The Tom Dougherty Blog



Posts by admin

Major changes are coming to the video game industry

 Subscribe in a reader

Over the past month, two pieces of news have caught my attention. The first was Sony’s purchase of Gaikai, a cloud-based video game site that allows big-named game titles to be played through an Internet browser. The second was that Ouya, an inexpensive game console that runs the Android operating system and Android-based games, is teaming up with OnLive to allow cloud gaming of some AAA content.

These moves have exciting and curious implications for the market. It’s exciting to see the industry rumbling towards digital, which will lead to the instant ability to play and be simple to use.

But how will the existing brands transition?

It will be interesting to see what, if any, integration Sony has planned between Gaikai and its next Playstation. Sony puts a lot of weight behind its high-priced hardware, using it to push new technologies. But streaming services, like Gaikai, don’t require much in the way of hardware. The Ouya is set to sell for $109 and that includes the processor chips, storage, etc.,needed to run Android-based games that would be downloaded to the unit. That $109 ticket price is quite a bit less then the $599 pricetag Sony slapped on the original 60GB PS3 in 2006.

Because of Ouya’s marriage with OnLive, Sony will have to think very strategically about how it utilizes Gaikai. If the company is too soft in its approach, Ouya has an opportunity to take market share. Sony needs to be aggressive, which means stepping out of its comfort zone and leaning more towards software than hardware.

There is a happy medium. Sony can achieve profits for its system and still retain preference for its brand, but if OnLive is successful at acquiring larger amounts of AAA content, Ouya’s existence will eat away at Sony’s margins.

Sony’s best bet is to champion the digital change rather than react to it.




Snoop Lion’s brand was worth more when it was canine

 Subscribe in a reader

In breaking news that can only be categorized as not real news at all, Snoop Dogg –  the rapper formerly known as Snoop Doggy Dogg – is jumping species and changing his name to Snoop Lion. Lion may be the animal of the moment, but Snoop throws away some valuable brand equity with the switch.

Snoop Dogg crafted the value of “Dogg” over the years. That moniker was one of instant familiarity for his fans. Even his music videos had his face morph into that of a canine. That’s now a thing of the past.  For most people, a name change is not all that critical because it’s the meaning that’s most important. Of course, most folks don’t have an idolized brand associated with their handle.

Consider Donald Trump, who similar employs the “Trump” name in almost every sentence. Trump continually reinforces his brand through repetition and visibility. If Donald Trump suddenly changed his name, the names on his products and properties would lose some of their appeal. This is not to say he couldn’t gradually build a new name brand, but it takes time and resources to do that.

Truth is, even when a brand is created by a person, the value of it may not follow the creator if he or she abandons the brand. Even Prince, who once changed his name to a symbol, realized the error of his ways and changed it back.

The good thing about Snoop Dogg, er,  Snoop Lion, is that he has never been shy to use lyrics to tell listeners his name and, in many cases, how it’s spelled. Much of rap music is about larger-than-life characters immersed in a lot of ego stroking. I am sure after one or two hit albums, Snoop Lion will have everyone wondering who this Dogg character was.

In the meantime, it will take more than just a press release for the brand of Snoop Lion to capture the essence of the late “Snoop Dogg.”




Chick-fil-A is no longer about just chicken and silly cows

 Subscribe in a reader

Every company that cares about its brand should work hard to separate its corporate identity from the political and personal views of those who work there. This is good advice for both privately owned and publicly traded corporations.

Chick-fil-A was in the news recently after its president, Dan Cathy, made public his position toward gay marriage. Regardless of persuasion, preference and possible religious views, these actions tarnished the Chick-fil-A brand. Cathy’s statements introduced elements that are contradictory to the brand identity that Chick-fil-A’s advertising, menu and workers have worked hard to establish.

Until last week, the mention of Chick-fil-A conjured up humorous images of cows that could not spell. What also came to mind were unfailingly pleasant employees as well as some of the nicest and cleanest fast-food locations – ones that never made you feel soiled for eating there.

Now what comes to mind is a divisive social issue.

Chick-fil-A’s marketing and continued brand focus over the years was not inexpensive. Judging by the company’s growth, that money was not wasted. Now, by making gay rights a reason to prefer or not prefer Chick-fil-A over other fast-food restaurants, the company has undermined the work it put into that successful brand.

While we live in a country that allows free speech, when it comes to divisive issues, it is smarter to say nothing at all. Stealing market share is all about understanding objections and identifying triggers that will make customers switch. Reduce objections whenever possible, never introduce new ones.

Free speech is an important right and it is certainly Cathy’s privilege to comment about his personal beliefs as much as he wishes. But as result of his outspokenness, Chick-fil-A must redouble efforts to refocus its brand because this chain is not only about chicken sandwiches and silly cows anymore.




Boxee’s ideas are on the right track

 Subscribe in a reader

The world of television is changing. It’s evolving as rapidly as the music, book and video industries. This evolution has brought Blockbuster Video to the doldrums and Hollywood Video to the wayside. Today, what we covet most is the simplicity of plugging in, downloading and playing in seconds. From eReaders to Apple TVs, today’s technology is saving us time and bringing the entertainment world directly to our fingertips. The pageant of technology has indeed found its home in the heart of our living rooms.

So, when news recently broke that Boxee has developed a live TV dongle that attaches to its external Boxee interface, I couldn’t help but think Boxee is on the right track with its thinking.

What does the Boxee dongle possibly mean? Cable TV may soon run the same course as Blockbuster or Hollywood Video. Consider this: many of my friends have already completely cancelled their cable subscriptions because they have grown tired of the exorbitant bills and endless array of painfully boring channels. In turn, many have bought rabbit ear antennas for their HD TV, which enables them to get about 20-25 major network television stations, all in hi-def, and for free. What’s more, most couple their antenna use with a Netflix and Hulu subscription, which runs the gamut of their diverse viewing needs. All said, the experience is affordable and of superior quality.

That said, Boxee’s CEO, Avner Ronen seems in tune with his brand and what people desire when it comes to television:

“People have avoided completely cutting the cable TV cord because Internet-based content does not usually include sports, local news, special events, and live TV shows like Dancing with the Stars. But these things are all available on broadcast TV channels like ABC, CBS, Fox, and NBC for free, over the air in HD. With Boxee Live TV you can watch them all on your Boxee Box (and still get all the regular Boxee stuff you love to watch too).”

In other words, Ronen’s company is helping to make our viewing experience simple and effective (which is just what we want). Through Boxee’s interface, we can stream Netflix and Hulu. But with the dongle, we can now get the live TV we still wish for (which means live sporting events are a viable option). Everything we want in one affordable place, which is really is bad news for a cable TV industry that has waited too long to make the proper adjustments.

Whether Boxee’s new dongle proves to be a breakthrough for live TV viewing and, ultimately, the end of cable bills still remains unseen. Boxee’s finger is clearly on the pulse of what we want. Whether Boxee succeeds or not, the idea is out of the bag, and it is surely easy to envision a live Apple, Amazon or Google TV, much like the Boxee dongle, on the horizon.




PlayStation Vita could prove to be an exercise in redundancy

 Subscribe in a reader

I have been following news about the upcoming PlayStation Vita handheld gaming system and, as its release date nears, I wonder more and more if its success will receive a similar lackluster release as the Nintendo 3DS.

The Vita is quite a technical powerhouse and looks like what the PSP should have been. And while it has an ample software lineup on release to avoid a lack of interest due of content, this new iteration is too little too late. The handheld gaming market has now expanded to include mobile phones in a very big way and the market that the Sony PSP and Nintendo DS once competed in has become vastly different.

The issues jeopardizing success are not due to a nonexistant market, but rather due to a nuanced market. In fact, the market for video games, is evident by the 24 hour, $400 million profit, Call of Duty: Modern Warfare 3 just raked in. The obstacle instead, is due to the advent of smartphones, causing the market for a standalone handheld gaming devices to become a bit redundant.

Adding to this hurdle is the young adult demographic the Vita caters to. It’s not that it doesn’t have titles for the younger audience, but with enhanced graphics, 3G connectivity, dual analog sticks, and multiple touchscreens it is certainly selling specs that an older market tends to care about. But this is a demographic that is already connected and invested in their smartphone. The key value of that last sentence being “connected.”

Take the recent success of Call of Duty. This was not a result of it having a profound story– in fact, the story is so fragmented and schizophrenic it’s sometimes hard to even get into. It did not sell so well because of groundbreaking graphics– it uses the same engine as the last Call of Duty and is certainly not the most visually stimulating game available in the market. No, Call of Duty sells because of its multiplayer. It is a game that breaks sales records and moves consoles because it offers a connected experience—an attribute that is very much an identifier of the mobile market.

Often, in both messaging and product development, companies miss the vital fact that no one switches for something they believe they already have. Sony might soon experience, as Nintendo’s 3DS has been experiencing, that the market might not have been pining for a new generation of handheld gaming systems, but instead might believe the phone that they own is the only handheld gaming device they need.




Starbucks Corp. is taking on the juice industry, and it just might work

 Subscribe in a reader

“I’ll take a venti, carrot, apple parsley juice du jour with a double shot of flax seed, please.”

Sound strange?

Maybe not, thinks Starbucks visionary Howard Schultz.

The CEO of the world-wide, mega coffee-chain just announced that Starbucks Corp. has acquired the healthy fruit juice chain, Evolution Fresh. And, for a cool $30 Million, Starbucks is banking on a branding transition into the health and wellness sector. A move that truly maximizes Starbucks’ potential to vault their brand into a category all its own.

Say’s CEO Schultz, “Our intent is to build a national Health and Wellness brand leveraging our scale, resources and premium product expertise. Bringing Evolution Fresh into the Starbucks family marks an important step forward in this pursuit.”

Since the reemergence of Schultz as Starbucks’ CEO, there has been a vested interest in bringing back, which he says, “the theater and romance” of their coffee shops. In my estimation, Starbucks has done just this.

How have they? I know that I can count on the Starbucks brand to always serve me a piping fresh cup of coffee, in whatever form, shape or size that I should most desire. This coffee is always delivered by a barista who greats me happily when they ring up and complete my order. Nice too, they are willing to take the time to perfect my drink (an example of that “theater and romance”). I also know that if I chose to order a side with my coffee — whether a piece of lemon pound cake, or an egg, bacon and gouda breakfast muffin — these items will be fresh and ultimately, better than any side at an immediate Starbucks’ competitor, say Panera or Dunkin’ Donuts.

So, it seems very fair to assume that Starbucks has their hands on the pulse of their customer and can potentially tap into something special with Evolution Fresh. Their plan? To slowly introduce juice products within their current market of coffee shops (a good move since immediately opening too many new shops could mean over saturating the market), and in time, transition this lucrative idea into separate Evolution Fresh store fronts, owned by the Starbucks brand.

What would I anticipate?

A clean and ergonomically appealing juice shop, where on the walls, images of the choicest ingredients hang. On the menu — an array of wonderfully concocted juice blends that are both filling, satisfying and interesting. Most of all, Evolution Fresh shops will come with a staff of employees who fully believe in the product and the brand behind it, and enjoy working for that brand.

With this commitment to customer satisfaction, how can Evolution Fresh not succeed? After all, there is no other company that makes me willing to sound as silly as I do when I order my “Grande, low-fat, Peppermint Mocha, skinny latte with an extra shot of espresso.” Why, if I feel silly, do I keep coming back? Because my minutely specific order shows me that Starbucks is willing to take the time to invest in my specific drink and make me happy. A brand that cares that much about my specific needs is one that I wish to support, whether they are making a cup of juice or a mug of joe.




Joe Paterno to retire, but Penn State needs to clean house now

 Subscribe in a reader

I say what I’m about to say without in any way diminishing the hurt and wrong done to the innocent kids by the people in charge of the Penn State football program. All of our hearts go out to them and it’s very easy for me to go from shock over the news to outright anger.

However, taking a step back, I simply want to look at the business issues that are raised by this nightmare as it relates to the Penn State brand.

The AP just released a story saying that Joe Paterno would retire at the end of this season. As a brand, this is akin to bobbing the dog’s tail an inch at a time to save it from pain.

The Penn State brand has been as pure as vanilla ice cream over the years (and sometimes as exciting as vanilla ice cream as well). Everything from its famous, simple black football shoes to its unadorned white helmets speaks to austerity and simplicity. They were without scandal in a tumultuous sports world.

I remember Joe Pa once saying (and getting in trouble for it) that he did not want to leave coaching in the hands of the Jackie Sherrills of the world (referring to the highly successful and controversial Pittsburgh and Texas A&M coach). He claimed to hold his program (and the university) to higher standards.

So, OK, now we know there was deep trouble in paradise. It turns out that Happy Valley was more like the Garden of Eden after the temptation by the serpent than it was the simple garden without a blemish that we all wanted to believe.

Well, Penn State, the blush is off the rose and you will be judged as a brand by how vigorously you do the right thing today. To believe the AP story, the powers at the university have decided that the bruises on their vaunted program are superficial and will fade away at the end of the season — when Paterno exits.

They could not be more wrong.

He was the man in charge and needs to be held to the squeaky clean standards he himself set over the years as he spoke about those “most important youngsters” in his charge. Instead of moving on now, Penn State has apparently taken the easy road and are simply pretending he is retiring at the end of this season.

But the troubles won’t go away. Fans at the rest of Penn State’s away games will make sure of that. The talk of a bowl game and a possible Big 10 championship will be charged with talks of pedophiles, scandals and cover-ups.

I ask a simple question of those supposedly guarding the Penn State brand: If his lack of action and control warrants his dismissal (let’s call a spade a spade here) at the end of the year, surely it would be a clearer statement to send him out now? What are you saving by keeping him on? His honor? A dignified retirement? University prestige? Surely all of that is gone and continues to erode until the head is chopped off the snake.

Be a brand. Stand for something. Restore our faith that Penn State does things the right way.




Banks are still failing, but so are credit unions and community banks

 Subscribe in a reader

It is amazing to me that, despite the current economic turmoil and consumer anger toward the big US banks, those banks such as Bank of America, Suntrust, and Wells Fargo still think they are above the common man. The recent debit card fee addition and subsequent removal are no exception.

I have heard a lot lately about how many consumers are starting to consider other financial institutions, such as community banks and credit unions, in lieu of their big bank only to find that the switching process is too difficult. I can tell you after doing extensive research in this category that the big banks make it this way on purpose. It is the only thing they can actively do to retain their customers.

I have no data to prove this but I would put it to you that banks have done more research over the past five years on how to keep customers than how to attract more of them. The simple fact is that no major bank has done any real investment in its brand or in the equities it could utilize to grow its market share.

This is a sad commentary on any number of levels. First, the major banks have seen no reason to change their way of doing business. Even with those few who have left big banks, the attrition rates remain very low across the board. Again, banks are more worried about keeping their customers than providing a value that resonates with their non-customers.

Secondly, community banks and credit unions have done an absolute horrid job in positioning themselves against the big banks in any meaningful way.

Community banks and credit unions have had years to figure out how to take share and, for the most part, they have failed miserably. Ever since the anger against the big banks began back as early as 2007, credit unions and community banks have tended to take a very timid and soft approach, hoping not to raise the attention and ire of the major banks.

Why? Are they afraid that the banks are going to suddenly notice them (after years of not giving them a thought) and aggressively go into their markets and steal their customers because of it?

While I have seen and heard a great deal of discontent about banks, I have not heard that discontent coming from those who use credit unions and community banks. I actually think the real reason that credit unions and banks have not been more aggressive is because they are scared. Even when they have positioned themselves against big banks, the tone is so soft it does not resonate.

Credit unions and community banks have traditionally viewed themselves as being very collegial. They think that they are part of a team that somehow all works together. In reality, they do not. Each is doing its very best to return value to its communities and customer base, and each believe it can do it better than its credit union or community bank “partner” down the street.

Some of the research we have done on a nationwide scale suggests that, once someone uses a credit union or community bank, they are much more likely to lump all credit unions and community banks to their considered set. What is worse is that many people who use a credit union or community bank use more than one and still have one of the major banks as their primary financial provider for day-to-day transactions.

Even for people who use a credit union or community bank, those financial institutions are not viewed as being on the same “level” as traditional banks. They are being judged by the lowest common denominator in the category, meaning audiences judge the category by the worst-looking credit union or community bank because they view all as one category instead of separate entities.

The problem is that credit unions and community banks either need to really start to work together or really start to distance themselves from their lowest common denominator image. They can no longer have it both ways if they hope to gain a greater share of the consumers’ wallet and increase their relevance in the consumer’s minds.

Could a community bank or local credit union match the national bank’s advertising spend? No way, but they could spend more smartly and utilize a message that resonates with a potential customer. (Or they could pool their resources, something we have recommended to credit union clients.)

The problem is that in order to take an effective and resonating position against the big banks, community banks and credit unions have to position themselves against both big banks and other community banks and credit unions. They have to stand out as different and better. But to many credit unions and community banks, that means openly admitting something they have already admitted internally – that, in truth, credit unions and community banks are competing against each other.




AutoZone, Advanced Auto Parts, etc., etc., etc. What’s the difference?

 Subscribe in a reader

Sometimes, there are certain categories of brands where every company associated with that category presents no significant difference from each other.

One such category of undifferentiated companies is auto part dealers.

This morning, on my way to work, I drove by one of these auto part dealers and, for or the life of me, I simply couldn’t remember if It was an Auto Zone or an Advanced Auto that I passed by. Thinking on it now, I still cannot accurately tell you which shop it was.

This kind of tells you something, doesn’t it? It has for Stealing Share, as it has reminded us that the auto part category is in desperate need of rebranding. It is also prime for a properly branded company to steal market share from its competition.

The sheer meaninglessness of these brands does not end with Auto Zone and Advanced Auto Parts. Hardly. In fact, it runs head first into the rest of the competition, you know, companies like: PEP Boys, CarQuest Auto Parts, and O’Reilly Auto Parts.

Where’s the difference between these dealers? And why would I personally benefit from shopping at CarQuest rather than at an O’Reilly Auto Parts? Is location the only thing that separates these shops? Nothing, as far as I can tell, has led to a brand preference.

Truth be told, there is not one iota of difference between the brands of these auto shops. It is a vague and undefined category. And what a shame. After the purchase of a home, the second most significant purchase of our life is that of our automobile. That means we should have an emotional affinity for the provider who helps take care of that car.

Even the external appearances of these shops lack any significant difference from one another. Step inside any of them, and the indistinctness shines through even more boldly.

At the end of the day, auto part dealers must do better and not consider their clientele as consumer cattle. So auto shops, it’s time you delivered.




Message to all brands: Shooting first & asking questions later is never a good idea

 Subscribe in a reader

In their effort to gauge just how disgruntled banks could make their customers for no good reason, Bank of America, Suntrust and Regions will be doing away with the $5 debit charge they proposed just a few months ago.

This consumer anger is not just exclusive to banking. It was also a just few months ago that Netflix made the decision to split into Netflix and Qwikster to only double back and stay exclusively Netflix. Or what about the new Gap logo? That one sure didn’t last long, although my feeling is that Gap should’ve stuck to its guns on that one.

Business decisions that affect brand need to be made carefully and, if the decision represents a complete 180 degree rotation, then the plan should be culled a bit more before being implemented. What’s happened here is that businesses such banks and Netflix have underestimated the anger that exists among consumers.

The problem with backtracking is that it never backtracks completely. Ground is always lost. Even if a decision was based on good intentions, then you backtrack, the brand has lost some ability to resonate with customers. More dangerously, if the decision is to benefit the company, consumers realize their lack of value – and that makes them angry. Either way the waterhole is poisoned.

The culprit of many of these bad decisions decisions if often the lack of research. Over the years, I have worked with or read about companies undoing decisions they made. At the root of most of them was using research that wasn’t research projectable to the larger audience.

Let me explain: Focus groups and online surveys tell you nothing. You cannot project the results because they are affected by group dynamics, speak only to the outliners and are not a large enough sample to be quantitative.

Even quantitative research performed today is often meaningless because only attitude and usage are asked, and not the meaningful questions that drive human behavior.

A brand launch is much easier than a rebrand for the simple reason that a brand launch starts with a clean slate. Once a brand is created, whether an effective or an ineffective one, changing consumer beliefs can be both difficult and expensive. It costs much less to make the right decision the first time around.