Amazon’s gamble with planes for Prime Air

Amazon recently showed off one of its new 767s that will ship some of its products purchased through the site, with Prime Air printed on its side. Last spring, Amazon announced that it was going to lease 40 such planes in an effort to curb some of its shipping costs.

Prime Air
Amazon Prime Air planes are soon to be crowding the skies.

Recently, shipping costs have outpaced sales growth, cutting into Amazon’s bottom line. In fact, in 2015, Amazon spent a whopping $5 billion on shipping expenses. Leasing the planes is a pretty clear demonstration of Amazon’s desire to streamline its logistical and delivery network.

Amazon trucks have delivered its products for quite some time, particularly with its 2-hour delivery service, Amazon Now, and its grocery fulfillment, Amazon Fresh. However, manning an airplane fleet is a much bigger and costlier proposition and is sure to disrupt what we know of traditional air shipments. Amazon’s hope is that the Prime Air planes will substantially reduce that $5 billion shipping cost.

Prime Air planes may not be such a gamble.

What does this mean for UPS and FedEx? They both should be extremely worried. Both FedEx and UPS depend on Amazon, with the online retail giant accounting for a large share of its business. But you can’t stop progress and it naturally fits for Amazon to take on those duties on its own.

For it to work, Amazon must secure an internal delivery and logistical system that also makes great brand sense. (Much like when FedEx purchased Kinko’s years ago in part because the brands of FedEx and Kinko’s aligned with each other so well – each were about piece of mind.) Amazon’s brand features a sense of discovery and convenience because it has everything you need that you can get easily. A key component of that is actually getting the physical items to the person who ordered them. That’s where the Prime Air planes fit in.

If Amazon can do it with the same or better efficiency as FedEx and UPS, why would Amazon do anything else?

Think about it. Amazon only has to do it as well as FedEx and UPS for this to succeed. That could be the catch because, if Prime Air can’t match that service level, the Amazon brand could be damaged significantly.

However, my money is on Amazon.

Apple Sirius XM would be a bad fit

The battle over market share in the automobile industry will be fought over technology, according to a study by Nielsen. With that in mind, CNBC’s Jim Cramer said an Apple Sirius XM acquisition would make sense so Apple can own more space in auto technology.

For the first point, consumers are already expecting a greater level of technology in their cars. Most of us have become accustomed to using Bluetooth to play music and podcasts from our phones through the auto’s stereo system. And GPS is now simply a table stake. It’s what you have to have to even be a car manufacturer.

But the stakes are getting higher because the differences between automobiles are small. They all last longer, get better gas mileage and have similar designs.

Now, though, the new expectation is that all cars will have rear camera mirrors, smartphone-linked media functionality, blind spot detection, surround view cameras and smartphone-navigation interfaces. If they don’t have those things, then you can’t be manufacturing cars.

That doesn’t even take into account the coming of driverless cars. Like most of our devices, we’re expecting our cars to be smart, just like our phones and, for some of us, our homes.

Apple Sirius XM would not fix Apple’s issues.

That’s why Cramer is proposing the Apple Sirius XM acquisition. Apple is reported to be working on a car itself. Even if that doesn’t happen (and I have my doubts), Apple wants to be more important inside the car than it is now. Just like any technology company.

Apple Sirius XM
Apple doesn’t need Sirius XM.

But Apple Sirius XM is a bad fit. While Sirius XM is adding subscribers, it doesn’t fit within Apple’s brand. Apple doesn’t have permission to own Sirius XM. Actually, more accurately, Sirius XM doesn’t fit into Apple’s brand of “Think Different.” Sirius XM is radio and, while that has value, it does not represent the true innovation that has made the Apple brand.

Admittedly, Apple has lost its way a bit in fulfilling its brand promise. The brand that Steve Jobs built set very high expectations that Apple hasn’t met recently. It just keeps trotting out new versions of the products it already has, while purchasing Beats in an attempt to goose Apple Music. What would it need Sirius XM for?

If I were Apple, I’d concentrate on new products, not just acquiring new properties in the hope that they will help. Any new innovation must come from Apple. Because the reason people buy Apple products and stand in line for the first run of them is because of the brand.

If the new product or service does not represent “Think Different,” than Apple shouldn’t do it. And Sirius XM is not different.

Should anyone sponsor the Denver Broncos?

When Sports Authority closed its doors due to bankruptcy, that left the defending Super Bowl champion Denver Broncos in a dilemma. What should they re-name Sports Authority Field at Mile High Stadium?

The Denver Broncos were left without a field sponsor and, now that Sports Authority has gone out of business, the team is igniting talks with potential suitors.

Denver Broncos
The Denver Broncos can sponsor its own stadium.

Tops on the list, according to some reports, is Papa Johns, the national pizza chain that has tied its wagon to both the NFL and founder John Schnatter. Considering its overall strategy, it would make some sense.

Or would it?

What would a brand get out of sponsoring the Denver Broncos?

As a brand strategist, I’ve always been wary of stadium naming rights. It can be expensive, for one thing. Costs usually run from $11 million (Levi Stadium near San Francisco) to $20 million (Citi Field in NYC) per year.

In the large scheme of things, especially when you consider how much brands waste on advertising, it’s not that expensive. But what do brands get out of it?

To me, the reason to be the name sponsor of a sports arena is strictly for awareness. There’s no other reason. I can’t fathom how a brand can create preference based on that sponsorship.

Of course, that kind of sponsorship doesn’t exist in a vacuum. It should be part of an entire marketing strategy. And, often, sports sponsorship comes from a local company with nationwide reach. (Such as Sports Authority, which was headquartered in Englewood, Colorado.) Brands consider it part of their community outreach.

What would Papa Johns truly get out of it? It doesn’t have an awareness problem and it already has an official alliance with the NFL. From a brand perspective, sure, it could be the name sponsor for the Denver Broncos without impugning on its brand. But it already has high awareness and reach so there’s no compelling reason for it.

Think about this. What did the sponsorship do for Sports Authority? It probably has less awareness than Papa Johns, but the sponsorship did nothing to create preference for its brand.

Five years into its 10-year deal with the Denver Broncos, Sports Authority closed up shop.

My advice to Papa Johns or any of the other brands considering the sponsorship: Don’t do it. The NFL teams are rich enough to sponsor their own stadiums.

Changing brands in today’s fast-moving environment

Embracing brand in an environment of change

The world is changing rapidly and with it so are the tastes and preferences of consumers. New products, brands and technologies are creating entirely new demands from consumers. New wants and needs emerge while others wane. Everything from Brexit to the eminent failure of the Airbus A380 to the global Pokemon Go craze demonstrates just how malleable the preferences of consumers of all stripes really are.

Taco Bell now serves breakfast and McDonalds serves breakfast all day. One can go into the store and buy hard cider, hard lemonade, hard root beer and hard cream soda. Some cars now drive for us, refrigerators take pictures of their contents and your bed tells you how well you slept the night before. Consumers today thrive on the newest and latest, and enjoy inundating themselves in noise under the guise of making things easier. The only constant is change.

Changing brands
Changing brands is a difficult proposition.

As the pace of change continues to hasten, what are companies to do? Should they be as malleable as the preferences of consumers? Should they be changing brands?

To properly answer that question, we have to once again remind ourselves of the difference between a company’s businesses and its brand. The business piece is easy. It’s what you do. In short, it’s the services you provide or the products you sell. Nike’s business is to sell athletic apparel and GEICO sells insurance.

Changing brands, the decision

Changing brands is a little more difficult. For some companies, brand is simply a logo. For the smarter company, it is the amalgamation of everything, including all operations. But that’s only part of the equation.

When brand is executed as it should it should be, the totality of everything an organization does comes in to play. This goes from R&D to customer service to sales and marketing to HR and everything in between. Understanding this is key to succeeding in an era of change, not just riding out the storm.

Brands too often today are responding to the nearly overwhelming changes in the market by drifting, often too far, from what has made them successful. We call this brand drift and, in a business environment where change is the rule of the day, it can be the wrong thing to do. Let the business adapt, innovate and change as market conditions demand organically.

This is not to say that good brands should avoid investing in monitoring their brand equities. Far from it. Brands should constantly be making sure, especially in times of great change, that their brands continue to be influential and resonate. Because in these times, consumers seek safe harbors. That is true of all human beings.

At Stealing Share, we create brands derived out of the beliefs and aspirations of your target customer, making it truly is a reflection of who your current and prospective customers are or aspire to be. If your brand does not truly do that, then changing brands is needed.

In this rapidly changing business environment, if you continue to do the good work of making sure your business has adapted to changing market forces, then we can help you create or modify your brand so that, no matter how much tastes change, your customers and prospects will remain true to your brand.

Will LeEco kill the Vizio brand? You bet.

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?

Vizio
Say goodbye to 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.