AT&T (formerly Cingular, who was formerly AT&T) has decided to drop their dropped calls message. After stomping on America with their $1 billion message, the mobile service provider has shifted gears.
The problem, claim many industry insiders, is that the data can be skewed to show a lot of companies having the fewest dropped calls. The problem, dear industry insiders, is much deeper and simpler than that: AT&T is known for dropping calls. Once a brand stands for something in the mind, it rarely wants to change.
A Consumer Report survey done in 20 US cities ranks AT&T worst in dropped calls. As for AT&T's new approach, "More Bars in More Places," the provider ranked below average in every city except Dallas. The article whimsically announces that AT&T should change their motto to "No Service."
Oy vey!
Tuesday
Sunday
Motorola vs. Razr
There really are no shortcuts to creating a winning brand. If there were, believe you me, they would be readily exploited. Motorola, who makes over four dozen products, got trounced again, recording their worst quarter to date. They also fell to third in the category of mobile phones.
According to an article by Macworld, "The company is suffering today from its strategy of cutting prices to win market share. In the short run, that helped it gain high visibility with the popular Razr, but excess inventory has allowed competitors to swoop in and gain share."
Where did they go wrong? For one, a lack of focus. Who is number one in mobile phones? Nokia. When I say mobile phone, what comes to the mind? Nokia. What is a Nokia? It's a mobile phone. Years ago, they made everything from truck tires to (of all things) toilet paper. They were also losing close to $1.5 million a year. When they spun off their other companies and focused on mobile phones, they soon became number one in mobile phones in Europe. Now, they are number one in the world.
What is a Motorola? It's a Bluetooth headset, mobile phone, wireless Internet, pager, data solution. The list goes on and on.
In mobile phones, their big winner, the Razr, became commoditized to death and treated like a product, not a brand.
Moto has struggled to harvest another "it" phone (the serendipitous blessing bestowed upon the once mighty Razr). And so, copycat phones such as the Krzr and the Rizr were released. But all they did was remind people of the Razr.
What Moto should have done was treat the Razr as a brand unto itself. The Razr brand needs constant innovation and updates. It should not be commoditized, as they did with the first one. Once everyone could get a Razr for free, the fun was gone. Those who paid several hundred for it were bummed, because the phone's elitist soul had been sucked right out of it.
Moto should not have asked, "How can we sell as many units as possibly, no matter what the cost?" They should have asked, "How can we deepen our market penetration with this expensive, elite phone?"
But now the Razr brand has been tainted. The Razr 2, which will retail for $300 (or so) in September will likely have a very quick, very short-lived surge in sales. And Moto, desperate to win back their market share, will again slice the price of the Razr (a funny concept: slicing a Razr). Once gone, clients rarely return.
Perhaps Motorola's Razr should take a clue from Occam's razor: entities should not be multiplied beyond necessity. (The simplest answer is usually the best, in other words.)
The Razr did not need a Krzr or a Rizr, it needed the Razr 2, sans the destroyed brand image that Moto managed to craft.
Wow. Krzy.
Wednesday
Wal-Mart vs. iTunes
Wal-Mart, the world's largest retailer, announced Tuesday that Wal-Mart Music will now sell music sans copy-protection, also known as DRM (Digital Rights Management). This is a mimicking move to iTunes, who began selling DRM-free music earlier this year.
Traditionally, iTunes charged $0.99 per song. Their new, DRM-free music has been sold at $1.29 a track. Initial reactions to this move have been positive from nearly every consumer, while labels (still stuck in the past–but that's a different story) continue to fight change.
CD sales have been on a continuous downward slide over the past several years, yet the digital music industry has been booming. iTunes is now the third largest music retailer in the United States, behind Wal-Mart (15.8%), and Best Buy (13.8%) with 9.8% of the market.
iTunes did not enter the music retail category as an also-ran. They created the category of digital music retailer. As Tom Peters once wrote, "They say, 'market share.' I say 'market creation.'"
When a brand enters an established category, they must contend with powerful category leaders. When a brand creates a new category, they have no competition, thus becoming the category leaders. Their task, then, becomes creating the new category, rather than trying to dislodge consumers from already well-established brand leaders.
In 1923, a survey was conducted of the top 25 brands. In 1983, the same survey was executed. 23 of the top 25 brands were the same. 19 of the top 25 brands from 1923 still held their leadership position in their category.
What does this mean? Minds don't change; leader's lead. To enter a well-established category against mature category leaders is maniacal and suicidal. And yet, everyday, thousands of companies across the U.S. do exactly that.
Apple is far more adroit than most brands. They took hold of the emerging digital music trend. In 2001, they launched iTunes, becoming first to the market, and, more importantly, first in the mind. Now, in the digital music retailer category, iTunes owns 70% of the market.
iTunes imposed their new category, digital music retail, on the existing category, music retail. They did as Dell did: change the distribution medium.
Their new category went from a 0% market share in 2001 to 14% in 2007. Not bad, considering that the music retail market runs an annual tab of nearly $4.8 billion in the United States alone.
In 2003, Wal-Mart launched their also-ran Wal-Mart Music. At the time, the retailer held 20% of the music retail industry. Wal-Mart Music, despite costing $0.88 per song (a full $0.11 cheaper), has had almost no impact on iTunes’ numbers.
Now, Wal-Mart will sell their DRM-free offering for $0.94, a whopping $0.33 cheaper than iTunes.
Wal-Mart stands for low-prices retail store, not digital music. Even the power of the Wal-Mart name is not enough to save them in the digital music arena.
"Wal-Mart has been behind on the issue of digital music," said Tim Bajarin, an analyst with Creative Strategies. "Making this move allows them to leapfrog to the front."
But does their price-cutting strategy really give them an edge? No. In the long run, history drastically favors iTunes. Wal-Mart’s move will only serve to call more attention to iTunes’ category leadership and DRM-free sales.
If people bought music were a commodity, such as eggs, then Wal-Mart Music’s price-cutting strategy would have iTunes in a heap of trouble. But music is hardly a commodity.
And therein lies one of the greatest powers of proper positioning: premium pricing. Improperly positioned, a brand faces market rate growth and commodity pricing.
Without a strong brand, iTunes would never have taken such a large share of business away from related categories, and they would certainly never stand strong against the onslaught of me-too competitors such as Real Rhapsody, Napster, and Wal-Mart Music.
And, just for fun (it seems), Amazon has put their hat into digital music ring. It appears that Jeff Bezos is suffering from severe delusions of grandeur, or rather, “delusions of brandeur.”
Jeff once said, "A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well." No, Jeff, you don't. The quarterback doesn't earn a positive reputation by trying to do math well, he earns a positive reputation by throwing the ball well and scoring touchdowns. Perhaps that is why Amazon sells digital music now, too.
Wal-Mart=low-price retail store
Amazon=online bookstore
iTunes=digital music
Wal-Mart and Amazon making digital music stores makes as much sense as iTunes selling laundry detergent and shipping hardcover copies of Harry Potter. Pretty insane, yes? Yes.
Monday
Standford Financial vs. Ambiguity
Stanford Financial recently ran a new commercial. There were lots of dramatic slow pans blanketed by emotional music. What, according to the commercial, makes Stanford Financial so worthwhile? Why, their people of course!
And what do their people do? A service!
And what is their service? Hard work.
And at what cost does the hard work come? At a value for the client.
And what does that value buy them? Clear vision.
"Welcome to Stanford Financial Group. Hard Work, Clear Vision, Value for the Client."
(Click on the image to see a larger version.)
Not only is their slogan boring, but it says very little about the real value in what Stanford does.
This is an older commercial, but it still says basically the same thing: come to us and we'll treat you better. (Than what, I don't know.)
Everybody wants to believe that they are hard working with a clear vision, providing value for their client. There is nothing remarkable, nor is their anything unique, about Stanford's proposition.
UBS, another financial group, had this to say:
Imagine a global financial firm with the heart and soul of a two-person organization. A world-leading wealth management company that sits down with you to understand your needs and goals. An award winning global investment bank and premier global asset management business dedicated to giving you the most personal attention at every level. You & Us. UBS.
Again, who cares? And is it even believable? A global financial firm with the heart and soul of a two-person organization? Do you know what company has the heart and soul of a two-person organization? A two-person organization.
What makes you unique? Service doesn't make you unique. Everybody has service.
Now let's look at Citibank. They, too, are in the money business, while not the exact same field. Citibank ran a very memorable set of ads that were benefit-driven. They could have talked about how great their services were, but instead they jumped on the "identity theft" issue. Since it was a hot issue, and others had yet to own that concept, Citibank was quite successful at preempting the word(s) in the mind.
Am I suggesting that humor is the only way to portray a point? Hardly. But I am suggesting that companies such as Stanford and UBS should stop being so self-important, contradictory, and/or cliché.
As a final example, let's look at ING Direct. They have revolutionized the banking industry by creating the first branchless bank. They have many wonderful features, like a zero-dollar minimum in your checking account, and offering a "loan" instead of charging service fees if one overdrafts.
People are attracted to features. ING made 9 billion last year on 25% growth. How much of that comes from ING Direct is hard to tell. One thing is for sure, ING Direct and Citibank actually have something unique to offer. If Stanford and UBS have something unique in their arsenal, it certainly isn't conveyed by their advertising.
The lesson is clear here: people want benefits. They want uniqueness. Nobody can own the same word or concept in the mind as another. ING Direct stands for "branch-less," and Citibank stands for "identity theft." UBS and Stanford stand for "service." Both UBS and Stanford are doing quite well, but their lack of focus opens up a gaping hole into which a smart competitor could carve out a profitable niche, exploiting the financial services' lack of positioning.
And what do their people do? A service!
And what is their service? Hard work.
And at what cost does the hard work come? At a value for the client.
And what does that value buy them? Clear vision.
"Welcome to Stanford Financial Group. Hard Work, Clear Vision, Value for the Client."
(Click on the image to see a larger version.)
Not only is their slogan boring, but it says very little about the real value in what Stanford does.
This is an older commercial, but it still says basically the same thing: come to us and we'll treat you better. (Than what, I don't know.)
Everybody wants to believe that they are hard working with a clear vision, providing value for their client. There is nothing remarkable, nor is their anything unique, about Stanford's proposition.
UBS, another financial group, had this to say:
Imagine a global financial firm with the heart and soul of a two-person organization. A world-leading wealth management company that sits down with you to understand your needs and goals. An award winning global investment bank and premier global asset management business dedicated to giving you the most personal attention at every level. You & Us. UBS.
Again, who cares? And is it even believable? A global financial firm with the heart and soul of a two-person organization? Do you know what company has the heart and soul of a two-person organization? A two-person organization.
What makes you unique? Service doesn't make you unique. Everybody has service.
Now let's look at Citibank. They, too, are in the money business, while not the exact same field. Citibank ran a very memorable set of ads that were benefit-driven. They could have talked about how great their services were, but instead they jumped on the "identity theft" issue. Since it was a hot issue, and others had yet to own that concept, Citibank was quite successful at preempting the word(s) in the mind.
Am I suggesting that humor is the only way to portray a point? Hardly. But I am suggesting that companies such as Stanford and UBS should stop being so self-important, contradictory, and/or cliché.
As a final example, let's look at ING Direct. They have revolutionized the banking industry by creating the first branchless bank. They have many wonderful features, like a zero-dollar minimum in your checking account, and offering a "loan" instead of charging service fees if one overdrafts.
People are attracted to features. ING made 9 billion last year on 25% growth. How much of that comes from ING Direct is hard to tell. One thing is for sure, ING Direct and Citibank actually have something unique to offer. If Stanford and UBS have something unique in their arsenal, it certainly isn't conveyed by their advertising.
The lesson is clear here: people want benefits. They want uniqueness. Nobody can own the same word or concept in the mind as another. ING Direct stands for "branch-less," and Citibank stands for "identity theft." UBS and Stanford stand for "service." Both UBS and Stanford are doing quite well, but their lack of focus opens up a gaping hole into which a smart competitor could carve out a profitable niche, exploiting the financial services' lack of positioning.
Saturday
Sierra Mist vs. Sprite
Sierra Mist announced that they are going to include "an extra burst of flavor" in their beverage. Then, the other foot drops: but only for the summer. What does this mean? It means one of two things:
1) Sierra Mist is fine as is, and doesn't need an extra jolt. Think Classic Coke vs. New Coke.
2) Sierra Mist is actually ripping off their consumers (I know you're out there somewhere...all five of you), and not giving them the best product for their money.
Check out this irrelevant commercial:
Even if people try Sierra Mist with its extra boost, they are unlikely to continue buying once the extra goodness is gone.
Compare this to products that come out with a low price, hoping to get consumers attached to their product. Early on, people are curious, and willing to take a small risk. Then, when the company jacks the price up to that of the competitors, the new brand's sales drop off almost entirely.
Initially, people built a value for the brand in their mind. Brand XYZ water costs $0.99, they think, I'll try it. The next week, it costs $1.79. "Forget you, XYZ," the consumer says, "I'll go back to Evian, thank you very much."
(Those numbers are fictitious and for demonstration purposes only.)
Is Sierra Mist likely to make any headway on Sprite by their "extra boost" (or whatever they call it)? No. And having the likes of Jim Gaffigan and his zany crew only made for fun creative work, plus an ad agency who will likely get a bunch of awards at the One Show. After all, awards for an agency do not equal money in the advertised brand's bank account.
As a side note, when I went to search for "Sierra Mist," I accidentally typed in "Sprite." Talk about category ownership.
1) Sierra Mist is fine as is, and doesn't need an extra jolt. Think Classic Coke vs. New Coke.
2) Sierra Mist is actually ripping off their consumers (I know you're out there somewhere...all five of you), and not giving them the best product for their money.
Check out this irrelevant commercial:
Even if people try Sierra Mist with its extra boost, they are unlikely to continue buying once the extra goodness is gone.
Compare this to products that come out with a low price, hoping to get consumers attached to their product. Early on, people are curious, and willing to take a small risk. Then, when the company jacks the price up to that of the competitors, the new brand's sales drop off almost entirely.
Initially, people built a value for the brand in their mind. Brand XYZ water costs $0.99, they think, I'll try it. The next week, it costs $1.79. "Forget you, XYZ," the consumer says, "I'll go back to Evian, thank you very much."
(Those numbers are fictitious and for demonstration purposes only.)
Is Sierra Mist likely to make any headway on Sprite by their "extra boost" (or whatever they call it)? No. And having the likes of Jim Gaffigan and his zany crew only made for fun creative work, plus an ad agency who will likely get a bunch of awards at the One Show. After all, awards for an agency do not equal money in the advertised brand's bank account.
As a side note, when I went to search for "Sierra Mist," I accidentally typed in "Sprite." Talk about category ownership.
Friday
Get a Rep
Give consumers a good time with very little commitment on their behalf, and they are more likely to think favorably of you. This animation was done by Alan Becker. He is setting the groundwork for his future, for his career.
After college–after all, he's only 18–he could easily have hundreds of thousands of people viewing his work. That is a nice little selling point when meeting with a design firm or potential clients. It's called a rep. Get a rep and you'll be on your way.
Animator vs. Animation by *alanbecker on deviantART
After college–after all, he's only 18–he could easily have hundreds of thousands of people viewing his work. That is a nice little selling point when meeting with a design firm or potential clients. It's called a rep. Get a rep and you'll be on your way.
Animator vs. Animation by *alanbecker on deviantART
Wednesday
Best Buy vs. Brown Cows (Seth Godin-ites Unite)
Credit cards float in a sea of unremarkable sameness. Today, I received an offer from Best Buy. If I opened up a credit line through them (via MasterCard), I would receive $25 in Reward Zone certificates.
This came in a mailer for 10-12% off in the entire store. Really? 10-12%? On the back of the mailer, Best Buy proclaimed this to be the "Summer of Wow."
No matter what Best Buy decides to call summer, I will call it the "Summer of I'm Not Going to Use Your 12% Off Coupon."
Compare their offer to Amazon's. Amazon completely stopped advertising and addressed the biggest issue nagging online bookstore nay-sayers: shipping. They have been offering free shipping on every order over $25 since 2003.
What are the results? According to the headline from their April 24, 2007 press release: Amazon.com Announces First Quarter Sales Surpass $3 Billion, up 32% Year over Year -- Operating Profit Grows 38%.
What's more, Amazon has continued to build customer loyalty by being remarkable, with Amazon Prime.
From the same press release: "Amazon Prime, Amazon.com's first-ever membership program, was introduced in February 2005. For a flat membership fee of $79 per year, Amazon Prime members get unlimited, express two-day shipping for free, with no minimum purchase requirement on over a million eligible items sold by Amazon.com. Members can order as late as 6:30 p.m. ET and still get their order the next day for only $3.99 per item, and they can share the benefits of Amazon Prime with up to four family members living in their household."
While Best Buy may be a fantastic business, offers like these are boring and routine. Do something remarkable! Offer me something that makes me run, nay, sprint to your store (but not really, because I'm going to drive). Best Buy is raking in dough left, right, and center. They are a great business model. But they are boring me.
Give people something to talk about, and talk they will. And buzz (which, coincidentally, is the hot new buzzword) can help grow a brand by leaps and bounds.
"You can't hit what you can't see," said a No Fear T-shirt that my friend wore fifteen or so years ago. Best Buy obviously didn't see me when they offered a pitiful 10% off. So they missed the target. Be remarkable! Stand behind your products!
If Best Buy offered free service plans, that would be remarkable. Would it be profitable? One would have to weigh out the options of initial revenue lost versus positive word of mouth, customer loyalty, and future sales.
Apple offers a remarkable version of Best Buy's Geek Sqaud called the Genius Bar. Apple's consumers can meet with Genius Bar employees for free. These are specially trained employees who work solely at the Genius Bar.
Now that is a remarkable concept.
Read up.
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