Tag Archives for brand

2 Reasons for Apple’s Distortion on Tech Sector Profitability

I received the below chart from Business Insider Monday, which highlights that without Apple the technology sector profits would be down 3% this year vs. with them profits are up 7%.  Why is Apple out performing and at such a degree against the back drop of all other technology sector companies?

Source: Chart of the Day from Business Insider
Without Apple, the tech sector's profits would have been off by 3% in 2011, according to this chart from Barclays Capital. With Apple, profits are up 7%.

There are many possible explanations and many have come before me trying to explain either the “Steve Jobs effect” or that the Apple  brand is the main component. Two points I think are at play are 1) differentiation and 2) marketing capabilities (the Big “M” marketing not marketing communications). And yes, brand is at play and I will show you that too.

First consider this statistic on differentiation, 80% of managers say their company is strongly differentiated but only 10% of customers agree (C. Zook and J.Allen, “The Great Repeatable Business Model”, Harvard Business Review, November 2011).  I think this is more true than most technology executives would allow themselves to admit. Unfortunately for those companies, this is within any organizations full control to find relevant differentiate in their respective markets.

Source: Chris Zook and James Allen, “The Great Repeatable Business Model”, Harvard Business Review, November 2011

The second is marketing capabilities, Keen’s body of academic research we know that a 1% increase in market orientation and marketing capabilities yields a 6% increase in return on assets. This coupled with a brand impact for Technology firms where 1% increase in brand equity drives over $650 million in additional cash flow the next year or over $1.3 billion in market capitalization.

Source: Keen Strategy Research

The bottom line is Apple is excelling at creating meaningful differentiation and has built the right market orientation and capabilities to manage the business and as a result the brand. Apple is also taking advantage of arbitrage (whether they realize it or not) because in the technology sector companies just are not as good on these dimensions and hence there is more upside for a firm that can get this formula right.

Top Brand Measurement Firms Can’t Agree, Are You Surprised?

I was reading a recent Adage article “Study Finds Marketers Don’t Practice ROI they Preach” where the author highlights the following:

MASB President Meg Blair noted that four major brand-valuation firms (Interbrand, Millward Brown’s BrandZ, CoreBrand and Brand Finance) peg General Electric’s brand value at between $30.5 billion to $50.3 billion. Two of those firms had GE’s brand value rising in the past year: one by 2%, one by 12%. Two showed its valuation falling: one by 4%, one by 10%.

Here is the visual from the report, which I highly recommend you download here.

GE Brand Value Comparison Chart

GE Brand Value Comparison from GE report to The MASB

Are you surprised? Probably not, we do need a better system and measures. More importantly as Ivan Cayabyab from GE points out the utility of these tools are suspect. We need more diagnostic, actionable and predictive measures of Brand Equity.

Keen® is working on this problem with our Brand Value Maximizer™ methodology. I would love to talk to you if you are looking for a better way.

Enhanced by Zemanta

Can We Save Marketing?

indecision dice

Image by snigl3t via Flickr

Over the last six years, I have had a personal interest on the verge of a crusade to better understand and study lead marketers and CMOs across industries. My concern, after meeting well over 300 leaders, is marketing is lacking influence and at some companies is considered “damaged goods”.

How do we fix it? The question I hope to answer over the coming months. There are three areas of concern, which I believe highlight the main issues.

1. Communications heavy, impact light

Historically, marketers and our peers in the executive ranks have been hyper-focused on communications – the latest ad, hot new website or now how many people “like” us on Facebook. We have lost substance and, in some cases, lack the will and determination to educate our organizations on what marketing is and is not. Traditional marketers seem to be less likely to hold the CMO post. In many of the companies I have spoken with, it is more likely that someone from sales, product or operations to be in the CMO role. The stinging reality… they are doing a better job. Why? Probably because they have a broader perspective on what is driving the business and how to harness it.

2. Losing influence, merging functions

Marketing leaders have lost influence. A recent IBM study of 1700 CMOs, show that less than half of the CMOs surveyed have much sway over key parts of the pricing process, and less than half have much impact on new product development or channel selection. Being a Marketing leader is such a herculean task of political gamesmanship to drive a cohesive strategy there is now wonder that the average tenure is still less than ½ that of the CEO. Despite these odds there is still hope as it seems a trend is growing in combining posts like Chief Commercial Officer or Chief Sales & Marketing Offer or Chief Marketing and E-commerce Officer. Although a great recognition on part of CEO and board that greater ownership is needed, they still lack the strategic focus on marketing in its potential long-term impact.

3. All-stars abandoning ship, lack of pride

My gravest concern is our very best are abandoning ship. The “best of the best” marketers that I have spoken to, rarely self-identify themselves as a marketer but rather opt for a “business leader”, “business executive”, “driver of the business”, etc. When I have asked do you consider yourself a marketer, their voice gets quiet and they say “no.” Despite the fear of being pegged a marketer, almost all agree that marketing is at the core of how they approach their jobs and that marketing with a big “M” is what more organizations desperately need.

Depressed yet. There is hope.

We have to start thinking about what matters again. We need to learn from those we think of as magicians of the practice. At the heart of what marketers are trying to accomplish is meaningful differentiation and capturing uncontested demand. “Meaningful differentiation” is difference that matters and customers are willing to pay for. As for “uncontested demand”, this term comes from Blue Ocean strategy and is the whitespace source of new demand we all seek that allows our products and services to occupy a new space that satisfies a real need not previously addressed.

Let’s all get back to what matters, which should deliver the impact, influence and pride marketers are lacking today. Help save marketing!

Enhanced by Zemanta

Renewed definiton of brand

Skittles.
by photographer PiccoloNamek and
image via Wikipedia

This is the fourth in a series of short posts related to The CMO Agenda research. Informed by recent CMO conversations and CMG Partners‘ collective experience helping top marketers develop marketing strategy, we have compiled a list of seven ideas or jump starters for further conversation. These are meant to spark discussion, ideas, and action as we all enter a difficult 2009.

The transparency and accountability of brands is increasing as new uses of the Internet drive the democratization of voice — shifting knowledge and control from marketers to consumers. This trend is forcing marketers to adopt non-traditional methods of brand management to ensure the brand is consistent not only in communications but through all customer touch points. As one CMO put it, “everything we do communicates.”

If you beleive that the true definition of a brand lies with the perceptions of consumers not with the marketing leaders, then the extreme brand management practice would be for consumers to drive the expression of the brand. Well maybe not, but this is exactly what the maker of Skittles has done (knowingly or unknowingly).

In March, Skittles re-launched their website, which used social media tools for content: Twitter for “Chatter”, Facebook for “Friends”, Wikipedia for “product information” and YouTube for “Media”. This was heralded by some and refuted as a circus trick by others (see a previous post for my take).  Unfortunately, I have not been able to find information on the performance of the campaign.

This example, whether good or bad, does provide a new theory for brand managers and bring to reality the old phrase “a brand is what others say about you, not what you say about yourself.” How will you begin to renew your brand management practices to align with consumer voice?

Mirror post at cmgpartners.com/blog

Reblog this post [with Zemanta]

Differentiate or be commoditized

This is the second in a series of short posts related to The CMO Agenda research. Informed by recent CMO conversations and CMG Partners‘ collective experience helping top marketers develop marketing strategy, we have compiled a list of seven ideas or jump starters for further conversation. These are meant to spark discussion, ideas, and action as we all enter a difficult 2009.

True differentiation is increasingly hard with faster moving markets and better-educated shoppers. This means the task of constantly exploring whether your products and services stand out in the mind of the consumer is critical.

How will you differentiate for the long-term?

Forecasting the “death of the American Brand” as one CMO said, forces you to think about the private label explosion and house brand strength by the likes of Target and big chains. These house brands are successful because very little separates them from the old standards.

This trend is happening in everything from CPG to Computers to Insurance. Dell rode the wave as it commoditized the PC market, which now tries to find a sure footing again. Even service markets like insurance are seeing this trend as GEICO and Progressive lead the charge to commoditize auto insurance and drive down prices — even large cost-ridden competitors are following them in this practice.

In this tough economic market, for many the first reaction is to discount or attempt to push value and rationale messaging, but marketers need to understand the long-term impact. It is time to reassess the market and understand current strategic impacts to make decisions and trade-offs on how your company can differentiate in a unique way.

Mirror post at cmgpartners.com/blog

Reblog this post [with Zemanta]

New brand in down market: Hilton launches Denizen Hotels

Hilton Hotels Corporation
Image via Wikipedia

Just received an email from Hilton that states they have launched a new life style brand – Denizen Hotels.

Below is an excerpt from the email announcement:

Born modern, with global appeal and a local accent

Denizen Hotels will become a cultural epicentre at each of its destinations, cultivating community within its walls. Eclectic, social and humbly authentic, each property within the brand will be smart in design, cultural in character and sensitive in service delivery. Developed as an international intersection of business and pleasure, Denizen Hotels will redefine how guests stay and play. With innovative check-in technologies and in-room comfort controlled at the touch of a button, Denizen Hotels destinations will harness the best and brightest design and technology to provide a seamless guest experience for the modern traveler.

Denizen Hotels and resorts will range from unique, select boutique experiences to larger destination resorts, creating a unified yet eclectic brand for the global traveller. Active development negotiations are currently underway for resorts and destinations in key cities throughout the globe; including, but not limited to Abu Dhabi, Austin, Beverly Hills (California), Buenos Aires, Cancun, Hollywood (California), Istanbul, Jerusalem, Las Vegas, London, Los Cabos, Miami, Montreal, Mumbai, New York City, Panama City and Washington D.C.

To become a Denizen, visit denizenhotels.com

[Caution: the Denizen website is painful to navigate and slow]

The Bottom Line:

I am an advocate for new product launches even in a down market, but have a hard time understanding how this is a good idea. The concept on the surface has legs based on my experience working in the travel industry. This is definitely a wait and see…

Reblog this post [with Zemanta]

Skittles is turning over the brand to consumers

Skittles
Image by Special via Flickr

The maker of Skittles, Mars Snackfood, is turning over the brand to consumers. The new website design at skittles.com, designed by Agency.com, is linked to social media content as its website content. The site includes wikipedia for product information, twitter comments on the home page as news and “chatter”, YouTube channel for video and Facebook to see Skittle friends.

This is a very innovative idea and I give a lot of credit to the courage of the brand managers at Mars Snackfood. Not many corporations would try something like this and I think this point is lost in the blog and twitter chatter of pros and cons.

More importantly, this is a great experiment on turning the keys over on your brand. I would say that Skittles is a fairly one-dimensional product that makes it easier to experiment than say a company like IBM.

The Bottom Line:

Short-term this is a stunt that has and will continue to get a lot of press, giving a renewed voice to one small brand in a crowded category. Success.

Long-term, less sure how this will play out, but I value the experimentation and courage displayed by the marketing team and agencies. Transparency and control are very sensitive topics for marketers and corporations to address head on and Skittles (a little brand that could) is leading here. The lesson for marketers is to watch, listen, and learn from this live experiment happening before us.

Reblog this post [with Zemanta]

Target gets advertising in a down-turn

I had to share this ad that a colleague was raving about — thanks Erin!

,

The Bottom Line:

Target in this commercial holds true to their “Expect More. Pay less.” tagline. I am really impressed with the positive emotional message of how this value consciousness, we all are facing with the economy, can be an adventure of experience. Really classy and elegant versus the other brands out their hammering the rational side of savings. Target has something here we all can learn from.