Ben Wise on Branding

Watching the world through the lens of the brand

Posts Tagged ‘brand

Amazon Devalues Their Brand

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After a lengthy battle with MacMillan, a big publisher, Amazon conceded to their demand to stop selling their e-book titles at the low price of $9.99. The specifics of their dispute are another matter, but the end result will surely hurt the brand of Amazon’s e-book reader, the Kindle.

From the consumer’s point of view, the reader is produced by Amazon and the book is produced by MacMillan. A classic fight between hardware and content. As has been seen in the past, the loser of the fight often becomes the producer of a commodity product while the winner can charge a price premium garnering high profits. Think of PCs – Microsoft was the big winner on content while the HP, Dell, IBM and others continue to duke it out over what has essentially become a commodity. By giving in to MacMillan, Amazon may have sent the Kindle down a similar path.

Will this happen to Amazon’s Kindle? There are arguments on both sides of the coin. Amazon not only produces and sells the hardware, but is the retailer of the content too. Even if the Kindle were to become a commodity product they would still benefit from increased adoption and sales of the e-books. While the Kindle brand would be diminished, Amazon would still benefit.

The second factor is the recent introduction of the iPad by Apple. Apple has maintained a differentiated computer/laptop product and could easily do so in the e-book space as well by leveraging their innovation capabilities. This could relegate the Kindle, along with all the other new e-book readers, to the commodity arena.

As proof of the diminished power of the Kindle brand, News Corp is already pushing for the same deal given to MacMillan. I’m sure they won’t be the last ones to do so.

What do you think? What does the future hold for the Kindle?

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Written by benwisebranding

February 4, 2010 at 4:49 pm

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How Does Your Brand Make Money?

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At first glance, this looks a bit of a silly question. The brand makes money by selling a product or service. But a closer analysis will give you a deeper understanding of what should drive your brand.

When I was doing my MBA, a marketing prof asked the class what Disney sells. Being a group of young keeners, we heard answers like ‘dreams’, ‘magic’, and ‘fun’. My favourite answer was ‘characters’.  With the benefit of a bit of research and data, the prof enlightened us. Most Disney movies will gross a few hundred million dollars in theatres. But over the lifetime of the brand of that movie, they will often clear a billion dollars in other merchandise. Disney movies are really just a conduit to selling merchandise so their brand needs to create such a strong emotion connection that consumers are compelled to buy the dolls and video games.

I came across another example from a friend who worked in sales at a CPG company. His first day on the job, his boss told him that his job wasn’t to sell their products on the shelves, but to get their products on to the end-caps and promo stands in grocery stores. This is where they made their money.

Understanding the source of a brand’s profit should dictate almost all of the strategic decisions that you make. This may seem a daunting task at first, but if you can nail this then the tactics should follow easily.

What do you think? How do your brand make money?

Written by benwisebranding

January 29, 2010 at 7:24 pm

Dealing With Toyota’s Crisis

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The halt in sales and production of 8 Toyota models, including the best-selling Camry and Corolla, will cost the company millions of dollars. Others have been forced to halt sales briefly for quality reasons, but the scale of Toyota’s troubles is unprecedented and will have an equally profound impact on their brand.

That being said, the level of reaction from Toyota might actually improve their brand. Think back to the scare that Johnson & Johnson had with Tylenol or the issues Maple Leaf Foods had with listeria. In both cases, giant recalls took place and the company suffered massive losses. But in both cases they proved to their consumers that safety is a top priority, potentially improving their brand.

Will this work out the same for Toyota? It is hard to say. I’m sure there are many more examples of recalls that didn’t have this silver lining. The list of faulty toys alone could fill a few pages. But watching Toyota navigate this issue should provide some great insight into how to handle these situations to minimize the damage to the brand.

What do you think? How will Toyota deal with the current crisis?

Written by benwisebranding

January 28, 2010 at 6:37 pm

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