Ries' Pieces

High Fructose Corn Syrup, not so sweet.

            Would a sugar taste as sweet by another name?

             I say absolutely. Even sweeter.

            High fructose corn syrup has become public enemy number one in the fight against obesity. Having successfully attacked trans-fat the food police have turned to high fructose corn syrup with great vim and vigor. And great success.

            Sales of high fructose corn syrup are in rapid decline. Consumption of corn-derived sweeteners sank 20% in the past decade compared to only a 3% decline in refined sugar.

            Just as we saw with trans-fat, food companies are racing to replace high fructose corn syrup with sugar in their products. Hunt’s ketchup, Gatorade, Wheat Thins, Ocean Spray juice and all the baked goods at Starbucks now are being touted as made with real sugar.

            But what is “real” and what is not? Hard to say. But when you give your product a name like “high fructose corn syrup,” it doesn’t sound very real at all. In fact, the name sounds dangerous.

            Yet most experts agree that sugar is sugar. “Leading scientists,” reported The New York Times, “say that high fructose corn syrup, made when various chemicals convert corn starch into syrup, is not any worse than sugar. Both sweeteners are made up of roughly equal amounts of glucose and fructose.”

            Ironically, what happens in a modern corn-refining plant is just like what happens in your mouth where an enzyme breaks up starch (a polymer made up of thousands of sugar molecules) into sucrose, glucose and fructose.

            But I am not here to argue about the science. Personally, I try to eat as little processed food as possible. Overly-processed foods and sodas containing either high fructose corn syrup or refined sugar are unhealthy and should be eaten sparingly.

            What I am here for is to analyze the branding of high fructose corn syrup.

            There is an interesting twist to this story because my Dad/partner Al Ries handled the advertising account for Corn Products International back in the mid-70’s.

            After the FDA approved high fructose corn syrup in the 1970’s, Corn Products hired Al to run a campaign to urge manufactures to switch to its high fructose corn syrup product. The main target was carbonated drinks since high fructose corn syrup was less expensive and also a liquid making easer to blend into drinks.

            The name used for the corn product was “55-percent high fructose corn syrup.” The 55 relates to the strength of the sugar, 55 is the same sweetness level as table sugar. Al’s first reaction to the name was “Wait a minute, that name is going to cause you problems! Why don’t you call it corn sugar?”

            Al’s agency developed a series of trade advertisements promoting corn-sugar. “Consider all three types of sugar,” said one headline. And the copy outlined the advantages of corn sugar over cane sugar and beet sugar.

           The ads were a hit, but neither Corn Products nor the corn industry did anything about changing the name of product. Would it have been easy to get the FDA to approve the “corn sugar” name? No. But it would have been worth the fight.

            Initially, the negatives of the high fructose corn syrup (HFCS) name didn’t hinder the rise of the category because the economics of high fructose corn syrup were so clear-cut. Because of its low cost and ease of use, HFCS now dominates the food and beverage sweetener business.

            Because it’s a syrup it’s clear to understand how much easier it is use. But why is high fructose corn syrup so cheap?

            A system of sugar tariffs and sugar quotas imposed in 1977 significantly increased the cost of imported sugar in the U.S. The cost of domestic sugar is artificially inflated to almost twice the global price. On top of that, the price of corn is artificially low because of government subsidies paid to growers.

            Today, HFCS is still cheap, but public opinion has turned against the sweetener leading to rapidly declining sales. What was the reaction of the Corn Refiners Association? Advertising. Two years ago, they started a $30 million campaign touting the “Sweet Surprise” of corn sugar. Did this help? No, of course not. Advertising is a terrible way to change a strongly-held perception.

            The perception is that high fructose corn syrup is worse for you than sugar. Well with a name like that, how could it not be?

             A name is important in creating a perception in the mind. And the not just the brand name, but the category name as well.

            Every brand has two names: a brand name and a category name. It’s not just Red Bull, it’s Red Bull energy drink.

            Too many marketers take the category name as a “given” or even worse they think it doesn’t matter. So all their efforts are spent on promoting their brand name, not the category names.

            This is a mistake. The category name is an extremely important element in the success of a brand. The consumer is more interested in the category than the brand. In the mind, the brand just represents the category. And if your category has the wrong name, you are going to be in trouble, no matter what the brand is.

            Take diet cola versus light beer. About 70 percent of carbonated beverages sold in America are regular-calorie products. Only about 30 percent are “diet” products.            

            Beer is different. Today, “light” beer accounts for about 60 percent of the U.S. market. And regular beer accounts for about 40 percent.

            Light beer is a roaring success. Diet cola and the other diet beverages are not.            

            One reason for the difference is the category names themselves. Calling a product a “diet” cola screams out loud and clear, “You’re not going to like the taste.”

            Calling a product a “light” beer sends a different psychological message, a message that can be twisted into a benefit. With a light beer, you can drink more of the product, as exploited in the famous Miller Lite campaign: “Tastes great. Less filling.”

            For corn-syrup producers, the high-fructose name was a time bomb. But it has taken decades for the bad name to sabotage the category.

            Outside the U.S., realizing their mistake, the major cola companies are using “light” as the category name and not “diet.” The recent success of Coca-Cola Zero shows dropping the “diet” is a better direction for a brand.

            The existence of “diet” colas sends a dual message to consumers, both of which are negative:

            (1) There are too many calories in regular colas.

            (2) Diet colas don’t taste as good as regular cola.

            On the other hand, few consumers react negatively to light beer. But suppose Anheuser-Busch had called its leading brand “Diet Budweiser?”

            Joe Sixpack would have laughed. And ordered a Miller Lite.

            A good category name should be simple, easy to remember and imply a benefit.

            What if Activia had called its product “high bacteria microorganism yogurt?” Technically, that is what Activia is. But instead they used the much better “probiotics” category name.

            Probiotics sounds like a benefit. Corn sugar sounds like sugar. High fructose sounds like hazardous. Too bad the industry didn’t take Al’s advice in the 1970’s and change the name to “corn sugar.” Unfortunately now it might be too late to do today.

 

You can also check out my segment from yesterday's CNBC's Power Lunch where I discuss HFCS.

McDonald's Goes Above & Beyond

     It seems that no brand is safe these days. From Toyota, the world’s largest car maker. To Tylenol, the country’s largest over-the-counter drug. To McDonald’s, the world’s largest fast-food chain.

      Each of these three brands has suffered massive recalls with the potential for massive brand damage.

      That said, even if its response to a disaster is less than perfect, a leading brand has an amazing ability to survive. Consumers believe the leader is better and runs a better company than its competition. As a result, consumers are willing to give the leader the benefit of the doubt. Consumers will almost always give a leader a second (or even a third) chance to make things right.

      One catastrophe won’t normally bring down a leading brand. The only thing that will bring down a leading brand is continuous and escalating catastrophes. Something we haven’t yet seen. (Remember, way before the current Gulf spill, BP wasn’t the leading oil company and also had a poor reputation for safety.)

      Even though a leading brand has more damage-control leeway doesn’t mean a leader should sit on its laurels when disaster strikes. A leading brand can reinforce its dominance by responding above and beyond what is expected.

      That is exactly what McDonald’s is doing.

      Last Friday, McDonald’s moved at lightning speed and initiated a voluntary recall of its popular Shrek glasses that contained trace amounts of a toxic metal in the paint. The tainted glasses were first discovered by a band of Moms with heavy-metal home-tests and then reported to California Congresswoman Jackie Speier and to the Consumer Products Safety Commission (CPSC.)

      While the spread of the tainted-glassware story certainly posed a problem for McDonald’s, the glassware itself wasn’t all that dangerous. Chief spokesperson for the Consumer Product Safety Commission told Fortune magazine that “the product was not toxic and does not pose an acute risk to children,” adding that “the risk to consumers was very low.”

      Many companies would have used this evidence to counter-attack critics. Many companies would have also shifted the blame to a supplier. (McDonald’s didn’t make the glasses and the supplier was a U.S. company. McDonald’s didn’t buy the glasses from a shady Chinese factory.)

      McDonald’s did neither. In its response, McDonald’s went above and beyond. It quickly recalled all the glasses. And it is paying consumers a premium for returning them. McDonald’s will pay a whopping $3 in cash per glass. (They had been selling the glasses for $1.99 with a food purchase and $2.49 without food.)

      For a company to pay above the purchase price for a recall is almost unheard of. But in McDonald’s case, the extra money is being well spent.

      Paying above the price of the glasses does two things. First, it gets more of the unsafe products out of the marketplace. In a typical recall, only 10 to 30 percent of consumers respond. I imagine McDonald’s numbers will be much greater.

      Two, it shows that McDonald’s doesn’t just care about the recall, it also cares about its customers. It is compensating them for the recall and making sure it gets as many glasses out of the hands of children as possible.

      While Toyota and Tylenol underestimated their problems and delayed responding to them, McDonald’s has done just the opposite.

      McDonald’s went above and beyond. They overestimated and overcompensated. I’m lovin’ 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.

What should Goldman Do?

 

What does Goldman Sachs need to do to save its brand? In a word, nothing.

 

A strong, powerful, leading brand is practically bullet-proof.

 

It’s not what you do wrong that determines if your brand will survive a scandal. It’s how strong your brand is in the mind that determines if your brand will survive. Strong brands survive even the worst catastrophes, while weak ones can easily be destroyed by minor ones.

 

Goldman may have cheated a few clients and Tiger definitely cheated on his wife but it doesn’t really matter. As long as Goldman makes money and Tiger makes good golf shots, neither brand is likely to suffer any long-term damage.

 

Is that fair? No, but that’s life. And that is why it is so important to build a brand in the first place. And even more important to build a brand that dominates a category.

 

When you dominate a category, your existence is crucial to that category. The category needs you and will support you. Investment banking needs Goldman in the same way the PGA needs Tiger Woods.

 

What made the Goldman brand so special? Goldman is the gold standard. It is the world’s largest and most respected investment bank. The “culture of success” is how the firm is described.

 

So while Goldman Sachs stock dropped on Friday after the SEC charges, it was back up again on Monday. Why? People saw it as a buying opportunity. Buying a strong brand at a discounted price. Not unlike the situation at Toyota.

 

After its cars were found to have unintended acceleration problems, the Toyota brand was hit with a huge crisis. Even worse, it seems that the company knew about the problems and delayed reporting them and delayed recalling the vehicles.

 

Will this destroy the Toyota brand in the long term? Nope. Toyota is the largest auto maker in the world and owns “reliability” in the mind. Consumers will give Toyota the benefit of the doubt and a second chance to make things right.

 

This wasn’t the case for poor Audi. After 60 minutes accused the car maker of the same unintended acceleration issues (which were eventually proven false), Audi’s sales plummeted. Audi was a weak brand in the mind. So the negative news took over and that was all people ever thought of when they hear the name Audi.

 

I’m not saying that Toyota or Goldman should do nothing. I’m just saying that neither needs to do anything to save their brands. For a leading brand, getting back to business as usual and giving the crisis enough time to blow over is pretty much enough to save the brand.

 

In the case of Goldman, it would definitely be a good idea to apologize and solemnly swear to do better in the future. Firing the mastermind of the Abacus deal, Fabrice Tourre, who calls himself “Fabulous Fab” wouldn’t be a bad idea either. Bringing in a respected outsider to help advise the board is another good idea. Someone like Warren Buffet whose firm is already one of Goldman’s largest investors.

 

Saying sorry, showing actions and following through with future reforms are all the classic ways to survive a crisis. Unfortunately, these work a lot better and a lot easier if you have a strong brand. If your brand is weak, you can hold as many press conferences, run as many ads, fire as many people and it won’t matter.

 

What ensures that Toyota, Goldman and Tiger will survive the scandals is the strength and dominance of their brands.

 

Bad press and scandals can happen to anyone. Your best defense is to build a strong brand to begin with. That and praying for another volcano to erupt and take over the front page of the papers.

 

It's what Tiger does next that counts

    Tiger Woods was a rare breed. A phenomenal athlete who delivered consistent record-shattering victories on and off the course with style, grace and integrity.

 

    In an intense game like golf, Tiger built his reputation by performing under pressure. And like his idol Jack Nicklaus, Tiger transcended from being one of the best athletes ever to being one of the best celebrity brands ever.

 

    The latest Forbes Celebrity 100 list put Tiger at number five just behind Angelina, Oprah, Madonna and Beyonce. And ahead of Springsteen. Not bad company.

 

    In sports, Tiger reigns supreme. For the eighth straight year, Tiger was the highest paid athlete in the world and last year was one in which he rarely played golf after being sidelined following knee surgery. In fact, nobody even comes close to the Tiger Megabrand. Tiger out-earns the number two athlete by more than two to one.

 

    That was then, this is now. The world’s good boy has suddenly gone bad. The guy who seemed to be perfect in every way has been discovered to be a mere mortal like the rest of us. Even worse, he seems to be flawed in some very disagreeable ways.

 

    No one was as proud of Tiger Woods as his Dad, Earl Woods. In an 1996 Sports Illustrated article, Earl famously referred to his son as the “chosen one” and predicted he would have “the power to impact nations.” Tiger certainly has enormous power but poor Earl must be rolling over in his grave over the news of the past few days.

 

    Tiger’s fall from grace is a catastrophe we have never seen before because Tiger was a brand we have never seen before. Tiger’s image was so pure, so squeaky clean and so universally appealing that his God-like status, his walking-on-water video and the founding of the First Church of Tiger Woods all seemed so well-deserved.

 

    Tiger’s universal appeal and lack of negatives made him the perfect pitchman. The big blue-chip brands that were lucky enough to sign Tiger knew he was worth every million they spent because of the trust and image Tiger brought to the table. Brands like Nike, Accenture, Gatorade, Gillette, American Express and Tag Heuer banked on Tiger and that unflappable image. Each of these brands played off Tiger’s image of integrity and performance under pressure.

 

    Slogans like “Just Do It” for Nike and “Go on be a Tiger” for Accenture resonated with people in powerful ways. Today they taken on whole new meanings.

 

    My favorite Accenture headline says “It’s what you do next that counts” and shows Tiger with his ball on the rocks, focused on how to get back on the green. For anybody else, the shot would be impossible.

    This is the perfect metaphor for Tiger today. What done is done. You can’t change the past or your last shot; you can only focus on what to do next.

    

    The world is waiting to see exactly what Tiger does next. What he does next is what counts and what will determine his future.

 

    Keeping his endorsements isn’t really a concern. Companies like Nike, Gatorade and Accenture are so tightly tied up with Tiger they are unlikely to cut him loose unless he goes out and kills somebody. In addition, Tiger’s sponsors are heavily male-oriented brands, so Tiger’s new ladies’ man image isn’t likely to hurt him much. Married, middle age women were never the target market when it came to Tiger’s sponsors anyway. Tiger is unlikely to gain any new sponsors, but he is making so much money now he doesn’t need more sponsors.

 

    Keeping his wife is definitely a concern. Tiger could buy a “Kobe Special” (in reference to the $4 million ring Kobe Bryant gave his wife) and refocus and rededicate himself to her. Or Tiger could do an A-Rod and divorce his wife and start hitting the Hollywood scene. (A-Rod has been linked to stars such as Madonna and Kate Hudson.) What will not work well for Tiger and his brand is an uncertain situation and the continued tabloid storylines of ups and downs with his wife. He is better off deciding right now to stay or go right now. Or maybe his wife and her nine-iron will make the decision for him.

 

    Keeping his fans is a big concern. Tiger used to be a universally likeable entity. Things everybody loves? Puppies, apple pie and Tiger.

 

    Today, Tiger has become extremely polarizing. Topics to avoid at your next cocktail party? Religion, politics and Tiger.

 

    Oddly enough, the business of golf stands to benefit from all this hoopla. The next tournament and the next PGA championship Tiger plays in will likely garner very high ratings. Everyone wants to see exactly how Tiger will perform under the extreme pressure.

 

    And just like the Accenture ad says, it is what you do next that counts. If Tiger can win, keep his cool and reconnect with the public everything is likely to be OK. Winning changes everything.

 

    In 2003, Kobe Bryant was charged by a hotel employee with sexual assault. The case when on for over a year when the changes were dropped after the accuser became unwilling to testify.  The accuser eventually settled a civil suit with Kobe out of court. With his wife at his side, Kobe admitted in a press conference to an adulterous encounter with the young lady. Sponsors like McDonald’s quickly dumped Kobe and others like Nike and Sprite put him on the back burner.

 

    Today, Kobe is a leading sports and celebrity superstar. He ranks as #3 in the world in athlete earnings with $45 million a year in earnings, a rank he shares with Michael Jordan. Kobe has come out with the fourth edition of his signature sneaker line with Nike the Zoom Kobe IV. And he continues his relationship with Cola-Cola however Kobe has been moved from the Sprite brand to the hipper VitaminWater brand.

 

    What won over his fans and corporate sponsors? The $4 million ring he gave his wife? Forget it. It was his success on the court that turned it around for Kobe. After Shaq left the Lakers in 2004, Kobe became the cornerstone of the team franchise. He led the NBA in scoring in the 2005-06, and the 2006-07 seasons. In 2008 he won a gold medal at the summer Olympics. He won his fourth NBA championship in 2009 as well as the finals MVP award.

 

    Alex Rodriguez was tabloid fodder plagued by steroid rumors, a nasty divorce and poor playoff performances. But all the negatives seemed to be old news after the Yankees finally won a World Series with A-Rod this Fall.

 

    A lot of damage, ill will and misdoings can be corrected by excellence on the playing field. If Tiger takes a championship or two in grand style in 2010, we might look back on all this as a minor blip. An incident that brought depth, grit and humility to Tiger.

 

    If Tiger takes another wrong turn and underperforms on the greens, we might look back at him with the same disbelief and disgust as one views Lindsey Lohan.

 

    It is what you do next that counts Tiger. Go on be a Tiger. Believe it or not, people want you to win.

Don't Tinker with your Brand!

 

 

The economy is in trouble. The stock market has gone haywire. And consumers have drastically reined in their spending. These are not good times for most companies and most families.

 

But now is not the time to panic. Now is the time to preserve. To preserve your brand, its meaning and its identity by staying focused.

 

In the face of uncertainty, focus is more important than ever.

 

Of course, it is not easy to be calm and steady amidst such economic turmoil. Your natural instinct is to get out there and do something. To actively tinker with your brand to keep it afloat.

 

Economic markets rise and fall like the ocean. Strong brands will survive no matter what the tide. The key to long-term success is riding the waves up and down using your brand as a steady rudder. You should not attempt to sail against the current. And you should not over steer the ship.

 

Changing your strategy depending on the economy is a trap that many companies fall into. That is the worst thing to do.

 

When times are good, companies often launch expensive versions of their brands like Folgers Gourmet. When times are bad, companies often go downmarket with coupons, discounts and sales.

 

Can't afford the $160 six-course meal at Wolfgang Puck’s Spago anymore? No problem, now you can get cheap Puck eats, like a BBQ Chicken Salad for $6.95, at Wolfgang Puck Express. “Express” is just a code word for cheap, many companies are using it.

 

Brands that stay strong and survive no matter what the weather are those that stay consistent. Your brand has meaning and strength only if it owns something in the mind. And the more you adjust and tinker with that meaning, the weaker your brand becomes.

 

Now that the economy is hurting, the worst thing you can do is to launch cheap versions of your brands or go the sale/coupon route. That just tells consumers your products weren’t worth the high prices you have been charging all these years.

 

Coupons are like drugs; once consumers get hooked they won’t shop without them. Only a fool would go to Ann Taylor Loft or Bed, Bath & Beyond or Cache without a coupon. Several times I've driven by these stores and wanted to shop for something but refuse to go in because I left the coupon at home.

 

Companies need to think long term not just short term. The choice is maintaining the brand or maintaining the sales.

 

Why not both, you may say. Well, when times are great that may be easy to do. But in today’s market that is going to be tough. Everyone’s sales are likely to go down. You need to focus on maintaining your marketshare and your mindshare not your sales.

 

The goal is to preserve your brand, ride the storm and wait for sunnier days that will eventually come.

 

If you only look at your numbers over the next few months, you are going to be in trouble. You need to think like a marketer and view the situation holistically. Because what might allow you to make your numbers today could sink your ship tomorrow.

 

Why should you care about your brand? Why not just look at the numbers?

 

Because your brand is what allows you to make a profit. Your brand is why people are willing to pay more for your product or service. And profits are what make company’s successful. Not just sales.

 

When you destroy your brand, you destroy your company’s ability to make profits.

 

Look at Sony, once a strong a powerful brand that has been decimated by years of reckless expansion. Compare Sony with Nintendo a company that just makes videogames and players.

 

In the last 10 years, Sony has had sales of $658.3 and net profits after taxes of $12.1 billion, or a net profit margin of just 1.8 percent. (In America, that would get a CEO fired. No wonder Sony is now run by an Englishman, Sir Howard Stringer.)

 

In the last 10 years Nintendo has had sales of $48.3 billion and net profits after taxes of $7.5 billion or a net profit margin of an astounding 15.5 percent. (More than eight times as much as Sony.)

 

No wonder Nintendo is worth more than twice as much on the stock market as Sony, a company more than 13 times as large.

 

Sony is worth $26.5 billion. Nintendo is worth $54.1 billion.

 

Sony is a well-known but weak brand. Nintendo is a strong, focused and profitable brand.

 

I know it is ugly out there in the marketplace, but do your brand a favor and don’t tinker. Stay true, stay focused and everything will eventually be alright.

 

 

 

 

 

 

Don't forget to become a fan of Al Ries on Facebook!

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.

Do it like JetBlue

In case you missed it, JetBlue suffered a major brand crisis this past week after an ice storm hit the Eastern United States and the airline failed to properly respond due to a communications meltdown. Nine planes sat on New York’s JFK tarmac for six hours or more. Nearly a quarter of its flights had to be canceled even days later and service to 11 cities was shutdown entirely.

While other airlines cancelled flights ahead of the storm, JetBlue rolled the dice and came up more than short. An all-out consumer revolt, a media frenzy and a stock collapse has since ensued.

JetBlue is a strong brand founded by a charismatic leader (David Neeleman) and is focused on low prices. Once flying high, the JetBlue brand has come crashing down to earth. The JetBlue brand, which was used to being cited as a favorite among passengers and stock analysts alike, has suddenly fallen from grace.

So what should JetBlue do? Exactly what they are doing. In my opinion, their response will become a textbook case for how to solve a PR problem. Much like the Tylenol case in the 80’s. "We'll do it like JetBlue" is bound to be the rallying cry of future brand leaders.

Here are the steps to follow so you can do it like JetBlue if your brand faces a similar PR crisis:

1: Admit your mistake and apologize publicly immediately.

Brands need a strong spokesperson to pull this off. Sending out a press release will just not do. You need a well-known leader the public trusts to make the media rounds and eat crow.

David's first move was to talk with The New York Times. The front-page story that ran quotes David as being “humiliated and mortified” by the breakdown in airline operations. Brilliant! Since then he has been speaking to almost every media outlet in town. Brilliant! The public likes nothing better that seeing and hearing an apology straight from the horse’s mouth.

2: Do something.

After a few days of hearing how sorry David is, the apology can wear thin and feel more like he is trying to save his stock options than the brand’s credibility with consumers. So after saying sorry, the brand needs to do something big.

Today JetBlue has done just this by rolling out a customer bill of rights that promises to compensate customers for delays. Brilliant!

3: Don’t advertise at all.

The worst mistake companies make is trying to use advertising to save the company’s reputation. After an E.Coli outbreak, Taco Bell ran full-page ads saying “Taco Bell food is safe to eat.” Yeah right, thinks the public.

Advertising is great for getting a message out to the masses quickly. But advertising lacks credibility. So it is not an effective way to educate or reassure consumers of anything.

The best thing to do is halt all advertising until the crisis cools down. Any ads that run during the crisis will just remind people of your problems without changing any minds. Even if the ads simply say your are sorry, they will unlikely ring true.

4: Give it time.

The best medicine for any PR crisis is time. Over time people are more than likely to forget about whatever has happened. Over time, if you don’t mess up again, people are willing to forgive. Over time what is left is your brand message in the mind. If you have a strong brand, you will survive just fine. Tylenol did and so will JetBlue.

Build a strong brand in the mind and if the unthinkable happens just follow these four steps so you can do it like JetBlue and survive too.

A New Yellow for the Wiggles

The Wiggles brand is back on track now that Greg Page officially retired from the kiddie super group on Thursday, November 30th. The ongoing saga has been put to rest as Greg’s mystery illness was finally diagnosed as orthostatic intolerance. (It is a condition which often makes him feel unbalanced and faint while standing because of a loss of blood pressure.) Luckily it is not life threatening, but it is chronic and will therefore prevent him from continuing in the Yellow Jersey. (Read my earlier post for more information.)

In a brilliant branding and PR move, Greg appeared in a video on the Wiggles website and made a ceremonial passing of his jersey to Sam Moran, his permanent replacement. A longtime backup singer and dancer for the band, Sam was Greg’s understudy for the past two years and filled in for him in the 150 live shows Greg was forced to skip due to illness.

Now that the brand is whole again, the future success of the Wiggles seems certain. What put the brand in serious danger was the missing Wiggle, the lack of information regarding his illness and the lack of media interviews with him. Nothing whips the media into a frenzy more that a missing celebrity. If Madonna walks the red carpet without Guy, the rumor mills starts up right away about trouble in the marriage.

The Wiggles can survive a new guy in the yellow jersey but they could not survive a missing guy in the yellow jersey much longer. I’m sure there was a lot of fear and uncertainly over what to do since Greg as lead singer was so instrumental in the success of the Wiggles. Many critics doubted if the Wiggles could survive without him. Even I myself have commented on how disappointed I felt after showing up at a Wiggles concert where Greg was a no-show and feeling like I came to a U2 concert where Bono didn’t perform. Could there be a U2 with no Bono, could there be a Wiggles with no Greg? The answer is no and yes.

What enables the Wiggles brand to continue, perhaps even stronger than before, is the enormous PR attention celebrities command. Powerful brands have endless opportunities for PR. And PR is what helps resuscitate even fallen brands. Everyone wanted to hear from Martha after she got out of jail. Or Mel after he sobered up.

Just look at the headlines the new Wiggle got. It made the FRONT PAGE of the New York Times on Monday. That’s right, not Entertainment Weekly but the New York Times; that is how powerful the brand is. Now that the group is whole again, the guys are wisely making the television rounds promoting Sam and the Wiggles big time. After 15 years together the group had run out of much of its PR potential. So the new Wiggle creates news value for the group and renewed interest in the brand.

Had the Wiggles dragged this out, not made a decision on a replacement and kept Greg away from media any longer, it could have been devastating to the brand. I can’t even put into words the beauty of the passing of the yellow shirt segment. I am personally saddened by Greg’s health problem because I loved watching him. But I am glad the Wiggles are on thier way to a fabulous recovery and that my favorite Wiggle Anthony is still performing!

Learning from the Wiggles

Do you have kids under five? If so, you need no explanation of who or what The Wiggles are. But for those of you who have not changed any diapers in the last fifteen years, I will explain the phenomena that are known as The Wiggles.

The Wiggles are an Australian pre-school sensation now celebrating their 15th year together. There are four members: Greg (Yellow), Murray (Red), Jeff (Purple) and Anthony (Blue). In 2003, they sold out 12 shows at Madison Square Garden in New York. This year they earned $38.4 million dollars with their tours in the United States and Britain helping greatly. The windfall meant that for the second year in a row The Wiggles were crowned the highest entertainment earners in Australia ahead of AC/DC, Nicole Kidman and Keith Urban.

The Wiggles story began in the early 90’s when Anthony Field, Murray Cook and Greg Page studied early childhood education together at Sydney’s Macquarie University. The three began writing children’s songs as one of their music projects. They enlisted the assistance of Jeff Fatt, who played with Anthony in the popular 1980’s band The Cockroaches, and The Wiggles were born.

Kids and parents alike are drawn to the enthusiastic, educational and easy on the ears music of the Wiggles. While hearing Barney makes most parents gag, the Wiggles makes watching television with little ones actually enjoyable. I believe the key to the Wiggles branding success are the “real” guys of the band. They are cool guys who could have (and some did) played in a rock band, but instead took their talent and good looks and applied them to preschooler entertainment.

While Barney and the Teletubbies play down to kids, The Wiggles play up to them. A Wiggles concert delivers a song and rock experience akin to U2 for little ones.

But today there is some Wiggly trouble going on. I first realized this when I took my two boys to the show here in Atlanta on Wednesday. As the lights dimmed, it was announced that the lead Wiggle, Greg, would not be performing due to illness and a substitute would be filling in. OK, I thought, everybody gets sick. But then the Wiggles commented during the show that Greg was in Australia and hoped to feel better soon. Well, in Australia meant that he was not just sick for one day but likely to be missing the entire US tour. I made a mental note to Google the Yellow Wiggle upon returning to the office.

And here is what I found out from an Australian newspaper:

YELLOW Wiggle Greg Page is reportedly suffering a mystery illness that threatens his future with the children's music supergroup. News Ltd says Mr. Page, 34, is at home in Sydney battling a condition that includes regular bouts of fainting while The Wiggles tour the US with a replacement member. The Daily Telegraph quotes Mr. Page as saying that he's “not really well enough to talk”. But in a statement to fans, Mr. Page said doctors had yet to diagnose his health problem. “I have had numerous bouts of this over the past eight months but they are getting more frequent, and more concerning,” Mr. Page said. “So I have decided that I must go home, rest and seek further medical advice to assure myself that I will be OK for future tours.”

Wow, this is a major problem, not only for Greg Page (who I hope gets better quickly) but for the Wiggle brand. What should The Wiggles do? I think the first step is honesty. When facing a possible PR and brand crisis, getting out ahead of the storm with the truth is the best strategy.

The problem of Greg being sick does not hurt a majority of The Wiggle brand business. The television shows, DVD’s, amusement park rides and merchandise are pretty much unaffected. But the live shows which are the bread and butter of the band are hugely impacted. Can you imagine showing up for a U2 concert and having no Bono on stage? That is exactly how I felt with no Greg. (My kids could not have cared less, running out of popcorn would have been much more traumatic.)

The reality was, the show was fine without Greg. Luckily there are three other Wiggles still on stage and Anthony did a tremendous job of picking up the slack. But keeping Greg’s absence a secret could backfire. I believe parents and kids would be very sympathetic and understanding to Greg being sick. It is not as if he is in drug rehab or jail. But feeling duped by not telling people that he will not be on the tour is a pain many could find difficult to recover from. It is usually the lying that gets you in trouble more so that the act itself. (Just ask Nixon, Clinton or Martha.)

This is always the danger of having a live brand. What happens if something happens to my brand’s persona? If Martha Stewart goes to jail? If Jack Welch retires? If Kobe Bryant attacks a girl? If Steve Irwin gets killed? If Mel Gibson gets drunk? If Greg Page gets sick?

Brand building always involves taking risks. But without taking some risks, you are unlikely to achieve the reward of building a strong brand. It is the price you have to pay to get into the mind of the consumer. So never be afraid to put your eggs in the basket of a person to stand for your brand. Build a strong brand and succeed first. After you are earning $38 million a year you can worry about the what ifs.

Because even if Greg has to retire, the Wiggles brand will likely survive because it is so powerful in the mind. But without Greg the brand would have never gotten off the ground in the first place.

Check out my new post with the latest on the Wiggle brand.