About 45% of the nation’s commercial air fleet is equipped with in-flight wireless Internet, with several airlines, including Virgin America and AirTran, offering the service fleetwide, according to In-Stat.

The nation’s airlines collected about $155 million in 2011 from charges to use onboard Internet and are expected to collect $225 million this year, said Amy Cravens, a senior analyst for In-Stat.

Coming soon: Hotspot Airlines

Brands that help us be more productive and proactive have signal advantages over brands fashioned as stylized sales stimulants. In planning a trip we’ll be searching Kayak and the rest for Wi-Fi flights. We’re looking for Hotspot Airlines, no matter what the name and livery say on the side of the plane. And not just any Wi-Fi mind you, but high-speed Wi-Fi at reasonable cost with the least amount of airline baggage dumped into the connection.

Fly a lot of miles and earn a free Wi-Fi upgrade. That would be nice.

A new kind of airline brand experience

The prevalence of onboard Wi-Fi changes the nature of the airline brand experience. With affordable Wi-Fi a flight becomes an online experience more than an “airline” experience. We arrive at our destination totally refreshed, having engaged ourselves for hours on end aloft, rather oblivious to the sardine can that got us from point A to point B.

AOL as a brand of inertia

AOL would seem to be a brand of inertia based on this recent piece in the Economist. Its antiquated dial-up Internet service is a dead end, but AOL depends on these customers for revenue, including a “substantial number” paying for a service they don’t really need. The old AOL business is profitable, but the old brand ethos hasn’t helped AOL reinvent itself, which it desperately needs to do.

Brands of inertia aim to harvest customers, not create them

AOL would not be alone as a brand of inertia, of course. Some companies never feel the need to innovate if they think they can make easy money by freezing the brand—and their customers—in time and space. As brands of inertia they aim to harvest customers, not create them. Customers are the cash cow, and the brand is their corral.

Dialing down the brand

Brands of inertia often dial themselves down to the least demanding (or least informed) customers, those willing to pay for the same product year after year out of sheer habit (or sheer ignorance). As the Economist notes, some customers may not realize that they’re paying for a marginal product or service. They don’t know any better, but as far as the brand is concerned, that’s perfectly fine. It’s money in the bank. Brands of inertia don’t rock the boat. And they don’t like ideas that rock the boat.

A brand of inertia condemns the company to inertia

There’s a fatal downside to brands of inertia. They condemn the company to inertia, stifling creativity and innovation, especially on the customer front. Opportunities are grasped elsewhere. Good ideas go elsewhere. Innovators (and employees) go elsewhere. Eventually customers wise up and flock to better brands.

Definition of “vertically integrated value”

A brand developed as vertically integrated value is one where company, products, services and brand all operate in a singular, clear and coherent context to make the customer better off. It’s the brand that integrates the “company context” with the “customer context.” And it’s the value delivered that gives the brand real traction.

Creating vertically integrated value

How does a company go about creating vertically integrated value through its brand? We can identity four basic steps.

First, it helps to understand that “the brand goes in before the brand goes on.” We produce brand value from the vision, talents and dedication of company employees. We don’t tack on a “brand” just before the product is ready to ship. The brand is a method to create value from the very core of the business. (In the big picture, the brand is company potential X customer potential.)

Second, and most critically, we structure the brand as a customer-facing application. This helps cultivate and focus the company’s creative energies into deliverables with the desired strategic impact. (We want to create customers beyond the reach of competitors—in ways where our customers can become our most powerful competitive weapon.)

Third, we employ a value-based brand model. See here and here.

Fourth, we integrate the brand mission with the company’s principles of operation.

Vertically integrated value at Amazon

Amazon provides us with a current example of the brand as vertically integrated value. In this  interview of Jeff Bezos by Steven Levy we can observe how Amazon is structuring its products and services to work closely together within a singular customer context, in a tightly focused brand operation. The charts in the article are especially revealing.

Amazon’s vertically integrated brand experience

Amazon’s brand challenge is to deliver its vertically integrated value as a seamless and satisfying brand experience while constantly reinventing itself. Amazon has grown from “online bookseller” to become an online seller of everything, a hardware manufacturer of digital readers and tablets, a publisher, a digital streaming service for music and movies, a movie studio, and a digital cloud storage and infrastructure service for startups and corporations. That’s a vast territory for a brand to cover. It could have been disjointed, inefficient and clunky, but Amazon seems to have made it click.

See also:

• The simple secret of Apple’s brand strategy
• Brands as collaborative strategies

The brand as a method to create value

Strategically, we want our brands to advance our customers beyond the reach of competitors. Being strategic, we design this process so our customers will also be able to add value back to the brand, through their initiative, insight and innovation. Our goal is to partner with customers to make competitors irrelevant in the new context we’re jointly creating. (Two against one being strategically superior to one on one.)

This means that your brand is much more than a communication tacked on to the product with bells and whistles. It’s a method to create value, a creative discipline far closer to innovation than to the fluff stuff of advertising or PR. Specifically, it’s a method of engagement that advances customers where competitors can’t follow. For example, Apple makes some wonderful products in the iPod touch, iPhone and iPad, but Apple’s real brand power lies in the systematic and seamless experience that it delivers to customers: an integrated operating system, iTunes, apps, App Store, Apple Store and perhaps soon the iCloud, all of which combine to take Apple customers to a new level of being and doing. Once Apple has advanced customers to this level, why would they settle for anything less?

Reference posts

Here are a few reference posts that expand on the ideas above:

• How brands create customers
• Value-based brands: brand innovation
• Adios branding, your day is done
• The brand goes in before the brand goes on
• Brand strategy: create your entire brand as a customer-focused application

While waiting to enter La Musée d’Orsay in Paris I noticed some interesting shoes on a young woman in the next line over. The shoes were shaped like . . .  piano keys! But wait! Those were socks, not shoes. The shoes were cut so low that they served as platforms for socks, giving the wearer great latitude in style combinations. In a role reversal, the shoe was an accessory to the sock. With one pair of low-cut shoes like these you could style-out with 10 pairs of eye-popping socks, giving the effect of 10 pairs of shoes. Plus socks offer so many more design possibilities. And they’re cheaper. And with statement socks like these you could do a nifty counter-point with a scarf: theme, color, etc.

“Footwear” redefined

In a nutshell, making the shoe an accessory to the sock redefines “footwear.” The “foot” now includes the whole foot. By providing less shoe, you create a larger product canvas, and a bigger market.

Brand lesson: create opportunities for customers

If I can derive a brand lesson from this shoe-as-accessory-to-the-sock example it would be this: develop your brand to create opportunities for your customers. Instead of offering a range of static choices, give them dynamic platforms so they can create and re-create themselves anew. By opening new dimensions for them, you can open new markets for yourself.

Ron Johnson, the Senior VP of Apple’s esteemed retail operations, is leaving Apple to be CEO of J.C. Penny. Johnson came to Apple from Target, so he’s no stranger to the world of traditional retail. Since J.C. Penny is already in the midst of a long rebound from its darker days a decade ago, Johnson can fine tune what’s in progress or he might think big and consider J.C. Penny a platform to reinvent the department store itself.  (He was certainly in the reinvention business at Apple, and at Target before then.)

Reinventing the department store—and its customers

If Johnson chooses the latter course he faces an enormous brand challenge: how to reinvent J.C. Penny in a new context of value, and to do so in a way that reinvents department store customers as well–all without grossly upsetting proven price points.

To quote Johnson from the J.C. Penny news release:

“I am thrilled to have the opportunity to help J. C. Penney re-imagine what I believe to be the single greatest opportunity in American retailing today, the Department Store.”

That’s the perspective it will take. Department stores can be much more than “departments” of inventory. I was in Galleries Lafayette in Paris recently and I was amazed at how energized it made me feel. It was a department store where the departments were not in-store boundaries but deeper human adventures. Each department stood for something inside the customer. Let’s see J.C. Penny do some of that.

The department store as a customer-focused application

From his decade at Apple and its apps Johnson might consider the J.C. Penny brand to be a customer-focused application itself, one that creates a new class of value, and new customers to match. That’s a key method of integrating the product, innovation and customers along a central brand axis.

Update: Steve Jobs and Ron Johnson on developing the Apple retail experience.

Photo credit:  Azt3r1x — Wikimedia Commons

Brands that lack strategy often position themselves as lures to catch customers, as if customers were fish in the sea and brands were a higher form of trolling, the perfect shiny bait with fetching face and hooks aplenty. Alas, a brand is not a lure. And customers aren’t fish.

Customers aren’t fish; brands aren’t lures

Brands fall into a strategic trap when they cast themselves as lures. Brands that try to catch customers like fish can’t create them as brand partners, and creating customers is what confers strategic advantage. Through your brand you create the customers that will drive the business forward. By developing your brand as a customer-focused application (here and here), the customers you create can help you create new markets. They return value back to the brand. By freeing customers from the hooks of mediocrity, the hooks of convention, and the hooks of competitors, your brand can turn them into the proactive partners you need so that you flourish together.

And brand touchpoints aren’t hooks

Please note that just as brands aren’t lures, brand touchpoints aren’t hooks. Brand touchpoints are discrete brand/customer interactions that deliver (or co-create) value. We carefully craft them in strategies to advance  customers beyond the reach of competitors—by delivering uniquely meaningful experience that competitors can’t match. The best touchpoints are transformative: they upgrade the identity of customers to new levels, so there’s no turning back to lesser modes of existence. Bottom line: the goal of touchpoints is to move customers forward, not to catch them with hooks. (See: How to define brand engagement.)

The mission of a brand is to teach customers to fish

The fishing metaphor is an apt one for brands, however—if we use the right context. The famous Chinese proverb gives us a clue:

Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.

Ergo, we use the brand to teach customers to fish. “Fish” metaphorically, of course. The brand mission is to free customers from constraints, and to advance customers farther and faster than they can advance themselves. We develop brands to enable customers to be more self-actualized, more proactive, more productive, more creative and to be more engaged with life. The more a brand enables its customers, the more the customers enable the brand.

Teaching customers to fish changes the game

When we teach customers to fish we are changing the brand game from all those mediocre brands who position customers as fish, and who design their brands as lures. Instead of the brand being a (one-way) hook, it becomes a cultural enabler. In effect, we are changing the brand game by changing the customer. Customers can repay us many times over with new ideas, experiences  and initiatives that we can fold back into the brand.

Image credit: Wikipedia

How does the application approach for brands differ from traditional brand approaches?

In the application approach the brand is a customer enabler. It incorporates dimensions of innovation that can move customers forward by making them better off. It does so as part of a joint venture with customers, an act of teaming rather than an act of selling. This is quite different from conventional brand approaches which treat brands as a structure of meaning to be communicated, or as a persuasion package to influence how customers feel and think.

Why is the application approach better?

The application approach incorporates a complete brand/customer strategy. The brand goal is to make customers better off through innovations that advance customers beyond the reach of competitors. Example: iPod and iTunes advanced customers beyond the CD, and beyond less integrated music players. They moved their customers to a new market space (category) where competitors couldn’t (easily) follow—and, where life was much, much better for customers.

The application approach also anchors the brand in company operations. We have one brand approach for company vision, values and operations that we leverage into the customer sphere. The brand is the backbone from the lowest employee to the highest customer.

What role do ad agencies play in the application approach?

They become app agencies.

Why must the brand be geared to innovation?

Gearing your brand to innovation can confer strategic advantage. Your brand helps deliver value that advances customers into new realms (markets) where competitors can’t follow. You make customers exclusively better off. If your brand can’t innovate, you are condemned to ad campaigns to make your brand “work” —while your customers are going nowhere. Eventually, the only way they can move forward is to leave.

Aren’t all brands applications of some sort?

Yes they are. Most brand programs are applications. Customer service is a common brand application. Community programs can be applications, too. These will be piecemeal and inefficient applications, however, unless the entire brand is developed as a focused application to move customers forward. The good news is that your existing brand infrastructure may facilitate the transition.

What about brand relationships?

In the application approach, a brand creates customer relationships through its structured customer interactions. These relationships become sustainable when the brand delivers value that moves customers forward. They are more strategic compared to relationships formed using the brand identity model, where what the brand “is” (or what it represents) forms the basis of relationships. Thus, a brand trying to become an “icon” is at a disadvantage to a brand developed as an application (other things being equal.) The icon is fixed. The application moves forward on customer feet. It can explore new types of brand relationships because it’s made to be iterative, collaborative and open to prototyping.

What about brand experience?

The application approach offers the best platform for creating strategic brand experiences. You will have a single, unified brand application that runs the business and makes customers better off.

Can the application approach scale the brand to new levels and new markets?

Yes. That is one of its primary benefits. It is designed to scale. And it can pivot.

Does the application approach entail a different definition of brand?

Yes. It defines the brand as a method of creating value. The brand goal is to create new forms of customer value that advance customers into new market spaces that competitors can’t reach. As a method for creating value, the brand equation is Company Potential X Customer Potential. The brand works as a single, integrated and systematic method to optimize company performance and customer performance. (A philosophical tenet of the application approach is that a company is only as good as its customers.)

Does the application approach change the context of the brand team?

Yes. The brand team acts more like developers than communicators. Instead of “building” a brand as a structure of meaning to be communicated, we develop it dynamically as an enabling platform, through strategic acts of innovation, in concert with customers. The brand team works shoulder to shoulder with product teams through product development and delivery. Ideally, the brand team leads product development. Through the brand team product development becomes customer development.

How does the application approach treat brand identity?

This is a very interesting question. We can view the brand as an application of the brand identity, and/or we can view identity is an application of the brand. It can be both, in a dialectic. Personally, I would put identity on a 3 X 5 card and put brand applications on a global canvas. Nordstrom gives us a clue. So does Zappos. Identity is a form of leadership. It must point the way. It can’t be an idealized projection decoupled from reality, like BP’s ill-fated “Beyond Petroleum.”

Our company believes that brands are perceptions. Why should they be “applications?”

If your brand is a perception, then you’re in the perception business. Your employees are being paid to make perceptions, not valuable products and services. As a perception, your brand will become a creature of campaigns, just like millions of others. It won’t create value. It won’t innovate. Your customers will reward you with the perception of loyalty. Frankly, your brand deserves better (and your customers, too).

Look at it this way: consider your brand a joint effort between you and your customers to out-wit, out-deliver, out-perform your competitors. It’s the real deal, not a “perception.”

What’s wrong with building a brand as a belief system, or as a total structure of meaning?

Nothing, really, except that those belief systems and those structures of meaning tend to be monolithic and inert, and are usually designed to lock customers in place. They’re often attempts to bind customers to a brand that can’t innovate. To survive, they require progressively irrational customers, a risky bet. They’re often a sign that innovation in the industry has stopped, and that only mind games remain for incumbents. Hence, we see these approaches in mature industries whose products resemble commodities in brand wrappers. These industries are ripe for brand disruption.

What is brand disruption?

Brand disruption is what the application approach is all about. It is the process of making customers exclusively better off in a new brand context beyond the reach of incumbent brands. A disrupting brand runs off with the customers of incumbent brands. It throws open the gates of the corrals where incumbent customers have been trapped for “branding.” Customers escape to the better brand context provided by the disruptor. And this context is real. It’s the difference between being subject to a monarch in a kingdom and then arriving in a republic of democratic laws where one is free.

Whole Foods is a pretty good example of the application approach to brands. It disrupts KFC, among others, by being an application of healthy living.

Our brand strategy is to capture, contain and control customers so they keep buying our products. That’s Marketing 101. Why is the application approach better?

The application approach is better because it’s strategic. The problem with the “capture, contain and control” theory of brands is that it locks customers and the company in one place. When a brand corrals its customers it imprisons the company in the same corral. The brand traps itself. It becomes a stylized sales stimulant that’s essentially static. If it’s an icon, it’s an icon with feet of clay.

In the application approach we keep advancing customers so we can progressively raise the brand bar, leaving competitors—and their corrals—in the dust. (For more information, see:  Some brands go medieval on their customers.

Is the application approach better at collaboration?

Yes. In the application approach the brand collaborates with customers to create new customer opportunities, instead of attempting to hold customers in place with emotional levers. Customers thus become active players in re-creating their lives; they’re not passive “targets,” and they’re not an “audience.” Through this process, customers become a brand’s greatest competitive weapon–not for their static “loyalty” but for their ability to help create new value that creates new markets.

Our CEO says our brand is an application to boost sales and make money. What’s wrong with that?

Your CEO is reducing your brand to a stylized sales stimulant. He thinks of it as “soft” advertising. This is a weak approach because it decouples the brand from value creation (via innovation), it doesn’t leverage the brand internally, and it disregards the power of the brand as a tool for customer collaboration.

We have a branded app for the iPhone and for Android. That’s an application approach, right?

Not really. A typical “branded app” is a poor excuse for an app, and a worse excuse for a brand. It’s usually little more than website features fluffed up with a new interface and maybe a game or contest for “interest,” as if the brand itself is boring. That doesn’t cut it. What you need are personal brand applications.

We’re on Facebook and Twitter. Can social media be our application?

No. Facebook and Twitter are applications of Facebook and Twitter. Your brand is a tenant on their sites. Besides, brands typically use Facebook and Twitter as promotional platforms. A sales platform is not a brand platform.

What if we use Facebook and Twitter to help our customer service?

That makes sense. In that case you would be using Facebook and Twitter as partial platforms for your customer service applications. Responding to immediate feedback can improve customer service. However, Facebook and Twitter are no substitute for the larger application that is your brand.

It seems like software companies have a big advantage in the brand application approach.

Yes they do. To control your own brand destiny you can’t let their applications outflank you. You have to be every bit as application-focused as they are.

The amazing success of Apple’s category-creating iPad raises some important brand strategy questions for high technology companies. What makes a “next-generation” product that creates its own category? Can traditional brand methods power a next-generation product leap? Or do we need a “next-generation” brand approach, with a new form of brand and brand strategy? Lastly, does Apple’s impressive brand achievement (Mac, MacBook, iPod, iTunes, iPhone, iPad) suggest a new brand strategy template?

These are critical times for brands in the digital era

These are critical times for brands in the digital era, as brand strategy and innovation strategy converge. Brands can no longer be treated as add-ons after the fact. They need to be baked in from the get-go, as methods of creating new customer value through the innovation process. As such, brand strategies can help power a sustainable first mover advantage. Brands late to the party can be reduced to peripheral players, on the outside looking in. Luckily, we can observe a “next generation” and “new category” transition first hand with the emergence of the iPad. The “Post-PC” iPad can teach us valuable brand lessons.

Is the iPad a next-generation product?

We can begin by asking, “Is the iPad a next-generation product?”  Writing in reference to the iPad as a “Post PC” device, Horace Dediu identifies key factors in  next-generation computer transitions, based on the historical computing transitions of Mainframe > Minicomputer > Personal Computer > Tablet.

He concludes:

I would suggest that the definition of a new generation of computing is that the new products rely on new input/output methods and allow a new population of non-expert users to use the product more cheaply and simply.

Consequences of moving from one product generation to the next

Dediu then enumerates the consequences of moving from one product generation to the next:

1. Consumption increases
2. Skill required decreases
3. Support required decreases
4. There are new applications and use cases
5. The economics are not favorable for incumbents
6. The economics are favorable for new entrants
7. The older generation slowly fades through diminished growth but never disappears.

It would seem that the touch-screen digital tablet exemplified by the iPad certainly marks a next-generation product.

The iPad as a “Post-PC” product

Steve Jobs likes to claim that the iPad represents a “Post-PC” product, a new category beyond the reach of conventional PC approaches (not to mention traditional PC companies.). He contends that tablet manufacturers locked in conventional “PC” modalities—trivial hardware features coupled with an outsourced operating system— can’t match the seamless user experience that the iPad delivers. Apple develops the operating system, user interface, tablet device, key apps and processor for the iPad, enabling a high level of system integration and fluid, intuitive operation.

You can see Jobs drive home these points in the first 10 minutes of his keynote at the iPad 2 launch event.

Competing brands stumble, and can’t keep up

Some of Jobs’ comments are hype, to be sure, but the fact remains that the iPad has seemingly created a category unto itself in the year since it’s initial launch. Competitors aren’t keeping up.

Some examples:

1. The Motorola XOOM has recently been released, but isn’t complete.
2. The 10 in. Samsung Galaxy Tab is being re-designed.
3. The BlackBerry PlayBook has yet to ship, amid marketing turmoil.
4. The HP TouchPad (Palm WebOS) has yet to ship. April?
5. The Microsoft tablet won’t arrive until late 2012.
6. The ViewSonic tablet with two OSes seems cobbled together.

The biggest (apparent) loser is Microsoft, the iconic PC company. Microsoft invented the “tablet PC” a decade ago, and got nowhere with it. When the new Microsoft tablet arrives in late 2012 it will probably be competing against a third (or fourth) generation of competitors, including the iPad.

Brand weakness of the “PC” Approach

We can define the classic “PC” approach as follows: The software comes from one source (originally Microsoft) , the components come from a multitude of sources, at many price points, and a computer manufacturer puts them together in a particular form factor (desktop, laptop, netbook, PC tablet). The maker’s brand is put on at the end, usually supplemented with a splat of partner stickers.)

Historically, the dominant brand in the classic PC approach has been Microsoft. Its software rules hardware makers and the end user experience. It commands the largest margins, often turning computer makers into low-margin commoditized complements.

The perennial brand weakness with the “PC” approach is the lack of deep integration between hardware and software. Hardware makers are largely dependent on another party’s software for their end user experience. No matter how elegant or high quality the hardware, software flaws in the user interface or device operations will create a mediocre (or negative) brand experience.

The “PC” approach and tablets

Microsoft has no competitive OS that’s ready at this time for the new generation of tablets. In tablets Microsoft’s role has been taken by Google, which makes a tablet version of its powerful Android mobile OS available free to tablet manufacturers. The manufacturer typically becomes a packager of the OS, and this limits the amount of brand value that the manufacturer can contribute. (Manufacturers can add interface layers to the OS, however, as they’ve done with Android OS mobile phones. See here.)

BlackBerry PlayBook and HP TouchPad

To their credit the BlackBerry PlayBook and the HP TouchPad will employ their own native tablet operating systems, giving them full control over the brand value chain. If they execute well, they may gain distinct advantage over the mass of Android tablets soon to flood the market. They may threaten market leader iPad, too.

The Apple brand advantage

I would argue that Apple’s current (and commanding) lead in tablets is largely due to Apple’s brand advantage. Apple’s brand advantage is operational; it’s not in myths,  “magic” or marketing. It lies in the way that Apple integrates software and hardware in its products in accordance with its clearly-defined vision and values. The latter are focused on optimizing user experience. The result is a unified brand approach, with the entire brand operating as a customer-focused application of Apple vision and values. The Apple brand infuses Apple products and the entire Apple ecosystem, making it operate as one.

Apple’s brand logic

If we look closely at Apple we can discern a resolute brand logic that underlies the recent course of Apple innovations. Today’s iPad is the product of at least eight years R&D in mobile operating systems that encompassed the iPod, iPod touch, iPhone and now iPad. The brand logic that runs through this development process is that innovation must make customers better off by making mobile devices more intuitive and less complex. It’s a logic where simplicity is power, and design does more by being less, all in the context of the user. This enables radical innovation across new form factors while preserving a consistent and productive user interface and experience.

Do tablets require a new brand strategy?

Do tablets require a new brand strategy, or can they simply recycle old brand modalities? Apple’s dramatic success would argue that a new brand strategy approach is required, where the brand infuses operations as a method to create value through fully integrated software and hardware. To my mind this means developing the brand as a customer-focused application, which Apple does in spades. Anything less leaves the brand hobbled in its efforts to advance customers. In this light, we can look forward to the BlackBerry PlayBook and the HP TouchPad as potential “end-to-end” competitors to the iPad. They appear to “get it” (on the drawing board) as brand applications for the customer.

For the time being, at least, the old “PC” approach seems doomed to a game of catch-up.

Photo credit:  waferbaby — Flickr