brand as business bit:  At CES last week, I couldn’t help but feel a little like I was in Apple’s 1984 commercial.

People seemed transfixed by screens -- and the 3D glasses made it even creepier.the crowd transfixed by LG display

no grey uniforms but...

I could only take comfort in knowing that adoption of wearing glasses to watch TV will never cross the chasm into the mainstream — they’re impractical, they’re too invasive, and they detract from the shared viewing experience.

2012, according to the Chinese calendar, is the Year of the Dragon.  In Chinese tradition, each year is dedicated to a specific animal and predictions for 2012 are for a dragon-like year of excitement, unpredictability, exhilaration, and intensity.

With this expectation in mind, I’ve selected several brands to keep my eye on.  They’re likely to shake things up, surprise customers and the Street, and make for an overall exciting year:

Smashburger – By most accounts, 2011 was the year the “better burger” category went mainstream.  I predict 2012 will be the year that separates the category men from the boys.

While growth is on the menu for big chains like Five Guys and smaller ones like Burger Lounge and The Habit, the darling of the industry in 2012 is likely to be Smashburger.  With 143 existing units and 450 franchise agreements on the books, Smashburger is on a roll (pardon the pun!)

But don’t take my word that Smashburger is a brand to watch — Forbes Magazine recently named the chain “America’s Most Promising Company.”  To make the list, Smashburger had to pass muster as a privately held up-and-comer with a compelling business model, strong management team, notable customers, strategic partners and precious investment capital.  The Forbes write-up reported on key differentiators such as the chain’s “blend of thoughtful product design and deft execution” and great service.

What makes Smashburger particularly interesting to me is its unconventional company culture.  At the 15th Annual UCLA Extension Restaurant Industry Conference, CEO Dave Prokupek explained he’s modeling his culture after Google’s and Netflix’s and hiring half of his employees from outside the restaurant industry (read more in my Brand New Perspectives column in QSR Magazine).  The concept seems to be firing on all cylinders – 2012 will reveal whether it has the right ammunition to take down some of its formidable competitors.

JC Penney – Will Ron Johnson’s gamble on JC Penney be a boom or bust?  We’ll get a good idea in 2012.

The former head of Apple retail has put all his chips in on the department store chain.  He’s recruited key people from Apple and Target, where he fueled that chain’s design strategy by bringing in a line of household items designed by Michael Graves. And he’s already signed a deal with Martha Stewart to create an e-commerce site for cross-licensed products and develop shop-within-a-shop retail spaces.

Building a stronger brand portfolio is only one aspect of Johnson’s efforts to “transform JC Penney into America’s Favorite Store.”  Other planned moves include restructuring its home merchandise-dominated online business, instituting a new pricing strategy, and focusing on the 18 to 35-year-old market.

All of these are smart, much-needed changes, but it’s Johnson’s vision for brick-and-mortar stores that stands out to me.  In an interview in the Harvard Business Review, he explains, “A store has got to be much more than a place to acquire merchandise. It’s got to help people enrich their lives. If the store just fulfills a specific product need, it’s not creating new types of value for the consumer. It’s transacting. Any website can do that. But if a store can help shoppers find outfits that make them feel better about themselves, for instance, or introduce them to a new device that can change the way they communicate, the store is adding value beyond simply providing merchandise. The stores that can do that will take the lead.”

Such comments not only reveal clues to how Johnson plans to jumpstart JC Penney in 2012 but also how other retailers might revive their own businesses in the coming year.

Chipotle – Chipotle appears on my list of brands to watch for the second year in a row because it continues to grow, innovate, and set the standard for the QSR industry.

The chain has grown spectacularly, from 16 units in 1998 to 1,200 today – quite an amazing feat considering its an ethnic concept and has a limited menu.  And it’s expected to increase the number of its stores by at least another third in the next few years, while McDonald’s (which has been doing quite well lately) is struggling to find growth markets.  In the litmus test of growth, Chipotle increased its valued by 6x over the past 5 years (McDonald’s only increased by 2x.)

Chipotle’s innovation has come in the form of a new concept, ShopHouse Southeast Asian Kitchen, which opened in the D.C. area this past fall.  With recipes inspired by the cuisines of Thailand, Vietnam, Malaysia, and Singapore in a store modeled after fast food kitchens in Asia, ShopHouse is billed as serving “delicious, stylish, natural, nutritious, and affordable” food “lightening-quick.”  No expansion plans have been announced, but we’re sure to see another location (or two or five) pop up in 2012.

And, in regards to setting QSR standards, Chipotle Co-CEO and founder Steve Ells has been on a crusade to make fast food good and good for you.  As an investor-judge on the America’s Next Great Restaurant reality TV show earlier this year, Ells declared, “Just because it’s fast doesn’t mean it has to be a typical fast-food experience.” As a strong advocate of “natural” food, Ells urged Congress just last month to curb the overuse of antibiotics in meat production. And after a government crackdown earlier this year found the chain had hired hundreds of illegal workers, it has become an unlikely champion of immigration overhaul.

Chipotle may reach its peak in 2012, but I expect it will be quite a summit.

Bluetooth and ANT+ – Wireless will take a huge leap forward in 2012, thanks to Bluetooth v4.0 (aka Bluetooth Smart Ready) and ANT+.  These lightweight, low-power technologies are going to revolutionize wireless devices and applications, particularly in digital health and fitness.

Digital health and fitness is a trend to watch on its own.  It’s the fastest growing segment of the consumer electronics industry, and if the buzz leading up to the Consumer Electronics Show next week is any indication, technology innovations in healthcare and fitness are going to steal the show.

Now with new wireless capabilities, digital health and fitness is crossing into the mainstream market:  Wireless sensor data streaming enhances people’s activity-tracking – everything from how many calories you burn to how well you sleep each night — and assists in the real-time monitoring of personal medical statuses and record keeping, the need for which increases as health problems like diabetes and obesity grow.

The ANT+ technology has been around for over 10 years and its alliance members include prominent brands like Garmin and adidas.  Bluetooth, with a Special Interest Group of 14,000 members, just launched v4.0.  In 2012 according to IMS Research, over 35% of smartphones will be shipped with dual-mode Bluetooth low energy, and over 10 million ANT+ enabled phones will be shipped.

There’s a lot of debate as to which technology will prevail – Bluetooth or ANT+ — but with the market growing as quickly as it is, both are sure to be winners in 2012.

***

I’m sure each of these brands is hoping http://chinesenewyear2012.net/ is right in its description of 2012: “Dragon years are lucky for anyone thinking of starting a business or initiating a new project of any sort because money is easier to come by for everyone.”

related posts:

• companies to keep an eye on in 2011
• Robin Raskin on living in digital times
• 2011 year in ideas

My curiosity was piqued by the headline of a recent article comparing Siri, the personal assistant application on new iPhones, to Speaktoit, currently available on Android phones – but not because I wanted to understand the differences between the apps.  I was struck by how different the two names are – Siri:  short, cute, a person’s name, vs. Speaktoit:  longer, cumbersome, a function.

I got to thinking about what makes a brand name effective and how that’s changed over time.  As I’ve dug into the trends, I’ve discovered how brand names reflect the business climates they’re developed in – and how understanding the relationship between the two can help people develop effective brand names in these modern times.

In the past, brand names have served as labels for companies, products, or services.  The role of name-as-label is description and the purpose is primarily to instill confidence.  That’s why founders’ names (e.g., Disney, McDonald’s, Hewlett-Packard) and functional names (e.g., Burger King, IBM, Weight Watchers) have been popular.  The names tell people either what the company/product/service is, or what it does, or who’s behind it.  Names as labels are about consumer risk-reduction.

But in today’s marketplace, it seems brand names need to do more than that.  Modern names need to stand out, draw people in, and inspire their imaginations.  These days the most effective brand names don’t serve as labels – they’re more like identities.  They declare instead of describe, convey personality instead of confidence.  That’s why we see names like Jack for radio stations, Freebirds for restaurants, and Zappos for e-tailers.  These names as identities are about consumer attraction.

Which brings me back to Siri vs. Speaktoit.  The name Siri is derived from the SRI International Artificial Intelligence Center which developed the technology that powers the application.  Fortunately the founders were prescient enough to understand the technology’s potential and adapted the center’s name into woman’s name instead of forming it as an acronym.  An actual person’s name makes the application seem personal and approachable — the precise attributes the technology needs to attract people and generate trial.

The name Speaktoit Assistant, however, seems pedantic.  While the name clearly describes the technology, its descriptive nature genericizes the product.  It emphasizes what the user can do vs. suggests how the user will feel.  The potential of the technology seems more limited with a functional name and the name almost begs for copycats (I’m sure plans for Talktome, SayIt, and JustSpeak are already in the works.)

And that’s really the point.  An effective brand name conveys – or at least evokes – differentiation.  And while differentiation has long been an important part of brand-building, in most categories today, differentiation is achieved less with features and functions and more through values and personality.  The former are easily and quickly copied and commoditized; the latter, less so.  Modern brand names need to tap into the differentiating power of values and personality.

An effective brand name also supports the primary marketing task, so modern brand names should facilitate the marketing task of today’s market.  Companies have and always will need to assure customers of the brand quality in order to reduce the perceived risks of purchase – but now that is achieved less by promotion and more by identification.  Modern consumers trust brands that demonstrate interest in them and the things they care about – they’re attracted by the sense of affinity.  So marketers should select names that facilitate this connection through identity.

There are two other factors to consider. First, salience. With the growing number of competitors and the shrinking size of screens – not to mention attention spans – the need for salient brand names is greater now than ever before.  Short, pithy names stand out quickly.

Second, if ICANN’s push to add as many as 1,000 new top-level domains is accepted (and it’s looking increasingly like it will), descriptive names will become even less important.  No longer will a company need to spell out that it’s an eating establishment if it can use the “.restaurant”  or “.eat” domain.  So marketers will enjoy more freedom when selecting modern brand names.

Brand names are an interesting sign of the times.  And it’s clear, it’s a brand new world out there (pun intended.)

related posts:

• a tale of two re-brands: syfy and starbucks
• losing more than a brand name
• fundamentals of brand naming

Ever run or cycled into a headwind? You have to work a lot harder to make the same progress that normally comes a lot more easily. Conversely, running or riding with the wind at your back is a glorious feeling.

On a recent ride, I had plenty of opportunity to consider how headwinds and tailwinds apply to business as I tried to distract myself from all the huffing and puffing I was doing just to maintain a decent speed. Here’s what I came up with:

The prevailing “winds” of business can make a huge difference in the amount of effort a company has to exert to be successful. Market shifts like the emergence of a new technology or the discovery of a new raw material create a tailwind which companies can use to their advantage (e.g., You Tube enjoyed a rapid ascent thanks to the democratization of video-recording capabilities) — or a company’s foundation can be threatened by a headwind like when Kodak found itself blown away by how digital imaging transformed the use, value, and meaning of cameras and picture-taking.

Consumer trends also create head- and tailwinds. Demographic shifts like the growing aging market have fueled the success of Oil of Olay’s Regenerist skincare products, while attitudinal changes like the growing concern for the environment drove (pardon the pun) Hummer out of business.

Developments in channels and distribution function like winds as well – shopping malls and mobile payment providers are operating in head- and tailwinds respectively. Political environments speed and slow businesses as the impact of recent changes in taxation, regulation, and healthcare demonstrates.

Although a generous wind at your back doesn’t guarantee success, business is generally better when the winds are working in your favor. Entrepreneurs would be wise to ascertain the prevailing winds of the market before developing their business model and plan. And established players need to maintain enough nimbleness to navigate the changing winds in their business environment.

But it’s not always possible to go with the flow – and sometimes there’s more to gain from zagging when others zig. Fritz Maytag didn’t allow his microbrewery, Anchor Brewing, to get caught up in the category’s popularity whirlwind of the 1990’s, and so the label continues to enjoy a strong reputation and high price premium today. At a time when most e-commerce companies are using a drop-ship model to offset inventory risks in a volatile economy, Zappos has engendered remarkable customer loyalty in part because chooses to face the headwind and manage its distribution in order to control the customer experience.

So the point is not to avoid headwinds – but rather, to be aware of the head- and tailwinds impacting your business and to develop your strategies and run your operations accordingly.

If you’re determined to tackle a headwind, some lessons from my running and cycling experiences apply:

- go slow and be deliberate – When it comes to headwinds, B.F.I., an abbreviation for Brute Force and Ignorance which I’ve heard the Army uses, is not the way to go. I’ve learned the hard way that trying to blast through a headwind when working out rarely works. The same goes for business.

Pace yourself and prepare for a long, hard haul. You’ll want to dole out expenditures slowly, set interim goals which keep you on track toward your ultimate objective, and double-up on efforts to boost morale. And you’ll want to ensure every step you take moves you closer to your goal, which requires careful analysis and planning. Accenture Institute for High Performance researchers report that conservative financial management and a bias toward profitable internal growth over acquisitions enabled companies to successfully face the headwinds of the early 1990’s recession.

- remove detractions and distractions – When I cycle into the wind, I zip up my jersey and crouch down a bit in order to lessen the mass for the wind to catch. I also keep my focus on the road and don’t look around as much, so that I can channel all my energy to the ride.

In the same way, businesses should cut – or at least delay — activities and programs which aren’t core to the mission. You’ll want to focus all resources on the task at hand and eliminate the things (bureaucratic processes, stale partnerships, and perhaps even cultural norms) which are slowing you down. Unfortunately in some cases this might mean cutting jobs. Kodak has emerged from a potential demise in part by slashing its workforce from 60,000 in 1982 to around 7,000 today.

I believe running and cycling also hold some valuable lessons for operating in tailwinds:

- don’t become overconfident – I can’t tell you how many times I’ve unknowingly run with a tailwind and chalked up my speedy time and great feeling to my training, only to turn around to head home and get woken up from my delusion by the strong headwind.

When your company experiences success, it may be tempting to attribute your progress to having the smarts that your competitors don’t, or to running a more efficient operation, or to having superior leadership. While all of these may be true, it’s likely that the winds of business have also been working in your favor.

You need to keep your corporate ego in check and not become overconfident. Taking favorable market conditions for granted can blind you from the need to develop new strategies and capabilities. So far Apple has been riding a great wave – I hope the recent antenna-gate isn’t evidence of dangerous arrogance.

- conserve some resources. Taking advantage of a tailwind makes sense. When I’m running with one, I pick up my pace knowing I can go farther and faster than normal. And I enjoy it, for sure. But I always conserve some energy, even if I’m not on an out-and-back route and worried about facing a headwind on my way back.

I never know when I’ll need an extra boost to get around a detour – or if a yellow light is going to necessitate a last-minute sprint across a large intersection – or even if another runner comes up on my heels and my competitive spirit kicks in. Likewise, companies should always be prepared for surprise detours, deadlines, and competitive attacks. Andy Grove’s famous motto “Only the paranoid survive” definitely applies here.

Those of you who are Star Trek fans would have felt right at home with me the other day.   I went to check out the new Microsoft store which just opened at Fashion Valley mall here in San Diego because I wanted to do a compare/contrast to the Apple store in the same mall.   My fellow fans would have felt at home in the Microsoft store not because it was a cool look at the future of culture and technology, but rather because it seemed to be the Mirror Universe.

For those of you who don’t get the TV show reference, the Mirror Universe is a parallel universe in Star Trek episodes – it’s the “what could have been” if the “what actually happened” hadn’t.  In the Mirror Universe, most of the same characters are there but they’re slightly different, whether in looks or personality.  The settings look familiar enough to cause some confusion at times, but the story lines are different enough as there’s usually more violent conflict than in the “normal” Star Trek universe.  Things are just a little off.

And that’s exactly what it felt like to be in the Microsoft store.  It was if I was in the Apple store –  but not really.  From the use of the Windows logo above the store entrance (no “Microsoft” logotype), to the big open space, to the young employees in colorful t-shirts, to the cool products displayed on tabletops, to the Answer Desk… — everything seemed oddly familiar.  I felt as if I was having a déjà vu, but then I realized that it wasn’t there at the Microsoft store that I had been before – I had been at the Apple store before.

microsoft store exterior

apple store exterior

I rushed over to the Apple store to make sure I wasn’t imagining things – and I did indeed find a similar store layout, similar display and visual tactics, similar employees in similar garb.  But there was one big difference – the Apple store was packed. Now that’s not to say the Microsoft store was empty – on the contrary, there were a lot of people and they seemed to be having fun browsing around and tinkering with the products.  In fact, I was pleasantly surprised by the feeling I got there (remember, it felt like the Apple store to me!)

But in comparison, the Apple store was on fire.  I would guess there were 3 times the number of people in that store – and there was an energy, perhaps spurred by the noise volume generated from everyone talking, that made it feel like an exciting place to be.

microsoft store interior

apple store interior

I walked away from my field trip confused and disappointed.  You see, I am a Microsoft customer and someone who actually likes Power Point!  Although I admire the Apple brand for many reasons, I really want Microsoft to be successful.  It has some great products and its brand could be so much better than it is. 

The Microsoft store could have been special – but it wasn’t.  It was simply an imitation of Apple.

Microsoft missed an opportunity to do something different, to interact with customers in ways only Microsoft can, to present a unique vision of its brand:

• Instead of putting all of its videogame products and displays in the back, why not put one of the company’s greatest strengths, XBOX, front and center?! It could have created a lot of excitement by creating an interactive gaming experience complete with real-time challenges between customers who other customers could cheer on and vote for, different pods to demonstrate the breadth of games available, special sound and lighting to add dramatic effect, etc.
• Furthermore the company’s KINECT launch on 11.04.10 is just around the corner, so why not promote it by giving a sneak preview?!  The highly-anticipated breakthrough XBOX platform will include 15 new titles and interfaces unlike anything we’ve ever seen, including voice control and Mission-Impossible-style hand gesturing. The store should be a place where the company builds anticipation for the pending launch – and perhaps select customers might be given exclusive access to experience a taste of the interface.
• Knowing that many of its customers are businesspeople, why not show complete home office set-ups equipped with multiple productivity tools already connected and synched?!  Or promote its enterprise solutions by using displays to tell compelling success stories?
• To show off its software, why not have ongoing demonstrations like the ones you see at shows and conventions?! The store was clearly pushing the new Office 10 product – watching someone in a booth with a mic and an enlarged screen walking through the new software’s features and capabilities would have made me consider purchasing it more than boxes of software piled high did.
• Why not show off Bing, Microsoft’s search engine, with a special interactive and/or live display which compares Bing results vs. Google ones?

The list of possibilities goes on.

The point is that Microsoft could have done some really special things with its store – things to leverage the unique capabilities of retail combined with the company’s unique offerings.  It could have boldly gone where no one has gone before – but instead, it chose to do the equivalent of Star Trek: Voyager.

Voyager was the last and least remarkable of television series based on the original Star Trek.  Although mildly entertaining, the show lacked imagination and failed to advance the overall Star Trek storyline in any meaningful way. And so it won’t be remembered or regarded nearly as well as its predecessor — just like the Microsoft store.

related posts:

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• microsoft’s ad misses the mark again

“Differentiate or die” is probably a familiar mantra to all; and there’s a well-established albeit less pithy corollary – don’t sell the category, sell your brand.  After all, given the overcrowded nature of most categories, the hope of success for most brands rests on their ability to stand out from their numerous competitors.  And promoting the category usually only benefits the market leader.

That’s why the most common marketing challenge is communicating a brand’s differentiation.  But there are instances where differentiation is not the primary issue — and in many of these cases, it’s the relevance of the category itself which marketing must establish.

I’m thinking there are at least three business situations in which marketing should focus on increasing a brand’s relevance first, and differentiating the brand second.

seeking more mass appeal for niche brands

When a company aspires to broaden its appeal beyond a narrow target audience, the brand’s relevance to the broader audience must be established.

For example, many health, fitness, and wellness brands enjoy a strong and loyal core customer base.  People who have a disciplined exercise regimen are likely to know and love brands of sport-specific apparel, fitness clubs, and nutritional supplements.  So they’re likely to respond to communications intended to position a brand as an expert in its field or a particular aspect of the category.

But most brands in these categories aren’t even on the radar screens of the majority of U.S. adults who live primarily sedentary lives.  In fact in some recent proprietary research I conducted among a general audience, many health/fitness/wellness brands performed strongly on perceived expertise in their category but were much weaker when it came to being a “brand for me” (see chart below.)

As such, marketing for these brands shouldn’t be about a brand’s superior performance on the things the narrow target audience cares about – e.g., unique product formulations, expert endorsements, etc.  Instead marketing should be focused on explaining the benefits of the category and connecting those benefits to primary drivers of the mass market.

I recognize that not every niche brand wants to go mainstream – but those which are serious about growing exponentially will most likely have to.  They can’t expect mass-market consumers to just “get” their brand, much less their category.

introducing “new to the world” innovations

Many innovations introduce new features, form factors, delivery mechanisms, etc. which capitalize on existing demand.  When marketing these innovations, companies explain how the new product or service improves upon – and importantly, how it differs from — existing options.

However, new products and services which are truly “new to the world” have no such foundation of existing consumer relevance.  Often these innovations are developments people could not have even imagined previously — completely new ways of doing, thinking, experiencing, even living.

Innovations in technology tend to fall into this category.  When the integrated iPod/iTunes solution initially launched years ago, the marketing brief was simply to tell people what had become possible in music listening.  The ability to seamlessly download songs and store thousands of them “in your pocket” was a compelling proposition in itself – messages about the uniqueness of Apple’s brand would have been superfluous.

Listening to music is a relatively universal consumer want/need and so, for Apple, the relevance of its solution was pretty easy to establish.  Other innovations, however, are based on less salient drivers — so companies must generate perceptions of relevance by communicating a compelling vision of the category. People must see themselves in the story of the innovation before they will care and can appreciate what makes the particular brand unique.

addressing changed consumers’ needs

In some cases, a brand has lost appeal because people no longer perceive the category it trades in to be relevant.  Perhaps consumer values have shifted – or their lifestyles have changed – or new technologies have rendered the category practically obsolete.

The viability of some retailers is being threatened in this way.  The Internet has given people direct access to products they previously relied on retailers to make available to them – and in many cases, consumers can access even more products than they used to through retailers.   So retailers which previously touted their unique or exclusive access to certain merchandise are finding such claims no longer true, nor differentiating.

The best way for retailers to combat this is not necessarily to try to regain the upper hand on access.  Instead, retailers may need to re-establish the importance of the physical store in the shopping experience. By promoting the sights, sounds, smells, and tactile elements – especially the human contact – of the store shopping experience in general, companies can make shopping in retail stores more relevant to today’s experience-seeking consumers.

Ultimately relevance is accomplished by weaving your brand into the fabric of consumers’ everyday lives. Brands addressing the above business challenges shouldn’t take it for granted – are there others you can think of?  Please let me know.

I’m fascinated by the recent flurry of activity of designer PCs.  Having worked at Sony during the early years of VAIO (perhaps the first fashionable PC line, launched with its distinctive violet color and sleek features and all), it’s pretty amazing to me to see how the category has developed.

Both HP and Dell have introduced lines of designer PCs in the last couple of years.  HP’s launch of the Vivienne Tam Mini in early 2008 was the product of the PC maker’s partnership with the popular clothing designer and its success spawned a series of other limited editions.  In December of last year Dell launched Design Studio, a customization program in which customers pick from custom colors and pieces of artwork from artists.

A study of the two companies’ entries makes for some interesting comparisons.

Different Starting Points

HP’s efforts are rooted in its desire to attract more female customers.  They reached out to Ms. Tam and eventually gave her complete control over the design of the Mini netbook.  Satjiv Chahil, SVP-global marketing at HP, is quoted in a recent Ad Age write-up saying, “No tech company has ever addressed this market with great authenticity…Other efforts have been about making products pink. … This is a total fashion design...”

Dell was inspired by its history of made-to-order PCs when it decided to launch its Design Studio.  In a Brandweek article, Dell’s VP of consumer experience design, Ed Boyd, is quoted as explaining the rationale behind the effort as:  “You can have it Steve Jobs’ way or you can have it your way.“  Their motivation is to deliver “the most personalized products in the world” – including the design.

Different Positionings

HP started off with a single Vivienne Tam product and has expanded the program slowly and selectively.  The line now includes another Tam Mini along with a couple of other designers’ products and my sense is they will continue to emphasize the exclusivity of the designs.  This is designer PC with the emphasis on design.

Dell launched with 100 choices of artwork and now there are more than 350 images available.  Artwork comes from artists as well as “branding partners” such as Major League Baseball, (RED), and OPI nail polish.  They change their offerings every quarter.  As such, Dell has positioned the program squarely on the benefits of personalization.

Different Channels

In their own ways, both brands have eschewed traditional PC channels like Best Buy.  In keeping with the fashion strategy, HP sells its designer PCs at fashion retailers such as Macy’s and Neiman Marcus.  And Dell’s customized products are naturally only available through Dell.com.

Different Objectives

Although the Vivienne Tam Mini’s sales were so high that HP abandoned its original plan to make it a limited edition, it’s clear the line will never be a sales leader at the company.  It is, however, believed to play a critical role in improving brand perceptions.  “It raises the tide for all HP boats. It’s very specific and unique activity that’s lifted the entire company. The halo effect has been great,” Mr. Chahil said in Ad Age.  As such, development costs for the line aren’t booked as an R&D expense but rather as a marketing one. “These are not products with a marketing program, these are in fact marketing tools,” said David Roman, VP-marketing communications, HP.

Dell has more grandiose plans for its designer PCs.  The Brandweek piece reports the company hopes to see this kind of customization grow across much of its portfolio. The program is currently available in most of the Americas, but Boyd said Dell will be able to expand it worldwide by next summer.  “What you’re seeing now is just the tip of the iceberg,” he declares.

Same Smarts

Both of these efforts are customer-centric developments in a category which is growing.  Both represent exciting innovations at a time when many categories and companies are struggling with dry new product pipelines.

And although both approaches provide ways for customers to express themselves through their PC designs, each company is doing it in a way that makes sense for their brand.   HP needed to boost its cool credentials and so launching an exclusive, high-fashion design line provides an appropriate brand perception boost.  Dell, on the other hand, needed to reinvigorate their existing brand equity in customization – adding design into the mix opens a new avenue to do so.

Perhaps most significant of all is that, while the last few years has seen Apple waging war with its Mac vs. PC ads and Microsoft trying to fight back with its “I’m a PC” campaign, Dell and HP have taken the high road and actually developed products that take the self-expressive power of PCs to a new level.

related posts:

• microsoft misses the mark again
• seinfeld isn’t going to rescue vista

Once again I find myself writing a post triggered by a New York Times article on the mobile category.  Last Monday it was about the different strategies brands are taking with their mobile application offerings.  Today this post introduces some thoughts based on the piece, “AT&T Takes the Blame, Even for the iPhone’s Faults.”

As the title suggests, the article outlines how AT&T is suffering from poor – and in some cases, undue and inaccurate — perceptions. The author, Randall Stross, reports on independent research which indicates AT&T’s 3G coverage is better than Verizon’s.  He also reveals that some of the problems users experience with the iPhone are a result of iPhone design flaws, not of AT&T’s coverage, or lack thereof.  Stross concludes, “AT&T, while meeting 4,000 percent growth in data use, has acquitted itself quite nicely. But the company is saddled with an awful public image as the perennial laggard.”

This prompted a few observations and insights on the topic of “perception is reality.”  “Perception is reality” is not a new thought, of course — remember those old Rolling Stone magazine Perception/Reality ads?!  But there are a few specific dynamics in the AT&T/iPhone/Verizon situation that add insight to the adage:

1.    Consumers’ perceptions are shaped by the things they care about most.

AT&T may indeed have faster download speeds and stronger signals but, if my understanding of the technology is correct, these are benefits experienced primarily when using mobile apps or the Internet browser.  They have less impact when using the phone to make calls – and that’s what people care about most (for now).

When a call is dropped, it’s a problem:
-    it causes a clear disruption — one instant you’re communicating, the next you’re not
-    that disruption impacts 2 people – you and the (in some cases very important) person you’re talking to
-    and it requires a messy recovery – first, you have to realize the call was dropped (how many of us have continued talking on and on until we realize the other person isn’t there anymore?!); then, you have to hang up and wait for your phone to reset; then you have to redial (which often involves you getting the other person’s voicemail because they’re trying to call you back at the same time and you play several rounds of dialing/getting voicemail/hanging up/waiting for the other person to call you/deciding you’ve waited long enough and maybe the other person isn’t calling you after all/dialing again, etc.); and then finally, when you do get the other person back on the line, you have to exchange apologies and explanations and figure out where the conversation left off before you can resume it

It’s a pain.  When a mobile app doesn’t work, you just refresh or hit “enter” again and it usually works just fine.   Very little hassle; very little lost time.

So, people care a lot more about reliable voice service than about reliable data service (again, for now).  As such, AT&T’s poorer quality of voice service has shaped people’s perceptions of the brand far more than their superior data service.

• The point for brands:  It doesn’t matter how good you are at something if you’re not good at the thing people care about most. Both product development and marketing need to be focused on consumers’ primary drivers.

2.    Perceptions are also shaped by people’s expectations.

Mobile phones are a mainstream category and making calls on mobile phones is an established behavior.  As such, people expect to use their mobile phones to make calls without incident.

Mobile apps and other data-based usage of phones, on the other hand, is still a new phenomenon.  People are just discovering what is possible and so they generally have low expectations.  If something doesn’t work the way they think it should, most people are likely to chalk it up to the new-ness of the technology.  And, really, they’re no worse off than they were 6 months ago when they didn’t even have the thought of doing what they’re trying to do.

People’s perceptions of AT&T and Verizon are based on their expectations of seamless phone calling service – so again, AT&T suffers from poor perceptions.

• The point for brands:  While perceptions may be hard to change, expectations are more easily shaped.  Brands can advance people’s expectations or focus them in a particular direction.  Brands can position themselves as an advocate for a higher standard of performance, and improve perceptions of their own performance in the process (think Target and its “Expect More. Pay Less.” platform.)

3.    Perceptions of a particular product or feature are shaped by overall brand perceptions.

The NYT piece reports that Roger Entner, SVP for telecommunications research at Nielsen, explains although the iPhone’s design has “shortcomings that ‘affect both voice and data…’” in the eyes of the consumer, “the iPhone has the nimbus of infallibility, ergo, it’s AT&T’s fault.”  This might seem unfair, but from the very beginning of AT&T’s partnership with Apple/iPhone, it’s been clear AT&T had more to gain.

A few years ago AT&T was working hard to shed its old “Ma Bell” image and compete more visibly in mobile communications. The new iPhone with all its bells and whistles and Apple’s powerful brand image provided an avenue for AT&T to move its brand forward.  A 2007 press release reporting on the launch stated, “During the past several months, AT&T has been strategically transforming the brand into one that is mobility-centric. The company kicked efforts into high gear in early May to prepare for…the iPhone. The accelerated push…took the company’s branding initiatives to the next level.”

While the effectiveness of these efforts may be debated by some, the fact is AT&T started out from a weaker position and continues to suffer because of it.   Its service quality may indeed be high, but perceptions of the brand overall continue to hold it back.  Promoting speeds and feeds has limited impact; advancing a platform of brand value which resonates with consumers’ values and emotions would do so much more.

• The point for brands:  Specific improvements in your offering go hand-in-hand with improvements in overall brand perceptions. Product improvements will not make an impact if they’re not connected to the brand.  And, attempts to improve brand perceptions without tangible evidence of change will fail.  But together they are a powerful combination.  In product development and promotion, specific changes need to be tied to the overall brand value.

OK, I think I’ll give the mobile category a break for now – but I appreciate the comments from my last post and hope to hear from you on this one.

Yesterday’s New York Times’ article, Apple’s Game Changer, Downloading Now, was a fascinating read.  I’m not knowledgeable enough about the technology behind mobile apps to evaluate the story as a representation of the programming and development challenges and opportunities of all the different companies.  But I found it a provocative report on the different brands’ strategies.

Apple/iphone as curator

First, there’s Apple.  Actually the primary point of the piece was Apple’s approach to approving – or in some cases, not approving – applications for inclusion in its app store. “The company places high value on what it describes as ‘customer trust,’ or the idea that users have faith that an application distributed on the iPhone won’t crash the platform, steal personal information or contain illegal content,” the article reports.

As such, it utilizes an approval process that some developers criticize for being opaque, arbitrary, and/or slow.  Nonetheless, the process positions the Apple brand as a screen for quality.  It also adds to the brand’s cachet, because developers of all sizes and scale are able to submit their apps for consideration and those that make it through seem to have a cool factor that Apple has bestowed upon them.

From a brand point of view, this is a smart strategy.  The role of the brand as editor or curator has always been important in sectors like retail and media, but it is becoming more prevalent in other areas now.  By endorsing another company’s product, a brand builds its own equity as an arbiter of what is good.  The brand becomes less about what it makes and more about what it does – a position that’s inherently more valuable (I posted about this last year when Apple’s app store was just starting to take off.)

The approach does have its downsides as well.  It leaves a brand vulnerable to forces out of the company’s control.  If an app from the Apple app store has quality problems, there’s a chance it could tarnish the Apple brand.  The strategy can also bring a backlash if the brand’s editing is perceived as too subjective or exclusive.  The NYT piece relayed the stories of several developers who were frustrated with Apple’s process.  Philip W. Schiller, head of worldwide product marketing at Apple admits, “Sometimes we make a judgment call both ways, that people give us feedback on, either rejecting something that perhaps on second consideration shouldn’t be, or accepting something that on second consideration shouldn’t be.”

RIM/Blackberry as leading innovator

The article also reported on Research In Motion, which is focused on the utility of the apps it makes available to Blackberry users. Jim Balsillie, co-chief executive of the company, explains, “We’re much more interested in changing the applications and changing the user experience and really unlocking the promise and the money and revenue opportunity for the ecosystem.”  RIM believes it “is going to innovate in the right way to drive that value proposition to capture [the] growth [in the category.]”

It appears RIM is aspiring to a brand position grounded in thought-leadership and innovation.  This builds on the existing perceptions of the RIM/Blackberry brand which is credited by many for creating the smartphone category.  And focusing on transforming the business value proposition of apps seems consistent with the brand’s history in the productivity and business aspects of mobile.

So RIM also seems to be employing a smart brand strategy.  Carving out a position of leadership through innovation has fueled many successful brands – and leadership of the “ecosystem” would be particularly compelling in a space that has so many moving parts.  Such a brand can enjoy the halo effect from the rising brands of all of the players.

However an innovation-based brand position can often be one with narrower appeal, particularly in technology.  Leading edge customers may easily understand and appreciate the value of the innovations, but “crossing the chasm” to appeal to the mainstream is a huge challenge.  As was the case with the Blackberry when the iPhone launched, the first-to-market brand may be relegated to a smaller, more niche position, while a more broadly-appealing brand which follows may be able to gain more traction after enough people have had enough exposure to the innovation.

Google/Android as populist brand

Google and its Android Marketplace were also discussed in the NYT article.  In direct opposition to Apple, Google eschews any review process – it allows any developer to publish an application instantly and as such, its app store already offers 14,000 applications despite being launched only a few months ago. “We’re doing everything we can to open the device to both developers and consumers,” says Eric Chu, group manager of the Android platform.

In a word, Google’s brand position is “access.”   And, once again, this seems smart.  It fits with Google’s broader brand aspirations “to organize the world’s information and make it universally accessible and useful.”  Just as its programs and apps for computer users are intended to help people communicate and collaborate more easily, Google is working to tear down the walls that segregate and restrict in the mobile app space.

The strength of this approach is its populist appeal.  It has the potential to attract a broader base and use that widespread popularity to squeeze out the followings of brands that are more intense, but albeit more limited in size.

Problems can arise, though, if the brand becomes too unfocused.  By trying to be everything to everyone, there’s the risk of becoming nothing to no one.  Also the brand’s value could be limited if it is perceived simply as a channel.  Without a clear, distinct point of added-value, it could be become a commodity which simply provides access to other brands.

my takeaways

In the end, the point of all of this is not to advocate for any particular strategy.  They all have merit. And there are those who are much more qualified than me to posit which brand is most likely to be successful.  I simply want to suggest two important points about brand strategy that I took away from the NYT article:

• 1.    The importance of differentiation. In far too many categories, I see multiple brands trying to position themselves in the same way.  The values and attributes embodied by each brand are not distinct from the others and all of the brands end up simply promoting drivers of the category.  In some cases this happens because the brands’ owners don’t understand or appreciate the value of differentiation.  But in many cases it’s because they think it’s not possible to carve out a distinct brand position.  The players in the mobile app space have demonstrated that differentiation is not only possible, it’s necessary. Differentiation helps companies steal share – and when differentiation is done well, it can grow the entire category.

• 2.    There are advantages and disadvantages of every brand strategy. No single approach is a sure bet.  Leveraging the strengths of your brand position while minimizing its vulnerabilities requires careful management. And in a category that is changing and growing as quickly as mobile apps, the ability to adapt as the market evolves is key.  Back in the ancient history of mobile apps (aka last year), Apple’s brand strategy could be based more on exclusivity and the cool factor of being the only real player in the market.   Now as others have gotten in the game, it’s had to adapt its approach and apply those attributes to its role as a curator and quality controller.

Are there other brand strategy takeaways from the mobile app market?  Let me hear your thoughts – comments are open.

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• squeezing blackberries
• pure joy