The Tom Dougherty Blog



Posts categorized “Marketing”

Burger King continues to imitate the rest

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In such a ho-hum market as fast food, I am constantly amazed at the ridiculousness of its participants. Burger King, the king of switching out new menu items, recently announced it is going to roll out a new limited-time sandwich called the BK Rib Sandwich this summer.

Uh. Ever hear of the McRib?

What is so bizarre is that Burger King believes it can out-innovate the fast food market. Its executives have flat-out said it. But what they call innovation, I call copying.

ht-bk-Rib-Sandwich-kb-130515-wmain-jpg_164628Let’s look at a couple of other innovative offerings for its 2013 menu: Sweet potato fries and a pulled pork sandwich – both of which can be found at Carl’s Jr. Arby’s have had sweet potato fries in the past. Subway and Hardee’s both have pulled pork sandwiches.

To compete in the fiercely competitive fast food segment, it takes more than trying to out-menu your competition. People don’t eat the McRib sandwich only because they like it. They eat it because it comes from McDonalds and McDonalds has been smart about practically building a mythology around it.

Burger King is currently number three in the fast food market, trailing McDonalds and Wendy’s. To overcome them, BK must stop copying the market leaders and be different and better. Not just in food, but in the way it looks, feels, sounds and acts. Time to get with it.




The HTC One tagline for its phone is a bit off

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Nokia just released its HTC One phone. While the instrument looks good, its marketing tagline doesn’t work: “Everything your phone isn’t.”

HTC-One-PhoneIt’s at odds with HTC’s brand theme of “Quietly Brilliant” because there is nothing quiet or understated about “Everything your phone isn’t.”

Also, the tagline is about the phone, not the customer who uses it. That makes it easily forgettable. Potential customers will ignore it.

OK, HTC has produced a nice-looking phone. But the iPhone, Galaxy, Blackberry and Experia smartphones also provide visually appealing models, so a fetching phone doesn’t make the product viable. By itself, it doesn’t steal market share.

With that forgettable tagline, HTC won’t threaten its competitors.




Over emphasis on quarterly earnings is bad for business

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Marketing campaigns and business models change at dizzying speeds. Problem is, many are scrapped before the true results are known.

The culprit? Quarterly earnings.

Shareholders use quarterly reports to judge advertising campaigns. That’s a mistake. Successful marketing moves should ultimately increase earnings, but one bad quarter doesn’t mean the strategy isn’t working.

Take JCPenney, for example. The retailer is in dire need of revitalization. Last year, the company unveiled its “square deal” initiative, which offered everyday low prices instead of coupons and other discounts. Once the first disappointing quarterly report came in, impatient shareholders stomped their feet and demanded a return to sales gimmicks.

Thanks to quarterly reports, long-term strategy and shareholders are often pitted against each another. As a result, there is little chance to see big change.




Zipcar and Avis can be a success but will depend on brand

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With the acquisition of Zipcar underway by Avis Budget group, Avis should take this time to consider how closely the Zipcar should be integrated. The joining of Avis, a traditional car rental company, and Zipcar, a car sharing company in which members pay for access to a network of Zipcar vehicles (located throughout large cities such as Portland and Chicago), is a match that makes sense from a business sense but one that will need more attention from a brand sense.

From a business sense Zipcar’s can expand its fleet easily with vehicles already in use by Avis, and Zipcar can help Avis diversify itself a bit from rental competitors like Hertz.  However, things are a bit less cut and dry when it comes to brand. From a brand perspective Avis is about utility and Zipcar is about a lifestyle.zipcar brand avis brand

The brand considerations are more about context than anything else. Take for example the Avis customer. They are someone in a position in which a car rental has become a necessity. The context in which they choose the Avis brand is most likely at an airport and in that moment, either due to business or vacation, a rental vehicle is needed. Zipcar on the other hand is about the day-to-day. Zipcar is for the city dweller where vehicle ownership might simply be impractical. The end result for an Avis customer and a Zipcar member might be the same (each gains use of a car for a period of time), but the context is very different.

There is certainly a commonality between Avis and Zipcar, and from an acquisition standpoint, it should not have many people scratching their heads as to why. But speaking as someone who first sees brand implications and then business implications, Avis needs to find the emotional thread that is shared between the Avis customer and the Zipcar member and should use that intensity to bridge the two brands. The fact that the two companies rent cars should simply be  filler.

 




Major changes are coming to the video game industry

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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.




No brand winner in Viacom/DirecTV debacle

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During an almost two-week long blackout, millions of DirecTV customers were unable to watch about a dozen popular Viacom channels, including MTV, Nickelodeon and Comedy Central.

The stand-off between Viacom and DirecTV over fees might have ended last week, but neither brand comes out a winner.

DirecTV was already in a tough spot. Few rave about his or her television, Internet, or cell phone provider, which means it is easy to get mad at DirectTV in this instance.

It did not matter who most pointed the finger, Viacom or DirecTV, because a lapse in service meant the service provider failed. The bright spot for DirecTV is that since all providers are viewed negatively, there is no impetus necessarily for viewers to switch. The blackout, however, did help further perpetuate a negative brand perception.

The flip side to that customer perception is the value Viacom placed on its own brand. Owners of content can thank Netflix for spotlighting just how much power they wield. Distribution once was a massive undertaking. Netflix’s DVD service was unmatched because the start-up costs for distribution of that magnitude were prohibitive. Where there was a greater dependency on physical distribution, the changing environment of digital distribution has increased control for those with the content.  I say “increased control” rather than “complete control” because content providers are not yet confident enough in their brand or their content to capitalize.

The great thing about content is that in addition to defining your market it acts as a differentiator. Make great content worth watching and customers have a reason to switch and increase usage. A good example of this is comedian Louis C.K., who avoided traditional distribution channels and sold his latest standup special digitally through his website. His success proves that, if your content is worth consuming, customers will inconvenience themselves in order to get it.

If Apple has taught us anything, it’s that there is a thriving market for simplicity – in usability, design and consumption. If ever there was an industry where simplicity was lacking, it is television. DirecTV and Viacom did little to elevate either of their brands during the recent dust-up and, in the process, demonstrated weaknesses in the system and highlighted change that might be slow but is inevitably coming.




OnLive’s brand must be about more than the technology itself

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OnLive is no longer new to the world of gaming. Yet, almost three years after its release, I am still not sure the brand will be a success unless the company quickly re-evaluates its focus.

Both my interest in OnLive as well as my frustration with the brand is rooted in a desire to see it succeed. I have talked many times about the natural progression toward digital formats and OnLive alone is carrying the flag for this transition within the console gaming market.

My frustration with the value of OnLive’s brand is that the value has been placed too heavily on technology. The technology is impressive, but when it comes to content, OnLive is lacking.

Sony had a similar problem when it pioneered e-book readers that used the e-ink technology that is still used in some circles today. Sony may have been first but today Amazon’s Kindle easily eats Sony’s lunch in e-reader sales. In the world of e-books – and video games – content is king.

Amazon understood that. Sony didn’t.

I first tried OnLive to see if the technology worked. Did it ever. That was all I needed to be sold on the idea of a purely digital transition for the market.

But then I looked beyond OnLive’s technology to the content and was disappointed.

In the video game market, brand and content are the two biggest points of differentiation. PlayStation 2 was a huge success because it commanded both. PlayStation 3 had a rocky run because it commanded neither. OnLive is new to the market and still trying to develop a brand. That won’t be easy with its content so weak.

This is not to say that OnLive is not making some smart moves. There is a push that could increase OnLive’s visibility, with rumors that Sony is looking to partner with a digital game service like OnLive that would run on Sony’s PS Vita and news that OnLive is teaming with Vizio on a new set-top box. Yet, due to its limited content library, it might be putting the cart before the horse.

Technology cannot drive preference all by itself. Technology must be driven by purpose. Content provides that purpose. As it stands, OnLive has no exclusive IPO, no big deals in the works with developers, no massive additions of current generation content to its digital library, and above all else, no brand message that defines who the OnLive customers are and why they should prefer OnLive.

It’s not too late. OnLive has the ability to turn this industry on its head. From how the market views content ownership and distribution of that content to how it can increase profits to developers, OnLive could change everything.

If OnLive fails, there will be at least one more console cycle stuck with the status quo. With or without OnLive, I believe the market will eventually make this shift. It just might take longer.




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.




Tough times for Best Buy, but mobile stores are not the answer

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Things are not looking very good for Best Buy. Its last quarter, which ended March 3, had it down by $1.7 billion, a figure even more disheartening when you consider that the loss included an additional week of sales to help soften it. Best Buy’s answer to the poor performance is a shift toward fewer big-box locations and an increased amount of mobile locations. There is one problem with the strategy however. Whatever issues it has with the big-box stores will be the same for mobile stores. Neither has a clearly stated reason for being nor a compelling enough message to establish brand loyalty.

The problem with Best Buy’s current big-box stores is that you can get everything they carry elsewhere. Its brand is not special nor are the products it sells, making it just a store rather than a destination.

Sure, it has a large selection that lets you get all your electronics/appliance shopping done. But how many people go out to buy a TV and a fridge on the same outing? Typically, you either go for one or the other. (Or you go to Costco.) If you are in the market for a fridge, Best Buy just joins a long list of stores whose value is also simply “a means to an end.”

On the other hand, if you want IKEA furniture, you go to IKEA. If you want a MacBook, you go to the Apple Store. There is value in IKEA and the Apple Store because of the experience, the focus and, most of all, having brands that offer something of greater value to the consumer than price. Best Buy is not a very pleasant shopping experience. Nothing it sells is particularly special, and it uses the rather emotionless value of price as its brand.

So are mobile stores going to be any different?

The problem with transitioning to more mobile stores is that too many mobile stores exist and Best Buy’s brand of price is not meaningful enough to increase usage beyond their stores’ proximity to consumers. AT&T, Verizon, RadioShack, the list goes on. Mobile stores already saturate the market.

Best Buy’s success does not rest in adjusting the size of its stores. It rest in adjusting its brand. Downsizing the stores is just addressing a symptom. It’s not addressing the cause.

Instead, Best Buy must decide who is it for and who is it not for. What does the brand promise? Best Buy is confusing its brand awareness as being meaningful when it is preference that signifies brand equity. The reason Best Buy is closing stores, laying off employees and switching to a mobile store model is because it hasn’t redefined its brand and used that to dictate structural changes.

Otherwise, it will soon become as irrelevant as RadioShack or, gulp, Circuit City.




Market research done right – and why most get it wrong

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Now, this is interesting. Columbia Business School and the New York American Marketing Association found that 29% of marketers have “too little or no customer/customer data” and, most strikingly, believe what they have is not appropriate to decision making.

The study was mostly focused on real-time data, such as from social networks, mobile and online advertising and so on. But here’s the rub: 74% of them rely on traditional survey data concerning demographics and 60% concerning usage.

Customer research that’s projectable to the market as a whole is the only kind of research you can count on because of its projectability and its means to eliminate the outliners that social media and other online processes can’t.

So why are marketers so disappointed with it?

Easy. Because they aren’t asking the right questions.

In most cases, the questions asked are only usage and attitudes, which only gives you a sense of the marketplace without uncovering the strategies to change it. Marketers are then left with data that’s simply not actionable.

Here’s a story I often tell: We’ve done research and brand strategy for several beers and it always amazing me the research they’ve previously conducted. For example, many of them will have asked the question: “Why do you prefer the brand of beer you drink?” The answer is almost always: “I like the taste.”

Duh.

How actionable is that answer? Funny enough, many beers fall into the trap of thinking that’s actionable, which is why most of them advertise taste – when taste is not a switching trigger. You only switch for what you currently do not have. Who prefers a beer they think tastes terrible? (More about the beer industry is listed here.)

That, however, is usually the kind of data marketers are struggling to use, especially at a time when 70% of them said their efforts are under greater scrutiny than in the past.

To understand consumer behavior and how to change it, you have to understand human behavior. That means testing true switching triggers, brand meaning and, most importantly, precepts – the belief systems that drive behavior.

It comes as no surprise to me marketers are struggling with their data. The real surprise is that, despite continuing pressures, most haven’t done anything meaningful to change it.