The Brand Man Speaks

Reebok and FTC settle false sneaker claim: Consumers to get back $25M

Surprising news release today:

"Reebok agreed to pay $25 million to resolve government allegations that the sneaker maker deceptively claimed its so-called toning shoes helped strengthen leg and buttock muscles." Reebok cannot advertise any such claims going forward. Here's more:

"The settlement covers advertising starting in 2009 for Reebok's EasyTone walking shoes and flip flops and RunTone running shoes. The agency said the ads made unsupported claims that walking in EasyTone footwear was "proven" to tone buttocks 28 percent more than other sneakers and build calf muscles by 11 percent more".

This segment of the athletic shoe business experienced fast growth after Sketchers introduced a similar type of shoe but did not make the same extreme results claims Reebok did in its effort to sell a "superior" positioning to the public. Shoes claiming to deliver such results played into consumers desires to get their bodies into better shape with the least amount of effort (and dieting) possible.

To the best of my knowledge, no athletic footwear company has made such a medical like claim in recent times and this probably represents the biggest call out of an athletic shoe company by a government action ever.

Reebok has struggled in recent years to find a positioning for its product line. After years of being a major competitor to Nike its business slipped dramatically as Nike positioned itself as the serious athletes (men and women) shoe line and Reebok championed primarily less active women. Reebok is owned by Adidas.

Watching out for you everyday.

Eli

Netflix: What are they doing with their brand? Destroying it? And this Qwikster DVD brand?

It was no surprise (full disclosure I own their stock) that Netflix's stock took a nose dive after the rather arrogant price raising strategy they took some weeks ago.

To anyone who has studied economics the law of elasticity of demand reigns supreme today as it has for years. To raise prices dramatically and NOT offer some value added to offset the price increase was clearly a very poor strategic move. Not only did Netflix lose many customers, many downgraded their services (including myself) and felt hurt by their actions. This brand had developed somewhat of a cult following. People were extremely loyal...to a point...but found this action unacceptable and insulting.

Today Netfix spun off its DVD by mail division into a new brand to be called Qwikster. Why you might ask? I asked the same question. For those of us who still have subscriptions to both DVDs and streaming the idea that one would have to deal with two different operations is just another nail in the coffin. Making it more time consuming to do business with this company will only serve to make more people drop the service and go elsewhere. More work less convenience, ugh. Not a good strategy.

I don't even like the idea that my familiar red DVD pack will no longer say Netflix but some obscure new name Quikster? Another ugh.

Some speculate that Netflix intends to sell off the DVD by mail business because that business model no longer works economically. Meanwhile, the stock plunges again down over 150 pts in recent weeks and there is nothing coming out of that CEO's office that makes anyone in my opinion think this business has anywhere to go but out of business as consumers lose all faith in this brand.

I believe we will see this as a case study of success mishandled turning a game changer into a game loser permanently. Sad, I don't think if the changes had been managed better, specifically rewarding customers who stayed even with big price increases with some meaningful value added experience that this would have blown up so fast and furiously.

The only way out now is mea culpa BIG TIME doing something fantastic for what customers remain, especially those using both services. Other than that, even I am ready to move on and take my loses.

Watching out for you everyday.

Eli

Missoni for Target continues to overwhelm retailer and greatly disappoints consumers.

On Tuesday Missoni for Target launched across the US both in Target brick and mortar stores and online. The response, which has been covered extensively by the media, was overwhelming with much of the merchandise out of stock in a matter of hours despite the plan to run the special designer event through October.

One additional issue that is now plaguing consumers who bought online: getting the merchandise they purchased.

Target has already pushed back shipping and delivery of online orders to a large number of consumers twice since the orders were placed on Tuesday. Further, Target in many cases, as of today, Friday, September 16th, has not been able to give online purchasers any new reliable information about delivery. Thus, it appears not only was Target not prepared for consumers interest level in the Missoni offering but also Target was also completely ill-prepared to deal with selling the product and getting it into the hands of excited and anxious buyers.

Some Target supporters have explained the problem as due to the online operations recently shifting from a system with Amazon to Target's own proprietary processing system. If this was the case, it would have made sense to wait until this launch craziness was over or for Target to do far more due-diligence with their own system to ensure it would not disappoint so many consumers.

Things are still so bad at Target that their customer service telephone line is useless because they are so backed up with calls from unhappy consumers trying to find out when they will receive the Missoni items they bought online now that Target has sent out "delay" emails.

You would think (hope) that days later Target management would have fixed some of these issues and made every effort to be on top of the situation to satisfy buyers or at least be in better communication with online buyers to reduce their disappointment. I always recommend to my clients that when issues develop it is better to over communicate with consumers than under communicate so the trust factor remains strong. Target is angering a lot of customers, maybe a good percentage of whom may be new to the retailer, and doing little if anything about the problem in a timely manner.

Watching out for you everyday.

Eli

Sears taking Kenmore appliance brand on the road.

Sears, the retail giant that continues to flounder with an uncertain identity and declining sales is expanding the distribution of its once exclusive brands. Recently Sears starting selling its superb and well regarded Craftsman tool line in stores beyond its own. Now Kenmore appliances will be sold at stores like Costco.

Craftsman was always a top brand among its loyal customers. It's lifetime money back guarantee along with outstanding quality made it the go to brand for DIY and professionals alike. Premium pricing didn't seem to hurt the legendary brand. Unfortunately, the rest of Sears hasn't fared as well, except Kenmore. Kenmore was known as a low end appliance brand until the division upped its quality and design when the housing boom began to explode. In the past decade Kenmore Elite products have come to rival in quality and style super lux brands of Viking and Subzero.

As Sears tries to figure out how to increase revenue and possibly bring more younger affluent consumers into its stores, it has decided a good step is having the Kenmore brand sold in many more retailers beyond their own doors. Costco appears to be the first major retailer to carry the brand.

There is no question to me that Kenmore has established itself as a top appliance brand and independent quality reports back that up. However, I am not sure that the vast majority of prospects know Kenmore has been an exclusive Sears brand and now with its broader distribution I don't see this actually bringing more people to Sears. The rest of the Sears brand identity is so weak and undistinguished it will be difficult to attract these younger more well-heeled consumers to the retailer just because they produce Kenmore appliances.

I believe Sears is a old dinosaur and it will be a very difficult brand task to fix without a major strategic change. The brand doesn't have a definitive place in the retail world today and it has struggled for quite some time to figure out what positioning to use to establish its presence. The last major push of any note was "The softer side of Sears"  over a decade or more ago when the retailer made a big push into apparel and soft goods. Their most recent push behind the Kardashian sisters is a miss-step in my opinion given the brand image of those girls is nothing but high end super deluxe and no female consumer is really going to believe they would wear the clothes under their label sold at Sears. Likely to go the way of Sarah Jessica Parker's Bitten line sold at now out of business retailer Steve and Barry's.

Watching out for you everyday.

Eli

 

Missoni for Target launch wildly successful. A true lux brand goes mass

Target Stores launched another limited edition designer line on Tuesday this week that proved Americans want truly lux brands at cheap prices. The line from Italian textile fashion house Missoni included apparel, beauty, home goods, luggage and bedding among other categories.

The consumer response was overwhelming with stores selling out in a matter of hours and Target.com shutting down due to traffic overload.

Why the craziness? Missoni is one of the old guard true luxury brands that has not made any effort over its history to discount or offer cheaper lines to aspirational consumers. The quality of their designs and manufacturing is top notch. For such a lux brand to offer a large collection of goods at "flash fashion" prices is unprecedented.

I am familiar with Missoni through family friends in Italy who over the years brought us various apparel gifts on visits to the US. Scarfs and sweaters that cost many hundreds of dollars ( I have a sweater given to me 20 years ago that cost $1200 then) are still in our family because the products are timely in design and crafted to last.

I called to several local stores and was immediately told by noon on Tuesday that all Missoni products were "sold out" with no idea when the stores would be re-stocked.I was able to finally get online and buy a few things to see (in a few days) how good the low priced items are in terms of quality. I truly was shocked. I expected a good turn out but not a sell out this quickly.

Most Americans have never heard of Missoni as the family run company has not pushed to brand their products as household names in this country. They have preferred to be a bit off the radar for most consumers and cater to a smaller well-heeled audience who appreciate the quality of their fabrics and their unique patterned designs.

With the mass PR that this "sell-out" has garnered in the past 24 hours, it is clear the Missoni name will be far better known across the US by week's end. Additionally, products are already showing up on Ebay and other sites for re-sale at quite inflated prices given the limited edition of the entire collection. (The plan was to offer the line through October...depending on inventory. It seems unlikely there will be enough merchandise to keep the promotion going that long.)

A good question I am being asked is, "will this damage Missoni's brand image among its more elite customers?" Honestly, I do not think so. The designs look similar to the "real" McCoy, however, the quality is likely substantially lower end and good for limited wear and durability. I highly doubt the dresses and other fabric designs will have the same hand down generation to generation quality the originals do which will keep the loyalists buying the high end. Missoni has successfully reached a broader audience with this one move which could assist it with greater distribution (if desired) in the US for its luxury products assuming the economy improves (at some point in the future). Overall, a smart brand building move by Missoni and Target.

Watching out for you everyday.

Eli

 

Does eliminating articles (a, an, the) before a brand create a more iconic identity?

The Wall Street Journal had an article today that talked about the elimination of "articles" in both speech and writing by marketers in recent times. The idea is that by eliminating the words "a", "an", and "the" before a specific name or brand (or any noun) somehow gives it more power and strength making it more significant and bigger than the object itself. For marketers making a brand "iconic" is akin to finding the holy grail.

Apple, not surprisingly, was one of the first to employ this technique. They don't say "the" iPhone or "an" iPad. It's "iPhone" and "iPad" within communications. For example an ad says, "Buy iPad Now".

The issue isn't just one isolated to marketers. This situation impacts the English language as a whole and the state of grammar in this country.

In the past decade, educators have expressed tremendous concern that "Johnny can't write or speak properly". The elimination of articles before nouns doesn't help that cause. However, we have to consider that our language and how we use it has been changing quite rapidly especially due in no small part to the advent of emails, text messages, tweeter, among the many tools we now all use to communicate. Many of these forms of communication limit the number of characters you can employ to get your message across further "teaching" us how to truncate our language. With the broad use of these quick message formats it seems unlikely grammar protectors will see a shift back to anything remotely familiar in the near future.

Interestingly, there is a small but growing collection of people (mostly older than 50) that are actively going back to using hand written notes to communicate. This movement is both a reaction to the informal and improper use of language that has evolved and a desire to separate ones message to another so distinctively it is noticed and not forgotten. Many new businesses have surfaced that specialize in high quality note cards and printing to address this burgeoning market.

Ironically, marketing pundits say the elimination of articles makes the noun more personal and human. At the same time the rise in use of more formal written notes also indicates a need to make communications more personal and human. The end result may be similar but the means are quite different.

Watching out for you everyday.

Eli