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GP 1 March 2006: Vapor Brands

And the Lights Went OutThe Week, a wee magazine in New York, which is sort of an emaciated re-incarnation of Time magazine in its halcyon days, got it right on the March 3 cover—“Flopping in Turin.”  Inside you can read, “Winter Olympics: The Games Fall Flat.”  Touched by boredom, we found ourselves hoping the Jamaican bobsled team would make an appearance in Italy.  For a host of reasons—devastatingly bad coverage by NBC which included a near obsession with the game of ice shuffleboard known as “curling,” several decades of listless and sometimes tainted leadership of the Olympics by its governing body, and a loss of amateurism which was once the hallmark of the Games—all the air went out of the balloon.  The Games did not have it. 

But the U.S figure skater, Sasha Cohen, created fantastic moments of elegance and drama: she was probably the star of the Olympics, although she only came home with a Silver, the Gold going to the technically proficient Japanese.  Nervous on Thursday night, she took two falls that took her out of contention.  You can lose the battle but still win the war.  She put on a most striking performance, hints of which were captured by the television cameras.  And yet, the still color photos in The New York Times, both during her win of the short program and her loss at the long program, more ably captured her magic.  TV has terrible visual limitations that reinforce the banal patter that surrounds the action.  Some marketing pundits realize that the Olympic brand is fading, while the Sasha brand is coming on like gangbusters.  Her pratfalls, rather than marring her performance, added that touch of humanity and individuality which separates the champion from the herd. 

Trend-Spotting.  If you ever decide to become a seer during times of great change, we recommend that you read the daily papers, see what they insist is most happening, then take a look behind the screen where you will discover that the flipside is actually true. The late Peter Drucker, back in 1999, told us all about the “vast merger boom” we were reading about: he said there was actually no boom at all, and that strategic alliances, not mergers, had become the dominant corporate value creator of the day.  Now we have been hearing ad nauseam about how well we and our economy are doing.  Only in February have we learned that average net income for consumers has fallen, when adjusted for inflation, from 2001 to 2004, and that our personal balance sheets are in trouble.  As consumers pay their bills by draining equity out of their houses, we begin to understand that nobody is reporting on our vulnerability.  Our economy is dependent on consumer debt and unbelievable, irresponsible government spending. 

This week we have spent some time with corporate “sustainability” people who seek to rein in the waste-making activities of mankind that are chewing up this planet.  The difficulty, of course, is that waste and excess, the earth over, have soared to new heights, though thinkers and smart corporations alike realize that our conduct is not sustainable. The facts, often enough, simply don’t square with what the wise men have to say.  The commentators are so caught up in minor changes that they miss the grand, underlying transformation that is sweeping away the past.  Our wrenching deficits put the lie to any talk about sustainability. 

One of our favorite myths, of course, is the claim that we are in an age of grand brand building in which companies and consultants are doing all sorts of spellbinding things to ensure that products and services become globally known in a favorable way that ensures a devout, addicted customer base.  Nothing, of course, could be further from the truth, and we will give you 2 patent examples of brand destruction in a moment.  We’re destroying brands as if there were no tomorrow.  And only creating and embellishing a few. 

L.L. Bean.  There are some marvelous examples of brands on the rise.  Three cheers for them.  We have put a fair representation on The Global Province which you can find in the Global Province Network.  This week we have added two: Rick’s Picks and Hixo, Inc.  Just like a whole lot of modern urbanites, Rick Field is a smart enough fellow who decided to exit the rat chase (in his case, TV production) to do something he loves at mid-life.  Down in New York’s Pickle District, he’s putting out pickles with farm-fresh ingredients, without adulterants, flavored with cumin and other ingredients that offer a lot of zing without killing you.  Mike Hicks of Hixo has been around Austin, Texas forever, even when it was still nice and sleepy.  A designer, he knows how to do more than put lines on paper, since you have to be a little more practical in a small town.  So he’s written books, done radio ads, and lord knows what else.  His mordant wit puts personality into the products and services of his clients. 

But L.L. Bean is the brand that makes us sing and for which we would write a jingle.  We, our friends, and our ancestors have been shopping there since we cannot remember.  Mostly from the catalog.  But we once would also stop in Freeport, late in the day, to take a look on our way to Pemaquid Point in Maine.  Bean always provided sturdy fare, at a good price, with great courtesy, and “no-questions-asked” service.  If we call in about a defective item, the Bean folks on the phone simply ask where they should send the replacement.  Catalog sales are at the heart of Bean’s operations, and we can only salute CEO McCormick for re-siting a call center when it threatened to upset Bean’s quality service.  Bean is so good and so ethical that we feel obligated to shop there—we don’t know a catalog operation anywhere that matches up to it.  Above all, it does not resort to behaviors that will destroy its brand.  Even Bean’s old-fashioned, outmoded design suggests that it adheres to old, reliable values. 

American Airlines.  American Airlines used to be the best American airline, no doubt about it.  On our way back from Europe decades ago, a Pratt and Whitney engineer told us just that: it had the best maintenance processes domestically, even if others were better outside the States.  Its personnel were uniformly polite.  It made good on mistakes.  Its interiors and its clubs were generally tasteful, and the food was a hair better than that of the other carriers.  The baggage got there, and the planes were on time when humanly possible.  The prices were generally fair, even where it dominated an airport or a route.  Occasionally the advertising was edifying: late at night in New York and around the country one could listen to its very pleasant Music ‘Til  Dawn.  Extra, gratuitous charges were not the order of day.  The Admiral Clubs were not noisy and they had a decent assortment of publications.  Back then, American Way, its publication, was filled with a host of articles about anything and everything, a relaxing read for a long flight, not the consumer rag it is today. 

Those of us who are have traveled over a 1,000,000 miles saw it all begin to become unraveled under Robert Crandall, and the degeneration of the brand has reached such a crescendo today that often American does not equal—in quality—the discount airlines.  Crandall, as you may remember, achieved his highest fame by taking one olive out of American’s martinis, the start of an infernal pattern of nitpicking.  One now pays to check one’s bags in at curbside, all designed, we suppose, to increase the already out-of-hand congestion in the ticketing areas.  One pays an extra charge if you call reservations to get a confirmation of an e-ticket, although it costs the airline nothing, since it is forwarded by email. 

American Eagle, its commuter subsidiary, continues to be a disgrace.  In its prop days, you worried about its crash record.  Today it is always late pulling away from the gate, the seats are too crowded, while baggage fails to make it abroad on every other trip from some cities.  Automated check-in, which was pioneered by the discounters, is a recent improvement.  American, desperately and awkwardly cutting costs, has lost its branding and its market position.  Signally, it has long lacked a leader—the essential part of branding, the CEO who by definition is the tireless advocate for the customer.  A leader is not an olive picker.  The employees who have been around a while are simply demoralized. 

Cingular.  Cingular and Verizon are the two giants of America’s cellular business, and they spend a potful on advertising telling us how easy it is to do business with them and telling us how reasonable their services are.  No amount of advertising can compensate for their mammoth product and system defects.  One of our employees had his eyes opened when he discovered that he could call home more cheaply from Munich with a German provider than he could inside the United States on the Cingular network. 

When another of our staff members signed up for Cingular, he bought the best of the 4 or 5 phones on display, a Siemens S56.  And he bought a national calling plan.  Imagine our employee’s surprise when he discovered the phone did not work at all well in the Boston area, dropping calls frequently.  It was a crummy phone that Cingular should not have been selling, and we understand that Siemens has since exited the cellular phone business.  Cingular’s technical people could not even understand the problem (and it’s no wonder there are other curious defects in its network): its customer service people were not empowered to do the right thing and provide an adequate replacement.  Our employee went to a Cingular store and bought a LG1300 phone which works satisfactorily.  Cingular, of course, will not pay up for the new phone or own up to its errors of commission and omission.  It is in denial and will deny everything. 

American, like GM, has slowly been destroying an old brand.  Relatively new, Cingular simply is not making the investments in plant and integrity that will build a new brand.  Eventually, in another day, government regulation over telecommunications will come back—to remedy such abuses.  Ironically, Cingular’s real parent, BellSouth, has taken over the AT&T name, even though it has shown itself incapable of carrying out the universal phone service principles that animated the real AT&T in the days before the feckless Judge Greene broke it up.  In any event, we would claim, brand destruction is much more pervasive than brand creation, as companies strive to get us to pay for their lack of customer service.  This is not a company that can “reach out and touch someone.” 

We have long talked about debranding, regarding it as a phenomenon that investors and economists should carefully investigate.  As the high-cost country in the world, our economic survival is really predicated on careful nurturing of brands—the cultivation in our products and services of value-addeds that lesser economies cannot hope to emulate.  For our economy and for our companies, debranding is a mournful, suicidal exercise practiced by desperado managers, largely bureaucrats who have neither hope nor conviction about their company’s future. 

The Attributes of Branding.  What’s implicit here is branding has little to do with what brand consultants, ad writers, mass media salesmen,  academic theorists, and company factotums have to sell.  It has little to do with the mark we put on the product and a lot to do with quality of the product.  It’s been years since Wal-Mart’s stock price has advanced, even thought it’s selling more products and putting up more shacks than ever before.  But it is not a brand, because it defines itself around cost, not quality—and this is a severe strategic limitation.  America produced a better Wal-Mart in the early days of the 20th century which, in its heyday, tied quality and cost together to produce value.  The name of that company was Sears Roebuck.  And it had a less ephemeral claim on our imagination because it was a real brand.  First and foremost, branding is about product and service quality. 

After that, branding has other intimate, sensory dimensions not well understood in our complicated age.  A brand is personal, a tough act to pull off for companies that don’t answer their telephones.  We have said that every real brand has a visible leader—L.L. Bean once upon a time or Mike Hicks and Rick Field today.  Mass media, particularly TV, degrade brands for several reasons but particularly because they are one-way vehicles that beam propaganda at us:  successful brands have a grapevine, word of mouth, customer interaction that help the customer puts his or her imprint on the brand.

Above all, brands have now turned green—that’s part of the 21st century.  The smart brands have connected themselves up with the social impulses of our culture, and are supporting initiatives that will reforest our landscape, improve our health, and lead to the general welfare.  Faith Popcorn, a futurist long on insight and perhaps a little short on execution, gets at the big idea here, saying “CEOs must go beyond marketing to embed their products in the culture.”  She has it a bit turned around: she should have said, “chief executives must go beyond marketing to embed culture in their products.”  Ms. Popcorn, or somebody, will have to rewrite the book on branding, since current treatises merely underwrite the biases and financial interests of those who pen them and often actually espouse tactics that undermine brands. 

Obsolescence Is Obsolete.  We have been long faced with a contradiction in our brandmaking.  In order to sell more, we try to come up with something new.  So there’s a proliferation of car models, and more and more model changes are demanded.  This model multiplication is inflicting too much capacity on a shrinking industry. 

As well, there are many other examples of products designed with a pitiful half life.  Software programs are upgraded frequently, becoming needlessly complicated, to sell more software and to sell heftier computers with more memory.  The waste here is endless.  Each new iteration has design flaws that must be ironed out.  And each design is inherently unstable because it has too many features, which leads to systematic breakdown.  We can no longer afford this compulsive obsolescence that consumes too much of the earth’s resources and too many of our dollars.  It is “unsustainable.” The products are obsolete the moment they hit the market.  We are reminded of the Long Island Expressway:  several of its designers knew that it was inadequate even before shovels turned over the first dirt.

The cult of the new and the obsoleting of yesterday have another dire consequence.  Brands have durability, integrity, and continuity.  Rapid product iteration and obsolescence are also part and parcel of debranding—since yesterday’s Buick Roadmaster has virtually nothing to do with the squatty little productions that role off the assembly line today.  One of the engineering challenges now is to construct modular platforms where parts of a product can be replaced without discarding the whole.  Good  brands connect today, yesterday, and tomorrow. 

Years ago, Mark McCormack put out What They Don’t Teach You at Harvard Business School.  We suspect they don’t teach the essence of branding there either—or even at Northwestern’s Kellogg School of Management, which is felt by some to be the temple of marketing.  The schools teach the science of marketing, which is about how to slice and dice markets: branding is about the art of engagement where we try to conquer the inherent distance between a maker of a product and his ultimate customer. 

The Bottom Line.  In these tumultuous times, the smart trick is to take what you hear as gospel truth and to wonder whether the flipside is true.  If the oracles tell you to go north, head south.  About brands, realize that we are in an era of unparalleled brand destruction, and only the lucky few will task themselves with brand building.  The pundits will tell you that brand building is a positioning exercise—realize that it’s guerilla warfare which aims to infect our society with quality amidst markets where most of the players are shaving corners.  To go upstream, when everybody is coming down the river, is a bit challenging.  But it’s a devil of a good sport, made for an Olympian.

P.S.  Those engaged in product development and branding must face up to seismic changes in their marketplace, not well charted in business literature.  For starters, the post-World-War-II enlargement of the middle class and the softening in income disparities seem to have come to an abrupt end.  The Fed’s most recent survey of American family finances, which is done every three years, shows a deterioration in average family income, when adjusted for inflation, during the period 2001-2004, and a very modest 1.5% gain in net worth.  Even more revealing is the 6.5% net worth gain of the richest 10% of the population, contrasted with a 1.5% fall of the bottom 25% of the population.  Sharp ideological bias in our newspapers has swept this startling news under the rug.  The Associated Press and The New York Times note that “Survey Says Average Family Income Falls,” but The Wall Street Journal, reacting to the same news, suggests that “Typical U.S. Family’s Net Worth Edged Up Only 1.5% in ’01-’04.”  On balance, the Times represents the data somewhat more fairly.  But neither seems to flag the gigantic reversal that seems to be underway.  The gulf between the rich and the poor is creating a two-tier marketplace, a situation that is hitting mass market Wal-Mart right in its pocketbook.  See 2004 Survey of Consumer Finances

P.P.S.  Interestingly, in many sports, women’s events are becoming far more interesting than the men’s.  In the Olympics, it’s the women who provided the startling surprises in skiing (Julia Mancuso) and skating.  Professional women’s tennis somehow has more punch in it today, with the Russians adding flair and style to the mix.  While women’s professional soccer eventually flamed out in the States, it provided more excitement while it lasted.  This flowering of women’s athletics presents some unique marketing opportunities. 

P.P.P.S.  The Global Province has a host of articles about many aspects of branding.  For instance, it comments on Christmas and branding, about sales and branding, innovation and branding, branding and the senses.  To find more, simply use the Google Bar on the bottom of our homepage

P.P.P.P.S.  Happy Mardi Gras, New Orleans!  Drink deeply and live merrily, Ignatius J. Reilly, wherever you are! 

P.P.P.P.P.S.  A couple of America’s best architects took very seriously the American Indian’s feeling that objects were inhabited by the spirits of the men who created them. As well they might.  For all real brands are haunted by the good spirits of men.

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