Tag Archives: branding

Sullying The Brand

It takes time, effort, ingenuity and often luck to create a strong brand. Not so with the reverse. It’s much easier to damage a brand and squander its equity, which has taken years to amass. This is painfully illustrated by the brand of the United States and its traditional AAA credit rating.

The US has had Triple A credit since 1917 – about the time it emerged as a world power, enacted a federal income tax, and played the decisive role in World War I. Since then, through recession, depression, and war, US Bonds were about the safest investment one could buy.

Back in the day when I was in B-school, normative finance spoke of “risk-free” assets and equated these with Treasury Bills. Perhaps this was an academic formalization of clichés such as “sound as a dollar.” Not any more.

Even if the US avoids an actual default, much damage has already been done. Indeed, the embarrassing process involved in raising the debt ceiling has added to reputational damage even as it resolved the crisis of running out of borrowing authority. The very fact that rating agencies will carefully review the credit worthiness of US debt is unprecedented and already dents the brand. The actual downgrade by Standard & Poors, simply confirms the problem. Thus, in spite of Europe’s own financial debacle, the dollar remains weak vs. the euro.

US Dollar vs Euro

The American Colonies finished the Revolutionary War deeply indebted. The founders, led by Alexander Hamilton, realized that credit worthiness would greatly enhance the reputation and prospects of the new nation. They endured the hardship of repayment and set a precedent we have followed with great advantage until very recently.

The initial response of the Treasury Department of arguing with credit rating analysts is essentially beside the point. Unlike corporate disasters such as BP or News Corp., the brand-bending embarrassment of the US budget crisis is one that no finite amount of social media, PR, or Marcom – let alone political spin – is likely to fix.

Marley Brew

First Music News reported that the estate of reggae singer and song writer Bob Marley may license his name and image to a range of products including snowboards, hotels, coffee, headphones, and beer. This is in part a defensive strategy to capture revenue from unlicensed use of his name or image, but is this good marketing?

Marley’s music remains popular 28 years after his death. A visit to the iTune store, shows that 16 of his tunes have a popularity rating of 7 bars or more. Start searching on iTunes, YouTube, or even Google for “bob” and “bob marley” is the first suggestion. His YouTube videos such as Buffalo Soldier and No Woman No Cry have been viewed millions of times. This is brand equity.

Marley and the Marley brand are known for music and associated with Rastafarianism, Jamaica, and cannabis. He has no relation with any of the product categories he may be endorsing from the grave. Just as, say, Tiger Woods has no logical relation to the cars, watches, and consulting firms he endorses. Marley Beer looks like an extreme case of brand extension and brand extensions are often a bad idea.

There could be McDonalds headphones, Ford coffee, Apple snowboards, etc. There aren’t. These, and most other companies are very cautious about what their brands mean and what businesses they compete in. If Procter & Gamble had a new way to clean something, it would very likely launch this as a distinct brand rather than as an extension of an existing brand. Similarly, Coca Cola is in the juice and water businesses, but not under the Coca Cola brand.

Most brand extensions disappoint. They risk diluting the position of the core brand and the extensions seldom thrive. Even multi-business wizard Richard Branson has had indifferent success with his derivative brands such as Virgin Mobile and Virgin Money.

Conventional marketing wisdom is not always right. Unlike classic brand extension, no investment or market risk would be born by Marley. The brewer or snowboard maker affixes a new label to an existing product and assumes what business risk there is. None of the proposed brand extensions appears to clash with the Marley brand as perhaps a Marley breakfast cereal or motor oil might.

I’d recommend they do a deal if they have credible licensees. Excuse me, I have to don my IBM athletic shoes and get the gym.