The Finch Post

Penn State in Philadelphia?

An energetic ad campaign for something called ‘Penn State in Philly’ received heavy run during March Madness (alas, more than the University’s perpetually disappointing men’s basketball team). This is a smart strategic move and, based on our experience, an extraordinary organizational achievement.

Penn State consists of 24 campuses across the Commonwealth. There is no physical Penn State undergraduate campus in the City of Philadelphia – the largest campus is several hours northwest of here. This campaign is actually a joint effort of several smaller, suburban campuses – including Great Valley, Brandywine and Abington.   

This initiative makes sense for a host of reasons, including:

• Despite some unwelcome recent headlines, Penn State casts a large shadow in this region – with engaged and successful alumni dotting the landscape. Promoting the idea of strength in Philadelphia can effectively galvanize key audiences, especially prospective students and eager alums, to explore and support the institution.

• It helps to defuse the perceptual issues faced by many state universities – that of a ‘main campus’ of high quality with a host of smaller satellite campuses of lesser appeal. In such a college-rich region, Penn State is missing an opportunity to acquire students who want to or must stay local if the perception is that only secondary (read: lower quality) campuses are nearby. Combining the marketing face of regional campuses conveys strength and focus.

• Prospective students and other key constituencies are seeking something to hold onto and buy into. To be able to say that the Penn State passion and excellence can be accessed in one’s backyard is far more emotionally powerful than these smaller campuses using their limited marketing resources to differentiate from one another (and all the other options).

In addition to the strategic merit of this approach, we can just imagine what it took to persuade campuses with stretched budgets and individual accountabilities to pool resources in this way. Our experience suggests that such campuses consider themselves (hopefully friendly) competitors on some level and this degree of coordination is obviously smart but exceedingly rare.

Simply look at the alphabet soup of regional economic development and tourism marketing agencies that may tentatively collaborate on some things but advance heterogeneous marketing campaigns (with reduced effectiveness thereby). Why would anybody look to build a brand by seeing the world through the eyes of the market when there are fiefdoms to protect and budgets to defend?

So kudos to Penn State in Philadelphia – the strategy is progressive, the creative approach is solid and the degree of organizational collaboration is (uniquely) enlightened. Now if they can only get the men’s basketball team on track… 

Ron Johnson: A Case Study in the Perils of Success

 

Much has been written about the incredibly quick rise and fall of Ron Johnson as CEO of J.C. Penney. Central to his failure was his decision to forego testing his sweeping changes in merchandising and pricing / promotional strategy in a sub-set of Penney’s stores to gauge consumer reaction prior to rolling them out chain-wide. 

Lesson #1: When you’re Apple, you are in the incredibly rare position of leading the market; meaning you have built so much equity with consumers that they will follow you wherever you take them. So, it’s less about appealing to the whims of customers and more about introducing experiences and products that they will likely accept and adopt based on their trust in the brand. And, if a brand like Apple does misstep, customers may be temporarily miffed; but they won’t stop buying.

J.C. Penney lives in the world of the 99% of brands who do not wield the power of an Apple. Consumers have many suitable alternatives and their relationship with the brand is based far more on price/value than emotional qualities. As such, as the company implemented change, consumers had no problem defecting with the result of 25% sales declines in the year in which the strategy was rolled out. 

Which brings us to lesson #2: Brands must beware putting their futures in the hands of leaders who succeeded in completely anomalous situations. Granted, Ron Johnson contributed mightily to Apple’s retail success; but the cult of Apple was already a reality, giving Ron a brand foundation (not to mention unlimited access to capital) on top of which to build the most productive retail concept on the planet. 

Ultimately, his success at Apple clouded his perception of how difficult it is to introduce change in the real world – how diligently a brand needs to understand customers and how delicately it needs to treat them in order to evolve towards a position of greater brand strength.  

The Truth about Rebranding

The concept of "rebranding" has become popular in a broader context than just the corporate world – in just the last several weeks, we have heard "rebranding" mentioned in connection with topics as diverse as the Republican Party, the NFL (on issues of violence), women in the workplace and the entire public education system.

Our sense is that the above uses of the word are meant to suggest a need to reframe existing ideas so these organizations or issues are better perceived by those who matter – voters, fans, etc. While these uses of "rebranding" are not necessarily wrong, our experience suggests that the broader the discussion of a concept, the less precise its meaning.

So let’s reorient our thinking around "rebranding" – what it is, why organizations do it and key considerations as one approaches such a project. At its most basic, "rebranding" is when an existing organization adopts a new brand approach (visual, conceptual or both).

There are three different types of rebranding:

• Cosmetic rebranding – when a new or evolved visual vocabulary is created to modernize the look and feel of a brand. Think of the recent American Airlines work or the many logos Pepsi has had through the years. The goal is generally to update the brand look, to provide a jolt of positive energy (for the team as well as the market) and/or to herald a particular milestone (in American’s case, preparing to yet again emerge from Chapter 11 and merge with USAirways).

• Strategic rebranding – when the core idea, function, status or business model of a company is changing and the brand needs to reflect this. Think about all that Domino’s Pizza has done in the past several years or where JC Penney currently is – two enduring brands seeking to reinvent themselves not just in how they communicate, but how they operate. Importantly, many strategic rebranding projects also include cosmetic rebranding (as with JCP) – but it goes much deeper than just look and feel. 

• "Newbranding" – the most stark of the three types, this is when a company goes through a strategic and cosmetic rebranding but also determines that an entirely new face and name of the company is required. This is generally done in situations where the marketplace is rapidly changing, there is strong negativity associated with the current brand or there is major new opportunity that the current framework doesn’t accommodate. Think of Bell Atlantic and GTE becoming Verizon or American Express Financial Advisors becoming Ameriprise Financial.

Now that we have internalized the types of rebranding, here are the top 3 things to consider when approaching a rebranding project:

1. Determine which type is required

The first step in thinking through rebranding is to determine which type of rebranding is required. The answer springs from the reasons why a company is considering this critical (and potentially expensive) step. Our experience suggests that most companies opt for cosmetic rebranding while many more need strategic rebranding – an updated logo or ad campaign will never fully address challenges that spring from a deeper set of needs.

2. The team is just as important as the external audience

Rebranding provides a great opportunity to reintroduce a company to its customers and prospects. Yet it is also a key moment to re-enroll the full team in the company’s purpose, assert brand consistency and tighten up the ways in which the organization communicates with one another as well as the outside world. An email from the CEO or a t-shirt with the new logo is not enough – the internal rebrand launch plan is absolutely critical, and we find that companies spend a small fraction of time on this compared to external marketing.

3. Consensus is important, but so is leadership

It makes sense to welcome a broad group of stakeholders into a rebranding process – via interviews, surveys, etc. This helps ensure insight is shared and that these audiences are invested in the process and outcome. Yet when it comes to the work itself, we recommend that small teams be empowered to drive the process. Rebranding (and all branding) is about simplicity and clarity and it is easy to detect an output that has been watered down by the compromise culture of committee consensus-building.

Rebranding is a rare, important process that should be done right or not at all. The investment of time, emotion and resources earns for a company a truly "newsworthy" moment and the right to tell a story to an engaged audience. Such a moment is not to be squandered.

Through the Looking Glass

After Google announced its fascinating (and invitingly creepy) Glass project, the Internet fluttered with the expected Terminator jokes and occasional YouTube parody – and the marketing world quietly took note. Here comes a transformational new gadget from arguably the world’s largest, most powerful real-time advertising company capable of reinventing, as they did with search, the way we interact with and access consumers throughout their everyday life patterns.

For those unfamiliar with the Glass project, Google has developed a hands-free “eyeglass” device that provides the wearer an "augmented reality" experience. Google Glass is a small metal and plastic frame supporting a uniquely squared glass focal piece (hence the “Glass”) positioned to sit slightly above the right eye. When worn, the viewer is presented with a Google-branded visual experience – with access to taking and posting photos and videos, running searches and accessing other forms of content.

Augmented reality is not really a new tool for marketers, but has been something of a clunky, odd shaped tool that hasn’t yet lived up to expectations. QR codes allow us to take viewers to designated online destinations with some effort, and location-based apps help us find a curated set of restaurants, shops and points of interest. But all of this has been transactional and a bit frivolous – never fundamentally embedded in the way consumers live.

The way the smartphone (and all it has wrought) revolutionized the consumer’s relationship with the Internet, Google’s Glass is the frontrunner to finally integrate augmented reality into the marketing mix – making it something useful and indispensible for consumers and marketers alike. We envision the race to leverage the power of Glass to become very intense, very fast.

But before we start going crazy in the marketing community with the top ten lists, predictions and recommended approaches, let’s first consider some of the exciting realities that true augmented reality will bring us:

• Real-time discounts and promotions in the blink of an eye – We’re already using mobile apps to alert us when we’re within reach of some great deals, but always-on augmented reality gives us a moment to “see” the deal without ever having to go through the trouble of taking our phones and tablets out of our pockets and bags. Retailers can highlight items within the real store environment. Imagine walking down the grocery aisle and the sale items glow red!

• Revolutionary customer service – Brands can become first-responders where they would usually not have access. For example, a malfunctioning ATM could summon your Bank of America virtual teller for a live chat.

• Try it before you buy it – High-involvement purchases and big-ticket items may be easier to choose with the advent of augmented reality. Forget being able to virtually try on clothes – how about being able to try on furniture?

• Making environments truly alive – Imagine approaching a clothing rack and being able to access the rich reservoir of content about an item simply by glancing at it. Burberry has brought a bit of this logic into its flagship retail stores, but the new method would be even more seamless.

Though it will likely be years before Google Glass or other augmented reality devices become ubiquitous parts of consumers’ lives, marketers would be remiss to wait to explore the potential these methods hold for connecting with consumers. This is the logical extension of some of the interactive aspects of the brand dialogue we have tried to achieve with social media, tablets, QR codes and other techniques. Up to this point, these interactions have always required a somewhat disjointed extra step – very soon that may not be the case.

 

Will USPS Apparel Deliver?

There will be no shortage of both humor and outrage about the announcement that the US Postal Service is launching a line of apparel. While jokes are always welcome, we can dial back the outrage – this is being done via a licensing arrangement, so the impact in terms of taxpayer dollars ought to be very modest. And the “crowding out” effect of the USPS marketing a product in competition with the private sector is not really an issue here.

So let’s evaluate the topic on the merits – what will it take for such a launch to be effective? As always, the answer depends on the objective. Brands license their trademarks (and all that comes along with them) for several key reasons:

• To drive revenue in a relatively riskless way (assuming the licensee is well managed) – a typical apparel/accessories licensing deal gives the licensee an opportunity for most of the upside and the licensee, in turn, bears responsibility for selling, marketing, production and inventory management.

Assuming the USPS didn’t get hornswoggled here, there is an opportunity for (modest) financial upside. Apparel royalty rates generally fall between 5%-12% of sales (with some categories higher or lower). The “Rain, Heat & Snow” line would have to become a huge business for the royalties to make a meaningful difference for an agency that has run billion dollar deficits since 2007 and has both increased prices and cut services.

For comparison’s sake, rugged Carhartt – with 123 years of history, wide distribution and its own retail and eCommerce businesses – does around $500 M per year. If the USPS apparel business became Carhartt overnight (no shot), they would still derive only ~ $50 M in annual royalties. Hey, every little bit helps, but this is clearly not a major gap-closer in the USPS operating budget.

• Beyond the financial opportunity, organizations also use licensing to expand the consumer definition of their brands. The USPS, with an apparel line self-described as innovative, may be attempting to associate the agency with progressive and practical design – likely a far cry from how the American consumer sees it today.

They may also be trying to contemporize the view of their employee base, romanticizing the letter carrier as the intrepid, reliable facilitator of important messages that make life better – no matter the weather. This is potentially worthwhile given the role of health and retirement benefits in the current financial challenges faced by the USPS and the need to remind the public of the role of the postal service.

For semi-public organizations such as the USPS, Amtrak, NPR or other subsidized entities, increased brand understanding on the part of the consumer may lead to the critical public opinion shifts required for success in the political process.

Let’s face it – the post office is struggling not for lack of style, but because people send far less mail than they used to and because the private sector has earned a large share of the commercial business for packages and special deliveries. An apparel business will not change that, nor will it come anywhere close to addressing the revenue shortfalls that will persist as these trends continue.

But – and a big “but,” given all that has to occur to make this line compelling and widely distributed – a successful line of work gear inspired by the USPS may have the effect of broadening and hardening support on the part of those in whose hands the future of the USPS depends – the American taxpayer.

So put us in the column of slightly confused but mildly interested. At the very least, this is a creative way for a government agency to consider its path forward. If this becomes a laughable curiosity or the latest kitsch for a small segment of studiously ironic Brooklyn hipsters, it will fail. If the product has unique stylistic and functional statements that earn consumer attention and dollars, the USPS may reap limited but meaningful benefits.