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Sears selling Craftsman tools at Ace stores: How screwed up is that?

Thu, 11 Mar 2010 13:52:00 -0800

Image courtesy of tedmurphy (flickr); permission being requested.

A couple of years ago, Edward Lampert, chairman of Sears Holdings, signaled his intention to sell Sears' proprietary brands such as Diehard, Craftsman and Kenmore through other retail outlets. Now Sears has announced a series of deals bringing his plan to life:

DieHard: Accessories will be sold by retailers in the United States, Puerto Rico, and Mexico. (Batteries not included!)
Sears Auto Centers: Will be offered as a franchise opportunity to car dealers.
Craftsman tools: 10 percent of the tools will be sold through Ace Hardware in all 4,500 stores beginning this June.

Back when this idea first surfaced, I offered a very balanced list of "pros" and "cons." Let me be unbalanced this time around: This is a bad idea that will hasten the demise of Sears retail stores. At a time when most other retailers are investing in their private label brands to create unique customer experiences to help differentiate themselves, Sears is trading away its strongest brand assets. While zagging while everyone else is zigging can sometimes be the right thing to do, this is not one of those times.

In an interview with Marketing News Exclusives, Guenther Trieb, the Sears SVP in charge of this initiative is quoted as saying:

“The fact is, unfortunately, not 100 percent of Americans shop at Sears. We want to reach those customers who do not come to our stores, who prefer to shop elsewhere. … Once we grow the customer base, there’s a much better chance some of those customers will go find [a greater] selection at Sears of Craftsman and DieHard [products].”

Alternative interpretation: Customers who've been schlepping to Sears because that's the only place to get Craftsman tools, DieHard batteries, Kenmore appliances, etc. won't have to go there anymore.

There is one scenario where this strategy makes sense: If the company's planning to shutter most/all of its stores. Then it would clearly be important to give these brands the opportunity to thrive elsewhere. Is that where this is headed?

From Brand Mix

Great brands of tomorrow

Wed, 10 Mar 2010 13:52:00 -0800

Image courtesy of Credit Suisse's "Great Brands of Tomorrow."

The Credit Suisse report on the 27 great brands of tomorrow (11mb pdf!) starts off with a strong argument for the power of brand investing:

"An underappreciated investment thesis. There are few true competitive advantages in modern industry: scale, proprietary technology, monopolies, and network externalities come to mind. We believe brand is an equally powerful and even more sustainable advantage, but one often ignored by financial markets owing to its intangible nature. Our research indicates that companies focused on brand building consistently generate outsized long-term growth, profitability, and returns. An equal-weighted stock index of companies that spend at least 2 percent of sales on marketing outperformed the S&P 500 by more than 400 basis points annually since 1997; the top quintile of these companies outperformed the market by an amazing 17 percent per year."

Now that's what I'm talking about! Credit Suisse admits that its use of marketing spend as a proxy to identify brand-oriented companies is "overly simplistic." Pretty amazing that even this crude measure works as well as it does.

Credit Suisse's report picks its 27 elite brands of tomorrow based on a deeper analysis of their potential. Most of the picks are brands that are "transforming," making the leap from niche/emerging players into powerful mainstream brands. Brands like Trader Joe's and Hyundai. These are brands that offer investors attractive returns and some risk, but not as much as early-stage brands that may never make it over the hump once the initial rush of growth and enthusiasm is over. Only two early stage brands make the list: Facebook and Comac, a Chinese aircraft start-up.

The 27 brands distinguish themselves in one or more of what Credit Suisse believes to be three core sources of sustainable brand value creation. These are: aspiration, innovation, and scale, each one on its own capable of creating a great brand but even stronger in combination. The strongest brands of all manage to combine all three—McDonald's, Apple, and Disney for example.

A second filter that Credit Suisse uses to identify high potential brands is how they fare against a list of "must haves" versus "can't haves." Must haves include: authenticity, quality, and brand-centric corporate culture. Can't haves include: brand over-extension, short-sightedness, and alienation of core market. This list points to the need to make sure that business growth is achieved by leveraging brand strength rather than destroying it.

Overall, Credit Suisse is bullish on the outlook for brand investing. It thinks that brand investing works especially well coming out of a recession as consumers are less inclined to make purchase decisions based purely on price. It also believes that there are many brands from developing markets that are poised to breakout internationally in the next few years. The top 27 brands has many of these brands including: Taj Hotels and Mahindra from India, Li Ning from China, and BIM the Turkish discount food retailer.

From Brand Mix

New China Daily is black and blue but still red all over

Tue, 09 Mar 2010 13:52:00 -0800

Old look.

New look.

Images courtesy of Ray Ally, Landor Associates.

Last week the new look China Daily newspaper landed on my doorstep. Launched on 1 March to coincide with the opening of China’s National Peoples Congress in Beijing. The newspaper has made many new changes in editorial and content as well as implementing a bold new design.

China Daily is the official Chinese government English language newspaper and was launched in 1981. It has a circulation of over 300,000 and reaches 150 countries. The redesign makes a modern statement and refreshes the previous outdated and traditional image.

The most obvious feature is the new masthead. Replacing the old fashioned and crude serif font with a bolder, modern Futura sans serif font. The Chinese characters 中国日报 (Zhōngguó Rìbào), previously in red, have been reduced in size and play a secondary role beneath the English name. It reminds me a little of the Guardian, but that’s not a bad thing, as the redesigned Guardian did win the Newspaper Design of the Year in 2006.

A new font has been specially designed for the newspaper. It's based on a traditional typeface but was given a modern feel to improve readability. Interestingly the Times in London was the first newspaper to commission its own typeface back in 1931. Designed by Stanley Morison, the font Times New Roman became an industry standard for newspapers and books around the world.

The layout of information inside the China Daily has been given a cleaner look with more use of white space. This creates a more interesting and visually appealing page layout. Although this may sound theoretical to those not in the design industry, you can clearly see the difference when you compare the old design to the new one.

The new design looks good, is easier to read and is a huge improvement on the previous design. Although the new look brings China Daily into the 21^st century, it won’t win any awards for its design and layout. As it still has a long way to go before it can sit alongside the innovative designs of the world class, the Guardian or the New York Times.

Surprisingly, at the recent Society of Newspaper Design Awards in 2009, the world’s best designed newspapers were from Moscow, Athens Paço De Arcos, Mexico City, and Berlin. Take a look at the site and you’ll see how the best in the world do it. Combining modern design and layout with powerful visual photography and illustration to communicate a story’s message.

China Daily has come a long way, but as the saying goes: “Even the journey of a thousand miles begins with one small step.” I think the newspaper has made a giant leap into the future, but still has many steps to take in becoming a truly world class newspaper.

From X-RAY China

Oscars red carpet goes blue!

Tue, 09 Mar 2010 13:52:00 -0800

Image courtesy of Jack Bredenfoerder.

Blues rule!

In my recent blog post, "Paradise lost and found: a tropical color direction for spring and summer 2010," I predicted that we would see a flush of tropical color this spring with blues and turquoise leading the way. Sunday night's Academy Awards certainly showed that this direction is starting to bloom. While there was an absence of turquoise on the red carpet except for Robert Downey Jr's teal-turquoise tie and tinted glasses, Barbara Walters did wear a lovely turquoise gown for her special that kicked off the evening. Even without the support of turquoise, blues did rule the evening. When the camera would scan the audience there were pockets of International Klein Blue everywhere—especially in the front rows. The celebrity blues were worn by: Mo’Nique and Gabourey Sidibe in International Klein Blue, James Cameron and his wife sporting Avatar blue, Mariah Carey in a deep high chroma cobalt blue. Elizabeth Banks in a pastel gray blue. Maggie Gyllenhaal looked magnificent in her International Klein Blue and white print. Another print that stole the show was Rachel McAdams' soft watercolor print—even though it was multicolor it had an overall blue impression. It had joy and recovery written all over it!

In my October blog, "The economy's influence on 2010 color and trends," I talked about the importance of white that started a year ago with Mrs. Obama's white inaugural gown. Keeping this strong classic simplicity trend alive were: Meryl Streep and Amanda Seyfried in bright white, Diane Kruger in classic bright white with black accents, Sarah Jessica Parker in classic Chanel with a slight gold cast white with gray accents.

Hot accents!

The hottest accent of the evening was the glowing orange worn by a pregnant Paula Patton. Reds added to the fire with Penelope Cruz in ruby red, Vera Farmiga in rose red, and Sigourney Weaver in lipstick red. Lee Daniels added a warm, yellow glow. Sunset purples glowed in Molly Ringwald's royal purple gown and Zoe Saldana's sparkly white, Ombré lavender to deep purple frock was talked about by all. Christopher Plummer looked dashing in his deep plum jacket.

Pretty pinks and lavenders

A celebration of back-to-the-'60s femininity was expressed with soft pastel gowns—Queen Latifah wore a satiny soft rose lavender, Charlize Theron was in mauve, Jennifer Lopez and Anna Kendrick wear pretty in the pale pinks. Demi Moore appeared to be almost nude in her classic pastel flesh ruffles.

And the winner's wore ...

Sandra Bullock sparkled in her bright polished sterling silver—it stole the show and the Oscar from Meryl's bright white. Kathryn Bigelow definitely was dressed to join the ole boys club in her conservative gray satin. I think Paula Patton's orange and spectral opposite of blue would have made a more appropriate, "I have arrived!" statement for Kathryn.

Foursquare: Hit or miss?

Mon, 08 Mar 2010 13:52:00 -0800

Image courtesy of dpstyles™(flickr); permission being requested.

Is Foursquare going to be this year's Twitter? I have some resistance to trying the latest thing just for the fun of it and I signed up. Should you, too? And if you are a marketer, should you already be thinking about ways to use Foursquare to grow your business? Or can you afford to wait? Here are a few posts that talk about what Foursquare is and what it might become. (For those who have absolutely no idea what Foursquare is and want to find out, start here.)

1) "Foursquare: Phenomenon or Fad:" Mindshare
This report decides that the answer to the question about whether marketers need to start taking notice of Foursquare yet is "a resounding maybe." On the plus side, the report notes that Foursquare has become the favorite of opinion-leading blogs such as Mashable and TechCrunch. It's also come up with an ingenious game-based model for getting people to play/participate in these early days before it reaches the critical mass it needs to be really useful. We are all gluttons for points.

2) "Why Foursquare clowns around:" Thought Gadgets
Ben Kunz explores this game angle in a bit more depth. He notes a curious trend in social media: "Most of its tools start out as perceived toys, worthy of laughter, and then gradually migrate to the mainstream." It doesn't take long either. In the early days those using Facebook, Twitter, and now, Foursquare are laughed at. Then just a few months later, anyone not using these tools looks like they are out-of-touch. Ben says that the game-like mechanics of these new tools may seem silly but they are actually the engines that help grow the number of users and their activity levels.

3) "Are virtual worlds over?" Raph Koster
The game-like mechanics that Foursquare and other social media use are just one of the things that they have co-opted from virtual worlds. They've take so much, in fact, that perhaps there's no need for virtual worlds any more? Raph explores this question his readers volunteer a lot of opinion too.

4) "Foursquare, Baby, Foursquare:" TechCrunch
Foursquare has around 450,000 users and just passed the one check-in/second milestone. But it's not so big that you'd expect it to already have attracted attention from the likes of Condé Nast, Marc Jacobs, and the New York Times. But it has. The latest deal is even more surprising. Foursquare is now prominently featured at the Miracle Mile Shops attached to the Planet Hollywood hotel in Las Vegas in a deal worked out with the help of place-based social media site, LocaModa.

5) "Foursquare—Dodgeball On Steriods—Is Going To Be Huge:" Social Strategy & Design
Kudos to Karl Long. He predicted that Foursquare would be a breakout hit right from launch. His pick this year: Social calendar Plancast, "a service for sharing your upcoming plans with friends."

6) "Are Modern Web Apps Killjoys?" ReadWriteWeb
Is Foursquare making us enjoy life a little less? In this interview Adam Greenfield says he stopped using Foursquare because it made him less social. For a while, he enjoyed "checking-in" at places he visited. Then he found himself spending time on that versus actually enjoying the place and socializing with those around him. As the post points out, all technology can be anti-social and Foursquare is not nearly as bad in this regard as a cellphone or even a camera.

From Brand Mix

Incredible India

Mon, 08 Mar 2010 13:52:00 -0800

I just came back from a stay in Kerala, an amazing southern province of India that really lives up to the country’s promise: Incredible India!

Full of stunning colors and fantastic flavors, Kerala is a place where your senses are constantly engaged. But the most thrilling experience for me were the sounds of Kerala. A unique mix of babbling birds, whispering winds titillating the top of trees, and the chanting of faith from temples and mosques. It instantly brought me back to 25 years ago when I first visited Kerala. Memories flooded like happy monsoon rains, powerful and refreshing.

In our Western world we are overwhelmed by visual stimuli. As designers we have reached a great level of sophistication and are able to manage these visuals and create unique universes. How fantastic it would be to explore the parallel universe of sounds and add a subtle layer to branding and design. Let’s go beyond words and colors to create of new form of stories.

Lipstick on a Gallardo

Fri, 05 Mar 2010 13:52:00 -0800

I was fortunate enough to visit the Geneva Motor Show this week. From the exquisite Lamborghini Gallardo to the modest Skoda Fabia, the great and the good of the the auto industry gathered on the opening day to display and delight in their latest shiny creations.

And here's what struck me: when you stop to think about the amount of technology, innovation, and design that goes into each car, it seemed ironic and perverse that each manufacturer—without exception—conformed to the presentation standard of covering their beautiful creations with a floppy drape (cue drum-roll reveal) only then to drape a floppy model over their beautiful creation (and in many cases, it was the car that was the stunner).

Sure, this is a very evidently a man's category. And sure: This is the category vernacular. But lipstick is, well, just lipstick—right? And gratuitous has always been, well, just gratuitous—right? Sex sells when it's sexy. But when flesh is pressed awkwardly onto metal, looking distant and occasionally resentful, it serves only to detract from the very thing you came to admire (and believe me, I'm as fond of a looker as the next guy). But this had that curbside quality that seemed even more anachronistic under the overhead lights of this vast, impersonal shed, amidst a flurry of gray suits barking endlessly into their Blackberries.

It seems many categories have revolutionized themselves and their presentation to the world, especially those that make a virtue of technology and innovation. I wasn't so sure about this category in Geneva...

Celebrity ad contradictions: Julia, Jon, and Jeff

Thu, 04 Mar 2010 13:52:00 -0800

This is something I noticed while I was under the influence of watching Lost. This trio of ads all seemed to express celebrity contradictions of some kind or another. I'll leave it up to you to see if this post makes any more sense than Lost does.

1) Julia Louis-Dreyfus for Healthy Choice

Many/most celebrity endorsement ads fail because it's just not believable that the celebrity would use and enjoy the product. Remember pre-tree Tiger and his Buick spots? So, how to use a celebrity spokesperson like Julia Louis-Dreyfus to endorse Healthy Choice? The answer: Have her in the spots but don't have her endorse the product. That's unusual and a bit contradictory, right? I think that these ads, with great execution, get the balance between credibility and promotion just about right. It's a decided improvement over previous efforts. (The whole "spokesperson" series can be seen here.)

2) Jon Hamm for Xfinity

Do you want a celebrity for themselves or for the character they portray? This is not Jon Hamm speaking here. It's Don Draper and, as we all know, he's a real pro.

3) Jeff Bridges for Hyundai

Finally, there's the case of Jeff Bridges who has been the voice-over for recent Hyundai ads but will be temporarily replaced by other actors for the seven spots planned to air during the Oscars. He's not done anything wrong. In fact, it's the opposite. He's nominated for best actor in for his role in Crazy Heart and the show has rules against ads that feature celebrities running near segments of the program that feature those same stars.

From Brand Mix

The curse of the code share, or how to lose a loyalist in one easy flight

Wed, 03 Mar 2010 13:52:00 -0800

Once upon a time not so long ago I booked a flight on my “preferred” airline. The one that has spent 20 years and countless emails earning my loyalty and awarding me near-goddess status. The one that claims it will reward my 1.8 million miles with eternal recognition. My airline and I have a reciprocal relationship: I continue to fly and even have some affection for this old-style airline. I smile indulgently and forgive its foibles—old seats, bad food, broken lights, and grumpy gate agents—because it is my brand, my airline. Our relationship is long and enduring. Almost a marriage.

Back to the story. Only after clicking "purchase" did I notice that the flight number was suspiciously long: four digits. Egad. The dreaded code share. Oh well (I thought), the flight is labeled as my airline. The airline that promises me upgrades, lounges, texting when a flight is delayed, and recognition whenever I fly. So of course my brand will deliver on its promise regardless of whose plane it is, right? After all, it doesn’t matter which franchisee owns the Starwood property I am staying at, they still recognize my gold status and the benefits remain. My husband’s Ralph Lauren polo shirts are just as good when I buy them from Marshall’s as when I buy them at Nordstrom’s. A brand’s a brand.

Apparently that’s not the case with airlines. A brand promise just isn’t. When you encounter the curse of the code share apparently all brand bets are off. You can’t pick your seat, you can’t check in online, you can’t upgrade, you can’t use the lounge, and you can’t use your free drink coupons. Nada. All the things my airline brand offers me as a reward for loyalty don’t apply—even though I gave them my money on their website and booked a flight with their flight number and later talked to their customer service agent about a seat.

So here I sit in the back of the plane, in a middle seat, drinking warm ginger ale. It’s one thing to make the brand promise. It’s another to deliver it.

Beijing billionaires love luxury cars

Wed, 03 Mar 2010 13:52:00 -0800

Image courtesy of Ray Ally, Landor Associates.

What do Lamborghini, Bugatti, and Aston Martin have in common in China? Well, apart from being the most luxurious sports cars in the world, they have all recently opened new showrooms in Beijing. These premises on Jinbao Street are the largest flagships sites for the brands in Asia.

The obvious reason for opening in Beijing, are it’s the capital and political center of China. It is also a favorite destination for China’s rich to shop. More importantly it’s the home of the most number of super rich people in the country. According to the Hurun Report there are 8,800 billionaires (U.S. $15m) and 143,000 millionaires (U.S. $1.5m) in Beijing, most owning at least two to five luxury cars.

In the current global recession most car owners are looking for more economic and fuel efficient options, or are just not buying new cars. With sales down in the rest of the world, China is the opposite with booming car sales across the country. China’s wealthy elite are even trading up and looking for ever more exotic cars to buy.

Late last year I was interviewed by CNN on a story about one of Beijing’s most private clubs. An exclusive members only club for the sons of millionaires who race high performance cars around Beijing’s race tracks.

These members drive Lamborghinis, Ferraris, and Porsches but not just your bog standard range. Most of these cars are special edition or supercharged versions costing upwards of RMB 2m (U.S. $285,000) to RMB 3m (U.S. $428,000)

With all the world’s car brands looking to China for their growth, luxury car brands could be the most successful. China is now the number one or number two market for most car brands. Lamborghini sees China soon overtaking Italy, to become number two market behind the U.S. Last year they sold around 80 units in China out of global sales of 2,000.

The traffic in Beijing is getting worse, yet car ownership in the city is on the rise. With a population of 17.5 million there are currently over four million cars on its roads. Despite this number rising by 2,000 new cars everyday you won't see many of these luxury cars on the streets of Beijing.

Only last month a Bugatti Veyron was spotted in Shanghai. The other drivers on the road, gave it a wide berth for fear of bumping into it. So if you see a luxury performance car in China, it will more likely be stuck in traffic, rather than roaring down the street at super-fast speeds.

From X-RAY China