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

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

 

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

 

Why the Print Version of Newspapers needs to exist: Even tech wizard Steve Jobs was a fan. [Second in a series]

Steve Jobs loved newspapers. He was obsessed with how consumers should and would consume news. But he was convinced the printed newspaper would be dead by 2011.

In a recent Wall St Journal article by Gordon Crovitz, Jobs was noted as someone who felt the printed newspaper was once an important tool but felt that the newsprint version of news lost its way, failed to take consumers on a journey (something all great brands must do) and was easily replaced by new media versions of information dissemination. The issue was one of print quality as Jobs was known for being obsessed with excellence especially when it came to the quality of printer matter, especially for his ads. If the ads in print form weren’t glossy and beautiful he wouldn’t use the medium.

 Although Jobs said newspapers would be obsolete by this year, he was to a great extent challenging the newspaper industry, according to Crovitz. Although Jobs is no longer with us, he leaves an important assignment for the news business.  Our lives have changed but newspapers have failed to evolve with us. What the newspaper industry has forgotten is the internet is just a new distribution tool, not a new brand, and the industry needs to better understand the relevance of the print form to consumers better than it does today, ( For example you can be reading the news with a newspaper on a plane without interruption when the flight attendant says TURN OFF ALL electronic devices when preparing to take-off and/or land. A case of print being more convenient than electronic!)

I contend there is something very special about holding and reading a newspaper (or a magazine for that matter). It is a combination of a vehicle of information mixed with the cultural experience of reading through the pages. One thing the glitzy online versions of news (as exampled on the iPad) lack is the tactile sense of going through the news and ads where the eye may pick up on stories (or ads) adjacent to ones you plan to read but would not have done so directly without the adjacency. Personally, I find the online version of news can create a sensory overload and finding the stories you want to read can be challenging in its own right and those you might have not known you want to read are not discovered. Some graphic versions of news online is so glitzy it is actually too hard to read.

Jobs said the quality of the newsprint was a problem. I realize it is expensive to make newspapers look like glossy online presentations of information. However, the lesson, if there is one to be learned, is that the print medium has important value in our culture and the newspaper industry has to figure out how to improve the quality of this distribution channel as well as remind people how meaningful this channel of information dissemination really is.

Watching out for you everyday.

Eli

PS HOT NEWS: Just read that the Newspaper Association of America is launching a new ad campaign that extols the virtue of newspapers with the slogan, "Smart is the new sexy". Now only if the print medium is made a bit more sexy they have a story to tell!

Why Netflix is failing: CEO Hastings doesn't understand branding

In an interview with the New York Times (appearing in the magazine section today), Netflix CEO Reed Hastings proved why Netflix is failing. As is common with most CEOs, he (admittedly) fails to understand what makes a brand in the first place and what makes one successful in the long term.

In the interview, Hastings says describing the major screw up that Neflix has encountered, "I think it was just a mistake in underestimating the depth of emotional attachment to Netflix". You think? Companies try (mostly unsuccessfully) to build emotional attachments with consumers. It's called brand loyalty and a very key ingredient to long term success. Not understanding this concept is a fundamental admission that one does not know how to market a product something CEOs arrogantly won't readily admit since they mostly think branding is an expense not a revenue builder.

Hastings also puts himself in a comparative role to Steve Jobs (hardly) and Jeff Bezos of Amazon saying his mistakes are all short term and CEOs understand the measurement of success is long term. However, and a big however, Jobs and Bezos understood and understand (respectively) how to build great brand loyalty and nuture it. Jobs was the master at it because he had a vision and took consumers on a "journey" which all great brands do. Hastings was on the right track, but missed an important station stop and went way off track to the point he may not be able to get his business back in gear.

I for one would like to see him resign and hire a more marketing savvy CEO to take the reigns and get the brand somewhat back on track by creating a new "journey" for consumers. It is going to take some great creativity and some concessions (to the brands most loyal consumers). Unfortunately, Hastings says he will not resign.

Watching out for you everyday.

Eli

Newspapers and their future: From Masters of the Universe to near extinction in less than a decade . [First in a series]

The newsprint version of the newspaper business has cancer but it was preventable and it may be still treatable. It was self-inflicted not caused by changes in the marketplace as the industry asserts. The top players were threatened by the new medium of the internet and instead of turning their fears into a triumph they succumb to them. Why? The newspaper industry’s “Old Guard” didn’t understand it and didn’t make any effort to master it. Instead of embracing the internet quickly they fought it, mismanaged it and forgot a very important element of great branding.

During the late 80s and early 90s I was a branding consultant to the newspaper industry.  Unfortunately, I rarely saw eye to eye with the traditionally minded senior executives of the day. It was at the time the internet was just starting to be recognized as a new force in communications and newspaper companies were trying to figure out how to deal with this game-changing tool. We know today most missed the boat and in an attempt to play catch up ended up using the internet medium poorly or incorrectly. While devoting so much money and energy to the new medium newspaper companies lost sight of reinforcing what made a newspaper in print form special and meaningful accelerating its rapid decline to where we are today.

What fascinated me was how many newspaper companies feared the internet and wanted to approach their re-branding efforts from that point of view. It seemed akin to the time when radio met television and radio broadcasters feared TV would eliminate their medium.

We know today that did not happen. Radio serves a place in both the information and entertainment world as does television. Companies became involved with both businesses and learned to use them for the unique elements each presented instead of trying to have one dominate the other. Radio thrives today along side television as two different mediums that deliver different kinds of experiences successfully to broad audiences.

The same should have been true for the newspaper industry.  Here’s why it wasn’t.

The key is the concept of branding is not often well understood by top executives primarily interested in the bottom line. They see marketing, especially branding efforts, as expenses and not investment spending. In the case of the newspaper industry, brands are not about the delivery systems they use. Newsprint, smart-phones and tablets are distribution channels. Brands are conceptual emotional contextual in nature. In the case of newspapers, the brands are the New York Times, Wall Street Journal, Chicago Tribute all in the information dissemination business and for years the masters at it. Many newspaper companies failed to integrate the internet as a new distribution system reaching new audiences (and eventually current audiences as well). Instead they saw the internet as a new brand and started building from scratch loosing focus on what a brand is.

In my opinion newspapers allowed the internet to become an entity beyond their control when in its infancy they could have become dominate players.

Today the internet offers thousands of new sources of news and information using the unique tools of this delivery system to reach all types of audiences all over the world 24/7. Today newsprint versions of newspapers are disappearing like dinosaurs but this didn’t have to be and just maybe this erosion can be stopped as they serve an important role in the information business and as a part of our way of life. Part of the problem likely lies in the fact the newsprint version of news hasn’t evolved in terms of quality and production values over the decades. It’s been cheapened to save money which has made it less attractive and competitive. The user experience has suffered.

Over the next few weeks I will examine other aspects of the decline of the newspaper business and what options might still be out there for its revival. Great brands weather storms even if they are deadly hurricanes. One aspect I will examine is the user experience with newspapers on the web, smart-phones and tablets. The news is not very good and I will explore why.

Next in the series: What did one of the world’s greatest techies think about newspapers and their future? What can we learn from his vision?

Watching out for you everyday.

Eli

 

 

 

 

What's wrong with the under 35 set? Common courtesies out the window

Normally this blog column focuses on brands, mostly products and services. On occasion I write about individual people as brands. Today, I am compelled to go slightly off-track and write about some of the issues I see with young people (classified here as under 35 years of age).

The issue? A complete lack of common courtesy behavior with their peers and more importantly with older folks like myself.

As part of understanding brands and brand building, one has to also understand human behavior as it impacts consumer decision making. A significant change I see between baby-boomers and their children and grandchildren is how they handle day to day interactions with other people.

These young people who increasingly socialize not in person but through online social media seem to have lost the understanding (and the art form) of how to deal with people one on one. It is so common for a younger person to make commitments (professional and personal) and break them or not live up to them as it is for them to use texting as their main form of communications.

I am astounded how often I personally experience this and how often corporate managers complain about their younger employees. They expect the world to be given to them but seem to also think failing to live up to a responsibility or an agreement as "no big deal". Making an appointment and not showing is not something a baby-boomer would do without (generally) contacting someone in advance to explain why the appointment would be missed. Or, in a extreme case, follow up immediately afterward to explain. Young people very often do neither. They expect their elders to respond to them quickly give them immediate feedback and answers but they see no reason to do the same in return.

For a group facing lives that likely for the first time since World War II will not be better than their parents, they are contributing in my opinion to this situation beyond just the economics of the world. A lack of reliability and dependabilty does not bode well for anyone in a world where jobs are increasingly harder to find and keep. It is no surprise that many employers would now rather hire retired "older" people than younger ones because of this behavioral situation.

I am not sure what has caused such a notable change in behavior but one thing I am sure is this seems to be another example of the decline of society as we know it.

Watching out for you everyday.

Eli

Apple iPhone4s...ugh. Some nice upgrades but overall a let down and disappointment for many brand loyalists

Apple failed today to excite brand loyalists with its humdrum launch of another iPhone, the iPhone 4S, not the iP5 most had been hoping for. It adds some cool features that are certainly upgrades and notable improvements, however, I believe it won't be enough for the rush of customers that came with the initial launch and that of the iPhone 4. I for one after reading the details on a notable tech blog updated live during the news conference, no longer feel any rush to get the new phone. First of all it will look exactly the same, so the "look what I just got" factor is zip.

Apple's stock dropped rapidly today as well as a result of broad disappointment. Whether it's the loss of Steve Jobs or the lack of excitement from the brand AND new management together, I sense most tech reporters thought the news was a yawn vs. what they had expected and hoped for.

Is this a sign that Apple has lost its midas touch? Maybe all goods things need to come to an end sooner or later or at least become more "normal" and "average" like most products made by American companies.

Watching out for everyday

Eli

Apple ready to introduce iPhone 5: Analysts weary it won't be sexy enough to stimulate strong sales. Why they are wrong

Apple is getting ready under new CEO Cook to launch its iPhone 5 (Can't we just now call it "i5"?). The planned introduction to the media is October 5th.

One of the most interesting things I have been reading about the latest introduction is not about the improvements and upgrades coming with this new version, but the insistence voiced by many business analysts that this version will not be exciting and sexy enough to generate huge sales. The thought is that you can only update and redesign such a small package so much before you get to the point where it is impossible to make noticeable changes meaningful to consumers to upgrade from older phones.

What I believe is missing in this conversation is the fact that Apple brand loyalists (the kind of brand loyalists other companies would die for) have another driver in their pockets. Owning the latest Apple device has become a badge of honor to many (of us---yes including me). Half the excitement is having the next new Apple iPhone shortly after it is launched. Apple loyalists are opinion leaders and first adopter types (in marketing speak). They crave new toys and greatly need to be first in line.

Normally this isn't a huge number of people as concerns most consumer products. With Apple it is different. Different in a way that no other company I know has been able to duplicate. Large numbers of people will still wait in line or curry favor to get a new iPhone within hours or days of the release. It has become almost a right of passage to wait in line to get a new one and Apple has carefully orchestrated this phenomena because they truly understand their customer down to the fact that they do not actively talk to consumers about what they want next in a new generation iPhone.

This brand has built a relationship with consumers that is about the journey and brand loyalists believe in the mantra that Apple knows best and will bring them features and benefits and excitement they haven't even thought about. This is a key strategy that separates Apple brand fanatics from other brand loyalists who take a greater stake in communicating their demands to a given company. (This is not to say that many Apple consumers do not share their feelings, believe me they do, however, they are more likely to be ok with Apple decisions than they are with decisions made by other consumer products companies).

The Apple brand still tops the list of best companies in the past few decades and it remains at the top because it truly leads and innovates and excites like no other company.

Watching out for you everyday

Eli