Brand strategy is business strategy, yet examples abound of Fortune 500 CEOs unable to grasp this simple truth.

If an interview in The Wall Street Journal is any indicator, the latest demonstration of this inability to grasp the obvious comes from the Chief Executive of Circuit City Stores Inc.

Too often the new CEO of an under-performing company focuses first on cost-cutting rather than revenue growth. The reason is that cost-cutting is easier than increasing sales. A cost-cutting plan may also be more quickly implemented, telegraphing “action” to a quarterly-focused Wall Street.

In contrast, developing a plan to build sales while increasing margin is more difficult, and more time consuming. It requires the CEO to ponder why their organization and products matter in a competitive marketplace.

To effectively drive sales, the CEO and his/her team must be able to define why they are, so that they become the only logical choice for what they offer. For many an otherwise certified smart CEO, it is a counterintuitive task at which many languish and even fail.

In the Wall Street Journal Q&A with Circuit City’s CEO, Philip J. Schoonover offers this:

WSJ: How is Circuit City’s multichannel approach — store, Internet and call centers — any different from the approach of its two bigger rivals, Best Buy and Wal-Mart Stores Inc.?

Mr. Schoonover: We have a culture that is beginning to cooperate and work together to provide a customer experience that is different and better. One example is our 24/24 promise. Order online, and we’ll have your purchase ready for you at a store in 24 minutes. If not, we’ll give you a $24 gift card. Our technology is unique and allows us to make that promise. Another is content. We have product reviews by leading consumer magazines. We have a whole explanation on what you need to make this new digital entertainment world work.

Mr. Schoonover claims Circuit City is different by being “unique” and, well, “different.” Instead, he would do well to look at the recent experience of another CEO who failed to understand the importance of articulating a simple brand promise demonstrating a memorable point of difference, and the predictable result.

The story of Paul Pressler’s reign at The Gap offers a cautionary tale of what happens when a CEO fails to think of brand strategy as business strategy. It is a lesson best illustrated by the backstory of Mr. Pressler’s failed development of a new Gap Inc. retail concept, Forth & Towne:

Gap designed Forth & Towne to offer baby boomers a miniature version of the department stores they grew up with, stocking four different labels under one roof…

Forth & Towne, or F.A.T, …never developed an engaging story to support the concept. And it never settled upon a single point of difference to set it apart from competitors. Forth & Towne tried to be too much for too many audiences.

How did this happen?

In a stunning display of corporate homogeneity, the suits at The Gap failed to articulate a simple guiding promise for the new brand, as demonstrated by how they settled upon a name for the new concept which offered no clue of a reason to care about it. The team at Gap Inc. thought they were playing it safe, when instead their decision had the effect of issuing an execution order for the new concept before it was launched.

Circuit City’s CEO makes the same mistake, as he fails to articulate what about Circuit City is truly different when compared to competitors such as Best Buy, Costco, and Wal-Mart. By speaking in platitudes, Mr. Schoonover fails to demonstrate why Circuit City exists, so that they become the only logical choice for what they offer.

This failure to focus on brand has been devastating.

Mr. Schoonover became CEO at Circuit City in March of 2006. Three months later Circuit City shares traded at a high of $30.49. Since then the stock has fallen to $4.95 per share at market close on February 12, 2008, a decline of 83% in some 20 months.

Yet a turnaround could be achieved with an effective rethink of the Circuit City brand.

But that takes guts, and appropriate leadership.

[More posts about Brand Relevance | More posts about Circuit City Brand Reputation | More posts about Brand Promise | More posts about Brand Differentiation | More posts about Consumer Electronics Branding | More posts about Retail Branding | More posts about Brand Strategy | More blogs about Retail Branding]

When attempting to unite a series of brands within a single message, an umbrella brand strategy is one way to get your consumer, audience, or constituency to make you their first choice.

An umbrella brand is a high altitude articulation of difference and benefits with several sub-conversations captured beneath. It unites a series of sub-brands with one voice, leaving room for each sub-brand to engage in sub-conversations relevant to more precisely targeted markets, through use of different products, communication channels, and promotional means.

As with all effective brand strategy, umbrella brands require a single message, an expression of a common sense benefit grounded in human emotion opening the way to own the conversation within a business category.

Umbrella brands abound in business; examples include Virgin, Kellogg’s, Apple, and location brands such as Japan, Manitoba, and St. Louis.

For example, an umbrella brand strategy will assist a nonprofit organization seeking to unite diverse local affiliate needs with a national headquarters operation, by allowing room for each affiliate to share a national brand promise while demonstrating brand relevancy to their own local markets.

Picture your nonprofit [or for-profit] organization communicating a clear, emotionally-engaging message, elevating the organization into the national consciousness. You could extend your benefits delivery, increase your resource base, and further your market penetration. Ask us about how we can help you turn this vision into a reality.

[More posts about Brand Promise | More posts about Brand Relevance | More posts about Umbrella Brand Strategy | More posts about Nonprofit Organization Branding | More posts about Umbrella Branding | More blogs about Umbrella Brand Strategy]

We like this quote from Thomas Friedman, from his book The World is Flat:

“There is nothing wrong with [a] complicated idea…, but if you want to convey a complicated thought to a mass audience, you have to first condense it into something digestible and believable. Once you grab someone’s attention, you can pour in the details.”

Friedman’s insight points to the power of simplicity in communication. With all of seconds to attract the attention of any audience, Friedman’s is good advice for any organization or product brand seeking to demonstrate relevance in answer to the implicit question asked by any audience — Why do you matter to me?

[More posts about Brand Simplicity | More posts about Thomas Friedman | More posts about Brand Relevance | More posts about Brand Promise | More posts about Brand Strategy | More blogs about Brand Simplicity]

The power of emotion behind decision-making comes from what might seem a surprising source.

Alexis de Tocqueville, a young aristocratic French lawyer, traveled to the United States in 1831 to study its penal system. His visit resulted in the classic De la démocratie en Amérique, also known as Democracy in America, a 19th century masterpiece of United States cultural and political analysis. de Touqueville offers this insight of the power of highly charged imprints upon the human mind, and how they guide us throughout life:

[To understand a man] we must watch the infant in his mother’s arms; we must see the first images which the external world casts upon the…mirror of his mind, the first occurrences which he witnesses; we must hear the first words that awaken the sleeping powers of thought, and stand by his earliest efforts—if we could understand the prejudices, the habits and the passions which will rule his life. The entire man is, so to speak, to be seen in the cradle of the child.

Some 170 years ago, de Tocqueville had it right. To understand any audience and identify the basis upon which decisions among competing choices are made, good brand research uncovers what the individual does not know they know, by reaching into the subconscious and uncovering what was experienced - imprinted - at an early age.

It is these imprints — the experiences of early childhood — that form the context through which an individual will view the world throughout their life and, as it relates to an understanding of brand effectiveness, react to communications seeking to influence them. These subconscious imprints, or mental codes, each communicate relevance, assurance, childhood joy, trust, and an expectation. The stronger the emotion associated with the experience, the stronger the imprint. Think of it this way, in an example from The Culture Code:

[A] child [is] told by his parents to avoid a hot pan on a stove. This concept is abstract to the child until he reaches out, touches the pan, and it burns him. In this intensely emotional moment of pain, the child learns what “hot” and “burn” means and is very unlikely ever to forget it.

Imprints are the subconscious memories we file away, forgetting them until they are recalled at some later date if the appropriate emotional trigger is experienced.

Before the importance of research into the effects of human emotion upon brand development was understood, de Tocqueville prophetically pointed the way to success. He could foresee the power of imprints, those first impressions, in most any effort to own the conversation within any industry.

Surfacing these imprints, this context, and understanding each as they relate to the relevance and reputation of your organization or product or city, is what leads to the story behind a brand that becomes unforgettable, and one taking its place alongside others ingrained in popular culture.

[More posts about Brand Relevance | More posts about Brand Research | More posts about Emotional Branding | More posts about Alexis de Tocqueville | More posts about Brand Strategy | More posts about Democracy In America | More blogs about Brand Research]

Notwithstanding the recent musings of its chairman, Starbucks these days is thinking of itself less as a coffee chain and more as a global platform with over 13,000 points of distribution. As reported in the New York Times:

When Bette Gottfried, a 48-year-old regular at a Starbucks in Ardsley, N.Y., saw that her favorite coffeehouse was promoting a film, she wasn’t immediately interested. “At first I was leery,” said Ms. Gottfried, dressed in workout clothes, wearing her hair in a ponytail and sitting near the window with her daily decaf mocha (“low-fat milk, no foam, no whipped”). “I thought, ‘Who are they to get involved in the movies?’ ”

Ultimately, however, she decided to take her 9-year-old daughter to see the film, “Akeelah and the Bee,” precisely because of the involvement of Starbucks. “I trusted seeing the movie, because it was promoted here,” she said. After all, she liked the company’s coffee; she had already bought and liked several CD’s it produced and sold, compilations of music by Carole King, Tony Bennett and Frank Sinatra. Why wouldn’t she like a Starbucks movie? She did, and now she’s considering picking up its latest cultural sales item: “For One More Day,” a book by Mitch Albom…

[Starbucks] is increasingly positioning itself as a purveyor of premium-blend culture. “We’re very excited, because despite how much we’ve grown, these are the early stages for development,” said Howard Schultz, the chairman of Starbucks. “At our core, we’re a coffee company, but the opportunity we have to extend the brand is beyond coffee; it’s entertainment.”

…Schultz explained, “With the assets [we have] in terms of number of stores, and the trust we have with the brand, and the profile of our customers, we’re in a unique position to partner with creators of unique content to create an entertainment platform and an audience that’s unparalleled.”

…As Mr. Schultz sees it, customers get a new cultural experience and Starbucks gets a “halo” — the associations people have with beloved music, with “quality, good will, trust, intelligence.”
…

“It adds to the emotional connection with the customer,” said Mr. Schultz, and keeps the Starbucks experience from feeling, as he put it, “antiseptic.”

This strategy of rethinking Starbucks as a platform through which to feed a range of music and other entertainment product offerings relies upon the law of borrowed equity — use of the reputation of another brand to add value to your own. Whether for Starbucks, or a casual dining chain such as Applebee’s, such a strategy can work, but only if those entrusted with the brand remain focused on their core product offering.

Difficult to accomplish, extending a tightly focused brand to a “platform” outside of a core product category. But it is possible. Just ask Virgin.

[More posts about Brand Management | More posts about Brand Relevance | More posts about Brand Extension | More posts about Retail Branding | More posts about Restaurant Branding | More posts about Beverage Branding | More posts about Emotional Branding | More posts about Starbucks Brand | More posts about Applebee’s Brand | More posts about Virgin Brand | More blogs about Brand Extension]

Denis Hennequin, a graduate of one of Paris’ top law schools who joined McDonald’s after deciding it would be more “fun” than being a lawyer, leads the McDonald’s effort to own the conversation in Europe. Mr. Hennequin demonstrates how a brand is your sole appreciating asset, in this report from the Los Angeles Times:

“I’m changing the story,” Hennequin says. “We’ve got to be loyal to our roots, we have to be affordable, we have to be convenient … but we have to add new dimensions.”

These dimensions include putting iPods in restaurants in France so that people can sit and listen to music, making better coffee from beans grown ethically and sustainably and introducing a “McPassport” so young staff members can work at any restaurant in Europe.

The changes seem to be working. Sales at McDonald’s Corp.’s European franchises are growing faster than in other regions. In January, Europe (which accounts for about 36% of annual profit) reported quarterly sales growth of 7.3% against 5.9% in the United States.

…The success of coffee chains such as Starbucks, which appeal as much to workers on the move as to students, has forced companies such as McDonald’s to create a more sophisticated eating environment.

…The restaurant chain recently reported [a] record annual [global] profit of $4.4 billion.

But it is developments in the European business that may provide the best guide to where the McDonald’s brand is going…

Hennequin, [President of McDonald’s Europe]…has a three-pronged strategy: Improve the experience of customers and employees, make sure restaurants adapt to local communities and be more transparent about how McDonald’s does business.

McDonald’s Europe is onto something, in thinking of their brand as the story they tell across every material touchpoint. C’est tout ce que j’aime.

[More posts about Brand Management | More posts about Brand Relevance | More posts about Global Branding | More posts about Restaurant Branding | More posts about Brand Story | More posts about McDonald’s Brand Strategy | More posts about Brand Strategy | More posts about McDonald’s Europe | More blogs about Brand Relevance]

Many U.S. based casual dining restaurants fail to differentiate themselves, or so says The Wall Street Journal:

Seared ahi tuna, cedar-plank tilapia and bruschetta hamburgers — they’re all on the menu as casual-dining chains delve beyond comfort food to hook more sophisticated palates. The question is whether customers will take the bait…

Applebee’s International Inc., the nation’s largest casual-dining chain, overhauled its menu in October with dishes from television chef Tyler Florence, in part to lure higher-income clientele. The new dishes don’t have “this big pile of mashed potatoes” that accompany many of the chain’s entrees, Applebee’s Chief Executive Officer Dave Goebel says. Items include a hamburger loaded with a bruschetta-style topping of pesto and diced tomatoes served with wedges of mozzarella on grilled focaccia. It comes with a side of garlic french fries sprinkled with Parmesan cheese.

For years, Applebee’s held back on adding more contemporary items out of concerns its customers wouldn’t accept them, Mr. Goebel says. “That was an injustice,” he says. “We had stereotyped a little too narrowly.”

…While a few chains say that some items haven’t been popular, several chains credit the updated menus with driving sales. Applebee’s says its most frequent customers like the new items as much as or more than the old dishes. Still, Applebee’s same-store sales, a key measure that strips out new locations, haven’t reversed their slide since the chain introduced its new menu in October…

Analysts say one of the industry’s biggest problems is that chains haven’t done a good enough job differentiating themselves from one another…

Apostrophe restaurants such as Applebee’s Neighborhood Grill & Bar, Bennigan’s Grill & Tavern, and Chili’s Grill & Bar are attempting to establish competitive separation through the introduction of more sophisticated menu items. But, as the story points out, these new dishes may create little more than confusion among target consumers:

Clay Dover, chief concept officer for Bennigan’s, part of Metromedia Restaurant Group, says the recent new item tests reaffirmed that its customers prefer fried food, hamburgers and beer instead of more eclectic fare. “Our guest consumer didn’t have as sophisticated palate as we may have thought,” Mr. Dover says…

Chili’s Grill & Bar, in an effort to add bolder flavors to its menu, recently came up with a grilled tilapia seasoned with hoisin, a Chinese sauce. The chain describes the dish as a fillet brushed with a sweet-and-spicy glaze and garnished with red-chile tapenade, green onions and sesame seeds. But Chili’s ended up taking the word “hoisin” out of the description and calling it “firecracker tilapia.”

“The consumers really said, ‘You know what? That’s not who Chili’s is,’” says Dana Tilley, vice president of product innovation for Brinker International Inc.’s Chili’s.

Any way you cut it, in moving their menus upmarket each of these restaurant chains ignore a basic truth: use of descriptors such as Grill, Bar, or Tavern stereotypes the restaurant and its menu. Such stereotypes are difficult to overcome without a shift in thinking.

Instead of myopically focusing on upmarket menu changes to increase the average ticket [”of course, we’re a restaurant, so let’s change the food!”], what should occur is a rethinking of the brand beyond the menu.

As an example, with nearly 1,900 restaurants in the US and 17 countries, Applebee’s has a ready made platform to sell more than chicken wings. Rather than trying to move upmarket away from its base, Applebee’s should refocus on its core customer. What is the brand promise the chain is trying to cultivate, and how does that promise result in an image reflective of the Applebee’s customer? It’s not a stretch to think of Applebee’s in a new way, as a channel with 1,900 points of distribution, with every point representing an Applebee’s restaurant around the world.

Applebee’s proclaims itself a part of “the neighborhood.” One wonders if the company seriously examines the meaning of this important human connection, beyond creation of a slogan and a smattering of localized artifacts included on the walls of most any Applebee’s restaurant.

Applebee’s should be all about this neighborhood, as seen through the eyes of the consumer, creating a relevance that extends beyond the hamburger, bruschetta toppings or no. The company should be intently focused on the dignity and ego of the consumer within that neighborhood.

It’s all about the community Applebee’s serves and aligning with that community, that neighborhood, to create human engagement. Such a strategy will create a powerful emotional connection with the customer, and creating an Applebee’s experience that is anything but casual.

As a growth opportunity, there’s nothing casual about that.

[More posts about Brand Promise | More posts about Brand Strategy | More posts about Brand Relevance | More posts about Brand Opportunities | More posts about Restaurant Branding | More posts about Brand Differentiation | More posts about Applebee’s | More posts about Bennigan’s | More posts about Chili’s | More blogs about Brand Differentiation]

Two marketing managers, one with Samsung and the other with Hewlett-Packard, offer these comments on the importance of building brand equity in the Middle East:

“It is the brand that is bought by the consumer and the product is made in a factory. While competitors can copy a product, a brand is unique.”

“Building brand equity is very important. Research shows that more and more customers are buying brands rather than a product, so effectively communicating brand values is essential.”

True in any market, anywhere on the globe.

Read the entire interview with these and other corporate marketing managers in Channel Middle East.

[ More posts about Brand Equity | More posts about Global Branding | More posts about Brand Relevance | More posts about Hewlett-Packard | More posts about Samsung | More posts about the Middle East | More blogs about Brand Equity ]

In a story on the importance of building brand equity in the Middle East, a Hewlett-Packard marketing manager recently offered this insight on the secret of branding success:

HP aims to understand its target market. When formulating branding or marketing activity we want to understand problems customers may face and then show, through our corporate communications, how those problems can be solved with HP products. This is absolutely vital in any successful marketing activity.

So very true.

H-P’s manager identifies one of the basics of great branding; find the problem of your market. What is the pain point your customer must resolve? The distress they encounter in searching for a remedy? And what exactly is the solution you uniquely provide? Understand the answers, and begin to build the formidable competitive advantage available through branding.

Without an understanding of this pain point, your brand will flounder and perhaps fail. Examples? The MG, Song, Montgomery Ward, Polaroid.

Read the entire interview of H-P’s and other corporate marketing managers in Channel Middle East.

[ More posts about Brand Equity | More posts about Brand Promise | More posts about Brand Relevance | More posts about Hewlett-Packard | More posts about MG Rover | More posts about the Middle East | More blogs about Brand Relevance ]

Federated Department Stores in the U.S. is converting it’s May department stores, including brands such as Hecht’s, Kaufmann’s and Robinsons-May, to Macy’s.

While developing a single national brand creates obvious operating and marketing efficiencies, the Cincinnati Enquirer asks the relevant question:

[W]ill it matter that a department store brand given a national patina by a century-old parade through New York City is coming to hundreds of malls in most major American cities? Will the Macy’s appeal alone be enough to bring new shoppers to the mall?

Beyond the parade, what’s the differentiator and the emotional attraction to the brand?

A Federated spokesman says the answer will come by “reinventing the department store.” More:

“We have made stores less cluttered. We’ve reduced the size and tone of in-store signs so they’re not screaming at you. We are bringing customers more places to sit and be refreshed - sitting areas in restaurants and coffee shops.”

In short, the new department store that Federated envisions is likely to look a lot like the department store of old: a destination place to shop where customer service reigns and quality merchandise is sold at slightly more than discount prices, an approach Federated calls “affordable luxury.”

The success of Federated’s May to Macy’s conversion seemingly hangs on whether the American consumer cares about the traditional department store model, a strategy driven not by what is relevant to the consumer, but rather Federated’s real estate portfolio.

In retail, we would call that a tough sell.

In late January, Ford Motor Company announced their Way Forward plan to reverse years of shrinking market share and deteriorating margin in North American operations.

After pleading their case to Wall Street, Ford is trying to convince Main Street. As reported in the New York Times:

In a new television commercial Ford timed for broadcast just two days after it said it would close as many as 14 factories and cut up to 30,000 jobs over the next six years, Mr. Ford says his company is “determined to retake the American roadway.” The ad, titled “Rebirth,” echoes much of the restructuring plan that Mr. Ford presented on Monday and candidly acknowledges the company’s recent difficulties…

Anne Stevens, Ford’s chief operating officer, said in an interview that if Ford was to overcome the perception it was not doing enough to address its problems, candor was the best way to do that.

“We recognize the reality of the marketplace,” she said. “We’re fighting to win, and that’s what we’re going to do. This is not the time to hide.”

The 30-second commercial will appear on national television and in some select markets, including Detroit, New York and Washington, during the next three months.

The commercial and a 60-second companion spot appear on the Ford Motor website [click through Innovation is Our Mission and Driving American Innovation]. Both spots speak of Ford Motor Company in language important to Ford insiders such as the determination “to retake the American roadway,” rather than demonstrating to the American public why they should care. The spots also suffer from copy overload, ignoring a law of branding known as the principle of simplicity.

These commercials demonstrate the inability of Ford’s leadership to wrap their heads around how the buying public sees Ford Motor products. The result is a misguided reliance upon advertising strategy, rather than a tight rethink of Ford’s brand strategy.

Ford can find an ownable brand position, one creating a sustainable opportunity to regain market share, by listening to the wisdom in a verse from the Robert Burns poem, To A Louse:

O would some Power the gift to give us
To see ourselves as others see us!

We attended a book signing last evening hosted at Le Pain Quotidien in Beverly Hills, California. Chef Alain Coumont, the baker behind Le Pain Quotidien, signed copies of his just published cook+book. His tome is part autobiographical, part entrepreneurial guide and, yes, part cookbook.

This rustic bakery concept originated in Brussels. With some 58 shops located in markets such as London, New York, Los Angeles, and Rome, the company plans, according to one report, to make its way into other global markets.

The company is attempting to create for its customers a compelling story, one demonstrated at every touchpoint in the retail experience. If successful, Le Pain Quotidien will stir powerful emotions that transcend its bakery products to become something far more – a meaningful part of the lives it touches through a relevant, repeatable and evocative experience.

It’s the difference between attracting the consumer, rather than chasing them.

The difference between competitive advantage revealed daily on a P&L, or just another bread shop.