SCHMITTblog

Luxury and Recession

The other day, in Hong Kong, I was wondering whether the old rule that luxury is recession proof still holds. Miles and miles of empty shopping malls in Central, Pacific Mall, and, across the harbor, in Kowloon convinced me that this time consumers have changed: this time they are  counting their pennies.

Or have the excesses of the luxury industry gone too far this time, irrespective of the recession? Consider casual fashion lines. Half a year ago, designer jeans for around a thousand US dollars were piled up at Lane Crawford’s and at Joyce.  Every designer was moving into athletic shoes at a huge price premium beyond Puma’s and Adidas’ (some of those shoes were running around USD600-800). Luxury makers were dancing on the volcano; and now they are getting buried under the fire.

Obama-Clinton: Battle of the Brands

For years, political campaigns have taken the best ideas of consumer marketing and put them to work in the battle for voters’ preference. Just as marketing has evolved from the traditional focus on unique selling propositions to brands and customer experiences, political campaigning has kept pace.

The ongoing battle for the Democratic nomination illustrates the three keys to brand success today: a great experience, consistent messaging, and an emotional appeal.

Just like the bottled water and tissue paper categories, there is little differentiation to be found among the candidates’ product features (tax policy, education, the economy, etc).  So, experiential qualities will hold sway:  leadership, consistency, inspiration. As the race continues across the country, voters are enjoying the ride – not only showing up in throngs to vote, but to take part, live, in the experience.  (The voting booth as destination store!)

Barack Obama had to build a new brand from scratch, so he was forced to be extremely disciplined in his message (commentators have even commented on the consistent use of his signature font). Hillary Clinton started with high brand awareness, but in trying to modify her established image, she had to deploy a variety of messages, which her critics took to be brand confusion (e.g. a New York Times op-ed listed “Soft Hillary, Hard Hillary, Misty Hillary… Let’s-Get-Down-in-the-Dirt-and-Fight-Like-Dogs Hillary”).

Clinton’s latest comeback shows that her brand has done best when it’s had an emotional appeal – whether her coffee-shop moment in New Hampshire, or her Ohio advertisement that set her familiar argument of foreign-policy credentials in starkly emotional terms (the sleeping child straight out of a Nyquil commercial).  Obama’s brand has generated strong emotional resonance by tapping into voters’ dreams and aspirations.

Where is this battle of the brands headed?  Possibly to an eventual co-branded merger, with the dominant brand at the top of the ticket.  Which brings up a classic question of brand architecture: would the consumer be swayed by the synergy of two brands?  Or opt for the purity of an un-diluted brand: John McCain?

- Bernd Schmitt and David Rogers

BRITE conference (this week)

I will be speaking this week on Big Think, and leading an interactive session for CMOs on sourcing big ideas, as part of the BRITE '08 conference and CMO summit on branding, innovation, and technology, at Columbia Business School, this Thursday and Friday, Feb 7-8th.

BRITE '08 is part of a major initiative by my Center on Global Brand Leadership at the school.  The event will bring together big thinkers from business, technology, media, and marketing to discuss how technology and innovation are transforming the ways that companies build and sustain great brands.

Topics include: social networks, user-generated content, viral campaigns, B2B branding, driving innovation inside and outside the organization, ROI for online marketing, TV 2.0, online content platforms, brands that thought big in 2007

Fellow speakers include:
    * Marty Homlish (Global Chief Marketing Officer, SAP)
    * Craig Newmark (Founder, Craigslist)
    * Patia McGrath (Global Director of Innovation, GE)
    * Bob Greenberg (Global Chief Creative Officer, R/GA)
    * Andrew Miller (CEO, Quattro Wireless)
(full speaker list)

Conference registration is here.  There is also a BRITE blog, wiki, and more fun things to explore.

I hope you can join us!

-Schmitt

Super Bowl Ads Go Online – or do they?

Many in my family tuned into the Super Bowl on Sunday to watch football.  But I fall into the reported 36% of Super Bowl fans who tune in each year primarily to watch the advertisements.

This year, advertisers paid $2.7 million for each 30 second slice of air time, but you didn’t have to turn on your TV for a minute to catch them.  YouTube, AOL, and MySpace provided online sites where you could watch the entire roster of ads and vote on them.  I’m sure SCHMITT wasn’t the only marketing guru to cancel their annual Super Bowl party this year as a result (Schmitt went to a classical music concert, and caught the ads online, like me).

But did the Super Bowl ads really make the transition online – to the new world of networking sites, user content, and interactive media?  Leading up to the game, there was much buzz about how advertisers were “exploring new ways to bring their ads online… to make [their] steep investment go further.” (Wall Street Journal)

But almost without exception, the advertisers failed to use their TV ad as a jumping off point for an online experience – one that could be more interactive, engaging, and potentially sales-driving.  (A notable exception was the super-tacky GoDaddy.com, which created a “censored ad” that you had to go to their site to watch.) Even user-generated ads were on the decline, with a single Doritos spot.

Instead, the ad agencies fell back to their old habits of telling 30 second “stories” about a brand, hoping that a tale of goofy cavemen, noble clydesdales, or aphrodisiac peanuts would make you think their brand was “funny,” “inspiring,” or “irresistable.”

We’ll continue the discussion this week as part of the BRITE ’08 conference and CMO summit on branding, innovation, and technology at Columbia, February 7-8th.  Bob and other marketing leaders from G.E., SAP, Fox, and more, will be discussing what the new models are for building brands in an age of interactive media.

For now, I’d give the Super Bowl ad line up a B+ on creativity, and a D- on catching the new media paradigm.

- David Rogers

New Schmitt website launched

The recent design of my flagship web site meetschmitt.com dates back eight years. Now, with the launch of my new book “Big Think Strategy,” it is time for a change. Big Think Strategy is a break in my writing -- moving from work on the customer experience to full-fledged work on business strategy.

The new web site reflects this transition. In addition, you will find a much fresher look. Of course, I will keep some of the classics (yes, the video “Schmitt gets a haircut” will still be there), but there will also be lots of new information. Take a look!

iPhone’s Smart Price Slash

Apple drew a lot of shocked responses when it announced last week that it would slash prices on the uber-hyped iPhone, from $599 to $399.

The Wall Street Journal reported that Apple’s stock price took a hit from nervous investors.  And my “early-adopter” friends who paid full price last summer for this gorgeous gizmo must have been wincing at the news.

But I think the market got it wrong. This isn’t bad news for Apple at all. The iPhone was never supposed to be another iPod -- a breakthrough product that redefined a category (digital music players) and transformed its customer reach (from engineering students to the music-loving masses).

The iPhone represented a very different strategy: an extremely well-designed new offer intended to help Apple get a foot into a large and mature (i.e. price-sensitive) market,  cellular phones.

The cut in the iPhone's price makes sense for Apple’s ambitions. As Gene Munster, an analyst with Piper Jaffray, told the Journal:

"The bottom line: Apple is investing iPhone profit dollars over the next few quarters in order to be a legitimate player in the phone market," Mr. Munster wrote in a report.

Apple was smart to cash in on the iPhone’s hyper-buzz this summer (though it’s thoughtfully offering a $100 coupon for its customers who bought the full-price bullet).  But with Holiday Season 2007 approaching, Apple may be able to use a less stratospheric price to achieve some meaningful penetration in the cell phone market.

At only $399, I would even consider buying one.

-David Rogers

Shameless Knock-Off

Just as I am stepping onto my flight from Munich to New York, I discover a print campaign in a German magazine that proclaims “Beauty is …” this and that.  It’s for Nivea. Some quick background research reveals that Beiersdorf, maker of Nivea, has launched a new campaign that is to run in 64 countries by middle of next year. The message: beauty is more than an ideal; everyone has their own view of beauty; beauty is individual. (View the web site video, complete with tacky music and images of all sorts of people, young and old, men and women, different races). 

Does this remind you of another campaign?

Knock-off’s (at times called “benchmarking”) happen all the time in marketing. But this is one of the most shameless I have seen.  Are Nivea’s marketing managers so uncreative that they can’t develop their own concept of “Real Beauty”?

I had been wondering how long it would take competitors to react to Unilever’s splendid Dove campaign. Now we know. On Wednesday, in class 1 of my branding course, I will talk about the Dove Campaign for Real Beauty.  I wonder what my MBA students will have to say about these Nivea ads.

McDonald’s Euro Chic

While celebrity chefs have discovered the appeal of mass market food (case in point: foie gras hamburgers) some fast food makers have decided to go upscale.  And successfully so: In Europe, McDonald’s Golden Arches have received a stylish design make-over. I just visited one in Munich, although purely as a “design excursion.” (I still don’t trust the food.)  American readers can see a slideshow of these new stores at NYTimes.com.  The refurbished stores have rejuvenated European sales, which surpassed the US for the first six months of the year.

That’s why I am puzzled by some of the comments by the brand experts. “If you stretch the brand too much it can snap,” one is being quoted in the New York Times article.  As a general statement that may be right.  But stretching McDonald’s too far?  Should we really be concerned that a future battle in the stadium arenas of “Iron Chef” will be fought between Daniel Boulud and Ronald McDonald?

Not Your Father’s Singapore

Whoever said Singapore is conservative and boring anymore?  Consider the following three businesses, all located in the same new upscale shopping mall:

Instant Karma sells ultra-cool Tee’s with provocative messages such as “My girlfriend loves pussy.” I bought: “Door Bitch: You are not even on the list.”

Strip, a coed hair removal service (brandline: “the Ministry of Waxing”), has moved way beyond American puritanism in waxing.  There’s your standard Brazilian but also a menu of “boyzilians” for men. The website (http://www.strip.com.sg) features campy pictures of bikini-clad women and hairy orangutans, and the Diary of a Brazilian Strip Virgin (“Having been stuck with the bushy for so long, I decided I couldn't be left behind the other girls any longer…”) When I asked in the store which gender does the waxing for you, I was told, “Your choice.”

Finally, there’s the fabulous “Browhaus” brand (http://www.browhaus.com). No, Browhaus is not a misspelled German brewery but a place to get “plucked, tweezed, threaded and waxed” so your face can enjoy the virtues of eyebrows with shape, volume and panache. Their brow design philosophy is inspired – you guessed it – by Bauhaus, the German design and architecture movement.  Thus: “The Idea Behind The Tweeze: Functionalism + Style.”

Remember Jerry?

Remember Jerry, the taxi driver from Hangzhou, who wants to be "a useful" from one of my earlier video blogs? He now has a web site. Check it out: www.jerryzhouhangzhou.com
This man knows how to brand himself!