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11/26/2003

Science and Branding

The most recent McKinsey Quarterly has an interesting article called Better Branding.

The piece gives a good overview of the firm’s thinking on brand building and how it needs to change to meet today’s demands. The thesis rests on the idea that by using “forward-looking” predictive market segmentation to plot where the market is going, marketers can build stronger brands.

The opportunity for marketers is that they “can eliminate much of the guesswork by applying social-science techniques to identify the underlying brand attributes driving loyalty among specific customers.” Once identified, these attributes can be targeted with specific brand building activities.

The argument is appealing and hope reigns supreme. Coming from McKinsey, it also has inherent credibility.

However the authors make a fundamental assumption that customers know what they care about. Under this assumption, effective marketing simply is a matter of taking the time (and having the help) to go out and find what it is that is making people happy and sad and then re-configuring yourself to have more happy-making attributes than sad-making ones.

We don’t buy it. Marketing is about selling products and services. Really great market segmentation and research (forward-looking or not) will always be a critical input to the process. It makes sense that McKinsey would want to take a quantitative approach to the process of brand building (although they insist that this is not “just” a quantitative exercise). However the magic fairy dust required for a transcendent brand, can’t be a scientific equation. Hollywood may increasingly use market testing to see how appealing aspects of a movie or an actor, but for the time being they still have to make movies themselves.

If you want a great example of what this approach is really great for, check out their Branding Cars in China. If you were about to try and break into the Chinese automotive market, you would want these guys on your team. But would that be enough?

Posted by Michael Megalli on November 26, 2003 in Digital lifestyle | Permalink | Comments (0)

11/24/2003

Sour Apples

Apple’s brand feels pretty inviolable these days. Financial successes supporting the cult-like following and some very smart moves (see iTunes Store post below).

But one great and horrible thing about life in the age of Internet: no one is beyond the reach of a disgruntled customer. Check this out: www.ipodsdirtysecret.com

Posted by Michael Megalli on November 24, 2003 in Brand volatility | Permalink | Comments (0)

11/18/2003

Getting to the Bottom of Brand Volatility

exclam.gifWatch out for falling brands!rocks.gif

Brands are recognized to be key weapons in the marketing of a company’s products and services. We no longer think of brands as being just the logo a company sticks on a product. Nor to we think of brands as being confined solely to consumer products. Brands have come to a central place in a company’s asset mix; for most coming even before tangible brick & mortar assets.

But in a world where something as amorphous as a brand is so powerful, companies are faced with extraordinary and unprecedented volatility of a new kind: brand volatility.

The latest folks to feel the burn of this cruel volatility are the mutual fund companies. Once seen as being beyond the reach of scandal, these have now also been sucked down into the muck and one-by-one are marred by malfeasance. Janus, Putnam, Alliance, Federated. All have watched powerlessly as their brands have been drawn through the cow pile.

Financial scandals (WorldCom, Enron, Adelphia, Tyco—the list goes on.) are way too familiar, with a large number of once respected companies disappearing in the last two years. But there are other kinds of brand volatility:

Lack of innovation: Kodak’s inability to take control of digital photography has seriously marred its brand.
Lack of standards: McDonalds’ ongoing struggle to control the quality of its product and customer experience after accelerated growth (watch out Starbucks!). Fellow sufferers: ATT Wireless
Lack of relevance: AOL’s serious brand deflation as Internet users become more sophisticated and question the benefit derived from the walled-off Internet experience

And volatility is not a one-way street. Where there are losers, there are winners. Big winners. Google’s meteoric rise to the top with a search engine that actually works. Apple’s newfound relevance as an entertainment company. The Vitamin Water craze.

What is it about the market today that has so increased the amount of brand volatility? The Internet? The global economy? Market capriciousness? Economic uncertainty?

Whatever it is, its something that we are very interested in and something we are going to begin looking at very closely.

Posted by Michael Megalli on November 18, 2003 in Brand volatility | Permalink | Comments (1)

Ho! Ho! Ho!

It's beginning to feel a lot like...The Unsafest Toys list release!

Just what every toy manufacturer wants for Christmas.

Posted by Michael Megalli on November 18, 2003 in News | Permalink | Comments (0)

11/17/2003

A Legacy Isn't Just Something You Leave Behind When You Run Out of Money

crazyworld.jpg
The American Legacy Foundation is a fascinating smoking cessation org funded by big tobacco as part of the multi-billion settlement in 1998.

The story now (NYT) is that they are running out of cash.

Posted by Michael Megalli on November 17, 2003 in News | Permalink | Comments (0)

New Telcoms?

This week's Economist has an interesting piece comparing telcos with airlines.

The main question posed by the article: should the telecom industry be ready for disruptive, low-cost entrants similar to Southwest Airlines? If so, what might such carriers look like?

One of the big questions, of course, how will new entrants access the customer? Players like Net2Phone and Vonage--which use voice-over-IP technology to ride on a customer's broadband connection--are mentioned in the article. What is not mentioned is the possibility that with number portability, customers will take to swtiching their home or office number to a mobile phone (only customers in the "top 100 Metropolitan markets" will have this option at first).

The more interesting question: how will these new entrants make themselves cool? Cool has certainly been a big factor for new airlines like Southwest, JetBlue or Delta's Song. Low cost is disruptive. Low cost + cool is deadly.

Posted by Michael Megalli on November 17, 2003 in News | Permalink | Comments (0)

11/13/2003

Wireless Tail Wind

It would be fun to do a hype-o-meter for the promise of wireless. (Remeber the Industry Standard's Internet Economy Metrics?)

Seems like optimism is on the upswing. Witness Business Week's latest piece on new, mostly business, drivers for wireless services and applications.

Posted by Michael Megalli on November 13, 2003 in News | Permalink | Comments (0)

11/12/2003

99cent

This week's Time Magazine names the Apple iTunes Music Store as this years Invention of the Year.

Simple is not only smart, it's lucrative too.

Posted by Michael Megalli on November 12, 2003 in News | Permalink | Comments (0)

Understanding Portability

CTIA has an interesting site about the complexity of number portability at www.easyporting.com. Be sure to check out the "behind the scenes" bit.

Posted by Michael Megalli on November 12, 2003 in News | Permalink | Comments (0)

11/11/2003

Feel the hand

Cult brands are an important study for anyone who wants to better understand the hold that a well-realized brand can have on a customer. Apple, Harley Davidson, MTV. Cult brands defy easy categorization. Some are fueled by massive marketing budgets others run far more frugally. Some, like Linux, have no central marketing budget at all.

We are members of a cult brand following. Filson is a Seattle clothing retailer of the old school. Clothing that is built – yes built – to last for years.

On a recent trip to Seattle we have an opportunity to visit the Filson mothership (where 85% of the merchandise they sell is still manufactured). In the course of the visit, we came to a couple of realizations about our membership in this cult:

Pride of belonging. One sales person told us that groups of Italians and Japanese Filson pilgrims would often come into the store. The concept that the “movement” had spread overseas was the source of pride.

Feeling protective. Membership in a cult brand is like being a shareholder, owning a stake of the company. This results in some protectiveness over the brand. For example, we would feel threatened if we heard that there was to be a ownership change at the company or that they planned to open a series of mall stores (neither of which is true).

Scarcity = desire. After years of buying through the Filson web site and the catalog, visiting the headquarters was an intense experience. The experience would be much less interesting were it with a similar company like Orvis (forgive the comparison) that has stores nationwide.

Posted by Michael Megalli on November 11, 2003 in Cult brands | Permalink | Comments (0)