JY&A Consulting

The branding crystal ball

Two of JY&A Consulting’s principal consultants probe into their branding crystal balls to reveal some trends for the coming year

Jack Yan and Stefan Engeseth
Jack Yan is CEO of Jack Yan & Associates and president of JY&A Consulting. Stefan Engeseth is the author behind Detective Marketing and serves as the principal consultant at JY&A Consulting Stockholm.
   In its original version, Detective Marketing was hailed by both marketing professionals and the general public as a landmark work in using creativity in the world of business. Named the ‘Jonathan Livingston Seagull’ of the business world by his colleagues, Engeseth has been lauded for his simple, yet challenging concepts.

The big picture by Stefan Engeseth
Hard times in 2002 were a good time for creative branding people. During the tough economy of 2002, consumers tended to favour private labels, creating a problem for original brands. Therefore, the original brands had to be more creative and business-focused. Many companies demanded more sales-focused activities, with a shorter-term focus.
   Branding doesn't need to be rocket science. In hard times, we all find common sense as a good way of doing things without high costs.
   The consumer power has grown really strong during the year. In the book No Logo, Naomi Klein pointed out the strong consumer power by showing how Attac and other opposition organizations give companies such as McDonald's a hard time. The internet has been a tool for consumers to spread their satisfaction and non-satisfaction about brands. For example the web site www.corpwatch.org lists suspected and high risk companies. This increases the risk for bad publicity about companies, as it spreads more quickly to media. Consumers' trust in the business world did not get better after the Enron and Worldcom scandals.
   In short, 2002 provided a rough environment for branding, and the demand for products and services to live up to the brand promise is critical for their survival.
   In 2003 bad brands need to wake up and take responsibility. We need to see more walking and no more talking. People love people but who loves your brand? Talk to people who don't work with branding, so you get out of the branding box thinking. We need to have more boardrooms in pink so that emotional values become as important as hard facts.
   The real world is hard to comprehend for the consumers, with wars and economical downturns.
   It´s easy to escape from reality into a TV soap. A Swedish grocery chain, ICA, has created its TV commercials into a soap were the story captures the interest of the viewers at the same time as they make specific product offers. While not new—there was the Anchor family in New Zealand in the early 1990s, which in turn brought back memories of the Oxo family and Life with Katie in the UK—this concept proved a success for ICA, and sales are increasing. This trend will develop in 2003 but it's important that this fantasy-land has healthy values.
   Why are brands interesting and products often boring? How can the branding knowledge be a part of product development? Absolut Vodka is not only a bottle, the SOE behind it works with many things that the competitors don't see, behind the scenes. To get that brand success consider these questions for 2003: how do you search for new distribution channels for your brand? Where does your consumer wish to buy? How can you get closer to your customers? Can you paint a new map for them to make it as easy as possible to find your brand?
   Distribution is still at the neanderthal stage. Try to think of how your distribution can improve the consumer's quality of life. How will you work to get your brand values to be not only a good feeling, but hard consumer value?
   In the coming year, I don't think that "anti-brand" will have the same market, especially when the product doesn't deliver what the brand promises. Common sense says that you really need a good product, like Google, the online search engine, recently voted 2002's best brand at Brandchannel. It is growing because of good customer value and satisfaction. Its simple design is functional, just as the web should be, and it delivers exactly what it promises: user-friendly, accurate results, even if its PageRank technology has its critics.
   Regardless of the brand favoured by customers, common sense remains a useful competitive tool. At a lecture I recently gave to 60 shoe store managers, I wore one brown and one white shoe. During the last 15 minutes of the talk I placed myself so the audience could not see my shoes. When I asked the participants to say what shoes I was wearing, 15 per cent were able to say they were different. It makes you wonder how interested stores are in their customers. Only 30 per cent wore their own brands. It makes you wonder if people believe in their own product, and whether it is here, at the level of basic values, that competition could become considerably more effective. Why not try similar tests with your own brand?

The death of snob value by Jack Yan
I HAVE WRITTEN on corporate responsibility a lot in 2002 and even in the first few months of this year. So, allow me to address the issues at the brand trend and operational level.
   I believe that Lexus has done particularly well in the United States, where there is a culture not of buying dull automobiles in huge quantities, but one of championing individuality. This means that the class system is not as overt and while there may be an American aristocracy, some people can break the door at the end of the staircase.
   The dot-com era might not be the trendiest thing to discuss nowadays, but it provides us with the most examples of why, for a time, being nouveau riche was not a bad thing. And now, in its ashes, we still find why snob value is a bad thing.
   Some companies are betting on how the excess of the Clinton era have caused a backlash against prestige brands. Pay-packets at Enron, or any major US firm, for that matter, are targeted for blame. Creating a US class system based on money seemed as unprincipled as the one that white settlers left behind when they arrived in America. It just wasn't caring, at least not in a post-9-11 sort of way.
   The whole Enron mess changed that brand from being one full of corporate fluff to a synonym for a massive business failure, even if it was not alone in exhibiting its bad behaviours. There are plenty more survivors who may be the next Enron, as Corpwatch.org examines. People have been scared off the premium brands, thinking that they might harbour corrupt practices or sweatshop employees. How else did they get so rich?
   Extreme products, such as the Lincoln Blackwood—a pick-up truck with a grille and a hefty price tag—are no more. Instead, we have Toyota selling subcompacts in the United States as a trendy diversion and Volkswagen, the people's car, offering a second V8 sedan, the Phaeton, and a V10 SUV, the Touareg.
   BMWs are common as muck, with 3-series littering the freeways of the world, as one of its top-selling cars.
   And even if you blame the current economic woes on the Republicans, not the Democrats, then that's all the more reason to stay away from traditional luxury brands like Mercedes-Benz and Cadillac, who make products that use more gasoline. And gasoline is a bad word right now.
   We see it in other products, too. How about media? Magazines now look duller because looking neat is considered too 1990s. Therefore, Fast Company now looks like any magazine. Empire is dumbed down with regular occurrences of the f word. Top Gear is hosted by Jeremy Clarkson presiding as the king over the other lads who front the programme but gone are the naice presenters.
   So I find it hard to believe when studies are sent to us saying that luxury product purchases in the fashion retail sector are on the rise because people want to show, more outwardly, that they are weathering the recession. Now that DaimlerChrysler has launched the Maybach and BMW the new Rolls-Royce Phantom, they seem, in the metal, to be well out of place.
   I know there'll always be buyers for these products and the profit margins are amazing for both German companies, but I am guessing that they will be the least trendy things to pull up in, even at the Cattle Barons' Ball in Dallas.
   Indeed, this following year may be the year for Skoda to find an opportunity.
   If you're working for General Motors, you'd probably want to be at Chevrolet, with new products in the Lutz era zooming out of factories swiftly.
   At Lucire, I see plenty of other brands surface. Recession has not killed innovation. And, one of our long-standing predictions—the revenge of the middle-class brand—may realize itself this year or in 2004.
   At the turn of the century, J. C. Penney and a few other retailers were worried because people were buying either poverty brands for value (in categories that no one cared about, like toilet paper) or premium brands for snobbery (hence Jaguar extending down into the compact sedan segment). Their return would be caused, I said, by the bubble bursting and expensive brands appearing vulgar (as they always have appeared, to some of us). As early as 1994 I was talking about the economic troubles in Japan. I said the Dow going over 8,000 was madness and was forced till recently to shut up when it kept breaking records.
   Now, we see brands like Esprit make profits. The French automakers are having a field day without needing premium marques. We are probably going to see the Japs pull off yet another oil-shock success with their subcompacts while GM rolls out its new Hummer H2. And before you write me to ask why I concentrate on the auto market so much, I'll say this: the trends are reflected everywhere, but most evidently with autos, because they take so much more consideration than a box of chocolates.
   Understand brand cachet and you'll understand how the rest of the economy will run based on consumer tastes. And right now, those taste buds are revolting against anything late-'90s in flavour. But it doesn't mean mere repositioning. Without all the other ingredients—social responsibility, living the brand, a genuine approach to being consumer-friendly—the middlers will suffer as badly as the premiums. Our own ignorance can harm the practice of branding way more than Naomi Klein could ever do. •