Archive for July, 2008

How Apple bet the brand—and won

Wednesday, July 23rd, 2008

Apple’s breakout success with its iPhone exemplifies how an elite company can, in rare and exceptional cases, “bet the brand” on a new product introduction and gain significant market advantage.

Betting the brand is for a select few

Most companies should never even consider “betting the brand.” They have too much to lose, and they’re generally not brand capable for such a high-stakes strategic action. For a small number of companies, however, betting the brand need not be a reckless toss of the dice. It can be a measured risk that favors the prepared brand—with the prospect of market-changing payback. It comes into play when such a company has no other choice but to leverage its brand to seize a compelling market opportunity. It either bets the brand or cedes strategic advantage to competitors.

What is “betting the brand?”

A company “bets the brand” when it risks substantial brand equity in a strategic move to unlock new customer value. In betting the brand a company believes that it can create a new kind of customer by introducing a new brand/customer context beyond the reach of incumbents. The risk in betting the brand is that a failure to achieve brand objectives may cause brand-wide collateral damage.

When a company “bets the brand” it is betting its proposed brand context against the reigning brand context of incumbents. It attempts to raise customers—dramatically—to a higher plane ofexperience. In this process it uses the “chips” of its brand equity. These “chips” are much more than “brand assets,” however, as we’ll see below.

A “bet the brand” scenario may involve changing the brand game.

Don’t bet a weak hand brand

First off, we should reiterate that it’s extremely difficult for a company with an average brand to bet the brand and win. It most likely won’t have the cards. Generally, it shouldn’t even try. Let safer strategies prevail, as discussed here and here.

This caveat would also apply to brands modeled as communications. While these may be rich in stories and images, they typically lack the platform depth (and the will) to raise customers to the next level.

How brands can stack the odds in their favor

If a brand-capable company desires to seize an opportunity with a high-stakes brand initiative, its first priority is to stack the odds in its favor. It will need to insure that its brand has definitive control of both its present context, and of the new context it intends to introduce. This means (at least notionally) that the brand evokes a superior customer model in both areas.

Fundamental steps to improve such a company’s odds include:

  1. Architect the brand to create customers
  2. Structure the brand as integrated platforms to advance customers in the direction you’re headed. (You want customers already on the way to your new promised land.)
  3. Build the brand as an enabler for customer innovation, rather than an “asset” or static icon.
  4. Adopt an extensible customer model so that the seeds of “the next big thing” are present in the customer of today.

The Key Posts section in the right column may have some useful links.

A fresh look at “brand equity”

To understand the process of betting the brand we need to extend the concept of “brand equity.” I define brand equity as a company’s strategic ability to create customers. This is an activist concept of brand equity. It is quite different from an accountant’s view, where brand equity mirrors share value, or the conventional concept that brand equity consists of a company’s many “brand assets.” In my view, these conventional concepts are too static. They often exclude customer initiative, and they can constrain brand innovation by ignoring the creative and qualitative elements that can make customers come alive (which is the purpose of brands in the first place).

I prefer to consider brand equity as a force, not an asset. It is the strategic firepower of a brand. And it is primarily composed of brand platforms for changing markets.

As I see it, a billion dollar brand may have multiple portfolios of brand assets, but if those assets are not configured into platforms for creating customers—and changing markets— their strategic value is limited.

Brand platforms power brand bets

A brand is vertically integrated value. When property constructed, a brand is a customer-creating machine made up of platforms of integrated brand elements, all geared to advance the customer through a singular brand vision. (Apple is a good example here, BTW).

Brand platforms give a company the greatest possible leverage in the event it makes a strategic brand bet. In this regard, the best brand platforms are customer platforms. They enable customers to advance themselves, and to add value back to the brand in the process. Proactive customers create more brand equity than passive ones, a crucial advantage when the chips are down. (Note how the iPod brand increases Apple’s market leverage, while Microsoft’s Zune brand, with a retrograde customer model, does nothing for Microsoft.)

The iPhone example

The weblog counternotions does a nice job of enumerating the major challenges that Apple faced in bringing the iPhone to market. (It lists 15 high-stakes issues.)

For Apple, bringing the iPhone to market was one gutsy move: a bold stroke to carve out a strong, sustainable position in a mature market controlled by powerful handset makers and entrenched (dominant) carriers known for their choke-hold on the industry. Apple’s only real option was a blockbuster product that could change the mobile paradigm—with a new brand context of the user.

Apple’s brand bet with the iPhone

It’s fair to say that Apple was betting the brand with the iPhone. An Apple mobile phone was widely expected, with speculation rampant. Anything less than a breakthrough innovation would be grounds for disappointment. Because the iPhone occupies a prominent plank in the strategic customer platform developed by Apple (integrated hardware, software, OS, user interface, applications, services and a new model of digital user), an iPhone failure would be far more profound than that of a single device that simply didn’t pan out. It would have serious repercussions for Apple’s ability to create new customers in the direction it’s heading.



New life for tired brands

Thursday, July 17th, 2008

What should companies do with brands that still retain valuable equity, but no longer generate expected sales? A growing market for brand builders is to develop strategic revival programs for such brands. A case in point is Booz & Company, which has announced a new service to help companies regain “new life for tired brands.” It’s “a rigorous, data-driven approach to brands” that helps companies decide whether to retire a dormant brand, or try to revive it.

(I have to admit that I did a double-take at the phrase, “tired brands.” It echoes the famous “tired blood” campaigns for Geritol®, the iconic tonic of old folks. Geritol® is now kind of a dormant brand itself, but it did have its frisky moments 50 years ago.)

It’s not the brands that are tired

Of course, it’s not the brands that are tired. It’s customers who are tired. They are tired of mediocre, do-nothing brands. That’s why they ignore them. The real brand challenge is to provide new life for tired customers.

A balance of analytics and emotion

In reviving a “dormant brand” one must balance analytics (on the marketing side) with the emotional and qualitative elements on the brand/customer side—as the Booz approach recognizes. To revive a brand means to revive a customer, and that calls for a fresh look at where customers want to go, and how the company can take them there. A piecemeal “brand refresh” does little. The goal is a strategic revival with new pathways where the brand can create and grow customers. Or better yet, change the brand game.

Choosing the right brand model

In any brand renewal effort, it’s also important to select the right brand model. An inappropriate model may fail to recognize (or capture) potential brand opportunities. For example, a traditionalist (i.e., old-fashioned) approach might position the brand as a stylized sales stimulant. That’s a messaging model typically geared to produce conventional media campaigns for a passive “audience” of customers—who may soon tire of it. A more productive model would be to make the brand a customer enabler, powered by interactive and collaborative brand programs that engage customers in new dimensions.

The brand as a tool to revive customers

If you think of the brand as a tool to revive customers, and to help them get where they’re headed, you may find that customers themselves become proactive players in the revival effort—a very good sign indeed.

Photo: wallyg — Flickr

Totalitarian brands

Friday, July 11th, 2008

[Updated June 22, 2011. Original post July 11, 2008.)

An article that every brand builder should read is Branding Youth in the Totalitarian State in Design Observer. The article is based on Steven Heller’s 2008 book: Iron Fists: Branding the Totalitarian State.

The article raises all sorts of interesting questions about the relationships between propaganda and brands, and on the sometimes “totalitarian” nature of brands themselves. As I see it, the key questions are as follows:

  1. Are brands a form of propaganda?
  2. How are brands different from propaganda?
  3. Are the best brands “totalitarian” in concept and in execution?
  4. Is every brand builder a closet totalitarian, inventing an all-encompassing new world order for customers? (Behind every logo is a torchlight parade.)
  5. What are the strategy downsides of brands conceived and executed as propaganda, or as “totalitarian?” What other brand models could disrupt them?

I’ve also discussed some of these elements in the various posts referenced  below.

Definition of “totalitarian” brand

For this discussion I define a “totalitarian” brand as follows: “A totalitarian brand is a brand that totally subsumes the customer into the brand, erasing the individual and the individual’s capacity for proactive, independent action.” In other words, in a totalitarian brand approach the brand wants to impose its will upon the customer. The customer becomes a creature of the brand. The brand intends to “own” the customer—body, mind and soul. ((And wallet.)

The customer as “true believer”

I would also suggest that a totalitarian brand approach is one that wants customers to be “true believers.” The brand seeks mindless followers—perhaps because mindful followers might see through it. I would define “true believer” as a one-dimensional person fanatically devoted to a cause, an organization or to another person. A true believer is a follower with a capital “F.” (You might also substitute “fan boy.”) In the eyes of the true believer, the leader can do no wrong. And thus, true believers add no value to the brand. They don’t interact with it to make it better. In fact, they typically magnify its shortcomings. A brand with true believers typically doesn’t innovate, or innovates narrowly, and may be its own worst enemy. True believers are not strategic.

True believers and “yes” men

It seems to me that a brand of true believers will be just as effective as a company of “yes” men. In other words, not very productive. Eventually both become an anchor, the opposite of a game-changing force. (And it may be that true believers are the products of yes men, who are simply cloning themselves.)

Two brand models: containment vs. liberation

As part of this discussion we can assess two different models of brands:  a persuasion or propaganda model, and a contrasting liberation model. A persuasion or propaganda model would try to shape customer thoughts and feelings so as to capture, contain and control customers, to keep them in place so they continue to be “loyal” to the brand and purchase the product at desired price points.

In contrast, a liberation model of brands aims to free customers to be more proactive for themselves, on the premise that greater sales will flow from a more proactive and productive customer culture, where customers are active players in product development rather than a passive audience. This model assumes that a company can gain market advantage via product and service innovations that create a more proactive culture, where customers leave behind old paradigms. It’s a method that uses customer initiative to disrupt competitors. Apple shows that it can be done, and quite profitably, too.

Some related posts along these lines:

Customers as puppets—or proactive partners?

The “totalitarian” approach to brands might also be contrasted to an “innovation” brand approach. In other words, do we want customers as puppets (controlled in the totalitarian model) or as proactive partners who move the brand forward? The puppet approach calls forth the salesman’s dream of “shooting fish in a barrel.” The drawback to the puppet approach is that it locks the brand in place and makes the brand incapable of the innovations that could take customers to the next level, leaving competitors in the dust. When the next level appears—and it inevitably will—customers move on, and the brand is left holding the strings.

Brands of puppets

Brands that position their customers as puppets eventually become brands of puppets. In terms of “total customer control” that may be a totalitarian ideal, but it doesn’t hold much future for the brand. I discussed this issue in Position the customer, not the brand. In essence, the puppeteer shares his fate with the puppet. Creating brand dependencies often means that innovation is placed on the back burner, leaving the brand further exposed to disruption.

Social media and totalitarian brand strategy

How does social media affect the concept of a totalitarian brand? Good question. Social media is bottom-up, whereas totalitarian brands are classically top-down. It certainly looks hard for traditional propaganda to work in an open social media setting. But (closed) Facebook now has 500 million members, and is becoming an alternative to the (open) Web itself. Is it possible for Facebook to be a totalitarian brand? Or is Facebook simply an all-inclusive platform where advertisers can have total access to customer data? It may be that Facebook is just the barrel, and Facebook users are the fish.


NOTE: See also the Youth under fascism site, which is the source of the poster above.

Brands and interaction design

Wednesday, July 9th, 2008

Martijn van Welie has written useful guidelines to help interaction designers deal with brands in “Brand behavior in interaction.” This is part of a longer series he’s doing called “Thoughts on interaction design.”

I’ve addressed the same subject from a slightly different perspective in Interaction design: the new key to brands.

Brands as interactions

If brands are interactions, then interaction designers will play an increasingly important role in brands themselves, especially as brands migrate to digital platforms like the iPhone. Their talents will be needed to make brand interactions amazingly productive for companies and customers, with solutions that address:

  1. How to maximize customer autonomy and freedom, through the brand
  2. How to make the brand a “second skin” to customers, one that is also personal, portable and persistent.
  3. How to foster customer participation and collaboration in building the brand, on an equal level with the company
  4. How to create strategic brand communities, value nets and “creation nets.”
  5. How to source brand innovation at the edge
  6. How to ensure that the brand delivers value the customer can use
  7. How to intensify and enrich the brand engagement

Interaction designers as the rock stars of brands

I’ll still keep my original prediction that interaction designers stand a great chance of being the new rock stars of brands. Their skills can unleash myriad new ways for brands to create customers, widening the gap between brand winners and losers.

NOTE: I originally dashed off this post while getting ready for a flight, and have now had the time to add to it since it first appeared.

How Google builds an education brand

Wednesday, July 9th, 2008

Don’t be too surprised if in five or ten years the US educational establishment runs on Google, from the neighborhood school to the college campus. Google teams are hard at work making Google the digital platform of learning. Through these efforts, Google is positioning itself to be a preeminent brand of education. You may physically attend Harvard or Yale or PS 27, but you’ll spend most of your time there inside Google applications. In practice, you’ll be going to school in Google.

A Google brand play

The elements of Google’s emerging education brand are set forth in Google for Educators. This initiative is a Google brand play, taking shape before our very eyes. (A brand, let’s not forget, is a collaboration in context that creates new customers and new customer value.) Google is building programs to create customers in teachers, and in students. To build its brand it doesn’t need glitzy campaigns, high-octane messaging, costly Super Bowl ads, celebrity endorsers, iconic symbols, or throbbing slogans. This is a Google brand built from the bottom-up, through customers themselves and their communities.

A brand of deliverables, not promises

Significantly, Google is building its education brand through what it delivers, and by what it does, rather than by what it says or promises. Bands are deeds, not words, and brands rich in deliverables have the inside track to be recognized as brands of integrity and trust.

In education, integrity and trust are fundamental.

Google in the classroom

To see what Google is up to in the education market, look at the links in the above-noted Google for Educators site:

Building the integrated brand

One way to describe a brand is to call it “vertically integrated value.” Google already offers a broad scope of integrated tools for learning, incorporating Google search, Google Docs, and many other applications. These are the building blocks of an integrated brand. Basically, Google is covering everything a student or teacher would want to do in the collaborative learning process, made available from single drop-in cloud.

Students can take notes in Google, write essays, share and collaborate, create special projects, and communicate with blogs, podcasts and videos. Eventually, they will take their tests in Google, too, with stealthy algorithms to keep things honest.

And yes, there will soon be “Google Certified Teachers” who successfully complete the Google Teacher Academy.

A Google brand platform for education

What Google is building with its education initiative is a brand platform. Here is how I define that term:

The brand platform is a structure of integrated brand components architected to create focused customer growth. As a platform, it: 1) serves as a common foundation for brand program applications; 2) allows for greater efficiency in brand program development via shared elements; 3) leverages context and content across the brand; and 4) enables customers to extend the brand through bottom-up brand innovation avenues.

You can see how all these pieces are being fitted together. And you can foresee the pieces to come.

Photo: jisc_infonet — Flickr

At GM, brands are part of the problem

Tuesday, July 8th, 2008

The AP reports that General Motors is now mulling the sale of struggling car brands Saturn, Saab and Buick in addition to its plans to unload the Hummer brand. A while back I noted the Hummer’s brand strategy problems. The other three brands are in a similar predicament: too much company, too little customer.

A Saturn brand that went nowhere

Of all these brands, Saturn is the most painful failure. It was launched with great fanfare in the early ’90’s as a Japanese import killer, a high-quality, high-value brand aimed directly at Toyota and Honda. The Hal Riney ad campaign that got it off the ground was a classic. Yet, after a few years GM neutered the brand. It’s been an afterthought ever since—while Toyota and Honda are stronger than ever.

A hefty dose of kaizen in the Saturn brand might have made a difference.