Insight Categories: Brand Strategy

“The new JCPenney is an injustice to middle America. The stores look like they are going out of business. Their most notable product lines have vanished, and the walls, shelves, and racks are depleted, stark, and sterile. Survey your customers and respond to their feedback. The board of directors needs to wake up. New is less and the old is more!” —Kathy of Maryland on February 4, 2013

Poor Ron Johnson, CEO of JCPenney. He is getting his pay cut for not being able to transform the JCPenney brand from a lackluster player to a Target-like phenome. And it has not been for lack of trying. First, there were three new logos in three years, all met with a certain amount of indifference. There was a new brand statement: Every initiative we pursue will be guided by our core value to treat customers as we would like to be treated—fair and square. (One of the new logos is a square that clumsily alludes to Fair and Square.) There were the new stark interiors and new mobile checkout units instead of cash registers. And most importantly there was a new pricing strategy—the launch of the new Fair and Square deals—no sales, no haggling, no coupons, no weekend specials. Trouble is, that their customer base really liked shopping for sales, and really liked bargain hunting.

JCPenney has experimented with various different logos over the past several years.

By August 2012, according to Bloomberg Business, “Same-store traffic and sales fell dramatically for a second quarter, indicating—not surprisingly—that JCPenney ’s strategy misfired.” Ron Johnson’s answer was, “While we have work to do to educate the customer on our pricing strategy and to drive more traffic to our stores, we are confident in our vision to become America’s favorite store.” Well, it seems that loyal  JCPenney clients were not happy with the new changes. A selection of comments from Consumer Affairs show how angry their customer base is.

“Big CEO person, change it back! Your way is not working. Everybody I know who used to shop there complain about the selection and how much they hate it! We want our old JCPenney back! I am sure your higher ups have to see a drastic decrease in sales since your new buyer personnel has come on board. Change it back!”

“Yet, the majority of us who used to shop there have no products to choose from. Your large women department is a joke. My husband can’t find the brand of pants he used to buy in your store. Your linen department got rid of American Eagle and sold a substandard Penney’s brand now. There are more employees than shoppers. I have money and I plan on spending it, just not in your store. You have become the Kmart of retail stores.”

“I am (was) a loyal JC Penney customer. I am 54 and ex-New Yorker who spent zillion hours shopping in my life while always hunting for a good sale, a good sale, which is something you took away! Why did you allow this to happen? Why did you stop the fun sales? You allowed this non-retail person to end fashionable and affordable lines for ladies (who are not 15 and a size 0).”

Brand, know thy target. JCPenney’s loyal customer base is not the teeny bopper set. It is generally older, with some disposal income, used to shopping sales, and comfortable with many of the once familiar brands the store used to stock. With the new move towards a younger demographic, older JCPenney brand loyalists feel disenfranchised and they are vowing not to return to the brand. And new partnerships with designer brands like Michael Graves, Martha Stewart, and Jonathan Adler are too much like a Target-wannabe for my tastes.

JCPenney launched a new brand identity last year, introducing different product mixes, a new pricing strategy, and re-inventing their in-store experience with everything from signage to displays.

Solid brands form lasting impressions—and whether you are a JCP devotee or not, it is almost impossible to do a remake of an old brand overnight. Changing product mixes, developing a new pricing strategy, AND not allowing the customer base to adapt to it, learn about it, weigh in, is not wise. If in-depth research was not commissioned before the JCP remake, then the CEO and his marketing team should be fired. If focus groups were not asked about the new interiors, then the negative backlash the company is experiencing should come as no surprise. One has to wonder, if indeed Ron Johnson wanted to recast a retail environment for a completely different demographic, should he have lost the JCP brand entirely and launched a completely new retail brand? And perhaps the biggest takeaway Johnson should learn is that it is one thing to mess with a store brand. It is quite another to mess with a pricing strategy.

Shoppers take pride in their “salesmanship”—their ability to save, to get something for less, their acumen at bargain hunting. Witness the success of Marshalls, T.J.Maxx, and Nordstrom Rack—all based on the love of the hunt for a deal. While JCP is now backpedaling on their fair and square deals, it will take a lot more to get shoppers back into the doors of this retailer.

JCPenney implemented a month-by-month, shop-by-shop strategy to update all stores with new merchandise and presentation.

The CEO of Netflix, Reed Hastings, was proud that his company had hit over 1 billion hours of video watching in one month. He posted a congratulatory note on his personal Facebook account praising his team for his hard work, and that 43 word message resulted in a slap on the hand from the Securities and Exchange Commission (SEC) saying that he broke the Regulation Fair Disclosure act that requires a company to disclose information to all investors at the same time. While he has over 200,000 followers on his personal Facebook page, it is not an official corporate sanctioned page—and the 1 billion hour record could have been deemed insider information. However, if he had followed up his casual praise with a press release on the company page, all would be well.

In light of recent events, SEC has been forced to take another look at their social media policies.

On Tuesday, according to a NY Times article, the SEC reviewed their antiquated policies towards social media giving corporations a bit more leeway to use Facebook, Twitter, and other social networks to disseminate information. After several months of investigation the SEC has relaxed its stance and said that if a corporation makes it clear which pages or feeds will be used to send out announcements, corporations may use social media outlets to communicate with their employees and investors. Unfortunately, the Netflix investigation may result in less spontaneity. CEOs will be more cautious and seek compliance approval before releasing information, especially on unofficial company pages.

I read this article with a certain amount of amusement. Our newspapers are filled with stories about serious insider trading, from Galleon to SAC Capital. But sanctions for praising employees for a job well done seem a bit crazy to me. And ignoring the importance of social media platforms is not only crazy but insane. The social media horse has already left the gate, and the SEC is wise to re-evaluate antiquated policies—even if those policies are only a few years old.

A CEO should have access to social media to compliment staff, connect with customers, and voice her thoughts and opinions. If smart investors are willing and able to find research and valuable information trolling on these open pages and feeds—is that wrong? Or is it really the democratization of insider trading?

You’ve  probably seen the logomarks—the Good Housekeeping seal of approval, the fleur de lys from Relais & Chateau, or the JD Powers emblem. And you probably have certain emotions—even if subconsciously—attached to them. But, not much thought is given to the heavy lifting that these tiny logos have to do in the marketing space.

Like the famed Michelin stars, these logomarks often indicate that a person or business has met a specified standard, or, may signal that an organization is approved by a larger association (see the American Institute of Architects mark below).  Whether it is the Heart Healthy mark that appears next to menu items that are low in fat or the Better Business Bureau’s blue B’s that give buyers confidence in purchasing a service, all of these logos have several things in common—they all have to co-exist with other brands.

Logomarks for the American Institute of Architects, Better Business Bureau, and Relais & Chateau.

This presents the designers of these marks with a lot of design challenges;  they have to be recognizable, but they can’t pull rank over the major brand. Legibility is also a critical factor, as they often have to appear very small (like a union bug). And there must be an educational campaign to let consumers know what the marks stand for.

Recently the NY Times ran an interesting article on Sanitas Per Escam (SPE), which is a fancy Latin way of saying “health through food.” Founded by the lead chef Emmanuel Verstraeten of Rouge Tomate, he believes that SPE is a “promise for a unique third-party certification and consulting program designed to enhance the nutritional quality of meals, without compromising taste.” This group is trying to certify that the food that is served to you in restaurants is healthy for you as well as the environment. The meal portion is correct, it is low in fat and sodium and it is properly sourced. As the Times article says: “Their stamp will let you know that each dish is dense with nutrients—vitamins, minerals, antioxidants—and low in salt and ‘bad fats.'” In appetizers and main courses, you won’t find any cream or butter. As one promotional document puts it, “SPE dishes contain more of what you need and less of what you don’t.”

(Left) Official seal for Sanitas Per Escam (Health Through Food), a nutritional charter developed by chefs and dieticians. (Right) The Slow Food Vermont Snail of Approval, awarded to establishments that contribute to the quality, authenticity and sustainability of Vermont’s food supply.

This is a challenging endeavor from lots of standpoints—including getting chefs to let other people into their kitchens to monitor the fat count and ingredients of their creations. But it is also hard to try to get the SPE mark to stand for something.  SPE would like it to mean that the food associated with this mark is not only tasty but also good for you. But this is a tall order for sure.

First of all, most people will have no idea what SPE means—and referring back to a the Latin phrase Sanitas Per Escam will not achieve the desired results since we are not a nation of Latin speakers. (In fact, there are 237 acronyms listed for SPE, and the Society of Petroleum engineers is at the top of the list. Oddly enough, Sanitas Per Escam is not even on the list.)  So it forces the diner to try to figure out what the mark stands for. Secondly the mark itself is difficult to read and the letters S,P,and E are configured to look more like a brain. It is even more problematic when you reduce the mark down to a very small size. Add to that to the fact that restaurants are reluctant to add logos to their menus, and, while some have embraced the Heart Healthy logo or the Slow Food snail,  how many will be willing to add yet a third mark? Already some famous chefs like Eric Ripert are dismissing the initiative and saying that putting the SPE logo next to some dishes on the menu seems to indicate that the balance of the items are not healthy, and he feels that it demonizes certain ingredients like butter, oil, or salt.

The familiar seals of approval for JD Power & Associates, Heart Healthy, and Good Housekeeping.

It takes a lot of time and effort to imprint a certification logo on consumers’ minds. So creators have to make it as easy as possible for the consumers. While SPE may be healthy for diners, one wonders if the mark might just be too complex to digest.

When I was growing up, in the ‘50s and ‘60s it was a very big deal to stay at a Sheraton. The brand exuded luxury and had the mystique of having outposts in faraway countries, long before globalization made it de rigueur for chains to be outside of the USA. The hotels were big, flashy, and important. Those were the glory days of the Hilton, The Ritz-Carlton, and long before each hotel brand had a multitude of sub brands.

The Park Sheraton in New York, while not the Plaza, was still a desirable address. My how times have changed.

I must admit, that in my mind, the golden age when Sheraton was viewed as a global outstation in distant lands seems light-years away. I rarely consider choosing a Sheraton and generally prefer another hotel in the Starwood portfolio.

In 2009, BrandChannel reported “Sheraton has been a brand in decline, unlike Starwood siblings W and Westin. The most recent Consumer Reports ratings ranked Sheraton as the worst in its category, based on value, service, upkeep, and problems; customers have blogged about the brand’s poor quality and even Hoyt Harper, Starwood’s senior VP of brand management, admits that “some of the hotels were substandard.”

Sheraton decided not to throw in the towel on this hotel brand, but instead embarked on a three-year, $6 billion rebranding effort that involved getting rid of properties that were subpar, redoing interiors, and overhauling all of the properties with a focus on social spaces. In October 2010, they launched an ad campaign focused on the new renovations.

HotelManagement.net reported that, “A key insight that directed the creative vision for the campaign is the growing trend of travelers seamlessly blending business and leisure—also known as “bleisure”—and the demand for socially driven designed spaces and amenities. As part of the brand’s overhaul, every aspect of the new Sheraton guest experience was designed to promote social interaction and bring people together.

As reported in HotelNewsNow.com, “The US $6-billion investment in the upper-upscale brand has already paid off because market share has increased, customer satisfaction is at record levels, and the percentage of Sheraton customers who are Starwood Preferred Guest members has jumped from 39% to 45%.

And, now, yet another $20 million ad campaign is set to launch this month. The new campaign, designed by Kaplan Thaler Group and Razorfish, is called “Meet You There.” According to their press release the new campaign is tapping into the growing demand from travelers for spaces that promote social interaction and bring people together. Every aspect of the new brand is designed to meet this expectation. And, of course, the ads will showcase the new enhancements.

So, will it work? My concern is that Sheraton has upgraded its interiors, provided new spaces for interaction, launched new programs like Link@Sheraton and Sheraton Fitness, but have they really redefined their brand or just fixed infrastructure problems that certainly needed fixing?

Brands are not “fixed” that easily. What will Sheraton have to do to get increased mindshare from a new audience that is probably not familiar with the luxury brand of old, and what will it have to do to reinstate Sheraton into the minds of those who “knew it when”? It will be interesting to wait and see if social interaction as a brand has legs in the hotel space. Let’s face it, if it is successful, I wonder how many spouses will even let their husbands or wives check into the Sheraton for business?

On Tuesday WWD reported that retail giants Target and Neiman Marcus have announced they will partner to create a limited edition of 24 designers for the holiday season. Following Target’s hit last year with the Missoni line, the two retailers, who are at almost opposite ends of the price spectrum, both have much to gain from this unique partnership.

Apart from an interesting retail story, this is a case where an iconic brand in luxury retailing has an opportunity to liven up its brand. While Neiman Marcus is synonymous with expensive merchandise and is famous for its Christmas catalogue where items can range as high as the millions, it also has the moniker “needless markup” and has become somewhat of a fusty brand. Teaming with Target can give this luxury brand a good dose of “hipness” making Neiman more relevant to a younger crowd. Neiman has been trying to shed some of its effeteness and, as WSJ reported, the store reversed a policy in October of only accepting a Neiman credit card, American Express or cash. Clearly the brand has to walk a fine line partnering with Target’s more “cheap-chic” to ensure that it does not erode the luxury and exclusivity that is associated with the Neiman name.

Target, on the other hand, will continue to demonstrate that it has the buying and manufacturing power to combine good design with value pricing. By using its production lines and less expensive fabrics, it can introduce new high fashion designers to its mass-market clientele. This alliance also bolsters the Target brand as a maverick in the retail space, willing to embark on alliances that seem unlikely. Target continues to entice its clientele by finding innovative ways to bring luxury goods to a broader market at a lower price point.

An unlikely partnership, perhaps. But hats off to the two brands for being daring enough and confident in their own brand position to attempt this.

With Grafik’s help, DC Prep’s mission of bridging the educational divide in Washington, DC was put to the forefront with the launch of their new website, www.dcprep.org. Since its inception, Grafik’s work with DC Prep has been comprehensive, spanning all aspects of the school’s communication channels from strategic positioning to brand identity development to two versions of the DC Prep website. In the website’s most recent evolution, our goal was to better serve current parents, support teacher recruiting efforts, and provide potential parents with the information they need to enroll their children. To properly motivate their targets, we felt it important to highlight their awards and academic achievements, provide a rational, streamlined information architecture, surface prominent calls-to-action, showcase vibrant photography that visually demonstrate life at DC Prep, and fully integrate social media to personally connect with the audience.

Founded in 2003, DC Prep was established as a public charter school in order to bring exemplary academics and character development education to more than 3,000 preschool, elementary, and middle school students. DC Prep has a firm commitment to not only improve performance of low-income, minority students, but to also equip them with the skills needed for the rigors of higher education.

March 20, 2012—Grafik is pleased to announce that its branding work for client JK Moving Services has placed it among one of the world’s most effective rebrands in the eighth annual REBRAND 100 ^® Global Awards. This recognition is the highest recognition for excellence in brand repositioning, and is the first and most respected global program of its kind. Grafik’s rebrand of JK Moving Services encompasses an effort that touches every facet of the brand from corporate mantra, to logo and visual identity, and every execution where the brand lives (e.g., moving trucks to uniforms to corporate website and brochures).

“Many projects had big ideas expressed elegantly through all methods of engagement—language, visuals, sound, etc.” said Shashi Caan, Founding Principal, The Collective US and UK and 2012 juror. Each year, an international and multidisciplinary mix of industry experts convenes to jury this annual competition. They consider “before” and “after” representations of brand transformations with written summaries and supporting elements that showcase integration of social media and mobile engagement.

“It is gratifying to be among the nation’s most recognized branding establishments,” said Judy Kirpich, founder and CEO of Grafik, and the strategic lead of the JK Moving Services account. “We’ve spent a decade focusing on strategic branding. It informs everything we do.”

According to the team at REBRAND^TM, a small consulting firm or brand had as much opportunity to be selected as did global organizations with exponentially greater budgets since the name and size of the brand strategists are hidden from jurors during their review process. Emphasis was on executed strategy that made an emotional connection and met the stated objectives and needs of the identified target audience and prospects.

“Grafik Marketing Communications armed themselves with solid research and customer testimonials before embarking on a one-year rebranding program for JK Moving,” said Charles Kuhn, Founder, President and CEO, JK Moving Services. “They completely reorganized our brand architecture and rolled out a powerful new corporate mantra that resonated with every division and facet of the company.”

The 2012 winners represented over 28 countries and 34 industries. They ranged from One Foundation (Global Ethics Ltd), Pfizer, National Music Centre (Canada), Merck Millipore, and Cisco. In addition to in-house teams, small agencies, and representatives of multinational corporations and nonprofits, competing firms included Interbrand, SNK, Lippincott, Siegel+Gale, and Brandient.

EDITOR’S NOTE:

About Grafik: Founded in 1978, Grafik is an award-winning strategic marketing communications firm located in Alexandria, VA, specializing in brand and creative development across traditional and digital media. Current clients include: U.S. Census, Honda North America, EYA, Convergent Wealth Advisors, Global Automakers, Prostate Cancer Foundation, and DC Prep.

About JK Moving Services: For over 30 years, JK Moving Services (JKmoving.com) has provided local, long distance, and international relocation services to a variety of commercial, residential, and government clients. Headquartered in Sterling, Virginia, the company maintains a full-time, professionally trained staff of relocation and move management experts committed to providing the highest level of customer care.

About REBRAND™ and the REBRAND 100® Global Awards: REBRAND is the world’s leading resource for effective brand transformations. The REBRAND 100 Global Awards is the first and most respected recognition for repositioned brands. Featured in such media as The Wall Street Journal, CNNMoney, Bloomberg Businessweek, various magazines and books, the annual competition has entry deadlines in late September. The full 2012 winners showcase is at www.rebrand.com.

One of the questions that we often have to address with new clients is how they are organized…brand architecture is the fancy word. Some clients are comfortable spinning off new companies when they develop a new product or look to expand horizontally to a new business sector—a House of Brands. Others create business units that operate independently but must conform to a corporate set of brand guidelines—a Master Brand. Understanding which branding model a company  should choose is based on many factors. There may be good reasons to launch different companies if they are making competing products. A House of Brands is an expensive proposition since each new company has to be marketed independently. With a House of Brands if one company fails, or has a bad reputation, it only takes down that entity and does not tarnish the parent company. With a House of Brands, if something untoward happens to one business sector, it may have an adverse effect on the whole company.

Pepsico’s House of Brands

Glancing at the New York Times last week I saw a wonderful example illustrating Pepsico‘s House of Brands. I, for one, had no idea that Pepsico owned Gatorade or Starbucks—two signature brands that have very different brand personalities. And certainly the wholesomeness that is part of Quaker’s brand might conflict with the junk food identity that is Cheetos. There are many good reasons to keep them separate.

A different perspective is told in an article that ran in the New York Times on January 6 on the new BMW slogan. BMW is the classic example used to illustrate a Master Brand. Rather than promote many different car models, BMW promotes one. Recently they launched new brand advertising. The article notes, “The new advertising depicts the BMW as the “ultimate driving machine,” whatever the model. The tagline has been used continuously by BMW since it was created in 1975. This of course is significantly cheaper than having to support all of the different brands that Pepsico supports. But Master Brands do have challenges. As Renée Richardson Gosline, an assistant professor of marketing at MIT Sloan School of Management, notes, “a campaign that emphasizes a consistent brand essence is powerful, but BMW has to keep in mind that luxury consumers seek distinction, even within the brand. So, along with the egalitarian message that all BMWs are ‘ultimate driving machines,’ BMW has to make owners of different models each feel special as well, by building relationships with the owners of each model.”

Choosing whether to adopt a House of Brands versus a Master Brand should not be made by default. While brand architecture is not always looked at, it is critical and will effect everything a corporation decides from mergers and acquisitions to naming conventions. At the very least, determining a company’s organizational structure should be a mandatory part of any brand exercise.