Branding Strategy Insider

Brand Threat: The Out-Of-Touch CEO

“Bank of America Corp. is scrapping its plan to charge a $5 monthly fee for making debit card purchases after an uproar and threatened exodus by customers.” --Bloomberg, 11.1.11

 “Netflix has decided to can Qwikster, the DVD-rental spin-off it announced to unlimited screaming last month." --Wall Street Journal, 10.10.11

“Barely a month into Meg Whitman’s tenure as chief, Hewlett-Packard announced on Thursday that it would not sell the company’s dominant personal computer business — closing off a strategic path offered by her predecessor.”--New York Times, 10.27.11 

These stories might be laughable if they weren't such a tragic waste of shareholder value. 

Most every company says it values its customers, and hates to 'walk away' from them. Leaders are called on to make tough decisions they believe are in the best interests of their companies. And sometimes, these decisions advantage some customers at the expense of others. That doesn't make them bad decisions, just risky ones. 

But leaders of some of our greatest brands act like they have forgotten (or never knew) what every junior brand manager surely knows --- to test potentially risky messages and find ways to mitigate their negative impact. Instead, senior leaders are acting like bulls in a china shop, awkwardly and prematurely broadcasting their strategic decisions in ways that destroy their company's (and their own) reputation and value.

Brand Marketing Mistakes All Leaders Must Avoid

 
Business leaders are over-educated. Never have I seen so much advice offered to executives about how to do things right. There are hundreds of business management books and over 2000 titles alone in marketing.

So why are we having such difficult economic times? Why did Detroit almost drive off a cliff? Why did the banks need bailing out? Why are some corporate legends such as Kodak, Nokia, Yahoo, Johnson & Johnson, Sears, Budweiser and even General Electric having problems? Sure, you can point to the dramatic increase in global competition which makes mistakes so costly. But there are books about how to deal with competition and I even wrote one of them. (Marketing Warfare.) One can only say “It’s a puzzlement.”

While there are a few shining examples of brilliant leadership, there aren’t enough.

If you study this paradox, the best you can do is categorize the most popular mistakes. So  rather than get into the psychology of “Denial” or a study of “Why?”, it makes more sense to lay out what are the traps that keep people from doing the right thing, despite all this advice. Avoid these mistakes and bad things won’t happen.

The “Me-too” Mistake.

Many people believe that the basic issue in marketing is convincing the prospect that they have a better product or service. They say to themselves, “We might not be first but we’re going to be better.”

That may be true, but if you’re late into a market space and have to do battle with large, well-established competitors, then your marketing strategy is probably faulty. Me-too just won’t cut it.

Brand Transformation And Fear

What holds brands back from innovation and market leadership is the same element that holds people back: FEAR!

As a species, we humans fear change.  We can’t help our natural inclination for safety and security. It’s wired into the lizard brain at the base of the skull. We fear taking risks, making mistakes, not meeting plan, looking stupid. It’s far better to fit in, go with the flow, be safe and not freak out our fear-based bosses.

Yet no one will argue innovation requires taking risks, making mistakes, not meeting plan and looking stupid. All transformation is scary.

Brand transformation (like personal transformation) requires a passion driven decision to add to the growth of the world. It requires creating opportunity by first bringing new value to people, rather than competing for the value already created by others.

If you’re intention is to build a leading brand, the majority of your organizational thinking must be on the creative plane (possibility and potential) not the competitive plane (hard bargains and discount pricing).

Influencing Your CEO To Support Brand Management

The number one reason branding projects fail is lack of CEO support. The number one reason they succeed is CEO support. If you are in charge of brand management for your organization and you have a CEO that is less than 100% supportive of brand management, here are some things you can do to help nudge him or her along:

• Send him or her articles/blog posts that talk about the value of the brand as an asset. Studies have shown that a significant portion of a company’s value (and stock price) is due to the strength of its brand. I talk about this in some detail in the Brand Equity Measurement chapter of my Brand Aid book.
• Bring Interbrand or Millward Brown representatives into your company to talk about their brand valuation approaches. Invite your CEO or members of his or her staff to that meeting.
• Initiate a brand management speakers’ series at your company. Invite chief marketing officers and brand managers from other companies to talk about the successes of their brand management practices. Invite all employees to these presentations.
• Ask your CEO how you and your brand management department can best help him or her achieve his or her highest priority objectives for the company.
• Let people in your organization know that strong brands have been shown to result in the following:

The Board's Role In Brand Management

Fortune Brands, known for its distilled spirits, home and security and golf brands is breaking up to be sold off as divisions. The strategic intent from two consecutive CEOs was to maximize the value of the corporation as a holding company - thus providing sound reasoning for a long-term cohesive corporate brand.

Unfortunately, in the transition to the next CEO that priority was replaced with more immediate needs of the product brands. All well and good, except that without a corporate brand focus the logic and cohesion of the holding company loses resonance, eventually leading to underperformance of the stock and increasing pressure to break up the company.

Corporate brand campaigns should be protected, and even funded, at the board of directors level. Corporate brands are long-term investments with returns best measured over years, not by quarters.

To maximize the ROI of this important intangible asset, the brand should be viewed differently than other company assets. The vision and the intent of the corporate brand are critical to a company's success and should supersede the domain of the corporate hierarchy.

Board members should never get into the trenches on the execution of brand campaigns. Rather they should be actively involved in understanding and managing the strategic intent of the long-term health of the corporate brand.

CEOs and CMOs might argue that this is an infringement on their territory, but there is no question that a tremendous amount of brand value is to be gained when they are managed well, or lost when corporate brands are compromised during the handoff from one CEO to the next.

Contributed to BSI by: James Gregory, CoreBrand 

Sponsored By: The Brand Positioning Workshop

Why Leading Brands Stay On Top

"You can't beat somebody with a nobody" is the old political axiom, and it applies to marketing, too.

Lately, a number of marketing somebodies have gotten into serious trouble. Typical reaction in the media: "Whoops! There goes the brand."

Not so fast. Once a brand has a strong position in consumers' minds, it is almost impervious to flak.

Take Tylenol, for example. In September 1982, seven people in Chicago died after taking cyanide-laced Extra-Strength Tylenol capsules. The media jumped on the story with predictions of doomsday for the brand.

"A death blow for Tylenol?" was the headline of a BusinessWeek article.

"The Tylenol scare," was the cover story in Newsweek.

"A flat prediction I'll make is that you will not see the name Tylenol in any form within a year," said a leading advertising executive in a New York Times article. "I don't think they can ever sell another product under that name."

"There may be an advertising person who thinks he can solve this, and if they find him I want to hire him," continued the ad executive, "because then I want him to turn our water cooler into a wine cooler."

Amusing, but not accurate. Today, Tylenol is back bigger than ever. It's the No. 1 drugstore over-the-counter brand.

Brand Centric CEO's Will Rule The Day

On a wet and windy Manchester afternoon in 2001, Sir Roland Smith, chairman of Manchester United plc, welcomed analysts and journalists alike to Old Trafford.

He introduced chief executive Peter Kenyon and sat down. Kenyon surveyed the room. His presentation was short and consisted of a single slide that summarised the club's fortunes: turnover up, operating profit up, dividends up. Kenyon sat down and David Gill, his deputy, rose from his chair and began a more detailed, hour-long presentation of the figures.

It was a typical presentation of preliminary results, the kind delivered by every mid-sized company once a year. Except for what happened next. Kenyon returned to the podium with a slide entitled 'Liberating the brand'. He discussed brand extensions, co-branding, and creating brand affinity and brand loyalty. He talked with vision, ambition, and most surprising of all, he talked like someone who understood branding.

Reviewing his years as chief executive at the club it is hard not to be impressed. The foreign tours to support merchandising and the alliances forged with Nike and the New York Yankees are evidence of shrewd leadership.

But they are not the reasons that led Chelsea to make their decision to steal him from United with a £2m salary. Kenyon, unlike almost every other chief executive in the UK (and many CEO’s in the US), is brand-centric.

The CEO Must Drive The Brand

In the next five years, we will see a rapidly changing landscape across the globe, where the opportunities for businesses to benefit from corporate and product branding efforts will be larger than ever before.

The growing emphasis on branding will move up the boardroom agenda and I strongly believe that branding will become one of the most prominent drivers of value across the globe in the next two decades. Businesses with a sustainable business model and with a visionary and passionate CEO with branding talent will benefit from the rising opportunities for competing in the modern marketplace and potentially taking on the global scene. 

It needs to be no less than the CEO who embodies the branding efforts and serves as the company's and thereby the brand's primary advocate and nurturer. The approach is particularly well suited to companies whose top executives have a passion and talent for brand strategy, but in tomorrow's tough environment all top-executives must be able to represent and lead the brand. World-class companies like Sony, Virgin, Starbucks, Microsoft, Nokia, Giorgio Armani, Singapore Airlines, L'Oreal and Nestle all meet that description. Their top executives are directly involved in leading the branding vision, strategy and implementation, and spend a significant amount of their work hours to drive their brands forward and to achieve even better results.

Tomorrow's CEO must be a brand champion who leads corporate and product branding strategies, all strategic brand-portfolio decisions and constantly monitors the implementation of the brand locally, regionally and globally. A strong CEO has credibility and respect not only because of business talent and organizational power but also because of the depth of experience, knowledge, and insight. A suggestion from a visionary CEO with branding talent and managerial experience in branding and marketing is the key driver of the branding efforts and results in any successful organization - internally and externally.

Blazing Trails to Brand Leadership

How come some brands are great, while others just manage to be good? Is there a trick up the sleeves of those great brands – a trick that good sustainable brands can adopt to become great household names?
The answer is yes.

Happily, the financial investment required to adopt this trick is modest. The biggest investment has nothing to do with your marketing budget, and everything to do with your readiness to change the way you manage and grow your brand.

The ironic fact is that the key tool to building a great brand is your competition, because your competition makes your brand stronger. As my dad used to say, if you want to get ahead of the leader, don’t follow his tracks in the snow. Too many brands have become obsessed with their competitors, shadowing and imitating their moves and becoming nothing more than ‘me2’ brands. Often practicalities necessitate this apparent uniformity. You’ll know that milk, water, cheese and countless other items come in similar packaging. These are groceries which, undifferentiated, offer the same benefits as each other. Price often motivates the purchase. And then, from time to time, a product stands out.

Remember Listerine? The mouthwash your grandparents probably used? With a history of over 100 years – first created in 1865 - Listerine is a product which has seen nothing but steady increases in its market share of the mouthwash category. Yet, that category has been diminishing and, with it , Listerine’s revenue has been steadily decreasing. As Listerine’s competitors faded away, so did Listerine’s fortune, even as the leader, in a shrinking product category. Then things turned around. The company shifted its focus to concentrate on how it was actually delivering oral care to its consumers. With a century of trade to reflect on, the brand’s consumers of 2008 are the products of cultures that would be unrecognizable to their 1870s counterparts.

Profitable Brands Need Right Management Perspective

Brand management is a dynamic and a continuous process that needs consistent investment of time and money. The boardroom must ensure that brand management is allocated a specific budget as it is much more than mere marketing communications. Due to the intangible nature of branding, the results may not accrue in a short period of time a it takes time and reinforcement to build customer loyalty.

Many companies increasingly complain that financial markets focus on short-term results and give little credit for long-term value creation strategies. These claims are contradicted by empirical evidence.

A McKinsey study has shown that expectations of future performance are the main driver of shareholder returns. Across industries and stock exchanges, up to 80 percent of a company's market value can be explained only by cash flow expectations beyond the next three years. These expectations are driven by growth judgments and long-term profitability. An examination of stock prices of leading consumer product companies illustrated that future growth accounts for 54% of the stocks' total value.

Another study by McKinsey of Standard & Poors 500 companies from 1984 to 2004 illustrated that the average total returns to shareholders was 9.4 percentage points better among the companies that balanced short- and long-term performance compared to less balanced peers.

The best performers also survived longer in the market, the CEOs of these companies generally remained in office three years longer, and their stock prices were significantly less volatile.

Therefore, corporate management must align short-term and long-term objectives and expected outcomes of branding, and be committed to support it accordingly with well-balanced strategies and time horizons.

Sponsored By: Brand Aid