The Tom Dougherty Blog



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Best Buy is leaderless…So what is different?

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I hate to harp on Best Buy yet again, but boy, when it rains it pours. Best Buy CEO Brian Dunn unexpectedly resigned due to a personal conduct investigation underway and all I could think was what a lucky break it is for Best Buy.

Not lucky in the sense that he was bad at corporate management or that he was a bad person (I guess the personal conduct investigation will clarify that). No, the only way I can evaluate Mr. Dunn is through the perspective of brand. From that perspective, Dunn was failing.

When Stealing Share rebrands companies, as much effort is put into the internal corporate culture of the brand as into the customer facing portion. If they do not occur in tandem, the customer sees the brand as hollow and fake. Before a brand can become important it must first be believed.

As I’ve said in recent blogs, Best Buy confuses its awareness with brand equity. The detriment of this confusion is that brand provides clarity and, in the absence of it, Best Buy suffered. Dunn focused too heavily on best practices and, as such, the brand of Best Buy became only as valuable as the lowest common denominator. Importance flows like a river, high to low. What a CEO believes is important becomes important at the ground floor. Brand must be the driver for the new CEO or Best Buy will continue to hit the same obstacles it is currently trying to clear.

A new CEO focused on brand also ushers in a new corporate culture. A big problem with promoting best practices (beyond their lack of meaning with the customer) is that they are not emotional and are the table stakes in which you must have just to play. But they do not create preference. They also give employees little reason to care because they are difficult to take personal ownership of.  As a cooperate culture, it is much easier to live something like “Think Different” than it is to live “best price.”

Best Buy’s Board of Directors should look at this resignation as a fresh start. Wipe the slate clean and take a new approach. Recognize that what Best Buy is missing does not center on operations, but rather on brand. Best Buy is down, but with some meaning it will not be out.




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

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“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.




Money and brand: The reason why college sport programs are switching conferences

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Am I alone in thinking the names of the collegiate conferences would work well under the guidance of Nurse Ratched?

This has been brewing in my brain for some time now, but with the recent application of both Syracuse and Pittsburgh to join the Atlantic Coast Conference, the sheer inanity of it all sent me into a complete tizzy. Well, not quite to the level of throwing my desk chair across my office in a heated moment of passion (thank you Coach Knight), but pretty darn close.

At first glance, it all looks so inane.

Pittsburgh, a team that is over 300 miles away from the Atlantic coastline, wants to join the Atlantic Coast Conference? Surely, we all know the motivating factor behind this is money. Playing for a stronger football conference helps with the revenue of the university (football is where the dollars are). But seriously, there is something absolutely mixed-up, backwards and upside down about conference names these days. And being that they represent the world of academia, you would expect a little work from the ole’ noggin to come into play.

Truthfully, I can let the Pittsburgh example slide because it is not nearly the worst example currently on the table. Yes, there is a much worse example.

Take the mid-major basketball conference, the Atlantic 10. You would think that the number 10 would suggest ten teams. Logically, that would make complete sense. But no. The Atlantic 10 boasts 14 teams — one of which is St. Louis University. Because you know, when we think of the Atlantic, we all logically think of St. Louis, Missouri.

Even St. Louis’ coach, Rick Majerus, complains about the team’s placement in the Atlantic 10. Says Majerus: “We belong in the Missouri Valley… the A-10′s a good league, but you’ve got to cross two states… What rivalry do we have? Dayton or Xavier? They sure don’t consider us to be big rivals.”

It goes on. Texas Christian University is now applying for the Big East as well as rumors suggesting that Kansas and Kansas State may join the conference too.

They do teach geography in college, right?

What about the Big 10 sporting 12 teams? Or how about the Temple football program playing for the Mid-American Conference? Surely, when I think of Philadelphia, I think of middle America.

However, all this swapping shows the power of the conference brands. (Although, they should be careful. They are all treading very close to becoming meaningless.) Truly great brands are those that exemplify something that we personally covet or want to be. In the world of collegiate athletics, this covetous agenda is of no exception. Take for example, the ACC, a very powerfully branded conference. I ask you, what does the ACC most readily represent? Perhaps that of a league that is home to the really exceptional athletes and the best coaches — teams that have a very real potential to win a national championship. You know, like North Carolina or Duke in Basketball, or Florida State and Miami in football. It’s a no brainer. If you could be a part of this elite group, and had the chance to, wouldn’t you?

Or what about the Big East? We might think of hard-nosed, athletic, basketball. Or a conference with the pedigree of players worthy to make it in the NBA.

So, behind all of this rearranging and moving and this and that, there is a semblance of sense as to why some colleges want to move to more elite conferences. Because when they are a part of these conferences, they too own the feeling of being a little bit better than the competition.

But despite all of these truths, it is still really hard to look at this giant cluster of conference names and yell out — as the world’s greatest basketball coach, John Wooden, once did — “Gracious sakes alive!”




The MAG shoe is for a great cause, but…

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In blogging about brands I tend to pull regularly from a batch of default “good” brands— Apple, Ikea, Nike, as well as default “bad” ones— US Air, US Air, US Air (they deserve all three mentions). However this week one of the “good” brands, Nike, is in an ambiguous middle ground—enter the Marty McFly “back to the future” MAG shoe.

I say ambiguous middle ground because the shoe itself is only a limited run shoe for charity and when it comes to promoting a good cause I would feel a bit soiled scrutinizing such a move too heavily—but it just doesn’t quite fit.

The shoe originally was seen in 1989 in “Back to the Future II” and to be fair the “Just Do It” campaign began before that in 1988, but the Nike brand since that time has been so steadily and consistently reinforced that the “Just Do It” of Nike today doesn’t allow for the MAG shoe pairing like it once did.

My initial reaction to the shoe was one of interest; it seemed fun, nostalgic, and almost humorous. When I first searched online for the shoe and was directed to the Nike.com this blog was created—It just looked so out of place. On the Nike homepage there was an athletic person in slim fit exercise clothing, a SHOXTURBO+12 sneaker, and a GPS sportwatch… and then a Delorian with a pair of light-up shoes sitting on it?

When I think of what “Just Do It” represents it is not fun, nostalgic and humorous, it is serious, in your face and a bit cocky. I would wager that the bidding currently underway for the 150 pairs of shoes is primarily being done by fans of “Back to the future” rather than of “Nike”. In fact, when I first heard the shoe was being produced I knew the shoe precisely, but until my recent search for them led me to Nike, I did not know they were originally Nike branded.

I do not discount Nike for the decision; the shoe was a Nike shoe originally, so for a charity like this, selling this, it needed to be through Nike if at all. The shoe itself brings light to a good cause, as well as attention and positive press to Nike as a company, but to their brand of “Just Do It” has lost some of its intensity because of it. This lost intensity is not something that is detrimental or even lost entirely, but one of the most important aspects of a brand is consistency and the MAG shoe cost Nike a sliver of theirs.




Nintendo mistakes the medium for the message

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Some time ago in an earlier blog, when the Nintendo 3DS was in development but had not yet hit the market, I expressed an opinion that the 3DS would not be successful because it was not in line with the Nintendo brand; based on the recent Nintendo sales figures and an impending price drop on the 3DS, it appears that I was correct.

This past generation of consoles was a big one for Nintendo. The Wii once dominated the console industry and the DS clearly dominated the PSP. Nintendo was making the right moves and were creating a brand of “group fun” and “active gaming”. Then the lure of 3D reared its head in the TV market and Nintendo was pulled in.

The problem with 3D is that often it is 3D for the sake of 3D. The medium became the message. When this happens, value is inherently lost and the message instead is only about the medium, which many players can own.
The DS worked because the games were fun, easy to jump in and out of on the go and the system benefitted from the brand equity the Wii was helping to drive.

The 3DS on the other hand changed little from its predecessor less its addition of 3D, a technology that required Nintendo to add disclaimers regarding eyestrain and potential damage to eyesight (especially in young children).

With news of the Wii successor stifling sales of the Wii and the 3DS taking such a hit on sales that the price was being dropped from $249.99 to $169.99, Nintendo must now focus less on technological additions to products. It must salvage the connectedness of the 3DS to the emotional equity of its brand. The Wii and the DS both proved that it is not graphics or processors that drive unit sales, but rather an image and emotion that a brand represents. Nintendo must not forget that.




A brand so powerful, it gets copied

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Sometimes I feel like a broken record when it comes to referencing Apple. But here I go again. I can’t help it because I heard a news story this morning about a US tourist traveling in China who happened upon an Apple store… or so he thought. As it turned out this was not a store of knock-off Apple products. In fact, it was actually a knock-off Apple store. From the same decorated walls, glass store fronts, wooden tables, staff in blue T’s to the Apple dogtag lanyards, the store duplicated all of it.

When we talk about brand, we always say that brands must be consistent. From look and feel to the language used, the message must remain the same. If a product is not in line with that message, it is not a product the brand should pursue. Apple understands this so well that, in addition to a catalog of products consumers covet, they also have stores that consumers view as destinations, much like IKEA. Before an Apple store opened in Greensboro, I frequented the Apple store over an hour away. Sure, I could order the new iPhone online, but the Apple Store experience is part of what makes it special.

You can walk into a Target or a Best Buy and recognize where you are. You can see their logos, color palettes and products that help you recognize and differentiate them from the shop next door. The difference with Apple is that if, you take away the products on the tables, the images on the walls and the logo on the exterior, you would still know it was an Apple store.

Brand is something that, when used correctly, creates emotional value beyond category table stakes. Apple has done this so well that it has created value in how the consumers view their stores – and copy them.




Apple is reported to be the world's most valuable brand. The top 10 reasons why.

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As no surprise to us, there’s another source that claims Apple has become the world’s most valuable brand.

Reports value Apple’s brand as climbing 84 percent from the past year to more than $153 billion, overtaking Google and leaving IBM, McDonald’s and Microsoft to round out the top five.

Anyone who has read this blog before – or even perused through our site – knows we have been championing Apple as the world’s most effective brand for years because it practices the art of persuasion better than anyone else.

In brief, here are just 10 reasons why:

• It knows who it is for (those who want to be ahead and, although not stated, show everybody else what has arrived).
• It finds a way to communicate that (“Think Different”).
• It is always a self-reflection of that customer (I’m a PC vs. I’m an Apple)
• It positions itself against the market (simple vs. the over-complexity of the PC world).
• It permeates the brand through every part of its company operations stringently and thoroughly, right down to packaging and R&D, with no exceptions.
• It considers everything through the perspective of the potential customer, never from the inside-out.
• It is aspirational.
• It does not claim to be for everybody.
• It never markets product benefits or the particulars of its technology.
• It is remarkably consistent in messaging and tone.

I could go on. But it’s shocking that most brands, including huge companies fighting for market share, do not follow those basic steps. Too often, internal politics, inside-out perspectives and fear to be different keep brands from being truly preferred.

It doesn’t have to be that way.

A quick side note to demonstrate: I asked a new client recently why was Apple so preferred. The answer, “Because they’re Apple.” I said, “Exactly. But you can create that kind of preference and here’s how to go about it.” The response: “But that’s Apple. We can’t do that.”

Why not?




S&P threatens to cut the U.S. credit rating, but how valid is their opinion really?

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This week saw a swift drop in the stock market as Standard & Poor’s threatened to cut the U.S. credit rating amid talks that the debt ceiling will not be increased possibly resulting in the U.S. defaulting on their loans.

It was the effect that this statement had on the stock market that hammered home the concept that when it comes too the permissions of a brand, the job of maintaining those permissions is much easier when a large amount of trust is unquestioningly granted by the customer.

With regards to Standard & Poor’s, it was not that long ago that they told investors that mortgage backed securities were an AAA investment.  This has since proved to be quite  the contrary.  At the end of the day, no one has a crystal ball and much like a weatherman who tells you it will be sunny and it rains or there will flurries and it blizzards, S&P’s rating system is only their opinion based on a variety of factors they have deemed to be important. And like with the weatherman, we continue to tune in, to listen and to dress accordingly.

In most instances once a brand wrongs its target audience, maintaining and recovering the permission that the brand once possessed becomes a difficult, sometimes impossible, task.

There is a team trust exercise in which a person falls back into the arms of their teammates. It is an exercise in which you only need to be dropped once to lose trust forever. In the case of Standard & Poor’s, their consumer’s have granted them what appears to be more permission leeway than is granted to the average brand.  They need to acknowledge this granted tolerance and remember that while they have permission now, the village eventually did let the wolf get the boy who repeatedly made a fool of them.

 




Wellness and health are not brand positions

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One of the most overrated brand promises is the one along the lines of “Be healthy.” This is a brand position that many companies and products have tried to claim, believing they are catching a new desire and wave that’s just now sweeping the world.

The problems with that position are many. For one, “health” has rarely been a winning strategy for the long term. Also, few brands have permission to claim it. And the promise of good health is claimed by so many brands that target audiences will most likely not see you as a different choice.

There is another reason, though: It’s not emotional. Or, at least, it’s not emotional in the ways brands often define it. They just say they will make you healthy, but they don’t align themselves with the emotional reasons why you want to be healthy. Those emotions are what drive preference.

A couple of recent examples: Uncle Ben’s rice is launching a new campaign centered on “Begin with Ben,” which emphasizes the healthy choice of eating rice. The problem here is that there are so many healthy eating choices that Uncle Ben’s has not given anyone a reason to choose it over the rest. In fact, it violates the first rule of marketing: It’s about Uncle Ben when it should be about the customer.

The “begin” part of the tagline does intrigue me a bit, as it suggests starting a new plan. But I wish it were a little less clever. Clever is simply not believable as it sounds like it was written by a marketing person instead of the company itself. Even “Start with Ben” or “Start Over” would be more concise and believable. Plain spoken, with a bit of awkwardness, is best.

Even coupled with the brand’s “supports a healthy heart” graphic, Uncle Ben’s has not uncovered the emotional reasons why we want to be healthy. Even if it was about wanting a more active lifestyle, living longer or being more attractive, there are emotional underpinnings of those that would be more persuasive. (It could be, for example, about wanting to be “accepted.” Just a thought.)

Even worse is a new initiative by Walgreens, which is sponsoring Walk With Walgreens events around the country. Walkers trade in “steps” for rewards. This is a permission problem because Walgreens is not about health. It is about convenience and low price, like a drug store from the 60s that sells everything from cigarettes to lawn chairs to photo developing. It’s an outdated model that’s currently sinking Rite-Aid.

The point is, before you develop a brand based on health, remember a few things. Make sure you have permission to claim it and, if you don’t, then make changes. Analyze your competition to see if anyone else has claimed it in a meaningful way.

Most importantly, uncover the emotional reasons why target audiences want to be healthy outside of the inane lifestyle messages that are currently being delivered.

And, also, make sure you actually believe that message will move audiences to act. Most of us talk about living a healthy lifestyle, but the truth is that we choose for other reasons (brand) and they are the reasons why obesity reigns in our country and McDonalds swallows up its competition.




Southwest Airlines will be just fine

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There’s a reason why all the “cracks” in the Southwest Airlines planes won’t hurt the airline at all: Because Southwest has a brand.

As we’ve said before in a detailed study a few years ago, Southwest is one of the few airlines that actually has any meaning in the marketplace. Therefore, it is another example of how we will forgive a brand if it has been meaningful to us.

Now, if this had happened to Delta or American, it would have been a different story. Because travelers have no emotional connection to those brands, the damaged aircrafts would give us another reason to ignore those brands.

Southwest has developed a position in the airline industry by focusing on low prices, no baggage fees and a model in which you line up in a kind of “first buy, first serve” order to nab a seat. It’s not my preferred way to fly, but the model and its operations are fulfillments of its “You are free to move about the country” brand.

 

The Southwest brand says that, now that you pay less, you can travel. With that brand, it is one of the few airlines to post increases in revenue over the last few years, although it probably won’t challenge the market leaders amid all the recent mergers.

But the power of brand is how you overcome communication crises. When Apple’s iPhone 4 had issues, nobody cared because Apple had a brand. If BP had a brand, even the justified outrage over the Gulf Coast oil spill would have been tempered.

Southwest (and Boeing) certainly need to take care of this issue (and, really, it’s a sign that airlines need to spend some money buying new planes and updating the old ones because most fleets are becoming outdated).

But having a brand means Southwest will weather this storm because, in a sense, it has already been forgiven.