Trashing a Brand?Smart or Dumb?
Cingular to bite the dust, joining Marshall Field's and NDL
May 4, 2006: Vol. 2, Issue No. 35
IN THE NEWS
AT&T Plans to Kill Cingular Brand
But Analysts See Change of 'Cingular' to 'AT&T Wireless' as Mistake
SAN FRANCISCO (AdAge.com) -- It cost $4 billion to turn it into one of the best known names in the country, a future-forward, dynamic brand with a strong connection to young consumers and a share lead in the wireless marketplace. Yet, in 2007, Cingular will be tossed aside like an old sock.
—Alice Z. Cuneo, AdAge.com, May 2, 2006
Reviving the past
Famous brands that were abandoned by their owners years ago are being updated by a Chicago firm bent on proving they still have potential for profit
Paul Earle Jr. had a feeling Gen-X hearts would flutter when Colecovision game systems reappeared last year in thousands of stores. And why wouldn't they? After all, many of today's 30- and 40-year-olds played Coleco Head-to-Head or Colecovision, the father of today's Sony PlayStation and Microsoft Xbox systems, while growing up in the 1980s. Coleco's successful relaunch last fall was the latest in a series of famous, and not so famous, brands that have been rescued from the scrap heap by River West Brands, a Chicago-based firm that has found a unique niche--restoring the luster to brands no one wants anymore.
—John Schmeltzer, Chicago Tribune, May 2, 2006
Anybody out there remember the following cereal slogans? Wikipedia does.
- "Cheer up with Cheerioats" (1942)
"Cheerioats: For Fighters on the Homefront" (1943)
"Cheerioats: The New Flavor King of Cereals" (1944 )
I used to eat Cheerioats as a kid—usually with a cut-up banana and milk. Also Wheaties, Corn Flakes and Rice Krispies.
Then a funny thing happened. General Mills consigned Cheerioats to the ash heap and renamed it Cheerios.
I didn't understand why back then. I don't understand why now. Sometime in the 70s or 80s, the nutrition police designated cold cereals as "cardboard calories" and worthless, thus thoroughly upsetting the packaged goods people as well as consumers nationwide.
Then in the 80s or 90s, it was discovered that oat bran was really good stuff for people with high cholesterol.
General Mills could have cashed in big—if only it had not changed "Cheerioats" to "Cheerios." The smartypants brand manager-types who changed "--oats" to "--os" had to spend a fortune explaining that the "--os" really stood for "--oats."
Is it smart to trash a brand?
Sometimes yes, most times probably not.
Are They Nuts?
Early in 2005, it was announced that Federated Department Stores—owner of Bloomingdale's and Macy's—purchased the May Company. Suddenly, a legion of great stores—a number of which I called on as a young book salesman—were either going to be shuttered or renamed Macy's. Among them: Hecht's, Filene's, Lord & Taylor, Famous-Barr, Kaufmann's, Foley's and Meier & Frank.
But for Business Common Sense reader Linda Stanley of Glenview, Ill., nothing was more outrageous or hurtful than the announcement last December that Chicago's venerable Marshall Field's was about to become Macy's. She wrote in high dudgeon:
Have the "Barbarians at the Gate", the mergers and acqs guys, taken leave of their senses? Buying a brand just to kill it?
Marshall Fields in Chicago is an old regional brand (and an actual, real, and historical shopkeeper). It has 3-4 generations of living customers, a logo, some decades old traditions, and even a candy ... the Frango mint. A real marketer should be able to develop some ideas that would deliver reasonable profits for stockholders from this brand.
Macys, which means nothing to me, is no marketer, apparently. They bought Marshall Fields & stopped making the candy on State Street. This year I noticed that some traditions are missing, and soon I expect the name to change. Then I will have bury the notion that there is a special place to shop in Chicago. I refuse to spend money in a business that seems careless. Why do modern managers think they can slap on a new name and retain customers? Am I alone in feeling manipulated and ripped off? How many other venerable brands have been trashed for cash, not nurtured? How do your readers feel about this?
Many Chicagoans protested and won a few concessions. Although the change to Macy's becomes official this September, according to Sandra Guy in the Chicago Sun-Times, "a Frango mint viewing kitchen and a private entrance to the women's couture 28 Shop will return."
But Linda Stanley's question is haunting: "Why do modern managers think they can slap on a new name and retain customers? Am I alone in feeling manipulated and ripped off? How many other venerable brands have been trashed for cash, not nurtured?"
I was always intrigued by Cingular and its curious name that should be spelled "singular." The company had grabby, hip ads that a legion of youngsters glommed on to. As AdAge.com pointed out, it cost $4 billion to make it a household name.
Stodgy, boring old AT&T bought Cingular with the intention of killing the name, the brand and the logo. It will be renamed AT&T wireless, a bit of an oxymoron, since the last "T" in "AT&T" is Telegraph, a primitive communications systems that relied on wires. In any case, analysts believe the tab to explain what happened to Cingular to its customers will be around $2 billion.
Many years ago, Jock Bickert, a wonderfully urbane gentleman, founded National Demographics and Lifestyles—known throughout the direct marketing community as NDL. It was the most elegant of data gathering business models. Bickert's company would contract with manufacturers to put warranty cards in with their products—kitchen appliances, watches, computers and anything else that could break or wear out before its time.
These warranty cards had dozens of questions beyond the few bits of information needed to register the purchase—name, address, date purchased, store where purchased and model number. This was followed by a slew of lifestyle and demographic questions ranging from hobbies and interests, financial information, credit cards, automobiles, magazine subscriptions, home ownership status and even illnesses and medications. The result was a treasure trove of information that enabled marketers to create a vast electronic dossier on 41 million households. It was not a question of tricking anyone or surreptitious snooping, since all the information was self-reported. (It seems people love to fill out questionnaires and talk about themselves.)
NDL was sold to R.L. Polk, a data gathering company that specialized in vacuuming up information from automobile registrations and drivers' licenses. Polk also vacuumed up the NDL brand, which was heard of no more.
In 1989, psychopath Robert Bardo, became obsessed with Rebecca Schaeffer, a young actress who had an unlisted phone number. Bardo found her home address at the Los Angeles Department of Motor Vehicles, went to her house and killed her. As a result, Congress passed the Driver's Privacy Protection Act that decrees no state employee shall "knowingly disclose or otherwise make available to any person or entity personal information about any individual obtained by the department in connection with a motor vehicle record." Only if the individual car owner "opts in" can this personal information be released to marketers.
Suddenly Polk's decades-old business model had a serious crimp. It was forced to rely on the self-reported data in the old NDL system, only it was no longer called NDL, causing confusion in the industry. In point of fact, the NDL list was made up of upscale consumers, whereas the old Polk lists covered the entire human food chain, with probably half the database being worthless for marketing purposes.
Believe it or not, last week Hasbro, heirs to Parker Brothers, manufacturers of Monopoly, announced that the original game would be scrapped and Atlantic City would be replaced by such venues and characters as SpongeBob SquarePants, Philadelphia, Star Wars, Junior Shrek 2 and Lord of the Rings Trilogy. From the official Web site:
In its first year, 1935, the MONOPOLY game was the best-selling game in America. And over its 65-year history, an estimated 500 million people have played!
*Over 200 million games have been sold worldwide.
*More than five billion little green houses have been "built" since 1935.
*A set made by my friends at Alfred Dunhill, with gold houses and silver hotels, sold for $25,000.
*The longest game in history lasted 70 straight days.
*The longest game in a bathtub lasted 99 hours!
On Tuesday, the Atlantic City Visitors and Convention Bureau organized a protest on Boardwalk—this being the city's second indignity after the loss of the Miss America Pageant.
However, it would probably require one minute of slot machine profits for Atlantic City to buy the rights to the game and more than make up for the cost by selling it all over town to visitors.
Dead Brands Redux
Chicago entrepreneur Paul Earle Jr. discovered that after Procter & Gamble dumped White Cloud toilet paper—the seventh largest selling brand—it was bought by Wal-Mart. White Cloud became Wal-Mart's house brand of toilet paper and diapers, whereupon Wal-Mart ceased to carry Pampers, a Procter & Gamble Brand.
Inspired by that story, Earle founded River West, a company devoted to resuscitating abandoned brands. Among them the early electronic game, Coleco; the pain medication, Nuprin; the old diet drink, Metrecal; Silkience Shampoo; Underalls that were originally sold by Hanes; and the men's clothing brand, Structure. The gross sales of River West products in 2005 was $50 million—hardly chump change.
The Vermont Country Store
One of my favorite catalogs is the Vermont Country Store, founded in 1946 by Vrest Orton in an old country inn. His first catalog was 12 pages with just 14 items. Today, The Vermont Country Store catalog is a delicious trip down memory lane, offering hard-to-find products beloved by our parents and grandparents (and geezers like me). Among them:
- An authentic reproduction of the original edition of Monopoly from 1935 including the old instructions and wooden houses and hotels.
- Big Ben Alarm Clock
- Soaps: Lifebuoy, Palmolive, Lux, Camay, Fels-Naptha, Sweetheart, Packer's Pine Tar
- Apothecary: Flicker Shaver, Dippity-do Styling Gel, Burma-Shave Brushless Cream, Tabu Lipstick
- Foods: Walnettos, Whip 'n Chill Dessert Mix, Horlicks Malted Milk Tablets, B&M Brown Bread in a Can, Dubble Bubble Gum, Ralston Wheat Hot Cereal, Necco Wafers
- Miscellaneous: Glass Magic Dishwasher Powder, Absorbine Jr., Tinkertoys, Princess Phones, Munsingwear
When to Trash a Brand
In The Wall Street Journal of Jan. 18, 2005, Gwendolyn Bounds wrote an article titled "Brands Bearing Name 'Tsunami' Ponder Change."
Takeaway Points to Consider
- Before trashing a brand that has a well-known name and a fine reputation, ask the hard question: "Has the product or service outlived its usefulness or is it the victim of bored, second-rate marketing people?"
- Before trashing a brand, add up the dollars spent on advertising, marketing and PR over the years to build the brand. What will it cost to make its replacement a household name?
- "Brand loyalty cannot be bought. It must be earned."
- What will be the long-term effect of trashing a brand or changing its name? Will AT&T be able to explain why the Cingular brand—its products, the service and the logo—were really lousy, thus insulting the intelligence and acumen of those young customers who believed the sales pitch and bought? How would Cheerioats have sold during the oat bran craze?
- When you trash a brand, how many customers will be orphaned and what is the lifetime value?
- In 1997, a devastating fire destroyed the Oyster Bar, a fixture in New York's Grand Central Station since 1913. New Yorkers had been taking it for granted and there was talk of not refurbishing it. A huge outcry arose and the facility was brought back to its original grandeur. The brand—and its superb food and service—survived. Happiness to me is being alone at the Oyster Bar lunch counter and ordering raw oysters, oyster stew (which is concocted before your very eyes) and a strong beer. Every time I leave the Oyster Bar, I am convinced that I have savored the best of its class in the world. It was nearly abandoned, but revived by consummate professionals who saved the brand and made it stronger than ever.
Web Sites Related to Today's Edition
River West Case Study
Vermont Country Store
The Oyster Bar
Update on a Prior Edition
"E-mail Postage—YESSSS!" was the title of the March 2, 2006 edition of this e-zine. In it I suggested that the Goodmail and AOL idea of charging a wee bit of postage for guaranteed delivery of e-mail would dramatically cut down on Spam, because the ROI for Spammers would be knocked into a cocked hat. Most responders of the column pooh-poohed the idea, saying that sophisticated filters were the solution to Spam. Yesterday's Wall Street Journal contained a story by Jessica E. Vascellaro with some revealing new information.
SPAM FILTERS GONE WILD:
Spate of Incidents at Verizon, AOL Point to Growing Problem Of Blocking Legitimate Email
As much as 20% of legitimate bulk commercial email—which includes mail users sign up to receive as well as online statements and receipts—gets caught in spam filters, according to Ferris Research, a San Francisco-based market researcher. The best filters, however, make such mistakes for email between acquaintances only about once a month, according to Ferris.