Category: data driven branding

Branding blunders – updated

Published on by brandconsultantasia7 Comments

Despite the fact that it is breaking new ground, there wasn’t much interest outside of the energy business when Russian president, Dmitry Medvedev announced in late June 2009 that Russia was entering into a joint gas venture with Nigeria’s state oil company. Perhaps it was because it was in Africa and energy deals are quite common in that part of the world or it could have been because the deal was relatively small, in energy terms at roughly US$2.5bn.

Whatever the reason, the story seemed likely to show up briefly in the trade journals and perhaps as a footnote in the business pages of a few mainstream publications. And then came the name. Naming is, depending who you talk to, ‘a fine art’ (most agency types) or ‘yanking a word out of your butt’ (Nick Wreden).

I don’t know who was responsible for the name of this new organisation. I wouldn’t be surprised if it was a team of industry brains who put their heads together for hours on end to come up with a suitable name that would position Russia as the saviour of African energy. Having been involved in similar naming projects, I suspect they studied the companies and countries involved, as well as others from different parts of the world, the competition, the industry, maps, multiple dictionaries, probably in many languages, the planets, names of extinct animals, disused road names, drilling equipment and so on.

Finally, no doubt after many arguments, late nights eating artery hardening comfort food and tantrums that would shame any precocious 5 year old, and as the deadline loomed, these exhausted creative geniuses eventually made a call and decided to play it safe. They decided to use a combination of Nigeria and gaz. Let’s call it Nigaz!

As you can imagine, Twittizens were onto the story in a flash and are still tweeting about it a month later. Meanwhile, more sophisticated trade publications such as Brand Republic announced that the name had “rather different connotations” for English-speakers. Indeed.

So as this latest branding blunder plays itself out, I thought it would be an opportune time to take a look at some others that have made us chuckle over the years. There are ten of them (including Nigaz) listed below. I’ve created a poll and you the reader can vote and decide who is the winner!

10) One of the most successful taglines for Kentucky Fried Chicken was “finger lickin’ good”. The trouble is, when translated into Mandarin (or is it Cantonese?) it becomes “eat your fingers off”.

9) When UK telecom company Orange launched their tagline “the future’s bright, the future’s Orange” Catholics in Northern Ireland were angry because the term “orange” is associated with Protestantism.

8) The Mitsubishi Pajero won a number of awards around the world for being so robust. For brand consistency reasons, they wanted to use the name in every country. Unfortunately they didn’t do enough research in Spain and after the launch had to change the name because in Spain, Pajero means ‘wanker’. (In the UK a wanker is someone who masturbates).

7) Spain gets another mention for another failed automotive branding story. This one revolves around Chevrolet. Some time ago Chevrolet decided to introduce the Nova to the Spanish market. Sales were poor, why? Because in Spanish Nova means ‘no-go.’

6) No brand mistakes article would be complete without a contribution from Pepsi. My favourite one is the “come alive with the Pepsi generation” slogan, which in Taiwan is “Pepsi will bring your ancestors back from the dead”.

5) And if we mention Pepsi, it’s only fair that we mention Coke. About 5 years ago, Coke wanted to break into the bottled water business. The name chosen was Dasani. OK so far. Coke announced that its “highly sophisticated purification process” was based on Nasa spacecraft technology. Soon after it was discovered to be a reverse osmosis process used in off the shelf domestic water purification tools. To make things even worse, just as the project was about to launch, it was discovered that the UK supply was contaminated with bromate, a chemical better known for causing cancer.

4) Five years ago, Cingular bought AT&T Wireless. AT&T was considered number one in terms of poor service. After the acquisition, Cingular binned the AT&T name. Four years later, Cingular Wireless was rebranded as AT&T Wireless.

I suspect the firm’s customers would have preferred that money had been spent improving operational issues rather than being wasted on a pointless rebranding exercise. Despite the re re branding, in 2007, AT&T Wireless generated the most complaints overall and the most complaints per subscriber, according to the FCC.

3) As personal branding seems to be getting a lot of ink at the moment, one of my favourite gaffs was the one about Lee Ryan (of Blue fame) who gave an interview just after 9/11. During the interview he was quoted as saying, ‘What about whales? They are ignoring animals that are more important. Animals need saving and that’s more important. This New York thing is being blown out of proportion.’ Many industry insiders consider these comments to be the reason for the demise of Blue.

1) One of the greatest naming disasters of all time must be the attempt by Dragon Brands to change the Royal Mail of the UK from a 300 year old domestic mail only (government) institution to a multi dimensional distribution company. Dragon Brands did a lot of internal and external research over a two year period and then assessed the aims of the brand using measures that included ‘the three p’s’ – personality, physique and presentation.

Next they took three circular like shapes and filled them with words such as ‘scope’ and ‘ambition’ and apparently (I’m not making this up) this brought together ‘the hard and the soft aspects of the brand’s desired positioning.’

This remarkable process threw up hundreds of actual words as well as some that were made up. Apparently the brain storming team favoured Consignia because it included consign and the dictionary definition of consign is ‘to entrust to the care of’.

The cost of the new name was £2 million. It lasted approximately 18 months.

Since this article was written we’ve had a couple of suggestions to be included in the poll.

11) When the Citroen C4 was launched in Malaysia (and no doubt elsewhere in the Cantonese speaking world), sales were poor. The manufacturer recruited expensive research companies to determine why. Apparently, C$ in Cantonese sounds like ‘stalled’.

12) Ken Peters reminded me of the fiasco back in the late 1990s, surrounding the sports attire manufacturer Reebok who launched a running shoe for women the ‘Incubus’. According to legend, Incubus was a “male demon who had intercourse with sleeping women.”

DATA-DRIVEN BRANDING VS. CREATIVE-DRIVEN BRANDING

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Recently, I’ve had a go at positioning and awareness (and I’m not finished yet!) and how it has no place in brand building today. Well, now it is time to have a go at creativity! I’m sure the agencies will be gnashing their teeth today!

For decades, information concerning consumers, their purchase criteria and the link between promotion and purchase was either too expensive or too difficult for companies to obtain. And even if data could be obtained, it took weeks or even months for the data to flow from stores and branches or field staff back to headquarters. Often, by the time it got back to HQ, it was too late to make any difference.

As a result, to build brands, companies had to put their faith in creativity, hoping that an innovative image, tagline or promotion would resonate with prospects and boost sales. In the 1960’s, 1970’s and 1980’s, with few conduits to consumers and limited competition, this type of creative driven branding often worked. Companies responsible for products including Clear Coke & Crystal or Storm Pepsi, 7up Gold, PAN AM, Mobikom, Pelangi Air and recently Mega TV as well as many others used this approach. Mass media, which was so powerful during this mass-market economy, was the logical vehicle to enhance the impact of creative-driven branding with reach and repetition.

But the mass-market economy no longer exists. Today’s customers are increasingly overwhelmed with those creative images, taglines and promotions. In Malaysia, for example, the average household receives 79 TV channels and up to 20 radio stations. Supermarkets carry between 15,000 to 25,000 Stock keeping units (SKUs). The number of titles handled by the average magazine wholesaler has doubled in 10 years to about 5,000. It is estimated that there are 800 billboards in Petaling Jaya alone. Ads appear on taxis, buses, lampposts and so on. And over 40 billion web pages are linked to the Internet. To make it even harder to succeed in the customer economy, budgets are tighter, competition fierce and customers are more demanding and knowledgeable.

Despite this proliferation of media conduits to consumers and the bombardment of messages received by those consumers, agencies and consultants continue to recommend firms build brands by using ‘cool’ advertising, creative or symbolic logo’s with pretty colours, catchy taglines and so on.

Data driven branding on the other hand, gives CEOs and managing directors accountability and ROI-based justification. While data was slow to materialize or hard to obtain during the mass-market era, the rise of the Internet, increasing computer power and sophisticated research techniques now enable executives to quickly obtain the information and insights they require about consumers and their buying habits, demographics, competitor products and actions, sales trends, promotional results, and other information.

Data from such research benefits executives in multiple areas. Information from data-driven branding can be used to not only determine where and when to advertise, but also other important areas critical to profitability. These include operations, customer service, research & development, logistics and customer relationships. Data enables benchmarking, enabling companies to determine whether marketing or other promotional or sales activities are effective over time.

Finally, and most important, data enables better executive decision-making. If research shows a certain segment is buying a product or service, executives can design strategies to pursue those specific segments, ensuring valuable funds are not wasted pursuing uninterested segments. Basically, without data, strategy and other executive decisions are guesswork.

Creative ideas are great, but information and knowledge are better. That’s why the smarter Asian and international companies are adopting research, data and analysis as the heart of their brand strategies because the Internet, more knowledgeable customers and increased global competition have changed the rules of the branding business.

Luxury branding in Malaysia & Asia

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Despite the global economic meltdown, the development of the retail sector in Malaysia continues at a phenomenal pace with over 1,000,000 square foot of additional mall space becoming ready this year. Passing almost unnoticed however is the proliferation of international luxury brands in many of those malls. Familiar international names such as Asprey, Giorgio Armani, Prada, TOD’s, Van Cleef and Arpels and so on, have all entered the local market in recent years, encouraged by the success of exclusive names such as Bulgari, Cartier, Hermes, Louis Vuitton, Rolex and other famous names already familiar to KL shoppers.

Unusually in Malaysia, The Pavilion has clustered its luxury boutiques into a high profile area facing Bukit Bintang. Globally, this clustering of stores is nothing new. For centuries stores have organized themselves into districts based on what they sell – think Saville Row in London (tailors), Faubourg Saint-Honore in Paris (designer boutiques), Deira in Dubai (jewelry), and so on. The cluster approach allows the rich and famous to be dropped off in front of the store, rush in and make a purchase that would make a small African country drool and then rush out into the safety of the limousine without having to rub shoulders with the rakyat.

With its double story street facing façade the luxury section or ‘couture precinct’ of the Pavilion is an exciting development in the evolution of the retail sector in Malaysia. But there is one thing missing from this development. That is a luxury Malaysian brand.

And as Malaysia moves from an Original equipment manufacturer (OEM) economy to an Original brand manufacturer (OBM) economy, and the government rams home the need to move up the value chain, the retail sector, where so many Malaysian OEM cut their teeth, should be at the forefront of this step up the value chain. Especially as according to the MasterCard Worldwide Insight report, the value of the market for luxury products and services in the Asia-Pacific region will jump from US$83.3 billion in 2007 to US$258.7 billion in 2016. Not a bad segment.

What’s more, there’s already a ready made market because the largest number of tourist arrivals to Malaysia is from ASEAN countries, followed by Japan and China with India and the Middle East not far behind. And the burgeoning middle classes from these countries are notoriously brand conscious.

This interest almost obsession with brands is likely to continue according to Radha Chadha, author of “The cult of the luxury brand”. She believes that the Asian interest in luxury products is because of the massive changes – social, cultural, economic and political that have been affected by the traditional attitudes to who you are and where you are in the societal food chain.

She believes that over the past 50 or so years, many of the traditional cultural indicators of social standing in Asia – profession, family, clan, caste have been eroded by the onset of globalization, migration and education. Free of rigid social hierarchies, mass migration and the development of urban areas, more people are making money and making it faster. The way to differentiate oneself is by purchasing a luxury product that shouted, “I’ve got money, respect me.”

Displaying one’s status through outward appearances of rank and wealth is nothing new but Asians seem to have taken to it like the proverbial duck to water. And those LV bags, Chanel suits, Jimmy Choo shoes aren’t simple female indulgences, they are part of a new world order that identifies the wearers position in society. Indeed, these luxury brands are a modern set of symbols that Asian consumers are using to redefine their identity and social position.

The Japanese have been devouring brands for years. 94% of Japanese women in their twenties own a Louis Vuitton bag. In fact, the Japanese as a whole are the most brand conscious and a staggering 92 per cent of Japanese women own a Gucci bag, 57 per cent own a Prada one, and 51 per cent own a Chanel bag.

In fact, Japanese passion for luxury brands is so huge that they account for over 40 per cent of worldwide sales for most major luxury brands. Meanwhile, Asia accounts for a third of Louis Vuitton sales worldwide whilst Cartier depends on the region for half of its worldwide sales.

And what of China? According to the China Brand Strategy Association, 175 million Chinese people can now afford to buy luxury products. By 2010 their number is projected to reach 250 million. Already, Chinese consumers are responsible for about US$10 billion of global luxury sales. Following the announcement of the US$586 billion stimulus that is expected to encourage increased spending, 70% of consumers confirmed that they will spend more in the next 6 months than they did in the previous 6 months.

Rolls Royce, the iconic British luxury brand owned by BMW, expects to double annual sales volume from 1,000 to 2,000 when the new, smaller ‘Ghost’ is launched in 2010, many of the early enquiries for the yet to be launched model are from Asia. Not bad considering each car will cost over US$200,000.

So, with all this new found wealth in Asia, the time is ripe for the development of Malaysian luxury brands. And the good news is, Malaysian firms know how to manufacture quality products. They’ve been doing it for years for iconic brands such as Apple, GAP, Guess, Ralph Lauren and other well known global brands.

But developing a luxury brand is also like raising a family – it requires a long-term commitment and investment, attributes that don’t sit well with corporate Malaysia. It also requires limited production, value over volume, even with a successful line. It also requires quality, not only in production but also in marketing and service, especially service. Training of staff is key. Walk into the Cartier store in Kuala Lumpur and the staff will assess you based on a number of pre-determined factors. Pass the test and they’ll offer you a bottle of champagne to anesthetize the pain of the purchase!

Ongoing research is also critical to the long-term success of the luxury brand. Back in 1837, when Hermes was building its brand, the founders lent new products to customers to get feedback on how the products could be improved. Zara applies the same tactics today. If a new line doesn’t sell, it is pulled off the shelves immediately and replaced with a new range based on customer feedback on styles.

One mistake many brands make is that they ignore existing customers, preferring to always acquire new customers. The successful luxury brands have an ongoing relationship with their best customers who become brand ambassadors and grow the family.

And for those cynics who don’t think Malaysians can build luxury brands or that there is any money in luxury brands, think of Jimmy Choo, the closest Malaysia has come to a luxury brand. Six years after Jimmy Choo sold his 51% stake in his own company for US$25 million, TowerBrook Capital Partners recently paid more than US370 million for ownership of the iconic brand named after the charming cobbler born in Penang in 1961. And with annual sales that have grown since 2001 at a compounded rate of over 45% to more than US130 million today, the purchase looks like good value.

Another British based private equity group, Permira, paid US$3.5 billion a couple of years ago for the Valentino Fashion Group. This was one of the most talked about acquisitions of the year because although Valentino is a well respected brand in Europe, it does not have the penetration in Asia of say Giorgio Armani. This is reflected in the global sales of US$340 million for Valentino compared with US$3.1 billion for Giorgio Armani.

There is also a strong argument to suggest that luxury brands are recession proof. At the end of last year, when the American economy was in free fall, Saks Fifth Avenue had a massive sale, offering huge 70% discounts on iconic brands such as Manolo Blahnik and even Prada. However, at the Louis Vuitton shop inside the luxury department store, nothing was reduced. Recently, Moët Hennessy Louis Vuitton announced that sales in its fashion and leather goods division, which includes Louis Vuitton, increased by 11% to $2.1 billion in the first quarter of 2009.

So, as the average tourist spends only 22% of his budget on shopping in Malaysia compared with 50% in Hong Kong and Singapore, the time is ripe for Malaysian firms to start building brands that can take pride of place alongside Canali, Ermenegildo Zegna, Jean-Paul Gaultier and Versace in places like the Pavilion, Star Hill and other prominent malls in KL.

Is it time to put positioning to bed?

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40 years ago this year, Jack Trout published his first article on positioning. But the term didn’t really become advertising jargon until his articles entitled “The Positioning Era”, were published in Advertising Age in the early 1970’s.

There are numerous definitions of what positioning is today but to ensure we’re all on the same page, I propose this version: http://en.wikipedia.org/wiki/Positioning_%28marketing%29

But in today’s marketplace, positioning has multiple problems:

1) Positioning is immeasurable: You can’t say “our positioning has improved our sales by 5 % or as a result of our positioning strategy, our brand is 12% better than competitions. Furthermore, it is impossible to measure the ROI or benchmark positioning.

2) Positioning is only suitable for mass markets. Yet branding today is about segmentation and communicating and engaging with those segments via relevant channels and with messages that resonate specifically with those segments or niche markets. Does this mean that a company should develop different positioning for different niches?

3) Positioning is suitable for mass markets with limited competition and limited consumer access to media and information. Today, consumers can get any information they want on anything from anywhere.

4) The wikipedia definition is a top-down, company knows best, hierarchical marketing approach. Yet we live in a C2C environment in which consumers define brands.

5) Positioning is one-way. The company knows best and you must listen to us. We tell you how our products are positioned. But today, if you are not entering into 2 way conversations with consumers you are about to join the brand graveyard.

6) Positioning was developed for the US mass market of the 1970’s. But we’re in a globalized world now, with much more competition and more knowledgeable consumers.

7) Positioning is competition, not customer driven. The basic premise of positioning is that you want to be number 1 or number 2 in a category in a prospect’s mind. If you can’t be number 1 or number 2 in an existing category because of competition, you make your own category. In today’s congested marketplace, the investments required to develop a new category are enormous. Furthermore, besides the difficulty and expense of creating your own category, you are also letting your marketing be driven by the competition rather than consumer demands for value.

8) Positioning is dated. With limited competition (by today’s standards) in most categories, positioning was a compelling theory. The problem is that the world has changed a little since 1969. Yet agencies continue to recommend positioning as the foundation for any brand strategy.

9) Positioning uses mass market channels such as TV and billboards to reach as many consumers as possible using repetition to create interest. Yet ask yourself, what do you do when the commercials come on? Surf? Put the kettle on? Go to the bathroom? Text a friend? Surf the web? Basically, do anything but watch the commercial. Same with billboards. How many billboards can you remember from your morning commute?

10) Positioning requires massive, and I mean massive budgets that few companies have. If you do have a massive budget and you do execute your campaign across multiple channels for say six months, what happens if it doesn’t work?

So my question is, what are agencies doing recommending a theory that was developed before the PC was invented? I welcome your comments.