The Brand Man Speaks

Mercedes Benz uses Che Guevara in promotional presentation causing outrage

In a bumbling effort to promote what Mercedes called "revolutionary" new developments in automotive technology the luxury automaker is scrambling to do damage control over the use of marxist revolutionary Che Guevara's image with a Mercedes 3 point star in his beret in a Las Vegas CES presentation this week.

In a rare moment of joining forces, liberal and conservative individuals and groups have cried foul and condemned the automaker for the use and reference. For example:

"Mercedes-Benz Uses Communist Madman Che Guevara to Sell Luxury Cars," said the headline on a blog from the Heritage Foundation, a prominent conservative political organization in Washington.

"Che Guevara... was a psychopath whose sadistic lust for blood was not easily quenched. He killed for pleasure," noted Heritage Vice President Mike Gonzalez.

It blows my mind sometimes how smart marketers do very dumb things without thinking about them. Mercedes has apologized for the use but the PR which is very negative can't be that easily ignored this time because key customer targets are expressing outrage throughout both traditional and social media.

Ernesto Suarez, who organized an effort to get Mercedes to apologize for using the image of a man often  called "a racist, homophobic, anti-semitic and tyrannical killer who admitted in his own writing to his endless blood thirst, " expressed relief that his effort to generate the apology was realized.

Some social media pundits have called for a boycott of Mercedes Benz cars. (Mercedes Benz just completed an oustanding sales year running neck and neck with BMW for top honors in the luxury automotive arena.)

A german automaker like Mercedes has to be very careful doing such polarizing activities because of its association with Hitler's operations during World War II and beliefs among segments of the American population (Conservative and Orthodox Jews for example) that Mercedes along with other German companies will never be cleared of their anti-semitic alliances from the War.

Watching out for you everyday.

Eli

BMW integrates "Ultimate Driving Machine" tag line into brand essence.

BMW has one of the most memorable automotive tag lines, "Ultimate Driving Machine", (created in 1975) and after reducing its use in last few years is integrating it back into the entire brand essence effort.

Few brands of automobiles are as clearly defined as BMW helping the brand be at the top or near the top of luxury car sales worldwide year after year. This past year it was number one.

The concept of the "Ultimate Driving Machine" has given BMW a distinctive positioning that has been meaningful to consumers in a way other luxury cars have not. Volvo's long gone positioning of safety was another extremely connective brand positioning but none have outlasted BMW's.

In their new effort, BMW will more aggressively use the slogan turned brand essence statement to promote the entire line versus focusing on individual models. Few automakers do this, however, BMW has built the kind of relationship with loyalists such that they (I believe) choose the brand first the model second. For example, if you are looking for an SUV you would not look across competitive brands first, you would see what BMW (your preferred brand) has to offer to meet your needs. This is a unique relationship consumers have with an auto brand and now one BMW is smart enough to capitalize on better than they have in the past. BMW clubs and magazines tout the thousands of families and individuals that ONLY own BMW products on a regular basis. Even though this is consistent with BMW's marketing effort, it is one that is grass roots and handled by car owners directly and not the manufacturer.

BMW is likely also tightening up their connection with loyalists now because Audi has been very aggressive and successful in stepping into the BMW sports performance luxury car arena in the past few years. BMW potential buyers who might not be loyalists have found Audi a good choice (not as many on the road, a bit of a better value and awesome new styling that speaks performance).

Watching out for you everyday.

Eli

 

 

Sears Holdings to close 120 or more Sears and Kmart stores

It should come as no surprise to anyone who shops brick and mortar stores these days that Sears Holding the parent to Sears and Kmart is planning to close 120 or more stores around the US.

Most retail competitors did fairly well this year and particularly this holiday season. Why did Sears not enjoy the same benefits of consumers going out and spending?

Simple.

Sears has no brand identity and hasn't for many years. Yours truly has written numerous times that Sears is a retail brand dinosaur that should close up and die. The brand hasn't had a positioning of note since maybe the "softer side of Sears" over a decade or more ago that helped consumers understand they were also sellers of soft goods (apparel) besides hard goods, (tools).

Sears used to be the catch all retailer one could go to, to get anything (besides food) you needed. It was America's store. They sold virtually everything. As WalMart exploded as the mega retailer of the past decade and retailing in general became more defined and brand specific, Sears lost its way. It isn't known for good pricing, service or selection or unique goods (that are consistent with its mid-America brand--Kardashian products make absolutely NO sense at Sears but don't get me started about that emperor's new clothes business). Sears exists because of inertia not because of any reason to exist and that is why I expect the brand to be out of business within two years or less. Sears is just completely out of step with the world in which we live today. Period.

Watching out for you everyday.

Eli

 

Macys expresses uncertainty about relationship with Martha Stewart after announcement of J C Penney deal

As discussed in a previous post, Martha Stewart has been successfully able to distribute her branded goods broadly across the retail planet, however, Macys did react to the news that she had sold a percentage of her company and would be building shop in shops in J C Penney's US wide. They did not end their relationship with her but indicated they would "re-visit" their product selection under her brand.

What likely will happen is a jockeying for position. Macys will keep Stewart's products if they are distinctively exclusive to the retailer and not somehow copied for inclusion in Penney's. Further, they probably will want to readjust their financial relationship with her to a more favorable one.

Macys is a higher level retailer than Penney's and has been fairing well in the economic downturn by offering unique and meaningful brands and products to its customer base. Stewart's line of home goods has been important to Macys so just giving it up likely would not be a good idea. Macys deal with Stewart expires end of 2012. They should renew. One iffy note. Apparently according to the Wall St. Journal, Stewart's company did NOT tell Macys about the Penney's deal until just before it went public which probably caused some major ill-will.

Altough Macys noted a concern about "brand proliferation" of Martha Stewart branded goods (too much of a good thing in too many places) I believe her brand is strong enough to do well in more types of retail concerns and I also believe Macys will see this too.

Watching out for you everyday.

Eli

 

Free shipping becomes commodity offering vs benefit for holiday shoppers

For the past number of years, many millions of consumers had chosen to buy online vs in brick and mortar retail (Including on Black Friday) because of two reasons. First, no sales tax (in most states). Second, free shipping. Not all online sites had offered free shipping in the past. It might have required a minimum expenditure of say $50 but it did entice people to shop one place versus another.

This year it appears that "Free Shipping" has become a commodity offering. This means that it is offered by a much larger number of online only retailers and is being matched by many brick and mortar retailers on their online sites. It has in marketing parlance become "a price of entry" into the online shopping game. You have to offer it to survive and compete.

This is very good for consumers but could pose financial problems for retailers. Shipping costs are not inexpensive for retailers to absorb and could hurt profitability numbers at the end of the holiday season when all is tabulated.

One online retailer that appeals to young urban hipster types, Karmaloop.com, throws "free shipping" and percentage discounts out to its loyal buyers pretty frequently all year long. However, when you click through to final payment terms on your purchase you find they charge a $1.50 "handling" fee and don't see that has a shipping charge. I have expressed to the CEO that I feel this is a bit disceptive to consumers. The company's response has been they need to offset the huge costs of free shipping and this is how their bean counters told them to do it. Bad idea.

Personally, I have become a heavy Amazon.com shopper because of free shipping and very low cost two day and overnight shipping options as a "prime" member, (which costs $79 a year and is worth it in my opinion). I also have found from the comfort of my beach side lounge chair better deals on Amazon then some advertised Black Friday offerings at brick and mortar stores with the added bonus of no sales tax and no shipping fees. Pretty hard to beat without facing the vicious Black Friday crowds.

Watching out for you everyday.

Eli

 

LA Times "brand" story on Kardashian brand has follow up.

Here is the link to the follow up piece by writer Adam Tschorn. He explores my point of view.

Kardashian a Brand?

 

Watching out for you everday.

Eli

Black Friday moves to Turkey Day, Thanksgiving but will consumers respond positively to this move?

Getting a jump on Black Friday retail sales has become an obsession for millions of Americans. In the past few years most electronic and mass merchandiser retail concerns have opened their doors in the wee hours of the Friday after Thanksgiving. Some open at Midnight to lure shoppers to (supposedly) great bargains. Consumers have been seen lining up for hours to get into these special shopping events. But there maybe a backlash this holiday season.

This year a handful of retailers are pushing the time frame even earlier announcing they will open at 10pm on Thanksgiving. Some consumers think this is great news. However, a growing number are publicly saying they think stores opening in the evening of Thanksgiving Day is "crossing the line".

The line being crossed is the one which says making employees shorten their holiday family time to come to work is unfair, unreasonable and at one extreme a violation of workers rights. In many news articles over the past few days, thousands of consumers have expressed concern to full blown outrage that greedy retailers are forcing their employees (even with holiday pay) to give up time with family to work. Is this going to far? Are these outraged consumers right? Will retailers who open "too early" see a negative feedback in their sales? It is too early to tell but things are a brewing.

The "Occupy" rallies around the US have shown many Americans are fed up with corporate greed and the needs of the wealthy to make more and more money off the backs of the average guy. It is within this cultural paradigm shift that such a backlash against retailers forcing workers to work on holidays is getting much of its fuel.

It is a tricky line to cross because many retailers feel they must be competitive and lure shoppers in as quickly as possible to "snap up" the available holiday gift buying dollars especially in this on-going weak economy. Those retailers who will not open on Thanksgiving evening have expressed support for workers and their families but also acknowedge it could be a costly risk to lose valuable consumer sales.

Personally I cannot imagine being a part of this craziness and have found many of the same desirable items available from the comfort of one's home office online at comparable prices. But what is important here is the underlying voice of average Americans which has until the "Occupy" rallies been kind of quiet. I think it is very important for consumer products and service companies to be mindful of this increasingly vocal group and not to dismiss it as unimportant or minor in anyway. There will be changes in our culture that come out of this still undefined movement across the US. As of yet, as always when you are in the middle of a paradigm shift, it is unclear what kind or what magnitude of change will be forthcoming. Be rest assured, however, that an important shift is coming.

Watching out for you everyday.

Eli

Consumer darling JetBlue brand suffers due to stranded planes in freak NE snowstorm.

JetBlue apparently faced some major obstacles dealing with the freak October Northeast snow storm this past weekend. In one case in which a plane was stranded on the tarmac at Bradley International in Connecticut for seven hours, it might turn out to be less of the brand's fault and more of the airport.

This past year a Passenger Bill of Rights was passed by Congress to ensure these kinds of incidents where passengers are stuck on planes for ridiculously long hours without food, water or bathrooms would be addressed. The fines the airlines face are as much as nearly $28,000 per passenger for each incident. Hefty to say the least.

Now I am no fan of airline travel these days nor the lack of service most airlines offer a sentiment shared by millions of people around the globe. However, if the latest news is true that Bradley International Airport is mostly at fault, then why should the airlines suffer millions of dollars in fines? What has surfaced includes the JetBlue Pilot's unanswered pleas to the airport to help get passengers off the plane after finding his company could not get the airport to help either. The airport was very slow to react seemingly with little or no emergency preparedness plan in place.

Maybe if the airline turns out NOT to be at fault and it is the fault of the airport and the city and/or state can they all be fined? Could the city and state be subject to lawsuits from passengers? Why not? Airports (run by governments) get fees from airlines to do business so they need to be held accountable, although, as we all know Government, whether local, city, state or Federal seem to not be accountable for much lately.

Until all the facts are known, JetBlue will be taking alot of heat from angry passengers and the media.

Watching out for you everyday.

Eli

 

Bank of America likely to pull a "Netflix": About face based on consumer anger

Looks like Bank of America is learning that you cannot keep pissing off your customers and nickel and diming them and think you can keep them loyal. In a move pundits are calling a "Netflix", B of A is expected to change a recent decision and drop its intent to charge customers for ATM/Debit Card use. Several other banks (who did not get the same flack as B of A) have already dropped the idea.

Companies have to realize in the world we occupy today, information, especially consumer dissatisfaction news spreads like wildfire in minutes not days or weeks. Companies are trying so hard to manipulate social media to generate business and open dialogues with consumers but seem to forget that these same tools can damage and possibly destroy a business easily and quickly.

The bad news is be sure B of A will find another way to levy more fees on its consumers. This is why millions of people are switching to Credit Unions for banking services where fees are low or non-existent and the service is far better and more helpful than at traditional banks.

Watching out for you everyday.

Eli

 

Netflix isn't Doomed.

So says Holman Jenkins Jr. in an opinion piece in the Wall Street Journal today. I do not agree. His conclusion? Despite the huge fall off in subscribers and the costs involved in obtaining more streaming content (of value to subscribers---not just stuff nobody wants to watch) he believes both investors and subscribers will see that no one source will meet their needs because of a fragmented marketplace for at- home entertainment content and that Netflix is still a good value and will survive.

The Netflix premise that took consumers on a "journey" was for a very good price (less than going to the movies) you had a bunch of choices that you could order online delivered right to your door sometimes next day for viewing for as long as you wished. Brand loyalty was built on this premise along with a very identifiable icon, the red Netflix envelope. Streaming was the next order of business but there were many subscribers who wanted both, one or the other, but wanted the choice their way. I am one of the those folks who wanted it his way. Both DVDs and streaming at a fair price. I was a huge fan of Netflix so much so that I bought the stock because I believed the vision and the journey was exciting to many millions of people despite the other options out there and on the horizon.

However, (and I will keep reminding people for some time to come) great companies should not fail to understand that building that brand loyalty is as important (if not more so) than what may appear to be great strategic business modeling to analysts. Many analysts said that Netlfix couldn't maintain the value proposition they had given consumers for much longer and the price increase was a necessity for survival. That may be true. Unfortunately, when a key element of your brand strategy involves price-value you have to be extremely careful when you increase your pricing structure not to go to the point (too quickly) where price elasticity of demand along with sheer shock value hits consumers hard in the face.

Many companies deal with increasing prices all the time as a course of doing business. When you do so in such a way to make the consumer stop in their tracks to say, "wait wow that's a big increase do I still need or want this service?", you are in trouble. If you don't have a very demonstrable plan to show those consumers the value they are getting (as well as if you are smart--adding more value along with the price increase) you are taking a huge risk that likely will alienate your core audience and destroy your business.

In my opinion that is what has happened to Netflix and although I would love to see them fix this mess and get their stock price back up (for me to break even) I just haven't seen or read anything that convinces me that this will occur. I also know that the company's cash flow has been greatly weakened by the greatly devalued stock and huge subscriber base loss over the past few weeks and there is now question if they can survive to pay their current bills, forget acquiring more content.

Lesson: Never underestimate your customers, their emotional connection to your brand or their expectation of your product or service.

Watching out for you everyday.

Eli