The brandgym blog

innocent's veg pots: update

Quick update on the post I did last week on innocent's new veg pots. My view was that this brand from fruit smoothies into chilled food would struggle. One of my concerns was that the veg pot I tasted was nothing to write home about.

Few impressive things about innocent's response to the post:
1. They read it, which shows they are one company tracking the blogosphere. They are smart to know that their online reputation is a key driver of brand and business growth

2. They quickly sent me a personal email from Annika, offering to send me a range of veg pots to taste - I had commented that the taste of the one I tried was a bit bland

3. They sent the pots, as promised, the next day

4. They had bothered to read about the one I had tasted, and sent me the other three to try

Is that cool or what? All this within 36 hours of the post.

So, what about the pots?

Made me smile :-)
- The Moroccan squash tagine was quite tasty; the nicest of the bunch
- Seeing the range did reinforce the strong health positioning: 3 full portions of veg, and for the tagine, only 0.9g of saturated fat
- Nice plastic pots for the pack, with plenty of innocent-style storywriting on the card wrapper

Made me frown :-(
- The Thai coconut curry was average. And the Pea and brocolli rice was, well, what you would expect peas, brocolli and rice to taste like.
- The recipes do seem to be a bit fancy-pants, for a brand that I think needs to carefully make itself more accessible to more people. Apparently they did the recipes with wacky, ultra-pricey restaurant The Fat Duck (signature dish: snail porridge).

And I still think the value proposition will limit potential. They are quite nice, but what a price: £3.50 a shot. Net, still worry they will struggle to survive long term.

Twinings tries to re-wire its brand

Marketers love to dream about changing perceptions of their brand in a big way. This could be turning a dusty old brand into something hot and trendy. Or stretching a brand from its core business into a new market. This is the brand extension trick Twinings is trying to pull off. They want to break free of their product category associations and becoming an "umbrella brand" that can cross categories. Having spent 301 years being famous for tea, they have launched…. coffee. 

My first reaction to this was to think it was a bit of kamikaze brand extension, doomed to fail. After all, Twinings themselves say on their website:

"For many people, Twinings simply is tea. Since we first started business in 1706, we've been using our blending expertise to create high quality teas"

Twinings = coffee just doesn't compute; Twinings = tea. These sort of brand associations are incredibly hard to change. Brain experts working on this issue have shown that these associations are "hard wired" into our brains. The Twinings coffee idea worked well in extensive consumer research. But in reality, a mountain of money will be needed to get the brand into the consideration set for coffee.

It's brand associations associations that allow us to make quick decisions in an over-crowded world. I posted before on how design agency JKR found that an average shopping basket contains 30 items, chosen from the 30 000 SKUs stocked by an average supermarket. In other words, we have to choose 1 in 1000 products 30 times over. You can only do this because you have strongly engrained images of brands, linked to their visual (or sonic) iconography. For example, when you go to cereal, you see a cockerel and grab the Kellogg's cornflakes. You move on to ketchup and zoom in on the iconic Heinz bottle.

However, having actually bought some of the Twinings coffee, I'm warming up to the idea. Here's why:
1. There is a functional link
This extension is not just relying on the dreaded emotional values, or sizzle, to make it work. Twinings are telling a story about blending. This has been established in tea, but is now being applied in coffee. Sort of works.

2. The pack jumped into my trolley
The pack is lovely. In contrast to many ground coffee brand offerings, it used a nice tin instead of a bag. This looks more premium and elegant, and also has the functional benefit of being more easy to re-seal.

3. It tasted great!
More sausage. We tried it out at the weekend, and it tasted really good. Smooth but rich.

So, the net effect of all this is that it might actually make it back on to the shopping list. However, the question is whether I would have considered it in the first place if I had not read about the launch and wanted to write a blog post on it. Or would I have simply filtered it out of my shopping trip? And if I had seen it, would I have got past the first hurdle of "Twinings = tea, not coffee. Wierd."

Time will tell if Twinings have managed to re-wire perceptions of its brand. Or whether it will have to squeeze its way into the over-crowded extension graveyard along with the other extensions that died trying to help brands break their category linkage, such as Lynx shavers and Cosmopolitan yoghurts.

Apple walk on air - Part 2

For this second part on Apple, we look at an update on the impact of the iPhone.

There were quite a few vociferous anti-iPhone people around last year. They doubted whether the product itself was any good. In particular, Laura Ries moaned about the idea of putting several products in one ("convergence"). And she thought it was a distraction away from the core business of selling PCs and increasingly iPods. Here's her post from last September:

"The iPhone is a distraction not an opportunity for Apple. A novelty product built on the technology whims of Jobs and another in a long line of convergence chasers."

In contrast, you, dear readers, predicted iPhone would be a hit. In the iPhone poll, most of you said Apple would sell between 4 and 10 million phones in the year to Sep 2008.

So... what's the story so far?

iPhone sales are pretty good
At MacExpo Steve Jobs announced that Apple had sold 4 million iPhones so far. This gives them an outside chance of hitting their lofty target of 10 million by Sep 08. In just a few months, and with no record in phones, they have become the number 2 smartphone on the USA. Their share of almost 20% is the same size as Sony, Palm and Nokia added together.

iPhone has changed habits
Laura Ries was way off the mark according to Mark Ritson. The marketing prof. reported that iPhone had managed to do what millions of marketing spend from the UK mobile phone networks had failed to do: it has got people using the internet on their phone. 60% of iPhoners use more than 25MB of data a month, compared with less than 2% of O2's other contract users. That is a mind-blowing habit change, driven by the intuitive, easy-to-use interface.

Things are going to get better
The first upgrade to the iPhone software has already been launched, with the ability to easily change your homepage (no menu, you just stick your finger on the icons and move em around) and better mapping. And the phone itself now has double the memory. These won't be the last improvements, with Apple set to repeat what they did with iPod I think: wave after wave of innovation.

Some distraction?
And what about the fear of distraction to the core? This is an issue that is very real in many cases, when a dwarf extension distracts from Snow White, the core product. Well, so far this doesn't seem to be the case. Check these figures out for the quarter to Dec 2007 versus year ago:
- revenue of US$9.6 billion, up 35%
- profit of US$1.58 billion, up 58%
- Gross margin was 34.7 percent, up from 31.2 percent- 2,319,000 Macintosh computers sold, +44%
- 22,121,000 iPods, with +17 percent % revenue growth

The iPhone is one of those rare extensions which does create a positive effect on the rest of the brand. This is especially true because of the investment Apple have put into their Apple Stores. They are no longer reliant on other retailers, they control their own destiny. The iPhone is a magnet that attracts people into stores, who then try out a Mac. Also, a high proportion of iPhone users are new to the brand, discovering the great design and user interface.

And as I posted earlier in the week, Apple is also using technology from the iPhone on the Mac.

So. So far, so good. Apple is still walking on air for now.

A "like-for-like" lesson from retailers

The habit of product brands to extend by launching new products makes it hard to compare sales from year to year. The brand might be up, say, 5%. But often this is all down to new product launches, and the core product has actually declined. Over time the core product is getting smaller and smaller. And the average sales per product is going down.

For some reason retail brands don't get away so easily. The industry norm is to report "like-for-like" sales. These results show the sales achieved from existing retail space,  stripping out the effect of opening new stores.

This would be a good discipline to use in consumer goods brands. They should report growth based on the same number of products so they can no longer cover up core product decline with brand extension.

Nokia goes green with iPhone-envy

Joseph Jaffe posted on a video done by a Nokia employee as he wanders down the queue for an iPhone, attempting to point out the advantages of Nokia's N95 phone. Joseph liked it a lot:

"Really love this very smart piece that Karl Long (who actually works at Nokia) created to pay tribute to the imbeciles who wasted 1-2 days of their lives to buy a phone.

As I watched the video, I couldn't help but wonder how many people were duped influenced by the iPhone advertising."

On the one hand, as a sausage guy, I was interested to learn of the areas where the N95 is superior. But, overall, the Nokia guy comes across as a geek who is royally pissed off that people aren't queueing up for his phone. He desperately and unsuccessfully tries to persuade the prospective iPhone punters of his feature-packed N95.

But he (like the most famous iPhone hater, Laura Ries) misses the mark by by trying to analyse the iPhone feature by feature. "Look, the iPhone has a 2 megapixel camera, we've got 5 megapixels. Na, na, na, na, na)." But I don't think people are buying the iPhone like that. They fall in love with it as a single, whole, drop-dead gorgeous piece of design. And they are expecting a superior user experience from the Mac operating system and iLife software.

If I were Nokia, I'd avoid trying to persuade iPhone fans to buy a N95 instead, as this is a losing battle. Instead, they'd be better off targeting the anti-iPodders and Apple-haters, who think being cool means NOT having an iPhone. These people may buy into Nokia's feature-based advantages.

As for Jospeph's comments, I think he's the imbecile in this case. The people who got an iPhone were not idiots who "wasted" their time, they were smart fans who happily queued up. Most brands (including Nokia) would kill for this sort of loyalty. Second, its just daft to think the same people were "duped" by the iPhone adverts. What sold people was all the free PR that the product generated. The iPhone did all the talking for itself.

And early reports I read via John at Brand Autopsy suggest the hype was justified. According to a recent study, 90% of iPhone buyers were extremely/very satisfied and 85% will recommend the iPhone to a friend. And some other killer data that John points out. First, 30% of iPhone buyers are first-time Apple customers. What a recruitment tool! And, most impressively, of the  50% of iPhone buyers who switched cellphone carriers and paid to do this, they paid on average...wait for it... $167 to make the switch. This, in a market where most people are deal hunting. Wow. No wonder the Nokia geek-guy is jealous.

Inside innocent part 2 - reasons to be careful

Yesterday I posted on the "reasons to be cheerful" after my trip to Fruit Towers to meet creative head honcho Dan, trying to bottle some of the innocent brand magic that he and the rest of the team have woven. Today I'm following up with some "reasons to be careful" regarding the brand's growth, and in particular the launch of This Water.

For any brand, its important to be clear on what is essential and what is optional when you grow, in particular in the area of brand extension. For innocent going forward, how do they do what Richard Reed calls "keeping the main thing the main thing"? And what is "the main thing"?

It was interesting to learn from Dan there they are looking at two main ways to grow, with separate teams looking at each of them.

Route 1: Warning! dangerous road ahead
The first route, led by Douglas, is looking at new types of HEALTHY DRINK, starting with This Water. This is the one that set my warning bells ringing, as I see it as moving away from what made the brand famous, and diverting attention from the core. After talking with Dan, I'm less concerned, though some questions remain.

First of all, you can't argue with the business opportunity. innocent, like Pepsi, Coke, Danone and every other food & drink company, are looking at the explosive growth in water. This Water is the first step to getting a share of this market. The idea would be to use this as a platform for launching other water-based drinks, such as vitamin-enhanced water and perhaps even a healthy energy drink.  And as innocent stands for "nothing but nothing but fruit", Juicy Water (c. 80% water) didn't really fit and even confused some people. So, rather than force it into the brand, the decision was taken to re-launch the product under the This Water brand.

Some questions remain:

i) My biggest concern with this is diverting management attention from the core. But Dan suggested that the amount of management time was clearly limited. Douglas and his team are like an internal start-up who have to beg, steal and borrow resources. This is OK for now, but care will be needed to ensure the "new toy" doesn't steal more than its fair share of money and time. But I still worry that overall this move takes the company as a whole away from its core in fruit. After all, the HQ is called Fruit Towers, not The Fruit and Water Tower. This is especially true if the brand moves beyond fruity-water into things like vitamin-enhanced water that is not fruit-based at all.

ii) Also, the water market has some formidable competition...as Virgin found in vodka and Axe/Lynx found in razors, you need to be ready for an expensive and painful bloody nose when you do this.

iii) Finally, the pack of This Water I bought has none of Dan's magical copy on it...its very mundane, and I couldn't find a single funny line. I hope the team are not following the daft suggestion from Wolf Ollins that they should "grow up...stop relying so heavily on a brand voice which speaks to a small group of consumers". Dan did say this was start, and it will evolve over time...I'm going to start collecting This Water packs to see if this happens Dan!

Route 2: Go, go, go
The second route, led by Rosie, is "sticking to the core" and looking at how to do more with FRUIT, which feels absolutely spot on. Its reassuring to hear that this is clearly where the focus is. Some of the many growth opportunities here include:
- The Smoothies for Kids have been more successful than planned, and there is lots more to do there
- New formats like the 1 litre tetra packs
- Starting to advertise for the first time to broaden awareness, with the investment paying back several times
- Geographic expansion
- New distribution, including, yes, selling in Mc Donald's

On the last one, I don't share the concerns expressed by other innocent fans about linking up with Mickey D's. It's a great business opportunity. And it helps parents have a healthier choice for their kids. I don't think it will have a negative impact on the brand at all.

All of the above ideas stick with smoothies, and I hope that innocent keep this focus for the next few years. I can also imagine the room full of mock-ups for other products Rosie must have (but I didn't see!).... sorbet, fruit lollies, fruit bars...the list is endless. But these would again divert attention from the core business.

The sell-out?
This was the other issue I raised in my original post. It does seem that the 3 founders (Richard, Adam and  Jon) are having a lot of fun, and doing alright in terms of houses/cars/cash. And they deserve every penny. Along with the original investors, they do still own c.80% of the company, and you worry that if the cheque from Coke was big enough, it would be hard to say "no". You can see the press release now "Coke take 30% share of innocent, providing valuable funding and distribution to help us take the innocent brand global, getting our message and product into the hands of more people". After all, Ben & Jerry's and Body Shop have done it.

But I do hope they hold out for few more years. Sell the company and its hard not sell your soul. And then, the brand is in danger of losing its magic. The good thing is that innocent do allow people to take a share of the company, and this is where the other 20% of the equity is.

My suggestion? One, get employee share ownership up as fast as possible, so that the people in the company have a say in the decision on selling out, and also benefit from any eventual sale. And second, why not invite innocent fans to buy a share of the company....not sure how. Perhaps you have to send in 100 proofs of purchase, or write a funny poem, or draw a picture. But you somehow make it a "family business" in a true sense.

Virgin: the worst or best of brand extension? (and win a free book)

I've been meaning to write this post for ages, so here we go. It draws on the research done for the brand stretch book (blatant plug: the only book in the whole wide world on brand extension). I'm offering a free copy of the book to the reader who is first to answer a Virgin brand trivia question at the bottom of the post.

Virgin is perhaps the most mis-understood and mis-used examples of brand extension ever. Make no mistakes, Sir Richard Branson has more balls, bravado and billions that I or anyone reading this will ever have. But when it comes to a case study in brand strategy, he's not the guy I'd use for inspiration.

Virgin is often portrayed as a 'philosophy' or 'lifestyle' brand that has successfully stretched into everything from life assurance to lingerie, unbound by banalities such as functional product performance. According to this theory, its the emotional values that ties together the 350 different disparate Virgin companies. So, people fly Virgin Atlantic because they buy into the philosophy of the brand challenging the big bully boys like BA.

This is, how can I put this politely? Sorry, I can't...its a load of old bollocks.

Firstly, the brand stretch performance of Virgin has been patchy. Virgin Atlantic is by far the biggest success, with its £1.9billion of turnover roughly 50% of the entire Virgin Group's sales. But as Professor Mark Ritson of London Business School commented in Marketing magazine, 'For every Virgin Atlantic there have been numerous failures such as Virgin Cola'.

Second, and most importantly, it aint the emotional 'sizzle' of lifestyle values that drove Virgin's success. The successful brand extensions all have a great product 'sausage', inspired by the Virgin personality of being irreverent and fun. You can see this in the Virgin brand values from the brand's website. Four of the six values are linked to product/service (innovation, brilliant customer service, quality and value for money), with the other two more about the sizzle (fun and competitively challenging). Of course the antics of Sir Richard have been a huge help in getting PR for the brand's extensions. But the long term success or failure of these extensions comes down to how good the product is.

Virgin Atlantic works because of the host of great service features they offer, such as a limmo service, amazing lounges, market-leading entertainment, on-board massages and so-on. But look at Virgin Vodka, Virgin Jeans and Virgin Cola and ask 'where's the sausage'? Where was the innovation? Would you ditch your Diesels for Virgin Jeans, or pour away you Absolut for Virgin Vodka? No. These products were examples of logo slapping the Virgin name onto me-too products. In the case of vodka and jeans, the brand lacked the credibility to compete in these markets. These are what I call 'brand ego trips', where the brand gets too big for its boots.

The other thing the sharp minded readers out there may have figured out is that there is another common feature of the successful Virgin brand extensions that differentiates them from the failures. What is it they have in common?

Prize of a free brand stretch book for the first correct answer posted below in the comments section (Monday e-mail readers, click on the title of this post to go to the site and add a comment).

Harley Davidson stars in extension chamber of horrors

Came across an absolute train crash of a brand extension on the brand express blog, who had brought to my attention a survey of best and worst brand extensions. This was done by the strange sounding US-consultancy Tipping Sprung (sounds like a bed repair company), who got 400 or so marketing execs to vote.

Top of the list of extension horrors was one that has to be up there with the worst of all time: the Harley Davidson Cake decorating kit. Yup, that's right. The hard-core, hairy biker brand for rebels stretching into cake decoration. My guess and hope is that this bit of brand vandalism is done by pirates who didn't have approval from the brand owner. Although they have launched the odd official extension that is also suspect, such as Destiny perfume for women.

Best overall extension was Iam's pet insurance, which sounds OK? Taking equity in pet-care, and using it to stretch into a new market where these attributes add value.

Stefan has gone to the trouble of finding the weblinks to the key extension losers and winners here. And if you want to download the full document, click on the link below. And feel free to comment on whether you agree or not with the winners and losers.

Download BrandExtensions.pdf

Sacre bleu! Should the Louvre stretch its brand?!

After months of rumour the French government has finally come clean about its plans for "stretching" the Louvre museum. It will "rent" the name, expertise and some of its treasures to a new museum being built in Abu Dhabi, the capital of the United Arab Emirates. In return, they will get the rather tasty sum of between $800 million to $1 billion.

This bit of brand stretching has created more than a bit of a fuss in France, with the New York Times reporting that over 2000 people have signed a petition accusing France of "selling its soul". The former director of Les Musees de France squealed that "One can only be shocked by the commercial use of masterpieces of our national heritage, cultural objects are not consumer good."

OK, so marketing the Mona Lisa isn't the same as promoting pasta sauce, but can't the same rules of consumer goods branding be applied? Firstly, the Louvre is sticking to its core business of museums, which is a good start. They're not trying to create a Louvre Art Holidays business, or sell Louvre art insurance (though why not). Second, the move makes huge business sense. There's the small matter of the billion dollars. And only 35 000 of the 300 000 works are on display at any one time. That makes 265 000 bits of "stock" sitting gathering dust. Finally, the museum is probably going to be pretty bloody amazing given the amount of money being thrown at it. The museum will be the centrepiece of a new district being created with $27 billion of investment.

Also, there are successful examples of museum brand stretching. The Guggenheim Museum has satellites in Venice, Berlin and Bilbao (on the right) and is also planning to get in on the Abu Dhabi action. More modestly, the Tate has regional outposts in Liverpool and Cornwall.

So, will the "Louvre of the Sands" go down in history as a great example of awakening, stretching and growing a dusty old brand? Or a case of stretching the brand elastic to breaking point?

iPhone announces the end of Apple Computer

Apple finally unveiled their iPhone this week in front of 4000 fervent fans at MacWorld. The event was more like a rock concert than a computer company presentation, with CEO Steve Jobs in the role of Robbie Williams. The iPhone created a frenzy of media coverage, with the mouth-watering photo on the front pages of many newspapers and a Google search bringing back 21 000 mentions. It does look like all the fuss may be justified: this is a truly remarkable bit of industrial engineering that combines amazing looks, functionality (phone+video iPod+web browser) and ease of use.

A less reported but nonetheless important bit of news was the formal changing of the company's name from Apple Computer to simply Apple. If we needed it, here was confirmation that Apple was no longer a computer company but rather a digital entertainment, creativity and communication company. So, what brand stretching lessons we can take out of this amazing transformation?

First and foremost, Apple's success dramatises the power of the product. Apple products are so cool they freeze your fingers off. But this coolness comes not from any attempt to be a lifestyle brand or emotionally-based communication. No, the coolness comes from the drop-dead gorgeous design of the physical product and the user interface. Isn't the real genius behind Apple's success not Jobs but rather head designer Jonathan Ive? No matter how much money Sony and Microsoft spend on their MP3 players, they'll never match the iPod in the coolness stakes as their products are not in the same league.

Second, it shows that as with the human body, the more you stretch your muscles, the more supple they become. Apple may have lacked the credibility to go straight from a computer to a mobile phone. But by moving into music players first, they created new brand associations to do with portability and music that mean the iPhone is now a more achievable stretch.

Third, Apple's success shows the power of an architecture based on simple naming not the use of the dreaded "sub-brand", maintaining a very coherent brand identity. Several key elements link the Apple brand and each extension. This creates a "virtuous circle" where the extension benefits from the brand, and the brand benefits from the extension:
- Unmistakable product design using white and chrome
- Use of the "i-" prefix: iPod, iLife, iMac, iTunes etc.
- Investment in Apple stores that allow the whole range to be presented together
- Launch of the the iTunes software and on-line store to create a link between the computers and the iPod

The only bad thing about the iPhone is the 8 month wait to get one for all the Apple-aholics out there. How will we survive so long without one?!