaf and ham to the menu. Then to explain the expanded menu to consumers, they changed the name of their restaurants to “Boston Market.”

And promptly went bankrupt.

It’s logical, isn’t it? If you want to grow your business then you need to expand your product line to sell more things to more people. And if your existing category is declining, then it would be criminal not to expand, right?

Wrong.

Of course, to left-brain, logical management people, expansion makes a lot of sense. That’s why Pizza Hut is not only adding pasta and wings it is also now using a more general name, “The Hut” in its marketing.

That's right, they are taking the "Pizza" off the "Hut" on signs and marketing materials. Why? Because management looks at reality and sees the chain as a massive delivery infrastructure machine not a pizza place. Big mistake.

Marketing is concerned, not with reality, but with perception. So right-brain marketing people understand that the place is perceived as pizza. After all Pizza Hut is the leading pizza chain with 18% of the $29 billion category, nearly double the share of the number two brand Domino's. While having more items to sell at Pizza Hut might be logical, but it undermines the perception of the brand.

Everybody knows what Pizza Hut sells, but what would happen if they changed their name to The Hut?

In the short run, nothing. But in the long run, some people are going to forget exactly what a chain like The Hut sells. And then there are the younger people coming into the market who have never heard of Pizza Hut. “The Hut” would be a strange name to them.

Would it make sense for Taco Bell to start selling hamburgers? And then change its name to “The Bell?”

And perhaps Burger King should change its name to “The King,” now that they sell chicken, fish, breakfast and a host of other non-burger items. 

Then there is Dunkin' Donuts? Surely they should drop the "donuts" and go by Dunkin' since they are more about bagels, muffins and coffee these days.

The management mantra at most companies is “more.” How do we dream up more items to sell to more customers? And especially how can we take advantage of our powerful brand name to sell those new items to those new customers.

Line extension is the most over-utilized strategy in business today. That’s true in spite of the fact that 90 percent or so of line extensions fail in the market place.

Line extension is a much-loved strategy because it’s logical. The more you have to sell, the more you sell. So almost every company is busy trying to figure out what new products to slap its brand name on.

They should study history. When Domino’s Pizza first got started, it sold pizza and submarine sandwiches. When Little Caesars first got started, it sold pizza, fried shrimp, fish and chips and roaster chicken. When Papa John’s first got started, it sold pizza, cheesesteak sandwiches, submarine sandwiches, fried mushrooms, fried zucchini, salads and onion rings.

Now do you suppose you would ever have heard of Domino’s Pizza, Little Caesars and Papa John’s Pizza if they kept expanding their menus? I think not.

Rather they all did the same thing. They all narrowed their focus to pizza only.

Good things happen when you narrow your focus. You should try it too, I think you will like it.

Tropicana gets Squeezed

The recent hubbub over the Tropicana packaging change shines a light on several marketing myths. Take note so you don’t make the same mistakes with your brand.


Tropicana brand background

Tropicana is a 60-year-old brand. Originally the company sold gift boxes of oranges, but looking for something to do with the smaller fruit that went to waste they got into the frozen concentrate business. But that category was well established and Tropicana was just another brand.

The key event that really built the Tropicana brand came in 1954. Not satisfied with being just another player in the concentrate category, the company pioneered a flash pasteurization method that raised the temperature of the freshly squeezed orange juice for a very short time, extending the juice’s shelf life to three months while maintaining its flavor. Tropicana then dropped the frozen concentrate product and focused entirely on the fresh, "not-from-concentrate" product.

Being first in a new category is the key to success. Tropicana got into the mind with a great name and built a new category. Tropicana owns not-from-concentrate in the mind and is the "real thing" in fresh orange juice. With the success of Tropicana, eventually the majority of the market for orange juice moved from frozen to fresh.

Today, Tropicana remains the dominant brand and the world leader in chilled orange juice. Since the original entrepreneur sold the company in the 1970’s, there have been several owners. Since 1998, PepsiCo has owned the brand.

Last month, PepsiCo introduced a major overhaul of the Tropicana packaging. Which was done after PepsiCo Chairman-CEO Indra Nooyi announced the company would embark on a sweeping revamp of all its brands. To be changed: "every aspect of the brand proposition: how they look, how they’re packaged, how they will be merchandised on the shelves and how they connect with consumers."

What? Is she crazy? Apparently. The last thing PepsiCo should do is totally redo all of its brands. The new Pepsi logo that is a little too close to Obama’s logo hasn’t been very well received. And results for Tropicana have been disastrous.

In just a few short weeks after the packaging change, the company bowed to consumer outrage and scrapped the Tropicana changes. The previous packaging will be brought back and Arnell will finally be humbled (this part of course I doubt.)

Unfortunately, the company will continue the advertising campaign by Arnell that accompanied the new packaging look. The tagline is "Squeeze. It’s a natural." Squeeze? That is not language that consumers would ever use. Tropicana should have remained focused on fresh not from concentrate orange juice.

"Squeeze" is a typical campaign that left-brain management loves. Management values cleverness in advertising. Advertising campaigns that are clever and new appeal to left-brainers. You see squeeze is used as a double-entendre in the ads. The advertisement are filled with people hugging. Peter Arnell says the campaign is all about love. Love? The worst part is there is not an orange in sight in any of the ads. How clever indeed! Reminds me of the Saturn ads with no cars.

Right-brain marketing values credentials in advertising. Advertising that is relevant, familiar and consistent is what works best at reinforcing a brand in the consumer’s mind.

Now that you know the background, let’s debunk some enduring marketing myths:

It is the product not the brand that consumers care about. Wrong.

Consumers care about brands. The brand is what gives the product its authenticity and credibility. The brand includes everything from the name, the look, the logo, the color and the package.

When you change the look of the packaging, you lose some of the power of the brand in the mind. It no longer looks authentic. And worse, consumers think you have also changed the contents.

"We underestimated the deep emotional bond consumers had with the original packaging," said the President of Tropicana. Consumers weren’t attached to the packaging! Consumers are attached to the Tropicana brand. And it didn't feel like their Tropicana brand when you changed the packaging. The packaging is the visual that signals the brand’s familiarity in the mind.

Suppose Coca-Cola changed its classic bottle. It would be a disaster. In fact, Coca-Cola has been aggressively increasing its use of that bottle imagery on cans, cups, and billboards to reinforce its brand. Good move.

The verbal is more powerful than the visual. Wrong.

Both are necessary and should complement each other. One of the worst things about the Tropicana redesign was the loss of the iconic orange and straw. It was a powerful visual that reinforced the fresh, not-from-concentrate idea in the mind. Instead they used the words “100% orange” on the containers. Bad move. But typical of left-brain management that thinks verbally rather than visually.

The strongest brands have powerful visuals that reinforce the brands in the mind.

Marlboro – Cowboys

KFC –Colonel Sanders

Pizza Hut – Red Roof

AT&T - globe

McDonald's - golden arches

Brands need constant change to keep up with consumers. Wrong.

Strong brands should not make radical changes. Leading brands in particular should be wary of change.

(Of course, if nobody knows your brand, you can change it as much as you want.)

Occasionally (like once a decade or two) brands may need some slight changes and updates. But only very infrequently and very subtly. The changes should be ones that few people even notice.

And sometimes it is a good idea not to change at all. Jack Daniels is proud of the fact it never changes. In fact, it is the theme of its advertising. “Not subject to change, not now, not ever.”

If your brand is facing an uncertain future because of a declining category, it might be better to launch a new brand. You can’t change a brand radically in the mind anyway. Think Kodak.

Here are some classic logo changes that kept the brand’s authenticity but made slight changes to keep the look current.

 

 

 

 

 

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Great Product, Lousy Brand

 

 

Just because you have a great idea and make a great product (or deliver a great service) doesn’t mean you will build a powerful brand and enjoy great success. This sad truth sometimes becomes personal when a product I love makes egregious branding errors. In fact, it really makes my blood boil.

 

I am an avid walker. I love walking in New York City going up the avenues and through the park. I love walking in Paris to the Eiffel Tower and through the Tullieries. I love hiking in the mountains of Austria and around the volcanoes in Maui.

 

I am also into fitness and new exercise trends and gadgets. I have all sorts of wobble boards, weighted balls, body bars, ankle weights, abdominal wheels and yoga mats. I also have an elliptical machine, Rollerblades,  an inversion table and now MBT shoes.

 

I love my MBT shoes, but their branding stinks.

 

The point of a brand name is to get into the mind of the consumer. The better your name, the easier it is to get into the mind. Think BlackBerry.

 

The point of a category name is to define the niche your brand occupies in the mind. Ideally you want to be first in a new category. This will give you credibility, authenticity and instant leadership. Think Red Bull and energy drink. If you aren’t first, then you want to be the opposite of the competition. Think Monster, the 16-oz energy drink and the No.2 brand.

 

The point of a tagline (or positioning statement) is to give consumers a verbal message to share with one another. The test of a good tagline goes like this: If somebody asks you why you bought the brand will the tagline explain it? Does it use words consumers would use? Does it even make any sense?

 

Why did you buy Barilla pasta? Because it is “Italy’s #1 pasta.”

 

Why did you buy a Toyota? Because they are “moving forward?”

 

While I can see the Barilla conversation happening. I could never see the Toyota one happening. Don’t Toyotas go in reverse anymore?

 

MBT fails on all three counts.

 

 

The name: MBT.

 

Launching a brand with meaningless initials is the kiss of death. While companies like IBM and GE might be known by their initials, they actually stand for International Business Machines and General Electric. They can get away with the shorthand because they are leaders and have been around forever, IBM has been around for 84 years and GE 116 years. When you are that old and that established, you can use initials. Note: neither company ever changed their name to the initials.

 

Nobody knows what MBT stands for. When nobody knows your name, you can’t use initials. It just makes a bad name worse. Initials are much more difficult to remember than a name and initials communicate nothing about your brand.

 

What MBT stands for is Masai Barefoot Technology. Of course the full name is no good either. I doubt any tribe in Kenya would be running around in $250 shoes. And the shoes are so big and so klutzy-looking that calling them “barefoot technology” is non-sensical even if it is true. The research might say they re-create the positive effects of walking barefoot, but they don’t give that impression at first glance. And perception is everything.

 

Furthermore, they don’t even own mbt.com! The brand’s website is swissmasaius.com. If you have a bad name, at least you should own the bad name website.

 

What MBT needs is a name like Crocs. Simple, different, memorable and a name alludes to the product. If Crocs were called PSTs (Plastic Shoe Technology), they would never have become the billion-dollar brand they are today.

 

 

The category: What is the category? Nobody knows.

 

MBT calls itself “physiological footwear.” Huh? What is that? Nobody is going to use that as a category name. What kind of physiological footwear do you wear? I don’t think so.

A category name should contain simple words and be easy to understand. And don’t trademark it. If you want to get big, you need your category to get big. And for your category to get big, you need competition.  As long as you are the leading brand, having a flock of followers behind you is a good thing.

 

What are some good category names: energy drink, sports drink, energy bar, expensive coffee, wireless email, safe car, packaged salad, performance underwear, natural cosmetics, organic groceries. Of course, the brands that dominates these categories are the brands that introduced the category (Red Bull, Gatorade, PowerBar, Starbucks, BlackBerry, Volvo, Fresh Express, Under Armour, The Body Shop and Whole Foods.)

 

In this emerging shoe category there are several brands and several words floating around to describe them. There is no consistency and no one idea to describe the category that makes sense to consumers. This is going to be devastating to MBT. Some call them “rolly shoes.” I call them “rockers.” Others call them wobbly or balance shoes. The names are all over the place.

 

Another company makes a flip-flop version called FitFlop which it says has “patent-pending micro-wobbleboard technology.” Walking with wobble boards on my feet doesn’t seem like a safe idea. Nor a good branding idea.

 

All this chaos undermines the potential of the category because nobody understands it or knows what to call it. While MBT has avid fans like me, they don’t have a clear message for the general public or the media to spread the word.

 

In addition to the confusion over the category name, there is confusion over the benefit of the shoes. MBT’s benefits range from the ridiculous “cellulite removal” to the relatively tame “improved posture.”

 

A brand should have one clear benefit. The benefit like the category name should be simple, specific, understandable and believable. For MBT is could be: “Makes every walk a workout.” Or “Get 30% more workout in every step.” The more crazy the benefit the less believable it is.

 

For Amazon.com the benefit was “30% off all books.” For iPod the benefit was “1,000 songs.” For Papa John’s Pizza the benefit is “better ingredients, better pizza.”

 

 

The tagline: First problem, MBT has two. Second problem, neither is any good.

 

Brands should have one tagline and use it everywhere: websites, advertising, letterheads, business cards etc. Having a brand tagline “physiological footwear” and an advertising tagline “the anti-shoe” makes no sense. Two taglines are not better than one.

 

Obviously the agency for MBT took one look at the current brand tagline and said we can’t use that!

 

 

So they came up with “The anti-shoe.” The anti-shoe? MBTs are the biggest, ugliest shoes ever made! How can they ever be known as the anti-shoe? Answer: they can’t.

 

But they can be known as the ultimate workout shoe. Every step, every day is a workout.

 

The thing I like most about MBT shoes is that they are so different looking. Every single time I wear them people notice these shoes and stop me to comment on MBTs. They are like the lime in the top of the Corona bottle. You can’t miss the difference.

 

Geox is a fantastic shoe brand known as “breathable shoes,” but the difference is unnoticeable. Unless you look at the bottom of somebody’s feet, there is no way to see the holes that allow the shoes to breathe.

 

When people see MBTs, they can’t help but to ask: What are they? What do they do? Do they work? Where did I get them? When this happens it pains me because the brand is missing a big opportunity. My answers to these questions are weak because the brand is weak. The terrible name, a shaky position and unnamed category leave me with a difficult story to tell about them. Without word of mouth no brand can thrive.

 

If you are single, you might get a pair of MBT shoes. For some reason guys at the gym see these shoes as the perfect excuse to come and talk to me. One guy said “At first I thought you had the funny shoes because one leg was shorter than the other.” Guess he thought that was a funny line.

 

MBT has got to be careful because FitFlop is moving in. They have a memorable and descriptive name along with a cleaver tagline "It's the flip-flop with the gym built in."

 

MBT shoes are a great product but a lousy brand. Such a shame.

An Achy Breaky Branding Blunder

She was named Destiny Hope Cyrus because her parents knew she would do great things. And that is exactly what the girl now better known as Miley Cyrus and/or Hannah Montana has done.

Miley has become an international pre-teen sensation and mega-brand for the Disney Company. She is only 15 years old but Miley is predicted to be a billionaire by her 18th birthday. Not too bad, all your typical teenager brings home is average grades and acne.

Miley Cyrus’ Empire includes:
- Hit Disney channel TV show: Hannah Montana
- 2 multiplatinum albums
- Sold-out concert tour and concert film
- Upcoming movie (due 2009)
- Book deal with Disney (reportedly seven figures)
- Merchandise including lunch boxes, bed sheets and MP3 players

Miley Cyrus is a teenager and a billion dollar franchise. That is a tough combination to manage from a business, branding and personal perspective. You have three forces at odds with one another.

Disney

Disney is in it for the short term. Disney’s goal is to milk the Miley brand as fast and as furious as it can. Why? Because of the short shelf life of a pop-princess. A pre-teen act has 3 to 5 years maximum before the kids grow up or their fans move on.

Disney can treat Miley like an ordinary brand. Ordinary brands in ordinary categories can develop, grow and mature over decades. (Like Red Bull introduced in 1987. )But in 20 years, Miley will probably be lucky enough to get a call back on a third-rate reality cable television show.

Miley Cyrus will grow out of her role as Hannah Montana brand before you know it. She has maybe 3 good years left. Nothing can stop time or puberty.

Ideally Disney would keep Miley in a bubble. With a short shelf life, nobody wants any major slip-ups.

Today Miley is incredibly important to Disney. But five years from now, they will have created another star to replace her.

Miley’s parents

While they are happy to make money now, Miley’s parents, who also manage her career, are also wisely keeping an eye on the future. Her Dad (Billy Ray Cyrus) knows all too well the realities of being a one-hit wonder.

Team Cyrus has to be very worried about how Miley can sustain her fame past 18 years old. It is not easy. There are very few Justin Timberlakes and Britney Spears who go from Mickey Mouse Club to mainstream stardom. Most fade into oblivion.

I imagine it was team Cyrus who wanted to do the Vanity Fair shoot. Vanity Fair is an upscale, sophisticated, cultural, adult magazine. It is the magazine that Tom Cruise and Katie Holmes gave their first baby photo to. And the one Bono was a celebrity editor of last summer.

The thinking goes like this: Appearing in Vanity Fair would give Miley her own credibility and authenticity with an influential adult audience apart from Disney. The photographer, Annie Leibovitz, is one of the most respected artistic photographers of our time and her images would lend an edgy, sophisticated look to young Miley. Clearly Disney would be against this; they want Miley to always be Hannah Montana and stick to Seventeen magazine at the raciest.

Miley Cyrus

Let’s not forget, Miley is a teenager. And as any parent will tell you, teenagers are not the most predictable or reliable of creatures. But for Miley and Disney things have gone perfectly.

The clean-cut, church-going, modestly-dressed Miley has been a dream come true for Disney and parents alike. But you could have said that about Britney Spears 10 years ago. So it goes to show you, you just never know. And sometimes delayed rebellion is far worse than one can imagine.

Britney jumped from Mickey Mouse club to "baby one more time" to this Rolling Stones cover when she was 17. And we have all seen the photos of her today.

Was the Vanity Fair shoot a good idea?

No. From the very start this strategy was flawed.

A few months ago Miley turned 15 years old. She is at the height of her success. Vanity Fair is the wrong magazine, Annie Leibovitz is the wrong photographer and the back-bearing shot was the wrong photograph.

But that was the point of the picture and it shouldn’t be such a shock. An adult magazine wants adult photos. The shot of Miley is a beautiful, artistic, edgy, mature photo commonly found in the book. Vanity Fair does not publish publicity shots, it is known for pushing boundaries. When you play with fire, you can’t complain when you get burned.

The time to move to Vanity Fair is when Miley turns 21. Then you have a story to tell of her move into adulthood. Managing the transition is not easy. Start too young and it is child porn. Start too old and it is creepy.

Will this hurt her brand?

It certainly didn’t help. But it is unlikely to do any long-term damage to the Miley Cyrus brand because:

1: There is nobody else out there for teens to adore. The lack of competition is the best thing she’s got going for her. Hillary Duff is in her 20’s. The Cheetah Girls are in their 20’s. And her biggest competition Jamie Lynn Spears (Nickelodeon star and Britney’s sister) got pregnant last year at just 16 years old.

2: The photo of Miley was shocking but not pornographic. It caused so much attention not because of its raciness, but because it was the opposite of her brand image.

Like I said, being the opposite and looking grown-up was probably the intent of Team Cyrus, but the photo obviously went too far. Although other girls have gone farther, quicker, parents thought that Miley would be different and wouldn’t try to grow up so fast like most other pop-stars.

3: She was not on the cover. Not being on the magazine's cover and being mostly covered is Miley's saving grace. This will allow the controversy to blow off relatively quickly as long as she doesn’t hitting the clubs with Paris Hilton or doing cocaine with Amy Winehouse. And her parents don't book her the cover of Maxim magazine.

Miley immediately issued a statement saying she is “embarrassed” by the photos; so she is likely to get sympathy. Her managers and parents on the other hand will get hell.

While it is good for Miley she is not on the cover. It is bad for Vanity Fair. All this free publicity and they are unlikely to reap any rewards or much of a spike in newsstand sales.

The Future?

While it lasts, Miley needs to enjoy the Hannah Montana ride. Her future is uncertain. If she is like the Olsen Twins, she won’t make it into adult stardom. If she is like Lindsay Lohan, she will make it and then throw it all away by doing drugs. If she is like Madonna, she will be as famous 25 years into her career as she was when she started. The secret to Madonna’s success is that she starts a trend, she fades from view and then she returns reincarnated. Hard to do, but when it works, it is pure magic.

Now playing: Blockbuster Bombs Big

Once upon a time Blockbuster Video was the quintessential success story. A company and a brand that was admired, feared and emulated. With its great name and focused strategy Blockbuster quickly swept the nation via growth and acquisitions to become American’s place to rent movies.

This fairly tale doesn’t end well. Today, Blockbuster is in shambles. Bad decisions, bad strategies and bad management have left the giant gasping for air. Where did it all go wrong? Let’s take a look and find out.

In the beginning things were great.

Great branding and rapid expansion made Blockbuster the world’s largest video rental chain with more than 7,800 stores in more than 20 countries (about 60% of which are in the US). Each year Blockbuster rents more than 1 billion movies and games. Impressive to say the least.

The brains behind Blockbuster was David Cook. In 1985, he created the brand known as Blockbuster by combining a flashy look, a great name and a computerized rental system. Entrepreneur Wayne Huizenga was the money behind Blockbuster.

In 1987, Huizenga took over Blockbuster and injected $18 million into the company. He set out to become the first national brand in the emerging video rental category and the category leader in the mind. In just three years, Blockbuster went from 130 stores to 1,500 stores. In addition, Blockbuster went global. With the purchase of Cityvision, Blockbuster became the largest video renter in the UK in 1992.

The beginning of the end.

Success can sometimes lead to arrogance. And arrogance in this case meant believing you can sell anything, putting your name on everything and being oblivious to the future. Several bad moves sealed Blockbuster's fate.

Bad move #1: Don’t line-extend into businesses you have no business being in.
Blockbuster Music

Feeling quite full of itself Blockbuster launched Blockbuster Music in 1992 by purchasing of the Sound Warehouse and Music Plus chains.

First of all, Blockbuster means movies not music. Second of all, Blockbuster means rentals not sales. Third of all, talk about getting into the wrong business at the wrong time. Retail music chains are a thing of the past. iTunes, Amazon and Wal-Mart are putting them all out of business.

Bad move #2: Be wary of huge corporations taking over your brand.
Viacom takes over Blockbuster and renames the division Blockbuster Entertainment Group.

Big companies have a lot of advantages including lots of money and distribution might. But unfortunately they usually have no marketing sense. Viacom looked at Blockbuster as an opportunity to expand the business into other “entertainment” areas. Bad move.

Corporate ownership isn’t always bad, but when it undermines your marketing strategy and your brand’s authenticity, it can be deadly. For example, Quaker Oats almost killed Snapple. But PepsiCo has done very well with Gatorade.

Bad move #3: Expanding into everything is a killer.
Blockbuster promotes itself as a “Neighborhood Entertainment Center”

Blockbuster greatly expanded the offerings in its stores to make itself a so-called entertainment center. They started selling videotapes (instead of renting them), selling books, CDs, gift items and music.

Consumers don’t use words like “entertainment center.” They rent movies and buy music and watch movies. Blockbuster had a strong and formidable brand in the movie-rental business. Blockbuster’s expansion into other types of entertainment undermines that. They should be saying “Don’t read or listen to music alone, watch a movie with your honey or family tonight.” And they should also be saying “it’s silly to buy a movie you only watch once.”

An attempt to regain its footing

Just when you might have thought all was lost at Blockbuster, the company did make one heroic comeback attempt. In 1997, Blockbuster refocused on movies and returned to its rental roots.

In one of the most brilliant business moves ever, they negotiated with the movie studios and forced them into a revenue-sharing agreement that replaced the standard practice of buying rental copies for as much as $120 each. This move allowed Blockbuster to stock all the latest movies in depth. It also lowered their costs, giving Blockbuster a huge competitive advantage.

Bad move #4: Giving up the future to be greedy in the present.
The DVD takes over and Blockbuster misses the boat.

One thing is for certain, the future will be different than the past, especially when it comes to electronics. In music, there was vinyl, then 8-tracks, then tapes, then CDs and now MP3s. In video, there was Betamax, then VHS and now DVD. Tomorrow it will probably be BluRay and in another ten years something else. Nothing lasts forever.

Blockbuster had a lock on the VHS rental market. With its revenue-sharing agreement, the movie studios received 40% of rental revenues. The formula was such a big success that everybody was happy. A rental window ensured a period of time where a movie was only available for rent before it was available for purchase. And the purchase price was high enough to promote Blockbuster’s highly profitable rental system.

But 1998 was the dawn of the DVD age. And a new technology meant a new agreement between Blockbuster and the studios. The facts are hard to find, but from press reports you can surmise that Blockbuster got greedy and wanted to keep more revenue for itself. Reportedly saying things like “The studios can’t live without a video rental business – we (Blockbuster) are your profit.”

Since rentals represented a $10 billion business for the studios, it was an important market, but today the VHS business is practically $0. Without a new agreement and system for DVDs, the future would be tough for Blockbuster. Too bad they didn’t know back then what they know now.

Warner & Sony which had sunk millions into DVDs didn’t want them to be the new laserdisc but the next VHS. So without a deal with Blockbuster, they moved to plan B. They basically knocked out the rental window and priced DVDs low enough so that they could be sold in competition with rentals. With Blockbuster’s outrageous late fee system, paying $20 to buy a movie could be a lot cheaper than renting it and bringing it back a few days late.

Bad move #5: Getting stuck in the mushy middle
Today Blockbuster is stuck in the mushy middle between Wal-Mart and Netflix.

Turns out people love to buy cheap DVDs. I have a whole closet of DVDs, most of which I haven’t even watched yet and probably never will. I see the case and say, “Gee always wanted to see that movie!” I buy it and then never have the time or patience to watch it. Then there is my closet full of kids’ DVDs. Those are the ones that get watched so many times that the DVDs wear out and I have to buy replacement ones. (All I can say is thank you to Volvo for selling cars with DVD players. Anything to keep two little boys quiet in the car is worth the price.)

By 2003, the studios were taking in three times as much money from DVDs as they were from VHS videos. DVD was the new king and Wal-Mart was the new queen beating out Blockbuster to become the new, single, largest source of revenue for the studios. Making things even worse for Blockbuster is the fact that mass retailers of all types began selling newly-released DVDs below wholesale costs to draw in customers with the hope of selling higher profit TVs and other electronics.

Add to all this, the arrival of Netflix. Like Amazon, Netflix used the internet to offer access to a wealth of titles (100,000 plus) which it delivers and you return via the old-fashioned postal service. A slow process indeed, but with no late fees, no due dates, no postage fees, endless variety and a personal movie queue, it is a system that is a killer. With its most popular plan, Netflix charges a monthly fee which gets you three DVDs at a time with no monthly limit. Simple, clever and cool.

Blockbuster is in the mushy middle. With cheap DVDs selling like hot cakes at Wal-Mart and easy rentals mailing out like crazy at Netflix, Blockbuster has nothing left to sell but its locations. Locations that are costing them an arm and a leg in leases.

Bad move #5: Merging with a loser
Blockbuster trying to take over Circuit City is insane.

Two losers don’t make a winner. Just look at the mess a combination of Sears and Kmart has created. A merger with Circuit City would result in two brands in two different businesses with two sets of problems to deal with.

The last thing Blockbuster needs is more real estate. And the last thing Blockbuster needs is Circuit City, a miserable brand getting clobbered by Best Buy.

In this epic movie, I’m afraid there is no happy ending. If only Blockbuster could go back and rewrite history, maybe things would have been different. But life is not like a movie. Once the scene is shot, there are no retakes.

Hand me a napkin, what a naming mess.

Kentucky Fried Chicken is the world’s most-popular chicken restaurant chain. But while Colonel Sanders’ secret recipe for fried chicken may be finger lickin’ good, the brand strategy has been finger pointingly bad.

In the beginning, things were great. The Kentucky Fried Chicken brand was born in the 1950’s. Colonel Sanders himself created his secret “original recipe” for chicken which he cooked in a pressure fryer to deliver his chicken faster and fresher than the competition. And the Colonel himself travelled from town to town cooking chicken for restaurant owners and signing up franchisees. By 1960, Kentucky Fried Chicken had more than 600 franchised outlets in the United States, Canada and England.

Keys to early success:

1. Be first in a new category.

Pressure-cooked fried chicken with secret spices.

2. Dominate the category.

Kentucky Fried Chicken quickly expanded the business becoming a national then an international chain. The rapid expansion blocked the competition and allowed them to own “fried chicken” in the mind globally.

3. Create a brand personality: Colonel Sanders.

Sure you can succeed by just being first (like Pizza Hunt in pizza.) But you can become so much more powerful if you use a strong spokesperson to lock your brand into the mind. Dave Thomas and Wendy’s. Papa John and Papa John’s Pizza. Michael Dell and Dell Computer. Howard Schultz and Starbucks.
How well known is Colonel Sanders? Well in 1976, an independent survey ranked the Colonel as the second most-recognizable celebrity in the world. Not bad for an old guy from Kentucky selling pressure-fried chicken in a funny suit.

Every brand needs a story. Every brand needs a spokesperson. And Kentucky Fried Chicken has both a wonderful story and a spokesperson. And even though the Colonel had sadly passed on, it doesn’t matter. His image and legend lives on today. It’s just as relevant and integral in selling his namesake chicken as it ever was.

The wave starts to crest.

The mistake most managers make is thinking the good times will last forever. They don’t. You ride a wonderful wave of brand success which eventually either crashes you into the rocks or slowly rolls you into the shore.

Kentucky Fried Chicken is still the biggest and most well-known chicken brand in the world. But it faces a serious problem. A problem management has incorrectly dealt with time and time again over the last 20 years.

The problem: fried food is unhealthy. And people are looking to eat healthier.

So what has Kentucky Fried Chicken been doing? You know what they have been doing, they have been trying to run away from “fried” the only idea they own in the mind, as well as copy every hot new chicken trend.

1. Running from Fried.

In 1991, Kentucky Fried Chicken changed its name and signage to KFC. As if using only initials removes fried from the name. It doesn’t. People may use the abbreviation to refer to the restaurant, but the abbreviation is just short hand for Kentucky Fried Chicken. The focus is still on fried albeit it with a weaker name. Initials are never more powerful than a strong brand name. Changing from a strong brand name to initials doesn’t make sense.

2. Chasing competition.

Boston Chicken was a big success, so KFC launched Colonel’s Rotisserie Gold and Tender Roast chicken.

White Castle was a big success, so KFC launched the Chicken Little sandwich.

McDonald’s was a big success with McNuggets, so KFC launched Kentucky Nuggets.

Were any of these successful line extensions for KFC? No. All have since been discontinued.

What is next?

Today, KFC is going back to basics and expanding all at the same time. And all slapped together in a new name.

First the good news. In 2007 company leaders realized their mistake and wisely went back to the original name and signage of Kentucky Fried Chicken. (Unfortunately most international locations remain KFC.)
Now the bad news. With “fried” still a worry, company leaders are adding “grilled” to the name. As if Kentucky Fried Chicken could become healthy like in some bad reality makeover show.

The new name expected to roll out nationally in 2009 is: Kentucky Fried & Grilled Chicken.

They will have the good, the bad and the ugly all together in one name and one giant mess.

What should they do?

The reality is that people are still eating fried foods and fried chicken. Not too many people are going for the carrot sticks over the fries. The future may belong to healthier alternatives. But the now belongs mostly to tasty higher fat and calorie eats.

I think there is a compromise right in front of Kentucky Fried & Grilled Chicken’s eyes. A way to keep the bad and include the good without resorting to a long and difficult name.

Why not just call it Kentucky Chicken? That name would work globally and solidify Kentucky Chicken as the dominate chicken brand for today and allow them to transition to healthier fare for the future.

Hand me a napkin, this is one mess that can easily be cleaned up.

Don’t coddle the cow. Kill the cow.

Much has been written about the failure to innovate at dominant companies like Microsoft, Coca-Cola and Procter & Gamble. These companies have little chance to innovate because innovation requires letting go, relinquishing control and potentially undermining a cash cow. Something not tolerated in corporate corridors.

Instead of developing innovative products internally, corporate behemoths tend to buy innovation. But like an absent parent who tries to make up for lost time by bringing home a box full of toys, the initial giddiness wears off quickly. After awhile, things haven’t changed and just get messy and difficult.

Why does Microsoft need to buy Yahoo? Why did Coca-Cola need to buy Vitaminwater? Why did Procter & Gamble need to buy Glide? Don’t these companies have some of the best engineers, developers and researchers on the planet?

Of course they do. But what they don’t have is marketing sense; they have only management sense. Management sense tells them to milk what they already have. Marketing sense would tell them to also invest for the future in new categories and new brands.

That is really hard to do when (a) it is so easy and sometime initially so profitable to milk your brands and (b) when you have so much cash you can buy whatever and whomever you want to buy. But is this the best way to grow? Is this the best way to run a company?

I think not. The best way to run a company is by managing your brands much like you would manage a stable of racehorses. Don’t over-train, over-race or over-fed.

Management people often confuse innovation with ideas like Oreo cake sandwiches. That is not innovation; that is a sacrilege.

Innovation usually involves abrupt change that can take years to fully realize. That is why small companies run by entrepreneurs are willing to take chances and big companies run by financial types can’t be bothered because they are more concerned with their next quarters.

Sometimes big companies can make innovation happen. Either because they are down and out and have nothing to lose. Or they get ahead of an emerging new technology and face little competition.

In the first scenario, one can point to Apple. By the end of the 1990s, its future looked bleak. Betting everything on the iPod wasn’t a threat to the cash cow, because Apple’s cash cow was bringing in very little cash. The company was free to chase the future.

In the second scenario, one can point to Orville Redenbacher, now owned by ConAgra but obviously run by entrepreneurial-types. Going from popcorn jars to microwave popcorn bags was a huge shift. Excellence in one area does not necessarily translate to excellence in the other. But the company wisely jumped on the microwave trend early and established its authenticity. Waiting could have cost them dearly.

It took many years to get there, but the future belongs to microwave. And you’d be hard-pressed to find a jar of Orville kernels at your local supermarket. Most are long gone from the shelves.

Sometimes the delineations are clear. Everybody goes from using popcorn jars to using microwave popcorn bags. Or from typewriters to computers. Or from film photography to digital photography.

Sometimes they are not. Most people still drink Coca-Cola but many people also drink Red Bull, Gatorade, Propel, Dr. Pepper and Snapple too.

Microsoft faces the same problem that Coca-Cola and Orville Redenbacher faced. Today everybody uses packaged software. Tomorrow things could be different. Today, all the money is in software packages and closed operating systems, categories that Microsoft dominates. Why would the company want to undermine that?

One motivating force for innovation is getting mad at the way things are and agitating for change. If the enemy is external, nothing charges up the troops like discussions of the enemy and its weaknesses.

But when the enemy is internal, it becomes a much more difficult game to play. It is not safe for internal marketers to offer up solutions that could be seen as hostile. That is why rational, management-type thinking usually prevails. “Let’s focus on what we’ve got, milk what we’ve got and if something else pops up, we’ll buy them.”

So Microsoft goes after Yahoo. Besides the obvious challenges of integration, people and cultures, a merger creates another problem. It creates a company without a focus.

A company without a focus is a company without an enemy. And a company without an enemy is a company without a purpose.

There comes a time when a company needs the courage to kill its own cow. Without the courage to do is, the company has no future.

Which is what happened to Western Union, Wang, Digital Equipment, Polaroid and many other once-famous companies.