Archive for January, 2008

How the Sears brand might save Sears

Wednesday, January 30th, 2008

A company in trouble may sometimes reach a critical state where only its brand can save it. Customers still trust the brand, but don’t really connect with the business. What’s required in these situations is a radical new way for the company to interact with its customers, across new value platforms, so that brand trust is converted into business growth. Companies may even revise their business models to give more traction to the brand.

Saving Sears from the retail death spiral

Newsday columnist Ellis Henican watched the great Sears brand slump toward irrelevance, drifting without purpose amid eroding financials and profit warnings. He asked innovation consultant Fahrenheit 212 in New York for ideas on how Sears might escape the retail death spiral—and still be “Sears.”

The result: a solution of “lifetime ownership.”

For a monthly fee priced like an insurance policy, customers will get a lifetime’s worth of home appliances or lawn-care equipment or auto repairs – delivered, maintained, upgraded and replaced by Sears.

Yes, it’s retail as a service. Of course, it’s an idea, not a plan. And we all know that executing on business reality is far more difficult than coming up with clever concepts. But as clever concepts go, this one has legs. First, it provides new value platforms for customers, with lots of room for brand innovation, and brand interaction. Second, it opens up new avenues of value creation for Sears. The result could be a unique win/win.

Plus, it integrates brand, business and customers. That’s always a good sign. The holistic brand context of “Sears” emerges even stronger.

Brands are avenues of value innovation

This idea to save Sears parallels our core definition of brand: “Brands are avenues of value innovation in a creative engagement between companies and their customers.” There’s certainly value innovation in the idea, new avenues, and the possibility of many levels of creative engagement between Sears and its customers. Enough, maybe, for a “lifetime.”

For those who may not like this idea, there are other options.

Hat tip: Jeff Jarvis

Can today’s luxury industry create meaningful “eco-luxury” and “ethical-luxury” brands?

Wednesday, January 30th, 2008

At the recent International Herald Tribune Conference on Luxury there was renewed attention directed to the creation of “eco-luxury” and “ethical-luxury” brands. These terms might seem like a stretch (or even oxymorons) to some, but luxury brands, which currently base their appeal on exclusivity, status and celebrity, can’t afford to ignore well-informed, well-off customers who demand higher standards of environmental and ethical responsibility. These customers are fast becoming vital markets.

Glitz and glamor isn’t enough

For today’s luxury brands, it will take some real work to fit “luxury” onto the same value platform as “ecology” and “ethical.” That’s because ecology and ethics are radically different avenues of value creation than glitz and glamor. Thus, the industry needs a revised brand approach to take this next step. The good news is that iconic luxury brands themselves hold the key to a successful transition.

The risk: luxury brands disrupted from below

What’s clear to me is that the luxury industry must take this transition seriously. If it can’t forge a deeper connection with the values that underpin environmental and social responsibility, luxury brands face a real threat of being disrupted from below—by a new form of luxury that uses ethics and ecology to make “traditional” luxury brands irrelevant.

The luxury industry has been totally transformed once, from small, family-owned workshops into a global marketing machine. There’s no law that says it can’t be transformed again.

Luxury brands don’t have the luxury of time

One thing is certain: luxury brands are on the clock. They don’t have the luxury of time to slowly and opaquely evolve their commitments to ethics and ecology. They are now being held accountable for their actions, just like the Gap’s, Nike’s and Levis’ of the world have been for decades. The world is waiting to see how passionate and creative luxury brands can be when the human condition and the environment are at stake.

A luxury scorecard

Shortly before the IHT conference a unit of the World Wildlife Fund published an in-depth social responsibility scorecard on the top ten publicly traded luxury firms, ranking them on 50 criteria in four categories: environment, human rights, corporate governance and stakeholder relations. The results were not pretty. The highest corporate grade was a C+ (received by three firms), while two firms received F’s. The full survey is worth reading. For a summary, see the Financial Times account.

The bottom line is that luxury firms, paragons of product quality and taste, must now become paragons of social responsibility. From brands of world-class excellence, one would expect no less.

Not a masquerade

Granted, it will take definite brand innovation for brands traditionally associated with self-indulgent elites to become brands of ecology and ethics. For luxury brands to gain credibility in these areas, their commitments (and actions) must be the real deal, not a masquerade. This would rule out commitments richer in words than deeds. If luxury brands appear to be faking their new commitments, they may be viewed as counterfeit, potentially falling to the same level as the shameless replicas that haunt their own business.

Let’s now see what the IHT conference produced.

“We need to replace hollow with deep”

From the IHT report:

The luxury industry, a booming business for the last 20 years, is positioned well for continuing spectacular growth – Bernard Arnault, chairman of LVMH, predicted a doubling in the next five years to €300 billion – but needs to heed the growing ethical concerns, particularly of younger consumers in Western markets, industry leaders said Wednesday.

Arnault and the next speaker, the designer Tom Ford, also gave strong emphasis to what is being called “ethical luxury” – the products that define their owners or wearers as people with human and ecological consciences.

Arnault said the trend was increasingly noticeable among the younger customers in the more saturated markets of the West, who, he said, seek discretion, while consumers in emerging economies still favor the pursuit of the ostentatious.

I especially liked this quote from Tom Ford:

Ford summed it up starkly: “Luxury is not going out of style. It needs to change its style.” He added, “We need to replace hollow with deep.”

A model for “going deep”

A brand that intends to demonstrate deeper commitments to social and environmental issues will be expected to adopt specific program measures to define and achieve its goals. These would answer the question: As a brand, how can we lead in the effort to advance ecological and social responsibility?

At a minimum, typical measures would include:

  1. A statement of principles, or a charter,
  2. Goals and objectives
  3. Codes of conduct for the brand and its suppliers
  4. Executive responsibility
  5. A means to work with customers, partners and suppliers to achieve the new aims.

These can’t be produced overnight, of course, but they’re needed to make ecological and ethical commitments a core component of the brand—so the brand can make a (legitimate) stand.

For now, a shallow start

The quotations cited above indicate that the luxury industry—as represented by those quoted—may initially intend to “go deep” by a succession of fairly shallow steps. The emphasis seems to be more on appearance than substance.

For example, it appears that “ecology” and “ethics” are being framed as style attributes to the brands themselves, rather than practices deserving real commitments for the companies behind the brands. It’s as if the products would be tweaked to represent ecology and ethics—using design, naming, creative promotions and associated campaigns—while the industry itself carries on with business as usual.



Three approaches to brands

Wednesday, January 23rd, 2008

These are three bits from a presentation I’m preparing on different approaches to brands. They’re metaphoric illustrations, each one describing a certain type of brand model. (I now have ten comparative approaches and need to whittle them down to five.)

While I compare and contrast these in my presentation as if they were exclusive approaches, in the real world most brands tend to be a blend of several.

Brands light the way

The metaphor of illumination seems to find its way into all of the approaches, in one form or another. How it is used depends to some extent on whether the brand approach assumes a passive customer, to be captured and contained, or a proactive customer to be teamed with and freed from old constraints. Much of this depends on how the brand agenda is structured.

The Mushroom Theory of Brands

Keep customers in the dark and feed them ads. Sell them brands as flashlights.

The Beacon Theory of Brands

Illuminate yourself. Draw customers to your beam. Sell them concrete shoes so they can’t wander off.

The Enlightened Theory of Brands

Erase darkness with the brand. Teach customers to see. Sell them tools to journey forth.

Admittedly, I’m partial to the last approach. It elevates brands from company sales pitch to customer enabler, and (to my mind) opens doors to many market opportunities that the other brand approaches ignore. It certainly prepares a brand to benefit from customer initiative and innovation.

Although I make frequent sacrifices at the altar of our beloved patron saint, I reserve a top spot in the Brand Pantheon for Prometheus, too. Brand builders are light-givers. Channel him, and you won’t go wrong.

Photo credits: Mushrooms: inkblotstew — Flickr; Lighthouse: MumbleyJoe — Flickr; Prometheus: Heinrich Fueger — Wikimedia Commons

Managing risk and brand reputation

Sunday, January 20th, 2008

In its usual level-headed style The Economist analyzes the basic issues involved in managing risk and brand reputation, especially for global corporations. They address the subject as part of a special report on Corporate Social Responsibility (CSR).

This special report will look in detail at how companies are implementing CSR. It will conclude that, done badly, it is often just a figleaf and can be positively harmful. Done well, though, it is not some separate activity that companies do on the side, a corner of corporate life reserved for virtue: it is just good business.

Three layers of CSR

The Economist identifies three layers of CSR as it’s currently practiced in large corporations:

  1. Philanthropy — beginning with “checks for charities”
  2. Risk management — to ensure that screwups (or disasters) don’t occur
  3. Strategic opportunities — to use CSR for competitive advantage

Where do brands come in? In level three, of course. Brands and CSR are a perfect strategic fit.

Beyond an antiquated notion of brands

I totally agree with the Economist’s integrated approach to CSR, where it shrugs off superficial feelgood communications and focuses on CSR operations embedded in the business. However, The Economist seems to have an antiquated notion of brands, as if we’re still living in the 1950’s, when brands were static “assets” to be kept polished and squeaky clean lest any “bad press” diminish their value. This defensive and reactive concept of brands prevents the special report from addressing proactive brand strategies that may dramatically raise the bar for both social responsibility and profits.

Brands and social responsibility

“Brands and social responsibility” is an important subject that deserves its own in-depth report. CSR requires new attention to the supply chain, and to the brand chain. It also requires new brand models, and new brand approaches. That’s more than I can manage in this post, so I’ll end with some general comments.

  1. A brand is company potential X customer potential. When brands are understood in this context, the arena of “social responsibility” becomes a strategic brand opportunity, rather than a nagging and/or awkward problem.
  2. Brands managed as “assets” are dead ends. The purpose of brands is to create customers. This is in itself a socially responsible act.
  3. When brands are reduced to perceptions (“how the company is perceived”) they become little more than PR exercises, with a dash of design. This completely ignores a brand’s game-changing potential to create customer value.
  4. The brand mission is to grow the customers that will grow the business. In general, the more socially responsible the brand, the more opportunities it creates for customer growth.
  5. A brand platform is a social platform. The more socially responsible the brand, the more power it can generate through (and from) its customers.
  6. “Asset brands” sit on the shelf, or hide in the vault. They’re eventually bypassed by proactive, socially responsible brands that can run (and grow) with customers.
  7. The best way to be “socially responsible” is to embrace those strategies that advance customers, rather than merely aim to empty their wallets.
  8. In general, a brand cannot do any more for its customers than it does for its employees. Social responsibility begins at home.
  9. Brands stripped of social responsibility are low-performing brands. At the very least, they will be leaving money on the table.
  10. The best way for a brand to manage its reputation is to lead customers to higher levels of value. Brands that don’t lead get stuck in the muck.
Photo: Jamison — Flickr

Paper brands go up in flames

Friday, January 18th, 2008

There’s currently a serious recycling scandal in Japan involving major paper companies who grossly overstated the amount of recycled paper in their products. Paper products that claimed to contain 50% recycled material actually had between 5-10%. The Guardian has the story here.

Reputation in tatters

Brand trust, reputation and credibility are taking major hits in the companies affected.

The reputation of Japan’s paper industry lay in tatters today after the market leader, Oji Paper, admitted it had lied for more than a decade about the volume of recycled paper used in some of its products.

The revelation comes days after the country’s second-biggest paper company, Nippon Paper Group, admitted it had made similarly false claims.

One company president apologized for “mislabeling” his products. Another took responsibility personally, and said he would resign.

Paper brands

Paper brands (those that exist merely as labels or packaging) are probably the worst kind of brands. They delude a company into believing that it really has a brand, when all it really has is a shell—and perhaps a very thin one.


Monopolies make bad brands

Thursday, January 17th, 2008

Jeff Jarvis recounts the ebb of cable customer brand experience in All cable companies must die.

I never cease to be amazed anew at how cable companies think it is their job to make their customers’ lives difficult.

I challenge any cable executive to publicly go through the experience of being a customer at their own companies and tell me straight-faced that it’s pleasant and efficient and worth the money and effort.

He’s not alone. For an ongoing exploration of cable brand shortfalls, one may also visit Comcast must die.

Brand failure precedes business failure

Cable companies seem destined to repeat the utter brand failure of the recorded music industry. Brand failure precedes business failure. Music lovers switched from CD’s to digital downloads, and then flocked to Apple’s iPod and iTunes. Apple now reigns as the preeminent music brand. The major music labels continue their plunge.

What new company will rescue terminally frustrated cable customers?


The context of your business makes your brand

Thursday, January 17th, 2008

The Economist has a insightful report on how a billion-dollar industry can collectively fumble its brand, and watch a competitor walk away with its customers. The industry in question is the recorded music industry, which is now caught in a disastrous tailspin. The article isn’t about brands per se, but it shows how an archaic and dysfunctional business context can produce an archaic and dysfunctional brand—that sends customers elsewhere.

What is the context of your business?

Every company (or industry) must ask itself: What is the context of our business? Their answer to this question will define their effective brand. This may not be the brand they publicize in symbols and slogans, but it’s the real brand that customers deal with (or work with) on an everyday basis.

To develop this context, a business (or industry) must start by answering these questions:

  1. What unique forms of value do we deliver?
  2. How can we innovate to deliver more?
  3. How does this value enable customers to create more value for themselves?
  4. Where are we leading our customers?
  5. How can advancing our customers build our competitive advantage?

If the context of your business is money . . .

The music industry never asked itself these questions, ignoring the fact that in the 1990’s hundreds of technology companies were making answers to these questions the core of their business. The music labels believed that the context of their business was money, not customer value. Specifically, the context was to rake in as much cash as possible by controlling artists and customers through a well-oiled, and well-protected, profit machine.

A cramped and coercive brand

Unfortunately, the industry didn’t realize that its profit context was effectively becoming its brand. Sadly, it was a horribly cramped and coercive brand, one that alienated artists and customers alike. It was often perceived as a brand of avarice. It was so strong that it also blocked the industry’s ability to transform itself, and to innovate. Not surprisingly, customers left in droves. Eventually, artists began to look elsewhere, too.

From the Economist:

IN 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realized the game was completely up,” says a person who was there.

Toward a context of value

From a brand perspective, the context of a business (or industry) can never be money alone. Money, or profit, is a customer result. The context of a business is the form(s) of value that the business delivers to customers, and how that value engagement can help customers advance themselves, and the business.

This context of value lays a solid brand foundation. It makes brand building easier, and more effective, with customers, employees and partners.

Where the recorded music brand now thrives

What happened to the recorded music brand that the traditional music labels let slip away? It now thrives at Apple, reinvented, re-cast and rejuvenated. Apple had the brand vision to see where new technology could take recorded music, and customers, in new value engagements. Thanks to the iPod and iTunes, recorded music has never been more popular, nor a music brand more prevalent.

Photo: Mulad — Flicker

Mapping brand values (and deliverables)

Wednesday, January 16th, 2008

The Inglehart Values Map may give you some ideas if you’re ever involved in mapping brand values, and/or your brand deliverables, to different cultures, populations or markets.

I might use a different contextual scheme, based on new brand models and where brands intend to lead customers, but this map could serve as a conceptual starting point.

The Inglehart Axes

The axes used for this particular map are:

Horizontal: Survival Values — Self-Expression Values

Vertical: Traditional Values — Secular-Rational Values

For brand builders, the form of brand mapping employed would be strongly influenced by one’s brand agenda.

Sweden is the one

Given the ubiquitous quadrant bias in business diagrams, it appears that Sweden is the epitome of self-expression and secular-rational values. Perhaps, but a devout Lutheran farmer scratching out a living in a remote province may be as tradition-bound and survival-oriented as his suffering counterparts in the desolate African sub-Sahara.

However, if I were Absolut I’d say, “Yep. Looks about right.”

Thanks to Sensorytumble.