Ries' Pieces

Audi's Visual Hammer. An opportunity missed.

                In 1986, CBS broadcast a 60 Minutes segment about Audi entitled "Out of Control." The show chronicled the tendency of the Audi 5000 model to suffer from "unintended acceleration."

                (Three years later, the culprit was discovered. “The major cause," according to The National Highway Traffic Safety Administration, "appears to have been drivers unknowingly stepping on the accelerator instead of the brake pedal.")

                Consumers, however, blamed the car instead of the driver. Audi sales in the American market plummeted. From 74,061 vehicles in 1985 to 12,283 vehicles in 1991.

                In 1990, Audi hired my Dad to help them revive the brand following the crisis and downfall. I remember the case well and was curious about what his exact ideas for Audi were so I dug up a copy of his report. Al’s advice: "Don't try to fight a bad perception. Just change the name."

                Not a bad idea. It has taken Audi another 20 years of struggling to finally get where it is today. Enthusiasts speak to the quality of the cars, but for decades the brand suffered from the crisis and a weak sounding name.

                What if they had listened to Al’s advice? What if they changed the name? What could they change it to? Sometimes there are no good alternatives.

                But in the case of Audi, they had something right under their noses. Audi had introduced a four-wheel-drive model called "Quattro" which Al thought was a good automobile name. And it is! It also focused the brand on a key feature: four-wheel drive.

                The Ries advice: change the Audi brand name to Quattro and import only four-wheel-drive vehicles to the United States.

                What was even more interesting was a single line buried in report: "Interestingly, the four-circle Audi symbol is a natural extension of the Quattro four-wheel-drive concept.”

                Too bad Al didn’t have me and a copy of my new Visual Hammer book to help him sell that idea to Audi. He could have made the point that four circles are a powerful visual hammer for a four-wheel-drive vehicle with a four-wheel-drive name. It would have been brilliant!

Social Media is a Tactic not a Strategy

            It’s the headline of our times “Brand X Moves to Social Media.” It’s the hottest trend in marketing with executives from the corner offices at Coca-Cola to the front lines at the local barber shop talking up Twitter, Foursquare, Groupon and Facebook.

            Since the Great Recession hit, we have been forced to do more with less and what better way to accomplish this than with social media. Compared to traditional advertising, a social media campaign is cheap. But is it effective? It all depends.

            After we wrote the 2002 book “The Fall of Advertising & the Rise of PR” a lot of companies got excited about PR. They ran out to hire PR companies and to launch PR campaigns. This resulted in a lot of lame and ineffective PR campaigns.

            Any company can run an advertisement, but with PR there are no guarantees. You can hire an agency, host an event, run a contest, pay a celebrity, launch a website, pitch reporters and bloggers alike and sometimes the media doesn’t cover it, nobody notices it, nobody tells their friends or hits the “like” button on Facebook.

            And the same is true with social media campaigns. What is social media anyway?  It is an evolutionary development of PR and word-of-mouth marketing. The internet has allowed people to interactively communicate in real-time, 24/7 on a global basis. Both PR and social media are tools but to be effective they need the right brand strategy first. That was the point of our book. We didn't talk about why "doing" PR was good for any brand, we talked about how PR gives new brands credibility and how to develop the right brand strategy to help make a PR campaign effective.

            The goal of marketing is to get your brand into the mind of the consumer. To own a word or a category in the mind. Starbucks owns high-end coffee shop. Google owns search. Twitter owns tweets. BMW owns driving.

            The first question any company must ask itself is, what does our brand stand for? Unfortunately, that question rarely gets asks. Instead, the focus is on what social media can we get into? Too many companies get PR, social media or advertising campaign all wrong. They forget that the brand strategy should come first and the execution should follow. Doing it in reverse doesn’t work.

            A typical example is a headline in today’s NYT “The Tupperware Party Moves to Social Media.” The Tupperware Brands Company has decided to greatly increase its presence in social media like Facebook and Twitter. They will have a Facebook page devoted to the theme “Chain of confidence” and feature women who will be confidence counselors. The company hopes to use social media “to reach out to a younger demographic in a more interesting and dynamic way.” The goal “is to find more disruptive methods to dispel perceptions that we are your mother’s Tupperware,” said Rick Goings chairman and chief executive of Tupperware.

            First thing first. What’s a Tupperware? It’s a party your mother bought plastic tubs at. Changing that perception in the mind is going to be difficult. A Facebook page and a few YouTube videos about confidence are unlikely to change that perception at all.

            “Chain of Confidence” what the heck is that? Since when do confidence and plastic tubs go together? Sure, I get what they are getting at: Women who work for Tupperware gain confidence and skills. But Tupperware doesn’t own confidence; it owns plastic tubs sold direct.

             Broad ideas like confidence and quality aren’t specific enough to be ownable. And even if you want own something like “great customer service,” you don’t do it with a “we love our customers Facebook page.” You do it with a specific and tangible concept like: “Free shipping. Both ways.” The concept that put Zappos in the mind and gave Tony Hsieh something to tweet about.

            What Tupperware needs to do first is focus on the idea. What idea can Tupperware own in the mind? They have to start from where they are at and slowly shift that. Plastic tubs save food. People are eating at home more, bringing lunches to work and school more. I would start with that. There is also the idea of saving the environment. Instead of throwing cheap plastic containers away, you buy Tupperware and keep them around a lot longer.

            Nothing is going to help overnight. The problems at Tupperware have been brewing for a longtime. And many of these ideas would have been better implemented years ago. Nothing works better than pioneering an idea or movement.

            Instead, most brands muddle along and introduce brand extensions like Tupperware stainless-steel pots and pans and rush to do social media not because it makes sense for the brand but because it is the trendy thing to do today.

            Marketing isn’t trendy. It’s simple.

            Focus. Own a word in the mind. Then decide the tactics.

            And if your brand is yesterday’s news, consider the possibility of launching a new brand.

            Social media actually works the best for new brands that are (1) focused (2) appeal to a new generation and (3) have news value.

 

Crazy for Consumers? RIM is insane.

 

            Mike Lazaridis, one of the two chief executives of Research In Motion, is baffled and defensive. In a rare interview, Lazaridis complained, whined and spent more time asking questions than answering them.

            “Why is it that people don’t appreciate our profits?

            “Why is it that people don’t appreciate our growth?

            “Why is it that people don’t appreciate the fact that we spent the last four years going global?

            “Why is it that people don’t appreciate that we have 500 carriers in 170 countries with products in almost 30 languages?”      

            To make matters worse, the exasperated Lazaridis ended with: “I don’t fully understand why there’s this negative sentiment, and I just don’t have the time to battle it. Because in the end, what I’ve learned is you’ve just got to prove it over and over and over.”

            Lazaridis is right and Lazaridis is wrong about RIM’s problem.

            He is right because RIM, the maker of the BlackBerry, has been on a roll. It wasn’t nicknamed the BarakBerry for nothing. From the President in the White House to business people around the world, BlackBerry is the preferred phone.

            During the last fiscal year, Research In Motion shipped a record 52.3 million phones, a 43 percent increase over the previous year. And RIM’s fourth quarter income of $924 million exceeded forecasts.

            He is wrong because RIM has made many marketing mistakes. If you have to prove anything over and over again, you are doing something wrong. Repeating the same thing over and over again and expecting a different result is the definition of insanity. And RIM’s recent marketing moves have been insane.

            What is RIM doing wrong? Why don’t people appreciate RIM’s BlackBerry brand, profits or growth? Because they are fighting the wrong battle. They are focused on the wrong target. BlackBerry has been chasing the consumer instead of chasing its less-sexy business customer.

            Why it is that companies that have great success and profits with business clients feel the need to ditch them for the fickle, finicky and thin-margined consumer?

            Dell has been making the very same mistake for years. Instead of staying focused on businesses, they continue to spend time and money chasing consumers. Consumers who will never think Dell is cool.

            Cisco learned the consumer lesson the hard way, too. After buying Flip cameras for $590 million in an attempt to be cool, they are shutting Flip down. It didn’t work, Flip didn’t make Cisco cool, nor did it make them much money. Compared to enterprise networking systems the Flip profits likely looked too slim to make it worth continuing.

            The reality is the business market isn’t cool or sexy, but it can be extremely profitable. Just ask Cisco. The business market also works very differently than the consumer market. Consumers are less loyal and always looking for the next new thing. Business users are extremely loyal and like to keep the same product or software for as long as possible, sometimes even if it is inferior.

            BlackBerry has been chasing consumers with an array of new phones with touch screens and other flashy features. New, different and flashy is exactly what business consumers don’t want. Flashy and sexy turns off business buyers.

            Not to mention that fighting the sexy war is a losing battle. If BlackBerry is going to compete on beauty, Apple is going to win every time.

            You can’t beat or even compete with Apple on the cool “it” factor. The only way to succeed is to avoid Apple and do the opposite by stayed focused on your core customers.

            For BlackBerry, the core customers are corporate users that value security above almost all else. Consumers who post every dumb photo of themselves online could obviously care less about security. But every company does. And with more and more business communication taking place via phone and email, security is going to get even more important.

            But if RIM wants to get credit for BlackBerry’s successes and wants to continue to thrive in the future, it needs to refocus on security and business. If they let their brand erode too much longer, they risk losing their leadership as well as their luster the way Dell did.

            No business could take a $50 million Dell contract seriously after they launched the “Dude, you got a Dell” commercials. BlackBerry is in the process of making the same mistake.

            There are some other fundamental issues with RIM’s marketing that are problematic:

1.    Why the double-naming?
Research In Motion is a long and meaningless name. And it usually gets shortened to the even worse-sounding “RIM.” The company would be better off just calling itself “BlackBerry.”

2.    Where is the powerful visual?
Apple has the “Apple.” Android now has the “Robot.” Blackberry has some weird dots that nobody understands or even uses. Never underestimate the power of a visual.

3.    Why not focus on three aspects of its core market?
Business. Security. Email. It doesn’t mean RIM can’t sell anything to consumers. It doesn’t mean RIM can’t add cool features like cameras or touch screens. It doesn’t mean RIM can’t launch a tablet. But it does mean that anything RIM does should be tailored to what the business customer wants and needs.

 

            All brands need to stay focused on the battles they can win. Not the ones they can’t. RIM needs to forget about being cool. Ugly can be great and very profitable.

 

 

Coupons, Groupon and Cocaine

         These days marketers are going in exactly the wrong direction.

         The recession has caused a lots of companies to panic. And when companies panic, they print coupons and throw up sale signs. Look in your mailbox, your email inbox or your newspaper and you will see what I mean. Everybody is having a sale.

         But does this coupon-sale-discount strategy work?

         Yes and no.

         Yes, in the short term coupons, sales and discounts do work. Discounts bring in customers and ring up sales. But the short term is not the only thing that needs to be considered when building a business and brand.

         Coupons are like cocaine. The first time you do it, it is the best feeling in the world. But over time it takes more and more of it to achieve that same feeling. And then you need it just to function. You are a cocaine addict. From the mug shots of Lindsay Lohan and others we know how personally destructive cocaine is, yet we fail to realize the similar brand-destroying danger of coupons.

         Think about it. The effects of coupons, sales and discounts are exactly the same as cocaine. The first time you get a discount card in the mail you are elated! Wow! 10% off, 20% off, 2-for-1! You might rush out to the store and take advantage of the offer. But next time you drive by that store you think, I’ll just wait and see if there are any more coupons coming. Next time you drive by that store you get mad since you forgot the coupon. Eventually you refuse to step into the store without a coupon.

         Try checking out of one of these stores without using a coupon and even the sales clerk looks at you like a pathetic loser. Nobody pays full price here what’s the matter with you! She may even reach down to pull out a coupon of her own to give you.

         Coupons and discounts do one thing every well. They teach consumers that your regular prices are too high. A lesson consumers learn very quickly. Once they think your regular prices are too high, they won’t buy from you until given a discount. And desperate companies are too quick to oblige.

         High-low pricing is devastating to the consumer’s opinion of your brand. It’s also devastating to your bottom line. If you are giving away the merchandise, you aren’t making any profits.

         You might be thinking in this economy what other choice do I have? My competition is doing deals so I have to do them too.

         Wrong. Its peer pressure. But Mom, all the other kids are doing cocaine so I have to do it too. No parent would buy that argument. And no marketer should either.

         What is even scarier is that there is excitement surrounding the rise of coupons. Look at the recent love affair with Groupon. A recent front page article of Advertising Age magazine proclaims “Suddenly, Everyone wants to be on Groupon.”

         Suddenly, everyone wants to damage their brand by undermining its position with Groupon! Great.

         Many marketers make it even worse by thinking that Groupon can help their brand and don’t acknowledge any downsides. Instead of a Valupak delivered in your mailbox, Groupon is an electronic coupon delivered via the internet.  

         It is new? Yes.

         Is it a cheaper form of discounting? Probably.

         Do consumers like discounts? Yes.

         Do discounts build your brand? No.

         Do discounts damage your brand? Yes.

         For local and small businesses, the rise of Groupon is seen as the obvious answer to the decline of the Yellow Pages. The marketing dollars for local businesses used to be predominately spent on a listing and an ad in the Yellow Pages. And for decades, this approach was enormously  effective.
         Of course, today the internet has made the Yellow Pages obsolete.

         So how do you build a business whether you are Joe, the Plumber or JC Penny? It comes down to basic marketing philosophy.

         Do you build a brand by:

         1) Standing for something in the mind of the consumer?

         2)  Offering coupons and discounts?

         My answer should be obvious, you build a brand by standing for something in the mind.

         If you are Joe, the Plumber you might be the leading plumbing company in your area, you might be the 24-hour plumber focused on fast service, or you might be the high-end plumber focused on custom work, or you might be the plumber focused on commercial jobs or you might be something else that is focused and clear.

         In any case, Joe needs a good name and a strong, unique visual. He needs to verbalize his focus so his customers can pass along his message. He needs to put his message on his truck, website, business cards. He may also need to advertise his message and credentials.

         Many small businesses today are desperately looking for an easy replacement to the Yellow Pages. So they have jumped on Groupon as the Holy Grail.

         I’m sorry to tell you, but Groupon isn’t the messiah as the hype promises. To me it looks more like coupons in sheep’s clothing.

         Coupons don’t build a brand, they destroy it.

 

BP has a Brand Problem

They talked the talk but never walked the walk.    

    No industry is more loathed and distrusted than big oil. But while people may hate the industry, oil is a necessary evil that our society depends on. Like it or not, oil companies aren’t going anywhere.    

    Like many companies in unpopular industries, BP launched a massive advertising campaign to put a little lipstick on the oil pig. Advertising is not very good at changing strongly-held perceptions, but in BP’s case it actually worked.

    Too well, in fact. Its “Beyond Petroleum” campaign was able to move the BP brand from the bottom of the barrel to one that was perceived by consumers as one of the greenest petroleum companies in the world. Actually, BP was at the top of a list of companies that had become greener in the previous five years.   

    But the “holier than thou” tone of BP’s advertising placed the company on a perilously high green pedestal it was sure to fall from.    

    A little history might be in order. BP traces its beginnings back to English adventurer William D’Arcy. Bankrolled by Burmah Oil, D’Arcy’s firm in 1908 was the first company to strike oil in the Middle East.

    The following year, the two companies formed Anglo-Persian Oil and in 1914 the British government took a 51% stake. In 1954, Anglo-Persian changed its name to British Petroleum, the name used on its popular gasoline stations in Britain and across continental Europe.    

    British Petroleum merged with Amoco in 1998, and changed its name to BP Amoco. Then two years later, after ARCO, Castrol and a few more companies were added, the company dropped “Amoco” and became just “BP.”    

    In a press release announcing the change, the company justified keeping the BP name because of its recognition around the world and because it stood for the new company’s aspirations: “Better People, Better Products, Big Picture, Beyond Petroleum.”

    In 2000, a rebranding effort was unveiled. It included a new green-and-yellow sunburst logo and a new slogan “Beyond Petroleum.” Launched with a massive $200 million advertising and public relations program, BP was talking the talk of a new, more environmentally-friendly energy company.    

    Unfortunately, BP never walked the walk. Ten years later, BP is still the big oil company it has always been. In the first quarter of this year, BP revenues were $73 billion, only $700 million (less than 2%) were from alternative energy. So much for moving beyond petroleum.    

    The fact that BP is still an oil company isn’t what hurts the brand. What hurts the brand is that BP is an oil company with a terrible reputation for safety. Known for cutting costs on safety and maintenance to increase profits, the company has suffered several disasters over the past few years. (The spill in the Gulf was just the latest and the largest.)

    ·    In 2005, an explosion at BP’s Texas City refinery killed 15 workers and injured 170 others.

    ·    In 2006, 267,000 gallons of crude oil leaked from an Alaskan pipeline maintained by PB. Later that year, another BP Alaskan pipeline suffered a catastrophic split which led to a temporary closure of Alaska’s entire oil supply. “Severe corrosion” caused by cost-cutting and lack of maintenance on BP’s part was blamed for the split.

     ·   Numerous safety and environmental violations from these events and others forced BP to pay $485 million in fines in the United States alone in the past five years.    

    To a company that posted $5.65 billion in profit in the first quarter, the fines are minuscule But the enormous profits show just how greedy and callous management is for not running a safe and ethical company. How could management watch reels of its television commercials knowing all too well it was failing to deliver on its promises?

    The spill in the Gulf has pulled the curtain off of a company that has been blowing smoke up our butts for years. No consumer, regulator or politician will soon forget this tragedy.     Producing oil is an dirty and dangerous business. Pretending it’s not makes disasters like this all the worse. And make no mistake, these disasters are not easily forgotten.

    Consider Exxon-Mobil, the world’s largest private oil company. Its methods of operations are today considered the gold standard in the production of oil. Yet, Exxon still remain cursed by the images of oily seabirds from the Exxon-Valdez disaster 21 years ago.    

    Strong brands with a reputation for quality, safety and honesty are able to survive even the worst tragedies and negative PR stories. Toyota, Tylenol and Goldman Sachs have faced some dark days recently, but for them the future is still bright because the brands are strong.    

    For BP, not so much. A brand with a poor reputation facing one of the worst oil spills ever is damaged goods. No amount of advertising can fix this. Anything BP says will no longer be believed. You can fool us once, but never again.

Domino's Should Apologize

      Everybody knows the rule. When you do something wrong, you say you are sorry. As a society we love to scold but we also love to forgive. And the simple act of just “saying” sorry goes a long way in righting many wrongs.

      But how, when and why you say you are sorry also matters.

      Say it too often and nobody will believe you anymore. Detroit has been begging for forgiveness for decades.

      Say it with advertising instead of PR and it looks phony. JetBlue ran full-page ads saying it was embarrassed and sorry for holding passengers over six hours with no water on runways during an ice storm. Yeah, right.

      Say it when you don’t have to and you create guilt where it may not have existed before. Domino’s current ads do just that. Domino’s goes out of its way to portray its guilt and lack of action for decades. And in the process mocks the stupidity of its customer base.

      At its site, Pizza Turnaround Domino’s proudly asks and answers: “Did we actually face our critics and reinvent our pizza from the crust up? OH YES WE DID.”

      And I say, OH NO YOU DIDN’T! The lack of brand and customer respect is astonishing.

      In a display of contradictions,  Domino’s admits it has been producing a horrible product for the past 40 years, devoid of flavor, taste, aroma and even “real” ingredients. Yet, they also brag about the obvious success of the brand.

      Domino’s is the world’s #2 pizza chain with sales of $1.4 billion and almost 9,000 locations in more than 60 countries (5,000 of which are in the United States.) It must be some kind of miracle that a company could sell $1.4 billion worth of such a disguising product given the stiff competition. Somebody obviously liked the pizza.

      When a brand faces a crisis, there is no doubt that an immediate public apology is best. During a crisis the flood of negative stories need to be countered with the sincere voice of the brand giving an open, honest, direct apology. Tiger Woods should have immediately apologized to his fans, his sponsors, and his wife. His silence cemented his guilt and lack of remorse.

      Currently Domino’s is facing no immediate crisis on taste. There are no cardboard pizza protests or processed cheese boycotts in the headlines.

      Winning the “taste” battle isn’t always even important. Many leading brands don’t win any taste challenges. McDonald’s, Coca-Cola and Starbucks to name a few.

      Of course back in the spring of 2009, Domino’s did face a very real crisis when two idiots working in a North Carolina store posted vile and juvenile sandwich shenanigans on YouTube. Domino’s did the right thing by striking back with a message from CEO Patrick Doyle. It would have been better if his message was not pre-recorded, if Patrick had more television presence and if Domino’s had released it sooner. But hey, they tried.

      But in this case, Domino’s took decades of customer criticism presented a federal case against itself creating its own media firestorm.

      It reminds me of the commercials that launched New Coke. In the ads, Coca-Cola announced that the “Real Thing,” the most powerful brand in the world, wasn’t actually very tasty. So Coca-Cola was discontinuing it in favor of New Coke. Nobody said that the people running companies were always very smart. New Coke has gone down in history as one of the worst management decisions ever.

      Well, “New” Domino’s might be a similar case. The worst thing you can do to an iconic brand is enact radical change. New Coke and the disastrous Tropicana repackaging show us that change (even positive change) is most often greeted with anger and resentment by the public and especially by loyal fans.

      Consumers don’t want different. Customers don’t want to be surprised. As Holiday Inn used to say, “the best surprise is no surprise.” That is what strong brands deliver. No surprises. The same thing, the same look, time after time.

      That doesn’t mean that a brand has to remain exactly the same forever. But it does mean that brands need to change very, very slowly and subtly. Coca-Cola has changed its original formula several times, but nobody notices. UPS has updated it logo several times, but nobody notices.

      Sure, Domino’s needed to work on its quality, consistency, flavor and taste. But not all at once. Even worse than doing it all at once is the fact that Domino’s launched a massive television campaign and internet site to promote that the pizza has really sucked all these years.

      Why was Domino’s successful in the first place? From watching the current ads, you would think it was because they got lucky and had stupid customers who had no taste in pizza and who were too lazy to look up another pizza place’s phone number. Wrong.

      Domino’s was successful because it pioneered a new category in the mind. Domino’s focus on “delivery” allowed it to do delivery faster and cheaper than the competition. Domino’s burned its delivery focus into the mind with its simple and specific “30 minutes or its free” slogan.

      The reality is that Domino’s real competition is not Pizza Hut or Papa John’s. The real competition of all the chains are the local pizzerias that still make up the bulk of the pizza market, only 35% of the market belongs to the big national brands. How are local brands different? Local brands emphasis local flavors and tastes.

      You build a brand by being the opposite of the competition. To build an international chain, Domino’s pizza needed to a simple taste that everyone would enjoy. So Domino’s was rather bland on purpose.

        And the truth is that many customers actually prefer a bland experience. It’s why kids like McDonald’s hamburgers, they are bland. And it’s why McDonald’s is the world’s largest restaurant chain.

      What Domino’s is currently doing to one of the world’s greatest brands is criminal. Domino’s definitely owes us all an apology, but not for the taste of its pizza. Domino’s needs to apologize for its foolish brand strategy.

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.