Branding Strategy Insider

Wal-Mart Learns A Branding Lesson

It has been a gloomy month for US retailers. Iconic brands such as Linens-n-Things and Mervyns are in liquidation, while former electrical retail powerhouse Circuit City filed for bankruptcy protection last week. Store sales are down at every major US retailer - except one.

On Thursday Wal-Mart announced a 7.5% increase in sales for the first three quarters of 2008. Chief executive Lee Scott was smiling when he declared his 'optimism' for the upcoming holiday season, and Tom Schoewe, Wal-Mart's chief financial officer, was in an even more cheerful mood.

There are two reasons for Wal-Mart's success: one economic, one strategic.

On the economic front, Wal-Mart is benefiting from the change in the fortunes of the US consumer. In the past six months, the middle classes across the Atlantic have begun trading down in the millions. A recent survey from Bain & Company showed that US consumers are becoming more likely to trade down and that when they do they feel more educated and more satisfied as a consumer. Thrift is the new luxury, and Wal-Mart is enjoying a middle-class renaissance at the expense of its upmarket rivals.

But there is also a strategic reason why cash registers at Wal-Mart are beeping with such fury. It has learned one of the great secrets of branding the hard way. In 2006 the company made a huge, but relatively commonplace error. Frustrated with flat sales and shareholder pessimism, the leadership team at Wal-Mart decided to reposition the brand.

PETA Must Adjust Brand Strategy to Make Fur Fly

What a difference a decade plus four makes. Back in 1994 Naomi, Claudia, Kate and Elle were at the height of their supermodel powers, naked as the day they were born and united in preferring to be that way than wear fur.

Sales of fur had been flat for years and many furriers had closed their doors in despair.

Fashion is, unfortunately, all about change, and today, supermodels are actively clothed in, and sponsored by, the very material they once denounced.

Vogue is filled with the latest celebrities modelling the hottest labels, featuring the finest furs. Designer brands such as Prada, Dolce & Gabbana and Alexander McQueen have all recently featured fur in their run-way collections. Now, high-street fashion brands such as J.Crew are following suit.

More worryingly, PETA (People for the Ethical Treatment of Animals) is beginning to lose its strong influence over the fashion world. Today, its message is sponsored not by Paris or Nicole, but decidedly B-list celebrities such as Heather Mills McCartney and ageing rock band Motley Crue.

Its tactics are growing increasingly predictable and, therefore, ineffective. Creaming Anna Wintour, the fur-loving editor of Vogue, with a tofu pie may have made the headlines, but it was hardly likely to influence her editorial stance.

Brand Resurrection - Never Out Of Reach

For lessons in branding there are few richer case studies than Laura Ashley. In the 50s Laura Ashley began silk-screening her own designs onto scarves and napkins. Drawing her inspiration from Victorian images, her work was unusual and sold well at John Lewis and Heal's. She quickly became associated with floral designs, a country idyll and a brand new vision of the past.

Like most founders of great brands, Ashley was a unique woman whose vision encompassed creativity and business.

In the 60s production was moved to Wales, Ashley's birthplace, and diversified into furnishings and Victorian dresses. In 1969 the movie Butch Cassidy and the Sundance Kid opened across Britain; co-star Katharine Ross, in her vintage dresses, started a fashion sensation that Ashley's designs spoke directly to. Five hundred stores, from Paris to New York, now offered the world a new fashion brand.

Ashley died in 1985, but the success of the brand continued. Laura Ashley was floated on the stock market that year, turnover reached £300m and production was expanded.

The death of a founder is a big challenge for any brand, as they are usually the physical representation of it, the creative spirit behind product development and the protector of the brand equity.

The key lessons for marketers are that they need to be aware of the effect this can have and must understand that a negative impact on brand strategy rarely has an immediate effect on the bottom line. When brands stray from their equity the effects on turnover and profitability are usually delayed, but always imminent.

When A Brand Path Departure Makes Sense

I have bought a Porsche. Last week I took delivery of my huge, black Porsche Cayenne Turbo, and for the past seven days I have been cruising the streets, intimidating BMW drivers and playing Shakira at full volume through the 12-speaker Blaupunkt stereo.

When my wife and I set out to buy a new car, we wanted an SUV, as we knew a family was not too far around the corner. We started looking at the Volkswagen Touareg, but then I realised that for another 50% of the price we could buy the Cayenne and I could become a Porsche driver.

So now our Cayenne sits in my parking space awaiting a decade's worth of journeys with the Ritson family - moving furniture, transporting children, holidays to the seaside and so on.

I really don't fit the ideal Porsche customer profile. I have only a superficial appreciation for the heritage of the brand.

I have no particular interest in driving performance cars. And I have no idea what is under the hood of my new car.

If Porsche had remained true to its brand, it would have done everything in its power to stop family types like me from buying into it. And I am not alone - more then 80% of Cayenne owners have never previously owned a Porsche.

Brand Management's Evolution Lesson

If you are ever in London for the January sales, can I suggest a quick pit-stop? Just across the road from Harrods in trendy Knightsbridge is a lovely tree-lined road called Montpelier Street. Immediately on your left, tucked between the sandwich shops and cafes, is a boutique bearing the name Mary Quant. It is a small shop - more than six customers makes it feels crowded - and it contains a limited combination of clothing, accessories, handbags and cosmetics. Yet it is a shop that presents marketers with an invaluable lesson in brand management.

Thirty years ago Mary Quant was at her zenith. She was set to launch the mini-skirt on an unsuspecting world and her designs were a global sensation. By 1969 it was estimated that more than 7m people owned at least one item bearing the designer's daisy logo. Despite its global appeal, Mary Quant was indelibly linked with London, a brand that came wrapped up in the cultural attraction of the swinging 60s.

Quant herself was an iconic figure who took great pleasure in breaking the conservative rules of women's fashion, once famously dyeing her pubic hair green and referring to this taboo area as 'the crutch' during an interview with The Guardian.

What happened next was as predictable as it was avoidable. The very strength and ubiquity of the Quant name became its weakness. Because Mary Quant had been so successful during the 60s, the brand became associated with the decade, and when the fashion scene moved inexorably on to the 70s and 80s, Mary Quant was left behind. The iconic designs that made it first cutting edge, and then contemporary, finally made it seem stale. Even loyal customers did the brand no favours at all. Their continued patronage meant that as they aged, so did the brand. New, younger customers were turned off by this brand gentrification and sought their fashions elsewhere.

iTunes Brand Unstoppable?

I love Italians because they have better words than us. Not just better-sounding words, but just generally better words. Let me give you an example. The Italian word for positioning statement is posizionamento. How much cooler is that?

Here is another example. My favourite word is sprezzatura. It means making difficult things look easy. It's an awesome word that does not even have an English equivalent. But if it did, it would be a word commonly associated with iTunes. In April 2003, Apple launched its incredibly successful music-download site and made it all look so easy. So much so, that a host of idiotic competitors have gone charging after it ever since, only to fall flat on their red faces.

For four entertaining years, a cavalcade of big brands has been blowing millions creating 'rivals to iTunes', launched with all the sound and fury 'big marketing' can muster, but fizzling and dying a few embarrassing months later with a three-line press release.

Barely six months after iTunes came Dell. The computer brand produced a very uninspiring music-player and partnered with Musicmatch for two years before an almost total lack of customers persuaded it to get out of the MP3 player business before it had ever really got into it.

Next came Coca-Cola's mycokemusic. In the UK, the Coke site actually preceded iTunes and offered British punters 250,000 songs with individual tracks costing from 80p. By 2006, Coke realised that if you can't beat them, join them. It closed the site and started to partner with iTunes.

A Study in Hollow Brand Values

One would expect that an annual marketing budget of more than a billion dollars would buy you a very well-positioned corporate brand. But that has not been the case for Pfizer.

This decade, the world's biggest pharmaceutical corporation launched some very successful drugs, including Lipitor and Viagra. But when it comes to its own corporate brand Pfizer is, like many multinationals, a mess of generic and insipid brand values.

All the usual suspects are there: integrity, innovation, customer focus, respect for people, community, teamwork, performance, leadership and, of course, quality. It is a roll-call of the generic from a corporation that sees branding as a superficial patina and not the fundamental core of its business.

Does it matter? With profits on average in the billions does it even need brand values at the core of its business?

We might get a different perspective from the people of Kano in Nigeria.

In the mid-nineties, with a meningitis epidemic raging in the region, a team of Pfizer researchers travelled to the city in what the company claims was a philanthropic mission. The team arrived with large quantities of Trovan, an experimental and, at that time unapproved, drug.

Time for an Almighty Rebrand

I found myself in a rather unusual position last weekend - on a pew in a church in Glasgow. One of my oldest friends was having his first born christened. He had managed, with the convincing promise of a post-ceremonial drinking session, to convince me to attend the event. So there I sat. In the back row. Dreading everything that the next hour promised to deliver.

To my surprise, however, the priest gave an extremely interesting and contemporary sermon. He talked about a Tom Cruise movie, post-modern philosophy and, of course, God. Despite, or indeed perhaps because of, his eloquence I began to consider all the factors that have deterred me and the majority of the British public from attending church regularly. This is, after all, a marketing problem: why don't people consume God?

We live in a society that has never needed God more. We are confused, unhappy, depressed, lacking spirituality, and lonely. Aside from previous world wars, the demand for God has presumably never been higher.

Despite this a recent survey estimated that the church's market share in the UK is only 7.5% of the population, and falling. The problem must therefore exist on the supply side. During the communion I worked out some marketing recommendations to solve the problem.

Marketers Must Deter Corporate Arrogance

As I look back, the news that Sony would axe 20,000 employees as part of a three-year restructuring plan came as no surprise.

2003 had been a horrendous year for the Japanese powerbrand. Poor performance was the recurring theme across its music division, movie studio, audio-visual products and market-leading PlayStation brand, resulting in record losses and an imploding share price.

Sony's troubles were in direct contrast to many of its rivals. Samsung, LG and Matsushita all had reported increased sales and improved profitability.

So how did an apparently dominant market leader's fortunes become reversed in such an extreme manner in such a short space of time? And how is it possible that smaller, typically less successful competitors were suddenly able to seize the market initiative? The answer lies in the very strength that made the apparent decline of Sony so surprising. Sony was suffering from a corporate disease formerly known as Levi's Syndrome, Marks & Spencer's Condition and the IBM Ailment. The symptoms are always the same: take a ridiculously successful company, flushed with a host of marketing triumphs, a long-established track record of sales growth.

Then add a tiny dash of that fatal ingredient: complacency.

Sex, Branding and Profits

Imagine your company brochure was so popular that people could sell it online for $38.95. Or your carry bags went for $9.90, and stickers featuring your company logo fetched $15.50 each. Impossible, right?

Maybe. But think again. Consider Abercrombie & Fitch, Victoria’s Secret and Playboy. A never-ending range of merchandise attached to these brands gets sold on eBay all the time, demonstrating the true value of those brands. And, perhaps, the value of their prime driver: sex.

But, is it really that simple. Does sex sell? Provocative behavior, seasoned with sex, seems to be an ever-effective formula. Seventy years after the first lightly clad woman was featured in advertising, for an automobile, sexual suggestiveness still seems to do the trick. As trivial and superficial as it sounds, the magic still seems to work in the old formula.

If you passed by an Abercrombie and Fitch store during the summer months you might have noticed something unusual about the U.S. clothing retailer. The staff who greet you at the entrance are wearing an unusually small amount of clothing. A pair of undies for the boys and, for the girls, a micro-sized bra which you can hardly see. Then there’s the store itself. It exudes a distinctive exotic aroma that you can detect from the other side of the street. Meanwhile, high-decibel chart-topping music maintains momentum. The windows are covered with posters of lightly dressed teens, preventing people on the outside from seeing in, and people on the inside from seeing out. All this, combined with the fact that the staff act more like models than sales staff, seduces you into feeling you’ve entered a nightclub rather than a fashion store.

Of course, this is all quite on purpose. And, it’s all about sex.