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April 17, 2006

Dell: A Brand in Flux?

For years, Dell has enjoyed one of the strongest brands on the market. Lately, however, the giant PC maker has been taking some real heat in a number of blogs and consumer affair sites. In fact, a quick browse of sites like My3cents.com, Ripoffreport.com, ConsumerAffairs.com and BuzzMachine.com will turn up multiple negative posts and comments from dissatisfied Dell customers. Not exactly what you would expect from a company with such a sterling reputation.

Dell executives say they're monitoring online complaints and taking steps to correct those issues. In particular, they've added more customer service centers and employees in an effort to better resolve customer complaints. These measures seem to paying off. In a recent article, Investor’s Business Daily cited internal Dell numbers that show a 35% year-over-year improvement in customer satisfaction and a 30% improvement in its ability to resolve problems the first time out.

Considering the fact that Dell surveys about 24,000 consumer customers a month, these numbers are worth noting. But I wonder if some of the steps Dell is currently taking might come back to bite their brand in the long run.

Great Out of the Blocks

I recently purchased a Dell computer online, and I have to say the experience was outstanding. In fact, Dell executed flawlessly.

I happened to be in the market for a new PC and saw a great price in one of Dell’s advertising circulars. I went to their web site and easily found the advertised box. I added a few extras (nothing like a little extra horsepower to jazz up a new PC!), placed my order and sat back to await delivery. Afterwards, Dell sent me several tracking e-mails to keep me apprised of my order’s status.

The computer arrived a couple days before promised -- a nice surprise. I whipped it out of the box and set it up in a matter of minutes. Everything worked fine and I began to install my own software. During the installation process, however, I hit a snag and my computer locked up. I called Dell, and in a matter of minutes they helped me resolve the problem.

I’m sure my experience is repeated thousands of times a day around the globe. After all, this is where Dell really shines. They do the acquisition and setup experience in less time, at a lower cost and with less hassle than any other personal computer company. That’s what Dell’s value proposition and brand promise are all about -- delivering a low-cost, customized PC to your door with minimal time and effort on your part.

Not So Great Down the Stretch

Although Dell has mastered the PC acquisition and setup experience, they have struggled to provide service well after the sale. And that’s where the Dell brand is taking a hit.

Dell built its reputation by providing quality PCs at a very low price -- a classic application of the lowest total cost value proposition. What Dell doesn’t provide is a true customer intimate solution or the best total solution. If a complicated problem arises several months after buying the computer, your problem-solving experience with Dell is likely to be very different (and far less satisfying) than the initial acquisition experience.

Until now, Dell has gotten by with this approach because their traditional customers, who tend to be experienced consumers of technology, don’t expect much service after the sale. However, Dell’s customer base is expanding, and that seems to be where many of the problems are coming from.

As Dell has achieved dominant market share and picked up more new customers, a growing number of them are first-time buyers or PC novices who require a great deal of hand-holding after the sale. If you read the posts on the customer affairs sites and blogs, you quickly get the idea that the majority of complaints are coming from technology newbies. Plus, as the absolute number of customers continues to increase, the number of mistakes on Dell’s part is bound to increase with them.

A Shift in Strategy

As a low-cost provider, Dell does not have the profit margins to provide comprehensive customer service. But that’s about to change.

Dell recently announced a spate of paid customer support options ranging from consumer services that mirror the comprehensive in-home services offered from Best Buy’s Geek Squad to comprehensive business services. The business services run the gamut from simple system set-ups to complex deployments that coordinate rollouts at multiple sites and meet tight customer deadlines. Looking ahead, it’s just a matter of time until Dell offers comprehensive IT outsourcing that mirrors similar service offerings from HP and IBM.

Why this shift in strategy? One, Dell is trying to protect its brand by offsetting a growing number of customer complaints. Two, and more important, they’re hoping to boost revenues by turning customer service from a cost into a profit center. To me, the most interesting aspect of all this is what it might do to the Dell brand.

Currently, Dell dominates the best total cost value proposition in the personal computer market. But some day their top line revenue growth will stall unless they do more -- hence their ventures into providing value-added services after the sale. My bet is that Dell will successfully navigate this shift and that customers will want the added services will pay for them. However, adding these services and becoming a services company may prove confusing to customers. Ultimately, it could confuse their brand.

Is Dell a best total cost or a best total solution company? Can they implement both value propositions without confusing customers and/or diluting the brand? For now, they remain firmly entrenched in the best total cost camp. But if their intentions are to migrate -- however slowly and tentatively -- toward a best total solution strategy, it should make for a very interesting journey. More important, it should teach us all some valuable lessons about the challenges involved in maintaining a #1 brand in a rapidly changing environment.

Posted by Rod Whitson at 12:55 PM | Permalink | Comments (0) | TrackBacks (0)

April 13, 2006

Let Your Best Brand Ambassadors Speak!

Guestblogged by Jennifer Crossen

As professional communicators, we are taught to control the message, limit the spokespeople to those trained and credible enough to deliver our carefully crafted corporate message.

But blogs have changed this.

While not for every company, blogs are an incredibly powerful communication tool when put in the hands of the rank and file. The leveraging of blogs for the PR department and executive suite should be reconsidered and instead, the value of empowering your hundreds or thousands of brand ambassadors to speak their minds and hearts about their lives and your work should be evaluated.

But what if they share all your secrets? Tell your customers how they really aren’t respected? What about controlling the message?

Your company culture will be a big determinant here: if your culture is closed and secretive, this will never work. But if you can stand to hear the good and the bad, within reason (more on this in a moment), the blogosphere and your customers, partners, investors, will be better for it. Because blogs are all about being real, transparent, accessible. Who has more of these qualities than your front line brand ambassadors? Especially when your company or value proposition is complex, these daily touchpoints for your brand can be the clarifying experience your potential or current customers need.

Microsoft is a good example. Once a secretive company thought to be the second coming of the evil empire, it has embraced blogging by its employees, in fact, has encouraged it. With limits (again, more on this in a moment), employees blog about their work, projects, and lives. They also do a fair amount of criticizing Microsoft or addressing criticism already out there about the company. This is OK. As a tool for engaging in a dialogue, blogging should address the good with the bad or you lose that transparency and credibility. You're quickly branded as PR party line and deemed irrelevant.

One thing you need to do before you send your employees on their way with links to www.blogger.com, is a little document that spells out what your company’s policy is about blogging, just to be clear, so that new product prototype doesn’t find its way onto the web before it should. Some good ones to review and possibly repurpose for your situation are Yahoo’s or Sun’s.

Some Microsoft blogs of interest:
Marketing and Recruting Blog
Robert Scoble’s blog
Mini-Microsoft

Jen Crossen is a Senior Account Executive at Townsend Inc. in San Diego. She is a seasoned PR professional who helps clients build their brands by using innovative brand-building ideas.

Posted by Jennifer Crossen at 10:24 AM | Permalink | Comments (0) | TrackBacks (0)

April 4, 2006

The Five Dominant Models of Branding

What’s the best branding strategy for your company?

The answer is, it depends.

The latest thinking in the field of branding (which first began to emerge as a true field of study back in the early ‘50s) identifies five branding strategies that reign supreme in today’s corporate world. Although each strategy can be successfully employed by companies offering very different products and services, they all seem to work best within fairly narrow parameters that pertain to the industry, product or service and market being served.

Choosing the best strategy for your company, then, depends on matching the parameters of your product/service and market to the appropriate model.

Keeping in mind that entire books have been written on the individual branding strategies, here’s a quick snapshot of each one:

1. Mind-Share Branding. Success in this category requires owning and consistently expressing a set of abstract associations that customers relate to the product or service. However, the perceived benefits of buying and using the products (i.e., consistently low price, great selection) are very real to the customers. As the company consistently expresses the “brand DNA” through each and every transaction, it becomes firmly entrenched in the customer’s mind as the only choice in this product category.

Interestingly, mind-share branding works equally well at opposite ends of the product spectrum. Functional and low-involvement product categories (such as Tide, Southwest Airlines and Wal*Mart) and complicated, high-involvement product categories (such as Dell computers) can both prosper under a mind-share brand strategy. At each end, however, the goal -- and primary benefit -- is to simplify the buying decision for the customer.

Good reads: Positioning: The Battle for Your Mind, Differentiate or Die and The Disciple of Market Leaders

2. Cultural Branding. Cultural branding is probably the most American of all branding strategies in that it uses cultural icons and “brand religion” to establish and sustain a brand myth with which individual consumers can passionately identify. The focus is not so much on the product or service as it is on the relationship between the cultural icon and the product and the brand myth that the consumer buys into. The most successful brand myths address acute contradictions in society that touch people at a very deep level.

Culturally branded companies run the gamut from home décor, fashion and automobiles to food/beverages, entertainment/leisure and social movements. What kind of person responds to cultural branding? It’s the meek, mild-mannered accountant who buys the Harley Davidson hog in order to unleash his “inner self” on weekends. It’s the budding playground hoopster who just knows that he will never reach the NBA unless he wears Nike Air Jordans. It’s the thirsty consumer reaching for an ice-cold Coca Cola because “it’s the real thing.”

Good reads: How Brands Become Icons and The Culting of Brands

3. Emotional Branding. Want your customers to consider you a friend rather than just some faceless entity they buy from? Then aim for the emotional branding strategy. Here, the goal is to build deep interpersonal connections with each individual who interacts with the brand, so that you end up with a relationship partner rather than a customer.

Emotional brands have real personality. They are often expressed through a character or persona (Mickey Mouse, Ronald McDonald) that appeals to people of all ages. Emotional brands work best with services, retailers and specialty goods -- such as Disney and Starbucks -- where the company can tap into powerful emotions and create compelling experiences that evoke strong loyalty to the brand.

Good reads: Emotional Branding and The Experience Economy

4. Viral Branding. Thanks to plenty of media buzz, viral branding has rocketed to the top of the charts as the latest brand strategy of choice. However, the fact that the media has embraced it does not mean that all companies should. As the name implies, viral branding works by spreading the word through “brand viruses” such as influential spokespeople, early adopter customers and other forms of grass-roots marketing. Accordingly, it achieves the best results with new fashions, new technologies and premium and super-premium brands that eschew mainstream markets.

Viral branding appeals to people who see themselves as cool, hip and fashionable. It attracts those who get a charge from “discovering” a new brand and leading the vanguard of early brand advocates. Who stands out in the viral branding category? Google, Hotmail, Absolut Vodka and Vonage are names that immediately come to mind.

Good reads: Tipping Point, Spreading the Idea Virus, The Anatomy of Buzz and The Influentials

5. Sensory Branding. Singapore Airlines and Kellogg’s Cornflakes in the same branding category? Hard to believe, but true. Sensory branding takes the focus off the product or service itself and puts it squarely on the sensory experience it creates for the consumer. Hence, this category includes a broad and a diverse range of products and services, from fashion, cosmetics and high-end retail to automotive and travel/hospitality.

Sensory branding goes beyond the ordinary to create a full connection with one’s environment through the senses. We’re talking full-on sensory engagement here! Not just with the over-stimulated senses of sight and sound, but also connecting with touch, taste and smell. In some categories, the buying experience (how, when and where the product is purchased) helps to create the brand. Here the brand doesn’t really begin until customers actually use the product or service. The end result is an experience so full, rich and satisfying that customers refuse to consider any other brand.

Good read: Brand Sense

Choosing Your Branding Strategy

As an avid student and practitioner of branding, my experience is that all strong brands can usually be linked to a clear focus on one of these models. However, while it’s usually best to focus your branding efforts on one model, aspects of the other models can be used to strengthen a brand.

For example, the mind-share model of branding tends to rely on the sight and sound senses. But it’s fairly easy to add a distinctive touch or smell from the sensory model to strengthen the brand.

Regardless of which strategy you choose, building a strong brand depends upon applying the appropriate model to your product category, the unique circumstances of your customers and your market. I hope I’ve given you at least a good start in identifying which model is right for you.

Posted by Rod Whitson at 4:29 PM | Permalink | Comments (1) | TrackBacks (0)

April 1, 2006

Be Like Intel: Sandisk's Journey From Commodity to Recognized Consumer Brand

Technology companies often want to emulate Intel’s success in moving from a hidden ingredient inside personal computers to a brand that consumers recognize, value, prefer and pay a premium for. For most, however, that journey represents a task much easier said than done.

On the surface, the Intel Inside campaign looks like a simple stroke of genius. Shell out a few million bucks for some well-placed television commercials, and in no time consumers will be insisting that your customers put your name on the outside of their product, right? If only it were that easy. What most people fail to realize is that the remarkable success of the Intel Inside campaign -- or any campaign that seeks to turn a commodity into a recognizable consumer brand -- rests on two very important principles.

First, it requires the financial resources to support a lengthy consumer-oriented campaign. You don’t create a brand name overnight. Second, and more important, it requires a dimension of value that end-user consumers actually perceive as important. Without both of these elements, branding campaigns won’t have enough muscle to convince consumers to demand your product above all others.

Let’s address the money issue first. At last count, Intel spends about a $1 billion a year in cooperative advertising with their major customers, such as Dell and HP. Add to that the $1 billion Intel’s customers spend and the total financial outlay to support the Intel Inside brand comes close to $2 billion a year. Or, as we say in the business, serious money.

In general, Intel matches every dollar its customers spend on advertising that mentions the Intel Inside brand. For example, those hundreds of millions of advertising circulars that Dell sends out each year? Intel absorbs about half their cost. In fact, every time you see the Intel Inside logo or hear the Intel Inside sonic brand, you know that Intel paid for about half of the marketing costs. This enormous financial commitment is one reason why the Intel brand stands out from the crowd and why technologists easily point to it as one of their favorite brands.

On the end-user benefit side, the key word here is “perception.” In this case, Intel has successfully convinced enough consumers that a computer with the Intel chip inside is the fastest available and therefore can handle any application they can throw at it. As a result, consumers perceive real value in the Intel brand, which is why the vast majority of PCs rolling of the assembly lines carry that well-known sticker on the outside: Intel Inside.

Likewise, any commodity product or ingredient technology that hopes to develop a powerful consumer brand must similarly convince the buying public that their product is so superior that consumers won’t accept anything less. And that’s exactly what a little-known company called SanDisk is trying to accomplish.

Will SanDisk Be the Next Intel?

A leading provider of flash memory -- the tiny wafers that store digital music, photos and videos -- SanDisk is one of the primary beneficiaries of the soaring demand for cell phones, digital music players, digital cameras and game consoles. Over the past three years, revenues for the Sunnyvale (CA)-based firm have surged an average of 70 percent a year. This year, they’re tracking an increase of 19 percent, for a total of $2.1 billion in sales. Not surprisingly, SanDisk’s stock has shot up 40 percent over the past 12 months.

Despite these glowing numbers, SanDisk faces a huge challenge. For the most part, memory is a commodity business, and prices can be harshly cyclical. Pricing wars frequently erupt overnight, and prices can take a nosedive almost as fast. During the summer of 2004, for example, flash memory prices plunged precipitously, causing SanDisk’s stock to drop 40 percent in four days.

To avoid ongoing pricing hiccups, SanDisk is striving to develop a strong brand that consumers will recognize and value. At the most basic level, this means convincing consumers to ask for a “SanDisk one-gigabyte card” for their digital camera rather than just any one-gigabyte card. Just as Intel has convinced personal computer buyers to insist on Intel as the “chip of choice.”

From where I sit, it seems like SanDisk has the first part of the consumer technology branding formula right. They’re spending millions on a worldwide advertising campaign that targets retail stores, magazines and even prime-time TV shows like The Simpsons and Survivor. In terms of sheer dollars, SanDisk isn’t shelling out as much hard cash as Intel, but it probably doesn’t have to. If fact, most companies don’t need to spend nearly that much. They just have to commit enough financial resources to garner the attention of consumers.

SanDisk also seems to have the second part of the formula well underway by working hard to distinguish itself through technology that delivers real consumer benefits. Last year alone, SanDisk increased R&D spending by a hefty 48 percent to $125 million. The result has been a string of innovations -- waterproof memory cards, titanium cards, and secure memory cards with embedded fingerprint readers -- that have captured the attention of consumers because they offer compelling value.

SanDisk is also working with wireless carriers to help protect consumers from fraud and identity theft. When faced with a lost or stolen cell phone, consumers can contact the carrier to remotely disable the card and keep sensitive personal data safe. SanDisk has even successfully offered new products in the gadget business. Last August, for example, the company introduced an MP3 player that quickly raced to first place in the category, only to be knocked off by Apple when it introduced the iPod Shuffle.

Does SanDisk have what it takes to make the leap from anonymous commodity provider to a recognized consumer brand like Intel? Only time will tell. In the meantime, I plan to follow them closely to see how their branding campaign continues to unfold and, more important, how the market responds. As someone who lives and breathes technology branding, I believe we can all learn a great deal from SanDisk’s ongoing branding efforts.

Posted by Rod Whitson at 7:06 PM | Permalink | Comments (0) | TrackBacks (0)

Ten New Ways to Create Value Using Technology

While scanning my regular reading material this month, I came across an excellent special report in the August 8th edition of BusinessWeek Online. Called the “CEO Guide to Technology,” the report identifies 10 new technologies that I believe should be on the radar screen of every CEO and senior executive. Why? Because they represent new ways to create value and solve problems.

Let’s get real for a minute. Far too often, those of us in technology industries get caught up in the glitz and glamour of the products themselves without regard for whether a market for those products really exists. For most “techies,” the thrill of the race lies in seeing who can produce the next new gadget or add the most innovative gizmos to existing ones. But when you get down to it, business -- in any industry -- is all about solving problems and creating value. If a product doesn’t do one or the other, it doesn’t matter how many bells and whistles you attach to it. The buying public will turn a cold shoulder and the product will die a lonely death in the graveyard of “great” ideas.

http://www.businessweek.comBut enough of my sermonizing. Here are 10 new technologies that I predict will add value to and/or solve problems for a lot of folks.

1. Uber-Personal Assistant. Wouldn't it be great to have a personal secretary that could anticipate your information needs? Tech powerhouse IBM is currently developing a software called the Uber-Personal Assistant (UPA). Souped up with artificial intelligence, the UPA will analyze your schedule, e-mails and the text you're typing to figure out exactly what you're working on. It will then help you with your research by looking through all the documents stored on your computer and scouring the Web to come up with the figures you need. Plus, it will alert you to any new e-mails that pertain to your project. It might be a few years before the technology becomes commercially available, but you can get a taste of it on inventor Ray Kurzweil's artificial intelligence site, KurzweilAI.net. Just turn on the chat mode and have a nice talk with Ramona.

2. Next-Generation Collaboration. E-mail has become the most commonly used collaboration tool, but anyone who uses it for shared work knows that it’s not really up to the task. Both Microsoft and IBM are investing heavily in the next generation of collaboration tools to usher in the next wave of technology-driven productivity increases. IBM may have the lead by offering a next-generation collaboration system that will allow people to communicate through the desktop computer or a wireless device with the click of a button. This software will allow you to not only contact the people you know, but also employees within your organization whom you don't know. You’ll be able to find expert resources inside your organization and link them into your dialog. Imagine that -- finally being able to connect with all the resources in your organization!

3. Podcasting. Steven Jobs has said that once people learn how to manipulate a new tool, the number of new uses is almost limitless. That appears to be the case with iPods. Recently, a number of companies have started using Apple's iPod music players to help spread the word. For example, Herbalife, the maker of weight-management and nutritional supplements, has given out more than one million iPods to distributors so far this year. This “Podcasting” promotion has increased Herbalife’s sales by 15 percent through the end of the March quarter. As a result, the company is now looking for ways to make its communications more effective by expanding the use of iPods.

4. Seamless Wireless. I don’t know about you, but when I travel I hate having to lug along all the electronic devices I need to stay connected. Not to mention all the power cords, chargers, headphones and accessories required to make those devices work. Fortunately, the days of packing all of these devices and their accessories are short-numbered. The next generation of smart phones just hitting the market will allow users to access e-mail, surf the Web at super-fast speeds, download and view PowerPoint presentations and watch video. More important, they will use various types of wireless networks to establish Net connections.

Verizon Wireless has offered Samsung's SCH-i730, costing $600 with a two-year plan, since June. The gadget lets users browse the Web via Verizon's new high-speed network. It also has Wi-Fi connectivity, allowing customers to make cheap calls whenever that network is available. Many wireless carriers are already developing services geared to such multitasking devices.

5. TiVoToGo. People who travel a lot seem to watch as much video on their notebooks as they do their TV. But if you’re a TiVo subscriber, it doesn’t do you much good on the road… until now. A new special feature lets you move all your favorite business news shows and The Apprentice episodes from your TiVo digital video recorder onto your laptop before leaving the house. As a result, you can now watch your favorite shows on a flight or in a hotel. Just download the free software off TiVo's site onto your laptop. But TiVo is expanding is services for the frequent traveler beyond that. You can load your favorite shows onto Windows Mobile-based smart phones and Pocket PCs as well. Plus, TiVo plans to further expand their services into hotel chains in the coming months. Meetings, and life on the road, will never be the same.

6. Mesh Networks. How do you get information quickly from devices in remote or hard-to-reach locations? Try “mesh” networks that use sensors to pass information wirelessly from one point to the next. Corporations can use these rapid-fire information networks to find out if equipment is overheating, or if a manufacturing line is starting to malfunction before these problems cause costly disruptions. Lower-bandwidth mesh networks (which, amazingly, require only one AA battery every five years), can also help increase buildings' energy efficiency. For instance, by turning off the lights when there's enough daylight. And unlike today's wired-sensor networks, mesh networks can be installed within hours, not weeks, so they can cut installation costs by up to four hundred percent.

7. Radio Frequency Identification (RFID). There’s a new kid in town. Thanks to successful trials at big retailers like Wal-Mart, our long-time inventory management friends -- bar codes -- may soon be replaced by RFID tags. Like their predecessor, RFID tags can be scanned at warehouses and stores. What makes them different and better is the accompanying intelligence software that enables companies to share their RFID data. It used to take companies days to communications breakdowns and take corrective actions. With RFID tags, it should only take a matter of minutes.

8. Business Activity Monitoring (BAM) Software. Catchy acronym, no? Analysts believe this next generation of business-intelligence software will become an indispensable tool. The software -- which provides a dashboard of critical business indicators such as up-to-the-minute product sales, units manufactured and even power outages -- allows businesses to take quick corrective action and prevent costly failures. For example, the power company might be able to dispatch a service truck to your house to restore power before you even have the chance to call. Or a company might reship damaged merchandise before an important deadline is missed.

9. Real-Time Identity Theft Notification. Quick awareness of identity fraud is the key to minimizing cost and damage. A Bellevue (Wash.)-based startup, called Intelius, has launched one of the world's first real-time theft-notification services. The software keeps track of a person's public records, such as credit-card information and car registration. If someone attempts to change personal information on any of these records (identity thieves often need to change your address to get a credit card or driver's license in your name), you're notified with an e-mail or a short text message (SMS) to your cell phone.

10. Prediction Markets. This technology enables companies to tap the corporate betting pool. Research at the Massachusetts Institute of Technology and University of Iowa has shown that betting pools are actually efficient ways to predict an outcome. The idea is to assist executives in predicting a success or failure before it occurs. Here’s how the games work. Players attempt to grow virtual portfolios that, instead of a stock, might consist of a drug that needs to receive approval on time. As stocks trade up and down, the CEO can get a sense of what people with partial knowledge of the situation are thinking. As a result, "You can get better accuracy than when simply using polls," says Emile Servan-Schreiber, CEO of NewsFutures, which, along with rivals like The Foresight Exchange, helps companies set up this game.

There you have it. Ten new technologies that, according to Business Week Online, are reshaping our world. Interesting how they all have to do with knowledge/data management and/or transmission. Think there’s a message in there somewhere?

What’s on your radar screen for new and innovative products that actually add value? Let us know by posting a response here.

Posted by Rod Whitson at 12:00 AM | Permalink | Comments (0) | TrackBacks (0)