The Tom Dougherty Blog
Chinese content provider LeEco announced that it will purchase US television brand Vizio for $2 billion. Until recently, few consumers in the US had even heard of LeEco. In China, it is a pretty big deal. Called the “Netflix of China,” LeEco’s services runs the gambit from Amazon-like shopping, driverless cars, online content, smart phones to TVs. And that’s not even the full list.
LeEco has been trying to break into the US market for some time now and that task has finally been accomplished. But what does that mean for the Vizio brand?
In 2015, Vizio accounted for one out of every five TVs sold in the US. By and large, Vizio TVs are generally well reviewed and, with a 20% market share, there are a lot of US consumers that would agree.
But don’t be surprised if LeEco kills the Vizio brand.
If true to form, LeEco will first change Vizio’s name to be in sync with the rest of its products. It will join the family of LeTV (everything in LeEco’s stable begins with Le) and LeEco will incorporate its acquired brand into what it refers to as its “premium ecosystem user interface.” That will allow consumers to have access to LeEco’s online content with 100,000 TV episodes and 500 films. Compare that to Netflix (4,300 movies) and Hulu (5,300).
Why Vizio will become something else.
But LeEco is not really buying Vizio to get into the TV business in the US. It is buying Vizio to get all of its businesses in the US, particularly its mobile phones and driverless cars. That is further proof that Vizio is doomed.
Chinese companies have traditionally had a difficult time in the US. American’s won’t buy Chinese car brands (though we buy US brands made in China). We shy away from Chinese TV brands – TCL, Hisense, and ZTE – as well as Chinese phone brands like Xiaomi, Huawei and Meizu. Again, we have no problem buying Chinese-made products owned by western companies. But, considering the current economic and political climates, there is something about Chinese companies that leads Americans to reject them.
The once strong rallying cry of “Made in the USA” has switched to “I don’t really care where it’s made as long as it’s not a Chinese company.” What’s odd is that we have little problem when a Chinese company buys a US company such Starwood Hotels, Smithfield Foods and GE’s appliances division. When a Chinese company enters the US market as its own Chinese brand, however, we dig in our heels.
This is the problem that LeEco will face if it really wants to be successful in the US market. It will be much easier for it to succeed if it kept the Vizio brand intact instead of bringing it into the LeEco ecosystem of brands.
If Vizio becomes LeTV, the acquisition will fail.
I can’t go through any morning without a cup o’ joe. One of life’s great pleasures (for me at least) is that first sip of fresh brew. It makes me instantly feel awake. My whole world seems brighter with that first taste. Sure, that’s psychosomatic and all. But whatever, I’ll take it.
My addiction to coffee is fierce. By 10 am, I am usually four cups deep — and feeling on top of my game. Coffee no longer makes me jittery, as it did when I first began drinking it. Now it just makes me feel at ease.
This habit of mine has undoubtedly made me a bit of a bean snob. I won’t get anywhere near instant coffee nor for the shiny gold bags provided in hotel rooms. No sir, none of that is for me.
I want the good stuff. I love a french press with ripe beans ground for eight seconds. Actually, I find this to be one of the best methods in serving a newly minted roast and I enjoy the process. I like the Keurig for its ease of use but the pods have to be top of the line. Most of all, I love having coffee from a Nespresso machine.
Nespresso drinkers have taste
While my morning coffee is purposeful, a mug of Nespresso is an experience. What’s funny about that is that everything about the Nespresso brand itself points right back to the idea of it being an experience with its own unique process.
Consider this: Nespresso capsules (a more serious noun than “pod”) can only be ordered online. When you click on a particular capsule, you get a story about it accompanied by a savory picture. What’s more, you are provided with a similar “aromatic profile”of coffees. All this ties in seamlessly with the Nespresso brand — that when when you sip it, you are a true connoisseur of coffee. It’s what your self-identification becomes.
To fulfill that brand face, Nespresso brand has considered your senses with its coffee. In fact, it’s toyed with my senses so much so that, as I am tapping away at my keys, I envisioning sipping a cup.
Such a shame my machine is 25 minutes away at home.
My first question upon hearing that Verizon is paying $4.8 billion to buy Yahoo was: Why would Verizon do that?
Yahoo has been a declining brand for some years. In the 90s, it was the search engine and counted millions among those who had an email address with the tech company. It won its battle with AOL and its future was bright.
But Yahoo never evolved after Google entered the market and took over so overwhelmingly that google is now a verb.
A better way to judge Yahoo’s downfall is to remember that Microsoft was willing to pay $45 billion for it just nine years ago. The $4.8 billion Verizon just ponied up is chicken feed in comparison.
The strategic purpose of buying Yahoo
Verizon’s overall strategy is to become a larger technology and media company rather than just a mobile carrier. It wants to count Google, Time Warner and Amazon as its competitors. Its recent purchases of AOL and the Huffington Post prove that. But it has an overall strategy that has yet to come to true fruition.
So why Yahoo? I suppose Verizon wants access to its one billion users. But AOL once boasted of those kinds of numbers. As we learned, those AOL customers were basically empty ones as they sported AOL email addresses they never used. Yahoo did buy Tumblr and brought in Katie Couric to be some sort of news anchor, for what it’s worth.
But it has been a brand without purpose. All that mishmash of what it had didn’t add up to a satisfying whole. It was a collection of disconnected parts.
Part of the reason why I wonder why Verizon would buy Yahoo is that, so far, Verizon’s collection also seems jumbled. What is Verizon going to become?
I suppose we should let this play out and see what Verizon will emerge as. But it worries me when companies grow through acquisition and not organically.
Verizon needs to come up with a brand promise that unites all its offerings. That was the problem Yahoo always had. No one could state what how its users were different than any other kind of user. It had no unifying brand.
If Verizon wants to make some sense of what it will become, then it needs to re-examine its brand. Because, right now, it doesn’t have one that will impact the market the way it should and buying companies like Yahoo don’t fix the problem.
Retailer problems seem to mount and grow
All (or almost all) brick and mortar retailers are in trouble. Macy’s is just one of the bigger retailer examples. Sports Authority, JC Penney and Sears would make the list. And even Walmart is closing some locations to better position the bottom line.
What’s really wrong with the retail industry? Are the troubles in which retailers find themselves due to online competition? Is the category of department stores doomed?
It all depends on if the retailers start to learn from their failures and change. Based upon past performance in adaptation to change, success in the category is highly unlikely. Retailers are the last to embrace change and the most stubborn in adapting to newer market conditions. Most of this is due to a lack of vision by leadership and a tenacious gripping on the model in which they have invested.
Macy’s leads the pack…in headlining the troubles
The trouble with these retailers (Macy’s closed close to 40 stores in 2015 and it looks like the blood-letting will continue in 2016) is not the rise in online retail sales. It is the inability to understand the WHY behind consumer changes. Online retail is NOT the problem. It is a symptom of the problem. Department stores like Sears, JC Penney, Macy’s, and Kmart are simply failing the needs and expectations of the mercurial consumer.
The prescription for this malady is to regroup under the wing of so-called industry experts. In other words, they look for answers in the same old places.
What it’s like to be a retailer?
It reminds me of a story I heard years ago. It goes something like this… A man and his wife leave a bar in the evening. As they head up the sidewalk, they pass by an alley and the gentleman notices that there appears to be a man crawling on all fours in the alley. He pauses for a moment, asks his wife to wait for a moment and he heads down the alley to see what the problem is and if he can help.
As he approaches the frantic crawling man he notices the strong smell of alcohol. Despite this, he asks the poor fellow if he can help with anything? The drunk man tells our hero that he has lost his wallet and is trying desperately to find it. So the gentleman agrees to help him and begins a careful search of the wallet in the alley. After 10 minutes or so, neither have any luck finding the wallet. Exasperated, the helpful gentleman asks, “Are you sure you lost it here?”
“Oh no,” says the drunk, “I lost it down there…” and he points to the far end of the alley.
“Why on earth are you looking here then,” the man asks.
“Simple” he says. “There is no light down there.”
If Macy’s wants to survive as a dominant retailer, let alone win, they need to look outside the category for answers. But, they all seem to always look where the light is.
Twitter is in a difficult spot. It has permanently removed Milo Yiannopoulos, the tech editor of Breitbart, after he sent numerous tweets were inflammatory and, frankly, racist, targeting SNL and Ghostbusters star Leslie Jones.
Yiannopoulos had been temporarily removed from Twitter in the past for abusive tweets and the social media giant decided that calling Jones in the movie “a black character worthy of a minstrel show” was too much.
One of the issues here is free speech. Yiannopoulos, who is a self-proclaimed gay conservative, claims he is being made a scapegoat for the hundreds, maybe millions, of offensive tweets sent out each day.
He could be right and I admit it’s a difficult issue to parse. But I don’t think this is totally a free speech issue. It’s also a brand one. All companies must respond to change and what their target audience wants. That doesn’t mean you flip your brand over and over but that you have a brand that is sensitive to market forces that impact your target audience.
Twitter’s response to Yiannopoulos: Enough is enough.
Twitter is my go-to social media platform. (You can find me at @BrandGenius.) And I admit that most of my news is gathered there. (Well, that and NPR.) I follow reporters, other strategists like me, and many news outlets.
I have also been aware of the Wild West nature of tweeting. I see responses to tweets that are extremely offensive, rude and outright ignorant. To defend free speech means you have to take the good with the bad, right?
But I’ve also sensed a rising disgust among many users over those kinds of tweets. People are coming to the defense of the original tweet (the non-offensive one) and expressing their repugnance to the comments. In a way, by deleting Yiannopoulos, Twitter is responding to its audience. It may sound like censorship but I think it’s more of the equivalent of making sure the adult gift shops are not located in your neighborhood. Yiannopoulos can go to other social media platforms, but civility will remain here.
I thought about this more when considering the potential ouster of Roger Ailes at FOX News after reports of numerous incidents of sexual misconduct. No matter your politics, you have to admit FOX News has been a brilliant construction that still leads cable news ratings (especially during the current Republican convention). Ailes has been the architect of that.
But FOX News has chosen not to stand by him. Maybe there are other factors involved in his ouster, but my gut tells me that FOX News (and the Murdochs, who own it) are responding to a change in the market. More and more of us are opposing sexual misconduct. To maintain its relevancy, FOX News has made a business decision.
That’s what Twitter has done here. It has basically made Yiannopoulos an example that states that courtesy should be the rule of the platform. Twitter said it permanently deleted Yiannopouls because he violated “rules prohibiting participating in or inciting targeted abuse of individuals.”
To me, that’s the Twitter brand remaining relevant.
I have a new obsession.
It’s a brand spanking new television series on Netflix called Stranger Things. Don’t worry, if you haven’t yet seen this series, you won’t find any spoilers here. Rather, you’ll get a nod to Netflix and also to the crew of the show for its attention to setting and entertaining storytelling.
Netflix, as well as Amazon and Hulu for that matter, have revolutionized home entertainment. Each is changing this landscape as we once knew it. These streaming services, through creative television series and film, have become a go-to for many. So much so that many of those Netflix watchers have cut their cable cords.
Stranger Things fits into the agenda of streaming networks seamlessly and stands out as one of the best. I think it deserves a place alongside House of Cards, Mozart in the Jungle, Orange is the New Black and Transparent as the upper tier of streaming content.
Stranger Things is binge-worthy TV
My social media feeds are going crazy with posts by folks who are plowing through the series in a day or two. My wife and I want to as well, but are forcing ourselves to watch only an episode a night to savor it.
What I love about the show is that it’s a sci-fi thriller that calls back to the 80s in its own original way while paying homage to that era. It’s peppered with a dynamic synthesizer score, ala John Carpenter, and classic 80’s tunes. The attire is just right, too (big hair, hip huggers and popped collars). At times, it feels like I am watching a near and dear cousin of Goonies, Stand By Me and E.T.. It’s so good that it fits right in with that crew of 80’s classics. The creators, the Duffer Brothers, have said that those movies and others were inspirations.
And don’t think Stranger Things is simply a copycat. About the third episode, it becomes its own thing.
That’s why it’s not all that surprising that Stranger Things is garnering a 90% rating from a coterie of critics on Rotten Tomatoes and a 9.2 user rating from IMDB.
Give Stranger Things some love. You won’t be disappointed.
Doing a re-launch of a brand is hard work to get it right. You have problems to overcome, not just with your outward face like a your current logo, but also what you do operationally. You have to do hard quantitative research, examine the competition (so you are positioned against it) and slay any sacred cows within the company.
The re-launch of an updated MasterCard brand gets it only half right, but in a weird way. The credit card company now has an app that you use to pay, ala the Apple Store app. This is the wave of the future where physical cards become extinct. (A purchasing app is also something retailers should do more often.)
MasterCard with its MasterPass app has taken the first step forward and I expect its competition, such as Visa and Capital One, to follow suit. In fact, because MasterCard has always had an old feel to me, I’m a little surprised that MasterCard was the first to step forward.
Why MasterCard did not truly rebrand.
MasterCard got the operational part of the brand re-launch right, but the new logo is actually just a refresh of its old one. It won’t affect target audiences much. It might help it get rid of that old feel a bit. But it doesn’t have a new promise or anything new to say. And it’s not connected with anything new MasterCard is doing, such as MasterPass.
Companies are loath to completely rebrand, which is why I’m using the word re-launch. That seems to soothe companies because a rebrand sounds scary.
To steal market share, all options must be on the table. That’s why the slaying sacred cows edict is so important. Companies are wary that a complete rebrand will scare away current customers, but that’s not true. They are already ambassadors of the brand. The target audiences you want to reach are the customers of your competition.
The old adage goes that the definition of insanity is doing the same thing over and over again and expecting a different result. That’s what MasterCard has done here. It has, I’m sure, poured money and time into this re-launch and it will have negligible effect. It will be left wondering why the re-launch didn’t move the needle and its leaders will believe that any kind of future rebrand would fail.
But that’s because MasterCard did not rebrand.
What made UBER so appealing a while back? Was it the business model of independent owner/operator?
Was it the UBER application that allowed users to order a hire from their smart phone? Was it the GPS tracking of the ride that you could track in REAL time on your phone? Was it your ability to pay in advance, save a few bucks, pounds, or euros? Was it the simplicity of not having to figure a tip?
It was all of those things. UBER was the definition of a disruptive innovation.
The means to hire a ride was transformed for the better. It was cheaper, predictable and more convenient. Sure, it was still easier to hail a cab in New York or London because of the abundance of taxis in most major cities.
But if your travels took you to a restaurant in an area of the city that was less popular — heck, UBER was great.
But UBER’s difference is shrinking. Like so many revolutionary ideas before, as the business matures, the differences shrink.
A few weeks ago, I hired an UBER ride and the driver had posted a sign in his vehicle that read: “Tips are Welcomed.” Sorry, buddy, but UBER is a tip-free ride in my book. Pay tips and you are an UBER Taxi. No different then a NYC Yellow Cab.
Disruption has a short life
Disruptive innovations often have a short shelf life. Competitors in the legacy markets adapt to the new changes and soon the differences that made the service or product so revolutionary become table stakes. A few examples? The BlackBerry took the interactive pager and telephone to new heights.
The innovation revolutionized the market. Enter the iPhone, which was the disruptive innovation that changed mobile communications and killed the BlackBerry. Just this past week, BlackBerry ceased production of its old style (retro, believe it or not) keyboard. Try to buy any phone today that is not smart and you will see how the market adapted.
Xerox pretty much invented the office copier. Today, it has become a verb that has nothing to do with the brand itself.
So much in our world loses differentiation and becomes synonymous with the product or service they were meant to displace.
UBER has poor brand management
The UBER Taxi is just such a service because no one is actually managing the brand. The brand’s promise is left up to the independent drivers and, as fares increase, taxi companies roll out apps, drivers/operators solicit tips…and the differences vanish and UBER becomes UBER Taxi.
Unless UBER continues to disruptively innovate and create a brand message beyond smart phone accessibility we can expect an UBER Taxi service that is a division of Yellow Cabs in NYC.
Remember when esurance was trying to disruptively innovate the world of insurance? It claimed lower overhead because of its on-line model and independence. Today? It’s a division of Allstate.