Managing Risk and Recovery in A High-Speed World
By Jonathan R. Copulsky
Palgrave Macmillan Copyright © 2011 Deloitte Development LLC
All rights reserved.
A BRAND NEW DAY
Valuable Brands, Fragile Brands
Close your eyes for a moment and consider the word brand.
Within milliseconds, images of the world's leading corporate brands, ranging from Nike to Apple to Disney, may flood your brain. Or, to be more au courant, Google, Facebook, Twitter, Wikipedia, Yelp, Foursquare, Urbanspoon, and YouTube.
The images inevitably consist of the iconic symbols, logos, and trademarks we encounter dozens of times a day on clothing, shopping bags, packages, sports arenas, office buildings, and homepages. Nike's swoosh, Apple's partially eaten apple, Google's font, Disney's Mickey Mouse, Geico's gecko, McDonald's golden arches, and Coca-Cola's script. If you're a baby boomer like me, you may think of Oscar Mayer's Wienermobile. If you're a millennial, maybe you'll think of the Red Bull MINI Cooper.
Think about it a little longer. We bet you can come up with brands associated with every aspect of life: sports, popular culture, politics, geographic regions, and even literature.
The Chicago Cubs, our hometown team, is a winner when it comes to brand recognition, thanks in part to television station WGN and its national cable reach. Cubs- branded caps, hats, towels, pennants, and other assorted merchandise generate millions in annual sales. If you have any doubts about the strength of the brand, try getting tickets to a home game at Wrigley Field on a Saturday afternoon in July.
The Olympics has its distinctive five rings, theme song, torch, and thousands of athletes who proudly bear the title of Olympian. Every four years, television networks ante up a king's ransom to secure broadcast rights ($2.2 billion for US rights to the 2010 Winter Olympics and 2012 Summer Olympics), corporations shell out extraordinary sums to sponsor the games, and cities invest huge amounts of money to support their Olympic bids. The lucky bid winner then earns the right to spend boatloads more money to build the venues and facilities that will allow it to stage the Olympics and Paralympics for a stretch of approximately four weeks.
Paris Hilton created incredible recognition first for herself and then for her Paris Hilton–branded products by parlaying a surname most known for its association with a global luxury hospitality chain. Her official website (www.parishilton.com) features footwear, fragrances, handbags, sunglasses, hair accessories, watches, sportswear, bedding, swimwear, and lingerie "collections" in addition to her blog, photos, videos, and other "news" items. Hilton, given as she is to tabloid coverage, personifies the idea of being famous for being famous as she graces the pages of People and Us Weekly. When Paris's brand wanes, any number of reality television stars, ranging from Kim Kardashian to Bethenny Frankel, are poised to replace her.
Donald Trump has his name emblazoned on the marquees of office buildings, hotels, and casinos. You can also tack on the advice books based on the Donald's business experience, a reality television show designed to test the mettle of would-be moguls, golf courses, a university, clothing, eyewear, leather goods, jewelry, furniture, lighting, home décor, mattresses, spring water, and vodka. Try to trump that.
Barack Obama was an electoral success due, in part, to the meticulous manner by which the Obama brand was developed, cultivated, and merchandised. Think of the photograph artfully converted into the now-famous campaign poster by artist Shepard Fairey (although apparently without first securing permission from the photograph's owner, the Associated Press), the simple but powerful theme of change (as in "Change We Can Believe In"), the patriotically colored O adorning bumper stickers and lawn signs, and the emotionally compelling personal narrative that informed not one but two bestselling books. In April 2009 Desirée Rogers, the former White House social secretary, asserted "we have the best brand on Earth: the Obama brand." (Presidential adviser David Axelrod responded, "The president is a person, not a product. We shouldn't be referring to him as a brand.")
We find Sarah Palin , the onetime mayor of an Anchorage suburb turned political dragon slayer, on the other side of the aisle. Palin and her running mate were self- styled "mavericks," with Palin willing to engage in a little self-parody by appearing on Saturday Night Live alongside her doppelgänger, Tina Fey, before taking up the mantle of political commentator. Ironically, they branded themselves with the name of a nineteenth-century Texas rancher, Samuel Maverick, who resolutely refused to brand his own cattle. In 2009, Palin added the sobriquet "rogue."
Geographies have long been associated with brands, particularly when it comes to food. Think of the basics—cheese (Roquefort), wine (Burgundy), and meat (Prosciutto di Parma). But the lure of geographic links has spread beyond quaint agrarian regions of France and Italy. The December 14, issue of the New York Times (a clear geographic tie) carried an article on "Brooklyn : The Brand." Brooklyn-branded products mentioned in the article include pickles, salsa, beer, and chocolate. It also describes a new bar, The Brooklyneer, that features Brooklyn hot dogs, Brooklyn pickles, Brooklyn whiskey, Brooklyn ricotta, Brooklyn jam, and Brooklyn-brewed kombucha, despite being located in Manhattan. The bar's owners define a Brooklyneer as "someone who admires Brooklyn" and claim that they "merely wanted to share the food and drink they love with the rest of the city."
Jane Austen, the nineteenth-century author of romantic novels, is a brand. The opening paragraphs of her novel Pride and Prejudice appeared unattributed in the early ads for Barnes &&&; Noble's ebook reader the Nook, as if daring the reader to identify the source. Legions of rabid Janeites eagerly consume new books, movies, and musicals that build upon her considerable legacy. Pride and Prejudice and Zombies, anyone?
Even terrorists have become brands. The January 31, 2010, edition of the Wall Street Journal carried an editorial titled "Carlos the Brand: The Jackal Has a Brand to Protect" that described an upcoming ruling by a court in Paris on a claim lodged by one Ilich Ramírez Sánchez, a.k.a. Carlos the Jackal . Carlos and his lawyer-cum-wife were "suing a French production company for the right to review and 'correct and edit' a made-for-TV film about him entitled 'Carlos.'" Carlos and his lawyer alleged that "the filmmakers ... [were] out to 'demolish Carlos,'" whose aim in filing the suit was "to protect the intellectual property rights to his name and 'biographical image.'"
Barco Uniforms offers a line of Grey's Anatomy scrubs for nurses. The article "Branding Operation" by New York Times columnist Rob Walker quotes a letter from a reader who writes, "How odd is it that a profession that asks people to trust its members to take life-or-death actions would advertise a brand based on a TV show on the job?"
Was it always like this?
The word brand, based on an Old Norse word meaning "to burn," originally referred to the practice of herders burning marks onto the hides of their animals. The different marks on the livestock identified individual herders and, thus, their products. Over time, a brand became synonymous with the names and images that manufacturers developed to distinguish their products from those of their competitors. A variety of businesses claim to be the first to have registered a brand, including the British brewer Bass &&&; Company, which used its distinctive red triangle on the barrels of ale that it shipped all over the world.
It's a short hop, skip, and a jump from a red triangle to the Budweiser Tastebuds. We have moved beyond simple brand marks printed on products and shipping containers. Everywhere you look, you see a veritable sea of brands.
Consider food. In 1988, during a vacation in France dedicated to the consumption of copious amounts of fine food and wine, my wife and I were lucky enough to dine at a very special restaurant in Lyon, L'Auberge du Pont de Collonges. The restaurant's chef and owner was (and is) Paul Bocuse, one of the fathers of nouvelle cuisine and a recipient of the Michelin Guide 's coveted three stars.
My wife still talks about the food, ambience, and service more than twenty years later as her benchmark for fine dining. We were surprised, consequently, given this experience, to see the cabinets in the restaurant's entry hall filled with Paul Bocuse–branded merchandise available for sale to patrons. Hardly what we expected to see in this bastion of elevated taste.
That was then. Not long after our visit, Bocuse opened up a restaurant at Walt Disney's Epcot. Other Paul Bocuse restaurants have followed. Today, Paul Bocuse has a website that includes "l'Espace E-Boutique de Paul BOCUSE" and sponsors the Bocuse d'Or, a biennial culinary competition featuring teams from twenty-four countries. In retrospect, it seems that Bocuse was in fact an early innovator when it came to profiting from a chef's fame through branded books, television shows, prepared foods, and cookware. What seemed odd in the twentieth century is common practice in the twenty-first.
Chefs are not the only brand names when it comes to food. In Chicago, for example, grass-fed Tallgrass Beef (founded by brand-name journalist Bill Kurtis) is offered for home consumption as well as on the menus of the city's top restaurants. You can sip branded espresso at the local outlet of a global coffee chain, where you can also buy its branded blended drinks, branded coffee-related merchandise, and branded music using the store's branded stored-value card. Or you can buy the global coffee chain's branded ice cream or branded bottled coffee drinks at your branded superstore.
At Deloitte, the professional services firm where I have spent the past fourteen years of my career, we teach our new practitioners to think about what it will take to build their "personal brand" and counsel them that their professional success is directly related to these brand-building efforts. On more than one occasion, I have delivered a PowerPoint presentation in which I quote from Tom Peters's book The Brand You 50: "We are CEOs of our own companies: Me Inc. Our most important job is to be head marketer for the brand called You. Starting today you are a brand. The good news is that everyone has a chance to stand out. It's this simple: You are in charge of your brand."
Not too long ago, I read an article about Bloggy Boot Camp, an event designed to help the participants (about 90 percent of them mothers) "take their blogs up a notch, whether in hopes of generating ad revenue and sponsorships, attracting attention to a cause or branching out into paid journalism or marketing." The title of the article? "Honey, Don't Bother Mommy. I'm Too Busy Building My Brand." The article's title, if not the piece itself, was tongue-in-cheek, although I found a breathless endorsement of the article on Samson Media's blog, Playing in Traffic, which opened, "As you probably know by now, in today's business environment, it's ALL about your personal brand."
A discussion on personal brands once led a colleague to refer me to the Interbrand website. Interbrand, a leading brand consultancy (as it says on their site, "started in 1974 when the world still thought of brands as just another word for logo"), offers a section on its website featuring its "Personal Brand Valuation" methodology. I was mildly disappointed to discover that it's actually meant to help value celebrities and athletes for endorsement purposes, rather than for ordinary schlubs like me. But after the Tiger Woods incident, it's not surprising that advertisers and sponsors would be interested in tools for personal brand valuation.
You get the idea.
THE POWER OF UBIQUITOUS BRANDS
The explosive growth of brands should come as no surprise. While it's easy to poke fun at the self-promoters scrambling to build their personal brands, the fact remains that ubiquitous brands are incredibly powerful value-creation engines.
What do we mean by a "ubiquitous brand"? A ubiquitous brand is one where the brand's presence and reputation extends well beyond the products or services with which it was originally associated to the point where it generates substantial economic benefits for its owners above and beyond the margins generated by the sale of its core products or services.
In the 2010 study "BrandZ Top 100 Most Valuable Global Brands," by Millward Brown Optimor, the ten most valuable global brands (Google, IBM, Apple, Microsoft, Coca-Cola, McDonald's, Marlboro, China Mobile, General Electric, and Vodafone) collectively account for an eye-popping $693 billion of value. The 2009 version of this same study notes that "in a year of global financial turmoil, when every key financial indicator plummeted, the value of the top 100 brands increased by 2 percent to $2 trillion." Sounds like a much better performance than my investment portfolio during the same period. It also sounds like a great opportunity for a financial engineer to figure out how to create a class of securities based on brand value.
Ubiquitous brands attract customers like flowers attract bees. These customers often pay premium prices, despite the availability of less expensive and equally serviceable alternatives. The willingness of customers to wait years to plunk down $6,000 (or more, according to my wife, who knows about these things) to purchase a Birkin handbag from Hermès is just one example of the hold a ubiquitous brand can have on its customers. Other examples range from the Cheerios that you consume for breakfast in lieu of the generic oat cereals that sit alongside it on the grocery shelf, to the popular BMW 3 Series that drivers continue to snap up despite the availability of much cheaper domestic alternatives.
Ubiquitous brands give their owners permission to enter new markets and launch new products and services in ways not available to owners of weaker brands. Take a look at how the market holds its breath whenever Apple drops the slightest hint of a new product launch. In the days surrounding the launch of Apple's iPad, the buzz was unbelievable. People may have criticized the price, the name, the features, and the functionality, but there was no lack of people talking, writing, blogging, and, tweeting—even though the product announcement preceded the actual availability by months. Apple has become an iconic brand, revered for its design aesthetic, distinctive advertising, and innovative products, and it was named the world's most admired company by Fortune in 2009.
Apple's success with its devices has also propelled the success of services and complementary products that adhere to Apple's design standards. In the company's reporting for the quarter that ended in December 2009, iPod sales grew 1 percent to $3.39 billion, while revenues from Apple-branded and third-party iPod accessories, iTunes-store sales, and other iPod services rose 15 percent to $1.16 billion.
The proliferation of successful brand extensions and the growth of lucrative brand licensing exemplify the potential of strong brands to create value. The major sports leagues generate billions of dollars in incremental revenue each year from licensed merchandise such as video games, apparel, toys, and trading cards—more than $13 billion and growing. Westin's Heavenly Bed, designed to address travelers' concerns about the difficulty of enjoying a restful night while staying at a hotel, has been so successful that Westin now sells the bed through in-room catalogs, online, and at Nordstrom.
WHAT ELSE CAN A UBIQUITOUS BRAND DO FOR YOUR COMPANY?
Ubiquitous brands are a magnet for talent, attracting employees as well as customers.
Like customers, employees relish being associated with a brand that radiates personality. What's good for the goose is apparently good for the gander. It should come as no surprise, then, that the lists of top brands and top employers correlate highly. Google, number one on the brand value list, ranks number four on Fortune 's 2010 list of "100 Best Companies to Work For."
Customers flaunt their consumption of ubiquitous brands, and engaged employees can become the most conspicuous consumers of a ubiquitous brand's products and services. Visit an Apple store if you want to see highly satisfied employee advocates at work, serving highly loyal customers. According to Sanford C. Bernstein analysts, Apple reached $1 billion in annual retail sales faster than any retailer in history. Its stores generate more than $4,000 per square foot—a tidy sum, particularly when compared to $2,600 for Tiffany, no slouch in the branding department itself. (Continues...)
Excerpted from Brand Resilience by Jonathan R. Copulsky. Copyright © 2011 Deloitte Development LLC. Excerpted by permission of Palgrave Macmillan.
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