"Companies are Throwing Money at Social Media"

rohit deshpande

Rohit Deshpandé is Sebastian S. Kresge Professor of Marketing at Harvard Business School, where he currently teaches in the Owner/President Management Program and in other executive education offerings. He has also taught global branding, international marketing. In this interview he talks to Forbes India on various aspects of branding.

I came across an interesting an interesting article that you wrote for the Forbestitled Branding Yoga: Good Business or Blasphemy?” Please tell us something about.
I wrote a case study called Branding Yoga. So my comments relate to that project. The first learning objective of the case is to ask the question can anything be branded?. The majority of the students say yes, anything can be branded. But the follow up question is, should everything be branded? And all of a sudden ethical issues and moral issues come up, in debating that question. It is a much more difficult question to answer.
Can you get into a little more detail?
The discussion broadens into this controversy over branding yoga. The particular controversy that got me interested into doing this case is something that I read about in The New York Times. There was a group of Indian Americans who had protested the commercialization of yoga and they said that it amounted to the commercialization of Hinduism. So they drew a parallel between commercialization of yoga and the commercialization of religion.
And how did that they do that?
In order, to make that argument they said that yoga is essentially Hindu and it would not exist if it were not were for Hinduism. This sparked a tremendous controversy that had to do with the history of Hinduism, the history of yoga, which preceded which one, can you teach Yoga without teaching Hinduism or is yoga all about exercise? That is really what fuels the case discussion. So, that is one set of issues that we deal with.
And what is the other set?
The other set of issues that we deal with is that there are two different branding models. One branding model is from Tara Stiles, who is a very successful Yoga teacher in New York. She is American. She is young. She used to be a model and a dancer and did Yoga herself as a way of keeping fit and started teaching her friends. They said there will be other people who will be interested. She made some free YouTube videos on this and they went viral. And then she started a yoga studio. Somewhere along the line, she became the yoga teacher of Deepak Chopra. He took lessons from her. He is a great fan of her brand of yoga and they have a joint venture . They made an iPad app, which has been very successful and even a DVD.
Which is the other model?
The other branding model is from somebody called Bikram Choudhury of Bikram Yoga. Now look at the contrast. Bikram is an American now but he was born in India. He was traditionally schooled and his brand of yoga focusses on the domain called hot yoga. It is extremely regimented and you have to be physically in a great shape to do that. And he has franchises. He has training programmes. He is much more of a yoga teacher training as a way of expanding the franchise, even though both are marketers. She is a much more of a social media type of thing. And both of them are successful. Both have attracted controversy, Bikram probably much more so, despite the fact that he is Indian and more authentic than she is.
What is the point you are trying to make?
Yoga has been very successfully branded, with different branding approaches and what makes it interesting is that in America the majority of yoga teachers don’t make very much money.
They have small studios. They are making a living. But they are not millionaires. Both Stiles and Choudhury have achieved a lot.
The ones who are not making haven’t branded yoga?
They haven’t thought about the branding aspects of yoga at all. I don’t know how it is in India, but this idea of the business of yoga, a lot of people look at it as an oxymoron.
You just talked social media. These days social media marketing is a huge thing. Does it work?
Of course it works. If done well, it works really well. There are a number of case examples of a number of companies that are doing a very good job. But it doesn’t work for everybody. Companies are spending a lot of money on social media. But a lot of it is experimental i.e. they are throwing money at something, and they are really not sure of what works and what does not work. We are at a nascent experimental stage where we are trying to figure this out.
Can you elaborate on that?
There are lots of examples of social media where the companies themselves are not sure whether the money is worth the spent. I am not sure I can isolate a social media disaster as much as companies not knowing whether they spent their money well. I would say 90% of the companies are in that group of not knowing whether they spent the money well.
Can you explain through an example?
It has to do with the appropriate success metric. How do you judge whether your social media campaign work has worked? One of the most popular metrics is the number of likes that you get. I have some colleagues who have done some research on this and they have found that likes do not translate into sales. When you think about it cognitively it doesn’t take a lot of effort to like but it takes a lot of effort, and not to mention money, to buy. Hence, click-throughs and getting sales, that is much much harder to measure.
So what is being done about this?
The companies are trying to figure out whether by spending more money they can get click-through , that is, translate likes into sales. But there are all kinds of other factors that might explain sales and how do you isolate it and so on.
Can you give us an example of a company which has used social media well?
I am developing a case on Dell. And they are considered to be a best practice example of using social media in the business to business space. What works for them is that they have a business model which is direct to consumer rather than going through retail. So they have open channel historically with their customers. They don’t get information on their customers from some sales partners, which means that when something goes wrong, they also find out very very quickly. And they have traditionally done that through their telephone lines. People call on their toll free lines when they have a problem. With the advent of social media, some irritated customers started blogging that they were upset at Dell, there is a problem that happened and so on.
And what did Dell do about it?
Michael Dell, who is the founder, is himself very active in the blog space and when he discovered this he told a team of his people that we should just reach out directly to these customers and fix these issues. When they reached out to fix these issues, the bloggers put blogs saying that here is what the company has done. Effectively, their bloggers were doing their job for them. As you know there is a lot of research that shows that restitution actually gets you a lot more business and than actually the initial sale does. And when the restitution story is being told by a customer it carries even more credibility. That is the story of how Dell got into this space. Now they have a command centre and they keep monitoring what is going on. It has to do with the complaint hotline or the repair hotline or whatever you call it, which is the history of the company. They have now translated this into the social media. They estimate that it has saved them a lot of money and a lot of loss, because of people who would have complained and gone away and scared other people from buying Dell.
Given your experience in the field of marketing and branding, which is the most frequent branding mistake that companies make?
The most frequent branding mistake is to assume that your brand is a logo rather than the personality of your product and company. To assume that its a simply a trademark and therefore it should be managed out of your communications department and maybe your legal department, rather than becoming a part of the overall strategy of the firm. In the research I have done this tends to be particularly true for technology intensive companies where the product is everything and the quality is everything. It is almost like a Dilbert cartoon which stereotypes marketing and says that marketing does not add any value and therefore branding is not very essential and it is all about the quality of the product. Companies in emerging markets are not comfortable with thinking about a brand as anything more than what their marketing people do. It is not seen as a part of the strategy of the firm. A brand is not seen as a relationship with a customer, it is seen as a trademark.
Can you give us an example which doesn’t hold true for whatever you have just said?
I wrote a case on Infosys and they have done an incredible job of making the Infosys brand mean something. Narayana Murthy in some ways represented the brand. The confidence that people had in buying from Infosys came from people who ran the company. The brand stood for more than just IT. The brand stood for the people and since 90% their sales comes from outside India, they actually had to brand India before they could brand Infosys. So there is a whole big story there of how India Inc came to be and what role Infosys played in it.
When brands become successful, the tendency is to extend it. Do line extensions work?
Line extensions do work but they don’t work in all cases. The Kingfisher story is an example of a line extension strategy that did not really work. Yamaha is an example of a line extension strategy that has worked very well. But I think the question is why the line extension? If the reason for the line extension is that you have built a powerful brand and want to milk it, then there is a chance that it won’t work. But if the purpose of the line extension is that it is something that the consumers want, then there is much more likelihood that it will work.
Any other point that should be kept in mind?
Another key part is that what does the brand mean? And does that meaning extend? The question for the Kingfisher management should have been what does the Kingfisher brand mean and how does that meaning translate from beer to airline? There are some brands that transcend the product category, in which case the brand might go across a whole variety of things. There are other brands where their meaning is very rooted in the product category, which is almost like the paradox of success. The brand is successful because people see it as Kingfisher means beer and it can’t mean anything else.
Do celebrity endorsements work?
The research on that is in this area called brand personality. Where the personality of the celebrity is consistent with the personality of the brand, it works. When there is a mismatch, then consumers are cynical and they believe that the only reason this person is speaking is because she or he is being paid for it, and they probably don’t use the brand themselves. I think that is the real issue.
Can you give us an example?
The bad example is the [James] Bond franchise. The BMW introduced a product called z3 through a Bond movie. It was for them a relatively inexpensive convertible car. This made a lot of news because James Bond was a British secret agent who used to drive a British Aston Martin and was now driving a German car. This made for good media. This was a very successful product placement. When that happened, not only BMW but a whole bunch of product companies decided that they would flood the next Bond film with product placements. There was a huge consumer backlash. Consumers were frustrated to the point that it was hurting the Bond movie franchise. People were saying that there is no way that the endorser is personally committed to all these different things but he is using it because he is being paid.
And a good example?
There are several examples of where the brand personality fits. An example of that is the basketball player Michael Jackson advertising Gatorade, which is a sports drink. And it went on for a very very long time.

The interview originally appeared in the Forbes India magazine dated July 10, 2014

Narrow your focus

al ries 2Al Ries
A rising tide lifts all boats. But a falling tide does the most damage to those boats that are poorly anchored.
In high-growth times, when things are going well, management ignores the marketing function. Why get involved when everything is upbeat?
When things are going bad, the first thing management does is to get involved in marketing activities. If sales are turning down, no CEO is going to ignore marketing.
This is the worst time for management to be involved in marketing. They don’t have the knowledge and experience to figure out what needs to be done.
In fact, their instincts are wrong. They know they need to increase sales in order to survive, so their first thought is to expand the brand.
That’s exactly the wrong approach. A downturn exposes the weakness of also-ran brands. In order to survive in a down economy, a company should narrow its focus in order to strengthen its brand, which ultimately can increase sales.
Great Wall Motor is a good example of this principle. In the year 2009, the company marketed trucks, passenger cars, minivans and SUVs, using nine different model names.
Then the company decided to focus their resources on a single model, Haval, using the strategy, “The most-economical SUV under 100,000 RMB.” (Roughly $13,000 at the time.)
Last year, Great Wall Motor sold more vehicles than any other Chinese automobile company. Furthermore, they made more net profits than the next four Chinese automobile companies combined.
The question is why does this happen? If you’re the CEO of a major corporation, chances are good you are a left brainer. Before you make a decision, you want to be supported by facts, figures, market data, consumer research. If you’ve a job in marketing, chances are good you are a right brainer. You often make decisions by “gut instinct” with little or no supporting evidence. It couldn’t be otherwise in a creative discipline like marketing.
A logical, analytical left-brainer generally won’t take a right-brainer seriously whether the economy is up or down. In China, for example, consumers saw passenger cars as “prestige” vehicles and trucks and SUVs as working vehicles for the lower class.
So if you are a logical thinker, you would want to focus on passenger cars. But a right-brainer is a holistic thinker. He or she sees the big picture. And the big picture in China back in 2009 was that every other automobile manufacturer was going to focus most of their resources on passenger cars. That’s why the better strategy for Great Wall was to do the opposite, focus on SUVs.
At the same time, low-growth times can actually benefit market leaders because it makes them relatively stronger than their weak competitors. Take the automobile industry in America. The recession of 2006 to 2008 bankrupted General Motors and severely damaged Ford. But it improved the position of imported brands like Toyota, Mercedes-Benz and BMW.
What should weaker competitors like General Motors have done? As a general principle, they should have narrowed the focus of their brands. General Motors’ leading brand, Chevrolet, has 18 different models. What’s a Chevrolet? It’s a large, small, cheap, expensive car or truck. That’s a weak position that can cause serious problems in low-growth times.
On the other hand, Toyota is the No.1 car brand in America. Mercedes-Benz is the “prestige” leader and BMW is the “driving” leader. They all did well in the downturn.
A weak brand may continue to exist in a rising economy. But not when the economy turns down. So marketing managers who manage a weak “also-ran” brand should “narrow the focus” of their brands in order to strengthen their positions.
As a starter, for example, Chevrolet should have divested itself of its truck business and concentrated on cars, preferably entry-level cars. General Motors has a truck brand called GMC that sells trucks only. That brand could be strengthened by the addition of the Chevrolet truck models as well as the Chevrolet model name for trucks, Silverado.
Look at the automobile market in Russia. Lada, the market leader, sells just six models yet has a market share of 17 percent. Chevrolet on the other hand markets 11 different models, but its market share is just 7 percent. Chevrolet’s leading model is Niva, an SUV made in Russia that has generated a lot of favorable interest. The model is often on back-order, with waits of two or three months.
If I were running Chevrolet in Russia, I would focus all my resources behind the Niva model, much like Volkswagen did with its Beetle model in the United States.
You are going to see the same things happen in smartphones. The rich will get richer (Samsung and Apple) and the poor will get poorer (BlackBerry, Motorola, Nokia and others) unless they do something dramatic like narrowing their focus to strengthen their brands.
Companies are like plants. Overtime, plants expand in every direction so a good gardener trims them back from time to time. Companies need to do the same. Keep cutting back on products and markets that are not performing well. Narrow the focus to both strengthen the core brands and increase their market share.
Look at the smartphone category. Apple basically markets one new model to replace an existing mode which is then discontinued. Yet the last time I checked, its competitor, BlackBerry, markets 15 different models. Which company is more successful?
But narrowing focus is easier said than done. Listen. Most CEOs we have dealt with take the position that they know what marketing strategies are best for their companies. They don’t want marketing managers to tell them what to do. They want marketing managers who will execute their strategies.
That’s why they seldom take the time to ask marketing managers for their advice and counsel. Most times, marketing managers have to force their way into boardrooms in order to present their ideas. I’ve been in those meetings. And it’s obvious that the chief executive and his or her staff has already made their minds up on what strategic directions to take. They just attend the meetings to placate marketing managers who often wind up frustrated.
Also, during low growth times, companies end up with metric madness. If you run a company by the numbers, you’ll eventually run the company into the ground. You might be successful in the short term, but never in the long term, as the financial crisis demonstrates.
The banking industry is a good example of an industry run by the numbers. And yet the banking industry was the one industry that did the worst in the recent recession. Left-brain managers are verbal, logical and analytical. Nothing wrong with that, as long as management also takes the remedy to counteract its overemphasis on mathematics.
Almost everything about marketing is the opposite of the typical manager’s approach to running a business. Marketing is illogical and definitely not analytical. Marketing is intuitive and holistic. We’re concerned, however, that this message is being ignored by the marketing community which seems to be drifting from right to left. From a right-brain approach to a left-brain approach. The hot topic among marketing managers today is ROI, return on investment.
Another mistake that some companies make during recessions or low-growth environment is that they introduce cheaper versions of their existing brands. Packard was the leading luxury car brand in America for many years. But during the depression in the 1930s, Packard started selling relatively inexpensive vehicles. Its major competitor, Cadillac, kept it prices relatively high, although selling far fewer vehicles than Packard. As a result, Packard is long gone and Cadillac is still alive.
I don’t know enough about Indian corporations to make specific suggestions, but as a general rule, if a company is losing market share or losing money, it needs to change its marketing strategy.
That runs counter to the normal thinking which is (1) The strategy is right, but (2) It’s the execution that is wrong. So chief executives tend to react to trouble by firing lower-level managers in charge of executing corporate strategy.
Then too, if a company changes its corporate strategy, it can reflect unfavourably on the chief executive. From an ego point of view, that’s a strong reason to focus on execution rather than strategy.
Also, there are few other things remembering. Does it make sense to launch new products in a low growth environment? Yes and no. Yes, it’s a good time to launch new markets for a market leader. Its competitors are weakened and are less likely to have a good response.
No. It’s a bad time to launch new products for a company that’s not a market leader. That drains resources from the company’s core business. Also, its worth remembering while launching new products that advertising today doesn’t have the credibility to launch new products. Only PR has that credibility. Regardless of the environment, companies should start with PR and then switch to advertising after the new product or brand has achieved some recognition among consumers. Our philosophy is: PR first, advertising second.
To conclude, the one message that marketers need to remember in times of low growth is to narrow your focus.

 (Al Ries is a marketing consultant who coined the term “positioning” and is the author of such marketing classics (along 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)
The article originally appeared in Business Today in the edition dated January 19, 2014
(As told to Vivek Kaul) 

Sonia Gandhi and the art of mystery branding


Vivek Kaul

Who is Sonia Gandhi?
Do we the citizens of this country really know her?
What are her views on various things?
What does she think about the current state of the Indian economy?
What does she think of the government which she runs on “remote control”, like Balasaheb Thackeray once did?
When she went abroad recently for medical treatment, what is it that she is suffering from? Does it bother her that her only son Rahul is in his forties now and is still unmarried?
Does she find time to be with her two grandsons?
Are her Hindi speeches written in Roman script?
Pardon me for being rhetorical, but I am just trying to make a broader point. The citizens of India don’t have answers for any of the questions asked above. They need not have answers for every question. But they definitely need to know her views on the Indian economy, the government she runs on remote control and the medical illness that plagues her.
The other questions are personal and answering them would just satisfy some curiosity and nothing else.
The fundamental question that arises here is why is there so much mystery surrounding Sonia Gandhi? Nobody currently influences the economics and politics of India more than she does. But when was the last time you read an interview with her and heard her interacting with the media?
The answer behind all her mystery might very well lie in the art of branding a product. As brand guru Martin Lindstrom writes in Buyology – Truth and Lies About Why We Buy “Mystery is a fascinating component as many brands leverage this in order to make us pay more for a brand.”
And so many big brands make mystery their selling point.
“Ye PSPO nahi jaanta,” went the catch line of an advertisement of Orient Fans. Towards the end of the advertisement it was revealed that PSPO stands for “Peak Speed Performance Output.” Now what does that mean?
Or take the case of “ZPTO yukt naya clinic All Clear.” What does ZPTO stand for?
Or take the case of Tata Xenon XT, the new car from Tata Motors. What does XT stand for?
Or Johnson’s natural baby oil with aloe vera? What is aloe vera?
Or products like Ariel Oxyblue and Opti-ThickTM Harpic?
All these abbreviations and terms stand for something. PSPO is a technology that uses lesser electricity to deliver more air, over a larger area. ZPTO is a microbiocide, which is supposed to kill microbes which cause dandruff. But dandruff can happen for a lot of other reasons as well.
The XT in Xenon XT stands for Cross Terrain. Aloe Vera is a plant with supposed medicinal qualities and has been often cited as being used in herbal medicines. It is even mentioned in the New Testament ((John 19:39–40))
Do most consumers understand what do these terms mean? The answer in most cases would be no. But do these terms matter to consumers when they make a buying a decision? Yes, they do. The mystery associated with such terms, makes the product more appealing to consumers. “Take the Sony Trintron TV for example. What is Trintron? No idea. It’s some technical mystery, which claims that the TV is better – it sounds technical and fancy and seduces us to believe this is something very special. This is mystery in action,” says Lindstrom
The case with Sonia Gandhi is very similar. The “mystery” associated with her along with her foreign origin makes her very appealing to the Indian voter.
And she goes out of her way to maintain the mystery. The recent “circus” in the run up to the Presidential election is a good case in point. Mamata Banerjee, the Chief Minister of West Bengal, went to meet her to discuss who would be the Presidential candidate of the United Progressive Alliance (UPA). Banerjee came out and told the waiting press that the finance minister, Pranab Mukherjee, and the vice president Hamid Ansari, were the two candidates on Sonia’s mind. No one officially knew till then what was Sonia Gandhi’s take on the issue. The cat was suddenly out of the bag.
Banerjee then went to meet Mulayam Singh Yadav and put out three candidates of her own, the former President, APJ Abdul Kalam, the current Prime Minister, and suspended CPI(M) member and former speaker of the Lok Sabha, Somnath Chatterjee.
But pretty soon Yadav had backed out of the so called deal he had struck with Mamata. It is said that Sonia Gandhi had secret meetings with Mulayam Singh Yadav, and soon he was ready to support the UPA’s candidate for the President.
There are couple of interesting points that come out here. One is of course that you don’t play games with the President of the Congress party, who comes from the Nehru-Gandhi family. But more importantly it was a lesson to everyone about what happens when you talk to the press about what Sonia Gandhi is thinking on a particularly important issue. The “mystery” is important to her being and it must be maintained.
Maintaining the mystery behind a good brand goes a long way in maintain their selling point. Lindstrom provides a very good example of a shampoo launch to explain what happens when the mystery associated with a brand goes.
“When Unilever was getting to launch a shampoo in Asia, a mischievous employee with time on his hands wrote on the label, just for the hell of it, Contains the X9 Factor. This last minute addition went undetected by Unilever, and soon millions and millions of bottles of the shampoo were shipped to stores with those four words inscribed on the label. It would have cost too much to recall all the shampoo, so Unilever simply let it be. Six months later, when the shampoo had sold out, the company reprinted the label, this time leaving out the reference to the nonexistent “X9 Factor.””
The company was in for a surprise. “None of the customers had any idea of what the X9 Factor was, but were indignant that Unilever had dared to get rid of it. In fact, many people claimed that their shampoo wasn’t working anymore, and that their hair had lost its luster, all because the company had dropped the elusive X9 Factor,” writes Lindstrom.
With the mystery gone consumers thought that the brand wasn’t simply good enough as its earlier version. Sonia Gandhi seems to be working on the same principle in keeping her mystery going and keeping her publicity to the minimum.
She is rarely seen speaking unless it’s an election meeting, where her speeches are largely prepared in advance, unlike Atal Behari Vajpayee who spoke impromptu on a lot of occasions. I don’t remember ever reading and interview of hers. Even the few biographies written on her are largely about the days when she first came to India and was put up at the house of Teji and Harivansh Rai Bachchan. Her initial struggle to adjust to Indians ways. Her strong relationship with her mother-in-law Indira Gandhi. Her reluctance at Rajiv Gandhi entering politics, after the death of his brother Sanjay. And so on. None of them get into the political side of Sonia Gandhi.
And so the mystery continues. That’s what great brands are all about. If that means that Indian democracy is run out of a ‘backroom’ with a ‘remote-control’, then so be it.
(The article originally appeared on www.firstpost.com on June 21,2012. http://www.firstpost.com/politics/sonia-gandhi-and-the-art-of-mystery-branding-352184.html)
(Vivek Kaul is a writer and can be reached at [email protected])

'The best thing that can happen to Google is that all its new products fail early'


Michael Brandtner is one of the leading branding and focusing consultants in Europe. and Associate of Ries & Ries. Beside his consulting work he is a frequent speaker on the topics of branding and positioning. “All my presentations start with “Brandtner on Branding”. But “focusing” is still the most important job to do in branding. A brand without a focus has no power at all in the long term. Take Sony! What does Sony stand for? Fifteen years ago Sony was a brand superstar. Today it is a burned out brand,” he points out. In this interview he speaks to Vivek Kaul.
You are a focusing consultant. What does a focusing consultant do?
I help companies to find the right focus for their brands. Most brands today are unfocused. That means that they try to stand for many different attributes at the same time. In a typical brand statement you will find phrases like this: Our brand stands for high quality, great service and innovation. Maybe this makes sense in a brand or positioning statement. But it sure makes no sense in the mind of the customer. Today, if you want to be successful, you need a powerful focus like “driving” for BMW, “breathes” for Geox or “search” for Google. The most powerful brands today are built around a single idea or even better a single word. That is the focus of a brand. And in my consulting work I help companies to find this one word.
What does it take for a company to be focused?
It takes strategic long-term thinking. You really must decide what your brand should stand for. Here in Europe Ryanair is focused on “low fare” airline. Today Ryanair is the most successful airline in Europe. Most other airlines are unfocused. They try to appeal to everybody. Of course most other airlines are in trouble today. Or take the Automobile industry. The brands in the so-called mushy middle are in trouble. The real successful brands are at the high end like Porsche, BMW. Mercedes-Benz, Audi or Lexus or at the low end like Hyundai or Kia. The brands in the mushy middle are unfocused. The brands at the high end or at the low end are focused. So I predict that Hyundai will become the largest Automobile brand in the world.
How does it help if a company is focused?
For most managers it seems not logical to focus. They still believe that the more you have to sell the more you will sell. It sounds so logical. But it isn’t. Marketing is not a battle of products. It is a battle of ideas. So if you want to win the marketing war, you have to focus on the right idea. Here is an example from Germany: In 1988 Dr. Best was just another toothbrush with a market share of about five percent. Then the brand becomes the first “flexible” toothbrush. This idea is the focus of the brand. They only make flexible toothbrushes. The advertising is focused on the flexible idea. They developed a powerful key visual or better called visual hammer with a tomato to dramatize the benefits of a flexible toothbrush. Dr. Best is flexible, flexible and flexible. Today the market share is over 40 percent. This is the power of a clear defined focus. A focus is more than an idea, it also a long term direction for the brand. It is the single idea that helps a brand to dominate a category.
Any other examples?
Take Opel. Opel is a European car manufacturer that makes a lot of different car models. But Opel has no focus. Why should anyone buy an Opel? I don’t know. Most people don’t know. In the mind of the prospect Opel is just another manufacturer of different car models.
What does it take a company to be all over the place?
Not much! A brand becomes successful with a single idea even a single product like Red Bull as the first energy drink. Then the management starts to add a “sugarfree” Red Bull and even a Red Bull Simply Cola. In most companies this is a natural way to grow a brand. And it is the perfect way to lose focus. This does not happen overnight because it is not easy to change the mind of the prospects. And that is the big problem with the issue of brand- and line-extensions. You can expand a brand over a long period of time and you are still clearly positioned. Then one morning you wake up and you have to realize that your brand does not stand for anything anymore. It takes time to build a brand and it takes time to destroy a brand. Take Sony! What does Sony stand for? Fifteen years ago Sony was a brand superstar. Today it is a burned out brand.
How does it hurt if a company is not focused?
If a brand has no focus, it will end up standing for nothing. That is the problem of Sony today. And maybe it will be the problem of Samsung tomorrow. Samsung is also unfocused. But today Samsung has the Galaxy. The success of the Galaxy is the main reason why most people think that Samsung is a hot company and brand. But Samsung as a brand does not stand for anything specific. Do you know what Samsung stands for? I do not. Fifteen years ago many people thought that Sony was a hot brand because of the success of products like HandyCam, CamCorder and Trinitron. These products faded away and Sony was left as an unfocused brand that stands for nothing specific. Now Sony is in deep trouble. It is like in the political world: If a political candidate tries to appeal to everybody, he will appeal to nobody. Take Barack Obama in 2008! He really did a brilliant move by focusing his entire campaign on one word, on “change”. “Change we can believe in” became his battle cry. That is the power of a focus.
Since everybody is talking about Facebook these days, how focused is a company like Facebook?
Today Facebook is a focused brand and company. Facebook stands for “social network”. It is the leading social network in the mind.
What about Google?
Google as a company is in the process of becoming unfocused. Google as a brand is still focused, because it still stands for “search” in the mind of the customers. It is still the ultimate search engine. But if Google is successful in expanding the company, it will destroy the focus of the brand. The best thing that can happen to Google is that all the new products under the Google brand will fail early.
How do you view the potential of Facebook when it comes to brands advertising themselves?
Facebook is not an advertising medium. It is much more an information medium. To but it even better: It is an interactive information medium. On Facebook people are interested in information, in conversation, in gossip, in buzz. But they are not really interested in advertising. On Facebook marketers have to think more like editors than like classical advertising people.
How does a marketer market in the world of Facebook, Twitter, blogs, and what not? How do you see social media changing marketing?
Social media today is totally overhyped. For many people it is a medium that will change the world of marketing as we know it. Here is my point of view: Social media is an important medium, but it is still only a medium. How important is television as a marketing channel for a company or a brand? It depends on the company, on the brand, on its strategy, on its messages and so on. How important are Facebook or Twitter or blogs as marketing channels for a company or a brand? It depends on the company, on the brand, on its strategy, on its messages and so on. For some companies and brands social media will become very important, for other companies and brands social media will only be another information medium like the web-site. For a car brand like BMW or Audi Facebook may be a great medium, because both brands have a lot of fans and a lot of relevant news for these fans. For a tissue brand Facebook is more like an additional web-site to give some basic information about the brand. Every company has to find out for itself how important Facebook, Twitter or blogs are in the media mix.
What’s the biggest branding mistake that a company can make?
(1) Believing that brand- or line-extension is the ultimate strategy to grow a brand.
(2) Believing that the better product will win
(3) Believing that it is easy to change the perception of customers with advertising.
Especially companies in trouble are doing these three things at the same time. Typical example here in Europe is Opel! Opel is in trouble. The typical reaction: We have to launch new models under our brand name to win market share. We have to build better products than the competition, because customers prefer better products. We have to change our logo and we have to launch a new advertising campaign to change the perception of our brand. Will it work? Of course not. Opel needs a new focus. Take Apple! About 15 years ago Apple was in trouble. What did Steve Jobs? He launched the iPod in 2001. He focused his efforts on a new brand to rebuild Apple. The success of the iPod did more for Apple than all other marketing efforts combined. It was also the base for the iPhone and the iPad. Steve Jobs knew about the power of a clear defined focus. He built three leading focused brands in only one decade, the iPod, the iPhone and the iPad. By doing this he made Apple the most admired company and brand in the world.
What are the areas of marketing according to you which marketers have the most trouble with? How can they address it effectively?
Still many management and also marketing people confuse reality with perception. That`s why they believe that the better product will win. Not true. The better brand will win. New Coke was the better product. Coke Classic is the better brand. Who wins? Coke Classic. Marketing is not a battle of products. Marketing is a battle of perceptions.
Could you elaborate on this point a little more?
Most companies are still building or investing in better products. But they should invest in better brands. Take Nokia! Nokia is the dominant brand for mobile phones. But Nokia is a weak brand in smart phones. Nokia stands for mobile phone, not for smart phone in the mind of the customer. So what is Nokia doing? They try to build better smart phones like the Nokia Lumia. Maybe the Lumia is a great smart phone in the factory. But in the perceptions of the customer it is just another smart phone on the market. Nokia should stop building better smart phones and start building a better smart phone brand. To achieve this they have to do two steps: Step one: Nokia has to create a new category of smart phones with a new powerful app. Step 2: Nokia has to give this smart phone a completely new brand name.
Why are big companies unable to launch successful new brands? They usually end up buying other brands. Like Google bought Orkut or Facebook bought Instagram recently.
The reason behind this is the so called corporate ego. If a company has a powerful brand name, it will tend to use this “powerful” name for all products. That is good thinking inside the company, but it is bad thinking outside the company. For the Kodak management is was logical to use the Kodak name also for the digital products. But this does not make any sense outside the company. Why should anyone buy a digital camera from a photo film company or brand? Kodak is not perceived as an expert for digital cameras. That`s the point. So it is not a bad strategy for big companies to buy new brands. If Google had launched a web-site for video search on its own, they would have probably called it Google Video. Instead they bought YouTube. Google now owns two strong brands and also market leaders in the search engine business. Google is the ultimate search engine. YouTube is the ultimate “video” search engine. Additionally Google has also Android. That is a great multi brand strategy. Google+ on the other hand is only a me-too social network. That’s a bad brand strategy.
So what does that mean?
That means: Companies have to overcome their corporate ego to launch second brands. But there is one very important point. It is not enough to launch a second brand first of all you need a new category. Take Microsoft in the search engine business! It is regardless whether the call the search engine MSN Search or Bing, because the strategy “launching a me-too search engine” is wrong. That means: If you launch a second brand, you first will need a new category. Without a new category you should not launch a second brand at all.
(Interviewer Kaul is a writer and can be reached at [email protected])

(The interview was originally published in the Daily News and Analysis(DNA) on June 11,2012. http://www.dnaindia.com/money/interview_the-best-thing-that-can-happen-to-google-is-all-its-new-products-fail-early_1700670)