Lululemon puts an Ayn Rand stamp on yoga

Lululemon has ridden the wave of yoga's popularity with great success, selling high end yoga clothes and promoting healthy living. So deciding to associate with a philosophy that's the antithesis of what yoga is all about seems a little odd, to say the least. 

As reported on NPR, the company's new shopping bags feature the question: "Who is John Galt?". And who is John Galt? He's the protagonist of Ayn Rand's novel Atlas Shrugged where she laid out her Objectivist philosophy, including the idea that selfishness is a virtue, a very un-yoga-like position.

Why this seeming act of self-destruction? Lululemon's own post on the subject explains that Chip Wilson, the company's founder, read Atlas Shrugged when he was 18 and was really inspired by it. So this could be a simple story about another ego-charged CEO running amok. But it's a bit more complicated than that.

The company was, in fact, founded with the mission to "elevate the world from mediocrity to greatness," an idea straight out of the Rand book. And its culture reflects many of her ideals. If you look at Lululemon's brand manifesto, you can see that it's a sampling of ideas and philosophies, some yoga-compatible ("The pursuit of happiness is the source of all unhappiness") and some more Rand-like ("Successful people replace the words 'wish,' 'should' and 'try' with 'I WILL.'"). 

As long as you don't delve too deeply, the company's mix and match of ideas kind of holds together and the company has clearly thrived despite its ideological impurity. The problem with the John Galt bags is that they shine a bright light at just one of the sources of inspiration and a very polarizing one at that. Now everyone who buys from the store will be carrying out a political statement as well as some expensive clothes.

Let's see what the impact will actually be. Maybe nothing. Whole Foods didn't suffer any lasting damage when its CEO did something similar. But the bags have caused quite a stir in some quarters of the yoga community with many promising never to buy anything from the store ever again.

The vexing problem of M&Ms in the mini-bar

"Fun" M&Ms at Kimpton Hotels

Hotel mini-bars have always been a flashpoint of confrontation between hotels and their guests. Guests hate the egregiously high prices and being charged for things they never ate. Hotels have to deal with their guests substituting tap water for bottled water (and vodka), tea for whisky and otherwise behaving badly.

I read a WSJ article about mini bars on the way to Los Angeles (summarized in this video) so I was curious to see what Kimpton Hotels has decided to do about this vexing issue. Turns out they've gone the obfuscation route, meaning they've substituted well-known brands with obscure ones which look more premium and perhaps worthy of their breathtaking price. So, instead of Evian or Aquafina, there's Fred Water at $8.00 and there are other products with no easy reference at all, like a Kopali Organic Mango snack for $7.00. (By the way, the Kimpton prices are nowhere near as bad as some other places.)

But what about those must-have products, of which one of the mustest-have of all is M&Ms? No substitutes allowed! The clever idea from Kimpton is to repackage/resize them and sell them in a resealable pouch bag, called 'Fun' so that the $7.00 price looks kinda/sorta justified.

Other hotels are trying different strategies--some have given up the fight completely, either taking out their mini-bars or leaving them empty for guests to stock themselves. Others are using technology to escalate the battle with their guests, installing fully automatic mini bars that monitor and track guests as if they are on some FBI list. And others (including Kimpton) are trying to lure their guests to buy more by strategically placing baskets of snacks and bottles of wine in easy reach.

From a brand perspective, mini bars are nothing but trouble--what consumers expect (all their favorite snacks and drinks at cheap prices) seems to be more than the business realities of hotels allows them to provide. (Apparently, mini-bars generally lose money, even with prices as high as they are.)  This appears to be a no-win encounter where the Kimpton strategy is about as good as it get in terms of damage limitation.

Anyone got any bright ideas about a better approach?

VW drives into the middle of the road

Photo: Max by mcchots (Flickr CC)

Volkswagen's U.S. chief executive, Stefan Jacoby describes his intentions to reposition VW from niche to mass appeal in an interview with the Washington Post, perhaps leaving behind Max, the star of recent campaigns. Here are selected highlights of the article with the thoughts running through my (current Audi and 3-time VW owner) head as I was reading the article:

Article: Germany's Volkswagen is "an icon brand" and "there are a lot of great stories and memories" about the Beetle, Jacoby said in an interview. But, he added, "to play a bigger role here, we need to modify and adapt to American consumers' needs."

Me: Uh, oh. This doesn't sound good. Why does adapting to consumer needs mean ditching great stories and memories?

Article: Here, there is more cruising and long-distance driving. In Europe, there are more tiny roads and you drive more actively than in the United States," Jacoby said. "We Germans drive and we are not drinking in the car," he added. "Americans have breakfast and coffee in the car. We have to adjust to this."

Me: VW has been in the U.S. market since the 1950s. This can't be where they've gotten to in terms of insight. And what's with the "We Germans" attitude?

Article: Jacoby, 51, offered few details about the cars, other than that they will be among the first Volkswagen vehicles built specifically for American taste. The cars will have a decidedly less European feel, with a more user-friendly steering wheel and entertainment system, an accelerator and brake pedal that are farther apart, and larger cup holders."

Me: Larger cup holders? And haven't they had enough of the distance between accelerator and brake issue after this? More importantly, isn't European a key defining characteristic of a VW and an important reason that people buy the cars? What do they want instead of a European feel? An American feel, represented by, say, GM?

Article: Audi officials say they do not intend to duplicate the Volkswagen strategy in Americanizing the cars.

Me: Phew! Leave my Audi alone!

(Apologies to Mr. Jacoby if the Post article does not fairly or accurately reflect his opinions.)

SIGG's choice comes back to haunt

Photo: ensign_at_e233net (Flickr CC)

Here's how SIGG CEO Steve Wasik positions the fact that SIGG bottles made before August 2008 contained BPA: "To be clear, all SIGG bottles made since August 2008 contain our new BPA free EcoCare liner. SIGG bottles manufactured prior to August 2008 have the former water‐based epoxy liner which contains trace amounts of BPA. These bottles have been thoroughly tested and showed 0% leaching of BPA. It is easy to determine which liner you have, as they are of 2 distinctly different colors."

Here's how Gawker translates that: "Haha: Those shockingly expensive Sigg water bottles beloved by yuppies and hippies for being free of some specific deadly chemical did in fact contain that deadly chemical. Do we spy the hand of The Creator?"

The great success of SIGG over the last few years has come from the fact, as Marketing News points out that it "became a badge of consumer eco-consciousness and all-around cool." As people worried about the waste and the potential toxity of plastic bottles with BPA, SIGG bottles presented themselves as safe and attractive alternatives. As the tidal wave of opportunity swept by, SIGG jumped in even though, as it turns out, they weren't quite ready.

How much of a backlash there will be remains to be seen. Competitors such as CamelBak and Klean Kanteen sense an opportunity and environmental groups are reacting with everything from disappointment to outrage. The CEO letter doesn't seem to have doused the flames but the offer to replace the old bottles with new ones looks like a step in the right direction if the exchange is set up in a relatively painless way for the consumer.

SIGG made its choice. What would you have done? Would you have gone for it too? Or would you have waited and maybe missed the boat?

Quote of the Day: on marketing spending

Worthy of its own post is this quote from the Morgan & Rego brand portfolio strategy paper I talked about yesterday:

"However, our results also indicate that efficiency-enhancing efforts to reduce marketing expenditures can be counterproductive. We find that relative advertising spending is positively related to firms' cash flow levels and negatively associated with cash flow variability .... This suggests that in contrast to current accounting conventions, marketing spending appears to be an investment rather than an expense."

Now that's something that marketers having been saying forever but it's great to see it confirmed in a comprehensive empirical study (a 10-year study of 72 Fortune 500 companies).

Source: Brand Portfolio Strategy and Firm Performance, Journal of Marketing Vol. 73 (January 2009) by Neil A. Morgan, Associate Professor of Marketing and Nestlé-Hustad Professor of Marketing, Kelley School of Business, Indiana University and Lopo L. Rego, Assistant Professor of Marketing, Tippie College of Business, University of Iowa.

What if we did away with the brand model?

In the 11.01 edition of Marketing News, Kevin O'Donnell laments what he perceives to be a branding backlash. "Was there ever a concept that was so misunderstood?" he asks. He challenges those that would criticize brand by saying: "Rail all you want. But brand is a fact of life."

That sounds like a challenge. What if brand was not a fact of life? What if we were all to collectively agree not to use the words: "brand" and "branding" ever again? We could do all the same things we've always done (or failed to do), just not use the words. How bad would that be?

Let's start with the activity of branding. What would our options be? Perhaps we could fold all "branding" activities under the general title of marketing using sub-categories like positioning, design and innovation where necessary. Maybe we'd have a new activity called experience delivery or experience management to make sure that what sometimes used to be called the brand promise gets translated into appropriate action.

How about brand itself? It seems like no-one can agree on a definition anyway so anything we come up with here might be an improvement. It should have something to do with consumer perception, something to do with expectations and ideally connect with the names and logos that represent this thing that shall no longer be named. Any ideas?

The point is that brand is a construct, a model that serves or ought to serve a purpose. Brands don't exist in the real world and it's not absolutely mandatory that we keep using the model. If the model doesn't work, we should replace it. If we brand practitioners can't agree on a basic definition and confuse ourselves and our clients maybe we need a new approach.

My vote though is to keep it. I don't want to change my business card and the name of my blog for one thing. But apart from that, we know (with empirical certainty(1)) that brand strength is closely tied to consumer ratings of relevance and differentiation. This gives us a way to measure success and a way to figure out what we should be doing.

So let's keep brand alive for now. But let's keep tabs on the situation. If it looks like we are all collectively wasting too much time arguing about definitions and not using this model to deliver effective business activity perhaps we will have to pull the plug. Or do you have a different perspective?

Notes:
1) How do we know that relevance and differentiation are the critical measures? We have great data from BrandAsset Valuator® (BAV) to support this. BAV is a global database of consumer perceptions about brands. It has plotted data against revenue growth, margin, NOPAT and economic value added (EVA) over a ten year period. Its consistent results show that:
a) Differentiation is the margin driver - brands that grow differentiation have about a 50% higher operating margin on average than those which allow differentiation to decline.
b) Relevance is the key to market penetration. Those brands that grow both their Differentiation and Relevance report the greatest increase in operating earnings.The relationships between these measures reveal the true picture of a brand's health: its intrinsic value, its capacity to carry a premium price and its ability to fend off competitors.

2) For a comprehensive visual map of brand and its relationship to experience, logos, take a look at this chart from Dubberly Design Office. It even includes a bit of semiotics for those with that inclination.

Wassup with that?

This election campaign ad must be driving the people at Budweiser crazy. It's a parody of Budweiser's "Wassup" ad with a very different and partisan message and it already has over 2 million views on YouTube. It shows that our Wassup friends have not not done so well in the Bush years and ends with a call to vote for change and Obama.

Burt Helm did some digging (details here) and found out that this new ad was made by the original director Charles Stone III and includes most of the original cast. That's why it looks so good. But how could that happen? Surely, Budweiser has the rights? According to Stone, the answer is "no." They never owned the idea and they just leased the rights (for $37,000). As he says: "That I’m able to use an idea distributed by a huge company, who made a lot of money off it, so that now when I put out what I want to say, it’s recognizable, and it sparks -- that’s worth $1 million to me."

From the Budweiser perspective, this is pretty much a disaster from a brand association perspective. The only good news is that there's a "does not reflect the opinions of Anheuser-Busch" disclaimer at the end of the ad which they'll have to hope works as intended. A little more generous allocation of funds to the rights ownership bucket might be in order in the future.

(Here's the original Wassup ad in case you want to see it.)

After the financial meltdown from a brand perspective

Photo: Union Bank of California rebuilds its headquarters after the 1906 San Francisco earthquake

The incredible events of the last few weeks have, to say the least, shaken up the financial services sector. As a brand strategist, I've been watching with shock and awe as company after company has been swallowed up by this man and mortgage-made disaster--some put completely out of business, others forced into marriages with financial institutions they would never otherwise have been attracted to, arranged by the FDIC, shotgun in hand.

At the time of writing, the storm (like the bailout plan) has not yet passed but it's not too early to think about the remantling of what has been so suddenly dismantled. Looking at things from my branding perspective, some observations and some questions:

1) Rebuilding trust: Bank failures were something you read about in history books. No longer. People's confidence and trust in financial institutions has taken a hit and it's going to take time and energy to win that trust back. What's needed? A clear and transparent way to show customers that lessons have been learned and changes have been made in how investment decisions are made.

We can expect a fair degree of cynicism from consumers so recently treated to taglines like: “The strength to be there" (in a before-the-meltdown AIG spot). And we should not expect either that consumers will be easily persuaded by talk of how many billions of dollars of assets banks have. They've seen that billions were not enough to save the likes of WAMU ($310 billion in assets).

Banks that stayed clear of the mortgage business in the last couple of years and those that have had a diversified or large enough business to ride the storm will have enormous advantages going forward. But, even for them, what's called for now is a conservative, perhaps humbler, approach. Very much back to basics.

2) Integrating assets: Bank of America, Chase and Citi have huge amount of work ahead of them integrating the assets of companies that they have acquired. Even Bank of America, an expert in integration after years of acquisitions, is likely to be stretched to its limit as it tries to absorb Merrill Lynch on top of not-yet-fully-digested Countrywide and LaSalle Bancorp. One important and fragile asset is people. Companies will have to move quickly to retain talent and engage employees from acquired companies with a shared vision of the future.

3) Integrating brands: Some businesses find themselves living together in very unexpected unions. WAMU was all about not being the same as other banks. Now it's part of JPMorgan Chase. Who would have thought that Bank of America and Merrill Lynch would wind up together? These sudden mergers throw up some interesting brand architecture questions. JP Morgan Chase has already announced that all branches of its combined network will carry the Chase brand. Is that right given WAMU's so distinctively different approach? How will they pull off that transition without losing customers? What should Bank of America do with Merrill? Leave it completely alone? Add some kind of endorsement like U.S. Trust? Or consider even closer integration? Will the overall trend in financial services towards master branding slow down or reverse if companies decide they need to build risk firewalls between one part of their business to stop problems in one area affecting everything else?

4) Improving customer experience: Both Wachovia and WAMU had focused on delivering superior customer experience as a way to differentiate themselves from the bigger banks. The Forrester's Customer Experience Index suggests that they had been successful since both banks were ranked towards the top of the list. Now that they've been acquired by Citi and Chase respectively, it will be interesting to see if any of the approaches they pioneered can be successfully transferred to the bigger banks.

5) Changing attitudes about money: How far will the current financial crisis affect people's attitudes about money? Will this crisis pull people back from living way beyond their means? Some are suggesting that it's time for people to start cutting back. Is that opinion likely to catch hold and, if so, will financial service companies then be held accountable for encouraging good financial behavior and discouraging poor behavior? Bank of America has been airing TV ads that focus on saving. Is this a good start?

Links:
1) Will WaMu brand jive with JPMorgan Chase? AP
2) Banks: Making saving sexy: CNNMoney.com
3) Shiny Happy Bankers: The New York Times

The Army marches into Sears, sets off the alarm

Sometimes finding a way to sell your product to customers can seem like the least of your problems when compared to the needs and demands of other stakeholders.

550 Sears stores nationwide are about to start selling a line of clothing with the Army's 1st Infantry division's Big Red One insignia. That's come as a big and unpleasant unsurprise to a whole bunch of groups including:

Congress: "I'm astounded," said Rep. John P. Murtha (D-PA) who chairs the House appropriations panel that oversees the military budget.
Army leadership: Apparently not everyone was in the loop. "There is a great deal of concern among the senior Army brass about this deal" according to a Defense official
Veterans: "That patch is to be worn by only people who served in the 1st Division. What right does the Army have to sell our patch?" Charles Horner, a retired Army officer. And, more strongly by CrowMeris in a comment in Forbes: "As a veteran (not of the 1st Infantry, but a veteran none-the-less), this saddens and sickens me. What's next? Purple Heart jewelry?"
Concerned parents: “It’s reasonable for anyone that’s a parent ... to be worried about the infusion of militaristic trappings into children’s culture,” said Robert Weissman, managing director of Commercial Alert. “It really has the potential to put the Army or any other branches of the military in the wrong position of marketing themselves directly to kids.”

The original intentions of this licensing deal may have been good. (Army spokesman Paul Boyce summed these up as to: "enhance Army recruiting and the public's general goodwill toward the Army and its activities") But the strong negative reaction to this program shows the danger of failing to get enough of the right people on board (especially those with the power and money).

It's often tempting and sometimes necessary to get things done by working with a small group and not involving a broader audience. But this story speaks to the need of making an accurate assessment of the future consequence of such an approach.

Links:
1) Army, Sears clothing deal irks lawmakers: Politico
2) Army, Sears partner for 1st Infantry clothing line: Forbes

Hertz playing with fire

There's something that's pissed me off about renting a car for so long that I've almost run out of supplies of, well whatever, to be upset about it anymore.

That's the: we'll-charge-an-extra-$3 plus/gallon-for-gas-if-you-don't-drive-miles-out-of-your-way-to-fill-up-at-a-gas-station-that-mysteriously-never-seem-to-be-anywhere-near-an-airport-(except-in-Denver) policy aka (by me at least) as egregious customer abuse.

So I had a sudden rush of euphoria when I read the following headline in my Hertz newsletter: "Save Time--Don't Stop for Gas." Could it be that this putrid policy was going to be abandoned? Could it be that finally one company had realized that whatever profits they make from this activity wasn't worth the cost in terms of customer disatisfaction?

As I read the copy, my hopes were being confirmed: "Now Hertz offers pump prices on gas when you return your car. No more leaving early to try to find a gas station on the way back to the airport. No more worrying about filling up before you return your car. We'll charge you the going rate per gallon in the area....."

Oh my god, they really were going to do this. I'm going to be a loyal Hertz customer forever....

"... plus a flat refueling fee. It's that simple."

I actually missed that little bit the first time around. Turns out the "refuelling fee" is $6.99 so if you drive less than (roughly) 60 miles you will actually pay more than you did before. Nice.

I feel inclined to find a pair of scissors and cut up my gold card into little pieces. But I'm going to resist such a dramatic gesture. Partly because it's company policy that we have to rent Hertz and partly because I think this is the thin end of the get-rid-of-this-charge wedge. Surely we must see promotions in the future where the refuelling fee is waived?

I'll wait to see, scissors at the ready.

Links:
1) Save time--Don't Stop for Gas: Hertz News
2) Overlooked: court upholds pricey car rental fuel: Elliott

United's tail end

These are the ways you can tell you're on a Ted flight by United, once you're on-board:

1) There's a yellow strip running the length of the plane just below the overhead luggage compartment
2) There's a blue Ted sign by the cabin door (slightly chipped on the plane I flew on)
3) And there's this napkin

Everything else is identical to United. The decor, the seats, the flight attendant uniforms, check-in, the mileage program - everything.

Give up already. What's the point of continuing with this? Or is it just about the cost of re-painting the planes?

Branding straw men

I get back from a hard day's branding work, have some dinner, play with the kids, put them to bed and then sit down in front of my computer to see what's new on the blog front. And there I find branding assaulted from all sides. Well, two sides:

"As I've said on other occasions, branding is something you do to cows. It makes sense if you're a rancher, since cows do tend to look alike. It's also useful to lots of businessmen, and they brand things like detergents or shoes for almost the same reason as ranchers. Branding is what you do when there's nothing original about your product."

That was Roy Disney at a shareholder's meeting in 2004, quoted yesterday by Derrick Daye as a "great moment in branding." It doesn't seem that great on the face of it. Then, there was this:

"Brand management was top down, internally focused, political and money based. It involved an MBA managing the brand, the ads, the shelf space, etc. The MBA argued with product development and manufacturing to get decent stuff, and with the CFO to get more cash to spend on ads.

Tribe management is a whole different way of looking at the world.

It starts with permission, the understanding that the real asset most organizations can build isn't an amorphous brand but is in fact the privilege of delivering anticipated, personal and relevant messages to people who want to get them."

That was Seth Godin yesterday. Nice.

I think what we have going on here is some straw man arguments. That means defining branding as something that it's not and then dumping on it. Earlier in the same speech from Roy Disney, he said:

"I believe our mission has always been to be bringers of joy, to be affirmers of the good in each of us, to be -- in subtle ways -- teachers. To speak, as Walt once put it, "not to children but to the child in each of us."

But he didn't count that as branding. In a previous discussion between Seth and I about branding, Seth said:

"Yes, I agree that the way you act and the types of interactions you create are up to you, and you can choose to highlight the ones that fit together and
tell a story. So yes, if you want to call that branding, it's essential."

Well, Seth, yes I do. So, for the record, and for all brand managers out there, whether they have an MBA or not, here's my take on branding.

Branding is about finding something relevant and differentiated* to say about your brand to someone, or better, some enormous number of people. Great if you can find a sustainable competitive advantage based on your product but that's not the only way to differentiate. Other options that can work: Brand experience, market leadership, service, attitude...

Marketing is about telling people about your relevance and differentiation. Within the world of marketing, word of mouth/permission marketing is one tactic out of a range of other options that also includes traditional media (TV, print). Marketers must stay on top of new marketing programs to constantly try and assess what's going to work the best and the most efficiently for what they are trying to say. But they don't have to jump on any particular bandwagon before it makes sense for them to do so.

*Why relevance and differentiation? It makes intuitive sense that these things matter but there's also statistical support. Y&R has a global database of consumer perceptions of brands that now includes over 19,000 brands and over 350,000 consumers. It has shown that relevance and differentiation drive brand strength and that brand strength, in return, promotes strong earnings.

Links:
1) Great moments in branding: Roy Disney's Speech: Derrick Daye
2) Tribe management: Seth Godin
3) Earlier discussion between Seth and I on branding
4) Brand Asset Valuator: Y&R