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.
Monday, December 7, 2009
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.
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.
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.
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.
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.
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.
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.
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