Branding Lessons from Jay Z

October 28, 2013

This week rapper Jay Z is dealing with some difficult branding challenges.

Later this month Barneys will start selling a new line of products designed by Jay Z. The collection includes a watch, raincoat, shirts and other expensive items.

Last week, however, two people accused Barneys of racial profiling. The stories hit the front page and received a lot of discussion in social media.

This created a big issue for Jay Z; fans accused him of supporting a store that discriminated against people.

The New York Daily News ran a front page story about Jay Z on Friday, saying he was under pressure to end his Barneys partnership.

 

Daily News

 

Over the weekend, Jay Z issued a statement about the incident. It has done little to address the concerns. Read more about the statement here:

http://www.vibe.com/article/jay-z-releases-statement-barneys-racial-profiling-incident

The issue is growing and Jay Z is clearly frustrated.

 

You can learn several important lessons about branding from this incident.

First, remember that every partnership impacts a brand. When you align your brand with another brand you get the positives and the negatives, the good and the bad. This means you must choose your partners carefully and limit the number.

Second, small incidents can have a huge impact on a brand. Two customers were upset with the treatment they received at Barneys. As a result, the Barneys brand has taken an enormous hit despite that fact that thousands of people happily visit Barneys every day.

Third, things move very quickly. Jay Z waited several days to respond to the Barneys accusations. As a result, many thought his comments were defensive and insufficient. Had he quickly put out a statement he could have addressed the issues quickly.

*   *   *

On Monday I have my regular MBA class at Kellogg and then I head to India to speak at the 2013 Brand Conclave. I’ll be talking about defensive strategy. You can read more about the event here:  http://www.brandconclave.com/

A Bad Day for the Boy Scouts

October 21, 2013

The rise of digital media is only making it harder to build a great brand.

The problem is that a single person can do something inappropriate that damages an enormous brand. This has always been an issue, of course, but digital technology has increased the risk because information can now travel faster and farther than ever before.

This week the Boy Scouts are seeing exactly how big a problem this can be. Recently Glenn Taylor and Dave Hall, two Boy Scout leaders, destroyed an ancient rock formation in Utah’s Goblin Valley and filmed the event. The clip ended up on You Tube. It shows them gleefully knocking over the formation.

You can watch it here:

More than 200,000 people have watched the video so far.

This hurts the Boy Scout brand in two ways. First, the leaders were clearly damaging a natural treasure. This does not reflect well on the Scouts.

Second, and perhaps worse, the leaders were acting like children. They were singing, dancing and laughing. They did not seem at all like serious individuals committed to developing young people.

Anyone who saw the video would have to think twice before sending their child off on a Boy Scout expedition.

Last week the Boy Scouts of America issued a statement condemning the act. Today the Boy Scouts announced that they had removed Taylor and Hall from their posts. Both moves make sense but won’t undo the damage.

*  *   *

This week I’m in Chicago teaching my marketing strategy course. I’m also teaching in the Kellogg Executive Development Program and a corporate program.

In early November I’m off to India to speak at the Brand Conclave, an event in Kolkata. You can read more about the event here:  http://www.brandconclave.com/  It should be quite an adventure.

United’s Good Start

October 11, 2013

It is hard to miss United’s new branding campaign. It is everywhere.

Last night I watched a United spot on TV, this morning I saw about 15 United ads on the train and this afternoon I found all sorts of United digital advertising as I surfed the web.

 

United Advertising

 

You can learn more about the campaign here:  https://hub.united.com/en-us/Pages/default.aspx

United clearly is investing a ton of money in this new effort.

Is it a good campaign?

This week I asked my marketing strategy students to grade the campaign. Results were mixed; some applauded the effort but many were skeptical. The average gave was a C.

I am more positive; I think this new campaign will build the United brand.

United is at a critical moment. In 2010, the airline merged with Continental, forming a global aviation giant. The integration was bumpy; customer complaints rose and on-time performance deteriorated. United executives, customers and front-line employees were all rather frustrated with the situation. Things are now getting better on the operations front but questions remain.

So the challenge for United is to revitalize the brand and get people excited about its future.

The new campaign does this. It is aspirational and positive. There are clear benefits. The branding is strong. The campaign links back to two key branding elements, the friendly skies and Rhapsody in Blue. Building on these makes enormous sense.

Is it perfect? No.

The new campaign doesn’t differentiate United from other airlines. It doesn’t explain why someone should fly United instead of American or Delta or JAL. Everyone has flat beds and many destinations.

But the United campaign is a good first step. It will build the brand and give employees and customers something to feel good about.

As United surely knows, a journey takes time. This is a good start.

*  *  *

Last week more than two dozen brand leaders gathered in Evanston for the Kellogg on Branding program. It was a terrific group from all over the world. We had participants from countries including Indonesia, Pakistan, Peru, Brazil, Italy and Denmark. One of the things I love about teaching at Kellogg is that I get to learn about different brands and the challenges they face. It was a great week.

Frontier Changes Strategy

October 1, 2013

Frontier Airlines, the Denver-based regional carrier, is about to become very cheap.

This week Bill Franke secured an agreement to acquire the carrier. Franke is a seasoned airline leader. Most recently he revived Spirit Airlines, turning it into an ultralow-cost carrier with exceptionally low fares, relatively poor customer service and lots of fees. The strategy was an enormous success.

Franke is apparently planning to embrace a similar strategy with Frontier.

 

Frontier

 

Bill Franke clearly understands marketing strategy. He knows there are only two ways to succeed in a market with ample supply: be cheap or be different. With Spirit he fully the embraced the strategy of being cheap. Now it is apparently going to do the same thing with Frontier.

This is good news for Frontier. The airline has been struggling for many years, searching for a reason to exist and getting battered in Denver by the both United and Southwest. The outlook wasn’t encouraging, either.

By becoming an ultralow-cost carrier, Frontier can create a distinct place to play in the market and attract new flyers.

This move puts carriers like Jet Blue and Virgin America is a very difficult spot. These carriers have been successful by providing good service and reasonable prices. To some degree, they were both cheaper and better than United, Delta and American. This won’t work as well in the future. Fliers looking for low fares will shift to the very cheap carriers like Spirit and Frontier. Travelers looking for service and a broad network will stick with the big players.

Going forward, carriers will have to embrace a clear strategy.

United, American and Delta will be global, premium brands.

Spirit and Frontier will be ultralow-cost players.

Jet Blue, Virgin America and Southwest will have to figure out what to do.

 

The Sochi Games: A Branding Disaster for the IOC

September 20, 2013

As I wrote several weeks back, the Winter Olympic Games is a branding problem for Russia. Now it is also becoming a branding problem for the International Olympic Committee.

Russia, host of the upcoming Winter Olympic Games, earlier this year passed legislation banning discussion of gay rights. People found guilty of spreading “propaganda of non-traditional sexual relations” face fines and jail time.

This predictably caused a major backlash and set up an obvious issue with the upcoming Sochi Olympic Games because the prohibition runs counter to the spirit of the event. It also is offensive to many athletes.

So it looked like the Sochi Winter Olympic Games would turn into a celebration of gay rights, with athletes wearing rainbows and Russian leaders looking on in dismay.

Recently, however, Russia started calling on the IOC to enforce its rule against political demonstrations. The suggestion is that if athletes show up wearing rainbows the IOC should send them home. Russia is deftly shifting the blame and making it the IOC’s issue.

The problem is that the IOC can’t control things and even trying to risks creating an even bigger problem.

Imagine that shortly before the opening ceremonies a major gay rights organization calls on athletes to show their opposition to Russia’s law by wearing dark glasses. Will the IOC then send everyone wearing sunglasses home?

If all the French athletes wear dark glasses, will the IOC send the entire delegation back to Paris?

This would do terrible harm to the Olympic brand. The IOC would look powerful, threatening and controlling.

It would also be a major problem for sponsors. People might reason that if Coke supports the IOC, and the IOC sends home athletes that speak out against Russia’s discriminatory law, then Coke is supporting both the law and the IOC’s heavy handed tactics. This is just about the last thing Coke wants in return for its massive investment in the Olympics.

My advice to the IOC is simple. Don’t try to control the situation. Let everyone wear rainbows. It might be an embarrassment for Russia but the host nation invited the controversy with its ill-considered legislative move.

*  *  *

Classes start this week at Kellogg. It is fun to be back teaching the MBA students. Spirits are high on campus; apparently the improving economy is translating into jobs and that contributes substantially to student morale.

Yoplait and the Hidden World of Defensive Strategy

September 11, 2013

Defending Yoplait is a top priority at General Mills but you wouldn’t know it if you look at the company’s annual report.

Yogurt is an important business at General Mills. The category is growing quickly, which is fairly unusual in the world of food. General Mills recently acquired global rights to Yoplait, one of the largest brands in the category. Yogurt makes up 15% of the company’s global revenue.

yoplait logo

Unfortunately, General Mills ignored the Greek yogurt category and now the business is quickly losing share as new entrants Chobani and Fage build awareness and trial and established player Dannon aggressively defends its position. In its 2013 fiscal year, General Mills saw U.S. yogurt revenue fall by 5% even as the category grew. This follows a similar decline the year before. These are just terrible results.

So defending its yogurt business has to be a top priority at General Mills.

The company is clearly focused on the task. It recently reformulated all of its Greek yogurts to improve the quality. It updated the packaging. Just this Sunday, the company ran a full page color ad in the New York Times. I can’t recall ever seeing a full page ad for yogurt in the New York Times. General Mills is (finally) investing and spending to defend.

The amazing thing is that this defensive effort isn’t mentioned once in the just released 2013 annual report. I received my copy last week. The words defend, defense, protect and respond don’t seem to appear at all. The report’s theme is “Healthy Growth.”

What?

The company doesn’t mention the defensive effort in the annual report at all?

Really?

Of course, this isn’t unusual. Companies generally don’t discuss defensive efforts. Brands defend all the time but rarely mention the topic. It is a hidden world.

This is partly because many executives think talking about defense seems weak. People like to discuss innovation and growth and social responsibility.

The other issue is that companies are nervous about antitrust regulations. The rules on competitive activity are not clear so the internal legal team will almost always say that the safest approach is to avoid mentioning defense in public.

But hiding defensive efforts is not the best approach.

Employees and partners need to see a company fighting back. A competitive battle is a great way to motivate employees. To defend well, a company has to move quickly, invest and engage the entire team.

Dannon took a very different approach, quickly recognizing the defensive challenge and responding. Dannon discussed the issue in public and then bought an ad on the 2012 Super Bowl, a move that had enormous symbolic value; Dannon let everyone know that it was not going to let the category slip away as Chobani grew. It was defending.

General Mills should not keep its defense a secret. It should communicate its commitment to maintain its market share to its employees, partners, customers and investors. The New York Times ad was a good move but it is just a start.

Nokia’s Branding Lesson

September 5, 2013

This week Nokia collapsed into the arms of Microsoft, selling its critical handset division to the software giant.

Nokia’s decline was stunning. The stock traded at over $40 per share in 2007. It now trades at about $5. It once had a market share of over 30%. It now has less than 4%.

This is partly a story about technology and defensive strategy; Nokia failed to respond effectively to changing technology and competitive attacks.

It is also a story about branding.

 

Nokia

 

Nokia tried to play in all segments of the market. The company sold cheap, basic cellular phones and advanced high-end smart phones under the same brand. This approach worked well for a while. Eventually, however, the Nokia name lost meaning. What does the Nokia brand stand for? What does the brand mean? It isn’t clear.

In a competitive market brands have to stand for something. Being a nice brand that people like isn’t enough.

Many technology companies fall into the same trap; they use the same brand to serve everyone. This is one reason these firms tend to come and go. Technology changes over time. Brands endure. Firms that rely on technology alone often struggle to hold customers over time.

You need to build a brand that people care about. These are the brands that are unique and have meaning.

*     *     *

This week I am over in Europe teaching a corporate seminar. I get back just in time to take part in a panel discussion on teaching best practices at Kellogg before heading to New York for another program.

The next session of Kellogg on Branding starts on September 29. This is a great program if you are new to brand management or if you want to refresh your skills. We have some terrific faculty in this session including Carter Cast, Greg Carpenter, Lisa Fortini-Campbell and Don Schultz. You can sign up here:  http://www.kellogg.northwestern.edu/execed/programs/brand.aspx

Hope for J.C. Penney

August 27, 2013

Things are looking grim for J.C. Penney.

The company’s stock began the year at a price of about $20 per share and recently traded around $13.

Earlier this month J.C. Penney reported that it lost $586 million in its fiscal second quarter with sales falling a disconcerting 12%.

And hedge fund manager Bill Ackman dumped his 39 million shares just this week, giving up hope for a rebound. He took quite a loss in the process; he purchased the shares for about $25 each and sold them for less than $13. This is a classic buy high, sell low approach.

At this point few people have much hope for the retail giant.

But I do.

J.C. Penney is a brand that totally lost its way under CEO Ron Johnson. Business school professors will be talking about the astonishing story for many years.

From J.C. Penney we can learn answers to important questions like this:

-       What happens when you abruptly try to reposition a brand?

-       What is the impact of a huge reduction in discounts?

-       What do customers do when you insult them?

Ron Johnson is pursuing other interests and J.C. Penney is focusing again on its core customers. I suspect many of them will come back. Brand equity is powerful and lasting. J.C. Penney remains a relevant brand for many. When the selection and pricing are right, they will return.

It won’t be quick. The problem with retail is that buyers have to make decisions far in advance and resetting stores takes time. J.C. Penney can’t shift gears overnight. Over time, however, the company will rebound.

Look for the brand to surprise people in 2014.

Geico, Airshows and Positioning

August 18, 2013

The Chicago Air and Water Show is going on today. The weather is perfect with clear skies and bright sunshine.

The U.S. military is absent this year, since the government decided to cut funding for air shows as part of the sequester negotiations. Government leaders promised the world would end if the cuts took place. It didn’t, of course. But to make a point the politicians cut the air shows.

One of the highlights of this year’s show is the Geico Skytypers, a team of WWII planes that fly around in formation and spell out letters and phrases in the sky.

It is highly entertaining; there are all sorts of words and letters in the skies over Chicago today.

If you know anything about Geico you won’t be surprised to hear that many of the phrases involve saving money on insurance.

Geico is a perfect example of why positioning matters. Why buy from Geico? To save money. This is the core of the brand; Geico is a reputable company with low rates.

Geico doesn’t promise the best service or the most complete coverage. It promises low rates.

With this clear positioning, Geico is free to be creative. It develops catchy ad campaigns and funds high impact marketing efforts. The message is always the same.

Geico can even fund a flight team and send it flying around Chicago. And the team connects with the brand because it is another way to deliver the same basic message.

People struggle to settle on a clear positioning. Geico shows that having one is the foundation of great marketing.

Russia’s Olympic Branding Problem

August 13, 2013

Russian officials are creating an Olympics branding disaster.

With the Sochi Winter Olympics just months away, Russia is taking a very public stand against gay rights.

The country recently passed legislation banning talk of gay rights and public demonstrations such as parades and gatherings.

Today there are reports a senior Russian sports official is associating homosexuality with Nazis. Alexey Sorokin, Russia’s World Cup chief, defended Russia’s legislation in a recent interview. He explained his position, noting “The Olympics and World Cup are not a stage for various views….not for Nazis, not for any other ways of life.”

You can read more about it here:

http://www.chicagotribune.com/sports/international/la-sp-sn-russian-sports-official-antigay-law-20130813,0,5782778.story

It all puts Russia in a very awkward position. The country really can’t enforce the anti-gay legislation in Sochi; it runs counter to the spirit of the Olympics, as the head of the IOC recently noted.

The most likely result is that athletes will celebrate gay rights at the Sochi Olympics. I suspect many of them will march into the opening ceremonies with rainbow attire, deliberately flaunting Russia’s legislation. The international press will focus on any sign of hostility toward gays.

The Sochi Olympics might become a global embarrassment for Russia.

More important, Russia’s brand may develop an association with anti-gay views. This will polarize how people view the country. It is not a smart move; you don’t want your country associated with discrimination.

As U.S. restaurant chain Chick-fil-A recently learned, wading into difficult social debates is not a smart branding move.

*    *    *

After spending July in northern Michigan and Colorado I am back in Evanston. This week I’m teaching international executive MBA students. There are students from all around the world; the cultural interaction is fascinating. It highlights how running a global enterprise is a huge management challenge.


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