Archive for March, 2011

The Harry & David Bankruptcy

March 28, 2011

Today legendary fruit seller Harry & David filed for Chapter 11 bankruptcy protection. There are two very important branding lessons in this story.

1.  Savvy marketing can create enormous value.

Harry & David does something remarkable: the company gets people to spend $30 for a few pears. A box of 7 to 12 pears currently runs $29.95, so that is about $3.50 each, not including shipping.  This is an accomplishment; think of the margins!

But anyone who has received a box of Harry and David fruit knows that the company isn’t selling ordinary pears; the company is selling incredibly special treats. The pears arrive in a beautiful box with lots of packaging. Each pear is individually wrapped. The shipment comes with a brochure explaining exactly why the pear is so special and amazing. It is well worth the price. 

Harry & David shows how to create value through great marketing.

 2. Short term thinking can ruin brands.

Harry & David is a sad branding story. It once was a fabulous brand. When I was a kid I always hoped that one of my father’s patients would give us a Harry & David fruit-of-the-month subscription for the holidays. Happily, someone usually did. It was an incredible treat.

Over the years, however, the Harry & David has lost much of its uniqueness. Partly this is due to a lack of consistent ownership. The current owner, private-equity firm Wasserstein & Company, acquired Harry & David in 2004. The goal apparently was to fund the acquisition with debt, deliver some quick financial wins and then exit with a stock offering.

With this in mind, Wasserstein gave management some big incentives to deliver good short-term results. Under Wasserstein, the Harry and David team drove sales at retail locations and expanded the product assortment. They also trimmed costs.

Predictably, the brand weakened and the customer experience declined.

One person on Yelp summarized things well: “Once upon a time, a long time ago, Harry and David was unique and good quality – now, it is so overpriced – they have spread themselves way too thin…mediocre merchandise, big price tag with lots of packaging and flash.”

I’m not sure what is next for Harry and David. The brand isn’t going away; today’s news is just a financial restructuring. I’m hopeful that the company will use the opportunity to refocus on its core business and restore the marketing magic.

United’s Temporary Branding

March 14, 2011

I’ve spent quite a bit of time in airports over the past couple weeks; I was teaching a course in Germany so I made four trips across the pond. As a result I’ve had a chance to get a good look at United’s new brand design.

My prediction: it won’t last long.

Airlines need good brand design; flying is fairly unpleasant so the companies want to elevate the experience. Branding is an important part of the effort. This is why airlines spend millions creating beautiful logos, buying stylish outfits for the cabin crew and painting airplanes.

United’s new brand design is fairly uninspired. The planes have the Continental globe with the word United on the side. It is easy to imagine one of the senior executives at United spending five minutes on it, “Don’t be silly. We don’t need to hire an expensive design firm like Landor. I can just do this on my computer. Put the globe on the tail and the word United on the side. Just use the Arial font. It works in presentations pretty well so it will work on the planes.”

I completely understand why United went with the new design. Combining two brands is always a challenge. Combining two organizations is an even greater challenge. The joining of United and Continental is very sensitive; executives don’t want to make it seem like one airline is acquiring the other. The new looks supports this view. The design clearly communicates that this is a merger, not an acquisition.

It won’t last. Once the integration is complete, United executives will realize the branding is uninspired and weak compared to global competitors such as Emirates and Virgin. They probably know it now. And eventually they will get to work on a brand design that has emotion and meaning. Perhaps the United tulip will return.

My prediction: United will announce a new brand design by early 2013. They probably won’t finish painting all the planes with the current design before they are on to something better.

Galliano’s Branding Lessons

March 2, 2011

This week luxury brand Christian Dior fired star designer John Galliano for making anti-Semitic comments. The incident provides some important lessons about managing a brand in today’s fast moving media world.

Lesson 1: It is very easy to damage a brand.

An apparently drunk Mr. Galliano said some highly inappropriate things while out one evening. The comments were captured on video and it is now quickly spreading around the internet. The video does not do good things for the Galliano brand. He is now out of a job and his personal brand will be forever tainted.

Lesson 2: Brand leaders need to move quickly to deal with issues.

You have to give Dior credit for quickly responding to the issue. The video became public on Monday and on Tuesday Christian Dior fired Galliano. This fast response limits the damage to the Dior brand; it is clear that Dior doesn’t approve of his comments.

You can read the Dior press release here (in French):

http://media.ft.com/cms/b9e9f456-4413-11e0-8f20-00144feab49a.pdf

Lesson 3:  It is important to get ahead of the story.

Yesterday Women’s Wear Daily reported that Natalie Portman issued a statement condemning Galliano:

“I am deeply shocked and disgusted by the video of John Galliano’s comments that surfaced today,” stated Portman. “In light of this video, and as an individual who is proud to be Jewish, I will not be associated with Mr. Galliano in any way. I hope at the very least, these terrible comments remind us to reflect and act upon combating these still-existing prejudices that are the opposite of all that is beautiful.”

Portman is a spokesperson for Dior. By quickly condemning Galliano she clearly distances herself from the issue and enhances her brand.

All of this highlights the importance of understanding the values behind a brand. When faced with fast-moving situations, brands with clear values can respond quickly and limit the damage.


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