Jean-Noel Kapferer on the polarization of brands

For the next three days, I will be bringing you interesting bits of insight from the other side of the big pond. Because I want you to be able to read and understand these posts, I will translate everything into English (yes, free of charge.)

How about that!

(If you want to read the meat of this post in its original French, the link go here.)

Jean-Noël Kapferer (HEC).

2007 was characterized by the success of extremes: Low cost and luxury brands in mass market like Apple, H&M or Nespresso. We observed a polarization phenomenon in the market.

On the one hand, certain brands positioned in the value-priced corner further discounted their products, like Ikea and Easyjet for example. The Logan, which was Europe’s cheapest car, will soon be dethroned by a vehicle costing only $2.500 euros born of a partnership between Renault and an Indian manufacturer.

On the other hand, middle-of-the road brands which not so long ago were known for producing mass consumption products are now becoming premium brands.

(…)

Apple isn’t technically a luxury brand but it employs luxury brand strategies. This is the case with iPhone: A single distribution partner, a premium price, an exclusive service package, messaging centered on living an ideal lifestyle… all of this to develop a unique experience aesthetic and a strong sense of community. The process is the same when Nespresso launches a boutique on the Champs Elysées.

Likewise, Air France is bringing back First Class in response to its Tempo Class being challenged by low cost operators. (The advantage of business class resides in that businesses, not individual passengers foot the bill.)

(…)

Sofitel is also following this model by repositioning half of its operations as luxury properties, under its Pullman brand. This tendency by mid-market brands to restructure “up” their existing stores, properties and product lines is important.

Indeed.

While many companies still remain in the soft, mushy center, the ones with a bit more insight into how the world has changed in the last couple of decades are taking steps to a) differentiate themselves from their competitors and b) stand for something. This is driving brand… or rather value proposition polarization.

As a brand manager, you really need to routinely ask yourself two basic questions:

1) Why should anyone do business with you instead of the guy across the street? Name 3 things. You have thirty seconds.

2) What’s your value prop? Are you primarily value (volume) or are you primarily luxury (margin)? (Yes, even if you want to be both, you have to choose one.)

Examples of volume: Ford, Bic, Motorola, Coors, Sears, Magnavox, Sony, rows 10+, Food Lion, Dasani.

Examples of luxury: Jaguar, Mont Blanc, iPhone, Heineken, Polo, Philips, B&O, rows 1-5, Whole Foods, Perrier.

Some brands do manage to cross the volume/margin barrier, but they are few and far between. They are the Starbucks, Nike, Apple and other mass-market relative lovebrands of the world. (I say relative because being a lovebrand is neither here nor there: Nike may not be the lovebrand it once was, and Starbucks’ star may not be shining as brightly a year or two from now as it did three or four years ago. Here today, gone tomorrow… Consumers, after all, are fickle.)

How to build a Lovebrand, in 5 simple (albeit major) steps:

Step 1) Start with a luxury value prop foundation.
Step 2) Develop volume-friendly products.
Step 3) Create a distribution channel that focuses on both breadth and depth.
Step 4) Love your customers even more than they love you.
Step 5) Keep your eye on the ball (Step 1)

Of course, the devil is in the details, but you have to start somewhere. ;)

Is there a future for middle-of-the road brands? Sure. Why not? For companies more concerned about maintaining a certain level of revenue this year – these are generally companies that take a “if it isn’t broken, don’t fix it” approach and don’t put much stake in innovation or growth strategies. I don’t see these types of companies disappearing anytime soon, but they should already be seeing a downturn in their market share, profit margins and new customer acquisitions. At best, they can expect to sustain perhaps up to 6% growth for another year or two – assuming they are already there now – before that growth suddenly slows and becomes negative.

Mark my words: that downturn will not be gradual. It will happen within a quarter or two at the most. Not good.

The soft middle may seem like a safe place to be if you’re either too dumb or too scared to read the writing on the wall… but hey, some execs are happy to just show up and collect a paycheck until it’s time to float their resume to the next flunkie status-quo company. That is the reality of this world. The tendency for proactive brands to clearly and deliberately realign their value propositition along the line of either value/commodity or its polar opposite (luxury/premium products) is as clear an indicator as I’ve ever seen of the impending doom of the soft middle’s “business as usual” model – at least when it comes to mass-market products.

There is simply a) too much information available to consumers and b) there are too many convenient channels through which consumers can purchase products from a variety of pricepoints for middle-of-the-road companies to have a fighting chance against brands with clear and polarized value props.

Have a great Thursday, everyone. We’ll be back with Part 2 tomorrow.

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The Passionate Ones

From this post by Seth Godin:

“The passionate worker doesn’t show up because she’s afraid of getting in trouble, she shows up because it’s a hobby that pays.”

So true.

Since childhood, I have dealt with three distinct types of people:

1. Passionate people: People like me who can put every bit of themselves into their jobs because it is either exciting, fun or rewarding on a visceral level… or all of the above. Entrepreneurial poets living at the intersection of business, culture and design.

2. Jaded passionate people: People who used to be passionate about their work but have been beaten into relative apathy. Generally, the passion in these people can be ignited again with a simple idea or project.

3. Whomever doesn’t fit in either of the previous two categories.

I don’t have to tell you which two categories I always love working with, and which one can make any job a drag.

Not to mention the fact that the first two always find ways to get the impossible done, while the third makes a point to make even the simplest tasks seem impossible.

In an economy so filled with passion, talent and brilliant ideas, give me a single reason why anyone should ever have to settle for either a boss or an employee who fits in category #3. Look to surround yourselves with 1 and 2 as much as possible.

image by intentionalart

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The Crayola Marker Incident

So, this weekend, the family and I decide to have lunch at a local Asian fusion restaurant, and because I have a cold, I order some green tea with my meal.

As the tea arrives, I pour myself a cup and notice that a strange greasy substance is beading all across the surface. A strange… bright yellow greasy substance. Kind of like… chicken grease, only thicker and shinier. Hmmm. Weird.

I lift the filter cap off the tea pot, and notice that the tea inside the pot also has a lot of the weird yellow stuff floating around. Perplexed, I stir the pot a bit, and that’s when I realize what the yellow stuff is. There’s something floating around in the tea. A rectangular piece of paper. No, a YELLOW rectangular piece of paper. No… a yellow rectangular piece of paper with letters printed on it: CRAYOLA.

The waiter brings us our food, and politely I jokingly ask him if he can please bring me a pot of tea without a dissolved Crayola marker inside. At first, he thinks it’s a joke, but he looks inside and starts to freak out. Apologies start flying. He takes the teapot to the kitchen, and the manager gets involved. From what we can hear where our table sits, the teapot incident is now the topic of discussion in the kitchen, and the manager is NOT happy. Minutes later, the waiter emerges with a fresh pot of tea, apologizes a half dozen times, and tells us that our entire meal has been comped.

The poor kid got a good tip, and we’ll be eating there again.

I would tell you what the restaurant is, but I don’t want to give them bad publicity. The Crayola marker in the teapot thing is not the sort of thing that a restaurant wants to be known for. It’s unfortunate, because they responded to the crisis perfectly, and I would love to give them their well-deserved props.

And Crayola markers are non-toxic.

The point of this post is this: Sometimes, businesses make mistakes. How they react when these mistakes pop up is perhaps more telling about them than the fact that someone in their organization made a mistake in the first place.

This business made a mistake, but corrected it immediately. The manager enacted new mandatory tea pot inspections within minutes of the incident. The kitchen was immediately briefed. The restaurant didn’t only apologize, it also paid for our entire meal. We didn’t have to argue. We didn’t have to act angry. We didn’t have to threaten… not that we would have. I wasn’t all that bothered by the Crayola marker. I would have been happy with a fresh pot of tea and an apology. Frankly, the free meal was unnecessary… but not everyone is as laid back as yours truly.

Perhaps out of pure professionalism or out of fear that a customer could sue them or give them the kind of publicity that could gravely damage them, they didn’t try to blow it off. They didn’t try to pass the buck. They didn’t offer us a free dessert. They didn’t give us 25% OFF coupons for our next visit. They took care of the problem right away, and treated us like valued customers.

Well played.

If only more businesses did damage control and customer service as well as this restaurant, the world would be a better place.

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Brand You – The Visual DNA personality test

This is pretty cool. Waste five minutes today playing with it. Why? Because it’s fun, quick, and it’ll tell you a thing or two about brand you.

Could this possibly the shortest brandbuilder post ever?

Maybe.

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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Excessive CEO pay gets visual.

In 1970, the average CEO in the US made 28 times more than the average worker. 35 years later, that number had increased to 465 times. Nice visual/interactive presentation over at Business Interactive.

I haven’t done the math yet, but I suspect there might be a direct correlation between CEO compensation and the increase in CO2 levels in Al Gore’s inconvenient presentation.

465 times the salary of the average worker. Wow. That would buy a lot of $0.99 junior Whoppers.

What does this post have to do with building brands? When the gap between CEO pay and their average workers’ pay gets this wide, people start getting cynical about their company. Especially when benefits get cut every year. Especially when more jobs start getting outsourced. Especially when layoffs become common. Especially when the company’s products, customer service and innovation quotient are suffering. Inequity doesn’t exactly sell brands. Fatcat loser CEOs are seen as merchants of exploitation, and no one wants to be a part of that.

As the asian stock markets start to crash again today (hopefully, things will get back to normal in a day or two), I thought it might be fun to look at who won’t be hitting the bread lines when the fit eventually hits the shan.

Wages 465 times greater than the average worker – in many cases, for playing a lot of golf. Brioches, anyone?

To leave comments (and read previous, related posts) hit the brandbuilder’s main page.

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The Brandbuilder deflects another bonehead attack

Someone tried to school me in the difference between verbal/written expression and visual expression today, and I feel like I am a much better man for it. Yes, I have grown today, if not professionally or… physiologiclaly, maybe spiritually. It’s good to know that there are still brilliant, polite, thoughtful people out there who value the power of making positive connections and understand the importance of being cordial, positive, and friendly when reaching out to complete strangers.

Ahem.

So I was asked to remove an image from an earlier post this morning. The request came via an email threatening to take legal action against me. Ha.

Yes, good morning to you too. I am doing great, thank you. Would you like some toast with your tea?

Interesting thing, this blogging business. We’re so used to cutting and pasting people’s opinions that borrowing other people’s intellectual property has become almost a non-event: Find a passage you like or think is relevant, copy it, paste it, write a blog post around it, give the author credit and link back to his/her blog/book/website so readers can go there and find more good stuff, and voila. Finito.

If you’re a true web 2.0 rennaissance man, you even send them a note to ask permission to use their words, but that is seldom done these days. Credit given and a link are usually all that is required. (Still, most of us do this with images even when we don’t with text out of some sense of duty or jurisprudence.)

To date, I have not received an angry email from a blogger or author threatening me with a lawsuit because I quoted them on my blog, and for good reason.

As a photographer, I understand the potential cash value of images. You can take a photograph and sell it. you own copyrights to it – or can share it with others at will. It’s a slippery business, but ultimately, someone owns every image that has ever been printed – very much like every written word can become someone’s property.

The reality of it is that both photographs and prose are modes of expression. Both are protected by copyright provisions. Some people use words while others use images to express themselves, but the only difference is in the medium, not in the level of legal protection. Those of us who write for a living value our written work the way a photographer values their visual work. The medium may change, but the principle is the same.

Yet here we are: Someone actually threatened to take legal action against me for having quoted them visually on the Brandbuilder. How sad.

I promptly removed the image (which wasn’t that great to begin with) along with all associated credits and hyperlinks – and will replace it with another when I get a chance. Not because I am afraid of getting dragged into court, but because I have no want to give someone so stupid and arrogant any kind of exposure whatsoever. You don’t want to be featured on this blog, I won’t argue with you. Don’t let the door hit you in the ass on your way out.

What is funny about this whole little tangent is that a simple email politely asking me to remove the image would have sufficed. It would have still been silly, but whatever. At least the author wouldn’t have acted like a rude little child. My email asking for permission to use her image was not rude at all, as I recall.

I have to wonder… would being polite really have killed her?

So anyway, to the young lady who sent me that threatening email this morning, I have this to say: If you don’t want exposure, if you want people to discover your work, fine. Stick to submitting your stuff to any of the dozens of stock photo outfits that might be interested in buying it for mere pennies. (Not that they have, incidentally, since the email didn’t come from them.) Knock yourself out. But then don’t post your images on flickr and make them public. Jackass. And when someone asks for your permission to use an image, reply with a simple “no” if you don’t want them to.

That being said, it is indeed your image, and you have every right to control how it is used and by whom. If you don’t want me to borrow it for a post and direct people to more of your work, that is your right. I won’t stand here and argue with you. It’s your life. Have at it.

One thing you probably should know before I close this little monologue is this: Not only are you a crappy photographer who got lucky with one image, you’re also rude, and a complete moron.

End of post.

As always, go to the home page to leave comments.

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Cloverfield Rocks. Plain and simple.

Three words: Incredible.

Don’t read about this movie. Don’t look for teasers or spoilers. Just go see it.

Does Cloverfield live up to the hype? Let me just say this: I was on the edge of my seat for most of the movie, and some of the scenes just blew me away. As for the monster, you will see it in all its glory many times,so no worries. In many ways, the way that the movie doesn’t focus on the monster the way you would expect a Godzilla movie to… but still allows you to get your fill is one of its greatest achievements.

This is a hundred times better than a Godzilla movie, by the way. Seriously. From the monster to the characters to the way it is filmed to the way the camera seems to shy away from the brilliant special effects, you will feel like you are in the streets of New York City as it is being inexorably taken apart by a giant sea monster and the US military, and yes, your heart will pound pretty fast at times.

Unlike Snakes on a Plane – which was a case of killer marketing tied to a terrible waste of a movie – Cloverfield concludes months of very effective buzz-making by delivering on its promise. It was actually better than I expected.

So put down that old issue of Fast Company, turn off the TV, and check out local times here. Time for a dinner and a date to a good old monster movie. Good to see they still know how to make them. ;)

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