Wednesday, December 30, 2009

Still a Disconnect Between Marketing and Social Media Branding and Reputation Management

e-Marketer has published a survey of how marketers are using social media for brand and reputation management. The results show that there still is a majority of marketers who see social media as another medium to sell a product or service. They don't understand or appreciate the relationship building aspects of social media, or they are so focused on transactional monetization that they cannot get beyond that.

More than 52% of those surveyed said that they either try to push the offensive comments appearing in social media down on the Google search pages or try to put out a positive press release or pay someone to say something positive about the product or service.

These actions are troublesome on so many fronts. There are still too many people who believe that social media is just another medium or that they can defy the changing nature of customer relationships--somehow feeling that they do not have to abide by the new rules of engagement. They do not seem to understand that social media is about relationships and community and conversation with the customer, not the company, at the center. It's a tough world for those who demand command and control. Intrusions into the community are not welcome and companies do this will lower their brand equity and reputation rather than raise it.

I am also troubled by the fact that 12% are trying to do a reverse SEO to squash negative information that appears about their companies. While nearly 40% said that they were working on improvements in product and service as a result of negative comments about their brands, there are still those who think that they can bury negative news. First, the importance of SEO has diminished as social media has risen. We used to only being able to determine the value of a brand by whether or not it came up on the first page of a Google or Yahoo search. With social media, there are conversations that are more important.

As I mentioned in a previous blog, I am not sure the analytics will work as intended to push the comments down, since so many people know how to manipulate searches these days. Also, it is a demonstration of the worst sort of management. Why not just hire the local "wise guy" to "wack" the offender? It's the same thing. We live in a transparent world. Embrace it or stay out, but don't think you can get rid of problems the way the Mafia gets rid of its problems.

Tuesday, December 29, 2009

Google vs. Apple--Battle of the Titans

The new Droid operating system by Google has raised a lot of interest in what this will mean to both Apple's I-Phone and RIM's Blackberry. Everyone keeps looking for the I-Phone "killer" the way people a decade ago looked for the Palm killer. What killed the Palm was the smartphone--a different category. The industry moved from the Palm, which was a PDA, to a smartphone, a convergence technology that combined PDA with mobile technology (phone and e-mail).

So, when people start looking for comparisons with what happened to Palm, they need to be cognizant of the fact that there was a category shift or a new category created. People stay within a category when their needs are being met. They switch only when they determine that the new offering provides greater benefits than they are receiving and the price of those benefits is worth it. In other words, there is value ("worth what's paid for").

Droid is not a new category. It is an operating system. I-Phone has its own operating system, as does Blackberry. However, we are talking about an operating system by Google, the most valuable and respected technology brand in the world--beating even Apple. We now have set up the "Battle of the Titans".

So, who is going to win and who is going to loose? My students have been asking me this since they first heard about Droid. So, here is my prediction and my rationale. I think that Droid will erode Blackberry, not I-Phone. I do not think that I-Phone users will switch, but there will likely be a significant number of Blackberry users who will. Droid is an improvement over Blackberry in many respects, although it will need to improve its e-mail functions to hurt Blackberry significantly.

Why will I-Phone continue to survive? This is no longer a matter of phone, but Apple brand. Apple has a community brand-- a "cult", similar to what we see in brands like Abercrombie and Fitch, Aeropostale, and the like. It is a reference group brand. We know that others are part of our same community because they have the same brand--it is entry into membership.

Google is loved as a search engine and one of the smartest companies around. I believe that Google will eventually use cloud technology to do to the technology space what Wal-Mart did to the retail space--many companies will become suppliers to Google. Google is becoming a brand beyond search engines the way Apple became a brand beyond computers.

Google will soon be selling its own branded mobile phones. It will create its own community. Blackberry has users; Apple and Google have community. Blackberry likely will be in trouble.

What does trouble mean? There are several things happening. First, there is what Boston Consulting Group calls the "market of three". That is, when an industry begins to mature, it devolves into three main players. Others either are squeezed out or become niche players. We also can look at this from a perceptual map and see the variables that drive mobile phone selection and map them. I think that Google and Apple will squeeze Blackberry into the middle, a dangerous place to be in any market--neither here nor there. Blackberry will remain the phone of choice for corporations, but for how long is the question. If Google is an accepted operating system, it will make inroads. To date, the CIOs in companies have resisted I-Phone, preferring Blackberry. How they react to Google and Droid will be interesting to watch. Clearly, there will be pressure coming from users to open the corporate market to another system. Younger users have wanted that to be I-Phone.

This is going to be an interesting battle between two very smart, very rich, very talented giants with incredible brand communities. I have talked with a number of people who are part of the "Apple community" who are starting to dislike Google because it threatens their beloved brand. We are likely to see battles between Google and Apple--the future Coke and Pepsi of the technology industry. Those caught in the middle, like Blackberry will be in a tougher position than ever.

Saturday, December 26, 2009

Pricing to the Attributes Perceived to have Value

There is an interesting article in Harvard Business Review with a little sidebar on how customers respond to different pricing schemes. The researchers manipulated a payment mix between products and labor for car service in a conjoint analysis. In one scenario, customers saw greater value in paying more for products than for labor. However, they rejected a scenario in which they only paid for products and all labor was free, or one in which they paid for labor and all products were free.

The authors concluded that the most important thing to assess is the perceived value of what is being charged for. If customers do not see the value in something, they will resist paying for it. In the conjoint analysis noted, customers saw greater value in paying something for products, but not exclusively for products. They saw less value in paying for labor.

Think about what the airlines have done to their brands by charging for things like bags and food. The airlines have made the value proposition all about them and their profitability rather than having a customer-centric model. So, the airlines decided that paying a large fee for a flight was not enough to make themselves profitable. So, they started charging for extras, like bags, peanuts, cokes, etc. After customer rebellion, they reinstituted beverage service, but they had shown their hand--they had demonstrated to customers that they did not understand customer perceived value. The airlines were being run by accountants and investment bankers, not by marketing managers who understood brand management.Southwest now has a value proposition based upon having bags fly free, demonstrating to customers that they are only paying for what they value--i.e., the flight itself.

We also have the craziness going on at Ryan Air, the Irish-based discounter. They are considering having customers pay to use the toilet on board. The argument from the airline is that customers can use the toilet before boarding and if they want to go in flight, they should pay for it. This is an entirely "ass-backwards" way of thinking. Ryan Air built its brand based upon a basic premise--that a flight could be cheap and that customers would pay for bags, food, etc. Their flights were really cheap--one could get a flight for as low as one British pound. The basic necessities of the flight were included in the low fee. All other things were charged on a use-basis. Customers loved it. The customer understood the value exchange--they were giving up a luxury flight for a basic one. They were not flying to major airports, but rather to secondary ones, in most cases. In exchange, they were going very inexpensively. The question is, when is using the toilet--a biological necessity--considered a luxury like bringing bags and getting food on board? This is stepping over the line and Ryan Air has gone from being an admired brand to one that is now an international joke. Ryan is showing that he is more of an accountant than a brand steward. He should call Sir Richard Branson for some advice.

Money needs to be made, but the point is to charge for things in which the customer perceives value and to discount things that the customer does not value. If something is totally free, there is no value--at least not one we can measure. Customers have to be willing to give something in exchange for something to demonstrate value. We don't want to give things away for free and assume these discounts, but the costs can be absorbed or subsumed into the prices of valued items. We need to be certain that we are pricing appropriately to the customer perceptions and not to our own accounting needs. If we provide value and charge accordingly, we will make more money.

Saturday, December 19, 2009

Deciding on the Right Brand Strategy

Brands are comprised of three components: symbols, attributes and associations. So much attention is focused on symbols--the logo, color and design. I get a bit irritated when someone tells me that their organization has a new brand and then proceeds to show me their new business cards with a new logo and colors. "Anything new about what the company believes in or any engagement with employees in a different brand promise"? I often ask. The answer is typically no, or a blank stare.

The real importance of brands is in their attributes and associations. We judge brands by whether or not the attributes meet our needs. We look at the associations brands have--whether other people "like us" are wearing or using the brand, and who the brand associates with. It is through engagement that brands become powerful, not through art and design. The symbols are there to highlight the attributes of the brand--they are not the brand.

Another mistake that companies make is that they think that the brand is differentiated with a cool name or by making bold claims of difference through marketing communications. You cannot spin a brand. It either has or does not have the desired attributes in the eyes of target customers. It is here that brands get their perceived value--why someone is willing to pay more for the brand vs. another product.

Consumer companies use what is called Unique Selling Proposition (USP) to differentiate what might otherwise be similar products. Toothpaste might all be the same, but some are whiteners, others have mouthwash, some have tarter control, etc. These subtle differences are designed to attract to the product those for whom these USP are important. They are not attracted to the ingredients, but rather to what the differentiated ingredients do for them to reduce risk of bad breath or yellow teeth. The USPs segment on the basis of psychological needs rather than functional ones.

For non-consumer products companies, differentiation can be found in what can be called Value Proposition. That is, the rationale for buying the product over another in the same competitive set. But, companies often mistake why someone buys the product. I was talking with a company that is trying to sell foam mattresses to hospitals. What's the value? They said it was weight, comfort, etc. The real value is that it eliminates bed sores, possibility of bed bugs, etc. Let's understand, though, that the marketplace of non-consumer products is very different from that of consumer products. That is, the needs of the customer are different, the competitive marketplace is different, and the sales engagement is different. Despite these differences, many non-consumer products companies follow consumer products principles in their branding activities. How can you make decisions about your brand strategies?

The best way is to look at the product from the outside-in, the way the customer sees it and to understand the needs and interests that determine the buying decision. I would suggest that there are two basic variables driving buying decisions: 1) the amount of fear, uncertainty and doubt (FUD) that the customer has in making the decision to buy; and 2) the complexity of the buying decision. Consumer products elicit little FUD and there is little complexity in the buying decision. If I want a Coke but the restaurant only sells Pepsi, there is little FUD or complexity. In contrast, if I am the CIO of a company buying 20,000 desktop computers for my company, there is a great deal of FUD and complexity. I could jeopardize or lose my job if my decision is wrong, and the decision may need the input of others who are more expert that I am. It helps for a company to draw a 2x2 matrix, with one axis being FUD and the other complexity, and to determine where their products and company value proposition lie. The more FUD and complexity, the greater the interest in corporate brand. The customer wants to know that the company behind the product is viable and strong. Consumer products have less need for corporate brand and focus on product brands. The same matrix can be used to determine the right marketing communications mix to support the branding decisions. Consumer products can be driven by advertising and marketing public relations. Non-consumer products brands need strong relationship management since they often build their brands at the point of sales.

Breaking Down Silos to Create Greater Value

Silos exist throughout the organization and they impede the organization in many ways. Organizations were historically set up along the so-called value chain. Each internal group was there to contribute to the overall value of the company. There were support functions --HR, technology, etc.-- and then there were functions that created and sold the products--inbound logistics, R&D, outbound logistics, marketing, sales. The structure of the value chain as it appears in textbooks has virtical bands--silos for each function. They were to do their thing and then hand it off.

Companies do not work this way anymore, at least not the efficient one. It is time to turn the value chain horizontally. Companies should focus on the value they are trying to create externally. They have many stakeholders--customers, employees, investors, and others. Why not ask the internal organization to come up with integrated, consistent plans and actions for each of these stakeholder groups? It would not be appropriate to have a customer program from PR, marketing, sales, etc. They would have to develop it in harmony. Similarly, there would be one organizational plan for investors, employees, government, etc.

If the organization incentivized integration and penalized silos, it would soon find that the traditional silos would begin to break down. Granted, each of these activities would need an expert steward (marketing, communications, finance, etc.), but the concept of “ownership” within an organization would begin to unravel.

What this would mean is that everyone would really need to fully understand what he/she did to add value and stop arguing over small bits of turf that may be intellectually interesting and functionally relevant, but add little value to the organization. Those who knew their stuff the best and had the best ideas would win, not just those who were appointed kings of a function.

When I was at Nortel, I headed both marketing and communications. I had a VP of Advertising who, as one would imagine, wanted to talk about advertising. I changed his title to VP, Customer Relations. His plans almost immediately changed. We gave prominence to those who headed Customer, Employee, Investor and Government activities. We asked all of the other communicators, trade events people, etc., to work with these VPs of major stakeholders to support them. The media were seen by us as being vehicles, not a key stakeholder. It was one small start to what we did throughout the company. Many in my organization argued that I was killing traditional PR; others said I was killing traditional marketing. Clearly I was. That was the intent.

In much of my work now with companies, I attempt this conversion through “Stakeholder Relations Councils”, bringing together all of the relevant functions to work together to integrate strategy with brand to engage the organization and enhance reputation.

Thursday, December 17, 2009

University Branding Becomes a Major Topic

Universities have really gotten into branding in a major way. New firms are forming that focus exclusively on the academic market. Articles are being written in various marketing and academic management journals about the importance of branding.

Why is college/university branding moving into high gear? The cost of an education in the US has become extremely expensive. At the university I teach at, which is a private institution, undergraduate students pay about $47,000 per year when all expenses are included. The MBA costs anywhere from $50,000-85,000 at our university, depending on the program selected (on-line versus full-time or executive MBA). At the same time, there are more students attending colleges and universities. So, the perceived value of the degree takes on greater importance. Companies want to know the value of potential employees have, parents begin to be concerned about where their son or daughter will receive an education that is valued in the market, and universities are concerned with their ability to attract the best and brightest students available. All of this adds up to a major reason for branding. University rankings become extremely important. They put the value of the university into context--allowing it to be assessed against others in the market.

I believe that universities should be talking about their reputations rather than their brands. Brand is focused primarily on consumers. Universities do not have consumers or customers, but rather a host of stakeholders, including, parents, alumni, corporate donors, government (for grants and ,in the case of public institutions, funding, and others). The term reputation is more acceptable to faculty. Everyone wants a good reputation for their schools; not everyone wants the university to think of itself as a brand.

It is difficult to have a university live its brand or reputation. A friend of mine once called a university a "group of anarchists sharing a common parking lot". Faculty do not like to be managed. They see themselves as independent contractors, each vying for their own position and fame. University tenure encourages this. A faculty member who plays as part of the team and serves his/her department and college well but does not publish is less valuable than the faculty member who does little in concert with others but who is a publishing "machine". So, it is difficult, if not impossible for a university to live its brand.

Far too often, universities fall into the trap of thinking that their slogan is their brand. The slogan of my business school is "Learn Here. Lead Anywhere". This is not our brand. Our brand is about attributes, namely co-op education, technology and applied research. Put those together and offer them to students and one has an environment that allows people to learn at Drexel and lead anywhere afterward. Just like in a company, the key is to link the slogan back to attributes that are real to the university.

Sunday, December 13, 2009

Reputation Trumps Brand is a Crisis

The move by Accenture and Gillette to drop Tiger Woods shows the power of reputation and the concern of boards about reputation risk. Brands are important, but they are related primarily to customers. Reputation is related to all stakeholders, and in a crisis, companies look to manage their relationships with all stakeholders and some of these concerns may trump the customer.

Years ago, DuPont had a situation with Benlate, a pesticide that was rumored to be burning cotton crops after a rain. The division argued to maintain control of the situation and keep it between the product management and the customers. By the time the board intervened, the cost had escalated to nearly $500 million. Investors were concerned about the company's insurance protection; lawsuits were pending; employees were questioning DuPont's commitment to environmental safety. The company learned a lesson. It should have made the situation a corporate issue rather than a division one.

In contrast, when Tylenol was tampered with in 1982, J&J didn't allow the crisis to be managed by McNeil, the division that makes Tylenol. They immediately made it a J&J issue. When Kidder Peabody, the investment firm that GE used to own had an scandal involving a broker who stole from his clients, Jack Welsh immediately made it a GE issue, taking responsibility away from K-P to manage it.

Accenture had to act. It is a consulting firm. Its value is entirely intangible. That is, it does not make or sell products, but rather gives advice. Its value is its credibility, its reputation. Anything that impacts that reputation is a threat to the firm's perceived value to clients. Tiger was the association they previously wanted. "Come on, be a Tiger" was the slogan. Tiger's winning, his talent, his aggressiveness, his intelligence, his personality, were the associations Accenture coveted. Tiger is now a tainted set of attributes. His association is no longer positive. He is a joke line on Letterman and Conan. Not the stuff Accenture can tolerate.

Reputations, like brands, are comprised of symbols, attributes and associations. The difference is that reputations are based upon a larger number of stakeholders. Brands are what firms decide they want to be seen as; reputation is how stakeholders see them. The reputation of other companies that Tiger endorses are all watching this. Someone has to be first--that was Gillette. I know that the calls are going on within the management teams and board rooms of AT&T, Nike, Rolex and other companies that "employ" Tiger. They are all asking the same question: "what is the impact on our reputation? Can we take the risk? Do we want to be the last company defending our association with him? What are we hearing from employees, customers, special interest groups, the media, investors and other stakeholders?

Reputation management is the process of balancing the financial interests of the company against the needs and interests of the company's many stakeholders. An endorsement is a brand association. The endorser's attributes help further enhance the performance characteristics of the brand. Tiger is "tainted goods". He may still be the greatest golfer in the world, but his personal character is under question. His attributes no longer are desirable association.

I heard one professor on TV claim that the contracts Tiger has are unbreakable. I am not sure what this fellow knows or doesn't know about the subject of contracts. Typically, companies have a clause in these contracts that allows them to be broken if the endorser does something to create risk to the company. All of the companies that have signed Tiger are intelligent companies. I can't imagine that they do not have clauses that allow them to cancel the contract without further payment.

This is a sad situation all around. But, it is an interesting learning situation showing how not to handle a crisis and also the importance of reputation.

Tiger's Death by a Thousand Cuts

So now the news is that Gillette has decided to stop its advertising with Tiger Woods. It seems that we are now seeing his death by a thousand cuts. My prediction is that others will hold on but start to back off if things continue to deteriorate. Gillette, a men's brand, spun it that they are giving him the time out of the spotlight he needs. It's the time out of the spotlight they need in association with him. You don't give a winning brand time off; that is reserved for question marks. As of this writing, Accenture just announced that they were ending the sponsorship with Woods saying that he no longer represents the type of person with whom they want to associate.

Let's keep in mind that Gillette is owned by Procter & Gamble. P&G has always been protective of its reputation and the primary focus on P&G, other than Gillette, is woman. They position themselves as a family company. It makes sense that they would back off Tiger until they better know where the "wind is blowing". The postured this as being on his side, but they are playing both sides in this one. They step aside from having Tiger associated with them, and for those who support Tiger they can say that it is done for him. Well played, sir!

Companies are very concerned with their reputations. This has not been a good year for corporate reputation, with all indicators of trust at record lows. Companies do not like controversy or to be caught in situations in which they have to defend the actions of another--they have enough problems defending their own actions. Woods now is a problem.

As I have said before, this did not have to be this way. Tiger still has not stepped in front of the cameras. He continues to speak through his website. Who the hell is giving him PR advice? Whoever it is should be ushered into the PR Hall of Shame. This is one of the worst example of handling a crisis I have seen. Tiger is allowing everyone to control this story other than himself. This is not an age when the news media take a quote from someone. This is an era of 24-hour news outlets that need to manufacture the news they cannot get otherwise to attract interest. They are sharks and Tiger is bleeding.

The first rule of a crisis is to take control of the situation, tell the truth, and take the offense rather than the defense. Admit your mistakes publicly, muster a few tears and look contrite. Do something, but stop hiding behind a manufactured, impersonal website. For those who think this is Tiger speaking to us directly through his site, let's get real. He has an entourage and they are hard at work. They are either terrible at their jobs, or he is the worst client they have ever had and refuses to listen to their advice.

While we're at it, can someone please tell David Letterman to stop with the Tiger jokes. He keeps referencing Tiger's problems and associating them with his own. He has a wife at home as well. Cool it, Dave. You came out of this looking like someone taking the high road. Don't go low road and ruin everything for a few laughs.

Thursday, December 10, 2009

Credo Mobile--a New Take on Social Marketing

I just got mail for a new phone carrier called Credo Mobile. The concept is a really interesting one, combining a product with concepts learned in social activisim and now called social networking when applied to the Internet.

This is a unique and different way to create a community and one with the power in the palm of its hand to influence policies. For some time we have been hearing about social investing. Now, we have a product that focuses on a community that cares about liberal social causes. They are out there. They came out in record numbers to help elect Barack Obama President. They are connected through social networks, just like other communities of interest. There are communities on the right as well.

The CEO is Laura Scher, a social activist from San Francisco. The slogan for the company is "More than a network, a movement". From the literature and website, it seems that Scher was upset by positions taken by AT&T, Verizon and others who decided not to back liberal social positions to avoid potential conflicts in their market. They also were upset by the political contributions from the big phone companies that go to conservative politicians who oppose abortion rights or woman's rights.

So, the idea is that one switches away from their current wireless carrier and contracts through Credo, which runs its own network. They will buy you out of your current wireless contract. A portion one pays each month to Credo goes to organizations like Greenpeace, ACLU, and others.

I'm going to assume that the network is viable and that one will not have problems making and receiving calls or dropping calls in progress. Regardless of commitment, people are not going to stay with a wireless network that does not meet fundamental, function requirements.

I find this concept really interesting because it is once again a use of technology to find and collect a community of like-minded people. While Scher lives in San Francisco where there are many people who will find Credo of interest, I am most happy for the poor liberal who finds him/herself stuck in a conservative community and feels like a complete alien. Now, they can find others to connect with. That's the beauty of technology.

Credo and other such plans serve the niche market. The web has made it possible to create what Christopher Anderson termed the "Long Tail", the ability to serve niche needs that were not economically possible in markets governed by economies of scale. I'm sure we will see others networks like Credo. I would imagine that some conservative group will hear about this on Hannity or Glenn Beck and start a phone service that gives only to those who oppose abortion rights or are against climate change legislation.

What we are seeing again is that brand is an emotional connection between product and consumer. In the past, we had to deal with the mass market, even if we did not identify with the attributes. We had few choices. Laura Scher and her team were put off by the attributes and associations of Verizon and AT&T. In the old days they would have sent letters to the editor and send out fliers to their neighbors. Today, they create a new company to collect people with similar values and beliefs who not only will talk on the telephone, but also can use it to lobby and further build the case for their causes. Very ingenious! While some will be offended by the causes Scher supports, they now have a business model they too can follow for their own community.

Maintaining an Exclusive Brand

I teach at a university. Every time I give out grades, I am reminded of the value of a brand and how it can be supported or eroded. Grades have been inflated in recent years. During the time I was working on the corporate side, grades began to rise across the board. Students now think they are flunking out of school if they receive a "C", which --to date myself used to be called a "gentleman C". It meant that one performed average in the class. Some people were better, some worse. In undergrad, I was a "B" student. There were a few "A's" sprinkled in, with mostly "B's" and even some "C's" in some courses. I was a good student at the time.

The grade of "A", which is supposed to mean excellent work, now is expected by students for good but not excellent work. Everyone has an excuse why they deserve an "A". They worked really hard, they have scholarships that need to be protected, etc. We now have a generation of students who all got trophies. They were all told they were wonderful. Heaven help the teacher who told a student that they were not excellent!

Let's turn this discussion and think about it from a brand-product perspective. What would someone say if they indicated that they needed Tylenol but because of other circumstances wanted it at generic prices? It would erode the value of the Tylenol. Why support a brand if there is no value perceived in it?

Of all the things I love about returning to teaching, the thing I hate most is grading. The value of the grade (the brand) has been ripped out. If everyone can get it, what value is it to those who truly deserve it? On a larger scale, this is what has happened to the value of a bachelor degree. If everyone can get one, where is the real value? So, that starts a hyped competition for students who want/need to get into so-called elite schools--the Prada or Guicci of universities.

This is a very US phenomena. I recall in the 1960's a discussion a British fellow had with my father who was bragging about the large percentage of American students who go to college. "What will you do when you need a B.A. to run an elevator or sell shoes?" asked the Brit. He was right. He saw that the value of the degree would be eroded. In many countries, there are exams that separate who can attend university and who cannot. This has its downside as well since many students who do not do well on large, standardized tests are excluded from universities in their home countries. The US does allow those who are "late bloomers" or creative types to find their way. It has helped US innovation. However, there has been a cost. In Canada, there has been less delineation amongst the many universities in terms of quality. All universities are government owned and all are deemed to have quality--a bit different in some cases, but quality none the less. So, a degree is a degree. Kind of generic, which also has its downside since people want differentiation when price goes up. They want to know if there is value in their purchase. Students (or their parents) do not suffer depression or stress over whether little Johnny or Joan is getting into University of Toronto vs. Brock. There even is pride in students who go to 2-year colleges because that is where one goes for the education that in the US is reserved for 4-year colleges (nursing, kindergarten teacher, graphic design, public relations, advertising).

Universities are brands. Grades are brands. People are brands. Brands are comprised of attributes and associations and symbols that have meaning. Erode the meaning and the brand begins to erode.

Wednesday, December 9, 2009

Gatorade Pulls Its Tiger Connection

Pepsi, the owner of Gatorade, has decided to drop a drink named after Tiger Woods. The timing is curious. Gatorade said it was decided before the whole "Tigergate" incident; many think the timing is more than coincidental.

The truth is likely somewhere in between. Gatorade is a product that is in trouble. It had a good market position and then, like the other Pepsi brands, was rebranded last year. Gatorade became "G", I would imagine to give it "street cred". The ads are harder-edged which supports my contention. Somehow, Pepsi decided it had to make the product more current and hip. The results have not been good. Reports have indicated that "G" has lost market share. This comes on the heels of Tropicana, another Pepsi brand, which had to reintroduce its old packaging after customers strongly objected to the new package design. The logo for the Pepsi product, which changes depending on the product, was criticized for being curiously similar to the Obama campaign logo--Pepsi said it was pure coincidence.

This has been a terrible year for Pepsi brand management. It did not have to be so. In the new world, Pepsi could have co-created the package designs with customers and gotten strong customer buy-in. Pepsi, instead, acted like it was pre-Internet days and did its branding in secret between the chief marketing officer and an outside branding agency.

Companies are not in control anymore. Brands are shared and are part of customer experience. They always have been but now customers can act on their likes and dislikes more aggressively. Pepsi needs to wake up to the new world. It claims to be the brand for a "new generation" but acts like it is managed by the old one.

Back to the question of whether or not the dropping of the Tiger brand was preplanned or is in reaction to his marital infidelities. As noted, I think the truth lies somewhere in between. Gatorade is in trouble and is looking for ways to reconnect with its original customer base which it is loosing. Tiger is an expensive endorsement and likely too expensive for a brand in trouble. The problems Tiger has had likely pushed the decision to the front burner.

Tuesday, December 8, 2009

Kudos to Comcast

I had a great luncheon discussion today with Frank Eliason, the head of social media for Comcast. I am a customer of Comcast in Philadelphia. I also am a customer of Mediacom at my beach house in southern Delaware. Comcast looks like the best customer service company in the world and the most advanced technology company in the world compared to Mediacom. The latter gives new meaning to thinking and acting like a public utility--you know the attitude: "if you don't like the electric company, live in the dark". That's a public utility mentality and it typically hits those companies that are monopolies or close to it.

Comcast has historically been a company customers have loved to hate. They had terrible customer service numbers. They were a company featured in a famous YouTube video of a service man falling asleep on a customer's couch.

The business model of Comcast has made for problems. They run cable to a home and bring the home TV. A few years ago they started bringing in computer network and now telephone. They realized that they had to change. Many companies in similar positions do not sense the market forces requiring change and stay the course--think GM, Westinghouse (remember them?), and many others.

Comcast, either due to more competition or just waking up and wanting to be better, has focused on customer service. A few years ago, they hired Frank Eliason to begin blogging, Twittering, etc. to connect with customers. He has helped Comcast listen and respond. With the technology, Comcast has responded so quickly that customers have started to notice. And, what they have started to notice is that Comcast cares more than they thought they did. This is changing opinions and helping Comcast keep its installed customer base and attract back lost customers.

It is interesting that Comcast chose to put is social media group in customer service. Typically, the group is attached to either marketing or corporate communications. All too often, marketing wants to use social media to sell and corporate communications wants to use social media to either listen or "spin" its take on an issue. By putting the social media group in customer service, Comcast put it where it could do the most good.

Social media is becoming an important part of Comcast and a key part of its ability to fulfill its brand promise. I give Comcast lots of credit for recognizing its own problems, dealing with them, and trying to become better. Its use of social media is exemplary.

Monday, December 7, 2009

It's Tough Managing a Brand in Bad Economic Times

I was moderator today of a panel discussion in Philadelphia on marketing during the economic downturn. That panelists, from companies like QVC, AstraZeneca, Siemens Healthcare, and Digitas Healthcare, were very engaging and thoughtful.

We got into the issue of brand and what has happened to brand during this recession. Every one of the panelists talked about how they have been able to manage their brands through the downturn. It has been tough. Customers are increasingly looking for price reductions and challenging the price differential of the brand.

The key is to establish the brand as either the high-end, differentiated value post or at the opposite end at the cost-savings. The difficult position is to be in the middle. This is a key illustration of what we have learned about strategy from people like Michael Porter and others. Find your point on the value frontier and manage your brand accordingly. Best of all, take a dual action to cut costs and add value in other ways, a la Southwest Airlines. But, recognize that when you respond to requests to lower price you are, in fact, undermining your brand value. If you established price at the appropriate level of value, it should hold, all things being equal. Obviously, all things are not equal, but you do not have to match a discounted price--in fact, it will destroy your value.

Think about what has happened in retail. We have Nordstrom's and Nieman-Marcus at the high-end and Wal-Mart and Target at the low end. These companies know their place and their brand promise. In the middle are companies like Macy's that has become one big sale. Macy's has taught the customer that nothing at their store is of value if it is not on sale. Nordstrom's has held to its yearly sale and has refused to discount. It has risked some market share to maintain its brand. Wal-Mart owns the low-end, discount brand in retail. Target now has been differentiating itself against Wal-Mart and gaining share. But, that share is likely not coming from Wal-Mart, but rather from companies like Macy's.

At one time, companies like Macy's were able to be a brand for all people. Sears had that status in an earlier time. Markets are becoming more segmented. Brands, by their very nature, segment markets--they meet specific needs of certain segments of the population. It is dangerous when people cannot determine what a brand stands for and who it is for--that's the middle ground where companies enter the death spire.

Brands are Alive and Well

I have read a number of articles and books in recent years suggesting that brands are dead. Don Tapscott, author of all things digital, suggested that young people do not care about brands. Even one of the people I admire most, Regis McKenna, suggested that brands were dead. Nothing can be further from the truth.

I don't really understand these arguments. The Internet has changed branding, from something owned and controlled by the company, to something co-owned and co-created with the customer, but this has not killed brands. In fact,there is evidence that brands are getting stronger. Look, for example, at Apple. The fact that people are willing to pay twice as much to get an Apple computer as a PC is ample evidence of the power of brand. Brands build perceived value and interrupt the natural tendency of markets to move to commoditization. The PC world is filled with brands battling for attention. Their brands may be eroding--the really powerful brand in the PC world is Intel, which is not the PC but which is the most powerful ingredient brand in electronics.

Same thing with the I-Phone. I talked to my students about the new Droid phone being offered by Verizon. It is supposed to be an amazing smart phone that may erode the positions of both Blackberry and I-Phone. Verizon sees it as their I-Phone offering. Most of the students were impressed with the potential of the Droid, but not willing to switch from their I-Phones. Apple has become a brand community--people feel connected to Apple--it seems to "get them". There is a true emotional connection with its customers. Powerful brand.

We can see many examples of where brands are being eroded and I can see where Tapscott and McKenna might have found evidence. AT&T long ago said that brand preference in telecom services was dying. Brands die when the value proposition no longer makes sense to consumers. If the AT&T brand was dying it meant that customers couldn't determine why they would select AT&T over Verizon or Sprint or others.

Brands are far from being dead. Where ever one finds a product or service that commands more attention than another in the same category, one can find the power of brands.

Saturday, December 5, 2009

Pharmaceutical Branding Leave Them Vulnerable to Generics

Pharmaceutical companies have historically been product focused. While the companies might talk about marketing, they are really sales organizations. Sales companies view themselves as product developers who push their products at a market. Drug companies take products from R&D and detail them to doctors. A marketing company would be more focused on customer needs and relationships and would measure themselves not by sales, but rather by customer satisfaction and retention.

Obviously, pharma companies are heavily regulated and the concept of customer attraction and retention might be a bit alien. Some would argue impossible. I would argue the opposite. Because of the way pharma companies see their value, they brand products with no connection to the parent company, which leaves them highly vulnerable when their patents expire and generic companies enter. When that happens, the market immediately becomes commoditized, i.e., dependent on price.

Pharma companies have screamed for years about the fact that they develop the drugs, investing, on average, $800 million and 12-years to bring a drug to market. Those are those that succeed through Phase III. There are many failures along the way. The heavy investments by drug companies in R&D has made the US the leader in pharmaceutical innovation.

Think about the intangible asset value of a research-based pharma company. They have the organization, the people, the resources and the ingenuity to develop life-saving drugs. It bewilders me, then, that these companies do build their corporate reputations and instead focus on product branding. Product branding is typically done because the scope of brands of the company and the number that compete with one another lend themselves to letting the product carry the value. This is a consumer products model. There is little value in the company. The value is with the product.

In more scientific companies, we typically find masterbranding or endorsed branding, where the company associates itself with the product because the customer finds value in the company behind the product. One would think that this would be the case for pharma companies. If there is significant intangible value in Merck, Novartis, Pfizer, Genentech, AstraZeneca, etc., etc., would it not be smart from a branding perspective to utilize that equity in their branding strategy?

This has not been the case in pharma. So, when the patent expires, generic companies can seize more value than they should be able to grab because the value was almost totally within the product. If there were association to the parent, it would be more difficult for the generic company to take as much value. There could be an opportunity by the original manufacturer to differentiate on value rather than price alone. Pharma companies always try to make the claim that they were the original discoverer and distributor of the drug. Why would they not invest in bringing that value to the market more forcefully? It could prove to be a turning point for many companies that creates a barrier to generics. While they would likely still loose the patent to a generic company, they would be able to maintain more of the real value in the drug for a longer period of time.

Thursday, December 3, 2009

Tiger is a Actually a Cheetah

So now we know what we all suspected. Tiger was cheating on his wife with several woman. He's human. What a shock. An attractive, rich guy traveling the world gets hit on by women and give in to temptation. Again, what a shock?

So, why are we still waiting for an appearance from Tiger? Why does he continue to believe that he can manage this through his website? Does he really believe that we believe that he is writing all of this and not having his entourage front for him? Maybe it is a shock to him to learn that he is human. He was raised by a father that developed him to be a robot and that has served him well on the golf course. Maybe he can't quite believe that he has human frailties like the rest of us mortals?

While he has helped by coming out and admitting his mistakes, he still has not done what needs to be done, which is to make an appearance and show his emotions. He has to stop trying to make us feel that the media are wrong for doing their jobs in covering this story. Once again, he is not an ordinary person. If he were, this would never have been a story. He is a brand. He has responsibilities beyond himself. As I said before, he needs to take the David Letterman approach. Admit mistakes and tell people that it is now his responsibility to rebuild his relationship with his wife. He can then ask for some privacy to do that. Spare her--she hasn't done anything wrong, nor have the children.

I am still waiting for Tiger to act like the person we all thought and hoped he was.

Monday, November 30, 2009

An Amazing Story of Employee Disengagement

I heard a story from someone the other day that was so amazing that it had to be repeated in this blog. The woman I was talking to had a friend whose husband travels a lot. He was on a US Airways flight. The flight was delayed and an announcement said that the flight crew was in a major traffic tie-up on the expressway to the airport. This gentleman decided to go on-line using his smart phone and see what information was on the local traffic reports. He found out that there were no traffic delays reported. The airline had announced incorrect information instead of telling customers the real story.

When this fellow arrived at his destination, he called US Airways to complain about what had happened. Now the story gets amazing... The response from customer service? "What do you expect from US Air"? The airline's own customer service was telling the man that he should not expect anything less than poor quality from the airline.

This is a story that anyone who flies, or is unlucky enough to fly US Airways, can understand. This is a miserable excuse for an airline. It has long ago given up any pretense to caring for its passengers. There are other airlines like that as well. I would put United as a close competitor to US Airways in the worst airline competition. It would be a tight race between these two giants.

I remember when USAir started an advertising campaign called "US Air Begins with You". It was an attempt to build customer relationships. It didn't last long. There was nothing behind it. Just fluff. When I heard it, I joked that it must mean that USAir begins with the letter "U", and that it was a play on words. Too bad they didn't use that campaign to transform their company.

What does this story really say about US Airways. Not only has it given up on its customers, but it also has given up with its own employees who are the face of the airline to its customers. One would think that they would want their front-line employees to be armed with rationale for every inconvenience. Yet, most of the airline employees have sided with the passengers. To paraphrase Bill Clinton.. they can feel our pain.

Note to companies. This is a miserable way to make a living. Stop doing what you obviously hate doing. Why be in business if you seem to hate it so much? The airlines have not made money in years. Why are they still putting us through hell? There are airlines that know how to run themselves and build customer loyalty. e.g, Southwest, British Air, Singapore, Porter, JetBlue. I sometimes think that making passengers unhappy is the only thing US Air, United and many of the other US carriers know how to do well.

Come On...Be a Tiger!!

Many golf fans like me are dismayed by Tiger Woods' recent car accident and hoping that he is okay. The brand and reputation management expert in me, however, is not enthralled by Tiger's response, or lack of it, to the situation.

Tiger is an individual and he has the right to his privacy. However, he has become a brand, both in his own right and in his ability to endorse other brands and provide them with equity, e,g, Nike and Accenture, among others. He is the first $1 billion a year pro athlete in terms of winnings and endorsements. He receives millions for simply showing up at tournaments and millions more for lending his name to projects.

When someone becomes a brand, he/she looses the ability to act as an individual. They take on larger, almost "corporate" responsibilities. His actions are his own and also reflect on other organizations.

I don't know what happened at Tiger's house that night that led him to jump in his car at 2:00am and back into a fire hydrant and tree. But, the speculation has become ridiculous. There are office pools with people betting on what happened. Some think he and his wife had a fight and he stormed out; others think he was cheating on his wife; others have other ideas. The sleazy media like the Enquirer and Star are running stories claiming he has been cheating on his wife and produced pictures of the alleged "other woman". I also understand that in the first 24-hours after the accident, there were more than 3,000 news stories written about the accident.

Tiger's silence just fuels those speculations more, giving them greater longevity and "legs". He needs to learn from David Letterman. If something happened, then tell us what happened and get it over with. We can all understand if he had a fight with his wife and stormed out. He's human. Maybe he was jet-lagged from his recent trip to China. Whatever the reason, or reason he can come up with, please say something.

I expected more of Tiger. I have always admired his talent and his philanthropic activities. All these begin to look manufactured in retrospect. When tested under fire, Tiger has failed the test that leaders must accept and brands are bound to accept--that they are larger than life and as a result have greater expectations on them.

Saturday, November 28, 2009

Live Your Brand; Grow Your Reputation

It seems amazing to me that so many people continue to talk about reputation as if it were something that we could build through communications alone. Reputation is primarily built through behavior, not through communications. We've heard the term "walk the talk". Companies that behave properly build their reputations more effectively than those who talk about it and do little to act appropriately.

Brand is the attributes, associations and symbols that we create that we want to be known for. Reputation is the "vote" by stakeholders that we are distinguished (differentiated in strategy terms) from our peers. How do we get from what we want to be to reputation? It is through our employees--they are the ones who connect the brand to stakeholders.

When we develop a positioning--the words that give our brand life; that explain why we should be favored over another offerings--we need to get employees engaged so that they are both willing and able to live the brand in their daily activities. One good way to do this is to develop an Employee Mantra, a simple, clear message that employees understand is their role in the positioning. It is tough to use the positioning by itself because it is focused on external stakeholders, and we ask way too much when we ask employees to understand how to translate the positioning. But, a good Mantra can do that. Like the concept of mantra in meditation, it is designed to provide focus when the "mind" wanders. So, when many people are telling employees different things, they can come back to their mantra to know what to do.

There is a famous story about someone who visited NASA and saw a janitor sweeping the floor. "What is your job"? the visitor asked. One would expect the answer to be that the person was a janitor. The answer, however was: "I keep this place clean so that we can put a man on the moon".

Consider how we could get all employees to translate their jobs to a final accomplishment that builds value for the organization. "What do I do that adds value?" is a great question for everyone in the organization. When we can find that connection and make it emotional, we have the real ability to engage employees in behaviors that will live the brand and grow reputation.

Friday, November 27, 2009

Stop Playing the Price Game

I am in Toronto visiting friends. Yesterday, I had a really interesting discussion with a fellow who imports household goods, spices, and other things. We were talking about value and brand over price. The gist of the discussion was that North Americans have become convinced that the only way to keep or attract new customers is through lowering price. This might bring in customers, but it also undermines the perceived value of the offering and undermines the brand.

The Wal-Mart impact is being felt in every sector of the economy. Many businesses look to Wal-Mart's success and conclude that they cannot succeed without having the lowest price. There are many ways to show value to the customer. Price is just one.

Consider that there is a continuum between high price, high differentiation and low price, commodity. These are the extremes of the continuum, not our only choices. Between these extremes we have many ways to show increased value--customer service, relationships, partnerships, etc.

It is a good thing to cut costs. But, that should be done to allow the firm to provide value in other ways. It should not be done so that price can be lowered. If it is, the margins are squeezed and the entire market become a war of attrition.

Let's consider Southwest Airlines or Porter Airlines (if you are not familiar with Porter, you should fly them to Toronto from one of the cities they fly from in the US--Chicago, Boston, Newark). Both airlines gained efficiencies by having only one type of place and flying only point-to-point. This means that all staff are qualified on all planes and they do not have to deal with hubs. This speeds flight arrivals and departures. But, at the same time, they used these cost efficiencies to create value differentiation--Porter actually pushes carts with free wine and provides food. Southwest does not charge for bags. These are things that drive up perceived value. But, they also do things that other airlines could do for free but do not--they smile, they act like they enjoy and appreciate having you on board. They make the experience enjoyable. This builds perceived value and increased loyalty.

We have to get control for companies back from the accountants and finance folks who think that everything comes down to price and start looking for ways to enhance perceived value. There are so many ways that companies can do it--it will enhance the brand and, if the entire organization is engaged, it also will grow the reputation.

Tuesday, November 17, 2009

Totes>Isotoner Sets High Standards for Customer Service

It is not often these days that one is totally shocked by a display of high customer service. I purchased a Totes (they use totes, lower case) umbrella last spring. It is guaranteed for life. At some point recently, one of the spokes of the umbrella broke. I followed the instructions I found on line to not take it back to a store, but rather to send it back to the company with $5.00 for return postage. A new or repaired item would then be sent.

Much to my amazement, I received a letter yesterday from one Helen Baur, Consumer Affairs, totes>isotoner. The letter indicated that "under your circumstances, we would certainly not expect you to pay this fee, having had the umbrella for such a short period of time". My $5.00 was enclosed.

Now, I should note that I did not have a receipt for the original purchase, so Totes was simply assuming from the model of my umbrella that I had purchased it recently.

I teach in a business school and we are always talking about customer service, or lack of it, and the return on investment that it brings or looses. totes>isotoner has gone beyond what I would have expected. I am absolutely impressed with their high consumer standards. They deserve my praise and my customer loyalty. I thought I would pass this on to others in hopes that my story will both inspire other companies to adopt similar standards, and for others in the market for umbrellas, gloves and other items by totes>isotoner, to consider totes>isotoner.

Saturday, November 7, 2009

Break Down the Silos Inside Companies

Companies continued to be siloed, depite the fact that this is counterproductive. Silos may be good ways to move information within an organization, but the infighting between silos in most companies gets in the way of real competitive advantage. Marketing, PR, advertising, sales, customer relations, etc. all remain in silos. Companies cannot afford this anymore, not only in terms of the costs of maintaining the silos and their inefficiencies, but also because it is ineffective in dealing with influencing customers and other stakeholders.

Silos create their own messages, their own organization, etc. They cost the company in many ways. Companies have customers, employees, investors, etc. Those are the important stakeholders for companies. Many companies, however, spend an enormous amount of time managing all the internal squabbles and turf wars rather than focusing on building value.

Look at the traditional value chain in text books. We have inbound logistics, outbound logistics, we have support functions, marketing, sales, etc. All of these are shown in vertical bands. Each is to work on their own activities and contribute to the value of the company. It has the right concept, but has been wrongly implemented in practice.

Some business strategists have been talking about "unbundling" the value chain. This is a means to turn the vertical silos into more horiziontal activities so that organizations inside the company work together toward common objectives. Marketing does not have domain over customers; the entire organization does. Finance is not responsibile for money; the entire organization should be financially oriented. We need stewards (experts) as the guides for each of these areas, but ownership should be done away with.

What if a company were to say the following? We have a number of stakeholders who create value for our company: employees, customers, investors, and others. We want a plan of how we can enhance customer value, investor value, employee value, etc. We do not want 3-4 plans from different functions, but rather one plan that is integrated and consistent. We will incentivize those who work collaboratively and penalize those who continue to want to hold onto their "sacred islands".

If CEOs demanded such an approach, the company would likely see people reaching out and working with others they have little or no incentive to work with currently. I tried a change like this within my piece of the pie at Nortel. Instead of having a VP of Advertising, the person became the VP of Customer Relations. It changed the nature of the activities from advertising to all of the things that were needed to enhance customer relations. It can work. What's stopping companies? What do other think about this?

Public Relations vs. Communications--Are We Still Debating Terms?

There are still many people who expend greats amount of enegy to attempting to argue why the term public relations should be used instead of communications. I have heard people claim that public relations is a higher-order than communications, i.e, communications is a sub-set of PR. I completely disagree.

Humans communicate, they do not public relate. The higher term is communications, that subsumes all activities such as PR, advertising, etc. It is a term that should replace promotion. Promotion, which in marketing is one of 4Ps, is a terrible term. It suggests an inside-out or push-type activity that does not have much utility in today's world. We communicate with one another.

Public relations is a totally misunderstood term and has so many wrong associations with it--press agent, events management, etc.--that I get tired of trying to define it. To spend a lot of time arguing for the proper definition of PR seems like a waste of time and energy, at least to me.

I have never been one to be concerned with definitions, because I found them constraining. I wanted to be engaged in things I considered important. If people called those PR or communications or marketing or advertising, it wasn't of great importance to me as long as I was engaged in activities I thought were meaningful to the larger enterprise. Power from my perspective is the ability to leverage influence, not run an organization called one thing or another.

I have never found marketing people getting hung up on what to call themselves. Marketing has been hurt by the misperception that it is about advertising or promotion. It is a strategic function. It also is wrongly classified by those on the PR or communications side as being focused only on selling something to a customer. That may be the case in many organizations, but that is not what marketing should be about.

The great philosopher Humpty Dumpty said: "words mean what I want them to mean, nothing more, nothing less". We all have definitions, some right, some wrong, in our heads. If we find that people we deal with have a wrong definition of a term, we can certainly spend most of our time explaining the proper use of the term, or we can adopt a different term that provides greater latitude of action and activity. I find the latter to be much more productive.

Thursday, November 5, 2009

Three Key Ratios for Reputation Management

I've been looking at a lot of reputation research lately. It seems to me that there are three key ratios that need to be measured and management to achieve reputation enhancement:

Ratio 1: The difference between what the organization wants to be known for and how it is perceived by key stakeholders vis-a-vis competition

Ratio 2: The difference between the attributes the organization wants to be known for and the importance of these attributes to key stakeholders

Ratio 3: The difference between expectations of stakeholders and the experience they believe they have with the organization

If organizations develop reserach that measures these three ratios and develop programs that address these ratios, they will be well on their way to enhancing their reputation.

Who Owns Reputation Management?

I was at a meeting in NY today sponsored by Echo Research. Because the meeting was primarily for communicators, it focused on issues related to reputation from the communications perspective. The argument was that communications should "own" reputation management within companies because it is the most suited discipline to do so. The rationale is that given social media, relationship management--a supposed PR expertise--is critical; and that communications looks at more stakeholders than any function other than the CEO.

I agree with the perspective that public relations is better suited to relationship management than is marketing and that it is a function with concern for many constituents. Still, I have problems with the concept of ownership of something as important to an organization as reputation. The equivalent would be to say that the CFO owns finances. He/she is the primary steward, but everyone in the organization owns responsibility for financial management.

Communications should be the catylst for reputation management, if they have the skill set to do so. However, this skill set needs to be more than a constant urging for social responsibility and "doing things right".

The leaders of reputation management will be those who first-and-foremost understand that the primary interest of a CEO is to build value for the organization. Reputation management does that, but I am not at all sure most communicators or most marketers understand what is meant by that. Communications often sees value as "doing good". Somehow these good things are supposed to translate into behavioral intent. Sometimes they do and sometimes they don't. Marketers suffer from wanting everything to have transactional monetary value--relationships take too long.

A blending of the two is what is needed. Reputation management leaders need to help the organization focus on those things that distinguish the organization in the eyes of key stakeholders to build value. When they do that they will be given the "keys to the kingdom" by the CEO.

Often the communications teams are focused on stakeholders other than those who make money for the company. One often hears "that might be good for customers and investors, but what will regulators or NGOs say?" These are good questions, but reputation is most imporatant with stakeholders who matter, not with those who don't.
Every organization has three key stakeholders who contribute to the company's financial success: employees, customers and investors. Other stakeholders can help or impede success and must be managed appropriately. So reputation management is really about making the company distinguised for the key stakeholders and good enough so that the organization is supported or not impeded in its objectives and activities.

It's time that marketing, communications, investor affairs and HR got together and understood that they are in this together and that common goals need to be worked on. Others need to be brought into the mix, but until the organization can work consistently toward common objectives and behaviors with its key stakeholders, reputation management will not work. CEOs shouldn't care who the catylst is for this. It just needs to happen and the leader is the person who "gets it".

Thursday, October 8, 2009

An On-Line Bonanza for Bad Managers

I had an interview today with a reporter who is covering a story about a company that sells the ability to bury bad on-line comments by pushing them down the Google search. In other words, a reverse search-engine-optimization concept.

It is not surprising that someone came up with the idea to sell companies on the idea to get rid of the bad reviews. It's like the Mafia getting rid of the body.

There are so many problems with this that I am not sure where to start. First, brands and reputation are not being build on Google searches like they were 5-years ago. This has now moved to social media--conversations on the Internet. Blogs and micro-blogs (Twitter) are where the action is. Second, this plays right into bad management. If someone is saying something negative about your company, a smart manager should want to know why, whether it might have some truth, and then take action to correct it. This is the opposite. "I don't like what people are saying and I want you should make them go away"

Tuesday, September 29, 2009

Challenges for the Newly Merged Pharma Companies

The consolidation in the pharmaceutical industry continues. It is interesting that last year at this time I was teaching a Pharmaceutical Marketing MBA class and said that consolidation was predictable. Most of the students, all mid-level at pharma companies in various disciplines outside of marketing, pushed back that this would not happen. I think it was more of a wish on their part rather than good market observation.

Anyway, the consolidation has been going on and will continue. We likely are moving to what the Boston Consulting Group called the "Market of Three". That is, as an industry matures, consolidation occurs until there are three major broad players, with a group of niche players.

There are huge opportunities awaiting these newly formed companies to enhanced their perceived value with stakeholders. When a company says they will be the "new ..., they are in fact framing expectations for stakeholders that something will be different. That is, there will be new attributes, associations and experiences that were there previously. From a brand and reputation perspective, this is a double-edged sword. On the one-hand, these companies can get out of the starting gate with new positioning, brand and reputation initiatives designed to prove that they are in-fact new. Or, they can simply hope that new means that they will be accretive at some point in their financial performance, which I would argue is insufficient to prove their newness.

I would hope that these companies are looking at how they created value before, individually, and how they will be creating value going forward; that they reidentify for themselves and for others their strategic group with which they compete; that they engage in organizational change efforts to bring the new cultures into alignment (60-70% of mergers fail due to culture clashes); and that they look for ways to enhance their reputation with there key stakeholders.

It will be interesting to see how many of these companies do anything more than simply try to tell people that they are new.

Thursday, September 3, 2009

Position Your Brand for Where the Puck will Be, Not Where It Is

I am looking forward to a trip in a few weeks to Toronto, one of my favorite (favourite, if you're Canadian or British) cities. I lived in Toronto for about 10 1/2 years. Great city! Vibrant, multi-cultural, young, wealthy, clean.... Somehow, though, this great city north of the border did a lousy job marketing itself.

When the Canadian dollar was cheap compared to the U.S. dollar (as low as $.59 at one time), Toronto had the brilliant idea to market itself as a cheap place for Americans to visit. "Come see us. We're cheap, have great theatre and restaurants, and you can buy all you want at basically half the price". Things worked well. Americans flocked to Toronto and shopped and went to theatre and had a great time.

Then, the Canadian dollar (called the Loonie in Canada) began to strengthen compared to the U.S. dollar. Up it climbed until it was nearly at par. As of today it is about $.93, or about equal to the U.S. dollar. What happened? You guessed it, Americans stopped visiting. Toronto was no longer cheap.

So, here sits a great city--the equal or better than any city we have in the U.S., and Americans don't visit because they do not know about all of the attributes that could have been part of the positioning of the city. So, off they go to Chicago, San Francisco and New York--cities as or more expensive than Toronto, but cities that have billed themselves all along as places you need to see.

Too bad the marketing geniuses in Toronto didn't follow their Canadian son Wayne Gretzky. When the "Great One" was asked what made him so great, he answered: "I skate to where the puck will be, not to where it is".

I use the Gretzky quote with every company I work with. It is a great marketing strategy. The Toronto dilemma is repeated in way too many companies that develop a positioning with brand attributes and associations that are wonderful for a time, only to find themselves in the wrong place when the market forces change.

It is important to think forward and to make market force analysis a part of the brand process. Will the attributes and associations hold up and be differentiating and desirable if things change? Don't just position against the market as it is; position against the market as it might be.

Tuesday, September 1, 2009

Companies Need to Get Customers Involved in Brand Redesign

IKEA recently made changes for the first time to its catalog. It changed the typeface it typically uses. Not a major revolutionary change to be sure. However, the reaction from customers was not what IKEA expected. It was negative and loud.

This comes not that long after Gatorade and Tropicana felt the wrath of its customers over packaging changes designed to update the brands. Gatorade, which I wrote about in a previous blog, redesigned itself and relaunched its brand as "G". Tropicana, which I talked about before, had to back down and reissue its old packaging when customers expressed anger over its new package design.

What is happening? I think what we are seeing is evidence that customers, not the company, own the brand. At one time, companies felt in total control over their brands. They changed things when the wanted and the public was expected to be soooooooo excited about the new brand name, logo and design. The problem was that with few alternative choices and few ways for customers to express themselves publicly, companies were often fooled into thinking that everything was fine. The Internet changed this. It moved power into the hands of the consumer who is free to express their opinions about brands and changes. With more alternatives to every brand on the market, changes that are not liked can easily lead to defections. The switching costs for almost every product--with few exceptions, like banking--are coming down rapidly.

Many companies are embracing this consumer ownership of their brands. Others are reacting with horror. At Hasbro, the company faced off against some of its most devoted customers who created an on-line version of Scrabble called Scrabbulous. Instead of finding a way to work with these brand-lovers, Hasbro sued them, turning many of them into brand-haters who are blasting Hasbro on-line.

Companies need to recognize that the brand is owned by the customer. That's where we always wanted it to reside--in the emotional connection with the individual purchaser. It is time that companies start to treat customers are partners rather than as passive purchasers. If changes to the brand are to be made, companies should get their best customers involved in the redesign. Then, they can use these customers to sell others who are less passionate. Times have changed and companies need to adapt.

Tuesday, August 25, 2009

Delaware's Proposed Sports Betting Damages the NFL's Reputation?

The State of Delaware got a shock when a court ruled that its proposed sports betting was illegal. Delaware can only off parlay betting (more than one team) and only on pro football. The NFL and other leagues argued that sports betting would damage their reputations? I wish I had been an expert witness for the State on that one!

What exactly is the reputation of the pro leagues that they are trying to protect? Is it Major League Baseball's blind acceptance of steroids? That league even did testing in 2003 but sealed the findings and did nothing about anyone who was found to be using illegal enhancers.

Perhaps it would be the National Hockey League that continues to walk a thin line between wanting a good game and a good fight. When discussions emerged a few years ago about banning fighting, the league found itself having to back down to the players' union.

Or, maybe it would be the good reputation of the National Football League that has had so many legal issues with its players that it is hard to keep track.

So, sports betting in little Delaware would damage the reputation of sports? Are you kidding me? Michael Vick and Ricky Williams can return to the game without damaging the leagues reputation, but betting will ruin it? Hockey players can beat each other up while the crowd goes wild, but betting will make the sport look bad? Manny Ramierez can come back as if nothing has happened, with ESPN cutting into games to show his every at-bat, but betting will taint the MLB?

Why can't the sports leagues simply say that they are afraid that games will be fixed, a la the "Black Sox" scandal in 1919? I can accept that argument. We know that there are many athletes who love to gamble. They're human. Pete Rose, Michael Jordan and Charles Barkley are just a few of those with big gambling habits--the latter two have never been linked to betting on their own sports while active.

It seems that professional sports are very good at turning a blind eye to things they do not want to see or acknowledge. Sports betting occurs all the time with bookies and at office pools. But, in a time when states are trying to find new sources of revenue, the "cause celeb" of the major sports leagues is to stop Delaware from legalizing the back room activities that go on all the time.

The hypocrisy is just too much!

Friday, August 21, 2009

Does Signing Michael Vick Hurt the Eagles Brand?

I was asked the other day whether the signing of Michael Vick hurt the Philadelphia Eagles' brand and reputation. The question was put forward with the obvious suggestion that the signing did destroy the brand of the team.

For those who are not familiar with US sports, the Eagles are a professional football (American football, not soccer) team. Michael Vick was a professional player with the Atlanta Falcons who spent two years in prison for running a dog fighting ring and personally being involved in electrocuting, drowning, and otherwise torturing dogs. He did his time; he's out and the Eagles signed him. Many teams refused to sign him. Needless to say, this has created quite a controversy amongst fans. One sporting goods store, Dick's, has said that they will not carry Vick's jersey with the caviat, that they will if customers demand it.

Those familiar with the National Football League know that there have been a large number of players who have had legal problems. At one time, people joked that the NFL stood for National Fellons League.

The Eagles argue that Vick has served his time and that he deserves another chance. Most people know that this is not the real reason he was signed. The Eagles were not trying to make a social statement. He was signed because the team thought he was a good football player and could help the team. Otherwise, he would have been defined as ex-con not worthy of rehabilitation.

Now, what about destroying the brand? We've seen in baseball with Manny Ramierez, Barry Bonds, and others that the home team cheers and the opponents jeer those who have been accused of or admitted taking baned performance enhancing substances. The home fans want a winner. Yes, even the sophisticated city of San Francisco loved Barry Bonds who claimed he never took performance enhancing drugs but could not explain how he gain 3 hat sizes and 2 shoe sizes as an adult. He hit homeruns and won games. He put fans in the stands and built the TV ratings. Major league baseball even ignored the entire steroid scandal, relishing the fan enthusiasm for the homerun derby that broke all historical records.

So, what is the brand of a major league football team? One might want to say a community, family sports franchise, but in reality, the attributes are of a rough, oversized group of athletes expected to win for the city they play in. Owners have long understood that the public wants a winner and that they also love controversy. The Dallas Cowboys became the self-proclaimed "America's Team" with a lot of bravado and controversy surrounding less than savory players. The TV viewing audience for Michael Vick's first game will be huge.

So, for all of those who want the brand to be one thing, the owners and coaches know that what the vast majority of sports fans want is a winner. Cognitive dissonance will play its normal role in helping people to explain away those things that do not fit in their buying rationale. The brand promise of a sports team is to put a winner on the field. If they can do it with a group of "boy scouts", then fine, but the fans have not shown an inclination toward that type of team, despite all of the critics who scream about athletes being role models for young kids. The role models we have in sports are generally bad--get over it. Too many are coddled, spoiled brats who are children in adult bodies. There are many exceptions, but they do not garner the headlines.

Let's all remember that brands are not about making everyone happy or establishing a "higher order". They are only those things if it makes sense from either: 1) the desire of management; 2) differentiation; or 3) customer demand. In the case of football, none of these things is at work. The Eagles are fulfilling their brand promise to the vast majority of their fans. I imagine, though, that more of the downside will stick to the Eagles because it reinforces another brand image of Philadelphia as a city with ruthless fans and a tough, working class underbelly. If this were San Francisco, people would be much more willing to explain it away as a city that recognizes that people can learn from their mistakes.

I despise what Michael Vick did. I wish that all felons were banned from sports so that they were not role models for kids, but my desires are not what make the Eagles brand. I'm not an Eagles fan and wouldn't become one because they signed someone wonderful or didn't. They do not appeal to me as a franchise--as a brand.

While many people wish that the Eagles management would run the team differently and believe that the team turned its back on its brand and brand promise, I would suggest that the team is actually no different signing Vick than it was before. It is the same brand and has the same brand promise. The team may loose some fans, but these will likely be a small group of people who are not devoted fans--those who contribute the most to the profitability of the team.

Tuesday, August 18, 2009

Connecting Brand and Reputation

I am starting to come to the realization after all of these years that brand is the essential part of reputation. Brand is about framing expectations; reputation is about the delivery of experience commensurate with those expectations. Brand is the control that reputation management lacks. We may not be able to control our reputation, but we can control the identity, attributes and associations we have, and we can work toward greater consistency of delivering experience to customers and other stakeholders.

So many brand projects stop with positioning, taglines and logos. They do not go the next step toward developing the processes to connect employees to the brand attributes so that they are both willing and able to "live the brand". Many employees are willing, but unable to understand what they are expected to do. This situation was found in a study by Mjken Schultz and Mary Jo Hatch. They examined the corporate branding efforts of companies globally and found that the missing piece for many was organizational change. In fact, they found that most employees at the firms that studied had not idea what was expected of them in delivering the brand promise, and as a result were not committed to it.

Consider that the companies employees are the most important stakeholders the company has since they are interpreting for customers and others every day the value--or lack of it--of the company.

So brand management is critical, but it will only be fully worthwhile when companies understand that their brands create expectations of performance and that they must take the steps necessary to make certain they can close the gap between expectations and experience.

Wednesday, August 5, 2009

From Radio Shack to "Shack"--Are You Kidding??

I just heard that Radio Shack plans to change its name to "The Shack" to distance itself from the old mindset connected with radios. Changing an outdated name or brand is not a bad idea. But, "The Shack"?? Is this a hamburger joint? Is it supposed to give it "street cred"? Is there a different Brand Promise in the name change?

Name changes are warranted when a company wants to recreate and reposition itself. However, the change only works well when the company also recreates and repositions its capabilities and the experience for its stakeholders. A company that clearly needs to have its name change is AIG. There has been such damage to this once proud brand that I do not see the ability of it to reposition itself with good key attributes. It always will have the association with economic disaster and poor management decisions. It may have been a joke, but I heard that they were considering changing the name to AIU. I hope this was just a joke, because if it were true, AIG's management team should be sued for complete ineptitude. If they want to change to AIU, they should save their money and instead put it into changing the internal culture of the company that created the mess in the first place. Then, they should start a major campaign apologizing for past mistakes, telling us what changes have been made, and trying to restablish themselves. Not sure if it would work, but an improved AIG would be better than a half-baked AIU. Still, a new name with a different culture would be the best course of action.

The Shack is following in the hallowed footsteps of Gatorade, which changed its name to "G". It is backfiring on PepsiCo, the owner of Gatorade, with a loss of market share. Pepsi had to back off its rebrand of Tropicana, going back to its old packaging after customers rebelled.

Why are companies listening to so-called "hip-hop" branding agencies who think that a new brand with "street cred" is the way to win the market? Perhaps they should be looking at where that youth market is relating to brands. It is on-line, not through traditional media and packaging.

Tuesday, July 21, 2009

10 Maxims of Brand and Reputation

1. The goal of reputation is not to be liked, but rather to enhance perceived value versus competitors

2. The foundation of a good reputation is an organizational culture that recognizes that financial results are a proxy for doing other things right and rewards and promotes people accordingly

3. Reputations cannot be controlled, but the best way to manage reputation is by controlling the things that can be controlled (brand attributes, symbols, associations, identity, consistent marketing and communications messaging, and organizational engagement)

4. When the brand symbols, attributes and associations resonate with target stakeholder, there is differentiation in perceived value, which in turn builds reputation

5. Brands and reputation are perceived within a context of competitive offerings; to the extent that the brand differentiates, there is increased reputation advantage

6. When stakeholders resonate with the organization’s attributes, the perceptions become dominant and perceived value is enhanced

7. Branding raises expectations of performance. Reputation is enhanced when the consistency and continuing of performance behaviors are equal or better than the communicated value

8. A positive reputation over time creates inertia in perceived value--the so-called “halo-effect”

9. Social media are about “me-ness”; organizations must become part of the conversation to continue to build their brands and reputation

10. Corporate Social Responsibility only builds reputation when both the CSR program is consistent with the attributes of the organization and the program is important to stakeholders

Friday, June 26, 2009

The US Chamber is Wasting its Money

The US Chamber of Commerce is planning a mega campaign aimed at reselling capitalism to the US public. They want people to recognize that regardless of all of the problems we have had, our capitalisitc system is still the best there is.

What? I didn't realize that people in the US were turning away from capitalism. This must be a bunch of Chamber people who really believe that we are headed toward socialism and that the public must be warned. Is the Chamber now an arm of the right-wing Republican party?

This is the most ridiculous waste of money one can imagine. The issue is not about capitalism, but rather about abuse of trust. We have become warry of the Madoffs and Sanfords and Thains, as well as the AIGs of the world. We have seen great companies go down the tubes, led by CEOs who seemed to be unable to grasp changes in the marketplace. While many people may be questioning whether "greed is good", that is a far cry from questioning capitalism.

One of the biggest problems US business has had has been its inability to understand the market dynamics and changes in perceptions among their consumers. The Chamber is showing that it is a leader in this tone-deaf business activity.

This reminds me of the ill-fated attempt under Pres. Bush to sell the "virtues of the US" to the Middle East through a PR campaign. The problem in the Middle East is that they are tired of foreign governments (UK and US in particular) in their region and biased toward Isreal. Regardless of whether or not we agree with those assessments, we must understand them. Bush showed that he did not understand them. He assumed that they didn't like our values and so we had to sell them. Such stupidity!

This is not bad brand and reputation management, this is bad business strategy. The inability to fully understand the needs and interests in the market is a kiss of death to business. Businesses move toward the wrong targets.

The Chamber is demonstrating that it is an organization more interested in touting political ideology that leading to the restitution of trust in business. If they were concerned about the latter, they would be focused on their members and the untrustworthy behaviors many have shown rather than assuming we do not understand them. When someone says: "you don't understand me; trust me", it is time to assume that they don't get it and are not worth the time.

Tuesday, June 23, 2009

Are We Entering a Time of Information Socialism?

There has been so much talk about socialism in the past year. The concept of socialism is typically related to economics. However, the most relevant type of socialism seems to be in the area of information. Except for a new piece in Wired Magazine, I haven't seem much about it.

Think about what has happened to information since the advent of social media. Information that was controlled by large companies seems to be breaking down. Social media, including blogs, microblogs and the like are putting information flow in the hands of the people, and with that intelligence is moving from the center to the fringes. We always thought of a networked society as being like an atom, with a core. However, we are evolving to more and more networks in which there is no center core. Networks simply evolve and beget new networks. Information and intelligence is shared within the network. If companies want to introduce ideas or brands, they are increasingly attempting to find ways to participate in the network. Companies are not the owners of the networks, nor do they control information flow. They are equals with others in the network.

I have noted that Facebook and Twitter are examples of the "me-ness" of society. We have always thought that technology was creating these social networks, but I am starting to think that technology is following the social and market dynamics. The founders of the new social media are part of the generation that is self-involved and more interested in what they are others like them have to say than they are in what some so-called authority has to tell them.

Like economic socialism, then, social media are creating a distribution of information (wealth). While it may not be the government taking control, as in economic socialism, there is a loss of control by corporations, owners and the wealthy. Wealth, which was centered amongst a few families a few generations ago, has been distributed as well--not withstanding the current economic collapse. The new wealthy, and there are many of them, are creators of information sources (Facebook, MySpace, Twitter, Flikr, Digg, etc.).

It is a curious phenomenon. Perhaps we need to rethink the concept of socialism? Does anyone have any thoughts on this--it's really interesting.

Thursday, June 4, 2009

Change is Hard to Accept

There is a famous quote from Baslo that says that "Half of the world's misery comes from ignorance. The other half comes from intelligence." This quote reminds me of the one about the quality of advertising attributed to John Wanamaker, who said that "half of my advertising works; the problem is I do not know which half".

The difference between pessimists and optimists has always been this view of the glass half full or half empty. So it is with the consternation over youth and their focus on social media. A new book by Mark Bauerlein called "The Dumbest Generation" is the equivalent of the glass half empty. Bauerlein, not surprisingly, is a professor of English at Emory University, who just cannot imagine that young people can have any intelligence if they are not reading books but are focused on technology and social media. He bemoans the fact that social media make young people think that they are the "center of the universe" and cautions them to wake up quickly before the business world snaps them into reality.

It is so difficult for those like Bauerlein to accept the fact that intelligence can come from different sources and that society changes. At the time of the invention of the printing press, the Church warned that society would crumble if there was no long a control over literacy and the production of text. When the TV was invented, critics warned that we had created a virtual wasteland for our youth. So it goes now with the Internet. The same cries come from the self-appointed keepers of the keys to the proper life.

The fact is that social media do put the user at the center of the universe. It is not companies who will snap young people into submission, but rather it is the other way around. Young people and social media are forcing companies to open up, to become more transparent. Marketing is no longer about touting features, but rather about cocreating with customers who are the acknoweledged sources of intelligence about the brand because they use it. People no longer simply see value in brands but look for value in what things can do for them. Industries are being customer driven and that same time that the technology is reinforcing this societal transformation.

Bauerlein writes as if the whole society were reading books until this young generation came along. Only about 10-15 percent of the US population buys books. We are not and have not been a reading society. I agree that this is a shame--I love a good book, but that's me.

Young people may not be reading books, but they are getting information. It just happens to be filtered to fit their needs and interests. Humans have always had seletive attention; now we have the media to fit our selective interests.

We can moan and moan, but there is no turning back. Yes we need to figure out how to run a democracy without a literate society, but this was a concern at the time the Founding Fathers drafted the Constitution. The real reason for the Electoral College was to make certain that the educated could save the country from a mistake by the uneducated classes who were never trusted to make smart choices. The Founders may have been brilliant and ahead of their time on democracy, but they also were aristocratic and intellectual in their thinking about themselves versus the rest of society.

Don't get me wrong, I don't like people I think are stupid making decisions that will affect my life, but stupidity is in the eye of the beholder. I'm sure that there are many people who would love to take the vote away from me because my views might change their lives in undesirable ways. My views haven't changed because of technology. I have thought for years that we are a society that is dumbing down. We live in a far different world than existed prior to the Internet. We have so mcuh more much information and too many choices, and that makes life hard--we have to be selective and manage ourselves. It was a simpler world when a few fed information to the many; today the many are sharing information with one another. The few need to join in or they will become superfluous--look at what has happened to newspapers already.

We are in the midst of a social-economic-politcal transformation that is being spurred on by technology. It has far reaching implications for us, and many of these changes are yet to be realized. The printing press changed society forever, bringing democracy and destroying feudal rule. The Internet is every bit as powerful a change agent as the printing press and we are just at the beginning of these changes. People are creating their own news services--we already have YouTube, which is the largest TV network in the world.

We can write about how stupid kids are--this has been a theme throughout history--and warn them that they are on the wrong path due to their reliance on "newfangled gadgets", but that will not reverse the course we are on. Perhaps people like Bauerlein should attempt to understand the value young people see in these social media and how he might provide content that would be of interest. The days of someone self-appointed as the purveyor of truth, the news, etc. is over.