Burger King's descent into commoditization

Burger King, in a desperate move to increase market share, is planning to test a $1 double cheeseburger to compete with McDonald's, reports the Wall Street Journal.

It is interesting because McDonald's has managed to maintain their brand even though they offer deeply discounted items. Yet Burger King is damaging its brand by going the commodity route.

I remember when BK used the "broiled, not fried" strategy to great success. Why do they not make a move to distinguish themselves as a brand? Why stoop to price wars?

As always, it has to do with the pressures of Wall Street, which leads firms to focus on short-term profits rather than long-term growth strategies.

If I were in charge at BK, I would go back to the drawing board...perhaps offer "gourmet" burgers at regular price. Value for the money, but without destroying the brand.

Branding as war

In the classic book Marketing Warfare (1986), Jack Trout and Al Ries make the point that marketing is no longer just about serving customer needs better, because everyone is already doing that. Rather, marketing is about fighting the competition.

Key point:"To be successful today, a company must become competitor-oriented. It must look for weak points in the positions of its competitors and then launch marketing attacks against those weak points."

Also: "The true nature of marketing today involves the conflict between corporations, not the satisfying of human needs and wants."

Key principles of marketing warfare:
  1. The best defensive strategy is the courage to attack yourself, but only the market leader should consider playing defense.
  2. Always block strong competitive moves.
  3. Find a weakness in the leader's strength and attack at that point.
  4. Launch the attack on as narrow a front as possible.
These principles apply equally to branding as marketing, although we may not normally think so, because branding is so carefully about getting close to the customer. But yes, in general, you want to knock out the competition to your brand more than you need additional customer insights.

The other important point here is that in branding, unlike marketing, smaller companies have an innate advantage in that customers today are turned off by big box brands. The question is how do you go from being a popular small brand to a mainstream leader without turning people off.

Branding leaders

In "Building a Leadership Brand" (Harvard Business Review, July-August 2007), Dave Ulrich and Norm Smallwood say that companies should in effect brand their leadership styles. For example:
  • GE, which is known for “turning imaginative ideas into leading products and services,” is also known for having the type of manager who is “a strong conceptualist as well as a decisive thinker.”
  • Johnson & Johnson, which states that “our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services,” has the type of manager who is “known for being socially responsible….committed to building consumer trust, to product quality, and to safety.”

The authors state that “building a strong leadership brand requires that companies follow five principles.”

  • Do the basics of leadership development well: “First, they have to do the basics of leadership—like setting strategy and grooming talent—well.”
  • Be customer-focused: “Second, they must ensure that managers internalize external constituents’ high expectations of the firm.”
  • Evaluate leaders according to customer perceptions: “Third, they need to evaluate their leaders according to those external perspectives.”
  • Invest in additional leadership development: “Fourth, they must invest in broad-based leadership development that helps managers hone the skills needed to meet customer and investor expectations.”
  • Measure success: “And finally, they should track their success at building a leadership brand over the long term.”

The authors state that many companies are off the mark in their leadership development practices because they tend to focus too much on individualistic approaches and not enough on grooming leaders to stand for something specific in the eyes of “customers and investors.” The result? “Leadership practices are piecemeal and are seldom integrated with the firm’s brand.”

Also, oddly enough, focusing on individualistic development leads companies in the direction of a “competency model that identifies a set of generic traits—vision, direction, energy, and so on.” This is the difference between “leaders and leadership”—leaders are individuals, but leadership involves “the methods that secure the ongoing good of the firm.”

I agree that companies should brand their leadership styles, but think that it is difficult to measure whether they have ultimately succeeded. Perhaps the best proof is in the (qualitative) pudding—in asking employees what leaders stand for—whether they embody the brand or not. I say ask employees and not customers because it is employees who are daily in touch with the behavior of their leaders. Unfortunately, in this article, the employee perspective is overlooked.

One last point: I liked the Leadership Brand Assessment the authors provided, but am not sure I should reprint the whole thing here. It is worth reading the full article, if you can get it from the library or pay for it at HBR.org.

Why do people love to hate the Department of Homeland Security? 7 reasons and 10 brand "cures"

The Department of Homeland Security does a critical job protecting the United States. Why then if you look it up on the Internet, do you find what can only be described as an outpouring of contempt? Some examples:

  • Milcom Monitoring Post: "I said this when Congress shoved this insanity known as the Department of Homeland Security down the American taxpayers throats--"This will be one of the biggest waste of time, money, energy, manpower and skin in US Government history."
  • Kerfuffles: "If Americans were truly serious, they would elect a 100% brand new United States Congress and a new President who would drive a bulldozer through...the Department of Homeland Security (D.H.S.). "
  • Suzatlarge: "Our fine bureaucrats in the Department of Homeland Security [sic] would rather watch our country’s buildings burn down than let a single questionable person sneak across the border. On a firetruck. With flashing lights and sirens. Responding to a fire call. I wish I were making this up. This federal agency has gone beyond incompetence - into insanity."

It is hard to understand how things have deteriorated to this point, especially since DHS (at least in its earliest stages) was strongly devoted to branding. In "The Image of Security;
Homeland Chief Tom Ridge, Keeping Up His Appearances," The Washington Post (May 22, 2003) talks about how former Homeland Security Secretary Tom Ridge and his aides were preoccupied with image issues:

"Tom Ridge, 57, is talking a lot about "branding" these days....Nearly all politicians care about branding....But Ridge is the rare public official who uses the term. He is attuned to small details of his department's "visual brand." These include the creation of DHS logos, patches and signs."

"Ridge is selling the brand hard....He wants Americans to know he's doing more than just waiting. He wants to make the "respected brands" of the Homeland Security agencies (FEMA, Customs, Coast Guard) as powerful as the brands of the U.S. military (Army, Navy, Air Force)."

"From the outset, Ridge's staff worked strenuously to market him as a reassuring presence. 'When people see him, we want them to think, "My babies are safe,"' a top aide said shortly after Ridge started at the White House."

From my perspective, there are a number of issues at work here:

  1. The lingering effects of the Katrina disaster
  2. Resentment of President Bush and his policies
  3. Longstanding paranoia about the federal government "taking over" at the state and local level
  4. Fear of another 9/11...and the wish to deny that the nation is confronting a long-term terrorist crisis
  5. Fear/perception of corruption/incompetence at the Department of Homeland Security (the TV series "Jericho"); publicity over reported corruption, however minor
  6. The immigration crisis/Lou Dobbs' continuing series on CNN, "Broken Borders"
  7. The reluctance of agencies to aggressively brand themselves for fear of being labeled propagandists

What can Homeland Security do about this? Essentially, the agency has to treat its beleaguered reputation like a full-fledged crisis, and do the following:

  1. Engage with its critics point-by-point, at every opportunity and in every public forum, especially on blogs, which are so virulently anti-DHS
  2. Demonstrate to the American public the dedication of its employees to public service
  3. Show integration and cooperation among its component agencies--that the whole is greater than the sum of its parts
  4. Proclaim its accomplishments at every opportunity online and in person, via speaking opportunities at conferences and trade shows
  5. Make special efforts to publicize partnerships with state and local authorities
  6. Initiate a public education campaign about terrorism, its risk to our homeland, and how Homeland Security is planning to combat it
  7. Embed the media with its component agencies as they go about doing their jobs, and have the media report back on what they see--generally play up the successes of its component agencies
  8. Downplay the impact of politics on its operations and play up protective measures that have broad-based support
  9. Create a special publicity campaign for FEMA to demonstrate how it has grown since the Katrina debacle
  10. Initiate publicity around employee corruption--how it is identified and rooted out of the agency

The Department of Homeland Security is a vital government entity doing vital public service, but it needs the support of the public in order to really be effective. Following these brand measures would help.

The end of Starbucks, part II

In a previous post, I said that the Starbucks brand should be killed and resurrected because it is veering toward commoditization, as CEO Howard Schultz himself admitted in a widely leaked memo. Now the Wall Street Journal (weekend edition, Nov. 17-18) reports in "TV Campaign is Culture Shift for Starbucks" that the company is turning to national TV ads in the wake of slower sales. This goes against the brand wisdom espoused ten years ago by Schultz, as the Journal reports: Schultz wrote that "By its very nature, national advertising fuels fears about ubiquity."

The central problem facing the Starbucks brand is that it seeks to be everywhere and an out-of-the-way "third place" at the same time. This cannot be. Either the company embraces a niche strategy, or it tries to be everything to everyone, diluting its brand identity. Despite its protestations to the contrary, it is going the latter route. There should not be a Starbucks on every corner; they should not be selling breakfast sandwiches and music; and the staff should return to its former reputation for having coffee expertise, not just be anyone off the street that wants to get health benefits. And of course the company should not be on TV.

Little by little, the brand is dying...and all of us are watching.

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