Marketing Thoughts by Domus Inc.

GM is hoping its Chevy Volt will become a huge success, and from a product design perspective they might well have a great car. It certainly is the only car that competes in its exact category. From an energy perspective, there will be four basic kinds of cars on the market by the end of this year – the traditional internal combustion engine cars, the hybrids like the Prius and Fusion Hybrid that run primarily on gas but switch to electric at times to improve gas efficiency, the pure electric like the Tesla and the upcoming Nissan Leaf, and the Volt. The Volt runs as a pure electric car until the battery is drained, at which point it seamlessly switches over to its gas engine. So GM is positioning the Volt more directly against pure electric cars like the Leaf, but for people who are nervous about the battery dying on a longer trip.

Compared to the Leaf, which will also be sold in the US by the end of this year, the Volt has a lower capacity battery (40 miles vs. 100 miles) and is more expensive ($41,000 vs. $33,000 – although each qualifies for tax breaks). So, unfortunately for GM, consumers are forced to trade better electric milage and significantly more more money for the peace of mind afforded by the gas engine. It won’t be an easy sell, although it’s possible.

The Volt’s price, though, presents GM with a much bigger sales problem because of Chevy’s brand positioning. Chevy has always been GM’s lower cost, every man’s car (separate from the iconic Corvette). Virtually all of its car models have starting prices of between $10,000 and $20,000. People expect Chevy’s to be less expensive. So the Volt’s price will be its albatross – it doesn’t fit Chevy’s brand positioning. Moreover, people don’t associate the Chevrolet brand with leading edge technology and innovations, which clearly GM is trying to do with the Volt.

GM would have been much better off if they had launched the Volt under the Buick or Cadillac brand. In addition to better lining up the car with the brand’s established position in people’s minds, GM could even have raised the price a little to include a larger electric engine. It would then have a car that beats the competition on all fronts.

The time is coming soon, though, when we’ll see how well GM’s strategy worked. By the end of this year the Volt will be on the market, along with competitors like the Nissan Leaf. As an early indicator, though, consider a few interesting statistics. The Nissan Leaf is significantly ahead of the Chevy Volt in terms of internet search volume (Google Trends) and Facebook fans (Nissan Leaf Facebook page vs. Chevy Volt Facebook page).

Domus is a marketing communications agency based in Philadelphia. For more information, visit us at http://www.domusinc.com.

Google’s Nexus One phone was an interesting marketing experiment – introduce a new, self-branded phone that Google sold directly, not through the wireless carriers. Unfortunately, sales never reached high enough targets and this week Google announced that it has ended production of the phone (through its manufacturing partner, HTC) and is closing its web store.

The questions of why the phone failed and even whether the phone failed are even more interesting, though. We’ll never know for sure, but here are some thoughts.

First, assuming the phone did fail (which we’ll come back to later), one possible reason is that Google did not pay enough attention to its four marketing Ps – product, price, promotion, and place (distribution). Let’s assume that the phone itself was good, so that leaves the other Ps.

First let’s look at the distribution channel (place). Cell phones – more than most other products – are inextricably entwined with their service provider, so attempting to bypass the service provider was already a daunting gamble by Google. Even Apple, which garnered enough interest in its phone independent of the network, still chose a service provider with whom to partner.

The cell phone distribution channel is especially important because of the marketing effort that the service providers put into their phones. First, there’s the next P, price. As everyone knows, you can always get phones for less than the retail price when you buy from the wireless carrier (as long as you accept the two-year commitment). So why buy outside of the wireless carrier? We’ve all been conditioned to think that way.

And finally, let’s consider the last P, promotion. Google didn’t just introduce a branded phone. More importantly, it also introduced a phone operating system (Android) that it hoped to induce others to use in their phones. One of those manufacturers who immediately decided to do so was Motorola. They, in conjunction with Verizon (as opposed to Google’s approach of going it alone), launched a huge advertising campaign for the new Droid phone (“Droid Does”) at the same time that Google started selling its Nexus One. With Verizon’s massive marketing push, everyone knew about Droid, everyone got a good price for Droid, and everyone associated the name, “Droid”, with “Android”. Where did that leave Nexus One? Apparently nowhere.

However, all of the above was based on the assumption that Google did fail with the Nexus One. What if, though, the primary purpose of the Nexus One was to generate enough buzz about the Android operating system to propel all Android-based phones (i.e., Google-based phones) to mainstream success? Once the buzz did its work, the Nexus could happily be retired. In that sense, maybe the Nexus One was an outstanding success. Android-based phones are quickly challening the iPhone for smartphone market share. Google never was in the physical product business anyway.

Domus, Inc. is a marketing communications agency specializing in integrating the digital and social media worlds with classic marketing principles to deliver high returns on investment for our clients. For more information, please visit us at http://www.domusinc.com.

Last year Microsoft introduced the world to an up-and-coming technology called “Project Natal”, its Xbox appliance that enables gamers to interact with Xbox games without any hand-held controllers. This week at the E3 conference Microsoft is finally introducing it for delivery this holiday season. But as part of all of the fanfare, Microsoft officially named the device “Kinect”.

Now, “Kinect” is actually a good name for the product, and the device has the potential to be incredibly successful, but that’s not the point of this blog post. Rather, I’d like to muse about the strategy to use one name for the many months leading up to the actual launch, and then change the name just before the launch. Microsoft has always done that with its operating systems. For example, Windows Server 2008 was referred to as “Codename Longhorn” from early 2005 through August, 2007, when Bill Gates announced its official name in anticipation of its February, 2008 release.

Although that might be fine with operating systems, especially those designed for the corporate server market, Project Natal – er, uh, Kinect – is different. It is a consumer product, not a corporate one. And 2010 is not 2005. When Microsoft announced Project Natal in 2009, it released a video showcasing its capabilities. That video has been on the Top 10 viral video charts every month since then. It has received millions of views, and virtually every gamer has heard about it. Moreover, forums and social media sites have been abuzz over it non-stop.

In other words, social media is the name of the game in 2009/2010, for those companies who know how to use it well. Microsoft certainly did use it well this past year, getting the whole gaming world knowing about and discussing their upcoming product. But they didn’t hit a home run because of their naming tactic. Some of that branding value will now disappear because the word “Natal” no longer exists for Microsoft. They absolutely can – and will – spend lots of money to imprint the new name in people’s minds, but a more nimble and cost-conscious company might have come up with the final brand name a year ago. Then they could have gotten their branding done for them without a massive advertising campaign (allowing that money to be used more effectively elsewhere).

Domus is a marketing communications agency specializing in integrating social media, digital, and traditional advertising and PR into effective brand strategies. For more information, please visit us at http://www.domusinc.com.

The NY Times reported that yesterday GM sent a letter to its headquarter employees that they should stop saying “Chevy” when communicating with people, instead exclusively using “Chevrolet”.

“We’d ask that whether you’re talking to a dealer, reviewing dealer advertising, or speaking with friends and family, that you communicate our brand as Chevrolet moving forward,” said the memo, which was signed by Alan Batey, vice president for Chevrolet sales and service, and Jim Campbell, the G.M. division’s vice president for marketing.

“When you look at the most recognized brands throughout the world, such as Coke or Apple for instance, one of the things they all focus on is the consistency of their branding,” the memo said. “Why is this consistency so important? The more consistent a brand becomes, the more prominent and recognizable it is with the consumer.”

Every once in a while some piece of news leaks out that just offers so much opportunity for fun. Everyone is talking about how stupid this is. Just as a few examples:

• Do they truly think that Chevy is made or lost as a brand by refusing to use the name that most of the public regularly uses?
• Might the GM executives have considered that the inconsistency of using “Coke” as an example of why they shouldn’t use a brand nickname?
• If they wanted to tell their employees not to use “Chevy”, might they have also considered changing their web sites, TV, and other advertising? All of them still use “Chevy” throughout. (In fact, tonight every TV commercial that I saw referenced “Chevy” exclusively – not a single mention of “Chevrolet”. And the web site presented was chevydealer.com, not chevrolet.com.)

Did Alan Batey and Jim Campbell not think that in today’s internet-based social media world, their ridiculous directive wouldn’t be discussed by everyone around the world? Did they not realize that they would be mocked and that Chevy’s (and GM’s) brand image would be hurt>

Isn’t the internet fun? Too bad not everyone knows yet how to play in it.

Domus is a digital agency and a full service marketing agency that combines expertise in marketing and technology to effectively communicate brand platforms. For more information visit us at http://www.domusinc.com.

Everything has a natural cycle of life – even major brands. Yesterday the Wall Street Journal reported that Ford Plans to Kill Storied Mercury”. Although as early as 1985 Mercury was still dominant US brand, since then it has increasingly declined. In 1985 Mercury sold over 500,000 vehicles, but by last year that number had dropped to just over 92,000.

For 25 years (and especially over the last 10) the brand has declined. As such it is a good business decision for Ford to cut its losses and move on. After a certain point, there is not much that can be done to revive a dying brand, no different than a dying person.

That doesn’t mean that there is no room in Ford’s line-up for another brand – Volkswagen does very well with multiple brands – but just no longer Mercury. Mercury’s demise began when it no longer stood for anything special, unless you consider replicating a Ford sister car with fancier trim as something special.

As such, hopefully Ford Motor Company has learned the importance of brand management for its future. Good brand management means that you don’t only declare and communicate the position in the consumers’ minds that you intend to hold, but that you consistently and exclusively deliver products and/or services that meet the consumers’ changing ideas of what that position means. Mercury failed to do so.

Moreover, it’s a recognition that sometimes a brand position can be squeezed into non-existence by other brand positions. Ford, Mercury, and Lincoln represented a “ladder of brands” strategy, giving people smaller stepping stones between levels of prestige. But when foreign auto makers started selling higher quality cars with more standard features at lower price points, Ford had to respond by improving its main Ford brand, which squeezed Mercury from the bottom. Similarly as Lincoln offerred cars at lower price points, it squeezed Mercury from the top. That has left no distinguishing position for Mercury.

Domus is a Philadelphia-based advertising and PR firm as well as a digitial and social media marketing agency. For more information, visit us at http://www.domusinc.com.

In less than a month, the most-watched sporting event on the planet will begin, the 2010 World Cup. But an associated competition is now well underway – brand sponsorship and advertising, specifically the rivalry between Adidas and Nike. Adidas is currently the biggest world cup brand, sponsoring major players and fully one-third of the teams going to South Africa. But Nike is not far behind, sponsoring some of the biggest names in the sport as well as their own teams. Worldwide, Adidas sells about $1.8 billion in soccer gear while Nike sells about $1.7 billion.

This week Nike launched their official World Cup campaign with a new three-minute video created by Mexican director Alejandro Inarritu (Babel, 21 Grams). Called “Write the Future”, it features soccer stars like Wayne Rooney, Franck Ribery, Cristiano Ronaldo, Landon Donovan, and Ronaldinho, as well as non-soccer stars such as Kobe Bryant, Roger Federer, and Homer Simpson.

Adidas, on the other hand, won the rights to be the overall World Cup official sponsor, so it will be interesting to see who wins this battle as Adidas counters Nike’s move.

Domus is a marketing and digital advertising agency based in Philadelphia. For more information, visit us at http://www.domusinc.com.

Volkswagen deserves kudos for creating an integrated campaign that spans traditional and new media in ways that support and enhance each other, while effectively working towards a classic marketing goal. Basically, Volkswagen is trying to own the word “fun” in consumers’ minds – VWs are fun, driving VWs is fun, VW is a fun company – and they’re doing a pretty good job laying claim to that brand position.

First VW started their “Fun Theory” campaign. This includes a number of experiential locations that entice people to choose a fun option that also coincides with useful behavior (walking stairs instead of an escalator, throwing trash in receptacles instead of littering, etc.). These locations have, in turn, become the basis of much local and worldwide PR. Moreover, videos of people experiencing the VW locations have been the basis of viral internet videos and other social media sites.

Finally, VW has complemented its “Fun Theory” campaign with its ubiquitous “Punch Dub” television advertising. Look at one of those commercials and one of the first words that comes to one’s mind is “fun”.

VW is successfully marrying a broad array of communication outlets with its one common brand positioning goal. They’re a textbook case study for how it should be done.

Domus is a marketing communications agency based in Philadelphia. For more information, visit our web site at http://www.domusinc.com.

Advertising Age is reporting that AT&T is “undertaking an ambitious rebranding effort under the banner of “Rethink Possible” to reposition itself as a “lifestyle company”. In other words, AT&T is implicitly declaring that it is losing the marketing positioning battle in the minds of consumers and wants to try something else to retain and gain customers.

Similarly, last month, Comcast decided to rebrand itself “Xfinity”. (“Simply put, XFINITY is about offering our customers more — more HD, more speed, more choice and more control over their services…”) Or, alternately simply put, Comcast is feeling the pinch of Verizon Fios’ competition and wants to try something else to retain and gain customers.

Interestingly, in both situations a company who has faltered in delivering upon the promise of its stated brand position decides to fix the problem by rebranding itself to a new position instead of improving upon its original promise. And just as interestingly, in both situations, the faltering company is being aggresively challenged in the marketplace by a company who dedicates more resources and commitment to delivering its brand promise better and better – and correspondingly communicating its success.

It doesn’t take a marketing genius to determine the better strategy for companies to mimic – especially in this age when consumers communicate with each other faster and more effectively than any one company can do on its own. Continue to invest in your brand promise – improve your product, improve your service, improve your delivery – and then your marketing communication efforts have legitimacy. On the other hand, no matter how many times you rebrand, if you don’t have the commitment to invest in your brand promise (whatever that may be), you’ll continue to come up short.

Domus is a marketing communications agency based in Philadelphia offering advertising, public relations, digital, and social media marketing expertise in an integrated approach based on sound, classic principles of marketing. For more information, visit us at http://www.domusinc.com.

In the world of wireless phone networks, AT&T has spent a lot of money staking out its brand position as the “fastest 3G network”, battling Verizon Wireless, who staked out the claim of “broadest coverage” (and a previous variation, “most reliable network”). AT&T’s problem, though, is that they did invest enough to maintain the physical reality of their claim.

First, Verizon marginalized AT&T’s brand position with their “they have a map for it” campaign, visually hammering their spotty coverage. In response, AT&T has tried to regain the word “fastest” in people’s minds with their own huge advertising campaign.

However, while they’ve been busy insisting that they’re the fastest 3G network, Sprint is starting to make that claim as meaningless as a horse-and-buggy manufacturer claiming they have the fastest buggy. Sprint is now rolling out its nationwide 4G network (in partnership with Clearwire), beating both AT&T and Verizon to the punch.

Sprint’s coverage is still spotty, as it tries to roll out its service in more and more cities, but it’s already available in almost 30 cities with more promised by the end of the year.

As such, Verizon’s brand position has not been damaged much – as far as they are concerned, Sprint occupies the same competitive position as AT&T – faster but with spottier coverage, and especially spotty in the high speed arena. On the other hand, AT&T’s position is significantly damaged. First Verizon made its “fastest” claim less significant by pointing out that its 3G availability was limited. And now Sprint has a fast, but spotty network; however, Sprint’s network is 4G – much faster than AT&T’s.

So what brand position does AT&T still hold? They’re the brand with not the fastest nor slowest network that is not the broadest nor spottiest in its coverage. This isn’t exactly a powerful position to hold. If I were a stock trader…

Domus is an advertising, public relations, and social media marketing agency based in Philadelphia. For more information, visit us at http://www.domusinc.com.

In our previous blog post, we looked at how Dos Equis has been continually improving its sales in the US while Heineken has been losing its. Similarly, over the last couple of years, Corona has continued to see its sales decline. Are Corona’s numbers declining for the same reason Heineken’s are?

There might be some similarities between their two situations, but there is also a fundamental difference – while Heineken has been relatively quiet in the US, Corona has been consistently advertising. So Corona’s problems are not related to its lack of advertising.

That leaves a few other possibilities – the effectiveness of the ads and the product itself being two prominent ones. Focusing on advertising, we already discussed how effective Dos Equis’ “Most Interesting Man in the World” ads are, but how about Corona’s “beach” ads? From a product positioning perspective, Corona positioned themselves to own the “cold beer at the beach” imagery in consumers’ minds, and for a while also mostly owned the “Mexican beer” position in the US. However, given that Dos Equis has been advertising strongly for several years now, the “Mexican beer” brand position is more evenly split between the two. Moreover, for the ten months out of the year when most people don’t think of the ideal beer to drink on a hot summer’s day, they’re not thinking Corona. So, although Corona might have been successful in owning the beach imagery, that also pigeon-holed them into a smaller place in consumers’ minds. Dos Equis, on the other hand, remains prominent in any season. Moreover, because of the “Most Interesting Man” ads, Dos Equis holds a more premium image, which is the segment of the beer market that is climbing.

Interestingly, in Mexico, Femsa (make of Dos Equis) has not aggressively run its “Most Interesting Man in the World” ads. Coincidentally – or not – Dos Equis’ market share has fallen significantly compared to Corona.

We’ll have to see what happens next, given that Heineken is now in the process of buying Femsa. Will they be smart enough to expand the successful Dos Equis campaign to Mexico or will they pull back on it in the US?

Domus is an advertising, PR, and internet marketing agency based in Philadelphia. For more information, please visit us at http://www.domusinc.com.