Brands, Characteristics and Relationships

I've tried to be a student of good brand management in my twenty years of marketing, positioning, selling and consulting. I try to read broadly on the subjects and stay in tune with the times and remain progressive in my thinking. Along the way, I've met some really smart, talented managers and most of them have been more than willing to share their best practices. Over these two decades, one voice has had the greatest influence on my thinking. No, it's not Al Ries, Jack Trout or Harry Beckwith - though they have been influential. His name is Chuck Jarvie. If you know much about P&G in the 60's and 70's or Dr. Pepper in the 80's, you know Chuck. Quite simply, he knows more about consumer marketing and brand management than anyone I've ever met and he has a gift for succinctly communicating the principles. With all of the excitement, confusion and hyperbole about Social Media Marketing today, I thought now would be a great time to review the basics as taught to me by Mr. Jarvie.

All brands have certain characteristics. No matter what the industry, these fundamentals do not vary. Only the tactics and culture vary. If your brand doesn't have all five, you might be offering "branded" products/services, but you don't command brand position. According to Chuck, here are the five essential characteristic of a brand:

1) A brand is easily identified and understood through its Unique Selling Proposition. Consumers know it and can easily and quickly summarize it.

2) A brand has true, measurable performance attributes. Consumers can tell you the actual benefits they derive from the brand.

3) A brand is price in-elastic. Its core customer is willing to pay a premium to obtain the benefits it offers.

4) A brand is long-standing and progressive. A brand is never a fad. It stays relevant to its customer through stability and is kept in tune with the times.

5) A brand maintains and ensures its value through a definite and sensitive consumer feedback system. This CFS anticipates shifts in consumer desires and satisfies needs in a proactive - not reactive - manner.

According to Chuck, most brand failures or products that fail to achieve brand status are a function of not having the consumer relationship right from the beginning. Or, in some cases, the brands that lose their status do so as a result of not maintaining and nurturing a "partnership" with their consumers. So, what is SMM if not a great new technology that allows us to communicate on a personal level with consumers - nurturing the "partnership" and deepening the consumer relationship with the brand? I'm not denying that the technology is new, exciting and powerful. I'm a big believer in SMM and actively engage in its use. However, the arrival of SMM does not change the fundamentals of marketing or communications. Brand management principles don't vary, they just adopt the technology that allows them to do a better job of staying in touch and progressive.

Global Warming, Good Intentions and the Perils of Bad Science

The administration and its promoters in Congress are now selling their latest spoon full of medicine that they promise is "good for us." Close your eyes, open wide and swallow hard. After all, who can argue with saving the planet for future generations? The cap and trade bill is the answer, or as our President referred to it, the "jobs bill." I don't know about you, but I love many parts of this planet and I very much want my grand kids to see and experience the spectacular beauty that is Earth. But I've read the scientific reports and summaries from across the globe and the numbers just do not match the rhetoric of global warming. In fact, the science that has been purported to support the postulate of man's "pollution" of Earth through the increased production of carbon dioxide is now being labeled as "junk" by an ever-growing community of international, credentialed, climate scientists. A list of sources for this data is under the "links" section of this blog. For a thorough (and thoroughly entertaining) review of this subject, read Green Hell by Steve Milloy.

So if the planet is not truly in peril from man's selfish need to drive V-8s down long stretches of highway instead of riding bikes to the densely new urban village/city, then why are we being asked to spend huge amounts of tax-payer monies to "discover, develop and market" green alternatives to reduce/slow global warming and thus save the planet? If the Zogby and Rasmussen polls tell us that a majority of Americans now believe Vice President Gore and his gang were zealously overstating the threat, why are we making huge financial commitments (our balance sheet doesn't look so good right now you know) and promises to the Europeans? My warm-hearted (but cold-headed) friends on the left will not like my answer. It is really quite simple. The broadly appealing ideas of doing good (government health care, government schools, government motors, government stimulus, government entitlements) are great covers to cleverly disguise the ultimate goal of every government...more government control and centralized authority. You can call it "cap and trade," but it's a tax on energy and it will affect everyone who buys gasoline, heating oil or electricity. We should not allow the laudable ideas and good intentions behind more government involvement to keep us from heeding the lessons of many past experiences with federal over-reaching. As George Will aptly put it in his column in today's Washington Post, "government is cumbersome, sluggish and inefficient." As examples, Will noted the US Postal Service lost $1.9 billion in Q2 and Amtrak has enjoyed 38 straight years without reporting a profit. Have you tried calling the IRS lately? Now, in the face of unemployment reaching double digits by year end, we are supposed to be in favor of more regulation, taxation and debt in the name of saving the planet?

Call me a publicly-educated, naive polluter, but I'm not buying what Washington is selling on this one. I'm all for developing alternatives to our dependence on foreign oil. I'm all for cleaner energy sources. I'm a conservationist. The idea of keeping America beautiful doesn't have to include creating new taxes and increasing burdens on private businesses. This is a time when we should be reducing the drag on private enterprise. This is a time when we should be supporting a robust free market battle for commercial solutions to these problems through capitalism. This is a time when the federal government should be tightening their budgets, reducing debts and improving the balance sheet...just like 95% of all businesses are doing all across this country.

Legal Immigration, Assimilation & the American Dream

Since gaining our independence, America has been the world's host to dreamers all over the earth. For those who truly yearn for the opportunity to pursue a better life and possess the desire to work, sacrifice and learn; the United States of America has been the fertile soil in which foreign dreams bloom into prosperity. Our country is the globe's greatest example of a free, democratic, generous society largely because of immigrants from foreign soils. Though never losing their identity or cultural heritages from their own "Mother Lands," immigrants to the U.S. have always put their love of this "Land of Opportunity" first. They studied our history, embraced our laws and core beliefs and taught their children our language. In so doing, immigrants have contributed mightily to the richness and diversity of the American way...and to its uncommon success.

For the last decade or so, the traditions of legal immigration, and its underpinning laws, have been usurped. 75% of American citizens want illegal immigration controlled. We have a constitutional republic with specific codes to govern the legal immigration of those who want to become U.S. citizens. In North Carolina and in many other states, illegal immigration is overwhelming our budgets. We are putting huge strains on health care, public services, law enforcement, schools and other taxpayer-funded programs just when our economy is at its weakest in thirty years. It is not just our budgets that are suffering; illegal immigration is destroying our identity. The common threads that unite us all as Americans are being sheared by illegal immigrants who are unwilling to pursue the American Dream legally, unwilling to speak the American language and unwilling to contribute back to the economy from which they graft.

So what do we do? There are four things that must be done to reverse the unhealthy and unsustainable flow of illegal aliens:

1) We must secure our borders and hold perpetrators (and their countries of origin) accountable
2) We must crack down on intentional hiring of illegal aliens by employers
3) We must empower law enforcement to truly "enforce" established immigration law
4) We must eliminate all benefits (licenses, welfare, in-state tuition, etc...) for illegal aliens

This is not as difficult an issue as many in D.C. and Raleigh want us to believe. If 75% of us are for these measures, we should quell the endless debates and get on with the implementation. It's time for action. If your elected representatives don't have the guts, then support those that do. Our American Dream is too important to be held hostage by those to weak to defend it or too selfish to honor it. After all, it's not just our dream...it's the dream and the example to most freedom-loving people all over the world.

Tobacco, Liberty and Government Regulation

I'm not a smoker. I really don't care for the look, taste or smell of cigarettes. I know they cause serious health problems if used consistently over a long period of time. It's my decision not to smoke them. I do admit to occasionally enjoying a cigar on the golf course, however. In an act of full disclosure, I also must admit to being from a long line of tobacco farmers. The Pritchetts harvested tobacco in NC all the way back to before the Revolutionary War. I even spent two college summers working in a cigarette factory, along side of all the unionized laborers (that's for another article), learning why I needed to pursue education and business. My company's name is Tobacco Road Capitalists, which is both a nod to the agrarian and manufacturing heritage of the Old North State and a play on our national reputation for being the home to the best college basketball in the country. However, this article is not about tobacco, cigarettes, farming or manufacturing; it's about free markets, personal responsibility, minority rights and government regulation.

Twenty years after a California municipality passed a smoking ban, the politically correct/nanny state movement has made its way all the way to Tobacco Road. A bill is pending approval in Raleigh that would ban smoking in private establishments. That's correct - this is not a ban on smoking in public places or thoroughfares. This is a ban on smoking in private establishments. So much for the free market. To heck with the liberties of tax-paying citizens or of tax-paying, business owners. The government has deemed the risk to be so great to your health from second-degree smoke that it can't allow the market to decide. Apparently, the government believes you can't choose which restaurants/bars to frequent based on your personal views and they don't think proprietors would respond to the vote from the market as expressed by their pocketbooks and wallets? All of this in the name of keeping the public safe and reducing health care expenses? If the health concerns are so great, how about a ban on all sales of smoking products? That would truly be "putting your money where your mouth is." Call me a skeptic, but I really doubt the government's conviction on the health risk is great enough to forgo the tax revenues.

I believe this is simply another case of political pandering to a majority constituency at the expense of a minority group. It's a popular, politically correct piece of legislation. It's also more of a dangerous trend. The government is incrementally encroaching on our liberties. At the expense of sounding like a nutty, right-wing conspiracist, we do have to ask the question, "where does it end?" Are we to be trusted about the consumption of alcohol? Can we operate our vehicles safely? Should we really own guns? If second-hand smoke is dangerous, what about influenza and other illnesses that can be acutely transmitted in schools, Churches and grocery stores? I know I'm demonstrating absurdity with absurdity here - but you get the picture. The more power we give to bureaucrats in the name of protecting us from ourselves, the more personal liberties we cede. The more individual responsibilities we trade in for government guarantees, the greater the cost of government to "administer" the programs. Over the past 50 years, the growth of government spending has been dramatic - but only if you look at it over the long span. Government spending (federal, state and local) has grown, as a percentage of GDP, from about 20 percent to nearly 35 percent. It's like kudzu. You can't see it growing, but if you ignore it for a while and come back and look at it...you are amazed by how much it has spread and what is has taken over.

NASCAR, Business Models and Growth

I have long admired many things about Nascar and the France Family that owns it. I think they are phenomenal at PR and very, very good at fan(customer) retention, among other things. Although starting very much through humble, boot strap efforts(like most successful businesses) 60 years ago, Nascar became quite sophisticated at linking drivers/corporate brands and fan affinity. With the help of strong television partners(ESPN really did the heavy lifting), great promotion-oriented business partners in the tracks(owned primarily by either SMI or the France Family through ISC) and a disciplined approach to honoring the traditional rules and spirit of William France, Sr; Nascar grew at a remarkable rate and became a legitimate, national sport. However, this editorial is not dedicated to "back-slapping" the guys and gals from Daytona. I'm here to share my thoughts on why Nascar is losing speed and how it can rev back up again. Though growing up in North Carolina, I'm not a true fan of the sport. I'm more of a "stick and ball" guy, but I've been to a few races and I know more than my fair share of passionate racing fans. What I know about the sport mostly comes from what I know about the business of sports after twenty years in the industry. In complete candor, I also must admit I did quite a bit of homework about eight years ago when the company I worked for was consulted to help an organization called TRAC(Team Racing Auto Circuit).

TRAC was one of the best sports business ideas I have seen, and trust me - I have seen a lot of them. I eventually became its COO for a period of time after helping the founders develop a strong business plan and secure capital. Don't just take my word for it, check with Carl Scheer, Robert Wussler, George Bodenheimer, Humpy Wheeler, Cale Yarborough, Ed Hinton, Joe Lecesse, Jay Klompmaker, Chuck Jarvie, Hank Jones, David Falk, Erik Spanberg, Bruton Smith, Charlie Bradshaw, Rick Flair, Bill Riley, etc... They were all there, in some form or fashion, when the start-up league was launched in 2001. For those of you who didn't here about it or don't remember it(probably most of you), here is the basic proposition: Combine the best attributes of traditional, full-fendered, oval track auto racing with the best practices and structure of major, professional sports leagues and you get the Team Racing Auto Circuit(TRAC). Unlike Nascar, the team owners were buying an equity stake in the league when they acquired their team. Unlike Nascar, the owners were business partners with the league and with the tracks, much like any NFL owner who manages and promotes his events but usually doesn't own his venue. Unlike Nascar, cost control for the owners was a major concern and creating a profitable, ever-increasing asset for the primary risk-taker was one of the league's major objectives. Unlike Nascar, which relies on individual driver affinity, TRAC tapped into the regional affinity of sports fans and racing fans by creating a local team, which consisted of three cars and three drivers and a point system that allowed there to be a team and individual champion for each race and the season. From an owner and corporate sponsor perspective, this was essential. As we have seen recently, drivers, owners and sponsors can quickly be put asunder and the fan equity remains with the driver. There is nothing wrong with that - the drivers operate in a free market system. They take huge risks and they should be rewarded commensurately. The problem is that the other interested business partners lose. Good businesses operate within the construct of multiple "win/win" alliances. When too many partners lose, the business can't survive. What happened to TRAC? Well, like many businesses, teams or families...failures are more often a product of internal forces than external ones.

So, why should anyone care about Nascar's business model? After all, aren't they virtually unopposed in the US motor sports industry with little competition and huge barriers to entry? The answer to the latter is, "yes." The answer to the former is simple. Over the past four years, Nascar television ratings have fallen 21%. Advertising expenditures on Nascar broadcasts were down 16% last year. Track attendance fell for the third straight year. Sponsorships of teams and the league are going away or cutting back significantly. Team owners are closing down shops, auctioning parts or looking for buyers at alarming rates. This is not a result of the weak economic conditions of today. This started many years ago. Because the business model is based on corporate sponsors footing the bill for operating costs, the biggest sponsors are aligning with the best drivers and the haves(big race teams) are clearly pulling way ahead of the have-nots. Owners don't have the proper diversity of revenue streams and the economic interests of the league and owners are not aligned. Owners need a share of the tickets and television. How does Nascar share revenue? The market needs to grow. It has stopped growing. It grew for a while in size. Through the opening of new tracks in new regions of the US, more people with similar demographic profiles came to the sport, but Nascar needs to grow in diversity. I'm talking about economic, educational, regional and ethnic diversity. To really grow, a business must make itself attractive to newer and wider audiences. Don't think of it as dividing the pie; think of it as making a bigger pie. Brian France is capable of doing this. I don't know him personally, but I'm told he is a very bright, forward-thinking executive. By chance, if you read this Brian, consider the Team-Racing concept. Tapping into regional fan loyalties, giving tracks more events, creating more compelling content for television partners and attracting well-capitalized, sports-owners will work. I'm not proposing that you scrap the current model and adopt 100% of TRAC's concept. That is not feasible or necessary. Nascar is still the best motor sports business. However, the time to make strategic moves is when you're on top. It's the difference between proactive and reactive. I do think adopting several of the concepts would be prudent. Perhaps you even consider creating a "developmental" league that lets you do some experimentation and refining? The tracks need the content. The owners need the upside. The sponsors need the ROI. Nascar needs to start growing again. You have plenty of smart people there in Nascar, but if you need a consultant...I'm open to discuss it.

Farmers, Entrepreneurs and the Lessons of a Dad

I'm a southerner. I grew up in North Carolina. My family roots go back to the mid-1700's and I am quite familiar(I know how to use a hoe, a maul and how to grind sausage) with the agrarian ways of my ancestors. In fact, from my father all the way back to Dr. John Pritchett (Planter, Chemist, Patriot), we Pritchetts have toiled in the soil. Though, I do it today in my own suburban yard as a form of cathartic relief from my business life. It's a small way to keep the link to the earth that I feel in my bones. Don't get me wrong, I never wanted to be a farmer. I did the math at an early age and decided I was going to do something else for a living. However, I will say that some of the most important lessons in my early life came at the side of my father as we worked the land. Trust me, farmers know a level of work ethic that is virtually unmatched by any businesses I have ever seen. Farming, before government subsidies, was the essence of being an entrepreneur. Here is why.

Farmers have to get up early and take advantage of the daylight. As most farmers know, "burning daylight" is a sin. The same is true for entrepreneurs. A "first mover" position is critical to most successful business ventures.

Farmers have to adapt to the changing weather. No matter how much we might try (even with help from the Farmer's Almanac), we just can't predict the weather. The same is true for entrepreneurs. No matter how solid the business plan, market conditions change and businesses need to be nimble and adaptive.

Farmers treat their neighbors, suppliers and "hands" well. You never know when you might need to borrow a tractor, a ton of fertilizer or a bushel of beans. The same is true for entrepreneurs. Treating suppliers, community cohorts and employees well will build up a reservoir of good will that you may need to tap one day.

So, using a little "plain speaking" here, the message is simple. Get in early; Be prepared for anything; Treat people with respect. May your corn be sweet and your profits even sweeter!

Taxes, Self-Reliance and Conservatism

Tax Day is here. If you did it right, you don' t owe the government anything. Regardless of your payment on the 15th, we're all paying more than our share. In fact, Americans are paying more than ever. Cost of Government Day (COGD) is the date of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of spending and regulatory burdens imposed by government on the federal, state and local levels. Cost of Government Day for 2008 was July 16. Working people had to toil on average 197 days out of the year just to meet all costs imposed by government. In other words, the cost of government consumed 53.9 percent of national income. Wait, it gets worse. The 2008 tax code was part of the "lower taxes" administration. You don't think the present administration is going to reduce the cost of government do you? Steve Forbes - where are you when we need you?

Friedrich Hayek's economic ideas - belief in smaller government, lower taxes and free markets - are the roots from which fiscal conservatives bloom. The concept is so remarkably simple. Reduce the tax burden on producers and watch how revenues to governments grow. It is not a mathematical theory or postulate. It is something for which the "null hypothesis" has been eliminated(researchers rejoice). I met with an executive of the NC Chamber of Commerce today and was disappointed, but not surprised, by the rapidly increasing cost of doing business in The Old North State. We are making ourselves less attractive to private businesses every time we allow the trial lawyers and unions to drive up the costs of doing business here. As the CEO of a private company that filed tax returns in over 40 states today, I can tell you it doesn't take long to tell which states are business-friendly and which states are taking the short-term approach to increasing revenues. In the Tarheel State, we need get back to our conservative roots - work, family, self-reliance, enterprise, personal responsibility...and a welcoming spirit - driven by a lower cost of living and a pro-business environment. If we don't reverse this course soon, we'll be known as the Garden State South...and not just because of all the NJ students at Duke!

We need to be diligent about not getting lulled into thinking that all of these fees and taxes (federal, state and local) are necessary to improve our lives or the lives of lower-income people. We have enough data over 235 years to know that more money does not correlate to better results when the bureaucracy of government collects and redistributes. I am a conservative because I reject that concept. I choose to take an optimistic view that all of us, given the opportunity, can build our own wealth by actively participating in capitalism. I reject the "one-size-fits-all" model of government and place my trust in each individual to make decisions about the services they receive. Citizens need the freedom to self-govern. The opposite of self-governance is dependence. Dependence is the absence of freedom. Freedom is what beats in the heart of every human.