Double Branding's Disadvantage

-Al Ries

Branding is so popular in boardrooms today that some companies are overdoing it. "If one brand is good," goes the thinking, "then two must be better."

Is Nescafe Taster's Choice really a better or more powerful name than Taster's Choice?

Category leader
Years ago, Taster's Choice overtook Maxim to become the No. 1 freeze-dried coffee in America. One reason was its superior name. Taster's Choice implied a benefit. The brand name Maxim was meant to allude to parent Maxwell House, the country's leading coffee brand at the time.

The seldom-told story of the Taster's Choice name is that Nestle management in Switzerland wanted to call the product Nescafe Gold to take advantage of Nescafe, the world's largest-selling instant coffee. U.S. management, on the other hand, insisted on the Taster's Choice name and eventually won the internal as well as the external battle.

2003 name change
Well, the folks in Vevey finally got their way. Since 2003 Taster's Choice is now officially Nescafe Taster's Choice.

It's a trend. Glide is now Crest Glide. Cottonelle is now Kleenex Cottonelle. SpinBrush is now Crest SpinBrush. And so it goes.

Consumers, however, will usually use one name instead of two. Nobody in their right mind would write Nescafe Taster's Choice on a shopping list. Or Crest Glide. Or Kleenex Cottonelle. It's just Taster's Choice, Glide and Cottonelle.

Furthermore, the most powerful brands are those that stand on their own, without corporate endorsements or master-brand hocus-pocus. If Nestle bought Red Bull (an acquisition they should definitely consider), should the brand be re-badged as Nestle Red Bull? I think not.

Single words are stronger
Strong brands are invariably a single word or concept. Absolut, Barbie, BlackBerry, Duracell, Gatorade, Haagen-Daz, Jell-O, Listerine, Mercedes-Benz, Olive Garden, Q-tips, Ritz-Carlton, Rolex, Tylenol, Victoria's Secret.

Adding a corporate endorsement to these (and many other single-concept brands) would weaken them, not strengthen them. "DaimlerChrysler's Mercedes-Benz" was not a concept that was going to attract any additional customers to the Mercedes brand.

One reason new products are often double branded is research. Few mega corporations would consider launching a major new product without extensive consumer research, which often involves brand names.

Take Crest Whitestrips, for example. Even though the product has little to do with toothpaste, Procter & Gamble still stuck its toothpaste name on the brand. Why? Research suggested that consumers would have more confidence in the product if it had the Crest name on the package than if it had a totally new name. (To be honest, in Cincinnati Crest is not a toothpaste brand, it's an oral-care brand.)

Skewed research
Research can lead a company astray because consumers prefer the known to the unknown.

Before Dietrich Mateschitz launched Red Bull, he hired a market-research firm to test the concept. "People didn't believe the taste, the logo, the brand name," he said. "I'd never before experienced such a disaster."

But he launched it anyway. And today Red Bull does $3.4 billion in worldwide sales.

You'll find very few Red Bulls in the portfolios of Procter & Gamble, Unilever, Heinz, Kellogg and General Mills. A shocking name (Red Bull) combined with a new category name (energy drink) is just not going to test very well.

Nowhere is double branding more rampant than in the automobile industry. Yet some of the most powerful automotive brands don't use double branding at all. Lexus, BMW, Mercedes-Benz, Infiniti and Volvo, for example, just use letters and numbers to differentiate their models. Some of their numbers actually make sense, as in the 3 series, 5 series and 7 series from BMW.

Acura brand
One double brander (Acura) found that its Legend model had higher name recognition than the master brand. So for the 1996 model year, the Legend became the TL. In five years, Acura's name recognition went up 25%. Compared to 1996, Acura sales last year were up 86%.

Compare Acura with the double-brander Chevrolet. In the same time period, Chevrolet sales were down 5%.

Or rather Astro, Avalanche, Aveo, Blazer, Cavalier, Classic, Cobalt, Colorado, Corvette, Equinox, Express/G, HHR, Impala, Malibu, Monte Carlo, Silverado, SSR, Suburban, Tahoe, TrailBlazer, Uplander and Venture sales were down 5%.

Simply Different

-Al Ries

Simply Better is the title of the marketing book that won the 2005 Berry-AMA Book Prize.

Customers rarely buy a product or service because it offers something unique, say authors Patrick Barwise and Sean Meehan. Consumers want products that are simply better in terms of quality, reliability and value.

Not true. Too many companies focus on trying to make better products when the real advantage is making different products. The current videogame dogfight between Sony, Microsoft and Nintendo illustrates this point.

Both Sony’s PlayStation 3 and Microsoft’s Xbox 360 are the result of a better-product approach. Compared to previous iterations, the new PlayStation and Xbox machines are faster and more powerful.

Nintendo did it differently. The Wii is perhaps one-tenth as powerful as its two rivals, yet its motion-sensitive wireless controller allows you to produce action on the screen by tilting and waving your hand. You don’t just sit on the couch and move your thumbs.

Wii has been winning the battle in the marketplace. In November and December of 2006, Nintendo sold 1,100,000 Wii consoles while Sony sold only 687,000 PS3 machines. Wii has also been winning the battle in the media.

Nintendos Wii, radiating fun, is eclipsing Sony. The New York Times.

. . . we found the more modest Wii to be the more exciting, fun and satisfying of the two new game machines. Walter S. Mossberg, The Wall Street Journal.

My prediction: Nintendos Wii will wind up outselling Xbox 360 and PlayStation 3 combined.

This would not be the first time Nintendo has won big with a different strategy. In 1989, the company introduced Game Boy, the first portable videogame player. Since its introduction, Game Boy has sold more than 70 million units.

In 2005, Sony struck back with the PlayStation Portable, a portable machine with a better approach. With the bigger, more powerful PSP, you could also play movies and music on your game player. The Walkman of the 21st century is how Sony Computers CEO described the new machine at the time.

Nintendo did it differently. Instead of introducing a bigger, more powerful Game Boy, Nintendo introduced the DS, a dual-screen portable videogame player. One screen is a regular LCD and the other screen is a touch-sensitive screen, allowing for a new breed of games.

So far Nintendo DS has sold 100 million units versus 50 million for Sony’s PSP. No surprise to me.

Marketing is a battle of categories. The brand is only a marker for the category itself. If you want an energy drink, you reach for a Red Bull. If you want soy milk, you buy Silk. Rental DVDs by mail? Netflix.

Creating a new category and then branding that category in such a way that your brand is perceived as the innovator and category leader (in both senses of the word) is the essence of marketing today.

To create a new category, however, you have to think different, not better. Pepsi-Cola tastes better than Coca-Cola, but its not different and therefore can never become a market leader.

Ironically, there are some categories where the better product does win. These are categories with few or no brands. Notice, for example, how consumers will take their time to pick and choose the better apple or the better orange in the produce section of a supermarket.

The number of these better-product-wins categories keep declining because these are the best categories to launch new brands. In the supermarket produce section, a new company called Fresh Express introduced the first brand of packaged salad, a typical think-different approach.

Naturally Dole and a number of other produce players jumped into the market with their own brands of packaged salads. So who became the market leader? Fresh Express with a 40 percent share.

Fresh Express was bought by Chiquita Brands for $855 million, a nice stack of greens.

Think different and win.

Line Extensions: Pulling Brands Off Course

-Al Ries

"Would you like to steer the ship?" is a question I used to hear in the Merchant Marine.

The helmsman on duty would tell the neophyte, "Just take the wheel and keep the compass reading at 180," or whatever the course called for.

Steering a ship is not like driving a car. The ship drifts to the left, so the neophyte turns the wheel to the right to try to correct the course. But the ship keeps turning left, so the neophyte figures maybe he needs to do the opposite, so he turns the wheel to the left ... and the ship turns to the right. Now he's convinced that he's got the hang of it, until the ship turns left again. After a while, the poor soul is convinced the wheel isn't connected to the rudder at all.

It takes time to turn a ship and it takes time to build a brand. If you want to turn a ship to the left, you turn the wheel to the left ... and then you wait and you wait and you wait. Finally the ship turns to the left.

Marketing is like steering a ship. If you don't wait long enough for a marketing effect to run its course, you can draw exactly the wrong conclusion.

Take the 1981 introduction of Bud Light by Anheuser-Busch, virtually the last major brewer to introduce a light version of its regular beer.

I asked management, "Won't that hurt sales of Budweiser regular? Instead, why don't you introduce a totally new brand?"

"Oh, no," came the reply. "We're not positioning Bud Light against Budweiser. We're going to take business from Miller Lite, Coors Light, Schlitz Light and all those other light beers out there.""

Sure enough, the 1981 introduction of Bud Light did not hurt the regular Budweiser brand. Year after year, sales of regular Budweiser went up.

1982 ... Budweiser was up 4.1%
1983 ... Budweiser was up 6%
1984 ... Budweiser was up 3.9%
1985 ... Budweiser regular was up 4.2%
1986 ... Budweiser regular was up 3%
1987 ... Budweiser regular was up 3.1%
1988 ... Budweiser regular was up 2%

Seven years of sales increases seemed to prove me wrong. "And you thought that Bud Light would hurt our regular Budweiser brand? Are you crazy?"

Then came 1989, which saw regular Budweiser down one-fifth of 1%, the start of the deluge.

As of today, Budweiser volume has fallen every year for 20 years in a row, to 23.5 million barrels in 2008 from 50.6 million barrels in 1988.

Does anyone have any doubt that regular Budweiser will someday become a marginal brand in the U.S. market? We call line extension the "hockey-stick effect." Short term, you get the blade and score a few goals. Long term, you get the shaft.

Oddly enough, what gave Anheuser-Busch confidence in its line-extension strategy was the track record of Miller Lite. Introduced nationally in 1975, Miller Lite also did not hurt sales in the short term of Miller High Life, the company's regular beer.

Year after year, Miller High Life climbed up the beer ladder, from 5 million barrels in 1971 to 20.8 million barrels in 1978, the most explosive growth ever recorded by a beer brand. That was the year Advertising Age named John Murphy, Miller president and CEO, "Adman of the Year."

What drove the brand to such heights?

"Miller Time," in my opinion was the most effective advertising strategy ever developed for a beer brand.

The target market: cowboys in hard hats. The psychological hot button: a reward at the end of the day for blue-collar men doing rugged jobs in outdoor occupations. (What Miller Time did for men, McDonald's was doing for women with "You deserve a break today," a campaign which coincidentally was also launched in 1971, the same year as Miller Time.)

By 1979, the combination of Miller High Life and Miller Lite (34.8 million barrels) outsold Budweiser (30.0 million barrels) by a significant margin. No wonder Anheuser-Busch pushed the panic button.

Too bad. If they had had a little more patience they would have realized that line extensions are inherently unstable. A successful line extension almost always damages the core brand ... over the long haul.

It's like a teeter-totter. When one side goes up, the other side goes down.

For Miller Brewing, 1979 was a year of high hopes. That was the year Miller broke ground on a new $411 million brewery in Trenton, Ohio.

That was also the year Miller High Life started its long decline, from 23.6 million barrels in 1979 to 5 million barrels in 1992, where it remains today.

The Trenton brewery? It sat idle for almost a decade and didn't open until 1991.

We kept forgetting the teeter-totter principle. When Bud Light declined this year, its first decline in 27 years, all hell broke loose. There were stories in all the major media.

"Anheuser-Busch InBev NW plans to tweak its marketing campaign for Bud Light and ratchet up spending," reported The Wall Street Journal, "in the hopes of reviving a brand that is facing a rare slump."

What slump? Bud Light is up 5% this year, not down 2.5% as reported in the media.

How can that be when everybody else is reporting a decline? The difference is that we included Budweiser's lime extension in Bud Light's volume. Bud Light Lime is the fastest-growing beer in America, with 1.2% of the market, and naturally that success came at the expense of Bud Light.

Budweiser, Bud Light and Bud Light Lime are not three brands with three different marketing strategies. They're one brand with three different flavors and three different marketing strategies that often cause confusion.

Line extension is a loser's game. It doesn't usually work, but even if it does, it almost always damages the core brand.

On the other hand, there's the well-documented evidence that a line extension doesn't hurt a leading brand as much as it does an also-ran. Why is this so?

A leading brand has a very strong position. It's the leader. And nothing works as well in marketing as leadership. Google in search. Hertz in rent-a-cars. Hellmann's in mayonnaise. Heinz in ketchup. Campbell's in soup. Thomas' in English muffins.

Many No. 2 or No. 3 brands become successful by narrowing their focus to segment the market, either demographically or in some other way. Miller High Life targeted the blue-collar segment.

Bud Light didn't destroy Budweiser's leadership perception. But Miller Lite definitely undermined Miller High Life's blue-collar perception.

What's a Miller? Over time, Miller became known as a light beer. And the cowboys in hard hats weren't about to drink a light beer.

What's a Budweiser? It's still perceived as the leading beer, but now available in a number of different flavors.

In the years that followed the fall of High Life, Miller Brewing tried to inject new life into its Miller brand with a raft of line extensions including: Miller Genuine Draft, Miller Genuine Draft Light, Miller Genuine Draft 64, Miller Lite Ice, Miller Lite Ultra, Miller High Life Light, Miller Chill, Miller Genuine Red, Miller Reserve, Miller Reserve Light, Miller Reserve Amber Ale and Miller Clear.

They even spent $60 million introducing Miller "regular" beer.

All for naught. Today, Miller sells considerably less beer under the Miller name than they did in the glory days of 1979.

So it is in many marketing situations: What works in the short term often doesn't work in the long term.

Well, you might be thinking, what about the trend towards light beer? It's true that light beer is now the largest segment of the market, but regular beer still accounts for 44%.

Why not have your beer and drink it, too? Why not try to dominate both segments with two separate brand names? Like Toyota and Lexus. Or Black & Decker and DeWalt.

Or Hanes and L'eggs.

Marketing people are often sheep when it comes to categories. Once a line extension becomes a big success, all the competitors get in line and say, me too.

Without giving a second thought to the possibility of launching a new brand that could clearly define the new market as a separate category.

It happened in light beer. It happened in diet cola. It happened in lithium batteries. It has happened in many other categories.

In 1995, to pick one year at random, the top 40 brands of light beer all used "light" in their names -- even Amstel Light, a brand that didn't have a "regular" version.

Line extension is a teeter-totter, but not necessarily in the short term. In the short term, both sides often go up. It takes time to turn a ship. It takes time to kill a brand.

You can't know whether a marketing move is effective or not until enough time has passed. Yet many companies are driven by short-term thinking -- promotions, coupons, special offers and discounts. And line extensions.

If it took Bud Light seven years to damage the regular Budweiser brand, how long are you taking to measure the success of your programs?

A month? Three months? Six months? A year?

Marketing is about the mind. Getting into minds and changing them is not for the faint-hearted or for the impatient. You need to launch a marketing program and then have the patience to wait and wait and wait.

Which reminds me.

Maybe my misspent youth will start to pay a dividend. The House of Representatives has just passed a bill providing a monthly stipend to those who served in the U.S. Merchant Marine.

Good things happen to those who have patience.

Innovation Is Not A Strategy

-Al Ries

As most of you know, Sharper Image, home of innovative products like the Razor scooter, the robotic dog, the Ionic Breeze, the StressEraser and the R2-D2 interactive droid, filed for Chapter 11 bankruptcy. What remains is an important lesson.

Innovation is not a strategy and companies which depend on a constant flow of new, innovative products will someday find themselves in deep trouble. As Sharper Image did.

Every successful company needs a branding strategy, which may or may not include innovation. Yet many marketing gurus have elevated innovation to a point where it is widely perceived as the single, most-important function of a corporation. Witness the raft of recent articles on the subject, including an editorial in my favorite publication with the theme, Forget the recession and innovate.

There’s also the famous Peter Drucker quote, The business enterprise has two and only these two basic functions: marketing and innovation.

I would simplify that quote. A business enterprise has only one basic function: build a brand that can dominate a category. Early on, innovation can help a company build that kind of brand.

• Instant photography and Polaroid.
• The plain-paper copier and Xerox.
• The microprocessor and Intel.
• Wireless email and BlackBerry.
• The athletic shoe and Nike.

But when a category matures, the situation changes. Take the automotive industry. The significant innovations in the auto industry took place decades ago: the V-8 engine, automatic transmission, power steering, air conditioning, seat belts, air bags, etc.

What makes a powerful automobile brand today is not innovation, but a narrow focus on an attribute or a segment of the market. Reliability and Toyota. Driving and BMW. Youth and Scion.

Innovations outside of a brand’s core position can undermine a brand. What did the PT Cruiser do for Chrysler, except to confuse customers? What did the Phaeton do for Volkswagen? What did the Viper do for Dodge?

Dodge is a big truck brand. Does the truck buyer prefer Dodge because it accelerates like a Viper?

Most brands don’t need innovations; they need focus. They need to figure out what they stand for (or what they could stand for) and then what they need to sacrifice to get there.

It’s sacrifice that builds brands, not innovation. Search was a commodity on the Internet, first pioneered by AltaVista and then GoTo.com. AltaVista later added innovations like email, directories, topic boards and comparison-shopping to its home page. GoTo.com changed its name to Overture and turned itself into an innovative syndication service.

It took Google to narrow the focus to search only and in the process build a powerful brand. So what is Google doing lately?

They’re innovating. Google is planning to extend its brand into targeted advertising for radio, television and newspapers. Also, Google software for personal computers and cellphones. The company is even spending hundreds of millions of dollars to innovate in alternative energy sources like solar, geothermal and wind power.

The March 2007 issue of Fast Company features the worlds 50 most innovative companies. No. 1, as you might expect, is Google.

As a matter of fact, the magazine devotes 18 pages to the Google story. Prospective employees are often asked, If you could change the world using Google’s resources, what would you build?

My answer would have been, I’d use the resources to build a second brand, like Toyota did with Lexus, instead of using the resources to sabotage the base brand.

Then there’s Apple, which seems to be an exception to the principle that innovation cannot build a brand. Certainly Apple has been successful because of the widely held belief that all Apple products are highly innovative.

That’s true today, but what about tomorrow? Innovation cannot last forever. Sooner or later Apple is going to run up against a brick wall and find itself fighting a host of competitors who dominate their categories.

Apple doesn't dominate any category, yet manages to compete successfully against Hewlett-Packard and Dell in personal computers. Against Nokia and Motorola in cellphones. Against Sony and Samsung in consumer electronics. Against Microsoft in personal computer operating systems.

Like Sharper Image, that’s a situation that cannot last. As the categories mature, Apple is bound to run out of innovative new ideas.

Innovation, as a corporate strategy, is not limited to high-tech companies. No category has seen as many innovations as the cola category. Over the years, Pepsi-Cola has introduced Pepsi One, Pepsi A.M., Pepsi Kona, Pepsi Light, Pepsi Edge, Pepsi Max, Pepsi XL and Pepsi Blue.

Typical quote: Pepsi Blue has the potential to reinvigorate the cola category, said a company executive. Were convinced innovation is the key to growth.

In the United Kingdom, the company launched Pepsi Raw, the healthy cola, which the marketing director called the most significant innovation from Pepsi U.K. in the last 15 years.

Over at Coca-Cola, the innovations also roll out on a regular basis. The latest is Diet Coke Plus with five essential vitamins and minerals.

Meanwhile, per-capita consumption of cola in the U.S. continues its slow decline as consumers switch to water and other healthier beverages.

In general, a company should spend its innovation money to create new brands, not to salvage existing brands. Why didn’t Coke put the five essential vitamins and minerals into water instead of cola? The company could have saved the $4.1 billion it spent to buy Vitaminwater maker Glaceau.

As the Sharper Image story illustrates, innovation is not a strategy. It’s a tactic that needs to be used in support of a company’s branding strategy.

Category Builders vs. Category Killers

-Al Ries

It can cost a fortune for a company to pioneer a new category of product or service. Digital cameras, for example. Or satellite radio. Or Internet grocery service.

Webvan, for example, lost $830 million on its two-year venture into the grocery-delivery business.

Since its so costly to establish a new category, why would any company deliberately want to kill an emerging new category?

Actually there are good reasons for putting the kibosh on a new category. In the marketing jungle, there are two kinds of companies: category builders and category killers.

A category builder is often a start-up company or a small company that hopes to compete with a bigger one by introducing a new brand that defines an emerging new category.

A small company called P.R. Mallory, for example, introduced Duracell, an alkaline battery that could last twice as long as the zinc-carbon batteries made by Eveready, the leading battery brand.

A unit of the much larger Union Carbide company, Eveready was a category killer. Six years prior to Duracell’s launch, Eveready had introduced its own alkaline battery. They called their new product, naturally, the Eveready alkaline battery.

Eveready had hoped that appliance battery would remain a single category with various choices such as zinc carbon, alkaline, etc. As the leading appliance-battery brand, Eveready would then be able to dominate the category for decades to come.

It never happened. Thanks to the marketing push behind the Duracell brand, consumers eventually perceived that there were two categories of appliance batteries: (1) inexpensive zinc-carbon batteries and (2) long-lasting alkaline batteries. As represented by two battery brands: (1) Eveready and (2) Duracell.

Eveready finally realized they couldn’t kill the category, so they launched Energizer, their own brand of alkaline battery.

Money cannot make up for lost time. In spite of massive advertising investments, today Energizer remains No. 2 to the dominant Duracell brand.

Creativity cannot make up for lost time, either. Advertising Age named the drum-playing Energizer pink bunny as one of ten best advertising icons of the 20th century (No. 5.) The second-generation campaign, which showed the bunny interrupting ads for fictional products, was cited by Ad Age as one of the 100 best advertising campaigns of the century (No. 34.)

Interestingly enough, the two big battery brands have apparently succeeded in killing the next evolution of the appliance battery: Lithium. Both Duracell and Energizer have had lithium batteries on the market for quite some time. Its probably too late for a category builder to get into the lithium game.

And so it goes. Sometimes the category builders win. Sometimes the category killers win.

Take light beer, for example. Miller Brewing actually tried to build a new category with the launch of Lite beer. They had to back off when they couldn’t protect their Lite trademark against the light beers introduced by a raft of category killers.

And so Lite beer became Miller Lite beer. And the battle to build a new category was lost.

Who wins when a potential new category gets sucked up into an existing category? The market leader of the existing category, of course. Even though Budweiser was virtually the last major brewer to introduce a light beer, Bud Light is now the No. 1 brand of light beer and the No. 1 brand of beer, period.

Today, light beer is not perceived as a new category. Light beer is perceived as regular beer, just watered down a bit.

That’s why Budweiser won the light-beer war and that’s why Duracell will win the lithium-battery war. If you want to kill an emerging new category, make sure your brand is the leading brand of the existing category.

On the other hand, take microbrew beer. This new category was built by Jim Koch (pictured above) with his launch of Samuel Adams Boston Lager. Ironically, the beer was initially brewed in Pittsburgh by the folks who produce Iron City beer.

No matter. Microbrew made it into the beer drinkers mind as the name of a new type of beer. Both Anheuser-Busch and Miller Brewing struck back with their own specialty beers. (Miller Reserve, for example.) But they were unable to kill the emerging microbrew category. Today, category-builder Samuel Adams is a big winner.

Diet cola was almost a replay of the light-beer story. The first brand of diet cola was Diet Rite, a terrible name and even worse, a generic name. (Would Microbrewed Rite have become a successful beer brand? I think not.)

Diet Rite cola is almost as generic as Lite beer. So an emerging new category was easy pickings for the category killers, Pepsi-Cola and Coca-Cola. First in the pool was Diet Pepsi followed by Diet Coke.

Today, diet cola is not perceived as a new category. Diet cola is perceived as regular cola with the sugar replaced by an artificial sweetener.

Both Coke and Pepsi seem to have forgotten they have successfully killed the diet-cola category. They both run separate advertising campaigns for their diet colas and their regular colas. That’s not only illogical, its wasteful. (The same holds true for light beer and regular beer.)

It can take an exceptionally long time to build a new category. Tylenol, for example, was introduced in 1956 as a prescription brand of acetaminophen. Four years later the brand went over-the-counter. Eight years after hitting the drugstores, Tylenol sales were still a meager $5 million a year. In 1975 (19 years after its introduction), the first Tylenol consumer advertising ran.

Today, Tylenol is the largest-selling brand in American drugstores.

Slow growth tends to tranquilize the competition. It was many years before Bayer responded with ads like: Makers of Tylenol, shame on you! The logo: Bayer aspirin.

That was a mistake for several reasons. If you want to kill an emerging category, you don’t emphasize your existing category. You need to broaden your category to encompass the new one.

Bayer pain reliever would have been much better. And leaders, of course, should never attack underdogs.

Organic is another emerging new category. So far no category builder, with the exception of Horizon organic milk, has been able to accomplish much of anything.

But there are a host of organic-category killers at work. Walk the aisles of any supermarket and you’ll see dozens of examples. Del Monte canned peas and Del Monte organic canned peas, for instance.

One mistake potential category builders make is trying to do too much. For example, trying to launch a broad line of products under a single brand name selected to define a new category. Healthy Choice made this mistake.

Its much better to start narrow and then only broaden the line after it has won the category-builder battle. (Horizon started with organic milk and then broadened the line to include other milk-based products: Butter, cheese, ice cream, yogurt, etc.)

Another mistake is waiting too long. Will premium coffee at McDonalds kill the category that Starbucks so skillfully built. I think not.

Smirnoff also waited too long to try to kill the premium vodka category built by Absolut. Smirnoff Black never went anywhere as a brand or as a category killer.

Partly as a result of the success of Absolut and the premium vodka category, all vodka makers gave up trying to kill the ultra-premium category built by Grey Goose. Instead they launched their own ultra-premium brands.

And who will win this battle? Silly question.

Once consumers are convinced a new category exists, the category builder will always win.

Exploit Advantages in Chinese Brand Naming

-Steve Rivkin

As FedEx and UPS expand their services in China, one leading linguist argues that they could have profited more from the positive sounds of their names transliterated into Chinese.

The name FedEx has a strong association in Mandarin Chinese with fei, which is flying – a desirable name hinting at speed. The U of UPS also has a good association: it sounds like yo in Mandarin Chinese, meaning excellent. In Taiwan, UPS has its name transliterated as You Bi Su (literally "excellent-compared-to-fast," insinuating quality service as well as speed).

Fed Ex’s “flying” nuance effectively expresses excellence with a picture of quickness in delivering, according to Andy Chuang, president of Good Characters in Fresno, California.

According to their official Chinese websites, however, both FedEx and UPS chose to translate the meaning of their names rather than transliterate the already familiar American names. The result is a mouthful. FedEx is Lian Bang Kuai Di, meaning Federal Express; UPS is Lian He Bao Guo Yun Sung Fu Wu, meaning United Parcel Service. Fortunately for them and no surprise to nameologists, customers use the shorter, positive-sounding English name more often.

The bottom line: Consider the positive association your brand name might have if transliterated into Chinese, and take advantage of it.

Brand Strategy: The Flanking Move

-Al Ries

The language of marketing has been borrowed from the military. We talk about defensive marketing, offensive marketing, and guerrilla marketing. Often overlooked, however, is flanking, one of the most powerful military strategies.

In 1940, Germany stunned France by going around its vaunted Maginot Line and attacking the country through Belgium. Six weeks later, the Battle of France was over.

In 1950, General Douglas MacArthur launched an amphibious operation at Inchon, flanking the North Korean army that had American forces bottled up in the Pusan Perimeter a hundred miles to the southeast.

Now isolated, the North Koreans rapidly retreated. Twelve days later, the two American armies joined up and prepared for the next stage of the war, the invasion of North Korea.

In 1991, at the start of the first Iraqi war, the U.S. and its allies were encamped in Kuwait and eastern Saudi Arabia. Naturally, the Iraqis assumed the invasion would come from the east.

So General H. Norman Schwarzkopf shifted 150,000 Allied forces 100 miles west and launched his major attack from the south, taking the enemy by surprise. After 100 hours, the Iraqi defense collapsed and the U.S. declared the war over.

Many marketers ignore the lessons of military history and continue to attack competitors head-on, a strategy that seldom works. They should consider flanking. Take Mercedes-Benz, for example.

Mercedes has increased its sales in the U.S. market every year for the last 13 years in a row, from 61,899 vehicles in 1994 to 247,934 vehicles in 2006, an increase of 300 percent. Through November of last year, Mercedes was up another 2.8 percent.

These increases were in spite of some pretty negative stories in the media about the reliability of the brand.

Headline: An engineering icon slips. Subhead: Quality ratings for Mercedes drop in several surveys. The Wall Street Journal, February 4, 2002.

Headline: Mercedes head-on collision with a quality survey. Business Week, July 21, 2003.

Headline: Mercedes hits a pothole. Subhead: Owner complaints are up. Resale values are down. Fortune, October 27, 2003.

The bad news continues. In a 2007 Consumer Reports survey of 36 leading automobile brands, Mercedes-Benz ranked dead last in predicted reliability.

No matter. Mercedes-Benz is a better automobile brand, if not a better automobile product. How did Mercedes-Benz achieve its marketing victory? It flanked Cadillac, its chief competitor at the time.

When Mercedes-Benz arrived in the American market, its cars were considerably more expensive than Cadillacs. The high prices created the perception that the Mercedes brand was somehow superior to the Cadillac brand. In other words, in a class by itself. (Nicely reinforced by its long-time advertising theme: Engineered like no other car in the world.)

As a result of its high prices, Mercedes sales took off slowly. Here are annual sales of Mercedes cars, a decade apart.

1954: 1,000 (The number imported, not all of which were sold that year.)

1964: 11,234.

1974: 38,826.

1984: 79,222.

1994: 73,002.

After 40 years in the American market, Mercedes was still selling fewer vehicles in a year than Chevrolet was selling in a month. No wonder General Motors wasn’t particularly concerned.

But Mercedes was building a brand that was going to pay enormous dividends down the road. In 2006, Mercedes-Benz outsold Cadillac 247,934 to 227,014.

Remember when Cadillac used to mean something? Remember when the Cadillac of the category was a compliment applied to many different brands in many different categories?

No longer. Cadillac is just another brand flanked by a competitor with a superior strategy.

What Mercedes did in automobiles, Absolut did in vodka. By pricing the brand 50 percent higher than the best-selling Smirnoff vodka, Absolut created a new category which ultimately became known as premium vodka.

What Absolut did to Smirnoff, Grey Goose did to Absolut. By pricing the brand 60 percent higher than Absolut, Grey Goose created a new category which ultimately became known as ultra-premium vodka. Seven years after its introduction, entrepreneur Sidney Frank sold his Grey Goose to Bacardi Ltd. for $2 billion.

Setting higher prices (or lower prices, for that matter) is just one of the many strategies involved in building better brands. But in many cases, it’s a necessary strategy in a branding program, or the new brand will never get off the ground.

But management never seems to learn this lesson.

With the enormous worldwide success of the Mercedes brand, you might think that German management would get the message that the brand is more important than the product. And one of the best ways to send a branding message is to make sure the product is priced right.

Not so. According to Automotive News, the Daimler board member in charge of the Mercedes group said the price tag is not the defining characteristic of the Mercedes brand. Its quality and technology.

That’s the apparent justification for the launch of the relatively cheap A-class Mercedes in Europe. In the U.S., Mercedes-Benz has promoted its low-end C-class models in the past with advertising messages such as: Built like a Mercedes. Performs like a Mercedes. Priced like a regular car.

Regular cars are priced like regular cars. Luxury cars are priced like luxury cars. That’s a marketing principle Mercedes management seems to have missed.

When you have a powerful brand like Mercedes, you can make these and many other mistakes and still come out ahead. Compare General Motors, Ford and Daimler AG.

In 2006, General Motors and Ford sold 14.7 million vehicles worldwide, more than three times the volume of Daimler AG (4.7 million), a figure that includes the money-losing Chrysler division which Daimler has since sold off.

Yet on the stock market, Daimler (minus Chrysler) is now worth $94.8 billion, more than three times the value of General Motors ($14.9 billion) and Ford ($14.1 billion) combined.

What should Cadillac have done? They should have moved upscale to block the Mercedes brand. Instead, they moved downscale with such models as the Cimarron and the Catera.

You don’t make money building better products; you make money building better brands.

Recently a senior editor of Automotive News wrote: Sales success can be summed up in one word: Product. Product. Product. OK, three words, but you get the idea.

I get the idea, but I don’t agree with it. Yet there seems to be a notion in management circles today that nothing matters except the product. Take Audi, for example.

No automotive brand has introduced as many advanced technological features as Audi, a division of Volkswagen. Some Audi innovations include all-wheel drive, direct fuel injection, the advanced design of the TT coupe and the 12-cylinder, aluminum-bodied A8.

The goal: Audi AG wants to be the leading premium brand worldwide by 2010, according to chairman Martin Winterkorn.

And just last year, Johan de Nysschen, executive vice president of Audi of America, said he wants to turn Audi into a sophisticated, edgy, luxury brand for the U.S. market as it shoots for a long-term sales goal of 200,000 vehicles a year by 2015.

Towards that goal, Audi just introduced the $110,000, 420-hp, space-frame R8 sports car, the $82,675 420-hp RS 4 cabriolet and the $51,275 354-hp S5 sports coupe. The sports cars, according to according to Marc Trahan, Audis No. 2 U.S. executive, help to further strengthen and clarify what Audi is all about.

Audi, in my opinion, is not going to be the leading premium brand worldwide by 2010 and Audi is not going to sell 200,000 vehicles in the U.S. by 2015.

In the 34 years that Audi has been selling vehicles in the U.S. market, it has never sold more than 100,000 units a year. In 2006, sales were just 90,116 units, less than Suzuki, which sold 100,990 vehicles.

In the automobile field, like in many other fields, what matters most is the brand, not the product. And Audi is a weak brand for two reasons: (1) Unlike Mercedes-Benz, Audi did not flank the competition by introducing the first expensive automobile brand in the American market, and (2) Audi, at least in America, not a very good name.

Howdy Audi. Say hello to Suzuki. These names just don’t have the poetry of Mercedes-Benz.

Category First. Brand Second.

-Al Ries

A brand is the tip of an iceberg. How big and how deep the iceberg is will determine how powerful the brand is.

The iceberg is the category. If it melts, the brand will melt too.

Take Kodak, for example. Just eight years ago, Interbrand ranked Kodak as the 16th most valuable brand in the world, worth $14.8 billion.

Every year since, the Kodak brand has fallen in both rank and value. In 2008 it fell off Interbrand's Top 100 list worth less than $3.3 billion.

What’s a Kodak? It’s the world’s best film-photography brand. Unfortunately for Kodak, the film-photography iceberg is melting as the world turns digital.

Years ago I was discussing the situation with a Kodak marketing manager. It was no secret then that digital photography was starting to replace film. You’re going to have to launch a second brand, I said.

Not so, the marketing manager replied. The Kodak brand stands for more than just film. It stands for ‘trust’.

Trust Kodak for film photography. Trust Kodak for digital photography. That seems to make sense. Furthermore, Kodak invented the digital camera and introduced the first model, the Kodak DCS, in 1991.

Sense doesn’t matter in marketing. The Kodak name was the tip of the film-photography iceberg. And so far no brand, including Kodak, has managed to climb to the top of the digital-photography iceberg.

As a matter of fact, all the digital camera products (Sony, Nikon, Olympus, Pentax, Casio, Samsung, Panasonic, etc.) are line extensions from other icebergs.

(There’s something wrong when a company called Fujifilm Holdings introduces Fujifilm digital cameras.)

Nobody is thinking category. Everybody is thinking brand. How do we take advantage of our well-known brand to carve out a piece of this new iceberg?

The Eastman Kodak Company has been devastated by its brand-oriented approach. Compare the past with the present.

In the last six years of the 20th century (1995 to 2000) the company had sales of $87.3 billion and net profits after taxes of $6.7 billion, or a 7.7 percent net profit margin.

In the first six years of the 21st century (2001 to 2006), Eastman Kodak had sales of $80.4 billion and managed to lose $296 million. (No wonder the stock market has lost its trust in the Kodak brand.)

The objective of a marketing program is not to build a brand, but to dominate a category. Red Bull dominates the energy-drink category. Starbucks dominates the high-end coffee category. Google dominates the search category. The Body Shop dominates the natural-cosmetics category. Whole Foods dominates the organic-food category. BlackBerry dominates the wireless-email category.

Does it surprise you that all of these relatively recent brand successes (Red Bull, Starbucks, Google, The Body Shop, Whole Foods and BlackBerry) were started by entrepreneurs, not by established companies?

It shouldn’t. Big companies are busy burnishing their brands while entrepreneurs are looking for ways to dominate new categories. Big companies think brands. Entrepreneurs think categories.

Brands are important, but they have value only to the extent they stand for categories. Take Coca-Cola, once the world’s most valuable brand, according to Interbrand. But the value of the Coca-Cola brand has been steadily falling. It was worth $83.8 billion in 1999. Today it’s worth only $67.5 billion. Why is the value of the Coke brand falling?

It’s not because Coca-Cola doesn’t support its keystone brand with advertising. In the U.S. market alone, the company spent $334 million on its Coke brand last year.

The Coke brand is dropping in value because the cola category is losing its share of the soft-drink market. A brand is only valuable to the extent it stands for a category.

The Marlboro brand, according to Interbrand, is worth $21.3 billion. As smoking continues to decline, someday the brand is going to be essentially worthless. (Maybe the nicotine-flavored chewing gum category will make the Marlboro brand worth a few dollars.)

As a category iceberg melts, so does its brand(s). As the minicomputer disappeared, so did the value of the Digital Equipment brand. As the word processor disappeared, so did the value of the Wang brand. As instant photography slowly disappears, so does the value of the Polaroid brand.

Most companies are so brand-oriented their first thought is, ‘How do I save my brand?’ So Digital Equipment launched a line of personal computers with the Digital name, as did Wang with the Wang name. And Polaroid launched a raft of new products including conventional cameras and film, printers, scanners, medical imaging systems, security systems, videotapes, etc. With the Polaroid name, of course.

All for naught. Polaroid went bankrupt in 2001 and through a series of transactions wound up in the hands of the Petters Group in 2005.

That year, when the new chairman was asked what would Polaroid be like in the year 2010, he replied, ‘a consumer electronics leader known for really cool products that offer quality and value.’

There’s no iceberg out there in the consumer ocean named cool products that offer quality and value in consumer electronics. So expect Polaroid’s second reincarnation to be no more successful than its first one.

There are two types of icebergs. The first type is narrow and deep. The second type is broad and shallow. While the second type might offer greater sales potential, the first type offers greater profit potential and greater brand stability.

(Just like a boat with a deep keel is more stable than a boat with a shallow keel.)

Brands that are narrow and deep are almost invulnerable to competitive attacks. Furthermore, they usually are incredibly profitable. Think Rolex in expensive watches, for example. But there are many other brands that fit this description.

• Hellmann’s in mayonnaise.
• Campbell’s in canned soup.
• Heinz in ketchup.
• Orville Redenbacher in popcorn.
• Tabasco in pepper sauce.
• Gatorade in sports drinks.
• Kleenex in tissue.
• WD-40 in slippery.
• Clorox in bleach.
• Ikea in unassembled furniture.
• Visa in credit cards.

Someday your brand’s iceberg might start to melt. So what. You can always look around for a new iceberg to dominate.

With a new brand name, of course.

Brand Positioning and Perceptual Maps

-Al Ries

A brand’s position is the set of perceptions, impressions, ideas and feelings that consumers have for the product compared with competing products. Marketers plan positions that give their products the greatest advantage in selected target markets, and they design marketing mixes to create these planned positions.

In planning their positioning, marketers often prepare perceptual maps that show consumer perceptions of their brand versus competing brands on attributes that are important to the consumer, whether functional or symbolic.

Perceptual Maps are useful for these key reasons:

* Assessing strengths and weaknesses relative to competing brands along certain criteria important to the customer.
o This is revealed by the positions of the marketer's brand and competing brands along the axes.

* Identification of competitive advantage for the brand

o Perceptual maps show differentiation among products in the customer's mind.

o For example, in a perceptual map representing the car market based on two dimensions, “conservative “ vs. “sporty” and “classy/ distinctive” vs. “practical/affordable,” Porsche will probability be seen as the classiest and sportiest of the cars in consumers’ minds, providing the brand with a strong competitive advantage. Assess opportunities for new brands, as well as for repositioning existing brands.

* Identifying market opportunities

o Empty spaces near an ideal point (meaning an attractive market segment) on the perceptual map represent potential market opportunities.

* See how ideal points are moving

o In addition, perceptual maps show how ideal points shift as markets mature, and therefore a brand might shift its positioning in order to retain or gain a competitive advantage.

What do you do when your product’s features are not registering with customers? If a brand has a competitive advantage on an attribute that is not salient, marketers can educate their customers as to why it is important and show them why they should care about this attribute.

If this does not work or if your positioning is not registering, marketers usually consider changing their positioning with a strategy that is more likely to be effective.

The Obama Marketing Lesson

-Al Ries

Nov. 4, 2008, will go down in history as the biggest day ever in the history of marketing.

Take a relatively unknown man. Younger than all of his opponents. Black. With a bad-sounding name. Consider his first opponent: the best-known woman in America, connected to one of the most successful politicians in history. Then consider his second opponent: a well-known war hero with a long, distinguished record as a U.S. senator.

It didn't matter. Barack Obama had a better marketing strategy than either of them. "Change."

Nazi propaganda chief Joseph Goebbels was the master of the "big lie." According to Goebbels, "If you tell a lie big enough and keep repeating it, people will eventually come to believe it."

The opposite of that strategy is the "big truth." If you tell the truth often enough and keep repeating it, the truth gets bigger and bigger, creating an aura of legitimacy and authenticity.

Clinton's 'Solutions' Fizzle
What word did Hillary Clinton own? First she tried "experience." When she saw the progress Mr. Obama was making, she shifted to "Countdown to change." Then when the critics pointed out her me-too approach, she shifted to "Solutions for America."

What word is associated with Ms. Clinton today? I don't know, do you?

Then there's John McCain. An Oct. 26 cover story in The New York Times Magazine was titled "The Making (and Remaking and Remaking) of the Candidate." The visual listed some of the labels the candidate was associated with: "Conservative. Maverick. Hero. Straight talker. Commander. Bipartisan conciliator. Experienced leader. Patriot." Subhead: "When a Campaign Can't Settle on a Central Narrative, Does It Imperil Its Protagonist?"

Actually, Mr. McCain did settle on a slogan, "Country first," but it was way too late in the campaign and it was a slogan that had little relevance to the average voter.

Tactically, both Ms. Clinton and Mr. McCain focused their messages on "I can do change better than my opponent can do change."

"Better" never works in marketing. The only thing that works in marketing is "different." When you're different, you can pre-empt the concept in consumers' minds so your competitors can never take it away from you.

The Ultimate Slogan
Look at what "driving" has done for BMW. Are there vehicles that are more fun to drive than BMWs? Probably, but it doesn't matter. BMW has pre-empted the "driving" position in the mind.

The sad fact is that there are only a few dozen brands that own a word in the mind and most of them don't even use their words as slogans. Mercedes-Benz owns "prestige," but doesn't use the word as a slogan. Toyota owns "reliability," but doesn't use the word as a slogan. Coca-Cola owns "the real thing," but doesn't use the words as a slogan. Pepsi-Cola owns "Pepsi generation," but doesn't use the words as a slogan.

As a matter of fact, most brands follow the Pepsi pattern. Every time they get a new CMO or a new advertising agency, they change the slogan. Since 1975, BMW has used one slogan: "The ultimate driving machine." Since 1975, Pepsi-Cola has used these advertising slogans:

? 1975: "For those who think young."

? 1978: "Have a Pepsi day."

? 1980: "Catch that Pepsi spirit."

? 1982: "Pepsi's got your taste for life."

? 1983: "Pepsi now."

? 1984: "The choice of a new generation."

? 1989: "A generation ahead."

? 1990: "Pepsi: The choice of a new generation."

? 1992: "Gotta have it."

? 1993: "Be young. Have fun. Drink Pepsi."

? 1995: "Nothing else is a Pepsi."

? 2002: "Generation next."

? 2003: "Think young. Drink young."

? 2004: "It's the cola."

Thirty-three years ago when the "Ultimate driving machine" campaign started, BMW was the 11th-largest-selling European imported vehicle in the U.S. market. Today it's No. 1.

Thirty-three years ago, Pepsi-Cola was the No. 2-selling cola in the U.S. market. Today, many advertising slogans later, it's still No. 2.

The average Pepsi-Cola advertising slogan lasts just two years and two months. The average chief marketing officer lasts just two years and two months. The average corporate advertising campaign in BusinessWeek lasts just two years and six months.

The Obama campaign has a lot to teach the advertising community.

1. Simplicity.

About 70% of the population thinks the country is going in the wrong direction, hence Obama's focus on the word "change." Why didn't talented politicians like Ms. Clinton and John Edwards consider using this concept?

Based on my experience, in the boardrooms of corporate America "change" is an idea that is too simple to sell. Corporate executives are looking for advertising concepts that are "clever." For all the money being spent, corporate executives want something they couldn't have thought of themselves. Hopefully, something exceedingly clever.

Here is a sampling of slogans from a recent issue of BusinessWeek:

? Chicago Graduate School of Business: "Triumph in your moment of truth."

? Darden School of Business: "High touch. High tone. High energy."

? Salesforce.com: "Your future is looking up."

? Zurich: "Because change happenz."

? CDW: "The right technology. Right away."

? Hitachi: "Inspire the next."

? NEC: "Empowered by innovation."

? Deutsche Bank: "A passion to perform."

? SKF: "The power of knowledge engineering."

Some of these slogans might be clever, some might be inspiring and some might be descriptive of the company's product line, but none will ever drive the company's business in the way that "change" drove the Obama campaign. They're not simple enough.

2. Consistency.

What's wrong with 90% of all advertising? Companies try to "communicate" when they should be trying to "position."

Mr. Obama's objective was not to communicate the fact that he was an agent of change. In today's environment, every politician running for the country's highest office was presenting him or herself as an agent of change. What Mr. Obama actually did was to repeat the "change" message over and over again, so that potential voters identified Mr. Obama with the concept. In other words, he owns the "change" idea in voters' minds.

In today's overcommunicated society, it takes endless repetition to achieve this effect. For a typical consumer brand, that might mean years and years of advertising and hundreds of millions of dollars.

Most companies don't have the money, don't have the patience and don't have the vision to achieve what Mr. Obama did. They jerk from one message to another, hoping for a magic bullet that will energize their brands. That doesn't work today. That is especially ineffective for a politician because it creates an aura of vacillation and indecisiveness, fatal qualities for someone looking to move up the political ladder.

The only thing that works today is the BMW approach. Consistency, consistency, consistency -- over decades, if not longer.

But not with a dull slogan. Hitachi has been "inspiring the next" for as long as I can remember, but with little success.

Effective slogans needs to be simple and grounded in reality. What next has Hitachi ever inspired? Red ink, maybe. In the past 10 years, Hitachi has had sales of $786.9 billion and managed to lose $5.1 billion. When you put your corporate name on everything, as Hitachi does, it's difficult to make money because it's difficult to make the brand stand for anything.

3. Relevance.

"If you're losing the battle, shift the battlefield" is an old military axiom that applies equally as well to marketing. By his relentless focus on change, Mr. Obama shifted the political battlefield. He forced his opponents to devote much of their campaign time discussing changes they proposed for the country. And how their changes would differ from the changes that he proposed.

All the talk about "change" distracted both Ms. Clinton and Mr. McCain from talking about their strengths: their track records, their experience and their relationships with world leaders.

As you probably know, Mr. Obama was selected as Advertising Age's Marketer of the Year by the executives attending the Association of National Advertisers' annual conference in Orlando last fall. But one wonders if these CMOs are getting the message.

As one marketing executive said: "I look at it as something that we can all learn from as marketers. To see what he's done, to be able to create a social network and do it in a way where it's created the tools to let people get engaged very easily. It's very easy for people to participate."

Whatever happened to "change"?