Common Brand Problems

Over the past twenty years, I have helped more than 200 brands in a wide variety of product and service categories. Here are the most common problems that brands seem to encounter.

• A disruptive technology has made the brand's core product obsolete. Example: Kodak.
• The brand's level of service and product innovation has not kept up with the competition. Example: Burger King.
• Stuck in the middle. The brand is neither low cost/high convenience nor does it deliver a high-end or unique customer experience. Example: Sears.
• The brand has extremely low customer awareness. Example: many start-up brands.
• The category has matured and all of the brands in the category seem to offer the same product quality, functions and features. Example: this has occurred in many categories.
• The category has been infused with new life through investment in advertising/marketing, but the brand in question has not participated in that investment. Example: any insurance brand that has not begun advertising at a fairly high level.
• The CEO or other organization leader has created a dysfunctional culture. Example: more brands than you would think.
• The brand's leadership is risk-adverse and so the brand (and its products and services) has not been proactive about reinventing itself. Example: numerous brands, Hallmark being one of them.
• A venture capital firm buys the brand, strips out costs and assets, dresses the company/brand up for sale but has not really invested in the long-term viability of the brand. Example: I have encountered many examples of this. I do not want to name them.
• Profit-focused management driven by Wall Street demands has gradually reduced the quality or increased the price of the brand's products (or both) until the perceived value is noticeably diminished. These actions can also be influenced by retailers such as Walmart that have huge leverage over manufacturers and how they price their products. Example: Newell (Rubbermaid). 
• In the effort to increase sales significantly, a more upscale brand broadens distribution to a mass channel, significantly diminishing its brand cache. Example: Columbia (vs. Patagonia or North Face).
• A brand walks away from or ignores its primary differentiating benefit in an effort to broaden its offering and gain more sales across more customer need segments. Example: Volvo (safety).
• A premium brand extends its product line down to the mass market but in so doing risks decreasing the social status associated with the brand. Example: BMW, Mercedes-Benz and Jaguar have had to grapple with this tradeoff as they try to extend down into the aspirational or mass luxury market
• Through rapid expansion and wild success, the brand becomes ubiquitous increasing the difficulty of maintaining uniform quality standards and feeling more commonplace in peoples' minds. Examples: Nike and Starbucks.
• The company and brand have been complacent for a long time, so much so that they have not kept up with evolving customer needs or the competition. Examples: Boy Scouts and Girl Scouts.
• The brand's product or service is so new, revolutionary or complex that people really don't understand what it does or how it works. This is a communication problem. Example: I have encountered this with several high-tech start-up brands that are based on new product concepts.
• Management does not have a good understanding of who their target market is, what they really want or what messaging or product configurations would work best for them. Example: I have encountered this more often than one might think. Stuhrling (watches) is one example of this.
• The brand has a ill thought through pricing or distribution strategy that does not support the positioning of their brand. Example: I have had a few clients that have had these problems. 
• The brand's founder, leader or spokesperson has encountered personal problems that reflect negatively on the brand. Examples: Anita Bryant and Sunkist and President Donald Trump and the Trump brand.

Hopefully, none of these problems seem familiar to you or applicable your brand. If they do, you need to take action before it is too late.

  

How Can Start-Up Brands Beat Well-Known Brands?

I was recently asked two related questions: Why are new no-name brands able to topple big decades old brands in today's environment? How can a small start-up brand effectively challenge older established brands?

There are so many different ways to answer this, many related to technology, but some also related to legacy brands resting on their laurels. The advent of digital photography (invented by Kodak) killed Kodak's previously highly profitable business model that was driven by film purchase and developing. This disruption was amplified by the advent of smart phones with built-in cameras. 

Uber's online platform not only revolutionized and democratized the way people can get rides but it also made it much simpler to find, hail and pay for a ride. Plus, it provided for a record of one's paid automotive excursions. This is an innovative model that is scalable and has network effects. Also working in Uber's favor is the general low level of quality of taxi service compared to the service offered by Uber drivers driven by a constant customer feedback loop. 

Though backed by a lot of money from Pay Pal's founder Elon Musk, Tesla also has made significant inroads vis-a-vis legacy automobile brands. It has done this by sheer strong will and innovation. From its vigorously pursuing the concept of a luxury all electric vehicle to its sales and marketing innovations, Tesla has taken the risks to do things differently. 

The Internet also makes it easy for smaller companies to seem bigger than they are and compete effectively with larger, more well-known companies. And the customer targeting offered by Facebook and other social media platforms makes it more cost effective to go after highly targeted customers. 

CarMax, though supported with major funding, came into existence because legacy used car dealerships did not treat customers well. CarMax saw the opportunity to make automotive purchasing easier and more transparent. Again, it relied on an innovative business model and a transformative technology, a database that can be accessed from anywhere through the Internet. 

Airbnb is another example of a brand that has used the Internet as its platform to achieve scalability. But it also is driven off of the concept of shared resources. This same sharing of resources has worked for Zipcar and Zagster.

So, in summary, these examples point to the following sources of legacy brand disruption and displacement:

• An innovative business model
• A superior model of customer service delivery
• New superior technologies
• The Internet
• Software-driven solutions
• Scalability
• Network effects
• Resource sharing
• Product differentiation
• Highly targeted marketing

Brands, Change & Innovation

The rate of change in our society continues to accelerate. This causes many people quite a bit of anxiety. Emerging technologies have replaced millions of jobs but, so far, they have created more jobs than they have eliminated. 

Consider what digital photography (invented by a Kodak scientist) did to Eastman Kodak company. Consider what Uber is doing to traditional dispatcher-led taxi cab companies. Consider how airbnb.com is impacting the growth rate of hotel chains. What did laptop computers do to desktop computers? How are pad computers and smartphones impacting laptop computer sales? Consider how Hallmark and American Greetings are impacted by digital technology. Consider what CreateSpace and other self-publishing platforms have done to traditional book publishers. What will artificially intelligent medical diagnosis systems do to medical internists? With self-driving automobiles, how will the auto insurance business change? What will Tesla and its battery-driven vehicle revolution do to the oil industry (and the auto industry and gas stations)? Where will drones ultimately take us? What will increasing aerial surveillance do to our ability to capture criminals and prevent wars? Consider that AI experts are exploring how to give computers the capacity to innovate. And this is just the tip of the iceberg.

Consider how Einsteinian physics superseded Newtonian physics and consider how quantum physics recast Einsetinian physics and consider the potential impact of superstring theory and multiverse theory. 

Research universities and company R&D labs are working on these disruptive technologies - energy storage, fuel cells, genomics, advanced materials, autonomous vehicles, renewable energy, advanced robotics, 3D printing, mobile Internet, automation of knowledge work, cloud technology, integrated digital design and photonics.

We were recently approached by a company that is on the verge of commercializing human organ regeneration. And consider the LED revolution. Incandescent and florescent lightbulbs may soon become historical artifacts. And several companies are working on developing direct computer-brain interfaces.

In a rapidly changing world, no business is safe from technology-driven obsolescence. So, what is a brand manager to do? For that matter, what is any business manager to do? Here is what will matter for future survival, and more importantly, to thrive well into the future - higher education, advanced degrees, lifelong learning, a solid understanding of math and science, diverse interests, diverse reading, personal flexibility, ideation skills, courage in the face of uncertainty, the ability to change course at a moment's notice, understanding the intersection of many different scientific disciplines and technologies, an opportunistic attitude, entrepreneurship, the ability to take risks, a penchant for action, an optimistic attitude and the ability to discern patterns and recognize meta-themes.

Trademark Law

As a brand steward, you must be aware of the laws under which legal protection is available. First, trademark law protects a brand’s identity. That is, it protects names, titles, taglines, slogans, logos, other designs, product shapes, sounds, smells, colors, or any other features that distinguish one source of products or services from another. Trademarks that protect services are often called service marks (“SM”). There are also “collective membership marks” (e.g., Boy Scouts of America) and “certification marks” (e.g., UL approved). Harley-Davidson filed to federally register the sound of its motorcycle engines. Dirt Devil vacuum cleaners are strongly associated with the color red. Geico owns the gecko icon. 

Trademarks, like brands, build in strength over time. The test for trademark infringement is “confusing similarity.” Put another way, if the average consumer believes both products to have come from the same source, there is infringement. Obviously, the more a consumer is familiar with a particular brand, the more defendable its mark. That’s why it behooves a company to do the following:

• Choose a distinctive mark, including a “coined” name. As I mentioned in the chapter on brand identity, brand names range from generic and descriptive to suggestive and arbitrary or fanciful (“coined”). Obviously it takes longer to build meaning for coined names, but they are also more distinctive and easiest to protect legally. Kodak, Xerox, and Exxon fall in that category. Suggestive marks are the next most protectable. Examples include Coppertone, Duracell, and Lestoil. Even common words can be used as trademarks as long as they are not used descriptively. These common words/phrases are also suggestive marks: Amazon (big), Twitter (brief and chatty), and Apple (different, offbeat). Descriptive marks are not protectable unless the brand creates a secondary meaning for the word, such as Weight Watchers, Rollerblade, or Wite-out. Generic marks, such as Shredded Wheat and Super Glue, are not protectable at all.
• Avoid geographic names as a part of your mark—they can be the basis of trademark refusal.
• Register the mark.
• Be consistent in the use of the mark.
• Create strong trade dress (as discussed later in this chapter).
• Widely advertise and distribute its trademarked products.
• Do all of this over a long period of time.

Because the strength of a mark is dependant upon consumers’ familiarity with it, it is much easier for a competitor to neutralize your mark soon after it has been introduced than after it has been in use for a long period of time. Courts use the following tests to determine infringement:

• Strength of the trademark claiming infringement.
• Similarity of the two marks.
• Evidence of consumer confusion.
• Care a consumer takes in comparing products.
• Intent of the organization in using the potentially infringing mark. (Some drugstores and grocery stores use generic brands that emulate a leading brand’s package shape, colors, typestyle, formulation, etc., and display the product side-by-side with the leading brand to imply that there are no differences between the two, encouraging consumers to purchase the lower-priced generic item. In this situation, there is clearly intent to emulate the leading brand and reduce the perceived differentiation and value advantage of that brand, but it is not clear that there is intent to deliberately cause confusion as to source.)
• Relatedness of the two businesses.
• Overlap between communication and distribution channels.

By using the mark in association with your products and services over time, you gain trademark protection. Registering your mark (marks can be registered at the state and federal levels) provides additional protection. Although common law and federal trademark statute protect an unregistered mark, registering your mark transfers the burden of proof to the second comer in challenging a mark’s registration. With federal registration, you can sue infringers in federal court. Also, after five years of registration, the mark becomes incontestable. Federal trademark registrations last ten years and can

be renewed every ten years ad infinitum.

You can acquire trademark rights in one of two ways. To acquire trademark rights based on use in commerce, you must be the first person or organization that uses the mark in conjunction with the products or services for which trademark protection is sought. To acquire the mark base on intent to use, you must apply to  register the mark through the United States Patent and Trademark Office.

Before choosing a trademark, first conduct a simple search to weed out marks that are not available. This search can be done online for free (for a list of online resources go to www.brandforward.com). After that, for the remaining candidates, conduct a full search through a law firm specializing in trademark law or through an experienced trademark search firm.

Strong brands run the danger of becoming category descriptors. Always use trademarks as adjectives, not verbs or nouns. If your brand is in danger of becoming a category descriptor, consider talking about your brand in the following way that differentiates the brand from the category. For example: “Jell-O® gelatin,” “Kleenex® facial tissue,” and “Xerox® photocopier.”

Note: I am not a lawyer and this blog post is not legal advice, but rather is meant merely to help you consider the legal issues in brand management. When actually dealing with any specific issues in this area, please consult with lawyers who have an expertise in intellectual property law.

(c) 2016 Brad VanAuken. Reprinted from Brand Aid, second edition.

Origin of the "Kodak" Name

Kodak is perhaps one of the best examples of a coined brand name. It was registered as a trademark in 1888, having first been used in 1887 as the name of a camera. I personally like the name because it is easy to pronounce with the same strong consonant at the beginning and the ending of the word and with pleasant vowel sounds in between. Since 1888, the name has been applied to hundreds of products produced by the Eastman Kodak Company. In 1920, Samuel Crowther of SYSTEM Magazine quoted George Eastman's explanation of the name's development: "I devised the name myself...the letter "K" had been a favorite with me -- it seems a strong, incisive sort of letter...It became a question of trying out a great number of combinations of letters that made words starting and ending with "K." The word, 'Kodak' is the result."

I list Kodak as one of the seven brand names I admire in the blog post, Seven Absolutely Brilliant Brand Names. Here is another blog post on brand naming.

Brands Must Transcend Product Categories

When I was named director of brand management and marketing at Hallmark, most of the company’s leadership team viewed the company as a greeting card manufacturing company.

With the advent of the Internet, it was easy to foresee the demise of “ink on paper” greeting cards.  I felt it was my duty to get the company’s leadership team to think about our business more broadly. Ideally, brands stand for customer values and benefits, not specific products.

It was clear through research that Hallmark helped people maintain their relationships and express their feelings. Based on this, we determined that Hallmark should stand for “caring shared.”

At the time, Hallmark was mostly manufacturing “ink on paper” products – greeting cards, giftwrap, paper plates and napkins and related products. It also produced calendars and day planners. It outsourced collectable Christmas ornaments and other small gifts. Most of these were produced in Asia.

I saw an opportunity for giftable candy and flowers and other “just a little something” gifts.  In fact, we worked with another Kansas City company, Russell Stover, to produce a co-branded upscale giftable chocolate collection.  And a group of us proposed a national florist network acquisition that far exceeded all of the company’s financial hurdles for new businesses and provided a platform for online order processing and significant add-on sales.  The best part of that acquisition is that the revenue and profit streams were very predictable for five years into the future due to outstanding yellow pages contracts (guaranteed first full page ad under “florist” across the nation). The best part is that Hallmark did not need to handle the flowers. It just recruited the right high quality florists, gave them a portfolio of floral arrangements to sell and processed people’s purchases by credit card. The company’s leadership team turned this opportunity down due to risk aversion.

I led the company into the digital age by innovating and launching “The Birthday Times,” “Letter from Santa,” “Peanuts Personalized Cartoon Strips” and other personalized social expression products printed in card shops using Tandy computers. I also developed a joint venture with Microsoft to create “Greetings Workshop,” greeting card software for the home. After that, I was on the advisory committee for the first website that would produce Hallmark’s online greeting cards. And I developed the concept and business plan for a joint venture with Kodak that focused on personalizing wine labels, ties, calendars, scrapbooks, t-shirts and a wide variety of other products with personalized photos and messaging. This joint venture (Image Gallery) was headquartered in Colorado and lasted for a few years.

In an earlier career role, as a new business strategist in Hallmark’s Product Discovery & Development division, I developed and tested the concepts for experiences and services as gifts, “just a little something” gifts and products for grandparents to share with their grandchildren. We also determined that it was possible for Hallmark to stretch the brand as far as offering branded romantic cruises for couples.

So, what happened to all of these endeavors to move Hallmark from a company reliant on manufacturing greeting cards, to a company known for helping people share their feelings and enhance their relationships? The comfort zones of the senior most leaders in the company. They knew how to manufacture greeting cards and sell them through card shops (and later, the mass channels). But they felt far less comfortable with other types of business models.

I left soon after discovering that Hallmark would never move that far from its roots, unnecessarily stunting its future growth prospects.  In fact, many senior managers left shortly after the corporate officers passed on acquiring the florist network, an acquisition that to this day I believe could have been transformational for Hallmark.

So, what are the key takeaways from this example?

• Do not define your brand as a product category. It will limit its growth potential and eventually lead to its demise.
• A brand should stand for something and share values with its customers or at least promise customer benefits, especially emotional benefits.
• The more different types of products that can be offered to deliver on a brand’s promise, the stronger that promise becomes.
• Defining a brand’s promise based on values or benefits (versus product categories) potentially extends a brand’s life indefinitely.
• Senior leadership must buy into the brand’s promise and not be afraid to invest in new product and service categories to deliver on that promise.
• Brands can enter new product or service categories through mergers, acquisitions, joint ventures, licensing or internal development.  Don’t limit the way you extend your brand into new categories to internal development only.

Seven Absolutely Brilliant Brand Names

Brand names need to be short, easy to pronounce, easy to remember, allude to the brand's benefit and evoke positive emotions. They also need to be legally protectable. Here are the brand names I like best and my reasons why.

• Amazon.com - Amazon means big. When you think of the biggest online store (with apologies to Alibaba.com), Amazon.com is it.
• Tesla - Tesla was a revolutionary genius who evokes awe. He is most associated with the invention of AC electricity. What better name could there be for an automobile company focused on an all-electric car?
• Apple - Apples are appealing. Apple pie is about as all-American as it gets. Apples with a bite taken out of them are tempting. An apple is a simple, recognizable icon.
• Kodak - Kodak is a completely coined name. It had no prior meaning. It is easy to pronounce with nice vowel sounds and a clean beginning and ending.
• Die Hard - This name, perhaps more than any, directly communicates the brand's benefit in its product category, batteries. And it is short and easy to pronounce and remember.
• Wrangler - This just sounds tough and western. It evokes the imagery of a wrangler. And what do wranglers wear? Jeans.
• Dove - One simple one-syllable word says it all - pure, soft, gentle, serene. Everything one would want in a bar of soap.