Tired brands: Polaroid

Live by the category, die by the category

If digital photography represents a difficult challenge for Kodak, it represented a near impossible one for Polaroid. In October 2001, after years of falling sales and drastic cost cuts, the firm filed for bankruptcy. Although the company was eventually purchased in July 2002 by the private equity arm of Bank One, many believe the glory days of Polaroid are in the past.

However, digital cameras are only one contributing factor in the perceived decline of the instant photography brand. To understand how it was unable to maintain its once formidably strong brand assets, it is necessary to understand how the brand evolved.

Polaroid was founded by Harvard graduate Edwin Land in 1937, who had spent years researching ways to reduce the problem of glare within photographs.

Indeed, early Polaroid products included glare-reducing desk lamps and eye glasses.

In the years after World War II, Polaroid became chiefly associated with instant photography. Land, who had pioneered a process in which coloured dyes were able to be passed from a negative onto film inside a sealed unit, launched his first camera in 1948 and by the 1970s the brand was a household name. In fact, as the first and only brand within its category, the brand became the name of the end product itself. In other words, people didn’t say ‘a Polaroid photograph’ or even ‘a photograph’, they simply said ‘a Polaroid’.

Polaroid’s profile was enhanced further during the 1970s through the longrunning advertising campaign for the company’s One Step camera, featuring actors James Garner and Mariette Hartley in romantic roles. Because of its instantaneous nature, with photos developed in your hand seconds after they were taken, the Polaroid identity became that of a fun, cool ‘live for the moment’ kind of brand.

The 1970s also saw Polaroid develop an almost cult status, with various high-profile figures becoming passionate fans of the brand. The art world, in particular, became a fan of instant photography. This was no accident.

Edwin Land had understood that artists could help to legitimize his invention since the 1950s. He had known that if Polaroid was seen as a novelty, or a gimmick, the brand would die as quickly as it had emerged. He therefore needed to establish Polaroid photography as a potential art form in its own right.

In 1955 he had found the solution in the form of Ansel Adams, an internationally acclaimed landscape photographer who had exhibited at the Museum of Modern Art in New York. Adams was sent out to Yosemite National Park in California to experiment with different types of Polaroid film. Artistic photographs of snow-covered landscapes which rivalled much of Adams former work were the end result. With the help of a ‘serious’ photographer such as Adams, Polaroid was now a brand to be treated with respect. Such was this success that every time Land created a new film he would invite photographers and artists to the Polaroid labs to see what they thought. There is even an official Polaroid Collection of Art which has been lovingly built up and now includes over 20,000 works.

By the mid 1970s, modern artists of a very different nature to Ansel Adams became Polaroid devotees. Such luminaries as Andy Warhol, David Hockney, William Wegman, Chuck Close, Lucas Samaras and Marie Cosindas were all big fans. Warhol, in particular, loved his Polaroid camera. He had it with him at all times and snapped everyone he met on his hedonistic adventures around Manhattan.

In an article which appeared in the Guardian in October 2001, Jonathan Jones explained the connection between the Polaroid brand and the art world:

Polaroid colour is intense, slightly unreal, adding its own sheen to an image. This appealed to artists because it made explicit the artifice of the photographic [. . .] The revolution that made Polaroid a universal tool for artists, as well as a truly mass photographic method, was the launch of its SX-70 camera in 1972. This was the first camera to have an integral Polaroid film, so you took the picture and saw it come out of the camera in an instant.

Since the company became a household name in the early 1970s, Polaroid had been used by artists to make dirty, cheap, quick, casual pictures whose contribution to the good name of Polaroid is debatable [. . .] The 1970s were the golden age of the Polaroid, but not in a way that lived up to Land’s artistic ideals.

In other words, the endorsement of artists and photographers which Land had so craved was now having a counterproductive impact on a brand seeking to establish instant photography as a serious medium. So while Polaroid’s popularity continued to rise, in many ways its credibility started to diminish.

With Polaroid viewed as a fun, frivolous and even throwaway brand, consumers rarely considered a Polaroid as a substitute for a ‘normal’ camera.

These cameras were usually seen as a luxurious and optional product, which although they might provide fun at parties, would never be as good as a Canon for taking family portraits.

This problem could have been partially resolved if ‘conventional’ photography brands such as Kodak were seen by the public to be treating instant photography seriously. In fact, Kodak had treated it seriously and planned to compete against Polaroid with its own range of instant cameras. Polaroid, however, was unwilling to share its market with anyone else and filed a lawsuit against Kodak. But while Polaroid may have won in the courts, it had effectively stopped the growth of the instant photography market.

This deliberate strategy of isolation was to cause further problems in the 1980s when more affordable conventional 35mm cameras saturated the US market, assisted by the emergence of one-hour photo shops. Customers could get high quality photos without waiting a week for them to be developed.

This meant that Polaroid was gradually losing its key brand asset. It hadn’t been able to compete on quality for some time, but it had been able to compete on speed. Now even that was being taken away.

The final blow was the arrival en masse of home computers and digital cameras. In his account of Polaroid’s demise, BBC News Online’s North America business reporter neatly summed up the superiority of digital photography: ‘Not only could pictures be taken and viewed instantly, but they could be sent hundreds if not thousands of miles away with a mere click or two of a computer mouse.’

Rapidly, the Polaroid brand was running out of options. It had already tried to expand into conventional 35mm photographic film, but had failed to convert enough Kodak customers. The brand association of Polaroid and instant photography had proven too strong in consumers’ minds. Polaroid proved equally incapable of turning itself into a digital-imaging company.

This surprised many analysts who believed Polaroid would have a better chance than Kodak had in competing within the digital arena. ‘Nobody was in a better position than Polaroid to capitalise on digital photography,’ said Peter Post, CEO of Cossette Post, a part of Canada’s largest marketing company, Cossette Communications Group. ‘What’s a bigger benefit than its instantaneous nature? Polaroid could have been a major force in digital photography today if somebody had looked out into the culture and tried to figure out where the brand would fit in. They just never went there.’

Ironically, for a brand associated with speed and instantaneity, one of the major criticisms levelled against Polaroid was that it was too slow in reacting to changes in the market. It had failed to anticipate the implications of digital photography, just as it had been unable to respond effectively to the rise in one-hour photo shops a decade before.

The creativity that Edwin Land had displayed when building his company simply wasn’t there anymore. As the famous US entrepreneur David Oreck stated in a lecture on ‘Who’s Killing America’s Prized Brand Names?’ there is a dangerous trend against creativity within many long-established companies.

‘Business managers are averse to risk. Wall Street people don’t want risks; they want this quarter’s results. But the visionary has a higher respect for the brand.

We have to find a way not to stifle the creative person,’ he said. ‘There’s still more poetry than science in business.’

Another failing attributed to the Polaroid brand is that it is a ‘one-trick pony’. It fought to become the one and only name in instant photography and has now paid the price. Yet brands can evolve. If Polaroid had been clever it could have branded digital products as a logical and even inevitable extension of its instant photography range.

Other experts have concluded that Polaroid should have concentrated less on the specific products it made and more on the particular values it represented to the consumer. Even John Hegarty, the chairman of Polaroid’s advertising agency, joined in this attack. ‘Polaroid’s problem,’ he diagnosed, ‘was that they kept thinking of themselves as a camera. But the “[brand] vision” process taught us something: Polaroid is not a camera – it’s a social lubricant.’

If Polaroid had concentrated on the unique ‘sociable’ aspects of the brand, rather than the unique technological aspects, it would have certainly been less vulnerable when technology overtook its core product offerings. But by the end of the 1990s it had left it too late. Debts were mounting, and the brand was by that point associated with the Polaroid camera. The terrorist attacks of 11 September 2001 caused a slowdown in travel, and consequently a decline in demand for cameras and films. These bleaker market conditions proved too much. By that time Polaroid had amassed debts of almost US $1 billion, and the company’s share value slipped from a high of US $60 in 1997 to a low of 28 cents in October 2001. That same month, the company filed for bankruptcy.

Lessons from Polaroid

• Be quick. Polaroid was slow to anticipate and respond to future trends, such as digital photography and one-hour photo shops.
• Don’t be over-protective. In forcing Kodak out of instant photography, Polaroid was defending its brand at the expense of the market. Very few brands can sustain a product category single-handedly over the long-term. Polaroid therefore went against ‘The Law of the Category’ as formulated by Al and Laura Ries. Namely, that ‘leading brands should promote the category, not the brand.’
• Focus on values, not products. According to Kevin Roberts, the US chief executive of Saatchi and Saatchi, for a brand to be truly successful it needs to become a ‘lovemark’ rather than a ‘trademark’. In other words, the brand needs to inspire passion. Roberts cites Coca-Cola, Nike and Harley Davidson as classic lovemarks. In order to create a lovemark, Polaroid would have needed to focus on its value as a ‘social lubricant’ (to borrow John Hegarty’s phrase). This would have helped to increase Polaroid’s elasticity (see below).
• Be elastic. Branding author Jack Trout observed that companies are limited to one idea per brand. When that idea is the product itself, as opposed to the values it represents, brands become inflexible.
• Feel it, don’t fight it. Polaroid’s early brand vision was to establish instant photography as a serious artistic medium. However, by the 1970s this vision was undermined by pop artists who loved its fun and frivolous associations. Polaroid resisted this image for too long, just as it resisted other external factors that impacted on the brand.
• Stay relevant. ‘Brands that don’t keep up can get lost quickly,’ says Peter Post of Canadian marketing firm Cosette Post in a brandchannel.com article by John Kavolefski. ‘They first become irrelevant, then invisible, and then they’re gone.’ Instead of exploiting the opportunity offered by digital photography, Polaroid was concentrating on developing a 35mm colour print film.
• Stay creative. ‘A lot of these older brands start to lose any kind of creativity in their strategic thinking,’ says marketing consultant, Bruce Tait in the brandchannel.com article. ‘The whole idea should be to insert originality into the strategic process, and push to be relevant and differentiated.
• There’s too much belief in marketing as a scientific process. People have too few ideas. The leads to sameness in strategy and that’s why brands die.’
• Be essential. With the arrival of digital photography there is no longer a need for Polaroid’s style of instant photography. For instance, whereas building site managers used to rely on Polaroid in their professional life, they now use digital cameras to take on-site pictures. The only exception is in the legal field, as Polaroid film remains the only thing certain courts accept as evidence because it cannot be altered.

Brand People failure: Planet Hollywood

Big egos, weak brand

Celebrity endorsements can help greatly in boosting sales of a product or service. For instance, when Oprah Winfrey recommended books via her branded book club, they were guaranteed bestseller status. Some brands also benefit from having their founder evolve into a celebrity, à la Richard Branson.

Then there are cases of celebrities turning their hand to business ventures. David Bowie lent his name to USABancshares.com, an Internet bank where you could get Bowie-branded cheque books and credit cards. Manchester United’s Sir Alex Ferguson was a shareholder at toptable.co.uk, a restaurant information and booking service. U2 own a hotel and a nightclub. Bill Wyman owned his own restaurant.

One of the most famous of these celebrity-backed ventures was the Hollywood-themed eaterie, Planet Hollywood. Boasting such high-profile investors as Bruce Willis, Demi Moore, Whoopi Goldberg, Arnold Schwarzenegger and Sylvester Stallone, the chain was guaranteed maximum exposure when it launched in 1991. The company expanded quickly and soon had nearly 80 restaurants worldwide. In 1999, however, the company went bankrupt and numerous restaurants were shut down.

‘Planet Hollywood has gone belly up,’ declared wine critic Malcolm Gluck in the Guardian. ‘Cows, vegetarians, food critics and assorted jealous restaurateurs will be rejoicing at the news that the most hyped chain of eateries in the history of cuisine has been roasted alive.’ As soon as the news was out, Planet Hollywood lost even more customers and kept going in only a few of its original locations, with help of new investors from Saudi Arabia who made a relatively modest investment in the company.

So how could a brand that had achieved such exposure flop within less than a decade?

Firstly, the company expanded too quickly, launching new restaurants before seeing a profit in its original venues. The original plan was to open 300 branches by 2003. Another factor was the food. Most people who eat out go because of the food, but Planet Hollywood never advertised this aspect of its business. In order to achieve long-term success, food or drink has to be the theme. Even McDonald’s is about the food, even if it’s the cost and convenience of it rather than the taste.

At best, Planet Hollywood attracted once-only visitors, lured by the novelty factor. ‘The magnet is purely that of being seen at such a place and seeing what other hip characters are there,’ wrote Malcolm Gluck. ‘The hope that one might catch a glimpse of the backers or the backers’ friends or celebrity hangers-on (who flock to the opening because of the chance of publicity and free food and drink but are never seen again).’ But this is not the basis upon which to build a long-term business with repeat custom, which any restaurant must have in order to survive, let alone expand. ‘It is great for tourists,’ said Richard Harden, co-editor of Harden’s London restaurant guides. ‘Or for those who want a day out with the kids. But it is a one-off. A case of “been there, done that”. There is no reason why the public should come back.’

Lessons from Planet Hollywood

• Celebrity isn’t enough. ‘These bozos thought, cynically, it was enough to trade on their Hollywood backgrounds. Bad move, fellas,’ wrote Malcolm Gluck.
• Word-of-mouth is crucial. Word-of-mouth is more important than advertising and media exposure when it comes to eating out.
• The theme should be tied to the core product. Food, rather than an abstract notion of ‘Hollywood’, should have been the theme.

Brand Extension Failures: Chiquita

Is there life beyond bananas?

Chiquita has been associated with bananas since 1944, the year the fruit supplier was founded. Indeed, this was the brand’s original intention. Not only to get the public to eat more bananas, but to get them to want to buy only those with the Chiquita sticker on them.

However, in recent times the banana association has been something of a mixed blessing, to say the least. After all, bananas represent only a tiny fraction of the entire fresh produce market (less than one per cent). Furthermore, Chiquita has witnessed rival brands successfully make the transition from one type of fruit into other areas. For instance, after years of careful marketing the Dole brand has managed to shift its core identity away from the product category ‘pineapple’ towards the more general attribute ‘delicious and healthy’. This has meant Dole has achieved equal success with other categories of fruit and vegetables.

In recent years, Chiquita has also tried to move away from its core association, by moving into related categories. For instance, in 1987 the company launched Chiquita frozen juice bars. The experiment was a complete disaster, and according to Business Week magazine cost the company over US $30 million.

However, Chiquita hasn’t stopped trying. A decade later it launched a range of ‘exotic juices’ which fared only marginally better. The company has also invested heavily in TV ad campaigns across the United States to inform people that it sells more than just bananas. Indeed, the Chiquita range of fresh produce includes pears, peaches, plums, grapefruits, green vegetables, grapes and cantaloupe. But even after the campaign most consumers and retailers still firmly associated the brand with bananas.

This wouldn’t be so bad, if the company’s banana sales were booming. But Chiquita was badly hurt towards the end of the 1990s with a number of banana-related problems. Quite simply, there were too many of the damn things. Banana production in Ecuador, the world’s leading banana producing nation, more than doubled from 1990 to 1999. This increased supply forced Chiquita to charge lower prices. As a result, the margin of profit diminished and debts mounted.

There were also other problems over which Chiquita had no control. For instance, Hurricane Mitch devastated Chiquita’s banana plantations in Honduras and Guatemala in 1998, forcing the company to spend more than US $75 million rebuilding them.

Chiquita has also accused the European Union of favouritism towards Caribbean bananas grown in former European colonies. The long-running dispute hit Chiquita hard and according to Stephen G Warshaw, president and chief operating officer of Chiquita, the company had about a 40 per cent share of the European market before 1993, but that dwindled to 20 per cent.

Although the EU banana trade policies were changed in 2001, Warshaw is sceptical that the company will be able to regain the dominant market position it once held.

The problems affecting the banana industry, combined with unpaid debts resulting from expansion and its many attempts to broaden its product offering, means the Chiquita brand is now in deep trouble. Whether the brand’s fortunes will be able to curve back up, banana-style, remains to be seen.

Lessons from Chiquita

• ‘Catch-22’ situations should be avoided. Chiquita tried to stretch its brand when banana sales were slipping. This led the company into debt, because it wasn’t selling enough bananas to cover costs. It needed to move beyond bananas to bring in more money, but more money was needed to move beyond bananas. A classic ‘catch-22’.
• Historical identities are hard to shake off. The company has been linked with bananas since the 1940s and that association has been difficult to undo.
• A brand is never under total control. The development of a brand is only ever predictable to a certain extent. Some factors will always be beyond control. Chiquita’s expensive attempts at diversification left the brand illprepared to cope with unavoidable situations such as Hurricane Mitch, the excessive production of bananas from Ecuador and the Euro’s weakness against the dollar.

Brand Idea Failures: Corfam

The leather substitute

In the mid-1960s, chemical giant DuPont invested millions in the promotion of Corfam, a synthetic substitute for leather. But although Corfam was launched in 1963, it had been conceived many years before. Indeed, in the late 1930s researchers at DuPont had discovered ways to make leather-like materials and had experimented with various possible uses. One of the most obvious uses was for footwear. Demographic trends were starting to indicate that the global population was increasing at such a rate that there would soon be a demand for footwear from non-animal sources.

DuPont therefore believed the world would greet the arrival of their hardwearing, shine-preserving, water-repelling leather look-a-like. And indeed, when the product made its first public appearance at the Chicago Shoe Show in the autumn of 1963, it was greeted enthusiastically.

All DuPont had to do now was to find out where exactly Corfam’s place in the footwear market would be. The company had predicted that by 1984, a quarter of US shoes would be made from Corfam, but to do that it would first need to carve a niche for itself. In the United States of 1963, the footwear market could be divided into the following percentages:

• 47 per cent Women’s shoes
• 20 per cent Children’s shoes
• 18 per cent Men’s shoes
• 15 per cent Athletic footwear/Other

Clearly if Corfam was to become as big as it could be, it would need to be used by manufacturers of women’s shoes. It soon became clear, however, that the female shoe market was itself divided – between comfy, everyday shoes and ‘fashion’ shoes made for special occasions.

For all Corfam’s strengths, it was not as flexible or ‘skin-like’ as ordinary leather, and therefore was not suited for those shoes designed for comfort or everyday use. So fashion shoes seemed to be the solution. And yet, even here there was a problem. A synthetic material called polyvinyl chloride (now known to us as PVC) was fast becoming popular owing to its extreme low cost.

Vinyl shoes, which could be coloured or embossed very easily, were perfect for women looking for a ‘throwaway’ pair which may be worn once or twice at special occasions before being discarded.

Furthermore, the leather industry was keen to dampen the appeal of Corfam by lowering its prices and improving quality. This factor, combined with the growing popularity of vinyl shoes, led to DuPont’s announcement in March 1971 that they were to withdraw Corfam. On 11 April 1971, the New York Times referred to Corfam as ‘Du Pont’s $100 million Edsel.’

Lessons from Corfam

• Improve on the original. For a substitute product to work it needs to be better than the original in the minds of consumers. Although Corfam was long-lasting, it lacked the flexibility and ‘breathability’ of leather. It also proved too expensive.
• Remember that there’s no such thing as a certain success. Corfam was, without doubt, one of the most thoroughly researched and developed products of all time. As such, DuPont felt that its prediction that by 1984, 25 per cent of US shoes would be made of Corfam, was a justifiable one. And yet, Corfam wasn’t even around to see 1984, having failed after just seven years.
• Compete on quality or value. When a product is unable to be the best in terms of either quality or value it faces an uphill struggle to convince consumers of its merits.

Brand Extension Failures: Bic underwear

Strange but true

Harley Davidson perfume. Coors spring water. Both of these were doomed to failure because of the brand name’s attachment to an unrelated product. However, the prize for the most bizarre brand extension must go to Bic. The company, best known for producing disposable pens, thought its brand name was strong enough to be applied to other categories. Indeed, it had already achieved success with disposable cigarette lighters and safety razors. The unifying factor here was ‘disposability’. Bic pens, lighters and razors were all throw-away goods. Furthermore, Bic could exploit its well established distribution network and sell the lighters and razors in the same outlets as its pens.

However, when the Bic brand applied its name to women’s underwear, consisting of a line of ‘disposable pantyhose’ they were unable to attract customers. Okay, so the disposability element was still there. But that was about it. Consumers were unable to see any link between Bic’s other products and underwear, because of course there was no link.

The main problem was that the company insisted on using the Bic name. As marketing writer Al Ries has observed, using the same name in unrelated categories can create difficulties. ‘If you have a powerful perception for one class of product, it becomes almost impossible to extend that perception to a different class,’ he argues. ‘Names have power, but only in the camp in which they have credentials and when they get out of their camp, when they lose focus, they also lose their power.’ Although this doesn’t hold true for every brand – Virgin is an obvious exception (and one Ries rarely discusses) – it certainly holds true in this instance.

Furthermore, Bic underwear required a completely new distribution channel and required different production technology. The lighters, razors and pens were all made from injection-moulded plastic, and could therefore share resources. Production and distribution problems, combined with the fact that the product’s function was totally unlike that of the previous products, meant that Bic underwear met an early, and not much-mourned death.

Lessons from Bic underwear

• Exploit existing resources. The other Bic brand extensions made sense because the company could exploit its existing sales force, distribution channels and production technology. None of which came in handy for the range of underwear.
• Be flexible. The brand association for Bic in the mind of the consumer simply wasn’t flexible enough for a move into an unrelated product category.

Brand Idea Failures: RJ Reynolds’ smokeless cigarettes

The ultimate bad idea

Cigarette manufacturers have often thought that the best way to build market share is to come up with new twists on the standard cigarette formula. For instance, Marlboro has had dozens of different varieties in its history, including Marlboro Menthol, Marlboro Lights and Marlboro Medium.

Normally, cigarettes produce new varieties based on different levels of tar. For instance, in the UK the Silk Cut brand produced various low-tar varieties – Mild, Low and Ultra Low. The popularities of such low-tar brands has caused cigarette companies to think of ever more ways to try and convince consumers that their unhealthy and anti-social products aren’t as unhealthy or as anti-social as they might have thought. Similar strategies have been deployed in the beer market, with brands such as Bud Light, Coors Light and Miller Lite.

However, some of these strategies take an extreme form. For instance, in the alcohol market there was the case of the beer brand which tried to sell beer-branded mineral water. The brand was Coors. The water it produced was called Coors Rocky Mountain Spring Water. It was launched in 1990 and survived only two years.

In the cigarette industry, the extreme strategy belonged to RJ Reynolds Tobacco Company known for brands such as Camel, Winston, Salem and Doral. In 1988, when the anti-smoking lobbyists could finally claim the majority of public opinion was behind them, and when passive smoking had been officially recognized as a serious danger to health, the company decided to conduct trials on a smokeless cigarette. In total, RJ Reynolds spent US $325 million on creating a smokeless cigarette which it branded as ‘Premier’.

However, problems became apparent straightaway. First, there was the taste issue. One person who ‘smoked’ Premier complained that it ‘tasted like shit’.

And he was RJ Reynolds’ chief executive. Then there was the difficulty of using the product in the first place, as Reporter Magazine (www.robmagazine.com) explains: ‘Inhaling the Premier required vacuum-powered lungs, lighting it virtually required a blowtorch, and, if successfully lit with a match, the sulphur reaction produced a smell and a flavour that left users retching.’

In addition, there was the damaging rumour that the smokeless cigarette could be used as a delivery device for crack cocaine. Hardly the kind of brand association RJ Reynolds had wanted to create.

One of the major forms of controversy was the brand’s possible appeal among younger people. Here is an extract from a statement by many leading US health organizations shortly after RJ Reynolds announced the new project:

The American Cancer Society, American Heart Association, and American Lung Association have filed a petition with the US Food and Drug Administration (FDA), asking that Premier be regulated as a drug. In filing this petition, we are not calling for an outright ban on Premier. We want simply for it to be properly tested before people use it.

We are especially concerned that Premier’s intriguing high-tech design will lure children and teenagers into the web of nicotine addiction.

RJR’s marketing emphasis on ‘clean enjoyment’ also may lull people who already smoke into a deceptive sense of safety when they really ought to give up the habit altogether.

According to the FDA, any product marketed that claims that it is healthier or safer, must be regulated by the FDA. Conventional cigarettes escape FDA scrutiny because they are promoted for the sheer pleasure of smoking and because the FDA does not consider them to be drugs or food.

In introducing Premier, RJR is stepping beyond that loophole. The RJR claim that Premier is ‘cleaner’ is a poorly disguised way to imply ‘safer’ to thousands of people concerned about the health risks of smoking.

RJR knows that if their ads said ‘safer’ in place of ‘cleaner’ the FDA would step in.

In the meantime, RJR promises that Premier is an improvement over conventional cigarettes that burn with foul-smelling smoke. But, we are skeptical. How can we trust the same industry that still refuses to admit that cigarette smoking is harmful?

The real problem though was that smokers didn’t enjoy using the smoke-free product, and non-smokers didn’t have a reason to. In short, there was no market. After four months of very slow sales, RJ Reynolds cut their losses and

Premier was withdrawn.

But the story doesn’t end there.

By the mid-1990s, concerns about passive smoking led the company to believe there was still a market for smokeless cigarettes. In 1996 it therefore spent a further US $125 million on developing an updated version, this time called Eclipse.

In a press statement, a company spokesman announced the potential appeal of the brand. ‘I think we can all agree that for many non-smokers and for many smokers, second-hand smoke is an annoyance, and to be able to reduce and almost eliminate that annoyance is a very positive step in the right direction.’

The new cigarette made less smoke than standard cigarettes because it didn’t burn. Instead charcoal was used to heat the tobacco. The user drew heated air over the tobacco to release a tobacco and nicotine vapour. As a result, the Eclipse cigarette caused only 10 per cent of the normal level of cigarette smoke, and promised lower levels of tar and nicotine.

However, whether the cigarette actually lowered the health risk of smoking – either for deliberate or passive inhalers – remains questionable. Sorrell Schwartz, a pharmacologist from Georgetown University who researched the tobacco industry, believed the cigarettes could be good news. ‘If it is as smokefree as it’s claimed to be, then clearly the individual’s risk of lung cancer, emphysema, bronchitis would be reduced,’ Schwartz told CNN. But Schwartz’s Georgetown colleague, Dr Naiyer Rizvi, was more sceptical.

‘There are risks that may be related to increasing carbon monoxide in this cigarette and heart disease,’ he told the CNN reporters.

An independent study commissioned by the Massachusetts Department of Public Health found that when it was compared to ultra-low tar cigarettes, the Eclipse cigarette had higher levels of several toxins, especially when the charcoal tip burned very hot from heavy smoking.

This information was clearly damaging to the Eclipse brand, because from the start the marketing activity was designed to accentuate the health angle. Indeed, the original campaign was to include this pitch. ‘The best choice for smokers who worry about their health is to quit. But Eclipse is the next best choice for those who have decided to continue smoking.’

This marketing message provoked opposition from many leading US health organizations. The American Lung Association issued a statement saying, ‘we fear that RJR’s health claims that this device is “safe” or “safer than cigarettes” may discourage smokers from quitting.’

The Campaign for Tobacco-Free Kids joined the attack, with the organization’s president, Matthew L Myers releasing the following statement: ‘RJR’s announcement that it plans to market a safer Eclipse cigarette is taking advantage of the regulation gap created by the US Supreme Court’s decision to remove FDA authority to regulate tobacco. Without FDA oversight, there is no scientific corroboration of these claims by an independent government agency.’

Particularly controversial was the fact that many of the medical experts who had suggested that these cigarettes were less dangerous than standard brands had been doing research paid for by the tobacco company itself. Furthermore, independent medical analysts soon discovered that Eclipse cigarettes presented one health risk which was actually worse than standard cigarettes –glass fibres. John Pauly, from the Department of Molecular Immunology at the Roswell Park Cancer Institute in Buffalo, New York, discovered that 99 out of every 100 Eclipse cigarettes have glass fibres within their filters. These fibres, he told ABC News, were ‘invariably’ inhaled or ingested when smokers took a drag from an Eclipse.

However, despite this massive outcry from health authorities, including the US Surgeon General, the real reason Eclipse failed to ignite the market was because consumers still felt absolutely no desire for a smokeless cigarette.

Lessons from smokeless cigarettes

• Don’t baffle consumers with research. RJ Reynolds spent a great deal of money researching the health aspects of its two brands of smokeless cigarettes. However, this only resulted in mixed messages. Although RJ Reynolds’ research concluded that in many ways the brands were safer, they couldn’t be considered entirely safe. ‘As we all know, no cigarette is safe,’ admitted RJ Reynolds’ CEO Andrew J Schindler. Furthermore, RJ Reynolds’ research prompted opposition from other health authorities who published their own independent findings. Rather than end up looking as if it was acting in the public’s health interests, the tobacco firm only ended up looking manipulative.
• Don’t sell ice cubes to cocker spaniels. Smokeless cigarettes appealed to people who didn’t like the smell of smoke. These people are called non-smokers, and generally tend not to buy cigarettes. Robert McMath in Business 2.0 likened this approach to ‘trying to sell ice cubes to cocker spaniels,’ and asked the seemingly obvious question: ‘Why create a product for a consumer who wants nothing to do with you?’
• Realize that if it has failed once, it will fail again. RJ Reynolds should have abandoned the whole idea once the Premier cigarette failed.

The Fight Against Brand Squatting

By Roman Golovatsky

The opportunities available to the owners of exclusive rights are a constant source of temptation, not least for those seeking an unfair advantage over the competition.It seems that one of the most problematic is the issue of trademark protection. The aforementioned persons would register someone else's, perhaps renowned, trademark in their name, using different sorts of gimmicks to take advantage of oversights committed by the trademark's actual owner.

These problems exist in almost every country alert to the issues of intellectual property protection. The international practice refers to this phenomenon as brand squatting. Exclusive rights give notable advantages in entrepreneurial activity, being the basis of economic policy, allowing the holder to dictate certain conditions to the market. This is why brand squatting is so rife in our country.

By occupying the intellectual property of others, brand squatters often pursue different objectives. In some cases, such activity is performed to eliminate competition from the market or to significantly decrease its market share. In other instances, a trademark is registered with the purpose of its subsequent resale to the actual owner or to the party offering the greater reward.

In Russia, squatting manifested itself mainly in relation to foreign companies, although Russian companies are often targeted as well. The reasons for this vary. One of the main reasons is that foreign companies entering the Russian market do not take adequate measures to protect their means of individualization, their intellectual property.

Thus, according to press sources, a number of famous brands such as IKEA, FORBES, FUNAI, AKAI and many others have been registered in our country without their actual owners knowing anything about it. The registration may be made in the name of Russian companies or foreign companies specially registered for these purposes.

Quite often a foreign company does not plan initially to enter the Russian market directly. Therefore, company products are delivered to Russia in small shipments through intermediaries. When company analysts realize just how attractive the Russian market is, the company's trademarks turn out to be registered in the name of one of its suppliers. Usually this is done to control the shipments of products to Russia and keep the competition away from similar activities.

This illustrates just how pressing this problem is. Russian legislation provides quite a variety of protective measures against squatters.

A common method not related to contesting the registration of a trademark is the filing of an application by an interested party with the Chamber for patent disputes, Rospatent, for an early termination of the protection of a trademark due to its non-use. Granting the exclusive right to a trademark, the state is at the same time interested in it being actively used in commercial transactions, contributing to the development of the economy. This is why, in order to make sure that registered trademarks do not "collect dust," thus blocking its use of third parties, the state, as well as granting exclusive rights also establishes corresponding responsibilities. One of them is the responsibility to use a trademark. The failure to fulfill such responsibilities causes unfavorable consequences in the form of termination of protection of a non-used trademark.

Another method of fighting squatting is to contest the registration of trademarks made in the name of squatters.

In accordance with Article 28 of the Law on trademarks, the granting of protection to a trademark may be contested or deemed invalid in the event where the trademark has been registered in violation of Articles 6, 7 of this law. Therewith, the handling of this category of cases is laid upon the Chamber for patent disputes, which initiates proceedings based on a duly filed objection to the granting of protection to a trademark.

Item 3 Article 6 of the Law on trademarks prohibits registration of trademarks representing or containing elements which are false or may mislead the consumer as regards the product or its manufacturer.

A rather common case of squatting is the registration of a trademark, reproducing the trade name of a successful commercial firm. According to Article 138 of the Civil Code of the Russian Federation, a trade name and a trademark are "equal" means of individualization. Protection of trade names is no less significant for the development of competition than protection of trademarks, since they too contribute to recognition of a commercial entity in commercial transactions and are an integral part of its status.

In accordance with item 3 Article 7 of the Law on trademarks, a mark identical to a trade name (or its part) protected in the Russian Federation in relation to homogenous goods may not be registered as a trademark, if the right to the trade name arose prior to the priority date of the trademark being registered.

Talking about squatting in the context of competition issues, one should also note the protection granted on the basis of antimonopoly legislation. The majority of squatting cases are related to bad faith competition among commercial entities, this is why the procedures stipulated by antimonopoly legislation may turn out to be the last chance for the actual owner to recover their rights on intellectual property.

The antimonopoly legislation prohibits any actions related to acquiring or using exclusive rights for the means of individualization of a legal entity, its products, works or services aimed at unfair competition.

Issues related to the violation of antimonopoly legislation are handled by the federal antimonopoly authority, whose functions are currently performed by the Federal antimonopoly service of the Russian Federation, acting through its territorial subdivisions. Having established bad faith competition as fact, the antimonopoly authorities forward their decision to Rospatent to terminate, early, the registration of the given object of exclusive rights or to recognize its registration as invalid, in accordance with the procedure established by the trademark law.

Therewith, according to sub-item 4 item 1 Article 28 of the Law on trademarks, protection of a trademark may be contested and recognized as invalid in full or in part during the whole term of protection, if the actions of a rightholder related to trademark registration have been duly recognized as an act of bad faith competition.

In the event of a squatter filing a suit, the actual owner of a trademark or a person, to whom the bad faith demands were addressed may base their defense on Article 10 of the Civil Code of the Russian Federation. This article prohibits any actions by individuals or legal entities performed with the sole purpose of bringing damage to others, nor does it allow the use of civil rights for the purpose of limiting competition.

Summarizing the above, we may conclude that Russian legislation provides diverse protective measures against squatting, different in their implementation but having the same objective — not to allow the obtainment of exclusive rights to a trademark by an unrelated person or entity. An effective defense against squatting resulting in minimal losses for the actual rightholder is only possible with clear strategic planning, choosing legal instruments for the recovery of occupied intellectual property depending on the given case.Roman Golovatsky is an Associate at DLA Piper in St. Petersburg.

Brand Extension Failures: Virgin Cola

A brand too far

Many brands fail when they move into inappropriate categories. For instance, Harley Davidson perfume proved to be an extension too far.

Virgin, however, is one company that seems to be able to apply its brand name to anything. Although Richard Branson’s empire began as a record label, signing groundbreaking acts such as the Sex Pistols, it now encompasses virtually everything – from airlines to financial services.

An article which appeared on 27 August 2000 in the UK newspaper The Observer explained the way in which members of the public can ‘live a Virgin life’:

Every morning you can wake up to Virgin Radio, put on Virgin clothes and make-up, drive to work in a car bought through Virgin using money from your Virgin bank account. On your way home you can pop into a Virgin Active gym. At weekends you can use a Virgin mobile phone or Virgin’s Internet service to find out what is on at the local Virgin cinema. As you head off on holiday on a Virgin train or plane, you can play Virgin video games stopping only to buy your Virgin vodka in duty free. If you meet someone on the beach and one thing leads to another, the Virgin condoms are in the Virgin hotel minibar.

When love blossoms, you get married with Virgin Brides and buy your first house with a Virgin mortgage and get a joint Virgin pension. In most cases, these brand extensions are successful. However, sometimes even Branson, dubbed ‘the people’s capitalist’, can stretch himself too far.

In the mid-1990s, the scale of his ambitions for the Virgin brand became clear. ‘I want Virgin to be as well-known around the world as Coca-Cola,’ he was quoted as saying. So what better way to achieve this goal than to enter the cola market itself. He therefore decided to join forces with Cott Corporation, a Canadian private-label soda maker, to produce cola under the Virgin name. In doing this, he was placing his brand with what he referred to as the ‘cola duopolists’. Namely, Coca-Cola and Pepsi.

Immediately, the move raised eyebrows among those who knew the market well. ‘It would be easier to make a snowman in July in Florida than to take on Coke and Pepsi,’ observed John Sicher, publisher of the US trade publication, Beverage Digest. But Branson seemed to relish the challenge, launching the drink to the US market in spectacular style. He rode a vintage Sherman tank through New York’s Times Square, aiming fire at a huge Coca-Cola billboard. He also placed his own 40-foot Virgin Cola billboard right above the Times Square Virgin Megastore.

‘The signage alone was worth the rent of the entire building,’ he joked at the time. ‘The store is a bonus.’

However, the new cola brand struggled on both sides of the Atlantic.

Although it was priced 15–20 per cent lower than the two leading brands, not enough consumers were being won over. Part of the problem was distribution. Coca Cola and Pepsi managed to block Virgin from getting crucial shelf space in half the UK’s supermarkets. Meanwhile, Coke doubled its advertising and promotion budget. As Rob Baskin, Coca-Cola USA’s spokesman said: ‘We take all competition seriously.’

Ultimately, Coca Cola and Pepsi’s hold on the market has proven too strong and Virgin Cola failed to make a serious dent in their worldwide sales.

Even on Virgin’s home turf, the UK, the brand struggled to gain 3 per cent of the market and it has never made a profit.

Lessons from Virgin Cola

• Strong brands depend on exploiting competitors’ weaknesses. ‘We often move into areas where the customer has traditionally received a poor deal, and where the competition is complacent,’ Branson once said, explaining Virgin’s brand strategy. However, Pepsi and Coca Cola are anything but complacent.
• Distribution is everything. If you can’t get the product on the shelves, it will never outsell its competitors.

Brand PR Failures: The story of Exxon

Don’t say a word

Many companies and organizations have had to deal with a crisis during their history. Only a very few, however, come to represent corporate incompetence and irresponsibility through one critical event. Oil company Exxon is among them.

In 1989, the Exxon Valdez oil tanker ran aground and began spilling oil off the coast of Alaska. Within a very short period of time, significant quantities of the tanker’s 1,260,000 barrels had entered the water, making it the largest tanker oil spill in US history.

At the moment of impact the ship’s third mate, Gregory Cousins, who was not certified to pilot the tanker into those waters, was at the helm. The whereabouts of the captain, Joseph Hazelwood, at the time of the accident was not immediately explained. A Coast Guard investigator had the blood of the captain and the third mate tested for alcohol. The results were that the captain had unacceptably high levels of alcohol in his blood even nine hours after the accident. The captain was later fined and sentenced to 90 days in prison, a sentence many considered ‘too light’.

Efforts to contain the oil spill lagged from the start. ‘The initial response was inadequate and didn’t match the planned, outlined response measures to be taken in a spill,’ said Dennis Kelso, commissioner of the Alaska Department of Environmental Conservation. ‘As of 24 hours into the spill, we still haven’t seen adequate containment.’ According to most observers, the company did too little and too late. Not only was the action to contain the spill slow to get going but the company refused to communicate openly with the press. The Exxon Chairman, Lawrence Rawl, was immensely suspicious of the media, and reacted accordingly.

Within hours an army of journalists had arrived to begin extensive coverage. A company spokesman pointed to the existence of procedures to cover the eventuality – procedures which the TV shots belied. When asked if he would be interviewed on TV, Rawl’s response was that he didn’t have time for ‘that kind of thing’.

While the company was getting off to a bad start with the media, the operation on the ground was failing to control the spill. Around 240,000 barrels had been spilled, with another million still on the ship. During the first two days, when calm weather would have allowed it, little was done to contain the spillage. This spillage spread out into a 12 square mile slick.

Then the rain and wind started to make things worse, meaning further containment was near impossible. A week later the company was still tight-lipped. Following President Bush’s declaration that the spill represented a ‘major tragedy’, Frank Iarossi, the Director of Exxon Shipping, flew to Valdez to hold a press conference. It went badly. Small pieces of good news claimed by the company were immediately contradicted by the eyewitness accounts of the present journalists and fishermen.

John Devens, the Mayor of the Alaskan town Valdez, commented that the community felt betrayed by Exxon’s inadequate response to the crisis. ‘Over the years, they have promised they would do everything to clean up a spill and to maintain our quality of life. I think it’s quite clear right now that our area is faced with destruction of our entire way of life.’ Alaskan Lieutenant Governor Stephen McAlpine also said that he was ‘severely disappointed’ in the company’s response. ‘Despite all statements to the contrary, I don’t think they ever had a handle on it.’

Eventually, the Exxon boss deigned to go onto television. In a live interview he was asked about the latest plans for the clean-up. Rawl started to look nervous. It turned out he had neglected to read these, and cited the fact that it was not the job of the chairman to read such reports. He placed the blame for the crisis at the feet of the world’s media. Exxon’s catastrophe was complete.

The consequences for Exxon of both the disaster, and the poor way in which it was handled, were catastrophic. The spill cost around US $7 billion including the clean-up costs. Most of this was made up of the largest punitive fines ever handed out to a company for corporate irresponsibility.

The damage to the company’s reputation was even more important, although more difficult to quantify. However, Exxon fell from being the largest oil company in the world to the third largest. The ‘Exxon Valdez’ became synonymous with corporate arrogance, and the story remained prominent in the media for over a year. According to a 1990 US news poll, 65 per cent of respondents said that ‘the Valdez oil spill was the key element in raising public consciousness about environmental issues.’

Lessons from Exxon

• Live up to your promises. The company failed to show that it had effective systems in place to deal with the crisis – and in particular its stated ability to move quickly once the problem had occurred was not in evidence.
• Act like a good corporate citizen. Exxon acted indifferently to the environmental destruction, and therefore did little to help the company’s case.

Brand culture failures: Quaker Oats’ Snapple

Failing to understand the essence of the brand

In 1994, food giant the Quaker Oats Company bought a quirky soft-drink brand called Snapple for US $1.7 billion. The company felt confident that the drink brand was worth the price tag, because they had already achieved an astounding success with the sports drink Gatorade.

However, in terms of brand identity the two drinks couldn’t have been further apart. Gatorade was about sports and a high-energy, athletic image. Snapple, on the other hand, had always been promoted as a New Age and fashionable alternative to standard soft drink brands.

As many commentators at the time observed, Quaker Oats simply didn’t understand what the Snapple identity was all about. Specifically, there were two main reasons why Quaker’s three years in charge of Snapple diminished the brand’s value.

Reason number one has to do with distribution. Before 1994, most Snapple drinks were sold at small shops and petrol stations. However, Quaker deployed its usual mass marketing techniques and placed the brand in supermarkets and other inappropriate locations.

The other problem was the way Quaker decided to promote the product, abandoning eccentric advertising campaigns in favour of a more conservative approach. The day after Quaker announced that it would sell the Snapple drink business for US $300 million (over five times lower than the price they had bought it for), the New York Times pointed the finger at the misguided advertising campaigns. ‘Quaker discontinued its quirky campaign featuringa Snapple employee named Wendy Kaufman, and replaced it with one in which Snapple boasted that it would be happy to be third behind Coca-Cola and Pepsi in the beverage market.’ The ‘real life’ US advertising featuring Wendy Kaufman, a receptionist reading fan letters from consumers, had been a real hit, but Quaker decided to come up with a new advertising campaign using the same company which produced its Gatorade campaigns. The end result was a counterproductive advertising campaign which succeeded in ‘normalizing’ Snapple’s previously quirky identity.

As sales started to slide, Quaker believed it held the solution – send sales reps out on to the streets to ask people to try the product for free. Then the company back-tracked on the new Snapple advertising strategy with artier ads more in tune with the brand’s original identity. But it didn’t work.

Snapple was fast losing its innovative image, along with its customer base. When Quaker sold Snapple to Michael Weinstein and his colleagues, the brand was in trouble:

We inherited a brand in a deep sales slide, losing 20 percent annually, and a demoralized organization. At the time Snapple was six times the size of our company, but only two Snapple headquarters personnel from Chicago chose to join the new team in New York. Few outside observers believed a small beverage company competing with Coke and Pepsi and with a new team could turn Snapple around, but we outlined a strategy and vision of success that the entire organisation could rally around.

In an interview with Fast Company in 2001, Michael explained how his company, called Triarc, managed to undo the marketing and advertising failures which occurred under Quaker’s ownership of the brand. ‘We tried to create an atmosphere that was fun and timely,’ he said. ‘We introduced our first new product two weeks after we bought the company. That’s fast.’

Another part of the strategy was to bring back the adverts featuring Wendy the receptionist.

Gradually, Snapple’s original customer returned and the brand again increased in value. In 2000, Cadbury Schweppes bought Snapple for US $1 billion and Michael Weinstein moved with the brand. He is currently the president of ‘global innovation’ at Cadbury, and Snapple is now fully restored after its rather rocky ride.

Lessons from Snapple

• Accept that different brands need different distribution. Quaker believed that Snapple could be pushed through Gatorade’s distribution system. ‘It turned out that Quaker’s distribution competences could not be leveraged to push Snapple because the image of the two brands is very distinct,’ says Sanjay Goel, an assistant professor at the Department of Management Studies at the University of Minnesota. Snapple’s New Agey image had been supported by the fact it had been sold through thousands of smallsized and independent distributors, Quaker decided it was best to use supermarkets and other larger outlets.
• Understand the brand. Ultimately, Quaker failed to hold onto Snapple’s brand value because it did not understand the essence of the brand identity.

Brand Culture Failures: CBS Fender

A tale of two cultures

For guitar fans, the Fender brand is an icon. Fender guitars, such as the Stratocaster and the Telecaster, were associated with the rock and roll scene of the 1950s and were later played by many of the most famous rock musicians. John Lennon and George Harrison both owned Stratocasters, and Jimi Hendrix also helped to turn that particular model of electric guitar into a legend.

However, at some point in the early 1960s Leo Fender made the near-fatal decision to sell his company. In 1965 he found a buyer in the form of CBS, which already at that time was one of the largest players in the music business, with its record labels and radio shows proving extremely popular and successful. The deal was viewed by both parties as a logical one. After all, CBS was in the music business and Fender made musical instruments. How was that for synergy?

Initially, the move seemed to be a success. As the electric guitar revolutionized rock music in the late 1960s and the 1970s, CBS-Fender remained the main manufacturer of the instrument. Eric Clapton, Mark Knopfler and almost any other guitar legend from that period played a Fender guitar.

By 1975, though, the company started to lose market share. ‘The problem was, CBS didn’t know all that much about real manufacturing,’ says Morgan Ringwald, the current PR director for Fender Musical Instruments Corporation.

‘After about ten years, they lost sight of all quality control, let their patents lapse, and forgot to keep putting money into research and development. Pretty soon, Asian manufacturers were able to make cheaper and better copies of Fender designs.’

The company’s major selling point – the Stratocaster guitar – was neglected. According to the Fender lover’s Web site, Fender-strat.com, this was a major mistake:

The conglomerate eventually did what no-one else could: make the Strat less powerful. As time went by, new players bought from Fender while experienced players turned to vintage Strats for the eternal brilliance of its design, combined with the understated remarkable versatility [. . .] By 1985, the Strat had been copied, stripped, doctored and otherwise abused.

In 1981 CBS had recruited a new management team to ‘re-invent’ the Fender brand. They put together a five-year business plan based on the idea of improving the quality of Fender products. However, the real turnaround didn’t occur until 1985, when CBS decided to divest all of its non-broadcasting businesses. Fender was subsequently purchased by a group of employees and investors led by William Schultz.

The Fender company which emerged from this ‘re-birth’ (as Fender fans like to call it) was certainly smaller than CBS-Fender had ever been. CBS sold only the Fender name patents, and the parts that were left over in stock. No buildings or machines had been involved in the deal. However, what the new Fender company did have was a team of employees who understood exactly what the Fender brand was all about. Indeed, many had been with the company since Leo Fender had begun making guitars and amplifiers back in the 1940s. It didn’t take long for the brand to reclaim its place in the hearts of guitar fans worldwide.

During the 1990s, Fender’s sales increased dramatically and the company extended its product offerings around the growing requirements of the electrical guitarists, producing not only strings and guitars, but also audio products such as amplifiers and mixing boards. The secret to Fender’s continued success rests in its understanding of the values that made the brand so popular in the first place – namely, craftsmanship and a deep understanding of the contemporary guitarist. When those values were temporarily forgotten, during CBS’ reign of 1965 to 1985, the brand suffered.

Now, Fender is back on track and its customers are more appreciative of the brand than ever before. As the Fender-strat.com Web site enthuses, ‘Fender has maintained its hold on the hearts, minds, and fingers of guitarists everywhere with relentless quality, as well as some of the highest research and development commitments in the industry.’

This view is supported by another non-official guitar Web site, harmonycentral.com. On that site, Fender-lover Richard Smith congratulates the brand on surviving the CBS years and on its return to its core values. ‘The Fender company is still shaping the way the world plays and hears music, and making life better for guitar players,’ he says.

Lessons from Fender

• Understand your product. One of the main problems CBS faced was that it had little real understanding of what exactly made Fender so special. ‘Most companies don’t do their homework,’ says Howard Moskowitz, the president of New York-based market research firm, Moskowitz Jacobs. ‘They don’t really know anything about the dynamics of their product, about the drivers of liking in a product that they’re going to go into.’
• Focus on what built the brand. CBS neglected the attention to quality and craftsmanship which had established the Fender brand in the first place.

More brand culture failures (part 1)

Schweppes Tonic Water in Italy

In Italy, a promotional campaign for Schweppes Tonic Water failed when the product name was translated as ‘Schweppes Toilet Water’. Subsequent campaigns have had better results.

Electrolux in the United States

Scandinavian vacuum manufacturer Electrolux raised a few eyebrows in the United States when it came up with the slogan ‘Nothing sucks like an Electrolux’. It later reworked its strap line.

Gerber in Africa

When baby food manufacturer Gerber started to sell its products in Africa it used the same packaging as for Western markets. This packaging included a picture of a baby boy on the label. Surprised at low sales, Gerber discovered that in Africa, as most customers can’t read English, Western companies generally put pictures on the label of what’s inside.

Coors in Spain

Coors beer had equally bad luck in Spain with its ‘Turn it loose’ slogan. It translated as ‘You will suffer from diarrhoea’.

Frank Perdue’s chicken in Spain

Sticking with Spain, US food brand Frank Perdue’s chicken campaign created confusion with the strap line ‘It takes a strong man to make a tender chicken.’ In Spain this became ‘It takes an aroused man to make a chicken affectionate.’

Clairol’s Mist Stick in Germany

When Clairol launched its ‘Mist Stick’ curling iron in Germany, the company apparently had no idea that ‘Mist’ was a slang term for manure. The company discovered that few women were crying out for a manure stick.

Parker Pens in Mexico

Parker Pens alarmed its Mexican market with ads intended to read ‘It won’t leak in your pocket and embarrass you’ because, in fact, the ad stated ‘It won’t leak in your pocket and impregnate you.’ The company had managed to confuse ‘embarrass’ with the Spanish verb ‘embrazar’ or ‘to impregnate’.

American Airlines in Mexico

When American Airlines decided to advertise the luxurious aspect of flying business class to their Mexican customers, they thought it would make sense to focus on the leather seats. They therefore used the slogan ‘fly in leather’ which, in Spanish, read ‘Vuelo en Cuero’. What the Spanish dictionary had neglected to inform them was that the phrase ‘en cuero’ is a slang term for ‘in the nude’. It soon emerged that there was little demand for mile-high naturism among Mexico’s business flyers.

Vicks in Germany

Vapour-rub manufacturer Vicks failed to attract much custom for its products in Germany. The problem was that ‘V’ is pronounced as an ‘F’ in German, meaning Vicks sounds like the German equivalent of the ‘f ’ word.

Kentucky Fried Chicken in Hong Kong

KFC’s ‘finger lickin’ good’ slogan is used the world over to highlight the tastiness of the product. However, when the phrase was translated into Chinese for the Hong Kong market, it came out as ‘eat your fingers off ’. Needless to say, most customers opted for the fries instead.

Read more about Car naming failures

Brand idea failures: The Hot Wheels computer

Stereotyping the market

A computer aimed specifically at children may seem like a good idea. Patriot Computers certainly thought so, which is why they came up with the Hot Wheels PC in 1999. These computers, which came with Intel chips and Windows 98 software, were targeted primarily at the boys’ market and the hardware was decorated with racing car imagery including the Hot Wheels flame logo. In addition, Patriot Computers had made a deal with Mattel to produce a Barbie computer aimed at girls. The boys’ computer was blue, the girls’ was pink with a flowery pattern.

Both products flopped. One of the reasons, according to analysts, was the crude attempt at gender marketing. Pamela Haag, director of research at the American Association of University Women’s Educational Foundation, told the Wall Street Journal that this type of marketing was ‘very out of step with what adult men and women are doing, and therefore with what children want – it really is anachronistic.’

Justine Cassel, professor at the MIT Media Lab and co-author of From Barbie to Mortal Kombat, also thought the computers were crudely conceived.

‘Just because you cover a traditionally boy product with girlish clichés doesn’t guarantee girls will like it,’ she said.

The computers were also criticized as bad cases of surface design trying to save a standard product. ‘It was just a desktop computer with some stickers on it,’ wrote Business 2.0. Shortly afterwards the products flopped. Patriot Computers went bankrupt.

Lessons from the Hot Wheels computer

• Don’t resort to stereotypes. Dressing up a computer with stereotypical gender specific imagery was not enough to entice children or their parents.
• Get designers involved at the start. ‘To avoid such costly flameouts, designers should be involved with projects from the outset, giving engineers input on product usability and interface issues,’ advised Business 2.0.

Internet and new technology failures: VoicePod

Failing to be heard

Technology company Altec Lansing learned the importance of marketing with its failed VoicePod digital recorder. As the leading maker of computer speakers, Altec was sure it had a hit on its hands with its innovative recorder that attached audio messages to e-mail.

PC World magazine said the VoicePod looked like ‘a mouse on steroids – a lot of steroids – and promised to make your voice dramatically more helpful as a tool for the PC.’ Gone, said Altec, are the days of unnecessary typing and fumbling for multimedia controls as its device offered the benefits of simple installation and use. VoicePod let users record and attach voice files to

documents and e-mail messages with a few simple pushes of a button. There was another handy feature of the VoicePod: personal to-do lists. Users could dictate a short message to themselves and then save it.

The design was also technologically advanced as it exploited the company’s ‘signal processing technologies’ that used noise removal filters and other technology to allow for minimum background noise and clear recording.

‘With these features, the VoicePod could be a sound investment,’ reckoned PC World. Not enough computer users agreed.

The trouble was, poor marketing had led to a lack of interest and awareness.

The company was so confident that consumers would snatch the product off the shelves that it spent little money and effort on promotion.

As a result sales were so poor that the company pulled the VoicePod from the market after just one month.

Lesson from Voice Pod

• Don’t ignore marketing. ‘Next time,’ Altec president and CEO Mark Lucas told Business 2.0 magazine at the time of the failure, ‘we’re making a huge marketing push.’