A Brand New Pitch

Dec. 21, 2004
Companies that once sold only to business are learning from master brand-builders how to reach consumer markets.

In Times Square, just below the spot where the ball dropped to mark the new millennium, the world's best-known brands now battle for the attention of anyone willing to lend an ear or an eye. As music from the Lion King soundtrack drifts out of the Disney Store, giant billboards stacked vertically proffer Pokmon monsters, Budweiser beer, and Jaguar cars. For those interested in checking the stock market, playing interactive market games, or watching financial reporters conduct live market updates, the National Assn. of Securities Dealers Inc. opened its Nasdaq MarketSite broadcast facility in January. The kiosk is capped by an eight-story-tall video screen that provides news, global market information, and ads. On a winter afternoon, the name Cisco Systems Inc., one of Nasdaq's high fliers, appears on the towering screen. If executives at the $8.4 billion San Jose computer-networking giant have their way, consumers walking through Times Square will glance up at the Nasdaq screen and recognize the Cisco name. Thanks to a series of converging forces, Cisco and other corporations that have grown powerful through business-to-business sales are seeking to build brands that tug at the purse strings of consumers. They're turning to a range of strategies, including approaches developed by service companies and dot.com ventures, as well as classic branding tactics invented by stalwarts such as Procter & Gamble Co. Corporations that have relied on industrial sales are now using television, the Web, and retail outlets to gain attention. "Experience branding-feeding on all the senses: scent, sight, sound, texture -- is the wave of the future," points out Marian Salzman, director of the Brand Futures Group, a division of advertising conglomerate Young & Rubicam Inc. Speed is another critical element, particularly as the Internet spawns online competitors. "The best launch I've seen in the last year is Pets.com. They created a brand overnight," says Salzman. The Internet plays a role in many corporate decisions to introduce consumer brands, and not just because it creates new competitors. Manufacturers that have thrived by selling through distributors now have a chance to interact directly with consumers, and want to take advantage of the opportunity. Going to the public also presents new challenges. The same companies that are eager to approach consumers for the first time often don't have the in-house skills to do so. A new breed of intermediary, the dot.com retailer, offers one route, but many traditional companies lack experience in collaborating with these online distributors. "Manufacturers need to strike up a relationship where they can control the presentation of their brand. Some have used affiliate programs or special alliances to secure a dominant position," observes Kevin Rowe, president, North America, of online marketing firm Agency.com Ltd. When it comes to benchmarking the best, the successes of megabrand builders such as Disney Corp. and Nike Inc. offer industrial companies models for taking their message to undiscovered niches. These corporations have turned commodities into hot sellers. Nike evolved from a sneaker seller into a purveyor of the athletic experience, thanks to three guiding but controversial principles, writes Naomi Klein, author of No Logo (2000, Picador USA), a critical evaluation of some of the strategies used by corporations to build the world's best-known brands. Nike fashioned its "swoosh" into a mythical symbol through these steps: "First, turn a select group of athletes into Hollywood-style superstars. Second, pit Nike's 'Pure Sports' and its team of athletic superstars against the rule-obsessed, established sporting world. Third, and most important, brand like mad," Klein writes. Not only did the Beaverton, Oreg., company put its swoosh on athletic gear and athletes, but that branding success enabled the corporation to push into new areas. For instance, NikeTown stores offer expensive products in a museum-like setting in Manhattan, Chicago, and other high-profile locations. Recently the company announced a move into cruise ships styled with an athletic theme. Nike-Like Marketing Invacare Corp. fancies itself the Nike of the home-medical-equipment market. The Elyria, Ohio, manufacturer has built a name for its high-tech wheelchairs, handcycles (hand-operated bicycles for people who can't use their legs), crutches, home-care beds, and other equipment among physical therapists and other health-care workers. Invacare Chairman and CEO A. Malachi Mixon III likes to invoke Nike when talking about his marketing approach. In the same way that Nike ties its name to sports celebrities, Invacare began sponsoring disabled athletes by giving them equipment and covering their expenses during special events. The company also provides a few stipends. In 1999 Invacare sponsored more than 80 athletes. "We've won both the male and female [disabled] divisions of the Boston Marathon. We have the national basketball champion team, and the world champion tennis team," lists Mixon proudly. Last fall Louise Sauvage, an Invacare-sponsored athlete, won Australia's 1999 Female Athlete of the Year, marking the first time a wheel-chair athlete has won the award. These achievements generated generous exposure for Invacare, especially within the disabled community and among health-care providers, but Mixon saw broader potential. To push the $878 million manufacturer past the $1 billion mark, Mixon needed to tap the consumer market. He especially wanted to introduce the Invacare name to those adults who will manage the care of their baby-boomer parents. "More and more the decision is made by the caregiver. So if your grandmother or mother needs a wheelchair, I want you to know about the Invacare brand because you're the one who will be choosing it," he explains. In November Invacare launched a marketing program crafted to boost awareness of its brand among consumers. It started by consolidating several dozen product names under the new Invacare medallion logo -- a pair of arcs designed to express vitality, energy, and an embrace. Each product will carry the logo. So will its packaging, which has been redesigned. Using the slogan, "Yes, you can," to convey the company's can-do attitude, Invacare is spending more than $5 million to create and share the cost of running television commercials for its dealers. It is also seeking a national spokesperson. The advertising slogan Cisco Systems chose to introduce itself to consumers is a question: "Are you ready?" The same question probably nagged at a few Cisco executives before they launched the company's multimillion-dollar TV, print, and Web advertising campaign in the summer of 1998. Since its founding in 1986, Cisco has prided itself on its business-to-business marketing. Its technically savvy sales force has sold routers and switches to network managers, software engineers, and chief information officers. To ease its way into consumers' pocketbooks, Cisco started by targeting businesspeople with home offices, students, and others who serve as CIOs in their households -- a market Cisco values at $9 billion. The company's "Are you ready?" advertisements draw consumers to what executives consider the heart of the brand -- the Web site. That's where salespeople send customers who want to reorder products; as a result, the Web accounts for 85% of sales. "Our Web [site] is a series of applications and content that lets prospects and customers seamlessly navigate and experience our company. That's our cornerstone -- marry the virtual world with the real world," explains Keith Fox, vice president of worldwide corporate marketing. Veteran brand builders, such as Procter & Gamble, want to know how Cisco does it. "P&G just came out and benchmarked us on our master brand strategy and how to do digital marketing," says Fox. But Cisco also is learning from consumer-goods companies. One classic practice it adopted involves ingratiating itself with young consumers. Through a program called Cisco Network Academies, and at a cost of close to $20 million over the last three years, the company has developed a curriculum and donated it to more than 3,000 high schools, vocational schools, and community colleges in the U.S. and countries including China, Japan, Germany, France, and Mexico. Often schools use the curriculum as part of an elective on networking and the Internet. Hefty Price Tag Creating a consumer brand doesn't come cheap. Cisco shelled out close to $80 million for its "Are you ready?" campaign, which is now shown globally. The company was able to devote dollars to the campaign in part because its outsourcing of production frees up cash that otherwise would be devoted to operating costs. Consider the success -- and branding costs -- of Salton Inc., a $500 million Mt. Prospect, Ill., designer and seller of kitchen products including bread and espresso makers, juicers, and grills. The company outsources most of its production to contractors in Europe and Asia, and as a result it has been able to hire expensive celebrity spokespersons. Five years ago Salton teamed up with one such luminary to promote a grill that had failed to draw much notice when it was first introduced. That changed when Salton struck a deal with former heavyweight champ George Foreman. The middle-aged boxer agreed to promote the grill, and in return Salton promised to pay Foreman 45% of profits on grill sales. Salton's CEO Leon Dreimann remembers his low expectations for the arrangement. "I did not recognize the love that the public had for George," he says. Foreman attracted consumers' attention on the QVC shopping channel where he promoted the grill, renamed George Foreman's Lean Mean Fat Reducing Grilling Machine, in infomercials. It took 18 months after inking the deal for sales to take off, but by 1999 Salton had sold more than 10 million grills. It had also launched new products with the prizefighter's name including the George Foreman Rotisserie grill, and George Foreman cookware. In January Salton bought the rights to use George Foreman's name in perpetuity in association with food preparation appliances. The price it paid pales in comparison to salaries of most professional athletes: $113 million in cash and $23 million in stock over five years. Dreimann considers it a worthwhile investment, and emphasizes the importance of the right spokesperson in building a brand. "The success of the grills can be attributed to a good product, but really should be attributed to George Foreman and the credibility he has with the public." Choosing the right spokesperson is one of several classic branding practices. Some of the smartest companies blend such established practices with fresh ones developed by the new millennium's brand giants. Marketing of the Nasdaq exchange, for instance, mixes old and new techniques. When Brian Holland joined the organization in 1989, "The exchange was in the shadow of the 1987 crash and had lost 10% of its companies. My task was to stop that outflow and to increase market share of new companies that were listing," remembers the executive vice president of Nasdaq worldwide marketing. Holland hired marketing veterans and began collecting market research from Nasdaq constituents including individual and institutional investors, broker-dealers, and listing companies. "It became very apparent that the problem was advertising -- an image problem," recalls Holland. Although large companies such as Microsoft Corp. and Intel Corp. listed on the Nasdaq, research revealed that the stock exchange was associated with fledgling ventures. To counter that image, Nasdaq became the first U.S. stock market to widely advertise on television. The idea was to target not the trading specialists, but the millions of households who own brokerage accounts or mutual funds. "A brand is created not by the people who use it, but by the people who don't use it. It's not the people who drive a Mercedes who make it what it is; it's the people who watch the people who drive a Mercedes who create the aura," explains Holland. The broadcast commercials helped to shift consumers' image of Nasdaq from a small-company exchange to one associated with innovative fast-growth technology stocks. Today the Nasdaq exchange trades more shares per day and has a greater dollar volume of trades than any other U.S. equity market. For consumers who want to experience the thrill of holding a fast-moving stock, there's a Times Square kiosk next to the Disney Store and not far from NikeTown that offers to help them do just that.

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