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June 5, 2014#

Why Hasn’t GM’s Recall Eroded Sales?

Remarkably, GM’s sales rose 13% in May. Granted, total U.S. car sales were up 11%, with all major automotive companies enjoying significant growth. Still, given the massive on-going negative news concerning the death of 13 people driving GM cars, one has to wonder why is it that car buyers don’t appear to be factoring this into their purchase decision and bypassing GM cars altogether?   Does GM have a magical fortress around its brand?

According to industry analysts the major reason GM’s sales aren’t suffering is that consumers don’t associate the recall of GMs largely discontinued brands (Saturn) and models (Chevy) with the company’s new vehicles. In other words, Buick, GMC and Cadillac appear to be disassociated with the recall; so as separate brands they remain largely intact. The same goes for Chevy trucks, which appear to be viewed as a distant relative of the core Chevrolet brand, far enough removed to avoid be associated with the recall problem.

In addition to the protective benefits that come from cultivating separate and distinct brands underneath a parent umbrella, there’s another mitigating dynamic which has kept GM’s sales from being adversely affected despite the company’s lack of transparency and its failure to respond with corrective actions: namely, while they don’t like them, consumers have come to expect and accept recalls within the auto industry.   In 2010 when Toyota was dealing with it’s exploding cars many experts wondered if they’d survive the negative press fall-out. Not only did they survive, they thrived as a business and a brand.   GM will too.

September 29, 2009#

Starbucks Launches Instant Coffee–Via

If what I saw at my local Starbucks this morning is any indication, the company’s new instant coffee offering, Via, should do very well.  It was flying out of the store.

From a branding standpoint there are so many things that have been done right.  The name is simple and memorable and suggestive of something instant.  The packaging is unique and attractive, embodying the essential visual equities of the parent.    And the messaging is compelling:  “you won’t be able to tell the difference.”

Of course, the proof is in the pudding, or in this case, the coffee. 

So much has been written about what makes Starbucks a great brand that it’s hard to keep up with it all.  Or to know what to believe 

But as far as we’re concerned the essence of the Starbucks brand, and the key to winning its loyal customers, has everything do to with the coffee itself.    At the risk of stating the obvious, Starbucks is a coffee company.  Not an experience company, or a café, or a “Third Place” after home and work.   More than anything else, it simply makes a damn good cup of coffee.

So, in our estimation, here’s what it comes down to.  If Via is so good that you truly can’t tell the difference between it and what Starbuck’s serves you in store (as promised), then it should do well, even at the significantly premium price over other instant coffees.

Even though instant coffee has a more down market perception, because Starbucks is a premium, high end product, it can legitimately apply its high standards to lower end products.  We call this Brand Gravity. 

Of course, time will tell, but we’re betting that if Via delivers a taste experience that supports Starbucks promise of being the best coffee on the planet, then it should be well on its way to a prosperous future, and, importantly, reinforcing the parent brand rather than detracting from it. 

September 18, 2009#

A Rolls-Royce for the Rest of Us

The people at Rolls-Royce must have cringed when they saw the headline in the WSJ yesterday:

Roll-Royce Unveils its Economy Car

Of course, there’s nothing “economical” about their new car—at least not to mere mortals like you and me.

With its Continental line of luxury cars, Bentley (once part of RR before being sold off to VW) has demonstrated that there’s a sizable global market in between the astronomically high priced Rolls Royce ($380k +) and the simply outlandishly priced high end Porsche and Mercedes ($100k+). 

That’s where Rolls Royce is launching its new Ghost model, somewhere in the middle of ultra high-end luxury cars, for the modest price of just $245,000.  A bargin for any economy minded billionaire. 

Rolls is smartly taking a page from its new parent company’s (BMW) brand portfolio management page by now offering a lower cost model while carefully guarding against diminishing or tarnishing the sanctity of the RR brand. 

Our guess is that the Ghost will do well.   At $245k the Ghost is unlikely to look anything like a discount version of Rolls.  

In matters of branding, a high quality, high priced product with powerful brand image has a good chance of successfully line extending into lower-end products if it religiously retains the quality standards and brand equities that built the brand in the first place.  We call this Brand Gravity.  On the other hand, lower-end brands (i.e. cheaper, lower quality) will generally have difficulty convincing consumers it can move into the higher-end arena.   

 

September 2, 2009#

Minny Mouse to Wed Iron Man

Disney just acquired Marvel.  From a branding perspective, these are two very different companies and Disney would be well advised to keep them separate in the minds of the public. 

Disney is about providing wholesome fantasy and magical family entertainment.   Marvel has succeeded largely by appealing to young men’s desire for realism, grittiness and violence. 

Disney’s target focus is children and teens (along with their parents).  Marvel’s core audience, “fanboys,”  is largely comprised of young men in their teens, 20’s and 30’s, whose attraction to graphic comics stems precisely from their desire to reach beyond wholesome, plain vanilla, story telling.

To date, Disney has been smart about managing their portfolio of companies, ensuring that the Disney name, other than to investors, never be associated with properties that don’t mirror Disney’s finely honed brand image.  For example, Disney used to own Miramax, creator of arty, sometimes dark and violent, films, but wisely let them operate independently. 

Like other companies in its extended family, including Touchstone Pictures, ESPN and ABC, The Walt Disney Company should treat Marvel as a separate master brand, respecting its difference and unique form of magical entertainment.  Because you just know that Minny Mouse and Iron Man shouldn’t be sharing the same bed at night.