Branding Strategy Insider

Brand Extension: Today's Default Strategy

When I'm not modelling the very latest sartorial gentlemen's fashion for you among the posts of Branding Strategy Insider, my day job involves teaching MBAs about branding.

One of the great things about a classroom full of 30-something MBA students, as opposed to undergraduates, is that the professor often learns just as much from the students as they learn from him, which is a polite way of saying that, occasionally, a student will pick a fight with you in class and make you look like a twit.

That is exactly what happened to me last week. I kicked off my class on brand extensions by defining the topic, 'what happens when an organisation spots a rare opportunity to leverage their brand equity in a new category?'

Despite this apparently innocuous definition, I was instantly aware of an arm flailing vigorously in the back row. Professors develop an almost preternatural ability to sense classroom danger and I turned to acknowledge the question with a growing feeling of doom.

My questioner was as polite as she was concise. 'Is brand extension really such an occasional move?' she asked. 'Surely, these days it's a given that if you have a strong brand, you will extend it?'

I gulped. She had a point. Traditionally, most part-brands were built in one category and any expansion of their brand architecture was limited to sub-brands within that same category. Therefore, car firms simply made cars and pen companies stuck to pens.

The Trouble With 'BIG'

Some years ago, I wrote a book titled Big Brands. Big Trouble. One chapter was "The Bigger They Are, the Harder to Manage."

When you start to study the subject of getting big, you can quickly come up with a stunning amount of research and analysis that seriously questions whether bigger is better. By the time I was finished, I began to wonder what in the world these CEOs were thinking about as they got trapped in the land of mergermania.

In a detailed study, two economists produced a 400-page analysis that confronts the quintessential myth of corporate culture: that industrial giants in an organizational bigness are the handmaidens of economic efficiency. In a 1986 book entitled , Bigness Complex, they argue that the preoccupation with bigness is at the heart of the United States' economic decline.

A little hindsight shows that they miscalled our "economic decline." Quite the opposite occurred as we roared off into an amazing economic expansion. They also missed that these big companies have been falling apart on their own, and we don't need any government policy to keep bad bigness things from happening. And they missed the small company explosion in high-tech land that helped propel our expansion.

After an intense amount of original and observed research, the authors concluded that conglomerate bigness seldom enhances, and more typically undermines, efficiency in production.

Brand Management: The Hilfiger Lessons

It has been quite a decade for Tommy Hilfiger. During the 90s, it seemed his brand could do no wrong. The business experienced meteoric growth and, by 2000, was generating $2bn in worldwide sales.

But then came the new century, and Hilfiger struggled to maintain the momentum. Tommy would learn some of the key lessons of brand management the hard way.

First, growth and success are the two biggest enemies of all strong brands.

Hilfiger's global sales grew tenfold during the 90s. On a Powerpoint slide to investors, this looks fantastic. But, internally, this kind of growth is a major challenge. It is a classic conundrum for most niche brands that experience market success. Their scale increases, they lose focus and, eventually, all the elements that made the brand successful are lost.

Second, watch out for retail 'partners'.

Hilfiger, like most fashion brands, relies both on its own outlets and selling through major department stores. The latter are not necessarily motivated to protect and care for brand equity over the long haul. Hilfiger experienced first-hand the classic one-two-three of retail sales. 'The problem was the department stores in the US,' he said. 'First of all they copy you, then they under-price you and then they discount the brand. They don't take care of your shop areas in stores.'

Brand Marketing Integration

When integrating your brand marketing efforts, here are some mechanisms you may find useful:

•    A well-communicated brand positioning statement including the target customer and the brand essence, promise, and personality
•    Conducting a brand positioning workshop with organization senior managers if necessary to build consensus
•    A brand marketing visionary at the top of at least the marketing organization (Marketing VP or Chief Marketing Officer), or better yet (from a marketer’s perspective) – the enterprise.
•    As broad a span of control as possible for the chief marketing officer (encompassing as many of the disciplines listed above as possible) and frequent forums for him or her to communicate marketing issues and initiatives with other senior leaders of the organization
•    Specific brand management and marketing objectives (long term and short term)
•    A brand marketing plan
•    Integrating brand plans with organization strategic plans
•    Product, program and segment marketing plans (driven by or at least congruent with brand marketing plans)
•    Marketing budgets allocated by market segment and sub-discipline (with 10-20% of the overall budget held by the chief marketing for unforeseen opportunities)
•    Integrated media plans

BrandQuote - April 26

"… at the heart of an effective creative philosophy is the belief that nothing is so powerful as an insight into human nature, what compulsions drive a man, what instincts dominate his action, even though his language so often camouflages what really motivates him. For if you know these things about [a] man, you can touch him at the core of his being."

   -Bill Bernbach, in a speech to the American Association of Advertising
    Agencies, 1980

Sponsored By: Brand Aid

Beware of Brand Schizophrenia

Powerful brands have distinct personalities: Duracell’s batteries last a long time. Volvos are safe in a crash. But even dominant brands can fade if they fall prey to multiple personality disorder.

Consider General Motors. What’s the difference between a Chevrolet, a Pontiac and a Buick? The company has woken up to the problem in recent times; In 2005 GM announced it would narrow its selection of cars. But this belated effort to bring the automaker’s brand schizophrenia under control is too little too late.

General Motors mucked up its brands over decades of endless line extensions. But Mercedes Benz has done it in less than one decade. Once upon a time, it was a high-quality, highly engineered, prestigious car. But now, if you wander into a dealership in Europe, you’re faced with the following lineup: A-Class, B-Class, C-Class, E-Class, S-Class, CLK, CLS, CL, SLK, SL, M-Class and G-Class. The prices range from 20,000 to 200,000 euros. The result is that in Europe, Mercedes Benz is not listed as the top brand. The Audi A8, BMW, Maserati and Jaguar have taken over this position.

The GM and Mercedes stories are not unique. Once a company abandons its brands' distinctive personalities or positions, it's just a matter of time before confused customers start to drift away. In 1985, Coca-Cola infamously introduced an identity-blurring new brand, New Coke. A massive consumer backlash ensued, and the company quickly reinstated its familiar Classic Coke.

You’d think Coca-Cola would have learned from that experience the importance of having a unique product personality.

Top Brands Illustrate Marketing Power

It is time to stop speculating about brand equity and turn, instead, to the ice-cold empiricism of financial brand values. Monday saw the annual publication of the BrandZ Top 100 brands from Millward Brown Optimor and, as usual, there were a host of winners and losers.

The first slice of good news was domestic (FYI - I'm based in London). Although only six British brands made the Top 100 list, they grew their value at an average rate of 33% - significantly higher than the 21% average of the Top 100 as a whole. Vodafone led the British contingent growing in brand value by a whopping 75% to $37bn (£18.7bn). But the BrandZ data that drives the Top 100 also recorded a slowing in Vodafone's brand momentum, suggesting that the good times may not continue.

Another big winner this year was McDonald's. The world's eighth-biggest brand recorded a 49% rise in value to $49.5bn. Impressively, it also recorded a brand momentum score of seven, suggesting its gamble to divest the other brands in its portfolio and focus on its main cash cow appears to be paying off. I must now eat humble pie and accept that you can revitalise burgers and fries in the 21st century.

I did get one prediction right this year, though. Robert Polet, who took over as chief executive of Gucci Group after two decades working for Unilever, is just as good as I told you he was. His main brand, Gucci, increased in value by 43%, and with a brand momentum score of 10, it seems Polet's revolution will continue to deliver results.

Brand values can go down as well as up.

Welcome Jack Trout

It's been a year in the making and today I'm very pleased to share with you our partnership with brand strategy pioneer Jack Trout. As most of you know, Jack is the acclaimed author of many marketing classics including: Positioning: The Battle for Your Mind, The 22 Immutable Laws of Marketing, Differentiate or Die, Big Brands. Big Trouble, A Genie's Wisdom, Trout on Strategy and others.

As a consultant he has guided such companies as AT&T, IBM, Burger King, Merrill Lynch, Xerox, Merck, Lotus, Ericsson, Tetra Pak, Repsol, Hewlett-Packard, Procter & Gamble, Southwest Airlines and several other Fortune 500 companies. Recently, he consulted with the State Department on how to better sell America.

Recognized as one the world's foremost marketing strategists, Jack is the originator of Positioning and other important concepts in marketing strategy. He has over 40 years of experience in advertising and marketing and is a boardroom advisor to some of the world's largest corporations. Jack has gained an international reputation as a consultant, writer, speaker, and proponent of leading-edge marketing strategies.

With The Blake Project, Jack will lend his expertise in the delivery of brand strategy and brand education.

Welcome Jack, we're excited to work with you.

Have a branding challenge? Contact us.

Creating the Signature Scent

Creating a “signature” scent for a brand’s scent marketing purposes is not much different from translating the persona of a celebrity or the ideas of a designer into a fragrance. In the “fine fragrance” (the perfumes and eau de toilettes) category alone, 1,000+ new scents are launched worldwide every year. It requires a lot of creativity and even more marketing dollars to bring - and keep - them on the consumer’s radar screen. Often times, fragrance launches are a very public affair, comparable to the premiere of a future blockbuster movie. And, like the movies, they often fizzle and disappear as quickly as they came…

As a brand owner taking the leap of faith into scent marketing, you want to do it right. So you hire a scent marketing consultant and she will help you develop a “fragrance brief”. It describes in detail what you want your brand to smell like and draws from inspirations such as brand image, corporate identity, core values, in-store design, color schemes, customer demographics and preferences, sometimes even the owners’ personal taste.

If you were in the fine fragrance business (like Estee Lauder or COTY) your consultant would take the brief to a number of fragrance manufacturers, most of which you probably never heard of; Givaudan, IFF, Firmenich, Symrise, Taksasgo to name the five largest. With an extensive staff of in-house perfumers they translate your “fragrance brief” into a scent and present you with the results. You narrow them down, maybe run some market research, make some modifications, shoot a beautiful ad campaign and you’re off to the store shelves. The “creative”, the perfumer’s work, by the way, you would get for free. It’s a well-oiled machine, which in the end produces large amounts of “juice”, fragrances often described as “emotions in a bottle”. And those manufacturers who didn’t win the brief will try again (and win) next time.

But since you are an airline, a consumer electronics brand or a car manufacturer, those traditional rules and processes do not apply.

Brand Equity Can Taint Perceptions

A couple of years ago I was invited to make a series for the BBC about brands. In one episode we went to a London pub to recruit brand-loyal drinkers in a London pub who claimed that they drank only one particular beer.

Invariably these drinkers cited the taste of their chosen beer brand as the reason for their loyalty, and when asked if they could identify their choice without the aid of the logo, each was certain they could.

We took these drinkers to the corner of the pub, where we had set up a blind-taste test. Three pints of beer marked A, B and C were set out on a table and the drinker was given one minute to identify their favoured brand from two imposters.

What the drinker did not know was that not only were all three beers identical, but they were all from a rival brand to the one they usually drank.