Brand New View

Lead or Mislead?

With so many examples of questionable behavior these days exposed instantly via digital communications, one has to wonder what it will take to get people to do the right thing.

In Europe, the European Commission has found at least 200 air travel websites that mislead consumers because they don't comply with EU pricing transparency laws. Quoted fares often lack taxes, fees and hidden insurance costs (for example), giving online users quite a shock when they click to complete their transaction and discover that they are paying considerably more than initially shown. In effect, what you see is not what you get.

In the US, the New England Patriots Football team (in the National Football League...the professional football league of the US) have been caught and fined for spying on opposing teams during the games by video taping the signals and conversations between players and coaches. As an undefeated team that appears likely to continue trouncing the opposition right on through the Super Bowl, a key question is whether the team's spying was instrumental to their on-field performance. Without a doubt, the spying episode has cast a negative light on the franchise that only the most die-hard fan could ignore. So was it worth it? If they do win the Super Bowl, will the victory come at the expense of credibility and trust?

In Asia, product recalls have tarnished the image of manufacturers in recent months. In a back and forth game of whose to blame (whether it is western marketers or Asian manufacturers), this week it appears that the manufacturers are to blame, partly due to sub-contracting practices that emphasize low cost over quality control. In an effort to curry PR favor and avoid losing future sources of supply and labor, even the guiltless are confessing to impropriety.

Is dishonesty and misrepresentation becoming a permanent condition of the human species? Has it become standard to 'do whatever it takes' to succeed, even if that means acting unethically or against one's better judgment? Well, the big challenge today is that the news is everywhere, so there are fewer places for those inclined toward bad behavior to hide. It is also true that consumer deception, sports scandals and unreliable business partners have been around for a very, very long time. But longevity is not an adequate explanation nor justifiable excuse for abandoning common sense. In fact, given the plethora of communications avenues available today, one would think that the sensible course is to act, behave and communicate honorably. The alternative is to risk rapid, massive and potentially humiliating exposure to a world eager to see which mighty have fallen today. And with that precipitous fall goes trust, credibility and the very foundation that makes people, businesses, and societies successfully engage with each other.

Brand News

The news this past week was interesting again for those who follow brands. My previous blog entry included a mention of Apple and its new iPod line, featuring the iPod Touch. One of my students asked whether Apple should have waited to launch this product, especially given the recent launch of the iPhone (both products share similar touch screen interfaces). It is a good question, which leads me to 2 others: does the iPod Touch dampen or dilute the iPhone before the latter gets firmly placed in the market; and is Apple rushing out more products faster and hastily than in years past? While we won't know the financial impact of these new iPods for another few months, Apple's management is making shrewd competitive moves in my opinion. We've seen Apple orchestrate big launches over the past 10 yearsf, from the first new iMacs to the iPod and now the iPhone. But in between these launches have come numerous smaller launches (I hesitate to call them updates as that implies something small and insignificant, and even Apple's updates are big deals), including 3 new iMacs, the partnership with Intel on the CoreDuo Processor, the Tiger operating system, several variations on the iPod (Nano, Shuffle), MacBookPros, AppleTV, and its iWeb and iWork software suites. As each product launches, Apple sunsets-out previous versions, keeping the product line relatively trim and focused. While innovative design is a key differentiator of Apple's, so too is the 'tidiness' of their offerings...it never looks too crowded. The consumer market is moving faster than ever, so Apple is ensuring that it stays on par with expectations that it deliver innovative products regularly. This applies to the iPod Touch, which leverages the momentum begun with the iPhone, rather than distracts and, most likely, also suggests where the iPod line may be moving in the future. So I think the iPod Touch is a good, flanking move that reinforces the strengths of the iPhone and begins to carve out a highly differentiated market position against other MP3 competitors, whose offerings look increasingly bland and generic....
Nike just announced a 51% increase in 1st quarter earnings following strong performances around the world, led by Europe and Asia. CEO Mark Parker commented that the company is on target for achieving revenues of $23 billion by 2011. When I left Nike to start a boutique hotel company in the 1990s, the company's revenues were around $4 billion. As it climbs past $16 billion this year, the company now has 30,000 employees and has an enviable brand reputation. What is driving this success? A number of factors, including Nike's historical emphasis on innovation (right now it is the new, low-profile footwear and its innovative cushioning) as well as management's reorganization around 6 core sports. This reorganization did not eliminate Nike's other product categories, instead it allows the company to build around the sports with the biggest global impact, from which smaller sports categories will be able to leverage more niche-oriented opportunities. At the same time, Nike indicated that its Bauer Hockey brand will probably be sold because an internal brand audit indicated that this particular business was not in line with the company's future growth areas. Such internal reviews (brand audits) are a critical tool for management to evaluate current and future opportunities, as well as the company's capability to develop the business. Visit the investors section of Nike's website and watch the videos (there are several) of CEO Mark Parker and Chairman/Founder Phil Knight as they discuss the company's financial performance and future direction. While such videos are effectively visual press releases, Parker's and Knight's comments do accurately reflect Nike's culture and company philosophy and hint at why the company is so successful in the global athletic industry. Their comments are virtually identical to what I heard when I worked there: a relentless drive to succeed; an optimistic view of the future and of human potential; a belief in sports as a force of good in the world; a commitment to authentic products designed first and foremost for athletes. Nike has always been a passionate company filled with hyper-dedicated people who love sports and this intensity of focus is a key reason why the company is so dominant in its industry today. Parker's and Knight's comments are genuine, not false bravado or hype...so if you want a glimpse into this company, then watch the videos....
Google has launched a new tool for brand marketers called Google Gadget Ads, which follows on the heels of the company's launch of its innovative AdSense. Essentially, Google Gadget Ads are rich media display ads in which companies can use video, animation, newsfeeds, and maps to market their offerings. With the web becoming the defacto hub of choice for consumers, these new ads may well make the web even more interesting. The ads are user-activated, allowing the user control over how they experience the web...
BrandWeek had an article this week highlighting Mercedes', BMW's and Volvo's new efforts to market 'lower luxury' products--affordable luxury cars, in essence. Each is supporting these new cars with sizable brand marketing campaigns using cross-platform advertising such as TV, innovative webcasts and an aggressive 'test drive' campaign. It will be interesting to see how these new cars sell--stretching brands downward is certainly a way to attract new, up and coming customers. The downside is whether the core brands are harmed over the long-term. Obviously, these car makers are betting that they can reach consumers with future potential who will ultimately trade-up as they become more successful.

Odds and Sods

Another SMU colleague, friend and professor at SMU, Michael Netzley, and I are prepping for launching our new podcast series 'Leadership Matters'. You can check out more information about it at these links: http://leadershipasia.wordpress.com/ and http://web.mac.com/brandnewview.....Stanford's football team won its first game of the season yesterday, beating Bay Area rival San Jose State 37-0. It was Stanford's first win in its remodeled stadium, which re-opened last year. Following Stanford's 45-17 loss to UCLA 2 weeks ago, this appears to be another up and down season. But I LOVE the team and the games nevertheless (and I wish they were broadcast in Singapore--there is far too much EPL re-broadcasts from games 3-4 years old...)....my book, 'Measuring Marketing' (published by John Wiley and Sons in late 2006) climbed as high as #40 on the Amazon.com business best seller list last week, which was a great thrill. I just signed a contract for a new brand book that will be published in late 2008 or early 2009, plus I am putting the finishing touches on a great new book on the secrets of successful business leaders.....in the past couple of weeks Apple launched a revamped iPod line, including a version called 'iPod Touch', which looks very similar to the highly successful iPhone launched 90 days ago. Speaking of which, Apple announced a $200 price cut in the 8 GB iPhone and eliminated the 4 GB iPhone entirely. This caused a bit of frustration among many Apple customers who purchased their phone at a far higher price. But Apple is offering a $100 early owner credit to ease the pain somewhat....are the Beatles becoming too commercial? Not necessarily, but I have to wonder given the new launches in recent years of the Cirque du Soleil show called 'Love' which is designed exclusively around Beatles songs. John Lennon and Paul McCartney's solo songs are beginning to appear on iTunes (so the Beatles songs are next, one supposes??). And a new movie just came out based on Beatles songs, called 'Across the Universe'. While none of these things are that unusual, they represent a change in direction for Beatles brand, which has historically been quite tight fisted and protective of the band's unrivaled legacy. But I have to say that most of these moves are quite tasteful and consistent with the image the Beatles developed during their commercially active years and even since, so maybe these developments aren't that bad, especially compared to the overcommercialization of much of the music industry....Michael Mendenhall, a 17 year Disney veteran who was most recently EVP of Global Marketing Support, has been lured away by HP to be their Chief Marketing Officer. This portends some interesting changes ahead for HP over the next 2-3 years as they try to increase their PC market share lead (among other things...)....the Dallas Cowboys were just ranked as the #1 most valuable sports franchise in the world, valued at $1.5 billion. This is interesting because for the past several years, the top ranked sports franchise has jockeyed back and forth between Manchester United in the EPL, and Spain's illustrious Real Madrid, both of which are still around $1 billion in value. Jerry Jones has done a terrific job tending to the business of the Dallas Cowboys. Now if he can only get them back to the Superbowl! (actually, I'm a San Francisco 49ers fan, so I hope they beat the Cowboys...)....that's all for now.

Facebook and its Challengers

An August 8, 2007 article in BusinessWeek entitled 'Facebook Faces Up' points out many challenges confronting the behemouth of online social networking.  Facebook began life as a college networking site, allowing only users with a .edu email address to join.  Facebook then abandoned that policy, allowing anybody to join.  Growth last year was over 2400% according to figures cited by Mitch Joel at the recent PodCamp Singapore 2007, an astounding growth rate, to say the least.  At the same time, the broadening of Facebook's membership has resulted in 50% of its members now being over the age of 34, certainly not the original audience from its founding. The change was brought home further when I informed my kids (ranging in age from 13 to 21) that I had created my own Facebook page and they reacted with mock-horror (I hope it was mock-horror) by saying "you WHAT?" Clearly, I had somehow violated their sacrosanct world. Back to the BusinessWeek article...given Facebook's all-comers approach to membership, challengers are now cropping up to take over the college audience that Facebook effectively abandoned (or, more accurately, de-emphasized).  The competitors include ConnectU, Collegetonight.com, CollegeOTR.com, and CollegeWikis.com.  These companies'  founders believe the college audience will hold strong attractions to outside businesses. According to the article, 30-40% of college-age adults frequent more than one site, so the overlapping audience is quite attractive  as well, and potentially powerful when a company is considering ways to maximize its message to this influential group of customers. Where does this leave Facebook?  Who knows.  For now, Facebook is still the big kid on the block, even with the current competitive and legal challenges it is facing.  But given how quickly and easily people can switch loyalties online, if a competitor delivers a better experience to a highly targeted audience, then Facebook will have to decide how it will remain relevant in the future.

Disney Buys Club Penguin

Disney announced yesterday that it is buying children's social networking site, Club Penguin, for $350 million. The founders of Club Penguin, 3 Canadian fathers, started the company in 2005 and stand to make another $350 million in 2009 if they achieve specific growth targets. That's not a bad payday for a company started barely 18 months ago. Why did Disney buy it? Social networking is one of the hot frontiers on the internet, if the recent massive growth of MySpace, Facebook, Second Life and other sites are any indication (and they are). Club Penguin has subscribers, so it is not free. But it also does not allow advertising. Its subscribers grew from 400,000 to 700,000 last year, so it is clearly popular in the 8-14 age group that Disney knows so well. Club Penguin is more like Second Life than MySpace or Facebook in that subscribers have an avatar that they use to interact with others in this virtual world. Parents like it because it is a safe, creative environment for their kids to 'play' without worrying about online predators or offensive spam and pop-ups. With Disney taking over, Club Penguin will benefit from Disney's deep pockets and entrenched reputation as a trustworthy arbitor of good taste. This should prove to be good for parents, children, Disney and Club Penguin.

Lenovo Shows Healthy Gains

Lenovo announced its first quarter results today, with earnings of $66.8 million on revenues of $3.93 billion, significantly higher than the $21.9 million in profits most analysts expected. Lenovo's CEO, Bill Amelio, attributes some of the success to an ongoing cost cutting effort aimed at making Lenovo more competitive over the long-term against Dell and HP, among others. Sales to the US rose 15%, sales to China rose 30%, and sales of notebooks (the former IBM PC division and its ThinkPads...) rose 53%. These are impressive results, to say the least, and very encouraging as Lenovo continues its quest to become a bona fide global brand. What is not discussed in their announcement, but is certainly underlying part of their current success, has been their 'one-two' approach to branding: one master brand--Lenovo; and one sub-brand--ThinkPad. The PC business is tough, we all know it. And Lenovo's current first quarter success is not a guarantee of long-term strength, especially if you believe that consumers want something more than just a commodity PC. Despite its small market share in computers, Apple commands much higher mindshare, partly due to its innovative and integrated designs. For Lenovo to sustain its current improvements and conceivably forge ahead one day past Dell and HP, it ought to seriously consider developing very unique PCs with innovative designs. Consumers are increasingly interested in products that they can get excited about, that make them feel like the company understands them, and that they can proudly share with friends. The rapid evolution of the social networking sites is but one example of products that offer unique ways for consumers to express their individuality. Apple has made a habit out of creating products that consumers see as utterly special. Perhaps this is something Lenovo can do at the premium end of the PC market as well. Until that happens (if it happens), Lenovo can at least feel confident that it is doing many things well already, as today's results indicate.

Marketing Creates Growth Opportunities

Here is a podcast episode from a recent radio series I did in Singapore. This is short, as are others I will add later. Right now this is a bit of a test and I am looking forward to making this blog a richer experience for you, so tell me what you think....Download 01_marketing_creates_growth_opportunities.m4a