The Tom Dougherty Blog



Posts categorized “Rebranding”

The mistakes of JCPenney

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It wasn’t long ago that JCPenney CEO Ron Johnson, the former head of Apple’s retail stores, was rumored to be on the verge of being sacked after just a few months on the job. It was too soon to make such a drastic move. Johnson’s strategy needed time to play out.

Well, it’s played out.

Johnson’s concept of “fair and square” pricing, meaning JCPenney would not discount, led to a new logo. More importantly, it was positioned against a retail market that constantly discounts. The CEO was was banking on consumers who believed that a discounted price was the real price, and that they were being gouged when merchandise was not discounted.

It hasn’t worked. The retailer just announced a $427 million quarterly loss and same-store sales drop of a whopping 32 percent from last year.

Johnson obviously miscalculated when he pinpointed what he thought was an emotional trigger for shoppers. Turns out it wasn’t emotional at all. In fact, a trip to a JCPenney store, as documented by Matthew Yglesias from Slate, demonstrated that the store hasn’t changed much either.

Johnson failed. His emotional trigger – that other retailers are not honest – was a pricing story, which is rarely emotional. In fact, even an advertising campaign that showed an item being sold for less at JCPenney than in a competing retailer didn’t arouse anger in shoppers. The ad was positively cheery.

The JCPenney brand, therefore, became unimportant and flat.

To his credit, Johnson had a coherent strategy in a market where few retailers even try. I mean, what exactly is Sears’ strategic plan?

Unfortunately for the new CEO, this was the wrong strategy. On top of that, it was poorly executed.




News gets worse for Best Buy

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Tough times continue for Best Buy. The latest news is that the company’s cash-flow expectations were lowered because payments on inventory had to be made earlier than expected.

This was not Best Buy’s fault. It received inventory sooner than expected and had to pay for it sooner too. But this perpetrates the negativity surrounding the Best Buy brand.

Best Buy BrandThe overarching problem with Best Buy is that nothing has been done to stabilize its brand. On top of that, the company refuses to adapt to the changing competitive landscape – which brought down Circuit City – and is fending off takeover bids from founder Richard Shulze.

The Best Buy brand extends only as far as one of its blue-shirted employees can take it. Online retailers have been devouring Best Buy’s market share. That cannot be attributed only to the overall woes of brick-and-mortar stores. Apple outlets, by contrast, are packed with customers.

The responsibility of any company with brick and mortar is to create enough of a brand that it becomes a destination. Best Buy should reexamine the experience its brand creates and figure out why it is no longer meaningful to its customers.

Why does the Best Buy customer use Best Buy? Why do others reject it? Who does the Best Buy customer believe they are? How does Best Buy reflect that? Is the Best Buy customer seeing Best Buy as easily interchangeable with other stores like Target or Walmart and what is driving those feelings?

These are important questions. The fact that little has changed at troubled Best Buy indicates that the critical questions are neither being asked nor answered.

Best Buy’s future is gloomy, unless it examines its brand closely.




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.




American Express: an example of smart destination branding

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There’s a lesson to be learned here. In Travel Weekly’s “Power List 2012” – which is based on numerous factors, including sales – the No. 1 spot is once again held by American Express.

Many of the brands you might expect are in the Top 10, online booking sites such as Expedia and Priceline, for instance. But I agree that American Express is the most powerful player in the destination and travel market.

There’s a simple explanation for this: American Express has a brand that is as much about the people it’s for as the people it’s not. It is for travelers, especially business people, who “don’t leave home with it” and want to project a certain upper-class image. The key is that American Express has not tried to be everything to everyone. When a company does that, it is for no one.

This is the trap that destinations – and most brands within the travel industry, for that matter – fall into. Instead of pinpointing their target market, they simply sell “getting away” or the amenities that exist at their particular destination. In the context of the competition, those messages are meaningless.

The usual approach is timid because it demonstrates that the destination brands are afraid of putting a stake in the ground. If we say we are only for X, then we’ll never get Y, they say.

The wrongheadedness of this is that if X is emotionally powerful, most audiences will want to define themselves as X – just as the large numbers of American Express customers have done. Very few travelers don’t want to think of themselves as cultured, smart and knowledgeable about the world around them.

Putting a stake in the ground is easier said than done. But the ones who take that step wield the most power. As Travel Weekly has noted, American Express is a case in point.




Addition by subtraction can be the right way to build meaning

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There are many signs that a company doesn’t know what it is doing with its brand, but one is a lack of willingness to let things go that are not working. While this might seem like simply an operational decision, predicated by a steadily declining financial sheet, it is actually one connected to brand. Often, what often performs poorly financially is also not correctly aligned with a brand strategy. They work hand in hand, which means by living to your brand promise, you can make the right decision on what products to keep and which ones to lose.

If you consider brands that are struggling lately (Sony, Best Buy), it is part and parcel to the fact that they lose sight of the brand. For instance, consider Sony, which has a hand in about every possible tech pot it can. From TVs to MP3 players, to Ereaders to tablets, to alarm clocks to cameras to laptops, Sony has just about everything. There might be some products that ring resoundingly clear to its themeline of “Make. Believe,” but the ones that are not ringing true take with it some of the clout that other products might deserve.  The Walkman might have still be bringing in dollars to Sony, but why did it take so long for it to pull old technology that detracted from the power and meaning of its brand?

Or take Best Buy, which has created a store that offers product solutions to satisfy an oven customer and a CD customer (whoever that is, anymore), providing less meaning to the whole group rather than more intensive meaning to a smaller group. What you sell and your willingness to scrap what is not in synch is an important part of staying relevant and resonant.

Clarity of message is not simply dependent upon the message itself, but how it is made real to the customer. Sony’s “Make. Believe” could have a real profound effect on the market if it meant a culture shift within Sony. Imagine the impact drawing a line in the sand and saying “from this point forward, absolutely nothing we do will be ordinary” might have. No more AM/FM alarm clocks, no more set-top boxes, no more DVD players, Only products that were true to “Make. Believe.”

There is a reason Ping is set to vanish from Apple’s repertoire. Its social network-angle was never about “Think Different” and has become more of a hindrance to its brand then a help. A brand is constantly being examined critically by potential customers looking for a meaningful connection to their purchase. Make it easy for them and get rid of the clutter.




POM Wonderful’s brand isn’t what it seems

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I live among a family of health nuts.

Whether they’re seeking the benefits of taking a long hike, going on a juice fast or contemplating a vegetarian diet, my family is keen when it comes to the matters of treating your body well.

So, in my desire to be one of the group, I tend to enjoy seeking out what may tickle the nourishment needs of my flesh and blood. Needless to say, when I noticed POM Wonderful hitting the news of late, I was intrigued. But as I dug deeper, my intrigue quickly turned sour.

For those of you unfamiliar with this “Super Juice” (as its site claims), POM Wonderful is made with a pomegranate base and sports a medley of blends.

Here is the problem. POM Wonderful has made powerful claims that its juice can be a risk reducer for heart disease, prostate cancer and impotence before having the evidence to back those claims. Turns out, as the New York Times reported, “an administrative law judge has issued a cease and desist order… [and that] The order will remain in effect for the next 20 years.” Adding, “[the order] was issued after a Federal Trade Commission complaint filed two years earlier which contending that POM Wonderful had engaged in false and misleading advertising.”

And so, POM Wonderful is now in dire need of rebranding as it has found themselves in a precarious position.

Why?

Because POM Wonderful is a healthy alternative as well as being beneficial for your body. The problem is that it has tarnished its image by making unsubstantiated claims and now have very little breathing room to prosper — and it should prosper as few juices have such rich levels of natural antioxidants.

There are several reasons to rebrand. The most obvious one is to grow market share. But one of them is to shed a negative image because the equity in the current brand has been tainted. You don’t want to overreact, but it’s something POM Wonderful should consider when caught in this net. On the other end of the health spectrum, the cigarette industry has actually done a pretty good job of rebranding to shed its image. So has AIG and others.

(The one that hasn’t: Radio Shack. “Radio” certainly constituted an old technology in terms of meaning, but rebranding to “The Shack” wasn’t the solution.)

My advice. When building your brand, never attempt to be what you are not, but embrace what it is that you are. POM Wonderful has attempted to be what it is not and now its brand is paying the price.




TCBY must create distance from other FroYo shops

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In the world of copycats, be an original. The saying could not be more valuable when it comes to brands. Sharing look, feel and identity too closely with competition means brand value is relegated to least common denominator.

In the years I have lived in Greensboro, there have always been a few places to get ice cream. There were Baskin Robbins, Carvel, Ben & Jerry’s and, for something a bit different, there were two TCBYs. I say “were” because in rolled Coldstone (with four to five locations within city limits) and ice cream soon snuffed out the TCBY’s frozen yogurt business, which shortly thereafter closed both locations.

There is certainly something to be said for the role heavy competition had on the closings. Greensboro seemed, at the time, to be right at the breaking point in terms of the ice cream to human ratio. But, alas, here we are, a couple of years after the TCBY closings with all of the original ice-cream shops still in business, and somehow Greensboro is now sustaining even more frozen treat locations resulting from the current FroYo craze that is second in “hip” only to cupcake shops. With FroYo chains opening at what seems to be a one-every-six months basis, there really is no telling just how much frozen treats Greensboroeons can consume.

While competition might have appeared heavy, the simple fact is that TCBY’s fall was due to a shortage of a meaningful brand, not a shortage of demand. TCBY was different but differentiation was only based on the value of its product. That’s not enough, especially when the reasons for choosing the TCBY brand were the same as choosing the rest.

A differentiator of product value can only go so far and is vulnerable when something new, like Coldstone’s mixing in of toppings, becomes the more exciting form of “different.”

TCBY, however, has noticed a rebound of a FroYo craze. (FroYo is hip lingo for frozen yogurt.) Yet, in trying to reclaim relevancy in that market, it has chosen to copy the “hip” tone and feel of the competition instead of staking out its own identity.

If you take a look at TCBY’s redesigned stores, a sort of rebrand, you would confuse the layout, color palette, design, and messaging with the FroYo location that I can assume exists right near you. TCBY needs to be careful at how similar it appears to these new chains that are popping up. The more it mimics, the more vanilla it becomes. In an attempt to become like the rest, TCBY blands itself so much it just becomes more noise in the already noisy FroYo market.




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.




Nostalgia is a clever branding tactic, but not very wise

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Design books rarely tickle my fancy, yet, when I recently perused Stylepedia: A guide to graphic design mannerisms, quirks, and conceits recently, I was hooked. The chapter that grabbed me was entitled, “Pastiche”. For those like me who are unfamiliar with the definition of “pastiche”, it means: “a dramatic, literary, or musical piece openly imitating the works of previous artists.” Which is a perfect title for the selection. I found the chapter an absolute gem as it conveyed an engrossing explanation on the laziness of brands reusing vintage concepts.

Traditionally, when companies reuse nostalgic imagery, it draws upon our sentimental feelings of the past. (Pepsi “Throwback”, anyone?) But the bigger question remains — does the reemergence of vintage design symbolize a lack of branding smarts? I believe it does.

As stated in Stylepedia, the initial re-exposure to vintage concepts is indeed a sentimental experience, but doing so alludes to a lack of fresh concepts, modern brand recognition, and moreover “courage, inspiration or ingenuity.”

Noted by Debbie Millman (a brand expert and also the director of the Sterling Group) in Stylepedia:

“I think that the brand is suffering from ‘no new-news’ situation, and thus management is trying to drum up any reason possible for consumers – and/or the media – to take notice. While the packaging had a certain charm to it, there was no real ‘reason’ for doing it other than to (potentially) tug at older consumers heartstrings waxing for anything nostalgic.”

It’s hard to not agree with these sentiments. While there are absolutely brands whose look and feel can stand the test of time (Classic Coca-Cola bottles, Converse All-Stars and Heinz, for instance), these are companies whose brands are at the forefront of their respective markets. More than not, the followers of those market leaders only appear weak when they rely on their past, rather than examining the endless possibilities of their future.

Nostalgia only works if a yearning for that bygone time – and what it means in context of the market – has the highest emotional intensity in the market. More often than not, however, it’s just lazy rebranding.