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The Total Image Group   ...Business Alchemists

A regularly updated resource of information and news items.

Posts Tagged ‘BusinessWeek’

How Ford Got Social Marketing Right

Posted Friday, March 12th, 2010

The automaker successfully re-entered the subcompact car market via the Fiesta Movement and YouTube, Flickr, Facebook, and Twitter

Businessweek, 7 January 2010

Ford recently wrapped the first chapter of its Fiesta Movement, leaving us distinctly wiser about marketing in the digital space.

Ford gave 100 consumers a car for six months and asked them to complete a different mission every month. And away they went. At the direction of Ford and their own imagination, “agents” used their Fiestas to deliver Meals On Wheels. They used them to take Harry And David treats to the National Guard. They went looking for adventure, some to wrestle alligators, others actually to elope. All of these stories were then lovingly documented on YouTube, Flickr, Facebook, and Twitter.

The campaign was an important moment for Ford. It wanted in to the small car market, and it hadn’t sold a subcompact car in the United States since it discontinued the Aspire in 1997. And it was an important moment for marketing. The Fiesta Movement promised to be the most visible, formative social media experiment for the automotive world. Get this right and Detroit marketing would never be the same.

I had the good fortune to interview Bud Caddell the other day and he helped me see the inner workings of the Fiesta Movement. Bud works at Undercurrent, the digital strategy firm responsible for the campaign.

Under the direction of Jim Farly, Group VP at Ford and Connie Fontaine, manager of brand content there, Undercurrent decided to depart from the viral marketing rule book. Bud told me they were not interested in the classic early adopters, the people who act as influencers for the rest of us. Undercurrent wanted to make contact with a very specific group of people, a passionate group of culture creators.

Bud said, The idea was: let’s go find twenty-something YouTube storytellers who’ve learned how to earn a fan community of their own. [People] who can craft a true narrative inside video, and let’s go talk to them. And let’s put them inside situations that they don’t get to normally experience/document. Let’s add value back to their life.

They’re always looking, they’re always hungry, they’re always looking for more content to create. I think this gets things exactly right. Undercurrent grasped the underlying motive (and the real economy) at work in the digital space. People are not just telling stories for the sake of telling stories, though certainly, these stories have their own rewards. They were making narratives that would create economic value. The digital space is an economy after all. People are creating, exchanging and capturing value, as they would in any marketplace. But this is a gift economy, where the transactions are shot through with cultural content and creation. In a gift economy, value tends to move not in little “tit for tat” transactions, but in long loops, moving between consumers before returning, augmented, to the corporation. In this case, adventures inspired by Undercurrent and Ford return as meaning for the brand and value for the corporation. Undercurrent was reaching out to consumers not just to pitch them, but to ask them to help pitch the product. And the pitch was not merely a matter of “buzz.” Undercurrent wanted consumers to help charge the Fiesta with glamor, excitement, and oddity — to complete the “meaning manufacture” normally conducted only by the agency.

This would be the usual “viral marketing” if all the consumer was called upon to do was to talk up Fiesta. But Undercurrent was proposing a richer bargain, enabling and incenting “agents” to create content for their own sakes, to feed their own networks, to build their own profiles…and in the process to contribute to the project of augmenting Fiesta‘s brand.

Fiesta‘s campaign worked because it was founded on fair trade. Both the brand and the agent were giving and getting. And this shows us a way out of the accusations that now preoccupy some discussions of social media marketing. With their gift economy approach, Ford and Undercurrent found a way to transcend all the fretting about “what bright, shining object can we invent to get the kids involved?” and, from the other side, all that “oh, there he goes again, it’s the Man ripping off digital innocents.” It’s a happier, more productive, more symmetrical, relationship than these anxieties imply. Hat’s off to Farley and Fontaine.

The effects of the campaign were sensational. Fiesta got 6.5 million YouTube views and 50,000 requests for information about the car—virtually none from people who already had a Ford in the garage. Ford sold 10,000 units in the first six days of sales. The results came at a relatively small cost. The Fiesta Movement is reputed to have cost a small fraction of the typical national TV campaign. There is an awful lot of aimless experiment in the digital space these days. A lot of people who appear not to have a clue are selling digital marketing advice. I think the Fiesta Movement gives us new clarity. It’s a three-step process.

• Engage culturally creative consumers to create content.
• Encourage them to distribute this content on social networks and digital markets in the form of a digital currency.
• Craft this is a way that it rebounds to the credit of the brand, turning digital currency (and narrative meaning) into a value for the brand.

In effect, outsource some of our marketing work. And in the process, turn the brand itself into an “agent” and an enabler of cultural production that is interesting and fun. Now the marketer is working with contemporary culture instead of against it. And everyone is well-served.


Creating Eco-Friendly Operations

Posted Sunday, December 20th, 2009

Entrepreneurs are turning their companies green, using a range of approaches from investing in alternative energy to banning plastic forks in the pantry

Businessweek, August 7th 2009

Entrepreneurs, already at the forefront of the environmental revolution with the products they sell, also are proving to be leaders of a less visible but equally powerful trend: the transformation of their companies into lean, green operations. Some say concern for the environment is their inspiration to go green; others are looking to cut costs or trim waste. Regardless of motivation, there are “countless thousands of small businesses out there greening,” says Byron Kennard, founder and executive director of the Washington (D.C.)-based nonprofit Center for Small Business & the Environment. “It’s a technological and cultural revolution.” According to an April survey by the National Small Business Assn., 38% of small companies surveyed have invested in energy efficiency programs in the past 18 months. Some 13% had invested in alternative energy sources, 6% had purchased or leased hybrid or alternative fuel vehicles in the past 18 months, and 18% had given employees incentives to cut back on driving.

Together, these changes have the potential to make a sizable impact. Small companies account for half the country’s industrial and commercial energy use, according to Energy & Security Group, a consulting firm based in Reston, Va. Because energy-efficient improvements typically reduce consumption by 30%, entrepreneurs have the potential to reduce their collective CO2 emissions by 182.2 million tons annually—the equivalent of 36 coal-fired power plants—and to lop $30 billion off the nation’s energy bill.

Such gains don’t come easily. It takes a lot of work—and sometimes outside consultants—to figure out how best to reduce the environmental impact of a business. And while some green initiatives save money, tight credit markets can make it difficult to finance green investments. Some 52% of companies surveyed by the NSBA cited weak cash flow as the main obstacle to making improvements in energy efficiency.


Using Design to Drive Innovation

Posted Friday, December 11th, 2009

Designers must deliver the orchestration of the total experience with a brand, product, or service or face irrelevancy

Businessweek, June 29 2009

In a previous era, all the talk was of strategy, strategy, strategy. More recently, it’s been innovation, innovation, innovation. As design thinking seems poised to sweep away some of today’s celebrated innovation practices, we must be wondering what new provocation is on the horizon. Relax, I’m not planning to conjure one up.

For those of us on the design consulting side of the business, it has not exactly been a smooth ride lately. But then again, I can’t say that I ever remember it being all that smooth, even when the demand for all forms of basic design and new production capability was sky-high.

Having lived one career on the corporate design side of the consumer-products industry and now a good part of another on the consulting side, I’ve seen the ascendancy of design as a profession and the movement of design toward business competency. At the outset, designers were about style and the creation of bright shiny objects, and we dutifully manned our post at the last decoration station on the way to the marketplace.

Today, there are arguably two design strategies in the marketplace. You either succeed as the low-cost producer, or you successfully differentiate your offering by design in a relevant, meaningful way that is valued by shoppers, consumers, and sellers. As such, the theoretical role of design in business is relatively uncomplicated and straightforward.

Design in Business
The complications come with these two questions: Where does the core idea around a differentiated, relevant, valued offering come from? And what is its relationship to this thing we used to call design? You know—the bright shiny objects.

In our practice, we refer to the former as innovation strategy, and to the latter as design strategy. Somewhere in between resides the opportunity for brand strategy, and we hope to create a system in which there is a seamless flow from ideas to brand meaning and, finally, to how that brand or product or service is expressed and communicated.

Putting all three aspects of this brand-building practice together provides validity in thinking about design as one of the primary idea generators for the creation of viable business platforms. Assuming that the manifestation of a business offering is realized in the context of a brand, that brand requires meaning, a defined expression, and then, given some success, a plan for continued opportunity development that sustains and grows the business.

How to Innovate
True innovation requires the adoption of a belief system that sometimes must prevail in the face of other data metrics. Read up on the great inventions and business wins and you will note that at the core of most of them lie belief, dedication, and the passion to succeed.

Today’s business leaders are often too afraid to move ideas forward without ironclad data proofs that they will be successful. All too often, they are the losers. Use your head, listen to your heart, and feel what’s in your gut.

As long as the human spirit and the marketplace lives on, I’m sure we will be inventing and innovating. Innovation is the commercial side of discovery and invention. Change is a huge driver of both discovery and invention. The world changes around us and we discover new things and we observe change and invent new things to deal with change.

If designers are content to function as purveyors of bright shiny objects, they will likely fade into obscurity. On the other hand, if they step forward and deliver the orchestration of the total experience with a brand, product, or service in the context of our changing environment, their future, too, looks bright.


What Should You Spend on Advertising?

Posted Wednesday, October 21st, 2009

It’s a ticklish question for every company. See what your rivals are doing, and then think about what’s going to be effective.

Businessweek, February 2009

One of the questions I’m frequently asked is: “How much should my company spend on marketing and advertising?” It’s a conundrum that vexes many corporate leaders, from emerging entrepreneurs to seasoned CEOs. Unfortunately, instead of seeking a rational answer to the question, many of them just ignore it and hope it will go away.

As a rule, emerging companies focus most of their time and talents on meeting the needs of customers, as well they should. If they don’t take care of the customers they already have, everything else will be academic. Strangely, however, many neglect the function of winning customers in the first place. Others naively assume that if they simply provide excellent products or services, their reputation will precede them. Call it the “build a better mousetrap” syndrome. But the world has too many other things to do with its time than beat a path to your door. That means you need to structure your profit-and-loss statement in such a way that you can profitably allocate a reasonable percentage of your revenue to marketing.

The Big Question: How Much?
While there is no definitive answer as to how much any business should spend on marketing, there are general guidelines any company can use to develop a formula that works for them.

Your first step should be to try to find out what the advertising-to-sales ratio typically is in your field. Public companies in your industry may give a figure for their marketing spending in their financial statements (found in their annual reports). With a simple calculation, you can figure out what percentage of their overall revenue that represents. If you can’t find any public companies that seem similar enough to yours, you might want to start at 5% and then adjust your projected spending up or down based on the size of your market, the cost of media, what you can learn about how much your competitors are spending, and the speed at which you’d like to grow.

You’ll also need to ask yourself if your business is built to leverage volume or to leverage margin. Even within industries, there are substantial differences in the marketing spend of volume-driven companies compared with margin-driven ones.

Volume-driven companies tend to spend a tiny percentage of sales on marketing, in part because their large revenues enable small contributions to add up fast, and in part because of the margin pressures they face in having to compete with other high volume companies. By contrast, margin-driven companies tend to spend a larger percentage of sales on marketing: They have room in their margins to afford it, and they’re often working from a smaller revenue base.

The retail industry provides some good examples. While Wal-Mart (WMT) might spend a meager 0.4% of sales on advertising, the sheer size of the company turns that tiny percentage into a significant budget. Wal-Mart’s nominally higher-margin competitor, Target (TGT), spends closer to 2% of its sales on advertising, while Best Buy (BBY), as a specialty retailer, spends upwards of 3%. Finally, more upscale stores like Macy’s typically spend on the order of 5%.

The same kind of ratios can be seen in the car industry (automakers’ generally spend 2.5% to 3.5% of revenue on marketing), liquor (5.5% to 7.5%), packaged goods (4% to 10%), and every other industry.

If you’re in a services business, you might want to bump your starting point higher than 5%. For example, like most professional services firms, my company is more margin-oriented than volume-oriented, so fueling its growth requires that we spend a higher percentage of our revenues. Last year, our number was just over 8%, and I’ve seen companies spend upwards of 15% when warranted—especially young companies that need to invest to build their brand.

Marketing, Not Just Advertising
It’s important to make a qualification here. Giant consumer corporations such as automakers, packaged food manufacturers, and retail chains spend a huge percentage of their marketing dollars on paid media advertising, the most visible (and expensive) tool in the marketing toolbox. Depending on the size of your company and the business you’re in, advertising might not be the right (and certainly not the only) tool for you.

A professional services company like my own is a good case in point. While we serve a national clientele, we are much too small to effectively advertise on a national scale. As a result, we don’t purchase paid media advertising. But we do have an aggressive marketing program built around tactics like direct mail, online marketing and public relations. For a variety of reasons, paid advertising might not be right for your company either, but events, vehicle wraps, point-of-sale displays, or other tactics certainly could be.

The important thing is intentionally and deliberately to set aside some rational percentage of your sales to get out there. That way, the question you have to answer isn’t “How much should we spend?” but rather, “How do we spend most effectively?”


Recession: The Mother of Innovation?

Posted Thursday, September 3rd, 2009

Our special report looks at innovative ways businesses can turn the troubled economy to their advantage

BusinessWeek, July 22, 2009

Necessity may be the mother of invention. But could a recession be the mother of innovation? After all, many of the world’s enduring, multibillion-dollar corporations, from Disney (DIS) to Microsoft (MSFT), were founded during economic downturns. Generally speaking, operating costs tend to be cheaper in a recession. Talent is easier to find because of widespread layoffs. And competition is usually less fierce because, frankly, many players are taken out of the game.

Recessions can also help executives figure out how to improve products, services, and processes internally and for customers. Ideally, the creative thinking that’s needed to weather the storm of an economic downturn can lead to new markets and revenue streams. “Innovation originates from challenges,” says Vineet Nayar, CEO of HCL Technologies, a Noida (India)-based global IT services company.

HCL recently partnered with Xerox (XRX) to provide tech support for corporate customers using Xerox systems meant to reduce the amount of wasted paper. The systems themselves were inspired by the dual challenges of helping to save the environment and the need to slash office expenses during the downturn.

Inventing cost-effective and time-saving processes becomes a priority in a downturn, and it’s an area of interest for companies and organizations in a variety of fields, from high tech to health care. “In a recession, you can innovate to be more efficient,” says John Kao, author of the book Innovation Nation and the head of Deloitte’s Institute for Large Scale Innovation.

Lessons to Be Learned
Sure, there have been some signs lately that the economy might be picking up—Apple‘s (AAPL) quarterly profits jumped 15%, for instance. But a recent survey by consulting firm Bain & Co. found that 60% of 1,430 global executives polled expect the current recession to last through 2010.

And smart companies will continue to apply the innovation lessons learned during today’s tough times even when things pick up. The innovative processes, products, and services that hatch now can help executives understand how to curb costs or take risks on fresh ideas when the economy rebounds.


U.S. Corporations Size Up Their Carbon Footprints

Posted Tuesday, June 30th, 2009

Coca-Cola and others use ever more sophisticated tools to measure their environmental impact and meet emissions goals

Businessweek, June 1st 2009

Like many companies, Coca-Cola wants to cut its carbon footprint. The soft-drink maker has pledged to eliminate 2 million tons of CO2 emissions from its manufacturing operations by 2015. To do that, Coca-Cola has become adept at using spreadsheets and databases to measure how much carbon it produces and energy it consumes. It’s even able to track less tangible causes, such as greenhouse gases emitted by vending machines. But when it comes to tracking and managing the projects that will help it reduce carbon emissions and make better use of resources, Coca-Cola is having a harder time.

The company needed a more sophisticated set of carbon accounting and management tools, says Bryan Jacob, director of energy management and climate protection at Coca-Cola. “I’m looking for something to take us to the next level,” he says. “I’m going to either enhance what I’ve got or move to a different platform that’s much more robust.” To that end, the company is testing a product from software company Hara that goes beyond simply measuring carbon footprints. The Web-delivered tools, formally introduced June 1st, help companies manage efforts to actually reduce carbon and more efficiently use natural resources such as water, waste, and paper.

Amid growing pressure from investors, employees, and environmental watchdogs such as Greenpeace, the circle of companies making a concerted effort to go green is widening. But corporations are finding that even in cases where there’s a will to reduce emissions, it’s not easy to measure a company’s environmental impact, much less keep track of the various projects aimed at meeting aggressive carbon reduction targets.

The Carbon Disclosure Project

Demand for better carbon accounting comes not just from corporate brass, but also from investors, customers, consumers, and employees who want detailed information about a corporation’s environmental impact. Among the leaders of the charge is the Carbon Disclosure Project, a nonprofit organization that has assembled the largest corporate greenhouse gas emissions database in the world. The group is backed by 475 institutional investors that manage $55 trillion in assets. Last year, 321 companies that make up 64% of the corporations listed in the Standard & Poor’s 500-stock index responded to a request for emissions information from the Carbon Disclosure Project, up from 235 in 2006.

To hand over data on emissions, a company must first gather it. Most still use fairly rudimentary homegrown methods. “About 90% of companies use spreadsheets,” says Baier. A December 2008 worldwide survey by research firm Gartner found that too many enterprises were in denial about the need for carbon management.

Of 575 companies surveyed by Gartner in the U.S. and 10 other countries, 18.8% had implemented carbon reporting and management systems and 64.7% had not. An astonishing 13.6% weren’t sure.

Intuit Tracks Its Carbon Footprint

They had better find out soon. According to the Carbon Disclosure Project, direct emissions from Coca-Cola and 416 other large global companies account for about 5.8% of the world’s greenhouse gas emissions. While regulations today regarding greenhouse gases are limited in many cases to carbon-intensive industries such as power generation, Gartner and other analysts expect individual countries to pass climate-change bills that would eventually target less carbon-intensive organizations as well. In the U.S., a bill now wending its way through Congress proposes to reduce greenhouse gas emissions and create a market-based mechanism known as cap and trade that would encourage moves toward low-emission technologies and practices.

Most companies that track greenhouse gas emissions use an accounting framework called the Greenhouse Gas Protocol from the World Resources Institute and the World Business Council for Sustainable Development. That tool covers the accounting and reporting of the six greenhouse gases covered by the Kyoto Protocol—carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6). The numbers are converted to a measurement called carbon dioxide emissions equivalents, a standard that allows comparison among different greenhouse gases.

Sony: The Carbon Its Consumers Use

Perhaps the most complex emissions to calculate, however, are those that occur outside a company’s boundary, but over which it has some control. These are referred to as Scope 3, a category that includes emissions associated with employee commutes, business travel, suppliers, and product use. The nature of this work involves estimation. When Intuit’s Shah calculated the emissions from employee commutes, for example, he got an Excel spreadsheet from HR that mapped the addresses for all 8,000 employees and calculated their commutes to Intuit offices—even accounting for vacation time and holidays. The company is trying to make its analysis more precise by taking into account such factors as work from home and Intuit-sponsored alternate transportation.

For some companies, the majority of emissions fall into this third, indirect category. More than 90% of Sony’s carbon footprint – an estimated 19.34 million tons for the 12 months through March 2008 – results from the electricity consumed when people use Sony products. “Sony has a measurable impact on global greenhouse gases,” says Mark Small, vice-president for corporate environment, safety, and health at Sony Electronics. He estimates that the company is responsible for “a little less than .01% of the total man-made greenhouse gas emissions.” That’s why Sony has made energy efficiency in its products a priority. In 2000, a 32-inch cathode-ray tube TV consumed 280 kilowatt hours a year. In 2008, a 32-inch LCD TV consumed about 86kwh. Still, Sony needs to take into account that consumers are now buying larger TVs. Since Sony can’t actually visit each consumer, it uses estimates to calculate greenhouse gases from product use.

Some companies are surprised by what they find when they look closely at the operations responsible for pollutants. Coca-Cola, for example, initially expected most emissions to come from its fleet of trucks or from its manufacturing operations. The company instead discovered that the lion’s share emanated from what it calls cold drink equipment – the coolers, vending machines, and fountain dispensers used to serve up frosty-cold soft drinks. This gear contains refrigerants and insulation with high global warming potential; it also consumes a lot of electricity. Combined, cold drink equipment accounts for about 15 million metric tons of emissions every year, compared with 3 million from Coke’s diesel-powered trucks or the roughly 5 million from manufacturing. Armed with that information, Coca-Cola is now striving to eliminate harmful chemical compounds from cold drink equipment. Says Jacob: “If we had never put pencil to paper and done the calculations, we might not have understood it ourselves – or believed it.”


Global Brands

Posted Tuesday, May 12th, 2009

BusinessWeek/Interbrand rank the companies that best built their images – and made them stick.

Advertisers who want to reach the Bublitz family of Montgomery, Ohio, have to leap a lot of hurdles. Telemarketing? Forget it – the family of five has Caller ID. The Internet? No way – they long ago installed spam and pop-up ad blockers on their three home computers. Radio? Rudy Bublitz, 47, has noncommercial satellite radio in his car and in the home. Television? Not likely – the family records its favorite shows on TiVo and skips most ads. “The real beauty is that if we choose to shut advertising out, we can,” Rudy says. “We call the shots with advertisers today.”

BusinessWeek, August 1, 2005

The Bublitzes and other ad-zapping consumers like them pose an enormous challenge these days to marketers trying to build new brands and nurture old ones. To get a reading on which brands are succeeding – and which aren’t – take a look at the fifth annual BusinessWeek/Interbrand ranking of the 100 most valuable global brands. The names that gained the most in value focus ruthlessly on every detail of their brands, honing simple, cohesive identities that are consistent in every product, in every market around the world, and in every contact with consumers. (In the ranking, which is compiled in partnership with brand consultancy Interbrand Corp., a dollar value is calculated for each brand using publicly available data, projected profits, and variables such as market leadership.)

The best brand builders are also intensely creative in getting their message out. Many of the biggest and most established brands, from Coke to Marlboro, achieved their global heft decades ago by helping to pioneer the 30-second TV commercial. But it’s a different world now. The monolithic TV networks have splintered into scores of cable channels, and mass-market publications have given way to special-interest magazines aimed at smaller groups. Given that fragmentation, it’s not surprising that there’s a new generation of brands, including Amazon.com, eBay, and Starbucks, that have amassed huge global value with little traditional advertising. They’ve discovered new ways to captivate and intrigue consumers. Now the more mature brands are going to school on the achievements of the upstarts and adapting the new techniques for themselves.

So how do you build a brand in a world in which consumers are increasingly in control of the media? The brands that rose to the top of our ranking all had widely varied marketing arsenals and were able to unleash different campaigns for different consumers in varied media almost simultaneously. They wove messages over multiple media channels and blurred the lines between ads and entertainment. As a result, these brands can be found in a host of new venues: the Web, live events, cell phones, and handheld computers. An intrepid few have even infiltrated digital videorecorders, devices that are feared throughout the marketing world as the ultimate tool for enabling consumers to block unwanted TV ads.

Some marketers have worked to make their brand messages so enjoyable that consumers might see them as entertainment instead of an intrusion. When leading brands are seen on TV they’re apt to have their own co-starring roles – as No. 9 Toyota Motor Corp. did in reality show The Contender – rather than just lending support during the commercial breaks. All are trying to create a stronger bond with the consumer. Take No. 41 Apple Computer Corp., which last fall launched a special iPod MP3 player in partnership with band U2. Not only did the “U2 iPod” say “U2” on the front and have band signatures etched into the back, but the band starred in a TV ad and buyers got $50 off a download of 400 U2 songs. No. 8 McDonald‘s Corp.’s sponsorship of a tour by R&B group Destiny’s Child means that fans who want access to exclusive video and news content about the band have to click first on the company’s Web site. “It’s hard here to tell where the brand message ends and where the entertainment and content begins,” says Ryan Barker, director of brand strategy at consultancy The Knowledge Group.

It’s no accident that most of the companies with the biggest increases in brand value in the 2005 ranking operate as single brands everywhere in the world. Global marketing used to mean crafting a new name and identity for each local market. America’s No. 1 laundry detergent, Tide, is called Ariel in Europe, for example. The goal today for many, though, is to create consistency and impact, both of which are a lot easier to manage with a single worldwide identity. It’s also a more efficient approach, since the same strategy can be used everywhere. An eBay shopper in Paris, France, sees the same screen as someone logging in from Paris, Texas. Only the language is different. Global banks HSBC, No. 29, which posted a 20% increase in brand value, and No. 44 UBS, up 16%, use the same advertising pitches around the world. “Given how hard the consumer is to reach today, a strong and unified brand message is increasingly becoming the only way to break through,” says Jan Lindemann, Interbrand’s managing director, who directed the Top 100 Brands ranking.

Possibly no brand has done a better job of mining the potential of these new brand-building principles than Korean consumer electronics manufacturer Samsung Electronics Co. Less than a decade ago, it was a maker of lower-end consumer electronics under a handful of brand names including Wiseview, Tantus, and Yepp, none of which meant much to consumers. Figuring that its only shot at moving up the value chain was to build a stronger identity, the company ditched its other brands to put all its resources behind the Samsung name. Then it focused on building a more upscale image through better quality, design, and innovation.

Beginning in 2001, the newly defined Samsung came out with a line of top-notch mobile phones and digital TVs, products that showed off the company’s technical prowess. By vaulting the quality of its offerings above the competition in those areas, Samsung figured it could boost the overall perception of the brand. Besides, consumers form especially strong bonds with cell phones and TVs. Most people carry their mobile phones with them everywhere, while their TV is the centre of the family room. “We wanted the brand in users’ presence 24/7,” says Peter Weedfald, head of Samsung‘s North American marketing and consumer electronics unit.

Now that strategy is paying off. Over the past five years, No. 20 Samsung has posted the biggest gain in value of any Global 100 brand, with a 186% surge. Even sweeter, last year Samsung surpassed No. 28 Sony, a far more entrenched rival that once owned the electronics category, in overall brand value. Now, in a nod to Samsung, Korean electronics concern LG Electronics Inc. has followed its rival’s playbook. Cracking this year’s global list for the first time at No. 97, LG has also sought to elevate its product under a single brand led by phones and TVs.

Some of the older brands in our ranking are clearly struggling to remake their marketing and product mix for a more complex world. This year’s biggest losers in brand value include Sony (down 16%), Volkswagen (down 12%), and Levi’s (down 11%). VW acknowledges its brand value slippage. “Volkswagen is well aware of the current deficiencies,” says VW brand chief Wolfgang Bernhard. Sony, which disputes that it is losing brand value, has suffered from an innovation drought. The electronics giant pioneered the Walkman, but left Apple to revolutionize portable MP3 players, as well as digital downloading and organizing of music. Meanwhile, Sony‘s moves into films and music put it into areas where its brand adds no value. Worse, those acquisitions made Sony a competitor with other content providers. That, notes Samsung‘s Weedfald, gives his company an advantage in linking to the hottest music and movies. Samsung, for example, is lead sponsor of this summer’s much-hyped movie, Fantastic Four, in which a variety of Samsung gadgets play a part. VW faces different problems. It has attempted to move upmarket with the luxury Touareg sport-utility vehicle and Phaeton sedan models; but that has left car buyers, who associate VW with zippy, affordable cars, confused. Similarly, Levi’s introduction of its less pricey Levi’s Signature line in discount stores means it now competes on price at the low end, while trying to fend off rivals like Diesel at the upper end with its core “red tab” brand.

Of course, defining the essence of a brand is only part of the battle. Communicating it to the consumer is the other. On this front, there has clearly been a divide between newer brands that use traditional advertising as just one tool in an overall marketing plan and older ones that grew up with it. Sony, for example, far outspends Samsung on traditional advertising in the U.S. on electronics products. (Samsung advertises on TV only during the last six months of the year, its peak sales period.) Many young brands that scored big gains in value, like Google, Yahoo!, and eBay, depend on their own interactive Web sites to shout about their brands.

Now some older brands, like Coke, ranked No. 1 in overall brand value, and McDonald‘s are decreasing traditional ad spending. In the past four years, McDonald‘s has cut TV advertising from 80% of its ad budget to 50%. Most of the shift has gone to online advertising. What’s evolving, then, is a model in which most brand builders use a variety of marketing channels. HSBC has branded taxis to carry customers for free. And although eBay spends most of its marketing budget on Internet advertising, it also relies on TV to some extent to boost simple brand awareness. “With fragmentation and ad evasion, you can’t count on one medium,” says Tom Cotton, president of Conductor, a branding strategy firm.

Marketers who do turn to TV are trying to make brand messages as engrossing as the programming. Last year Toyota, whose brand value rose 10%, paid $16 million to have its vehicles be part of the storyline on NBC reality show The Contender, about small-time boxers competing for a nationally televised bout. The grand prize: a million dollars and a Toyota truck. Rival Nissan, up 13%, has been parking its Titan pickups on Wisteria Lane in hit ABC show Desperate Housewives. The trucks will also ride into the new Dukes of Hazzard movie this month.

Nor are TV and movies the only target. No. 1 Coke, McDonald‘s, No. 88 Smirnoff, No. 16 BMW, No. 23 Pepsi, and No. 61 KFC are among brands striking deals to plant their brands in video games and even song lyrics. Deborah Wahl-Meyer, who headed Toyota marketing until recently moving to the company’s Lexus division, says both divisions attempt to seed magazine and newspaper articles with vehicle references and pictures. “We have to be more a part of what people are watching and reading instead of being in between what people are watching and reading,” Meyer says.

In an echo of Procter & Gamble Co.’s creation of the soap opera on radio and then TV, some brand builders are taking control of the programming themselves and creating content that tries to draw in ad-allergic consumers. BMW, whose brand value rose 8% over the past year, turned out a series of popular short films on the Internet starting in 2001. The seven-to-ten minute films starred BMW cars and were produced by A-list Hollywood directors like John Woo. The German auto maker has moved onto comic books based on the films aimed at Bimmer-aspiring teens and adults alike. “It’s imperative to create media destinations that don’t look like advertising,” says James McDowell, who headed marketing for the BMW brand before recently taking over as chief of the parent company’s MINI USA business. BMW has also embraced the enemy, TiVo, the television-top gadget that consumers use to skip ads altogether. Since last year, BMW has produced short films and long-form ads accessible through TiVo’s main menu page. BMW fans are alerted to the films in the on-demand video menu when a BMW ad runs.

Such old-line brands as No. 14 American Express Co. are heading down the entertainment path, too. Tipping its hat to BMW, AmEx ran long-form Internet ads/films starring Jerry Seinfeld last year that succeeded in drawing consumers to its Web site and Webcasted concerts. AmEx Chief Marketing Officer John Hayes says flatly: “Brands are not being built on [traditional] advertising.”

Still, none of these marketing ploys are sure bets in a world where old-school advertising means less. That’s why more marketers are investing in design as a fundamental way to distinguish their brands and to stay on the leading edge of technology. “Design isn’t just the promise of a brand, like TV advertising – it’s the reality of it,” says Marc Gobe, chief executive of design consultancy Desgrippes Gobe. Samsung has tripled its global design staff to 400 over the past five years. No. 73 Motorola, whose brand value rose 11%, and No. 53 Philips Electronics have boosted design spending. The move sparked the launch of Motorola‘s hot-selling Razr phone, the thinnest flip phone ever made. No. 85 Nissan gained 13% last year on a wave of bold designs, like its curvy Murano SUV and Altima sedan, as the Japanese company differentiates itself from Toyota and Honda through design rather than quality.

Good design implies more than just good looks. It’s also about ease of use. Apple demonstrated this with its iPod. Users can pick songs or download music from the iTunes music bank with the swipe of a finger. That’s blunted sales of Sony‘s Walkman MP3 player, which has been criticized as too cumbersome. Design can also mean sound. Samsung insists that all its products make the same reassuring tone when turned on. The Samsung tone is even being used in some advertising. “We want to have the same sound, look, and feel throughout our products so it all works toward one Samsung brand,” says Gregory Lee, Samsung‘s global marketing chief.

The era of building brands namely through mass media advertising is over. The predominant thinking of the world’s most successful brand builders these days is not so much the old game of reach (how many consumers see my ad) and frequency (how often do they see it), but rather finding ways to get consumers to invite brands into their lives. The mass media won’t disappear as a tool. But smart companies see the game today as making bold statements in design and wooing consumers by integrating messages so closely into entertainment that the two are all but indistinguishable.


 
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