David Aaker, author, brand guru, Vice Chairman of the brand consulting firm Prophet, and professor emeritus at Berkeley’s business school, joins me for a provocative interview on the state of brands today.

Providing color and context for his latest book, Brand Relevance: Making Competitors Irrelevant, Dave explains:

• why the only way for brands to win is to create a new category or subcategory
• the difference between incremental vs. substantial vs. transformational innovation
• why researching your innovations with your target market is not enough

He also provides a host of examples to support his theses.  You can learn more by reading Dave’s blog and following him on Twitter — and of course, check out the book.

I have long admired Dave and, from the very beginning of my brand-building career, I’ve been deeply influenced by his thinking.  It’s an honor to post this interview.

other interviews:

• john gerzema on how to connect with today’s consumer
• jonathan salem baskin on the history of social media
• john costello on behind the scenes at dunkin’ donuts

What do Justin Bieber and Donald Trump have in common? Besides mops of hair! Both guys (we can’t really call 17 year-old Bieber a man yet) are driving major brand extensions – they’re own.

The Donald’s brand may have started in real estate, with office buildings and hotels littering several metropolitan areas. But the Trump name now appears on vodka, health products, mattresses, furniture, cuff links, shirts, ties, and even a seminar company. Trump’s most recent extension pursuit is golf courses, as he is building a billion dollar golf course in Scotland to add to the nine golf properties he already owns.

Justin Bieber’s aspirations seem to be just as ambitious. He’s released his own line of headphones, nail polish, and even scented dog tags (no, I’m not making this up.) Current rumors suggest he is planning to launch his own retail store as well as a line of Snack Pak pudding cups.

On one level you could lump Trump’s and Bieber’s brand extension pursuits together and chalk them up as the sort of hubris and greed that seems to come with celebrity territory. They are simply joining the ranks of others stars who have built business empires by trading off of their names.

But there are important insights to be learned from them about brand extensions. Actually it’s the differences between the two guys’ approaches that is most revealing:

Motivations — Trump seems to be pursuing brand extensions as an exploitation of his brand, while Bieber’s moves seem to more of an expression of his.

In a BusinessWeek article, Trump explains the success of his endeavors saying, “[My] name is hotter than ever…it’s been hot as a pistol.” The piece reports, “After taking a break to greet Kate Gosselin, star of the onetime reality show Jon & Kate Plus 8, Trump says: ‘If Trump wasn’t doing well, the stars don’t come up and kiss my ass.’” Trump clearly recognizes the value of his name and he’s using it as leverage for business deals.

Bieber, on the other hand, seems to view extensions as an expression of himself. In a video introducing his new headphones, he explains their purple color saying, “It’s my favorite color. I just think it represents me the best.” And the colors of his nail polish collection are reportedly inspired by his songs: Me + Blue is dark blue and One Less Lonely Girl is a girly lavender.

Guardrails – The primary judgment call of any brand extension is whether or not the new product or category is appropriate for the brand. Effective brand managers apply guardrails to delineate what is appropriate and what is not.

In Trump’s case, the guardrail he applies is brand-based. In a 2006 blog post, he wrote: “I’ve worked hard to make sure the Trump name is found only on buildings of the highest caliber and products of the finest quality. I won’t even consider giving my approval to anything unless I know it’s the top of the line because when people see or hear Trump, they expect the best.” To Trump, the quality his brand is associated with is the primary guardrail within which an extension must lie.

Bieber’s guardrail is fan-based. His statement in an interview with Rolling Stone magazine — “I don’t think of myself as powerful. If anything, my fans are powerful. It’s all in their hands.” – reads like an overall philosophy as well as his approach to brand extensions.

With teen girls and the products they love as his guide, decisions about what is appropriate come easily for him. That’s why it doesn’t seem odd that a male celebrity would develop a female product like nail polish. David Reeder of talent agency Green Light observed in a Brandweek article that Bieber’s extensions “make sense to his core audience, so there’s nothing completely off-brand for him.”

Business relationships – For Trump, brand extensions are a solo endeavor. Most of his deals are acquisitions or development plays. It’s the traditional real estate approach – there is a buyer and a seller, and after the transaction closes, there is a single owner. He may work with another entity to develop a product, as he did with Talbott Teas to create new tea blends or with PVH to create his clothing line, but the end product is always branded Trump.

But Bieber is all about partnerships. It’s an approach he first employed with his career. He started out by taking on Usher as a mentor and released early hits with him and Ludacris. More recently he’s collaborated with musicians like Kanye West. His brand extensions reflect a similar collaborative approach.

The aforementioned headphones were developed in partnership with Monster and Dr. Dre and are branded “Just Beats.”  The nail polish line is a result of a collaboration with Nicole by OPI and is called the One Less Lonely Girl collection.  Bieber is mentioned in promotional materials but his name doesn’t appear on the product.

They’re two entirely different approaches to brand extensions – neither is right or wrong – just different. Trump has taken the tact that most companies do with brand extensions. Most companies look to brand extensions to leverage the value of a brand name in multiple categories, so they take an approach that exploits the existing brand equity, uses the brand as the filter for decisions about appropriateness, and asserts the brand in the end product.

Bieber’s approach is less conventional and not without downsides. Allowing appropriateness decisions to be driven by your customers vs. the brand has the potential to take your brand off course. And by doing co-brands or partnerships, your brand may derive less value from the extensions. But the Bieber approach may resonate more with your target audience, as it conveys more humility and flexibility.

I love how brand insights can be derived from a 66 year old business tycoon and a 17 year old pop star alike!

other posts about brand extensions:

• garden fresh restaurants practice fresh business principles
• brand-building: yohn on ries
• underwear that’s fun to wear

Thanks to my column-writing gig with QSR Magazine, I recently got an insiders’ look at a remarkable company, Garden Fresh Restaurant Corp.  You probably know them as Souplantation, the 110+ unit salad and soup buffet concept, or Sweet Tomatoes, the name they operate under outside of Southern California.

I’ve always loved their restaurant concept and so I appreciated the opportunity to take a look behind the curtain.   What I found was a fun team, a smart business approach, and some fresh takeaways for all companies:

1. When it comes to corporate personnel, don’t underestimate the value of front line experience.

Many of the people on the corporate staff at Garden Fresh started their careers on the company’s restaurant floors.  Co-president Ken Keane got his start as a Souplantation restaurant manager, for example, while a couple of restaurant dishwashers worked their way up to roles as the company’s Culinary Director and Vice President of Business Development.

Not only does such a track record produce a deep passion for the brand and the distinct wisdom which results from longevity with the company, but also an intuitive understanding of what customers want and a careful eye toward in-restaurant execution to shape every decision.  The organization seems nimbler and more focused because it’s run by former front-line employees.

2. Understand the difference between a product and a brand.

The company just introduced a new restaurant concept (read a great write-up about Souplantation Express by my QSR Magazine editor Sam Oches.)  The way the company developed the concept reflects their understanding of the difference between a brand idea and a product offering.

The new concept, in which a customer points to the ingredients he or she wants while an employee builds the selections into a salad, is a departure from the signature all-you-can-eat buffet set-up of the chain.   Souplantation Express was inspired by the many you-pick-we-make salad QSRs which have grown in popularity in New York City over the last several years and are now popping up everywhere.  But as CEO Michael Mack explains, “Salads are products; other restaurants don’t have a concept.”

The company is using Souplantation Express to reinforce – and to grow – the company’s brand identity in “choice.”  To that end, they offer over 30 salad ingredients to choose from as well as five soup selections.  Plus customers are not limited to a certain number of ingredients and they’re not charged by the weight of the completed salad, common practices among most salad restaurants.  All of these factors increase operational complexity and are likely to wreak havoc on food costs, but the company believes delivering their brand identity, not simply a product, will make the business a success.

3. Use social media as a business tool.

The way CEO Mack explains it, social media is a like a “mirror image.”  It reveals what you really are, how you’re really perceived – and the company embraces that sometimes harsh reality.

Garden Fresh doesn’t simply use social media as a way to interact with guests – although it does have over 15,000 followers on Twitter (three times as many as Burger King, which has 10 times the number of units), and more impressively the company follows over 15,000 people (for most QSRs, the number of followers dwarfs the number of people they follow.)

The folks at Garden Fresh see value in using social media to round out their other market research efforts and to increase transparency within the company and with the outside world. Social media enables the company to “get more well-rounded information, it puts everyone on their best behavior, and it ensures everyone has the same information.”

—

It’s difficult to determine the impact of these principles on business growth and the bottom line since Garden Fresh is a private company.  But, chain-wide sales have been reported at $300MM, which translates into a $2.6MM+ PSA (Panera Bread’s is around $2.1MM).  They haven’t closed any stores recently and in early 2009 they reported annual same stores sales had increased 3.2%, which is pretty impressive given the chain’s concentration in California, a state hit hard by the recession.

So from what I can tell, Garden Fresh’s approach is, well, fresh, and worth learning from.

other impressive companies:

• herman miller, a business lab disguised as a furniture company
• six best practices in retail
• love the moosejaw madness

New formats of existing retail brands seem to be popping up all over the place.  Best Buy Mobile was introduced a couple of years ago as a store-within-a-store concept — the company then launched standalone Best Buy Mobiles and recently announced plans to open 40 more this year. 

Petco just launched Unleashed (with more personalized service and “hipper attitude” than the original format) and Baskin-Robbins has been testing Cafe BR (featuring a make-your-own-sundae bar and higher-end desserts such as fondue) and BR Express (a smaller store focusing on soft-serve ice cream.)

These new formats seem to be a great way for retailers to appeal to more shopper need-states.  A need-state is defined by a group of consumers who seek similar product benefits and attributes in a particular usage occasion.  Need-state segmentation overlays usage occasions onto attitudinal classifications.

For example, in the snack foods category, there might be some consumers who are looking for a snack to tie them over between meals, while others are looking for something to eat post-workout (two different usage occasions) — but they share a desire for healthy alternative (same attitude).   Unlike attitudinal or demographic segmentation approaches which classify consumers into discrete groups, with need-state targeting, a single consumer can experience different need states over time — and thus be reached in multiple ways.

Typically need-states have been used by manufacturers to drive product development.  By understanding different purchase drivers, manufacturers develop different product variations and brand extensions — e.g., a healthy snack food that’s packaged in portable packaging might fulfill one need-state while a more traditional pack lends itself to another.

What’s interesting is that more retailers are getting in to the game.  Best Buy Mobile is targeted specifically to people shopping for cell phones and services.  These consumers may be the same ones who browse the aisles of the big box retailers’ regular stores in search of the latest gadget, but when they are specifically looking for a mobile solution, Best Buy wants Best Buy Mobile to be their go-to store.

Likewise, Petco’s Unleashed boasts a smaller format, is located in high-traffic locations, and emphasizes community — perfect for the pet parent who is already passing by the store and needs to drop in for a quick purchase or some friendly advice.  Baskin-Robbins’ Cafe BR concept seems more like a destination (a great post-movie date place), while BR Express’s name makes its target need-state clear.

With these new formats, these brands expand their appeal, giving existing customers more options and reaching new customers who previously hadn’t found the brand relevant or convenient.

New formats also provides other benefits:

• emphasizes select brand attributes — Best Buy Mobile is described as having “one of the largest selections of carriers, handsets and accessories available anywhere, as well as a highly-trained staff to help customers make the most of their mobile phones…Employees undergo at least 80 hours of intensive training, as well as continuing education on mobile phone technology and trends.“  As such, the new concept shores up Best Buy’s credentials in wide selection and knowledgeable staff.
• reinvigorates the brand image — Unleashed has a more urban contemporary feel than its master Petco brand.  By embodying these attributes, Unleashed helps update and improve Petco’s brand image.
• opens the brand to new opportunities — Jimmy Fitzgerald, VP of concept innovations for Baskin Robins’ parent company explains the chain’s new formats by saying: “This allows us to open doors and go into places we really don’t fit — upper-scale malls and downtown locations.“

So it seems these new retail formats hold a lot of potential for their parent brands.  It will be interesting to see how well they do — and who else jumps on the new retail format bandwagon.

Haagen Dazs just added a new line — Five — it’s billed as “All-natural ice cream crafted with only five ingredients for incredibly pure, balanced flavor… and surprisingly less fat!“

The move is brilliant!  and I love the name — crisp and simple!

They’re tapping to the sizable segment of people who define healthy food in terms of wholesomeness and natural ingredients — which reinforces something I wrote about last year in the CMO Council‘s Marketing Magnified — that is, healthy isn’t just about counting calories and fat.  There are numerous and widely-differing health and wellness mindsets among consumers, and smart marketers understand and navigate through them to identify the right target and positioning for their brand.

Last week’s Ad Age featured a column by brand luminary Al Ries that I just can’t let go without comment.  Ries’s main thesis is that brands must remain narrowly focused in order to dominate their categories.

Having grown up as a brand enthusiast, studying the seminal texts of Trout & Ries and forming my understanding of brand strategy by their insights and edicts, I find myself in the interesting position of taking issue with several points in Ries’s column.  But I feel I must raise some questions.

By stating that “you can’t dominate a category if you expand your brand into many other categories,” Ries seems to be lobbying for limits on businesses that are unacceptable in today’s marketplace.  It’s true, businesses in narrow categories can well afford to keep their brands focused and resist the temptation to expand into new categories.  There are only a certain number of uses of facial tissues, after all, and no shareholder is expecting the Kleenex brand to become a multi billion dollar business.  But in most cases, shouldn’t a company that wants to remain viable not only grow its share of its existing category, but also look for new growth outside of it?  And wouldn’t a smart brand architecture (e.g., the use of endorser or sub-brands) can help strengthen the brand as it grows into new areas?

Ries argues the most reliable measure of the power of a brand is market share.  Really?  Can’t brands prop their share up through promotions and incentives without actually growing?  And isn’t the channel playing an increasingly powerful role in balancing out competing brands, such that market share is less a measure of value to the customer and more a result of purchasing clout (or lack thereof)?  And what about brands that are big but not necessarily strong?  McDonald’s has been the fast feeder market share leader for decades, but only in the last several years have they been able to derive their strength from something more than sizable brand distribution.

Which leads me to my last question – how are we defining “building a brand” here?  Ries points to market share leaders like TurboTax and Taco Bell and praises them for being dominant.  He then flips to Coca-Cola and Nike and uses their value according to Interbrand’s list of 100 most-valuable global brands to prove their strength.  While these measures have their merit, I question whether they are the best bellwethers for brand power.  If a brand is, as Ries states, “a word that stands for something in the mind of prospects,” then shouldn’t brand strength be evaluated on how strongly it stands for that something?  Or how strong of a connection it has with its prospects?

In the end, Ries seems to be saying that building a business is at odds with building a brand.  I guess I simply disagree.   I advocate a “brand as business” approach – that is, applying brand understanding to business decision-making about which categories to enter and how.

Care to weigh in?

In dropping the Kinko’s name from its moniker, Fedex (formerly Fedex Kinko’s) may be losing more than 6 letters and an asterisk. The name change, announced 6 months ago, is now for all intents and purposes complete but the transition is far from settled.

BusinessWeek’s story on Fedex’s efforts reports on the struggles the company has had since Fedex bought the copy business in 2004.  Apparently the corporate cultures of the merging entities was quite different. and has led to major clashes.  Customer complaints and falling profits for the combined division (down from$100MM in 2004 to $45MM in 2007) give testimony the problems.

Only time will tell whether the company is able to reconcile its internal culture issues.  But interesting brand questions are also raised by all of this.

First, brand elasticity.  Fedex claims that dropping the Kinko’s name and calling its retail stores Fedex Office reflects the current and potential broader array of services offered by the company — and as FedEx Office CEO Brian D. Phillips explains, “Kinko’s is known as copies…FedEx is a very elastic brand.”

Not surprisingly Kinko’s founder Paul Orfalea sees it differently.  “All the things they could have done with that brand [Kinko's],” he laments. “They could be providing online photo processing. They could be the leader in printing books on demand.”

So, which is it?  Is, as Phillips argues, FedEx the brand with more elasticity?  Does FedEx have more “permission” from its customers to enter into new service arenas, while the Kinko’s brand would hold them too closely to low margin offerings like copies?  Or, do you believe Orfalea and agree the Kinko’s brand would have provided the credibility a company with strong roots in shipping needs to enter into the burgeoning world of digital printing?

Second, and relatedly, brand equity. BusinessWeek’s piece relayed the concerns about the change of four customers who were fiercly loyal to Kinko’s — I’m sure there are thousands more out there like them.  By dropping the Kinko’s moniker, does Fedex risk alienating this core fan base and losing more business from a division that’s already hurting?  Or will the benefits outweigh the risk and in the long run it’s better to get it over with now?  After all, there doesn’t seem to be a viable competitor in the space that these frustrated customers can flock to.

I’m curious to hear your take on these questions.

The verdict from brand marketers on the worst brand extensions of 2008 is out — Burger King underwear, Kellogg’s hip-hop street wear, and Allstate Green insurance were named the worst offenders.

The annual survey, conducted by TippingSprung a marketing consultancy, reports on the opinions of Brandweek magazine readers and other marketing pros — so it’s definitely not the most scientifically-reliable test of brand extension value, but it makes for good conversation, and that’s exactly where I want to jump in.

Asked to comment in Brandweek magazine on the selection of Burger King underwear as the most inappropriate extension (by 45.5% of the those polled), Laura Ries of Ries & Ries said, “Marketers are so in love with their brands that they think consumers are as well and will go to the lengths of wearing their brand name on their underwear…While people love the Whopper, they don’t want to parade around in underwear that says, ‘This is where my big, fat ass came from.‘”  (Great quote, huh?!)

Bill Cross from Broadstreet Licensing Group, the agency that inked the deal, responded in kind, “It’s a fit for the predominantly male 18-24 target.  People who are buying it aren’t reading Brandweek and don’t care anyway.  BK likes things to be a little edgy. Their CMO, Russ Klein, loves stuff that’s a little weird.”

I want to interject into this tit-for-tat that I don’t think the issue with the extension is that it’s underwear — I get that some people like to wear underwear that’s fun to wear (long live Underoos!) and clearly some people want to wear branded underwear (long live Joe Boxer!)  So I am willing to concede that Burger King branded underwear might be an appropriate new way for its target to experience the brand.

The problem with this extension is the design on the underwear. The artwork features a large image of the creepy Burger King character, a large logo, and the Have It Your Way tagline, all superimposed over sketches of various Whopper ingredients (block of cheese, tomato, you get the idea.)  It looks like they took one of their packaging designs and slapped it on the boxers.

It seems to me there are far more creative, “edgy,” and “weird” designs they could have used.  For starters, “Have It Your Way” makes for great sexual innuendo, doesn’t it? — might clever use of the word “King” and some arrows do the trick?  Surely people with more perverted, er, I mean, creative minds could come up with something more appropriate for the brand and more appealing to the brand’s target (and the women they’re trying to impress.)

In case you’re wondering, this is not a gag post — I’m serious.  If a brand is going to do a brand extension, then they should really do one — and do it well.  Simply pasting your logo on different products is not a brand extension.

Brand extensions should reveal more of the story of your brand.  To explain, a brand identity is like a character in a movie — it must captivate its audience’s imagination and subsequent incarnations (that is, sequels for movies and extensions for brands) should feed on its audience’s desire to know more about it or to experience it in new ways.  Marketing Management, the monthly publication from the American Marketing Association, published an article of mine on this topic earlier this year.

So if BK had been more brand-driven in their underwear licensing deal, they might have had a better response — at least among the brand extension survey respondents and commentators.  And I hope this provides a (slightly) more thoughtful analysis of the results.

Bond is back!  Quantum of Solace

will launch in theaters beginning this Friday, 11.14.08.  While my, um, affections for the “spy who loved me” are generally pretty visceral, I do believe there are some important lessons for marketers to learn from the famed movie franchise.

In fact, I wrote an article a few years back providing insights and ideas about brand extensions that brand managers can learn from entertainment “brands” like  James Bond.  In honor of the upcoming release, I thought I’d resurrect the piece — I think the points are still as relevant today and may actually explain, at least in part, the success of Casino Royale the last Bond blockbuster.

Hope you enjoy the article, the movie, and Daniel Craig!

Sunday’s NYT featured an insightful analysis of “Survivor,” the reality-show pioneer from CBS, currently in its 16th season — the piece recaps the show’s rise to popularity and its current slow decline.

Once again, Hollywood has provided an excellent lesson in brand-building (see a piece of mine “The Brand Ultimatum” published this past summer by the American Marketing Association about how a deep brand identity – one with rich, multiple layers of associations – fuels successful extensions the way a deep hero character like Jason Bourne or Harry Potter fuels a successful movie franchise.)

This time the lessons from “Survivor” are about creating and managing a brand hit.  The show is a worthy case study.  In its second season (early 2001), the show ranked #1 in prime time and sustained 20MM weekly viewers for 4 more years.

The factors contributing to its success, according to NYT’s Brian Stelter (whom I’ve quoted liberally here), were:

-  its ground-breaking nature — it’s hard to imagine a world before reality TV, but we have to remember how “audacious” the concept was –”when it started, it was almost inconceivable that regular people could be prime-time TV stars”

–  for brand development, the lesson is the importance of innovation — truly innovative brands challenge norms and change the way we think, feel, and/or live

-  CBS’ risky investment — “Given the first season’s success, CBS made the daring decision to schedule the second season on Thursdays at 8, the first hour of network television’s most lucrative night. ‘Survivor’ was facing the NBC sitcom ‘Friends,’ then TV’s most popular program.  Mr. Probst [the show's host] asked Kelly Kahl, head of scheduling for CBS, why the network seemed to be setting up “Survivor” to fail. Mr. Kahl’s reply: ‘When you have a sledgehammer, you have to use it.’”

– for brands, the lesson here is about taking risks — bold investments are necessary to generate bold results — if you believe in your brand, swing for the fences

-  telling a compelling story and holding key attributes constant — “Citing ‘The Hero With a Thousand Faces,’ the mythological study by Joseph Campbell, [Mark Burnett the show's producer] said ‘Survivor’ adopted classic storytelling styles and devices that ‘just work.’”  The show’s attributes are “easy to explain, have high production values and generally stay true to an original idea…[it] never strays far from the template the producers have painstakingly created. The host never changes. The time slot never changes. The tribal council never changes.”

– for brands, the lesson is about storytelling — consistent storytelling.  People love stories.  Whether it’s the reluctant warrior, inspirational figure, or scrappy underdog — different types of roles are appropriate for different types of brands but the emotional resonance of a brand is best derived from the power of plot in which the brand plays the role of the hero.  Likewise, elements of the brand’s story may evolve or mature over time, but its fundamental attributes should not.

In the article there are many other gems of wisdom for brands based on ‘Survivor’s’ success but I’ll close this entry out with the most significant one — it’s about the show’s decline (50% drop in viewership over the last 8 years.)

Essentially the article’s point is that while the show may be down, it’s definitely not out.  Stelter states, “CBS would be foolish to let ‘Survivor’ retire, at least until it comes up with something that will deliver higher ratings in the time slot.”  So it seems, “The task for Mr. Burnett’s staff, then, isn’t to expand the ‘Survivor’ brand. It’s to manage the decline.”

Similarly, brand managers need to know when their brands have reached a similar point — when, rather than pursuing desperate, expensive, and fruitless attempts to keep a brand alive, they should acknowledge the brand’s time has clearly passed.  And, while executing a graceful exit for one brand, they should channel their creative energies into developing a new breakthrough with another.

As the brand world turns…