Sunday, September 30, 2007

A slippery slope

So many companies have learned the hard way that once you start down the slippery slope of price cuts it is very hard to wean consumers off the drug. The auto manufacturers know this all too well. We all know that if we wait just a bit longer the car we want will come handsomely equipped with a $3,000 cash back or 0% APR.

This week Macy's admitted its attempt to wean customers off the drug had backfired. The New York Times reported that Macy's tried to pull back on coupons and discounts after the company consolidated over 11 department store chains around the country under the Macy's brand. Macy's CEO Terry Lundgren admitted that abruptly curtailing discounts like coupons was Macy's biggest misstep, contributing to four consecutive months of falling store sales this spring. Macy's now pledges to offer plenty of coupons in time for the upcoming holiday shopping season.

Which brings me to Apple. For years Apple was a master of competing on price without overtly discounting. Each fall, to stoke demand for MacBooks among college students, Apple offers a free iPod with every MacBook. Classic strategy -- add value, don't discount. After the iPod first appeared Apple adeptly covered a range of price points by continuously introducing new models at lower prices (Mini, Nano) while simultaneously offering more expensive models with more content (video). This strategy left little room for any competitor to steal share with a lower price.

Which is why I'm still stunned at Apple's decision to cut $200 off the price of the iPhone. Apple sent a message that its most loyal early adopters are being overcharged and that, in the future, we should simply wait a couple of months before buying Apple's next big thing. Apple, to its credit, was quick to respond with Steve's open letter and rebate offer. But the debate in the blogoshpere is still raging. (My iPhone was the butt of jokes at a recent dinner party. When was the last time anyone was ever ridiculed for buying an Apple product?) I, for one, hope Apple doesn't become just another consumer electronics company that launches, discounts and abandons. I love the brand and hope it has learned from this mistake.

Friday, September 28, 2007


Here's a better link to Microtrends, Mark Penn's new book I reference below.

The consumer is not a moron!

David Ogilvy, founder of Ogilvy & Mather, the agency where I started my career, was fond of exhorting his agency to respect the intelligence of the people to whom we were advertising our clients' brands. "The consumer is not a moron, she is your wife!" Nowadays David would probably replace "wife" with husband, partner, significant other, son or daughter. But his point was clear: never assume Madison Avenue has a monopoly on intelligence. (Far from it!)

I'm reminded of this same point today within our political climate. Too many politicians and policy makers and their advisors treat the voting public as idiots that can fooled by a photo-op. Mark Penn, pollster and zeitgeist guru to President Clinton, Hillary Clinton, Bill Gates, Tony Blair, among others, makes this point loud and clear in his new book, Microtrends. He uses survey data to show that the average working American is actually more in touch with important issues that matter than more affluent and well-educated Americans. Surveys show that the affluent tend to be swayed by a candidate's "vision" and "leadership" whereas the working Joe makes his decision on issues impacting job security, healthcare, their kids' education and crime.

Today's New York Times carried a story about John Edwards' appearance last night on MTV to engage in some Q&A with America's youth. Instead of fielding questions about his favorite band, briefs or boxers, or Yankees vs. Cubs, he was bombarded with serious inquiries about how he would fund his proposed universal healthcare plan, what he would do to curb inner-city crime and how he would keep college affordable.

So what does all of this have to do with WikiBranding? Everything. The consumer is smart. The consumer is in control. The consumer will punish marketers and brands that treat them as idiots (except in the case of beer advertising!). Conversely, consumers will reward those marketers that show respect for their customers' values and intelligence. (Did you hear that Steve Jobs?)

Thursday, September 27, 2007

WikiBranding in action

A great example of wikibranding in action. Rats in a fast food joint is nothing new. Rats in a fast food joint on the evening news is nothing new. Consumers taking this story and making their own content on YouTube to spread the word about rats roaming freely in a Taco Bell/KFC is wikibranding in action...much to the brand's detriment.


I've long been fascinated by the power of brand alignment. I'm not talking about consistency across media or sales channels, but alignment with the company's fundamental value proposition, alignment with its business model, alignment with how the company invests and makes its money. That kind of brand alignment.

Target is a great example of alignment. Years ago, when squeezed between Wal-Mart (low price) and Macy's (variety and selection), Target decided to differentiate and win on the strategy of offering affordable design. We all love the advertising, but that's not the real story. Target aligned its business strategy, product selection, pricing, store design, and, yes, advertising around the idea of affordable design. "Tarzhay" leaped from being a discounter to a pop-culture icon. (What other store makes it into lyrics in a YouTube music video? Kohls? Not so much.)

Enterprise Rent-a-Car is another successful example of brand alignment. Its business model is based on delivering replacement cars to customers who are suddenly without a car (in for service) or without the right car for the weekend (need bigger car to haul visiting family). Enterprise doesn't target business travelers nor leisure travelers, two sizable segments. Its decision to focus entirely on the replacement car market drives and aligns its real estate strategy, pricing, and message ("we'll pick you up.") True, the advertising can be soooo much better, but at least Enterprise has resisted the temptation to be all things to all people and, instead, has a brand proposition that is aligned with a differentiated business model.

While President of Saatchi & Saatchi LA we explored a range of positioning strategies to launch Toyota's full-size Tundra pick-up truck. Then one day we realized a very simple truth: Toyota invested considerable engineering capital to give this 1/2 ton pick-up truck the strength, power and capability of a larger 3/4 ton pick-up truck. The result? A strategy and launch campaign based on the idea that the Tundra is the 1/2 ton pick-up with 3/4 ton guts. True. Differentiating. And fully aligned with how the company invested its capital.

During my time as head of marketing communications at Aetna Healthcare I helped lead a new positioning strategy to reframe the brand as a source of empowering health information -- not just health insurance. This idea was aligned with Aetna's Intelihealth venture with Johns Hopkins, its increasing emphasis on eHealth initiatives and the need to empower more of its members to practice preventive medicine. Again, like the examples above, a strategy fully aligned with the company's fundamental value chain.

Monday, September 24, 2007

Welcome to WikiBranding.

First off, a quick word about the title of this blog -- WikiBranding. It comes from a term I think I coined at a recent Ad:Tech panel discussion to describe the current state of play. While everyone is talking about how consumer now exercise full control over their media choices, what most marketers are missing is the fact that more and more consumers are exercising control over how brands are positioned and communicated. We're no stranger to the power of word of mouth marketing. But now consumers have access to mass media with which to spread their opinions of a brand's true meaning and worth.

This blog aims to be a brainblender for insights, ideas and observations from the world of marketing and branding. It will likely veer off into the realm of pop culture, design, communications and media and all things in between. Why? Because the best brand ideas find their inspiration from these worlds. The best marketing innovations come from the collision of diverse perspectives and experiences -- not just a bunch of marketers locked in a room with a whiteboard. I've been in the branding business for 25 years and have never been more energized. A quote from Tom Peters' "Re-imagine" sums up why: "If you don't like change you'll like irrelevance even less!" Indeed.

The pace of change can make your head spin. Microtrends. New media platforms every day. A flat global economy. Good times.