Dell: Part 2

Originally there was not going to be a Part 2 to my original pontification of Dell's 54% revenue drop.  But, as if I needed to be proven right, last Tuesday on the Fox Business channels morning show, The Opening Bell, Alexis Glick, Charles Payne, Shibani Joshi and Ashley Webster opined about Dell as they see it.  So what did I hear from the experts on FBN?  All the buzzwords that got Dell into trouble in the first place.

• Dell may be a one-trick pony - As if this is bad?  As we saw in the last post, Dell was the market leader and highly profitable when it was a one-trick pony.
• Diversification - What?  They can't be serious.  Dell is diversified.  They sell everything from computers to televisions and almost everything in between yet their revenues dropped 54%.
• More distribution - Dell does have extended distribution in retail stores; do they need even more?  Maybe they should re-open their mall kiosks since those did so well.

This is a classic case of business management trying to expand the Dell brand to mean more things to more people, when they should be looking at contracting it.  Confucious said, "Man who chases two rabbits catches neither."  How many "rabbits" will Dell continue to chase before they figure it out?

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Dell: A Case Study of MBA Thinking

Yesterday the Wall Street Journal reported Dell's quarterly profit dropped 54%!  Wow, 54%!  Are the automakers even down that much?  But I digress...  So what is Dell's strategy to change this issue?  According to the Wall Street Journal article it is to focus on "profitability at the expense of market share."  While I think this is blatantly ridiculous, clearly it's not working.  So what is Dell's real problem?  Dell's problem is the breaking of a classic branding rule: you can't be all things to all people.  Yet the breaking of this rule is common thinking amongst some so-called business experts and Wall Street analysts.  Dell has lost it's focus of computers to go after the MP3 market, smartphone market, televisions and a recent acquisition of Perot Systems to put them into the tech outsourcing business dominated by companies such as IBM and HP.  Is this a good idea? According to some of these experts...YES!  What is the best way to grow (because that's what business is all about)?  Sell more stuff!  But what happens when you just sell more stuff or try to?  You lose focus.

What Dell needs to do is re-focus.  Dell used to be a highly profitable company, ironically, when they sold less stuff.  Think about it; how did Dell become the company that was #1 in the PC market with the best stock performance on the 500 companies listed on the S&P during the 1990's?  By selling one product, with one distribution method, to one consumer; personal computers direct to businesses.  Then what happened?  Analysts said Dell needs to keep up with their previous level of growth (there's that word again).  Dell listened to the analysts and in 1997 they announced they would go after consumers.  Then in 2003, they dove - pun intended - headfirst into the consumer electronics market.  You can even get a Dell in Walmart and Sears.

What Dell needs to do is simple, but they will never do it.  They are third behind HP and Acer by unit shipments, only have a 1% profit margin in their consumer business, and now they are trying to take on IBM in the service sector.  Is that common sense?  No.  Dell needs to return to their roots; sell off the other businesses and get back to selling one product, one way, to one market.  There is no need to sacrifice market share for profitability.  Dell proved that in their early years, maybe they have forgotten.

Nobody said it better than Al Ries and his 2005 book - Focus: The Future of Your Company Depends On It.

Is your brand focused?

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SEMA Lessons

I was fortunate enough to spend some time this week in Las Vegas at the SEMA Show.  Even with the economy in the shape that it's in, the show was packed and ripe for B2B marketers to make the best of their opportunities. While there were some very nice setups there were some not-so-nice setups as well.  Regardless of space, there are a few things to do to make sure you leave the right impression at tradeshows, consumer shows, or roadshows; and for that matter, any experience marketing environment.

1. Work it - Your staff is an extension of your brand mantra, whatever that might be.  Make sure they look the part and act the part.  Whatever your band is, I'm sure it's attributes are not cold, stale, and un-energetic.  Get your staff up on their feet greeting customers as they walk into and past your booth; inject them with Red Bull and coffee if you have to.  But nothing says "bad" like all of your tradeshow staff sitting around, reading email, updating their Facebook status, and adding apps to their iPhone while potential customers wander aimlessly around your area.

2. Useful Giveaways - Everybody is giving something away at these shows; posters, pens, wristbands, etc.  Whatever it is you choose, make sure it is useful and not just a gimmick.  The best tradeshow giveaway I have received is from Cosworth at SEMA last year.  It was a plastic business card holder with their logo on it.  Very practical and sure to get usage throughout the show as you network.  Every time you exchange cards and pull the cardholder out people notice it.  I didn't get a chance to get by the Cosworth booth this year, but I hope they brought those back.

3. Business Cards - Of all the touchpoints for your brand, maybe the most important one is your business card.  At tradeshows or not, your business card is often all that is left behind once you have given your elevator speech.  What does your card say about your brand?  Here's a test: close your eyes, and feel it.  What does the quality of the stationary say to you?  Is it easily bent or is it thicker and have some strength to it?  What does that say about your brand if it is printed on cheap, thin stationary?  At busy tradeshows like SEMA where you can potentially hand your card to hundreds of people you need to make sure you are handing them the right impression.  Have you reviewed your company's business card lately?  You should.

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3-Step Drop: Rivalries

What a great weekend for college football fans coming up with the marquee games on the schedule.  Topping this list of rivalries and big games are USC v Notre Dame and OU v Texas.  What can your brand learn from these annual match ups?

1. Brands Need Brands - If your marketing agency has done a great job during the discovery and account planning process, your brand will be able to pioneer a new category free from competitors, initially.  But with today's resources and technology, some other company will copy you and come to market soon after you enter.  Do not worry, you want and need this to happen.  Why?  Think about it...how else would we be able to judge how good USC or Notre Dame is unless they play another team?  It would be ridiculous to crown Texas as national champions if they didn't play a game all year, right?

Your brand is the exact same.  If no competitors come into the market after you, the consumer will likely not give you the credibility you deserve.  Consumers need a way to gauge your brand against others to see just how good it really is; whether or not your "big idea" is as big as you think it is.  Past the initial phase of newness, consumers tend to think, "it must not be that good if nobody else is doing it."  You have a decided advantage when you enter this new market first, and you will have chances to "out play" your competition with better strategy, just as USC and Texas will this weekend.

2. Consumers Need Brands - You might be thinking this statement should be the other way around.  You would be correct; brands do need consumers.  But it is equally as true that consumers need and want good brands as well, for three main reasons.  The first being it saves time.  Assume your favorite college football team has a bye this weekend, will you not watch games at all?  Most likely not.  So how will you choose?  You will scan your TV Guide channel and look at the match ups.  Certain teams/universities have built brands over the long term that give you a sense of what to watch; OU v Texas being one of them.  Your brand is the same way.  Once you make a name for yourself, it will be easier to sell to the consumer because the consumer knows what they are getting.

The second reason is that brands project the right message to the people who will be judging you; and face it, we all judge.  Again, assume your favorite team has a bye this weekend and you choose to watch these two marquee match ups.  Let's say both of these games end up being one-sided blowouts.  Will anyone fault you for tuning in to these games, even if they become blowouts, instead of Central Seaweed State v. Northern Turkeyneck University?  No.  But if you tune into the Turkeyneck's game and OU v Texas is a close nail biter people will think you're nuts for not even tuning in at all.  Nobody will fault you for choosing those marquee match ups and you, as a consumer, don't lose any image points.

Lastly, and closely related to the second point is brands provide consumers with an identity.  Consumers need an identity just as much as brands do.  Being a fan of USC or OU aligns them with a group of like-minded people.  However they choose this association, for now, is irrelevant.  What is important is that consumers WILL choose things, groups, people, and/or products that will help people identify them and so they can identify themselves.  If you want to be seen as cool and hip, you might buy an iPhone.  When people see you with that iPhone they will think that you are an up-to-date, tech-savvy, cool person.

3. Brands Are Long Term Assets -  When we look at these games, today we see them as the big games of weekend.  But were they always that big?  No.  There was a time when OU v Texas only had meaning for people associated with those institutions.  Eventually overtime with the success of the teams and the national championship implications, this game itself became a brand, hence the name the Red River Rivalry, as well as the teams that play in them.  This did not happen overnight.  It took years on the recruiting trail for the coaches, countless wins, loses, championships, and marquee players to get this game noticed at the national level.  Now when someone mentions the Red River Rivalry we don't need to ask who's playing in that game.

Your brand will start small and may need years to prosper to the level where it is synonymous with a particular category.  It takes consistency, cash and an ability to cut through the competitive clutter.  Don't believe me?  Red Bull took nine years to exceed $100 million in annual sales.  It took Microsoft ten years to exceed that same amount.  How long did it take the world's largest retailer, Wal-Mart (with approximately $339 billion in annual sales), to reach the $100 million mark? FOURTEEN YEARS!  Be patient and don't expect instant results with your brand either.  Eventually your brand can reach the heights of a USC, Notre Dame or the Red River Rivalry as well.  Fight On!

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3-Step Drop: Huskers v. Mizzou

Wow!  What a football game that was.  Finally the Huskers come through in a big game.  If you went to bed early, you missed one heck of a rally from the children of the corn.  Nonetheless, let's learn something about marketing from this stellar football game.

1. Don't Change, Adapt - Both Mizzou and Nebraska run wide-open offenses.  And both teams skew their play calling towards the pass.  But with last nights rainstorm during the game, one might conclude that more traditional offenses would fare better than these new-age schemes and you would probably be right.  But would it be good for the Huskers to start lining up and running plays as if Tom Osborne were still coaching?  Should Mizzou have started lining up in the I-Formation and let their QB be true dual threat like Corby Jones?  No.

What they did was adapt.  They threw shorter passes, screens, Missouri ran the ball more than they probably would have.  Both teams stayed true to who they were and adapted to the conditions.  Your brand needs to be the same way.  There will be times when conditions outside of your control - economic climate, political climate, new regulations - will force you to make a decision about your brands direction.  The right answer is to stay true to your brands promise and not pretend to be you are not.  The Huskers could not become the Huskers of old with Power-I formations and throwing only 10 passes in a game.  They don't have the expertise in personnel to pull it off.  Same for your brand.  Trying to do something that you don't have the expertise or capacity to do is silly.  Stick to your game plan and you'll have a far better chance of winning.

2. Don't Shoot Yourself in the Foot - Football, like business, is hard enough facing a fierce competitor that you don't want to compromise yourself.  Mizzou did this at key times last night.  Not that Mizzou would have won the game, but 8 penalties for 100 and 3 turnovers is bad enough.  But when you factor in when and where they happened in the game it was devastating for the Tigers.  You know the competition in your market and you don't need to give them anymore help than they already have.  Don't let your CEO get caught driving drunk, don't screw up a product and have a big recall, don't become the next Enron.  Luckily for Mizzou, this is their first loss and they are not out the championship hunt.  For your brand, a screw may not mean you go out of business but a loss of market share instead.

3. Momentum: Ride The Wave - The Huskers hit a big pass to Niles Paul for a 56-yard touchdown.  They then scored twice more quickly before putting the nail in the coffin with just 56 seconds left on a 5-yard run by Roy Helu Jr.  The Huskers lacked big plays all night and finally they had a burst at the end; when it counted most.  The Huskers rode that momentum and emotion to what turned out to be a crushing loss.

Hopefully, your brand will get some momentum on some event.  It might be because an influential blogger tries your product and blogs about how much they like it.  It might begin on a positive story highlighting you brands commitment to a cause or charity.  It might even be strong earnings on Wall Street.  Use your creative and PR to highlight these accomplishments internally and externally.  Whatever it is, be ready for it; seize it; and ride it to victory.

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3-Step Drop: Oakland Raiders

The Oakland Raiders have been one of the biggest jokes in all of sports the past few seasons.  They have been incorporated into the punchline of countless jokes and parodies.  And this year they didn't disappoint; Head Coach Tom Cable punched an assistant coach in the face breaking his jaw.  Only in Oakland could that happen.  But even with all this organizational incompetence, is there anything a marketer can learn?  Yes.

1. Your visible head - Who is the visible head of the Oakland Raiders; QB JaMarcus Russell, Al Davis, Head Coach Tom Cable?  Probably a mix of all three.  In either case, the perception is not good.  Most people think Al Davis is senile, we already mentioned the head coach's issue, and JaMarcus Russell couldn't hit the inside of a barn if he was standing inside the barn.

The visible head of your organization can do more to help or hurt your brand than any ad campaign the best creative director in the world can dream up.  Your visible head - CEO, CMO, COO, PR - needs to be on top of their game at all times.  In today's world of 24-hour news cycle, blogs and other social media outlets anything they say and do in public will scrutinized.  Whoever this person is in your organization should exude the qualities of your brand at all times and be good for a sound bite or two occasionally.  My favorite: Larry Ellison of Oracle. http://www.youtube.com/watch?v=8UYa6gQC14o

2. Deficiencies in strategy make execution look bad - As of this writing, JaMarcus Russell ranks 30th in the NFL in passing with 1 touchdown, 4 interceptions, 378 yards and a pathetic 39.8 passer rating through three games.  Is JaMarcus Russel this bad as a player, as a quarterback?  Probably not.  What this is indicative of is bad strategy by the Raiders play callers.  The Raiders need to run the ball more and put Russell in manageable situations and not ask him to win games with his arm just yet.

Look at your current marketing strategy.  Do you know why your ad looks the way it looks and is running with the frequency that it is?  Do you know why you are positioned in the market where you are?  Should you reposition yourself to gain a competitive advantage, and you should you reposition your competitor to take away their edge?  Your advertising might not be working because there is a key bit of strategy that is lacking; be it in your positioning, creative or messaging strategy.  Oh, I know your agency won an award for it, but if it doesn't help you sell more stuff does it really matter?

3. Don't let your tagline become a punchline - Commitment to Excellence.  Does anyone really think the Raiders are committed to excellence?  Well in actuality they are.  Al Davis wants to win just as much as the the next owner and so do the staff and players of the Raiders.  The problem is with the execution of the Raiders and how it compares to what they say they are about through the use of their tagline or slogan.  The Raiders are usually one of the most penalized teams in the league, we have coaches punching coaches in the face, coaches calling players dumb, and a revolving door of coaches to name a few.  None of these things exude excellence.

Whatever you tagline or corporate slogan may be, constantly review it.  Make sure your brand is living up to it in every touch point that you have.  If you find it is not, change your execution to match the tagline or change your tagline.  If you wait until your tagline becomes a punchline you'll have a hard time reversing course in the minds of your consumers.

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Vick, Nike & PR

With the re-signing of Michael Vick, Nike has certainly made a bit of news.  This is not an endorsement deal, but just a supply deal as they have with several athletes.   Let's answer a few quick questions.

Will this hurt Nike?  No.  Nike has dealt with controversial athletes in the past: John McEnroe and Dennis Rodman are examples.  I am sure some parents did not buy their kids Rodman's shoes, but Nike is still here stronger than before.  Keep in mind, this is not an endorsement deal as with the two aforementioned examples.

What about the possible negative PR? Given the timing of this announcement, I don't think there will be any.  Vick as reinstated some time ago, so if there was going to be any large backlash against Vick, it would have already happened.  And since it has not, there will probably won't be now.  Sure there will be some people who now won't buy Nike because of this, but they are few and far in between and probably won't have a large affect on Nike's bottom line.

What's in it for Nike? Besides the obvious opportunity to sell more Nike branded football goods and apparel, it's positive PR for their Corporate Responsibility Division and Nike in general.  Because Vick has committed to doing these community service events, Nike will now there be there by extension and add to their portfolio of activities for this unit.  In this day, with all the negative lights shining on corporations and their activities, can you argue with more corporate responsibility?

What this illustrates for all brands is a need to manage your reputation.  With all the online access to chat rooms, Facebook groups, etc. brands need to make a conscious effort to manage this on a daily basis.  If I am wrong and the Vick situation does get out of hand, it will start online: in the blogosphere and other social media type groups.  If you see it coming you can react, if you don't you could be spending untold amounts of time and money trying to slow down a snowball rolling downhill.  Do you know what consumers are saying about your brand?  Who have you appointed at your firm to manage these outlets and monitor what is being said about you?

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3-Step Drop: Aaron Corp

Last Saturday the USC Trojans were upset by the Washington Huskies.  The Trojans were forced to play the game with their #2 quarterback Aaron Corp because the Freshman phenom, Matt Barkley, had an injured shoulder from their previous weeks win at Ohio State.  So what can your brand learn from Aaron Corp?  In honor of football lets look at three quick points.  Let's call it the 3-Step Drop.

1. Credentials - Aaron Corp was a top recruit in from Lutheran High in Orange, California.  His senior season he completed 68% of his passes throwing for 2,750 yards with 21 touchdowns while rushing for another 1,197 yards and 12 touchdowns.  He won the Glenn Davis Award as the best player in Southern California while leading his team to a 14-1 championship season.

You need to build strong credentials early before your brands makes the big time.  Running one great ad with a great tagline isn't going to cut it.  It's often a slow process and you can't cut corners.  You must be consistent, perform well at the lower levels, and get noticed.  Corp (the brand) built his credentials from Pop Warner through high school and got noticed by the Trojans (consumer).  What are you doing to build your brands credentials?

2. Perform - Once your brand gets noticed and makes it to the big stage you have to perform.  Corp got his chance against the Huskies.  What happened?  13 of 22 passing for 110 yards, one interception and no touchdowns.  Your brand has to perform when given the chance.

That means your sales staff has to look the part and know what they're talking about.  That means the receptionist can't sound like she hates talking to people when she answers the phone.  If your brand performs to levels below expectations, as did Corp, you may never get a second chance.  That one rude interaction from your salesperson can turn that upset customer into an advocate AGAINST your brand because that is how they will remember you.  Aaron Corp is probably a great guy that will go on to be successful at whatever he does, but for now he will be the quarterback that didn't get it done when he should have.  Until he gets a second chance, if he does, that is what we will remember.  How will your brand perform when given a chance?  You may not get another shot.

3. Brand Equity - Because Corp goes to USC and was in a battle for the starting position, we expect certain things from him.  We expect him to be the next in line; to be able to make USC perform as seamlessly as the transition from Carson Palmer to Matt Leinart.  Why?  Because that's the brand USC has built for themselves in this modern era.  All the experts expected USC to beat the Huskies convincingly because of this equity.

If you are fortunate enough to own a successful brand, there will be a time when you think about growing your business and extending your brand into new categories.  Be careful!  Like Corp, if your consumers extend the main brands equity (trust) to your new category and you do not perform up to the original brands standard you are doomed.  USC's loss to Washington may cost them a shot at the national championship and has caused fans and pundits alike to question just how good the Trojans really are.  It will be tough for the Trojans to make it back to the top even if they do win out.  What will that failure cost your brand?

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Imus on Business

In what I think is a stunning turn of events, Fox Business Network signed Don Imus to begin simulcasting his morning show beginning on Oct. 5 during the 6-9 AM EST time slot.  Is this a good idea?  I think not.  Not that I have anything against Don Imus, but is this really a solution for the low ratings they have been experiencing?  Well it is if what is most important is the short term bottom line.  In the short term, adding Imus in the morning will almost certainly bring in some advertising revenue and some new viewers to the network.  But what about the big picture?  Let me re-phrase...what about the Fox Business brand?

More than likely, the viewers and listeners are not are not largely from the demographic that Fox Business wants to reach with its core message.  While the new viewers will tune in for the I-Man's show, will they stick around for the rest of the day?  Probably not.  Better yet, will the core audience that Fox Business is trying to reach tune in to see Imus in the mornings?  Probably not in large numbers.  Those money managers, traders, C-suite players, and Wall Street junkies will, in large part be getting ready for the market open.  Where will they do that?  CNBC or Bloomberg.

The even bigger issue for Fox Business is the loyal customer base they have already captured.  Will they turn to CNBC or Bloomberg until the Imus show is over and then turn back or will they leave there sets where they are never to return?

One of the most critical issues in branding is sticking to who you are.  In other words, credibility is everything.  No brand is credible in all areas so you have to be certain when making alliances that they match with what your brand stands for.  Don Imus might be a fantastic "shock jock", he might be the funniest the guy on earth, he might be the nicest guy you know.  It's all irrelevant.  The only thing that matters is his lack of credibility as an anchor on a business network.

What this does exhibit is short-term MBA business thinking; what are the numbers?  Brands are long-term assets, not quarterly reports for Wall Street analysts.  As one former Kraft Foods executive noted, "Good numbers don't guarantee your success, but bad numbers will get you every time."

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