When Large Companies Buy Small Brands — Buy and Hide or Buy and Show

As the market fragments into countless niches and communication channels, practitioners must regularly test the conventional logic of brand communications and marketing. There will also be odd or unlikely company marriages and buy-outs.

Take basketball shoemaker Converse. Manufactured since 1908, the shoe company has made a comeback in recent years. Described as a leader in the “vegetarian” shoe category, the product is typically purchased by those who call themselves environmentalists and those who use their purchasing power to object to the labor and environmental practices of large shoe makers (e.g., Nike), among others.

Consumers may believe that they are buying Converse to avoid Nike, but ultimately their purchase affects Nike’s bottom line. It’s a little known fact that Nike owns Converse.

Few official press releases about Nike’s purchase of Converse exist. A quick search on Nike.com yields nothing for “Converse shoes.” A quick search on Converse.com for “Nike”—no results.

Converse is a “Swoosh-free” brand. This is a case of buy and hide.

While Nike has leveraged the strength of Converse, neither brand mentions the other in marketing and customer communications. The dis-synergy between the two brands is evident and planned. There’s a greater downside if the connection is touted than if customers simply discover the information.

When the dowdy Sears took over the preppy Lands End, the brand communication and marketing touted the new business relationship. Sears took the buy and show approach. Sears devoted floor space to Lands End products and clothing and focused on serving the multi-channel customer. Lands End clothes is feature on Sears.com, but not vice versa.

While both stocks moved up on the news, customers reacted negatively. Sears sells appliances and not so good clothing. Lands End sells high quality, durable clothing and had superior customer service.

Did Sears buy Lands End to improve its brand image or to offer the customer better quality clothes, or both? Was Lands End’s brand image diluted from its new association with a company that was just a notch above K-mart?
These are important questions.

As the marketplace changes, there will be evidence of both models…buy and hide and buy and show. Because the brand experience is so pervasive, marketers must ensure that the brand communication decisions support the long-term business strategies, as well as consistently evaluate the nuances of the customer’s brand experience.

Government Agency Branding

Why do U.S. government agencies need to brand? For mission and for money. Often they need to create citizen and stakeholder awareness of their programs. Such was the case when the Federal Trade Commission launched the National Do Not Call Registry. The military services brand their recruiting programs as exemplified with the highly successful U.S. Marines campaign “The Few. The Proud. The Marines.” that was inducted into Madison Avenue’s Walk of Fame in 2007.

When government agencies do not manage their brand, detractors can easily determine their position in the eyes of stakeholders. When no one manages the government agency brand, then the relationship between the agency and its publics can suffer.

Moshe Engleberg in Government Executive notes “while government agencies can learn much from the private sector, there are two key differences between them. Government agencies must improve their funding in order to advance their missions. They also presume that because they have a worthy, socially minded mission, they have no competition. That's wrong. Recognizing competitors for funding — even if they are partner organizations — is critical in determining what makes your organization different and how to carve out your marketplace position.”

USAID, the Postal Service, the Census Bureau, the EPA (Office of Research and Development), USDA, Naval Air Systems Command, the IRS, the State of California, to name a few, have strategic branding efforts under their belt and are benefiting from increased recognition, improved internal processes to support the external brand, and cost-savings from having a predetermined look and feel for all of their communication outputs. A number of USAID case study examples were presented by Joanne Giordano to the American Marketing Association DC Chapter in the seminar on "Branding in the Federal Sector."

Government agencies have much to gain from improving their brand competencies and from initiating a brand life cycle that increases alignment internally and externally.

Change agents and early adopters using brand techniques in the government context face a daunting challenge, however, their efforts can yield significant results and product development savings.

You Don’t Know What You Don’t Know

Every branding initiative can benefit from research. Focus groups, gap analysis, product testing, and logo evaluation can provide useful information to guide brand development. A survey or message workshop with clients, customers or stakeholders can be the cornerstone for decision making.

Oftentimes because of budget considerations, research is not included in project plans. Why spend thousands or millions of dollars on marketing and advertising when a brand proposition is not solid? Ill-fated branding can alienate current and potential customers, and employees alike.

Why is research important?

1. Research can help improve the credibility and reputation of the brand
2. Research provides actionable solutions if you have an interest in expanding market reach
3. Research can help form the foundation of brand messages
4. Research can help ensure that you create designs and collateral that resonate with the customer
5. Research drives elements in a brand that can support long-term impact in the marketplace.

Known for the brand acumen that helped make Nike and Starbucks two of the most successful brands of recent years, Scott Bedbury, the author of "A Brand New World" says that brands are "psychological concepts held in the minds of the public, where they may stay forever. As such you can't entirely control a brand. At best, you only guide and influence it." Even a strong brand is subject to erosion in a difficult economic environment.

If a brand is the sum of "the good, the bad, the ugly, and the off-strategy," then it's imperative you get your brand as close to right before you let it out of the gates. Do right what you can control.

Incorporate research. You'll reap the benefits of knowing. Forever is a long time.

Recycled Brand Is an Asset with Equity

In a recent seminar I presented to the DC Chapter of the American Marketing Association, I gave the attendees my perspective on the defining characteristics of a brand:

1. A Promise
2. An Identity
3. The Customer or Stakeholder Experience
4. An Asset with Equity

I cited the Interbrand study published in a 2007 Business Week magazine article that rated Coca Cola as the world’s number one brand with an estimated brand value of $65 billion. I also noted that guru investor Warren Buffet recently invested $6.5 billion for confectionery brands Mars and Wrigley.

For further proof that a brand is an asset with equity, I suggest you check out the June 26, 2008 Wall Street Journal article where it was reported that a brand that had fallen into bankruptcy and was thought to be dead, was resurrected by someone willing to spend millions of dollars on it.

The retailer Sharper Image was revived from its demise to become a “virtual brand” name with its moniker rented to other retailers. Hilco and Gordon Brothers paid about $49 million with about $33 million of this amount attributed to the Sharper Image brand name.

The buyers intend to pursue a brand-licensing investment strategy by selling the rights to use the brand name on products that will be manufactured and sold by other companies. James Salter, Hilco Consumer Capital Chief Executive, envisions Sharper Image products being sold via infomercials, websites and catalogs to consumers around the world.

It seems a branding company can earn royalties in the range of 2% to 3% of the brand revenues. It all adds up to a nice piece of change for a recycled brand!

Investing in Brand Leaders

Warren Buffett is the leader of that new category of investors--a brand investor. Strong brands drive his portfolio.

This savvy investor's strategy reflects a strong penchant for stocks with a verifiable brand identity--those household brands with value not sensitive to swings in the economy and free to increase prices to keep profits up.

Buffett supports companies that stand behind and deliver on their brand promise. And the results...well, check their marketplace position. A well-regarded brand--that intangible corporate asset with business value and economic impact that influences the behavior of customers and stakeholders--delivers in the marketplace.

Buffett owns Coca Cola, for example, the world's #1 brand as ranked by Interbrand in a 2007 Business Week magazine article when Coca Cola was determined to have a brand value of $65 billion. This brand value was determined by taking the company's outstanding stock value and then subtracting the value of its existing physical assets listed its annual report.

Brand investors focus on strong brand leaders that leverage their brand equity, which includes their cadre of loyal customers, name recognition, and their dominance in the field.

While not a perfect and error free model for investing, brand investing fits the patient investor who is comfortable with a long term-investment that uses brand power as a tail wind.

If brand can indeed be valued on a balance sheet and is used as a financial performance indicator that affects investor activity, it behooves any organization to focus on effective management of their brand assets.

Brand valuation can help companies, government agencies, and non-profits refocus their "business" and ensure that marketing and branding efforts do not drain the kitty, but create returns.

While a brand provides a unique long-term competitive advantage and has obvious commercial importance, it is important to mention that current accounting regulations are deficient in the treatment of intangible assets. That is changing as the large number of mergers and acquisitions has forced a second look at how to report brand value on the balance sheet.

Branding in the Federal Sector - AMA Event

Brand development is no longer the sole domain of consumer marketing. Government organizations and non-profits are reaping the benefits of a strong brand, creating awareness for their causes, and moving people to action.

At the June 25 American Marketing Association - DC Chapter luncheon seminar, "Branding in the Federal Sector," Len Johnson and Joanne Giordano, former USAID Deputy Assistant Administrator for Public Affairs will each present a high-profile federal agency branding case study.

DHS - Len will present the process used to create the employer recruitment brand developed under a contract with OPM for the Department of Homeland Security. He will discuss the research and design process used to develop key messages, taglines, and collateral materials to attract new employees to DHS.

USAID - Joanne will discuss challenges and ultimate success of USAID's global branding campaign to brand U.S. foreign assistance as “from the American people.”

Held at the Herman Miller Design Center, 600 14th Street NW, Suite 700, Washington, DC 20005 (Near Metro Center station on the Red, Orange and Blue lines), the luncheon seminar costs $20 for members and $35 for non-members. A $10 surcharge will be added for onsite registrations.

RSVP deadline: Monday, June 23, 2008 C.O.B.
Registration: www.amadc.org or 703-683-4883

Looking Nice - It's Not Enough

In today's crowded brand marketplace, looking nice is not enough. The road to developing collateral—be it web banners, brochures, or print ads—can be a rocky path if not approached in a strategic manner.

Graphic design should not be an afterthought or developed simply based on what "looks nice."

Good design is only truly effective if it's created with a clear understanding of an organization's goals, audience, and unique selling proposition.

Rely on the power of the creative brief. This essential tool outlines the scope and parameters of a project and helps define client expectations. Tactical and goal-oriented questions yield information that pinpoints business objectives and vision as they relate to the design project. They can also help to define exactly what sets your company apart from the competition...your unique selling proposition.

This information serves as the bedrock to successful concept development and strategically created projects that set your company, organization, or agency apart in a meaningful and distinctive way.

Research and a detailed creative brief drove a successful brand alignment at the US Environmental Protection Agency (EPA).

To establish the business case for a project inspired at the grass-roots level, the EPA's Office of Research and Development conducted nearly 350 interviews with scientists, managers, and staff prior to the kick-off of the visual identity project.

At the beginning of this project, JDG performed a communication audit and one-day workshop and focus group with the project Advisory Board comprised of scientists, senior managers, and communication staff representing both ORD and other offices throughout the EPA.

This audit and workshop fed the creative brief for this project. To collect additional real-time feedback and to present status updates, the team held small group feedback sessions and video conferences with key agency stakeholders throughout the process.

Research ensured that ORD and JDG charted the appropriate course and guaranteed a successful implementation and adoption. It yielded insights on current communications vehicles, organizational perceptions, and new potential products.

The increased adoption, cost savings, and strong identity development is helping ORD and EPA build a voice for environmental science that is resonating in the U.S. and worldwide.

The 52-page visual identity guidelines was recognized with a 2007 M Award from the D.C. Chapter of the American Marketing Association and two Silver Inkwell Awards from the International Association of Business Communicators.