28 December 2009

Why Companies Keep It Under Wraps

A week ago, Fast Company carried a post from Peter Clarke's blog (http://www.fastcompany.com/tag/peter-clarke) about steeling ourselves on Christmas morning for the inevitable flare-ups of wrap rage: the heightened levels of frustration, anger and injury potential resulting from one's inability to open a package.

Wrap rage is triggered by retailers' need for products that self-merchandise without the fear of theft. Apparently US retailers suffer losses from pilferage of more than US$10 billion annually.

I'll leave you to read the post for yourself (it's informative and insightful, and well worth the time even though it's past Christmas); and limit my comments to the statistic that leapt off the page for me:
According to the 2009 Global Retail Theft Barometer, the majority of retail theft is carried out by store employees. 44% of all retail losses are the result of employee theft. 35% is attributed to shoplifting; 15% attributed to administrative error; and 4% to vendor fraud.

Not many service organizations are keen to track or report these numbers. Do you ever wonder why?

If companies don't take the time and make the effort to cascade their core brand values throughout the organization, if the company's leaders don't align individual goals to company objectives, if employees are not given a clear line of sight from their actions to the resultant impact on the company's top and bottom lines, how in the world can you expect employees to live and breathe the brand, to correctly interpret core brand values, to be loyal to the organization? Yet often line managers merely pay lip service to the intertwining of brand and business strategy. They think branding is fluffy, and don't have the time for anything that doesn't goose their numbers.

If your company isn't cranking up its brand internalization and employee engagement programs, don't be surprised if your inventory and brand equity walk out the door.

Big Pharma Is Sick

Some have blamed it on the tyranny of the quarter.

In the relentless bid to meet analyst expectations with each earnings announcement, pharmaceutical companies are pressured to pull out all the stops to goose their numbers.

Their resultant behaviour (collectively speaking) has often been appalling.

This month's issue of Bloomberg Markets (http://www.bloomberg.com/news/marketsmag/) carries a damning report on the state of Big Pharma, and the common practice in recent years of off-label marketing: promoting the use of drugs in ways that have not been approved by regulators.

Pfizer, in particular, is tainted. Already hammered with a US$430 million fine in 2004 for pushing doctors to prescribe the epilepsy drug Neurontin for unauthorized purposes, it was again hauled up for the same crime in September this year - for the off-label marketing of Bextra and other prescription drugs. This new felony generated the largest single criminal fine in US history -- $1.19 billion -- plus another $1 billion in civil penalties.

Incredibly, the rap sheet goes on: Eli Lilly, $1.42 billion. Serono, $704 million. Purdue Pharma, $634 million. Scherling-Plough, $435 million. Cephalon, $425 million.

The widespread off-label promotion of drugs for unapproved uses without adequate evidence that the medicines work has caused substantial harm and even death to some patients. But as large as the penalties are for Big Pharma's off-label transgressions, they are small compared to the drug companies' annual revenues. Indeed, some firms appear to regard them as just another cost of doing business -- in much the same way as certain animals periodically shed their skin, then move on with life.

As a regional marketer in two previous lives, I can imagine the tremendous performance pressures those responsible for off-label marketing must have experienced. As a detached commentator and future patient, I am outraged that these transgressions were allowed to happen.

By condoning if not instigating such behaviours, senior management at these companies have lost the moral authority they sorely need to inspire and lead their troops up the performance curve. They will find it harder to recruit and retain top talent. (Yes, it matters what company you put on your CV -- and the brand associations those names conjure.) And even though the consuming public tends not to look at the pharma company behind the drug, the investing public will consider the value assigned to the stock -- a figure that's bound to be affected by the values ascribed to the company.

Thankfully, while these firms zig, a few exceptions have chosen to zag. GlaxoSmithKline and Astro-Zeneca have so far side-stepped the current quagmire; and I must imagine there are other companies that have managed to stay on the straight and narrow. Disclosure: I worked on the GSK business for a portion of this year, so will admit to some degree of first-hand knowledge and bias. GSK had a problem in 2000 with a ghostwriting program for articles targeted at medical journals; but that's behind them, and their current leadership team has worked hard to embed integrity within its corporate culture.

Pharma companies depend on their intellectual property and patent pipeline for growth. A close study of the advanced development pipelines of the top 15 companies in 2008 delivers a forecast that by 2015, more than 2/3 of this cohort will be smaller in size. When blockbuster drugs lose their patent protection and become inexpensive generic options, the pressure to resort to off-label marketing and other forms of questionable behaviour can only increase.

It will take a strong brand with moral fibre to keep on the high road. We should stay tuned -- and healthy.

26 December 2009

The Disciplined Brand

Today, let's talk dolphins.

If you set out to develop a dolphin attraction, what would you do to build a brand and your business? You'd put up a slick show, and train your dolphins to do fancy tricks, right? You'd let your customers feed them, swim with them, pet them. You'd provide lifevests, snorkelling gear, and towels. You'd engineer lots of photo opportunities -- heck, even deploy a staff photographer and flog huge colour blow-ups that cost an arm and a leg.

Discovery Cove in Orlando, USA (http://www.discoverycove.com/) does almost all of this -- and puts together an amazing customer experience. My family visited a few years ago, and I gladly (well, kinda) paid more than $1,000 for the privilege. I didn't think I'd ever find another dolphin interaction experience to match it.

I was wrong.

Monkey Mia (http://www.monkeymia.com.au/site/) is the best-known attraction within the Shark Bay World Heritage Area in Western Australia and a 10-hour drive from Perth. Wild Indo-Pacific bottlenose dolphins have visited the beach there since the 1960s when Alice Watts first began feeding them from her boat, encouraging them to take fish from her hand. Later on Wilf Mason and his family lived at Monkey Mia for many years, enduring the hardships of a remote coastal lifestyle while managing a humble caravan and camping area which has developed into the Dolphin Resort of today.

Unlike commercial dolphin attractions the world over, Monkey Mia has a vigorously observed policy of "no touching the dolphins". (A dolphin's head contains a highly developed organ called the melon which is the source of its acute sense of echo-location. Imagine the magnified sensation of a hundred strangers' hands pawing your private parts every day, and you'll understand why this rule was instituted.) Visitors are allowed to stand no deeper than shin-deep in the water and wait for the dolphins to approach. No sunscreen is allowed on legs because it can irritate the dolphins' eyes. And when it's time for their feed, everyone is asked to move out of the water except for volunteers selected at random and supervised by Department of Conservation (DEC) officers.

Remember, these are wild, untrained dolphins. There's nothing to coerce them to come to the shallows of the beach at Monkey Mia. But come they do, of their own free will -- because a dedicated team has, over the years, worked hard to earn and keep their trust. (Brand stewards, take note: What are you doing to collaborate with your internal constituents to present an aligned brand story?) Four adult female dolphins and their offspring, spanning three generations, are fed up to three times each morning to lunchtime, with no more than 1/3 their daily intake of fish (this is to prevent them becoming dependent on handouts, and encourage them to continue hunting for their own food).

The dolphins' visits are amazingly reliable -- their attendance record is 99.6% over the past 10 years. Talk about a consistently delivered brand experience.

I was at Monkey Mia two weeks ago, and came away with a new-found respect for these intelligent animals -- not to mention heaps of admiration for the way the guardians of this amazing attraction have taken the firm and narrow contrarian path to develop their brand with tremendous discipline, working tirelessly every day of the year to care for the dolphins and convert visitors to brand ambassadors.

Two different business models on opposite sides of the globe. One a slick, well-run but commercialised customer experience. The other a more basic, more restricted yet more authentic interaction with dolphins. Each has its admirers. But the smaller attraction, I believe, is in sync with the global trends of simplicity and sustainability. The stewards of Monkey Mia instinctively understand that human beings tacitly seek to be part of something larger than ourselves. Interacting with dolphins in this way allows us to achieve a little of that.

Monkey Mia 1, Discovery Cove 0.

One Audience, Two Responses

How fast should a brand react when child safety is in the balance?

A couple of weeks back I'd blogged about Maclaren, and the fracas that started with its product recall in the USA on 9th November. A few days ago, the 23rd Dec edition of Singapore newspaper TODAY carried a report that the local distributor of Maclaren had (finally) contacted its 1,000 customers who had purchased the affected strollers to collect safety covers for the stroller hinges to prevent injury to stray fingers.

Is 44 days a reasonable time for a company to respond to a threat to its goodwill and reputation? (And we haven't even begun talking about customer safety.)

Consider this: Swedish furniture giant IKEA announced earlier this week (on 22 December) a global recall of 5,474 children's high chairs after IKEA received 11 reports of malfunctions of the locks securing the seat to the frame of the high chair. "As soon as we started to get the incident reports, we decided to stop selling the product," an IKEA spokesman said. The company is discontinuing the product and issuing a full refund to all purchasers of the Leopard high chair.

Two different companies, serving -- in this case -- one single customer segment. No prizes for guessing which one has earned my respect and trust.

06 December 2009

How Coherent Is Your Brand?

I was checking-in at the airport yesterday when I noticed this huge sign on an LCD screen along Row 7.

It's good advice, no doubt about that (I once almost missed my flight because my name was misspelt on my boarding pass). However, in doing passengers a service, a ground crew member did Singapore Airlines a disservice by amplifying an ironic, shoddy announcement to everyone and his blind father in 96-point type.

Consumers consider all contacts with a brand when forming their image of it ... whether it's a million-dollar TV commercial, customer event, online banner ad, or a visit by a sales rep. Whenever you touch a coherent brand -- as a customer, shareholder, employee, supplier, business partner, or just someone who's noticed the brand before -- it should feel the same. Otherwise the mythology, the brand story breaks. And when that happens, the magic spell is broken. You're going to have to work that much harder to earn back that trust, to win back respect.

Thankfully, SIA did just about enough on the flight down under to do precisely that.

Short post today -- I'm on vacation!

05 December 2009

Brands With A Social Problem

I've been asked by some friends to count down 2009 with them and usher in the new year with a tipple or two. But somehow I don't feel in the mood for bubbly or sparkling conversation. Maybe the years are catching up with me. I've noticed that as we age, we tend to move in ever-smaller circles, maintaining fewer (but hopefully deeper) ties with a select group of buddies with whom we're comfortable.

Brands face the other end of this social problem. By this, I mean that as consumers get on in years, they are less open to trying out new brands. It's just human nature. We become set in our ways, and hunker down with our proven repertoire of so-called 'gateway' brands that have earned our trust to fulfil several related needs: a financial brand, an entertainment brand, a food brand, a transportation brand, and so on. That's why brand marketers scramble to get aboard this golden brandwagon for a greater lifetime share of customer wallet ... before everything is cast in stone and the 'choice' key is thrown away.

This is perhaps the biggest reason why brand stewards should plunge courageously into social media marketing -- to make themselves accessible to and engage with consumers on their own terms, through communication platforms they use, in the hope of earning an invitation into their homes and lives in time to come, before the game is over. Because consumers aren't going to be open to experimentation tomorrow as they are today.

Elvin Ong, a friend of mine and astute social media commentator, puts it eloquently in his Facebook note (http://www.facebook.com/#/note.php?note_id=141684857632): "If a brand finds it hard to break into a community now, think about how difficult it will be when communities break up into small, tighter groups made up of tightly-linked individuals with set views, lifestyle and buying habits." His note goes on to make a compelling case for why marketers should venture into social media campaigns -- notwithstanding the haziness around the most appropriate and effective metrics by which to measure success (or the lack thereof).

Irresponsible advice? Well, you're entitled to your opinion. I just think that we all have to start somewhere. No one knew how to get to the moon until President Kennedy pulled the trigger and plonked some money on the table. Caution is commendable -- but only to a point. Make sure you don't hang back until the train leaves the station, and there's no one left to befriend.

To paraphrase the SAS: Who dares, wins.

04 December 2009

Brands Behaving Badly

If you have young children, chances are the Maclaren scandal would have been brought to your attention recently. No, we're not talking about fast cars here, but furious parents outraged at reports of Maclaren strollers being responsible for fingertip laceration or amputation in the USA. In 8 cases over the past two years (and 15 such reported incidents over a 10-year period), children's fingertips were lacerated or amputated when they got caught in the pushchairs' hinges. The 42-year-old British brand's response has been revealing.

Maclaren had planned to announce a product recall on Tuesday Nov 10th, but the news leaked over the weekend of Nov 7th-8th, so concerned parents jammed Maclaren's consumer hotline -- which was not set up to take those calls -- on the Monday, effectively short-circuiting any hope
Maclaren might have harboured to conduct a low-key, orderly recall. The company scrambled to issue their recall announcement by the end of that day, affecting about 1 million strollers that had been sold nationwide over the past 10 years.

Significantly, the company chose not to recall affected strollers in its home base of Britain -- perhaps because there have been fewer reported cases of injury across the pond. (The company's website lists 53 markets in which it does business -- should the rest of us take comfort in Maclaren's tacit message: that our kids are less reckless and we are less litigious than the Americans?) Instead, it merely issued safety warnings -- only to amend this policy a week later to offer hinge covers to any customer who requested them, after being inundated with protests closer to home.

What can we learn from this sorry sequence of events? Can the brand's reputation for quality survive this very public smear?

First, be prepared. Conduct disaster planning and run the drills annually at the very least. We can hope for the best -- but should plan for the worst.

Second, don't discriminate. Maclaren inexplicably seemed to be treating American children's fingertips as more precious than those of children in the UK and other countries. It failed to remember that in the Internet Age, a local problem can easily become a global one.

Third, remember that some things just won't stay quiet. In a TIME magazine article on the unfolding saga (http://news.yahoo.com/s/time/20091110/us_time/08599193700300), Pete Blackshaw, a brand consultant for Nielsen Online, states that "anything relative to child safety tends to be off-the-charts viral". New mothers are more likely to use social media and start blogs than other consumer segments. The search term "Maclaren fingertip amputation" has pulled more than 5,000 results on Google.

Other brands have misbehaved -- to their detriment -- in the past. In 2000, Ford Explorers and the Firestone tyres mounted on them came under fire for hundreds of deaths and injuries caused by tyre blowouts while on the road. Ford and Firestone executives bickered publicly while a wave of negative publicity mounted against both brands on the Web. Ford finally ended up recalling 13 million tyres at a cost of US$3 billion.

In 2004 an Internet posting reported that Kryptonite bicycle locks -- a long-standing market leader -- could be opened with a Bic ballpoint pen. Other postings quickly surfaced with similar tales. The company totally ignored the blogosphere before issuing a statement after five interminable days -- stubbornly contending that Kryptonite locks were completely theft-deterrent. The final outcome: A recall of the locks which cost the company US$10 million (nearly half its annual revenue).

Thankfully, some brands are better-behaved. In 2007 a freak snowstorm hit New York's JFK airport on a winter's day. Over 1,000 flights were cancelled. JetBlue, the fledgling entrepreneurial airline, suffered a startling breakdown, and took nearly a week to get its services back to normal. The difference here? CEO David Neeleman handled the crisis with authenticity and humility. He accepted responsibility for bad decisions and overwhelmed departments. He said he'd fix the problems and promised refunds and credits for angry passengers. He apologized repeatedly on his company's website, in his blog, on TV and in print. Despite the collosal Valentine's Day meltdown, a consumer poll conducted a month later revealed that 43% preferred JetBlue, the most for any airline.

A brand's story and mythology are fundamental building-blocks of how the brand is built over time. Brand stories help to articulate the persona and identity of the brand, and define the role and behaviour you can expect from it. Storytelling conceptualizes a strategic message in a far more emotive and engaging way than a press release could ever hope to accomplish. Maclaren's website speaks of the renowned features of all Maclaren strollers (or "buggys" as the Brits would say): from "the lightweight frame, durable fabric and one-hand fold, to the above-industry standard safety features".... but its current misadventures are shredding that hard-earned credibility. Negative stories can't always be avoided. However, it is not what happens to you, but how you react to it that matters.

David Neeleman and JetBlue understand that intimately. It remains to be seen if Maclaren will recover sufficiently to make some belatedly wise moves as this saga is played to its conclusion. All may not be forgotten ... but perhaps it can be forgiven.