Al Ries is a marketing consultant who coined the term “positioning” and is the author of such marketing classics (with Jack Trout) as The 22 Immutable Laws of Marketing and Positioning: The Battle for Your Mind. He is also the co-founder and chairman of the Atlanta-based consulting firm Ries & Ries with his partner and daughter, Laura Ries. Along with Laura he has written bestsellers like War in the Boardroom and The Origin of Branding. In this interview he speaks to Vivek Kaul and analyses why brand Barack Obama emerged stronger than brand Mitt Romney.
How would you define the brand Barack Obama? What are the three characteristics that you would attribute to him?
Consistent. The three characteristics I would attribute to Barack Obama are (1) Consistency. (2) Consistency, and (3) Consistency. He took office promising “change.” And the major changes he promised include creating jobs, reforming the health-care system and reducing the deficits by increasing taxes on the wealthy. He has never wavered from these three basic principles.
Brand experts talk about a strong story accompanying a brand. What do you think is Obama’s story?
His story is his climb from poverty to a law degree from Harvard, our most-prestigious university. It includes his birth to a Kenyon father and an American mother, one black and one white. He is unique. Very few politicians have a story quite like Barack Obama. One exception is John McCain, who was defeated by Barack Obama in the 2008 Presidential elections. John McCain’s story is the five-and-a-half years he spent in Vietnam as a prisoner of war and the torture he endured. This created a tremendous amount of sympathy for him. But he lost the election because he was handicapped by the negative reaction to the eight years of the previous President, George W. Bush.
What are the right things that Obama did to build brand Obama in the run up to the elections?
His entire campaign was built around a single idea and he expressed it with a “two-sided slogan.” A two-sided slogan is like a two-sided knife. It cuts both ways. It says something positive about your brand and something negative about the competition.
Could elaborate on that?
Take “Believe in America,” Mitt Romney’s slogan. It’s a nice thought, but it’s a one-sided slogan. It says something positive about Mitt Romney, but what does it say about his opponent?
That Barack Obama doesn’t believe in America? A country that educated him at Harvard. A country that elected him to the Senate and the Presidency. A country that made him wealthy and world famous. Barack Obama doesn’t believe in America? Highly unlikely.
What does Obama believe in? The number one issue among voters is “jobs,” but he couldn’t claim much progress on this issue because of the economy. His best approach was to plead for more time to “finish the job.” So he used the slogan “Forward.”
And what did that imply?
His “Forward” slogan implied that Republicans want to go backwards to policies that failed in the past. Forward is a great slogan because it cuts both ways. This makes two in a row for Barack Obama. His 2008 slogan, “Change we can believe in,” was also a two-sided slogan. With the Republicans in power, John McCain couldn’t exactly advocate “change,” because that would offend his base. The best he could do would be to imply that he would do the job “better than Bush.”
What are the things that went wrong for Obama?
Nothing. The American economy is in bad shape. Deficits are enormous. The Republicans should have won in an easy election, but their marketing strategy was bad.
Which is the brand that you think comes closest to brand Obama?
Virgin might come close because it’s a brand associated with Richard Branson, a unique individual with many stories.
When it comes to brand names the brand name Obama is fairly different from the usual. How does that work/not work?
What many companies forget is that a brand name should be “unique and different.” The biggest mistake companies make is trying to create a brand name that says something about the product or service they are offering. A typical example is “Seattle’s Best Coffee,” a high-end coffee chain launched in America. But the competitor was Starbucks, a unique and different name unrelated to coffee. Starbucks is a far better name than Seattle’s Best Coffee, which is a generic name. Ask people, What is Seattle’s Best Coffee? And they are likely to say, Starbucks.
Could you give us another example from business to substantiate your point?
Google is a typical example. When you start with a unique name without any specific meaning, you can make the name mean whatever you want it to. Yesterday, Google meant nothing. Today, Google means “search” and it’s become one of the most valuable brands in America. On the stock market today, Google is worth $220.1 billion.
How would you define the brand Mitt Romney? What are the three characteristics that you would attribute to him?
Romney is a “business” leader and the attributes voters attribute to him are all based on his business experience. Businesses should (1) Make money. (2) Reduce expenses. (3) Avoid taxes legally.
What is that made brand Romney attractive to the white American male? And what is it that made him unattractive towards everyone else?
The white American male is focused on becoming a business success. He expects to work hard and be rewarded when his hard work pays off. The white American male resents having to share the rewards of his hard work with the government in the form of higher taxes. Women are more family oriented. They don’t mind sharing with less-fortunate individuals. That’s why many of them voted for Barack Obama.
Which is the brand (or even brands) of a product or a service that you think comes closest to brand Romney? And why?
You could list almost every American corporation from IBM to Microsoft. The general perception is that companies want to increase profits, reduce expenses and find a way to avoid taxes (legally.)
You have always said that marketing and branding are all about focus. So who do you think had more focus Obama or Romney? And why?
Barack Obama was focused on just one thing: “Let me finish the job.” That idea was expressed in his slogan “Forward.” Mitt Romney was focused on attacking Obama for the lack of jobs and the high deficits. All true, of course, but that’s a losing political strategy. A politician needs to first have a “positive” focus. I think Mitt Romney should have focused on his business experience and then used a slogan like “Let’s run the government like a business.”
I was reading somewhere that both Obama and Romney employed a technique called brand hijacking in the elections. People who type one candidate’s name into Google’s search box in some markets have seen ads for his opponent. A search for “Barack Obama,” for instance, has yielded ads for Romney, while entering “Mitt Romney” has resulted in ads for Obama. Romney has used a similar tactic on Facebook. How does that help? Would you advocate something like that in the future?
I would not advocate something like this. While it might be effective with some people, it might turn off others.
What are the branding mistakes that Romney make? How difficult was it to beat an incumbent President who was struggling with the economy and most of everything else?
Mitt Romney spent most of his time attacking Barack Obama. That’s the wrong strategy. What a politician needs to do is to offer a positive concept first (business experience) and then point out that his or her opponent lacks this concept. (Barack Obama has never worked in the private sector). It should have been easy to beat an incumbent President with his track record.
I was reading an article on Fast Company and it said “politics, after all, is about marketing — about projecting and selling an image, stoking aspirations, moving people to identify, evangelize, and consume.” Would you agree with something like that and why?
Absolutely. It’s all about perceptions, not reality. That’s what marketing is all about, creating positive perceptions in the minds of consumers.
What are the branding lessons that companies can learn from Obama’s successful campaign?
Years ago, Bill Clinton became famous for running a campaign which his consultants dubbed: “It’s the economy, Stupid.” Today, a company should adopt something similar. It’s what I call the KISS approach. “Keep it simple, Stupid.”
The article originally appeared on www.firstpost.com on November 8, 2012. http://www.firstpost.com/world/why-brand-obama-trounced-misbranded-mitt-romney-518734.html
(Vivek Kaul is a writer. He can be reached at [email protected])
Companies are in a perpetual race to expand sales. And the easiest way to do that is to expand their well known successful brands into other categories. As marketing consultant and author of many bestsellers Al Ries puts it “If a brand is well known and respected, why can’t it be line extended into another category. That’s common sense. That’s why Xerox, a brand that dominated the copier market, introduced Xerox mainframe computers. A decision that cost the company billions of dollars. That’s why IBM, a brand that dominated the mainframe computer market, introduced IBM personal computers. In 23 years of marketing IBM personal computers, the company lost $15 billion and finally threw in the towel and sold the operation to Lenovo, a Chinese company.” Ries is the author of such marketing classics (with Jack Trout) as The 22 Immutable Laws of Marketing and Positioning: The Battle for Your Mind. In this interview to Vivek Kaul he speaks on various aspects of branding and marketing.
You have often said in the past that there is a a big difference between common sense and marketing sense. Could you discuss that in some detail with examples?
Common sense is another way of saying “logical.” Almost every rule of marketing is not logical, it’s illogical, which I defined as “marketing sense.” It takes years of study and personal experience to develop good marketing sense. Yet too many management people dismiss the ideas of their marketing managers because “marketing is nothing but common sense and who has better common sense than the chief executive?” Line extension is a typical example. If a brand is well known and respected, why can’t it be line extended into another category. That’s common sense. That’s why Xerox, a brand that dominated the copier market, introduced Xerox mainframe computers. A decision that cost the company billions of dollars. That’s why IBM, a brand that dominated the mainframe computer market, introduced IBM personal computers. In 23 years of marketing IBM personal computers, the company lost $15 billion and finally threw in the towel and sold the operation to Lenovo, a Chinese company. That’s why Kodak, a brand that dominated the film-photography market, introduced Kodak digital cameras. In spite of the fact that Kodak had invented the digital camera, the company was never successful in marketing the cameras under the Kodak name. And recently Kodak went bankrupt.
With all the experience you have had consulting companies all these years which area of marketing do you feel that marketers have the most trouble with?
We have had the most trouble working with large companies marketing big brands. And the issue is always line extension. Companies want to expand their sales so they figure the easiest way to do that is by expanding their brands into new categories. In other words, line extension. We have worked with Burger King, Intel, Xerox, IBM, Motorola, Procter & Gamble and dozens of other companies that invariably wanted to expand their brands whereas we almost always recommend the opposite strategy. Narrow the focus so your brand can stand for something. The second issue is timing. We have always recommended that companies try to be the first brand in a new category. But that is a difficult sell to top management. Their first question is usually, What is the size of the market? Of course, a new category is a market with zero revenues. And many, many management people never want to launch a product into any category that doesn’t already have a sizable market. We worked for Digital Equipment Corporation, a leader in the minicomputer market. We tried to get them to be the first to launch a personal computer for the business market. (IBM eventually was the first to do so, but without a new brand name which led to their failure.) In spite of days of meetings and presentations, the CEO of Digital Equipment refused to launch such a product. “I don’t want to be first,” he said, “I want IBM to be first and then I’ll beat their specs.” After IBM launched its personal computer, Digital Equipment followed, but never achieved more than a few percent market share. Eventually the company more or less fell apart and was bought by Compaq at a discount price.
How can a No. 2 brand compete successfully with a leader?.
What a No.2 brand should do is easy to explain, but difficult to execute. A No. 2 brand should be the opposite of the market leader. Why is this difficult to do? Because it’s illogical. Everyone assumes the No.1 brand must be doing the right thing because it’s the market leader. Therefore, we should do exactly the same thing, but better. That seldom works. Take Red Bull, the first energy drink and the global market leader. One reason for Red Bull’s success was the fact that it came in a small, 8.3-oz. can that symbolizes “energy,” like a stick of dynamite. So almost every competitive brand was introduced in 8.3-oz. cans and marketed as “better” than Red Bull. Except Monster, a brand introduced in 16-oz. cans in the American market. Today, Monster is a strong No.2 brand with a 35 percent market share compared to Red Bull’s 43 percent share. Also in the American market, BlackBerry was the leading smartphone until Apple introduced the iPhone. BlackBerry had a keyboard. Apple eliminated the keyboard and used a “touchscreen” instead. Mercedes-Benz was the leading luxury-vehicle brand until BMW came into the market. Mercedes vehicles were big and comfortable, so BMW became smaller and more nimble, as dramatized in the brand’s long-running advertising theme, “The ultimate driving machine.” As a matter of fact, BMW introduced the campaign with a two-page advertisement headlined: “The ultimate sitting machine vs. the ultimate driving machine.”
Do long running marketing campaigns help? How many companies have the patience to run a marketing program for two or three or four decades?
Next to line extension, that’s the biggest problem in marketing today. Companies don’t run marketing programs nearly long enough. The best example of a long-term successful campaign is the one for BMW. “The ultimate driving machine” strategy was launched in 1975 and the company still uses the same slogan today. That’s 37 straight years. Most marketing programs don’t last longer than three or four years. That’s way too short a time to make a lasting impression in consumers’ minds. I can’t recall any major marketing program, except for BMW, that has lasted more than a decade or so.
In a recent column you wrote that logic is the enemy of a successful brand name. What did you mean by that?
By “logic” I mean what you would use as a brand name if you did not study marketing and had no experience as a marketing person. In other words, common knowledge versus specialized knowledge. It’s like the Sun and the Earth. Common knowledge would suggest that the Sun revolves around the Earth and not the reverse. Look out your window and it’s obvious that the Sun is moving and the Earth is standing still. But specialized knowledge knows that isn’t true.
What is the connection with brand names?
As far as brand names are concerned, logic or common knowledge suggests that a generic name like Books.com would be a better choice than Amazon.com. If the prospect wants to buy a book, then logically the prospect would go to a website like Book.com or Books.com.
But a marketing-trained person knows that isn’t true. It’s not how a mind words. When a person hears the word “Book,” he or she doesn’t think it’s a website at all. It’s the generic name for a category of things. On the other hand, thanks to its marketing program, “Amazon” has become a specific name for a website devoted to selling books. So when a person thinks, “I want to buy a book on the Internet, he or she doesn’t think “Books.com,” he or she thinks “Amazon.com.” In almost every category, a specific “brand” name performs better than a generic “category” name. Google.com is a better name than Search.com. YouTube.com is a better name than Video.com. There is a caveat, however. In the absence of a marketing program that establishes a brand name in consumers’ minds, a generic name could do well.
Why do you say that as a general rule, any name that specifically defines a category is bound to be a loser?
Consider how a mind works. If I say “coffee,” you literally hear that word in your mind spelled with a lower-case “c.” It’s a common noun, or a generic word that stands for an entire category of things. The same reasoning hold true for a more specific name like “High-end coffee shop.” If I say “Starbucks,” on the other hand, you literally hear that word in your mind spelled with a capital “S.” It’s a proper noun, or a brand name that stands for a specific chain of high-end coffee shops. Oddly enough, you can use common English nouns in another country as brand names? Why is this so? Because consumers don’t know the meaning of these common words. So these words become proper nouns instead and usable as brand names. For example, a stroll down a street in Copenhagen turned up these store names: Biggie Best, Exit, Expert, Face, Flash, Joy, Limbo, Nice Girl, Redgreen, Sand and Steps. Nice brand names in Copenhagen perhaps. But they wouldn’t work in America.
What do you mean when you say that “the internet is exceptionally good at promoting web, not physical, brands.” Could you explain through examples?
First of all, consider the fact that the Internet has created a host of new, very-valuable Internet brands including Amazon, Google, Facebook, YouTube, Groupon, Pinterest, LinkedIn and dozens of others. How many new physical brand names were created on the Internet? I can’t think of any. The Internet is the newest, latest medium. It attracts people who are interested in what’s new and different on the Internet. So there is intense interest in any new website that promises a revolutionary way to handle some of your affairs. But there’s not the same level of interest in new physical brands. Like a new toothpaste, or a new camera, or a new breakfast cereal. That doesn’t mean that new physical brands can’t take advantage of the PR potential represented by the Internet. They certainly can, but it’s going to be more difficult for a physical brand to get a lot of attention on the Internet than an Internet brand.
You recently wrote that “If you don’t have the right strategy, good tactics won’t help you very much. And social, like all media, is a tactic. What concerns me is that too many marketers have elevated tactics — especially those of social media — to the level of strategy.” Could you elaborate on this statement?
Our leading marketing publication is called “Advertising Age.” I have suggested facetiously that the publication should be called “Social Media Age,” because a high percentage of the stories the publication writes about involve social media and marketing on the Internet. Strategy is seldom mentioned. One reason for the intense interest in the Internet is because many aspects are easily measured. A video on YouTube, for example, will be measured by: (1) The number of “Views.” (2) The number of “Likes.” (3) The number of “Dislikes.” And (4) The number and content of “Comments.” That’s a range of responses no other medium can deliver. No wonder marketing people devote endless hours to evaluating the success of Internet programs. But suppose a marketing program is not successful. Do you blame the strategy or the tactics? Today, it’s too easy to blame the tactics. My feeling, however, is that most of the time strategy is at fault.
Are there any ideas on branding which you have espoused in the past which you have now junked?
Yes, we used to think that brand names ought to communicate something tangible about the brand. Duracell is a good example. It suggests that the appliance battery is a “long-lasting” brand. But today, there are too many competitors in any given market. A tangible name like Duracell is likely to be surrounded by many other brands with similar names, confusing the consumer. A meaningless name is often a better choice. It allows you to develop your own unique meaning for the brand. Google is a good example. Initially it meant nothing, but today it means “search.”
What is your opinion on big brand names. India has a lot of them like Tata and Reliance. And they attach these names to every business or product they launch? How do you view that?
That’s line extension and it might work today in India, but would never work in America. In America, there are too many competitors in every category with distinctive brand names. A line-extended name like Tata and Reliance would be at a serious disadvantage here. Why does it work in India? I’m not an expert, but I believe that India suffers from a shortage of venture capital as compared to the United States. It’s hard for an entrepreneur to launch competitive brands to Tata and Reliance because it’s difficult to raise enough money for their introduction. But I believe that will change in future so both Tata and Reliance should be concerned about the future of their brands.
(Interviewer Kaul is a writer and can be reached at [email protected])
Laura Ries is a globally respected marketing consultant. Ries has run Ries & Ries, a consulting firm with her partner and father, Al, since 1994. Together they consult with Fortune 500 companies on brand strategy. Her new book Visual Hammer is just out. “The critical missing piece in most marketing programs is a powerful visual that can drive a brand into the mind,” says Laura. This book outlines the steps a brand needs to take to develop a visual hammer.
In this interview she speaks to Vivek Kaul.
You talk about marketing messages from companies ignoring half of the prospect’s brain. What do you mean by that?
Everyone has two brains, a left brain and a right brain, plus the corpus callosum connecting the two brains. The left brain is associated with verbal messages; the right brain with visual messages and is also the site of your emotions. If a marketing message is totally verbal, it ignores the right brain and especially the right brain involvement with “emotion.” What things do people remember the best? Those things that have an emotional connection. The day you got married. The day you had an automobile accident. The day you graduated from college. Etc. A totally verbal message is usually flat and unemotional. That greatly hinders the memorability of the message.
Could you explain this through an example?
The old-fashioned Coca-Cola bottle (which the company calls a “contour” bottle) communicates the fact that Coke is the original cola, the authentic cola, the real thing. Coca-Cola has also used the verbal (“the real thing”) but it just doesn’t have the same emotional impact of the bottle itself. Of course, the best strategy to use would be both. The Coke bottle (the visual hammer) and the verbal nail (“the real thing.”) They reinforce each other.
You say that most marketing messages are abstract ideas built around concepts like good consumer service, superior reliability, dependable performance etc. Why is that?
In general, a major corporation would first develop a verbal strategy for a brand. Then the company would “sell” the verbal idea to top management before they bring in an advertising agency to develop the idea. And since most corporate executives are left brainers, they readily accept verbal ideas. There is a lot of evidence that top management is dominated by left brainers. Right brainers are usually introverts and not very talkative. Left brainers usually are extroverts and very talkative. Now which type is likely to make it to the top of any organization? A quiet, introverted left brainer. Or a talkative, extroverted right brainer. When a CEO makes a speech, he or she usually stands behind a podium and reads from a Teleprompter or from a script. Totally word-oriented and a sure sign of a left brainer.
But exceptions are always there…
There are exceptions. Steve Jobs of Apple was a right brainer, but of course, he was once fired from Apple. After he returned to Apple, his “speeches” involved a screen 40-feet wide and enormous visuals, not exactly the type of speech a left brainer would make.
Could you share some of the most abstract marketing messages with us?
Here are some recent slogans from major global corporations. starting with the letters A and B.
ABB: “Power and productivity for a better world.”
Accenture: “High performance. Delivered.”
Air France: “Making the sky the best place on earth.”
Audi: “Truth in engineering.”
BlackBerry: “Be bold.”
Bridgestone tires: “Your journey, our passion.”
British Airways: “To fly. To serve.”
None of these slogans can serve as verbal nails because they are not specific enough. They are typical abstract ideas that need to be brought down to earth before they can be visualized. I could go through the rest of the alphabet and give you dozens of similar slogans. All abstractions.
You write “Words are what they use the most and are most familiar with. Yet there is a lot of evidence that visuals play a far more important role in marketing than do words”. Why do you say that?
The reason Visual Hammer is such a helpful concept is that very few companies are actually using visual hammers. That’s why successful examples are few. The lime in the top of a Corona beer bottle. There were dozens of Mexican beers imported into America, but until the arrival of Corona none used a visual hammer. The lime help to communicate the fact that Corona is an authentic Mexican beer. Thanks to its visual hammer, Corona went on to become the best-selling imported beer in America and the best-selling Mexican beer on the global market. It also was ranked by Interbrand, a branding consultancy, as the 86th most valuable brand in the world (and the only Mexican brand on the list) worth $3.9 billion. The last time I was in Mumbai, a diner at the table next to us ordered a Corona beer. And sure enough, the waiter served the beer with a lime on top of the bottle.
Any other example?
The red soles of, a French designer who regularly tops The Luxury Institute’s index of “most prestigious women’s shoes.” In 1992, he applied red nail polish to the sole of a shoe because he felt the shoes lacked energy. “This was such a success,” reported Mr. Louboutin, “that it became a permanent fixture.” The red sole was the hammer, but what was the nail? It was the stiletto (heel heights of 120mm or more) which Louboutin helped bring back into fashion in the last two decades. To build a brand you need both: The red sole and the stiletto. Let me give you another example. BMW, for example, owns the word “driving,” an achievement that lifted the brand from nowhere into the world’s largest-selling luxury-car brand. But what put the “driving” idea into the minds of consumers? What’s was BMW’s visual hammer? It was a long-running, consistent series of television commercials showing happy owners driving their BMW vehicles over winding roads. “The ultimate driving machine” was the nail. But it was the visual hammer was put that idea into the mind.
You write in your new book “Unless there is an instant connection with a verbal idea, a visual becomes nothing but wasted ammunition in a marketing war.” Can you elaborate on that through an example?
There is a lot more to say about how visuals are received by the brain and how verbal messages are received. For example, you are driving down a street and a stoplight in front of you changes to “red.” Your foot hits the brake . . . without conscious thought on your part. That’s the right brain at work. If a stoplight used words (Stop, Caution, Go) instead of visuals, your left brain would have to first translate those type-set words into “aural” sounds that your mind could understand. That takes time and effort. You might be reading an article and you get to the end of a paragraph and suddenly think to yourself, What was that all about? In other words, it takes effort for your left brain to understand printed words. With a visual, however, your right brain can almost instantly understand a visual and react to it.
How is that linked to building a brand?
In building a brand, however, visuals are only effective if they “say something” about the brand. Advertising is filled with visuals, but very few visual hammers. It’s only things like the Coke bottle (authentic cola), the lime on top of a Corona (authentic Mexican beer), the TV commercials showing happy BMW owners (the ultimate driving machine), which hammer the nail in.
You have repeatedly talked about the visual hammer hammering the verbal nail. What do you mean by that?
The Marlboro story is probably the best example of the power of a visual hammer. We don’t like to feature it, however, since smoking is such a health hazard. Before Marlboro was launched, there were four exceptionally strong cigarette brands in America: Lucky Strike, Camel, Chesterfield, Winston. All of these brands were “unisex,” in the sense that they appealed to both men and women. In general, they pictured both men and women smoking.
Marlboro narrowed the focus to men only. (Another strategic concept that we strongly recommend for an also-ran brand.) In other words, Marlboro wanted to become a masculine cigarette. And the cowboy is perhaps the best visual to use to communicate the masculinity idea.) In America today, Marlboro outsells the next 13 cigarette brands combined. Marlboro is also the largest–selling global cigarette brand.
Why is it very difficult today to put a verbal idea into a consumer’s mind without a visual hammer?
The world is awash in words. This is especially true because of the Internet. Consumers are drowning in Emails, Tweets, Facebook pages and other web-oriented media. To cut through the clutter with a verbal message only is extremely difficult unless you have a revolutionary development. And if you have a revolutionary development, you probably don’t need much marketing help. In 2010, the five largest advertisers in America were AT&T, Verizon, Chevrolet, Ford and Toyota. Together these five brands spent $6.9 billion on advertising. What was the verbal idea, or slogan, used by each of these brands? I’ll guarantee that few consumers would remember. Here they are.
AT&T . . . “Rethink possible.”
Verizon . . “Rule the air.”
Chevrolet . . . “Chevrolet runs deep.”
Ford . . . . “Drive on.”
Toyota . . . “Moving forward.”
None of these slogans can be effectively visualized into a hammer. That’s why, in spite of the $6.9 billion, most consumers don’t remember them.
Could you share some marketing messages from companies which have good visual hammers and why do you think they are good?
In general, it is difficult to create a memorable visual hammer. One exception is for leader brands. Any simple visual used consistently with a powerful leader brand can become a visual hammer.
The “Golden Arches” of McDonald’s.
The “Swoosh” of Nike.
The “Tri-Star” of Mercedes-Benz.
What these visual hammers are communicating is “leadership,” and leadership is probably the most important verbal idea for a brand. If consumers perceive your brand to be the leader in a category, your brand can maintain that leadership for decades. Hertz in rent-a-cars. Kleenex in pocket tissue. Heinz in ketchup.
You say that unlike a verbal idea, a visual hammer can cross International borders with no translations necessary. Could you explain that through an example?
The Coke bottle, the Marlboro cowboy, KFC’s Colonel Sanders, Mercedes-Benz’s Tri-Star, Corona’s lime are all global visual hammers that say something about the brands. Coca-Cola is sold in 206 countries and 74 percent of the company’s revenues come from outside the United States. Coca-Cola can use the same contour bottle visual in every country, but trying to translate a single slogan into dozens of different languages would be very difficult. And sometimes a verbal slogan just cannot be translated into another language. For example, my dad (marketing guru Al Ries) wrote a book called “Bottom-Up Marketing,” a verbal idea that works well in English. But the Spanish translators of the book couldn’t find any Spanish words that could capture that idea. (They were all vulgar expressions not suitable for a book title.)
Coca-Cola’s exceptionally-strong visual hammer puts its major competitor in a difficult position. What should Pepsi-Cola do?
Narrow its focus. In general, you cannot find a visual hammer with a broad conceptual idea. You have to narrow that idea. For example, BMW could have used “performance” as its verbal strategy, but how would you visualize that verbal idea? Instead, they narrowed the focus to “driving,” an aspect of performance. That allowed them to run “driving” TV commercials to drive in the idea to prospects.
So what is Pepsi-Cola’s new verbal strategy, just announced last week. “Live for now.” How can you visualize a conceptual idea like that? You can’t. Years ago, Pepsi-Cola had a verbal idea that could be visualized. “The Pepsi Generation.” In other words, Pepsi was appealing to the youth market, the Pepsi generation, a narrow-the-focus concept. That idea could have been easily visualized. As a matter of fact, even today, most consumers remember The Pepsi Generation, but none of the dozens of other slogans the brand has used.
You write “Today, “The real thing” lives on in newspapers, magazines, books and television shows in spite of the fact that Coca-Cola used the slogan only once, for just two years, more than 40 years ago.” The real thing was a slogan that Coke used just once for two years, 40 years ago. But it lives on. So why does the company keep coming up with all these different slogans which no one can remember?
The dominate concept in the advertising field is “creativity.” Ideas are evaluated based on how creative they are. But what is creativity? An idea is usually considered “creative,” if it’s “new and different.” An old idea used before can never be considered “creative.” That’s why Coca-Cola refuses to use it. There’s also the influence of the advertising agencies that handle big accounts like Coca-Cola. Advertising agencies live or die based on their abilities to win awards in the annual creative contests. And you can’t win an advertising award if your advertising is not creative. Take Marlboro which has used cowboy visuals ever since its launch in 1953. I don’t believe Marlboro has ever won an advertising award because its advertising is not “creative” in the usual sense of the word.
(The interview was originally published on May 14,2012, in the Daily News and Analysis (DNA). http://www.dnaindia.com/money/interview_marlboro-is-probably-the-best-example-of-the-power-of-a-visual-hammer_1688368).
(Vivek Kaul is a writer and can be reached at [email protected])
So what is common to Baba Ramdev, Kishore Biyani, Vijay Mallya and the government of India, other than the fact that they have all been in the news lately? To put it simply, they all like operate in areas where they lack expertise and in the process make a mess of it.
Let us start Baba Ramdev who became a household name by selling the benefits of Yoga to the masses. He claimed that even diseases like cancer could be cured through yoga. Those who have seen his yoga DVDs will recall the line “karte raho, cancer ka rog bhi theek hoga”.
So far so good. Then he decided that he had enough of preaching yoga and wanted to get into politics and vowed to get all of India’s black money hoarded abroad, back to India. The politicians in the government clearly did not like this (for obvious reasons) and went hammer and tongs after him. Stories were leaked to the media about the wealth he had accumulated over the years and that damaged his credibility as a yoga guru as well. Ramdev has continued in his attempts to establish himself as a politician but with very little success.
Kishore Biyani brought the retail revolution to India, having been inspired by Sam Walton who started Wal-Mart. His retail businesses were doing decently well till he decided to get into a wide variety of businesses from launching an insurance company to even selling mobile phone connections. When times were good he accumulated a lot of debt in trying to grow fast. Now he is in trouble in trying to service the debt and rumors are flying thick and fast that he is planning to sell Big Bazaar, his equivalent of Wal-Mart. This after he sold controlling stake in the cloths retailer, Pantaloons.
Vijay Mallya started Kingfisher Airlines in 2005, going beyond his core business of alcohol. Kingfisher now has accumulated losses of over Rs 6000 crore, and has never made money since its launch. The lack of focus has hurt Mallya’s core alcohol business and United Spirits is no longer India’s most profitable alcohol company. That tag now belongs to the Indian division of the French giant Pernod Ricard.
And finally the government of India, which has been bailing out the troubled airline Air India over and over again. The pilots of the airline keeps going on strike and the government keeps putting a few thousand crores every few months, to keep running the airline.
So the question that crops up here is what is Baba Ramdev doing in politics? Why is Kishore Biyani trying to sell insurance and mobile phone connections to you? And why are Vijay Mallaya and the government of India trying to run an airline?
They would be better off concentrating on things they are good at. These are things they shouldn’t be doing. It is not their area of expertise or what they are good at. The days when individuals, businesses and even governments could be an expert at many things at the same time are long gone.
In the last 100 years there have been only two individuals who have won the Noble prize twice for two different subjects. Marie Curie won the physics prize in 1903 and the Chemistry prize in 1911. Linus Pauling won it twice, the Chemistry Prize in 1954 and Peace Prize in 1962.
So in the strictest sense of the term, Marie Curie is the only person ever to have won a Noble prize in two different subjects and that happened almost 100 years back. This is primarily because as more and more things have been invented and discovered, subjects have become more complex requiring full time attention and expertise.
What is true about individuals is also true about businesses. The expertise and the attention required to run a business has increased over the year. Hence, the moment a businessman tries to go outside its area of expertise, he loses focus, and the chances of the new business doing well are remote.
Let’s take the case of DLF, the biggest real estate company in the country. It tried getting into the insurance and mutual fund business. It had to sell its stake in the mutual fund business and if news reports are to be believed it is trying to lower its stake in the insurance venture by selling its stake to HCL. Now why is a computer major trying to buy into an insurance business which is losing money, is beyond me?
Satyam was in good shape till it remained an IT company. The moments its owner developed aspirations beyond IT and got the company into real estate and infrastructure space, trouble cropped up. Real estate companies have tried unsuccessfully to get into the luxury hotel business and hotels have tried unsuccessfully to get into the luxury apartment business.
Reliance Industries attempts in the retail business haven’t gone anywhere. Anil Ambani who had build a good business in Reliance Capital is struggling with Reliance Communications and Reliance Power. Subrata Roy’s attempts to diversify into the film and television business have come a cropper, with the film business of Sahara, more or less being shutdown. NDTV, a premier English news channel, tried getting into the entertainment channel business with NDTV Imagine. It had to sell out. Cigarette major ITC has been trying to establish itself in the FMCG business for years now. Though it has had some success at it, the business hardly throws up any money in comparison to its cigarette business. All kinds of entrepreneurs have gone into the insurance business in India and are now struggling. This includes Kishore Biyani. At the same time the Tatas have been struggling with their telecom business for years.
There is a thing or two all these guys can learn from internationally renowned investor Warren Buffett. During the period of 1994-2000, the United States saw a whole lot of dotcom companies coming up with their initial public offerings. Some of these shares achieved astonishing highs. The shares of Netscape Communications Corporation, an internet browser company which controlled 75% of the browser market, were sold to investors at $28 per share. When the stock was listed on August 9,1995, it went to $74.75 during the course of the day and finally closed at $58.25, doubling in a single day. Another stock booksamillion.com went up by 973% to $47 in the course of just three days in November 1998. theGlobe.com which listed on November 13,1998, gained 606% during the course of the day and closed at a price of $63.50.
Despite these humungous gains Warren Buffett did not invest a single penny in these stocks. He did not understand the business models of these stocks and remain focused on his investment philosophy of “value investing”. Not surprisingly he had the last laugh as dotcom and technology stocks started crashing after they had peaked in March 2000.
Buffett did not abandon his core philosophy of value investing just because there was “easy money” to be made somewhere else. And he came out on top, for the simple reason that he chose to remain focused on what he knew.
But this is rarely the case. When times are good and there is a lot of easy money floating around every entrepreneur likes to “expand” his business and get into other things. But in this day and age, when things are as complicated and competitive as they are, diversification into different businesses rarely works.
Businesses these days need full time attention from entrepreneurs. Let’s take a look at the airline business. As Warren Buffett put it in a letter he wrote to the shareholders of Berkshire Hathaway “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down…The airline industry’s demand for capital ever since that first flight has been insatiable. Investors have poured money into a bottomless pit, attracted by growth when they should have been repelled by it.”
The reason airline businesses burn capital endlessly is for the simple reason that airlines have very little control over their cost. The major expense in running an airline is oil (the company can lease the aircraft it doesn’t have to always buy them). And oil prices have been over $100 per barrel for a while now. Airline companies have no control over this price, though they can hedge themselves by buying derivatives. But that can be a risky business as well.
So higher the oil price, higher is the cost of running an airline and given the lure of owning an airline, the sector remains a very competitive one, all over the world. Hence companies cannot always pass on an increase in their costs to the end customers though higher ticket prices. Given these reasons airlines are a specialised business, which require full time attention. It is definitely not a business which Vijay Mallya can look to successfully manage, busy as he is running his diverse businesses of alcohol and real estate, indulging in expensive hobbies like IPL and Formula 1, and cheaper ones like commenting regularly on Twitter.
The government of India falls in the same category. Its primary area of activity is governing the nation(which it is anyway making a mess of) and not running an airline. It simply doesn’t have the expertise to run one. Southwest Airlines is successful because it has remained focused on the airlines business. It did not suddenly decide to launch a new beer just because their airline business was constantly throwing up cash over the years.
Kishore Biyani should learn from his inspiration Wal-Mart. The company did not get into the insurance business. They did not say “now that we have so many people coming to our stores, let’s try and sell insurance to them along with fast moving consumer goods”. Or as Warren Buffett puts it ” If you buy things you don’t need, you’ll soon sell things you need.”
That leaves Baba Ramdev. He can learn from his more famous predecessor the Sai Baba of Puttaparthi. Given the following he had he could have easily gotten into politics. But that would have put him at the same pedestal as the politicians who looked up to him as their guru. And thus rightly he did not.
Marketing guru Al Ries has said in the past “Focus is the essence of marketing and branding.” I guess it’s time to rephrase that phrase. “Focus is the essence of marketing, branding and business”. And its time Ramdev, Biyani, Mallya, the government and many others learnt that lesson.
(The article originally appeared on May 10,2012 at http://www.firstpost.com/business/what-ramdev-biyani-mallya-and-govt-can-learn-from-buffett-304770.html).
(Vivek Kaul is a writer and can be reached at [email protected])