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Archive for October, 2011

Brand Watch

Brand Arrogance: The Threat Within

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Netflix reed hastings brand strategy  
Consumers don’t value brands; they value the idea the brand represents to them. This idea will always be worth more than the product, or the actual bricks and mortar of the business enterprise. When marketers behave arrogantly, the value of the idea people care about is instantly diminished. And once this happens, the road to redemption is long, difficult and expensive. 

A recent example of a marketer’s arrogance towards its customers is NetFlix.

The story is classic, almost cliché. In Netflix’s case, an innovative technology quickly ramps into an innovative business model with rapid customer acceptance and advocacy, and then inexplicably breaks its trust bond with the very people who were making it great. Other brands have done this as well. New Coke comes to mind.

Of course, much of the hubris and arrogance was initiated by Netflix’s CEO, Reed Hastings.  When the decision was made to raise prices and change how customers receive value without any consideration to the value of the brand’s “reason for being” and what it represents to people, the value of the Netflix brand was instantly diminished. Not even a gracious mea culpa from the CEO or promotional incentives will undo the damage done.

The Netflix brand paid an incalculable and heavy price.

The lesson for brand managers is clear:

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Advertising Derrick Daye

Targeting Consumers: A New Perspective

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Consumer Targeting Brand Marketing Strategy

Direct marketers have long known something that brand marketers haven’t: responsiveness counts. And not much else.

Brand marketers have long focused on targeting their advertising to consumers based on various demographic and psychographic characteristics. Women 25-34, Male beer drinkers 21+, Early Adopters, and so on.

Increasingly though, targeting and media buys will move away from this kind of targeting to what I call “response based targeting” – even among brand marketers. Response based targeting is just that: targeting consumers who are proven to be most responsive to your advertising, regardless of what they look like.

How does it work? For starters, let’s assume that your brand historically targeted Women 25-34 years old. Naturally, your media plan targeted this group too, maximizing reach at 80% using traditional TV.

Along comes single-source. Long hailed as the “holy grail” of advertising, single source matches individual household viewing behavior with the same households buying behavior. Several firms now offer this capability in the consumer packaged goods sector, and it’s likely to come to other categories in the not too distant future.

What now? Using single source, you can analyze historical data to identify households with similar purchase behavior prior to your advertising campaign. Then, households are divided into exposed versus non-exposed households and, using smart statistics, identify the single variable sales impact of your advertising.

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Brand Differentiation Derrick Daye

Brand Strategy: Rethinking Brand Differentiation

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Diamond Shreddies Brand Strategy Differentiation

The ultimate goal of any brand effort is differentiation. Setting your product apart from its competitors is an essential first step toward creating preference and loyalty. According to research firm, Millward Brown, “Brands that are perceived as being different have a much higher potential for growth than do other brands.” Consequently, identifying and communicating meaningful points of difference has become the focus of much strategic branding work.  

Yet we wonder if consumers are listening? Do they even care about our carefully crafted ‘points of difference’ and ‘reasons to believe’?  Harvard professor, Youngme Moon, observes in her book “Different: Escaping the Competitive Herd”, that corporations have become experts at augmentation and replication, but aren’t that good at creating meaningful differences. She provocatively writes:

“If aliens were to visit a grocery store or a drugstore in this country they would have to conclude that we are a people hooked on the pleasures of picking needles out of haystacks.”

The Case of Diamond Shreddies

In 2006, a clever Canadian campaign for “New Diamond Shreddies” turned the mirror back on marketers’ often inane attempts at creating differences. The joke is that the only difference is that the shape is no longer a square, it is a ‘diamond’, (“kind of like the difference between a 6 and a 9”), and therefore tastes better. The satire is carried off brilliantly with focus group testimonials and commercials touting the advantages of a diamond shape over a square.

Urban legend says this campaign was created by an intern at Ogilvy. If that is true, it’s a case of the newbie pointing out the emperor’s lack of clothes. How many of us are guilty of seizing upon some meaningless, but exclusive product point of difference as the supposed basis of brand preference?

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Branding: Just Ask... Derrick Daye Place Branding

What Experts Are Best For Community Branding?

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Brand Strategy Place Branding Community Branding City Branding

We welcome and answer marketing questions of all types here on BSI. Today's question comes from Lisa, an economic development executive near Toronto, Canada. She asks:

“I work in economic development for a small municipality that is challenged with negative brand perceptions from an association with radioactive waste. As I prepare a Request For Proposal (RFP), can you tell me who is the best partner to help us change these brand perceptions and help better the future of our city?”

Thanks for your question Lisa. First let me share, the best partner in place branding, city branding or community branding projects as they are known, is actually two partners. A brand consultant or brand consultancy that focuses on strategy, and an advertising agency or creative partner that focuses on implementing the brand strategy creatively. Each possesses a different skillset and specializes in one of the two critical areas of expertise you will need. Look at each in this way:

Advertising Agencies traditionally focus on the execution of creative strategies. That is, they will determine the best marketing vehicle to reach your target audience and will use compelling creative to make a connection and entice a reaction. The best ones are strategic in nature and see tactics as a second step.

A Brand Consultancy traditionally lives by this philosophy: Instead of trying to communicate a brands' features and benefits, they recommend studying the minds of the target audience first and then try to "position" the brand in the mind, taking advantage of the strengths and weaknesses of the brand and competing brands. This process ensures that your brand has selected the most powerful benefits to own and that it has developed the proof points and reasons to believe for those benefits. Brand consultancies also aid companies (in this case municipalities) in any strategy-related brand decisions from brand equity measurement to brand extension.

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Brand Licensing Branding: Just Ask...

Brand Licensing: The Answer For Sears?

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Sears Brand Licensing Strategy Die Hard Battery

Regular readers of Branding Strategy Insider know we welcome and answer marketing questions of all types. Today's question comes from Ryan, a senior analyst with a private investment fund in New York City, New York. He writes:

"First question: I read today that Sears is thinking about licensing its Kenmore, Craftsman and Die Hard brands. Could you hazard a guess as to (i) the range in licensing fees such brands might generate, and (ii) the prospects that someone of substance would be interested in licensing those brands given their present distribution?"

Ryan, thanks for your question. My thoughts as a brand licensing strategist…

(i) Range of fees would go from $7.5 MM – $45 MM over three years (after commercialization commenced).

(ii) Prospects of someone interested – I think interest could be high based on my assumptions below.  The key is how to not compete with the parent brand. After all, those brands are why people go to Sears.

Kenmore, Craftsman and Die Hard are mid tier brands that have a long history and substantial brand equity.  Moreover, the brands are closely tied to the Sears name.  While there may be some confusion generated in consumers’ minds if these brands were licensed for distribution in other channels, I still believe they would perform well.

Royalty rate: These brands should command somewhere between 5% – 10% depending on the product category, the channel and the region.

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