Finding the balance between maintaining the old and introducing the new is one of the most difficult tightwires to walk for bands or brands-a balancing act in which it is easy to fall by launching radical new products or changing the brand too rapidly. When successful bands and brands don’t innovate, however, they run the risk of gradually fading away like Elsie the cow, former top bovine in the oncestrong portfolio of Borden brands. Radical innovations that force consumers to throw out the old in the name of the new often reach results similar to those of Pets.com, Webvan, or any other dot bomb of the 1990s. Unlike the short term success of these and other onehit wonders of the e world, eBay, in contrast, simply took a business format consumers had experienced for decades-the auctions-and migrated it to the Internet, with its enormous geographic reach compared to local auctions and flea markets. It has never strayed far from its core product, but has added technology and protection features to the point that eBay now dominates the auction business as the most profitable firm on the Internet today.
Create Culturally Relevant Brands Brands are often rejected if people feel they are not culturally relevant. If a product doesn’t match their lifestyles, values, belief systems, or basic needs, consumers forego a new offering and stick with what they know. Innovations, whether they be new technologies or new styles, are more likely to receive mass acceptance when they are introduced through an accepted channel.
Perhaps the most poignant example of this is the migration of rhythm and blues from black culture to white culture. Elvis transformed minority music, then known as R&B, into majority music, known today as rock and roll. If it were not for the post
Kraft Brands, Attributes
September 22nd, 2009 — Investment Strategies
Deliver on Fans’ Expectations When fans attend a Rolling Stones or Eagles concert, they expect to hear a string of hits they can sing along with, performed with topnotch sound quality and delivered with high energy. Like these legendary bands, Kraft brands give customers what they expect. Kraft may not be gourmet food, but its fans don’t expect it to be. They do, however, expect reliability, top shelf quality, familiarity, and good value.
Firms must ask themselves, “Do our products really deliver the attributes consumers consider most important?” In a food company, those attributes might include taste, ease of preparation, consistency, reliability, and safety, all of which affect the overall perception of product quality. Distribution is the less observable attribute of great brands, just as road crews and staging may escape the attention of fans at a concert. But a focus on quality that customers expect has lead to a hit parade of number one brands at Kraft, including Philadelphia, the number one cream cheese in the world.
Evolve to Remain Relevant without Alienating Current Fans Many artists featured in this article are dedicated to innovation, often trying to incorporate the latest technology into their shows, musical sounds, and productions. Madonna sticks to her core brand, but innovates in terms of how she presents that brand to her fans. Neil Diamond, on the other hand, innovates by releasing new music but changing as little as possible, following more closely the adage, “If it ain’t broken, don’t fix it.” Kraft follows a combination of the two.
Kraft Brands, more Parts Function
September 22nd, 2009 — Investment Strategies
Reading like the Forty Licks greatest hits CD, Kraft brands include Tang, DiGiorno, Tombstone, Knudsen, Cracker Barrel, Bakers, Calumet, Shake ‘n Bake, Grey Poupon, Cream of Wheat, Milk Bone, Jell O, Balance and Oasis Bars, Sure Jell, Claussen, Minute Maid, Good Seasons, Seven Seas, A 1, Chips Ahoy!, Ritz, SnackWell’s, Triscuits, Zwieback, Corn Nuts, Altoids, Toblerone, Life Savers-and we could go on, but won’t! Kraft follows the branding strategies from the classic rock era in which each member of the band projected a unique identity. When Mick Jagger, Keith Richards, Ronnie Wood, and Charlie Watts walk on stage together, they are the Rolling Stones, but each draws screams from fans because of his individual personality. For instance, some people are huge Watts fans because they have an affinity for him greater than the connection they feel toward Jagger. Today’s contemporary bands usually promote the name of the band, passing up the marketing effort required to promote individual personalities. Like the Rolling Stones, each Kraft brand has its own identity, any one of which may connect with consumers better than another family brand.
Function + Fun = Focused Brands In their recent Face to Face tour, Elton John and Billy Joel electrified audiences with an integrated display of piano genius and personality.
Their endless string of combined hits kept concertgoers emotionally engaged for over three hours, but it was their unique synergy that kept fans on their feet a majority of the time. John and Joel blend just the right amounts of function and personality to pack a powerful entertainment punch to even the most discerning fans. Though each artist has tremendous skill and personality, it is their collective formula that allows them to work as a successful team; John adds more parts function (with more serious piano interludes and focused demeanor) and Joel more parts fun (laughing more and jumping around the stage).
Cracker Brands, Leading Brands
September 22nd, 2009 — Investment Strategies
What makes Kraft so cool is the long term dominance its brands have commanded in the marketplace, their effect on overall financial return, and their role in driving long term strategy for the company.
Kraft’s brand focus exemplifies our conclusion that the most valuable assets on a balance sheet often don’t even appear on the balance sheet-a company’s brands. Brand equity, sometimes measured by the excess of a firm’s market capitalization over its net worth, represents a long term investment in market share, wallet share, and heart share.
And as the legendary bands featured in this article show, the greater the heart share or emotional connection between fan and brand, the more likely that brand is to be adopted into consumers’ lives.
The ultimate cheese and cracker combo was born in the merger of Kraft and Nabisco to reign as the largest branded food and beverage company in North America, with revenues of nearly $30 billion.
Kraft brought the world’s number one brand of cheese, along with leading brands of salad dressings, packaged dinners, barbecue sauce, and other products to the table, while Nabisco brought with it the world’s leading cookie and cracker brands. The marriage, which is expected to result in cost savings of $600 million a year by 2004, transcends languages, permeates cultures, and sells in 150 nations around the globe.
Promoting Individual Identities: Marketing One Collective Brand Many brands featured in this article are single brands, firms whose corporate identity is closely tied to one brand. Unlike JetBlue, WalMart, and Madonna, however, Kraft is a family of brands that holds the number one share position in 21 of 25 product categories in the United States and internationally. The company owns over brands that, according to Nielson data, are so culturally relevant that at least one can be found in 99 percent of U.S. households at any given time.
Dominant Brands
September 22nd, 2009 — Investment Strategies
S Increasing the presence of its brands through stores, catalogues, e commerce, and international supply chain excellence, and the delivery of consistently superior in store and e commerce experiences.
S Constantly focusing its business units on dominant brands. This includes growing some brands (as with Limited Stores, Express, and more recently Victoria’s Secret) and spinning off others (as with Lane Bryant and Limited Too) to maintain a portfolio that is relevant and attracts fans.
Leslie Wexner is a brand leader who not only understands innovation and how to reinvent brands; he knows how to communicate his vision to others and assemble teams to coordinate and execute brand strategy. He expresses succinctly the strengths of the firm he founded over 40 years ago; “Clearly, brands win and we have some of the most compelling brands in retailing. Well planned. Well bought. Well coordinated. Well displayed. Well marketed. Well done.” Well said, Mr.
Wexner; well said.
Die Another Day Many attributes unite Madonna, Neil Diamond, and Victoria’s Secret, and many attributes distinguish them from one another. Eminem sings in his song “This looks like a job for me, so everybody just follow me, ’cause we need a little controversy, ’cause it feels so empty without me.” As his lyrics reflect, doomsday certainly doesn’t always precede controversy. Madonna and Victoria’s Secret have proven that. And while Eminem might believe the cultural scene would be empty without him, so might it be barren without the likes of Madonna and Victoria’s Secret.
Not everyone, however, wants to follow brands that challenge the status quo. Neil Diamond’s sustained popularity and degree of impact prove that controversy isn’t necessary to achieve cultlike fame; in fact, there are legions of fans looking to worship someone with traditional values. One need just look to the popularity of Christian singer Bill Gather, who sells out arenas wherever he performs, and to the phenomenal growth of Branson, Missouri-a mecca of good, old fashioned, family oriented entertainment (including the revival of The Lawrence Welk Show).* Madonna is innovation, change, and evolution personified. But not all of her moves are smooth, like her appearance in the movie fiasco Swept Away (directed by husband Guy Ritchie), which even her kindest critics and audience members panned. Robert Summer, former president of Sony Music International, says, “The challenge she faces now in terms of finding another cat’s life is exponentially greater than anything she’s faced previously. She handles the matter of relevance masterfully, but more immediate is the issue of Swept Away. When you hit the floor that hard, it’s really tough to bounce back.” Madonna presents a tantalizing study of how to craft a brand that interprets, relates to, and influences the values of its fans. The next episode in her saga will be how she rebounds from her most recent setback-her controversial album American Life, with an antipatriotic video, causing even some fan backlash. But that was last week.
Limited Brands Focuses
September 22nd, 2009 — Investment Strategies
Much of the controversy surrounding the Victoria’s Secret brand has to do with the influence people feel it has on culture-pushing the envelope of what is acceptable in the areas of sexuality, exposure, and even body image. What the average person doesn’t see and the media chooses to ignore is Limited Brands’ commitment to influencing the culture in which it operates in a very different way. One of the values at Limited Brands focuses on giving back to the community. Following in the personal footsteps of Wexner, Limited Brands topped the list of specialty retailers in Fortune magazine’s list of 2003 World’s Most Admired Companies, due in part to its intense focus on social responsibility. One such initiative is an outgrowth of Governor Taft’s Ohio Reads initiative. Hundreds of company associates volunteer one hour per week in a classroom for one school year, teaching on company time, with the company underwriting all program expenses. Each associate tutors two children for half an hour each week, with another associate duplicating that with the same two students on another day.
It’s a practical example of how to manage a Madonna type brand with Diamond type values.
Orchestrating the Perfect Brand Concert Victoria’s Secret boasts a growing base of fans that evangelizes others; it embodies an image like no other; it exemplifies functional excellence to execute brand promises. It’s a brand that rocks, generating as much buzz among its shareholders as the supermodels do among fans and media. The lesson for everyone is that brand strength, market share, and profitability arise from Limited Brands’ strict commitment to three major initiatives: S Maintaining its brand dominance through constant innovation in products with integrated brand marketing in a wide variety of media.
Limited Logistics Service, Brands Incorporates Logistics
September 22nd, 2009 — Investment Strategies
The Victoria’s Secret brand is about more than sexy images and supermodels, however. The functional component of the brand is paramount in creating and maintaining fans. Just as Neil Diamond’s concerts depend on high end equipment, competent crew, and experienced band members, Victoria’s Secret depends on the Product Quality group at corporate headquarters to execute the brand experience seamlessly, from new product development through sourcing to production. Supply chain issues, from inventory control to delivery, fall under the realm of Limited Logistics Service (LLS), which makes sure that the right products are delivered at the right time, in the right condition, in the right quantities, at the right price, when consumers want them. Rather than relying on vendors to deliver quality goods on time to stores as most department stores do, Victoria’s Secret exercises Madonna like control of its own logistics systems.
Unlike many other firms that view logistics as little more than an operations function, Limited Brands incorporates logistics excellence into its brand strategy and strength. Nick LaHowchic, president and CEO of LLS, explains the role of logistics to a brand. “We’re always asking ourselves,
Household, Boomers Brands
September 22nd, 2009 — Investment Strategies
Branding to Boomers Brands are gaining importance among boomers’ product choices. If you examine boomers’ spending patterns, you can begin to predict demand for various consumer and industrial goods. For example, when people are between the ages of 25 and 44, nearly everything they buy classifies as a necessity, because they need everything to build and run a household. In these markets, brands guide the choice between which food, cars, clothing, and household options will be bought, not whether the products should be bought. Although younger baby boomers and Generation Xers have definite brand preferences, their purchases are driven by such strong immediate need that they may not have the opportunity to exercise much brand insistence. If the household is empty, it needs to be supplied with furniture, food, and a car suited for commuting and carting kids to soccer practice; price often plays a more important role than brand during this life stage.
The baby boom buying frenzy of the 1980s and 1990s, characterized as the Need Economy, put retailers on Easy Street to growth and profits. Today, however, the Need Economy is giving way to the Want Economy, which ticks upward every seven or eight seconds, as another baby boomer someplace in the United States turns 50! Often, these peers of Mick Jagger are at the height of their careers and earning power, have low or no mortgages to pay, and have generally reduced family responsibilities.* Yet, as they reach age 50, their need to buy things to build a household is decreased, unless they have to furnish a second home due to divorce. For the most part, as they become empty nesters-with children out of the house and later out of college-they find themselves with too much stuff. They are in the unique position of having the ability to buy what they want but without the immediate need.
Brands Major Retailers, Store Brands
September 22nd, 2009 — Investment Strategies
Retailers as Brands Major retailers of the past were usually sellers of other firm’s brands.
Grocery chains sold brands of products from Procter & Gamble and Kraft. Department stores sold fashion brands ranging from Levi’s to Tommy Hilfiger. Hardware stores sold Stanley tools and Kohler plumbing fixtures. That’s changing. To be culturally relevant today, the goal for retailers is to be not just a seller of branded products, but to be the brand in the minds of consumers. This is fueled partly by the fact that an increasing proportion of sales and margins is derived from store brands (”private brands”) at most retail chains.
More important, in an era of too many retailers chasing too few consumers, it’s fueled by the need to be positioned in consumers’ minds as the place that delivers the satisfaction of a Stones or KISS concert. It may not matter to consumers whether that satisfaction is derived from manufacturers’ brands, the store’s brands, or the right combination of both. In consumers’ minds, it’s the total experience that creates a retailer’s brand. Are the right products in stock? Are prices in the expected range? Are personnel knowledgeable and friendly? Do the location, atmospherics, and in store logistics invite consumers to the store, delighting them so well that they return and tell their friends? Some retail brands are succeeding, none so well as Wal Mart, as you’ll see in Chapter 4. No retailer has had faster growth in sales recently than Florida based Chico’s, the boomer oriented retailing champion in ability to relate to consumer lifestyles. Kohl’s, Container Store, and 99 cent stores are other big winners in understanding changing lifestyles and relating to them.
Music Brands, Music Marketers Sacrifice
September 22nd, 2009 — Investment Strategies
“Today, the music industry is very song driven,” says Lake. “People may connect with a particular song, but they often don’t know who sings it, let alone the names of the front men of the group, which is different from bands of the past.” Rather than focus on which bands have the talent to impact the music world in the long run and build large fan bases into the future, the industry focuses on the songs that can hit number one today. If the artist behind the song can release several hits over a few years, that’s icing on the proverbial cake.
What is missing from the formula is a focus on emotional connection and the long term goal of cultural adoption. Since marketers hold tight rein on who will actually break into the music industry, they often market artists who fit the mold rather than break it. As a result, seemingly less than stellar artists achieve success, albeit contrived and most likely short lived. In an effort to find the next hit and to sell the most records this year, music marketers sacrifice the longterm investment in music brands that generate long term revenue and profits, as has been the case for Elton John, U2, Dave Matthews, and Billy Joel. If today’s rock and roll darlings have disappointing sales on their second go rounds, marketing and PR dollars disappear, new stars are created, and the process repeats itself. And after a decade of hits by flash in the pan artists, who sang what becomes a blur-band loyalty as known in previous decades is rare, and so is the sense of relationship of music to personal life events.
On the other hand, once bands and their music are adopted as part of a culture, the role of advertising, promotion, and other branding activities take on different dimensions and goals. Rather than selling the band or creating awareness, branding activities can focus on evolving the band to maintain its emotional and cognitive connections to the culture. For example, the Rolling Stones and Neil Diamond know that when they announce a tour, they can count on a large proportion of their fans to buy tickets and concert garb. And many of their fans are of the generation that still buys music, opting to pay for CDs rather than invest the time to learn how to download music and then actually do it.