DECEMBER 2004
MARKETING AT C-LEVEL
SCOTT DAVIS
THE DEATH
RATTLE OF
‘CLASSIC’
MARKETING
MODELS
SECRET SOCIETY
A BRIEF
TOUR OF M50
COCA-COLA
VOLKSWAGEN
MOUNTAIN DEW NIKE
HOW TO TAP
INTO THE
POWER
OF ICONIC
BRANDS
KMART
STOPS THE
CLOCK
AN $11 BILLION MERGER WITH SEARS LOOMS, BUT
CMO PAUL GUYARDO ONLY HAS TIME FOR HIS SHOPPERS
SUPPLEMENT TO
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’05
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Hosted by Simmons Market Research Bureau
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KEYNOTE SPEAKER
Barry Schwartz, author of
“The Paradox of Choice: Why More is Less”
Professor of Sociology, Swarthmore College
Consumers are paralyzed by the bewildering array
of choices in the marketplace. Professor Schwartz
has written extensively about the dilemma of
choice and the difficulty consumers face in the
decision making process. At the Summit, Barry will
speak to the ways people respond to choice and
how advertisers and marketers can better target
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LUNCHEON GUEST SPEAKER
Grant J. Schneider,
Vice President, Brand Strategy & Development
TIME INC. WOMEN’S GROUP
“Seven New Rules of the Road:
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PROCTER & GAMBLE
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UNIVERSAL McCANN
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In partnership with:
Please visit
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to view complete agenda
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DECEMBER
2004
FEATURES
5
Kmart Stops
The Clock
By Sarah Mahoney
FROM THE EDITOR
“The first thing that impressed me about Paul Guyardo is his energy,”
says Sarah Mahoney, freelance writer and the author of “Kmart on the
Clock”, (page 5). “As the chief marketing officer for an established
brand, he’s working at the most sophisticated level of business. But
Kmart is no ordinary company. It’s bounced out of bankruptcy and now
finds itself on the verge of a major merger. And, as the senior marketing
officer, Paul has all the challenges of a start-up.
“His job demands a delicate balance of long-term perspective with
turn-on-a-dime immediacy,” Mahoney continues. “And energy is a
Precourt
requisite for that assignment. So are intelligence and enthusiasm.
Guyardo seems to have it all.”
This second issue of Point comes to you with many of the same dynamics. We’re an extension
of one of the most venerated brands in publishing. But we’re also a start-up, learning more about
our readers and their information needs with every issue. When we find something that works,
we’re going to stick with it. If we dare call anyone a regular in this evolving Point universe, it would
be Scott Davis. His monthly “CMO Agenda” column (page 4) once again goes right for the
marketing jugular—those “classic” brands that have not yet discovered that the world (and, most
particularly, their target audience) has left them in the dust. Not everyone agrees with Davis, a
managing partner of Prophet. Indeed, his column is Issue #1 already has generated some lively
exchanges—comments that you’ll see next issue (remember: there’s a good bit of start-up in the
Point mission) when we introduce our Letters column. If you’d like to take part in the
discussion—or have any other observations, please feel free to contact us at point@adage.com.
And we encourage you to join in the discussion. As we learn in the M50 story in our “Pointers”
section, c-level marketers stand to learn a lot when they share information. In fact, some are willing
to spend $50,000 for the privilege. It’s our mission to provide the same kind of
strategic-management service—at a much lower cost.
POINT MAGAZINE
Editor in chief: Rance Crain; VP-publishing/editorial director: David S. Klein; VP-publisher: Jill Manee
EDITORIAL
Editorial Director: Scott Donaton; Executive Editor: Jonah Bloom
Editor: Geoffrey Precourt; Design: Jesper Goransson
Contributors: Brooke Capps, Scott Davis, Thom Forbes, Sarah Mahoney, Paul Hyde, Randall Rothenberg
Art director: Donna M. Lappetito; Photo/art editor: Susan McCoy; Production editor: Lisa Fain; Copy editors: Sheila Dougherty, Ken Wheaton
ADVERTISING/CIRCULATION
General manager, sales and marketing: Vanessa Reed; Advertising director: Jeff Burch, 212-210-0280;
General manager, online: Allison Price Arden; Circulation director: Philip Scarano III; Subscriber services: 888-288-5900
BOARD OF ADVISERS
Michael Boylson, chief marketing officer, J.C. Penney Co.; Ian Beavis, senior VP-marketing and promotions, Mitsubishi Motors North America;
John Costello, exec VP-marketing and merchandising, and chief marketing officer, Home Depot; Paul Guyardo, senior VP-chief marketing officer, Kmart;
Allison Johnson, senior VP-corporate marketing, Hewlett-Packard Co.; Jim McDowell, VP-marketing, BMW of North America;
James D. Speros, chief marketing officer, U.S., Ernst & Young; Joseph V. Tripodi, chief marketing officer, Allstate Insurance Corp.
For Paul Guyardo, Kmart
CMO, so much depends
on timing. Even though
the Sears merger is just
months away, he has his
eye on another clock:
His focus is on the store,
where he figures he has
just 20 minutes to grab
his shopper’s attention
9
The Power of
Cultural Activism
By Douglas B. Holt
Iconic brands tell stories
that address the
particular desires of their
target constituencies.
What marketers can learn
from their success
DEPARTMENTS
2
POINTERS
Marketing’s most
secretive—and most
powerful—members-only
group. Selling through the
five senses. Capturing the
wisdom of crowds
4
THE CMO AGENDA
By Scott Davis
Listen closely for the
death rattle of classic
marketing models
12
END POINT
What our holiday shopping
habits tell us about our
national psyche
Cover photo by Darryl Estrine
POINT DECEMBER 2004
1
THOUGHT, TALK & SPECULATION
CoreBrand
Value Index
The latest CoreBrand
Equity IndexTM is 1.05,
up 0.01 from last month.
The Index measures the equity value
of a portfolio of 10 blue-chip corporate
brands to track trends in corporate
brand value. Index value of 1.00 based
on Aug. 2, 2004 portfolio value.
Sector Report:
Energy
Performance of top
10 valued brands in
Energy sector.
(Scale is $1 million
in brand equity.)
‘SECRET’ MARKETING SOCIETY
PROVIDES FORUM FOR IDEA SWAP
Marketing thought leaders have long mused that
the industry needs a way for senior managers to
share knowledge and ideas. To that end, a new (and
somewhat secret) society of the informed gathered
for the first time in Manhattan.
Inspired by such executive clubs as the
Corporate Executive Board and Spencer Stuart’s
G100 club, Marketing 50 (or M50) is the Skull and
Bones of the marketing set. The group is a subset of
World 50, an organization that runs a dozen
executive clubs for such disciplines as international
finance, technology and human resources. Rick
Smith, a former Spencer Stuart consultant from
Atlanta, started the member-driven groups as
havens for discussions.
I grew up in Africa, and one of the
first things I realized was that
predators have small ears.”
—Ted McConnell, manager,
Information Technology Research Organization,
Procter & Gamble Co., on whether big companies
are good at listening to consumers
‘‘
Source: CoreBrand
2
DECEMBER 2004 POINT
“It’s not a secret group, it’s a group of secrets,”
said Mr. Smith, while declining to comment
further. Elaine Stock, a former McKinsey & Co.
senior partner, is M50’s managing director.
Membership is by invitation, with one executive
from each industry category. A $50,000 annual fee
buys: two to three formal summits in London and
New York; a series of informal dinners; and online
tools; access to proprietary content from such
advisers as WPP Group’s Kantar Group, VML,
Omnicom Group, Accenture and Goldman Sachs.
Allstate’s Joe Tripodi, General Motors’ C.J.
Fraleigh, Charles Schwab’s Jody Bilney, Kodak’s
Carl Gustin and ESPN’s Lee Ann Daly are said to
be members.
MARTIN LINDSTROM MODELS
FIFTH-DIMENSIONAL MARKETING
Martin Lindstrom was hired by the R&D
department of Lego Co. when he was six. At 18, the
young Dane sold his first ad agency (complete with a
handful of national clients). By his late 20s, he had
been COO of LookSmart—British Telecom’s
Internet search engine—as well as CEO of BBDO
Interactive Europe/Asia Pacific.
Now, at 32, Lindstrom is a brand-thinker on a
world stage, with a plethora of papers and books to
his name, not to mention a host of Fortune 500
consultancies.
Early next year, Free Press will publish “Brand
Sense,” Lindstrom’s latest book. As the name
suggests, the work aims to revolutionize branding by
showing marketers how to leverage all five senses.
Lindstrom plans to put on a series of symposia—
scheduled in at least 16 countries—to tell marketers
exactly what he’s talking about. To demonstrate the
validity of his theory, Lindstrom recently told an
Australian audience how Kellogg’s uses audio-
By Kate
MacArthur
By Jonah
Bloom
testing to upgrade the sound quality of its cereal’s
crunchiness and how several automakers have
created new-car smells for their latest models.
According to Lindstrom, 72% of our emotions
are based on what we smell, not what we see or hear.
Consequently, he believes, 40% of the world’s
Fortune 500 companies will have a sensory
branding strategy in place by the end of 2005.
‘‘
One of the contributions I was able
to make … was to start asking
people, ‘I hate this thing—does anybody
like it? No. Then why are we doing it?’ ”
—Robert A. Lutz, GM vice chair/
head of product development, discussing
corporate culture in The New York Times.
Q&A
DAN McLINDEN
How can the Open Source Decision Methodology™ (OSDM) provide
managers with insight they can’t get from other research?
When managers need information the typical response is “conduct a survey” or “hold a focus group” or
“let’s organize an off-site.” But what a manager really needs is the wisdom to make the right decision.
OSDM provides the best ideas of many individuals in response to a complex issue, and integrates these
multiple and diverse ideas in an actionable plan.
What are some of the brand-positioning – or realignment – lessons you’ve
learned from tapping into collective wisdom?
A large financial-services organization with multiple retail locations throughout the country was investing in
significant organizational and technology changes that would affect customer service. Instead of working
from a narrow vision, management used OSDM to listen to the customer-facing work force about their
needs and expectations.
Two lessons emerged. First, the management debriefing led to a real “aha” experience. Opportunities
emerged that no one anticipated; potential problems were identified that no one had contemplated. Second,
rather than creating a program that was driven solely by management or consultants, the new systems and
processes included a new and better understanding of the customers and the work force as well as the
insights of the other stakeholders. In other words, a single picture of the outcome was built with diverse
input from multiple perspectives.
How would a brand manager use OSDM?
Imagine a stable product in a changing market. How do you increase sales? Ask the right people to provide
their best ideas in response to the following: “To leverage our brand into new channels requires that we …”
Take all of those ideas and ask these same people to organize this insight into key themes. Behind the scenes
OSDM uses sophisticated mathematical algorithms to take that individual input and paint an actual picture of
the collective wisdom that shows the detailed ideas organized into key themes and the perspectives on value
(i.e., importance, criticality, market opportunity). These answer the question of “what must be done?”
How do you identify the most useful kinds of “crowds” as information sources?
We look for a diverse group of people with an informed perspective on the business challenge.
A new-product project, for example, can start by getting input from the designers, manufacturers, sellers and
buyers, and building it into a single integrated picture.
How does this differ from broad-based survey?
The “your comments” section often at the end of a survey implies the not-so-subtle message, “Now that we
have asked what we think is important, you can add your thoughts.” Why not start by focusing on what you
need to hear, and what the respondents know and want to tell you? With OSDM, individual participants tell
you what they know about a subject, which is totally different from the premise of a survey.
How do you measure the efficacy of OSDM?
By getting the right input. Rather than focusing on who can make the meeting and provide input, OSDM
focuses on who ought to participate and allows people to take part regardless of location, time zone or
schedule. Efficacy is also about being enlightened. Rather than asking people what you want to know,
OSDM lets the right people tell you what they want to, without preconceived ideas and beliefs. ■
DARRYL ESTRINE
Dr. Dan McLinden leads the Open
Source Decision Methodology™
practice at Rogen International,
where he solves client’s
problems by tapping into
their stakeholders.
POWER OF
COLLECTIVE
WISDOM
“Collective intelligence”
has caught the attention
of business managers
as a counterintuitive
way of determining
customer needs. In
“The Wisdom of Crowds,”
James Surowiecki,
business columnist
for The New Yorker,
reminds us of the
mechanics of
“Who Wants to Be a
Millionaire”: Stumped
contestants can
answer a multiplechoice question, call
an “expert” or poll the
studio audience.
“Everything we think
we know about
intelligence suggests
that the smart individual
would offer the most
help,” Surowiecki writes.
“And, in fact, the ‘experts’
did OK, offering the
right answer—under
pressure—almost 65%
of the time. But they
paled in comparison
to the audiences.
Those random crowds
of people with nothing
better to do on a
weekday afternoon
than sit in a TV studio
picked the right answer
91% of the time.”
While collective
wisdom has a rich
academic heritage,
it’s a relatively new
business tool. Rogen
International, a 36year-old New Yorkbased management
consultancy, is tapping
into the theory of
collective wisdom
with a practice it calls
“Open Source Decision
Methodology.”
Contact
DMcLinden@rogen.com
POINT DECEMBER 2004
3
BY SCOTT DAVIS
TOMORROW’S CMOs: ESCHEW
YESTERDAY’S MARKETING MODELS
’’
Scott Davis is
a managing
partner of Prophet
(prophet.com), a
consultancy specializing
in the integration of
brand, business and
marketing strategies.
Davis has written several
best-selling books on
brand topics.
Contact:
sdavis@prophet.com
4
DECEMBER 2004 POINT
downloads and its opening of Red Lounge teenhangout centers.
You also see it in Starbucks’ move to mix more
than just mochas with its pilot Hear Music media
bars that allow patrons to listen to music, create
custom mixes and burn their own CDs. It shows
once again that the coffeehouse giant is as much
about the experience as it is about the brew.
Too many, however, struggle to find ways to
compete and re-establish their relevance—all the
while watching their margins decline as they fail to
break out of the old marketing
paradigms. They continue on
the noble yet dated search for
the message du jour—such as
KFC’s oxymoronic attempt to
jump on the low-carb
bandwagon—or for the silverbullet fixes to deeper problems.
Swiss Air’s failure to bring to
life a promising message of
“Attention to Detail” stemmed
from a culture that couldn’t
follow through.
For others, it’s been too
little, too late, like Geoffrey: A
Toys ’R’ Us Experience stores.
Toys ’R’ Us once had the
muscle to pull this concept off,
but today has been out-WalMarted and is now considering
the sale of its toy operations.
Ultimately, it’s about
creating relevance and meaning in a highly
fragmented and commoditized world.
It’s about knowing how your most profitable
customers think and act.
It’s about ensuring that the totality of your brand
and marketing delivers the experience for them.
It’s about effective partnering with operations,
technology, merchandising, billing and the call
center to truly go beyond the traditional marketing
model.
You may call it “taking a risk” to throw out your
old Marketing 101 textbook.
I call it “survival” and the opportunity to write a
new bestseller. ■
TOBY MORISON
‘‘
This new model
is less about
messaging and
more about
understanding
your profitable
segments of
customers in
order to design
the experiences
that are right
for them.
That sound you’re hearing is the death rattle of an
aging icon taking its last breath after a long and
honored run: the “classic” marketing model as
epitomized by consumer-package-goods
companies.
If there was any doubt that this model—based
around one-size-fits-all advertising and
promotional efforts—is no longer able to move the
masses, consider how some of the biggest brands are
shifting away.
Dell lets other manufacturers fight for retail
shelf space (and eat its dust)
while it markets and sells
more computers and
consumer-electronic
equipment on dell.com.
McDonald’s now assigns
just a third of its marketing
budget to TV, compared to
two-thirds five years ago.
A more powerful model
for marketing has been
emerging in recent years,
and it’s shaking up the way
traditional marketing
departments are organized
and how Madison Avenue
markets itself.
Forged by the service
sector’s experientialmarketing approach, this
new model is all about
establishing and maintaining
a sustainable relationship with, and loyalty from,
customers at every nuanced point of interaction. It’s
less about the messaging and more about
understanding your profitable segments of
customers in order to design the experiences that
are right for them, not necessarily everyone.
While few could state, for example, what Tide’s
advertising message is today, loyal Tide customers
can easily talk about Tide’s Fabric Care Network
Web site that shares tips and tactics going far
beyond detergent usage.
It’s why Coca-Cola Co. reinforces its lifestyle
connections through such vehicles as a Web site
featuring “fantasy” Nascar racing teams and music
COVERSTORY
KMART
ON THE
CLOCK
PAUL GUYARDO HAS ONE EYE ON HIS SHOPPERS,
ONE ON THE MARCH TO MERGER WITH SEARS
By Sarah Mahoney
For Paul Guyardo, Kmart CMO, the clock is always
running. There are the usual retail benchmarks—
back-to-school sales and the make-or-break holiday
season. And then there are the demands, just 18
months after emerging from bankruptcy, of proving
the company is on track: The month-to-month
pressure to improve same-store sales, and the
closely-watched quarterly results.
Then there’s the newest clock, the one that
started ticking last month when the Troy, Michiganbased chain announced its $11-billion merger with
Sears, forming the third-biggest retailer in the U.S.
“It’s a win-win for both companies,” Guyardo
says. “For Sears, it’s location, location, location—
we’ll help them pursue their off-mall strategy in a
major way. And Kmart gets even more great
proprietary brands—Craftsman, Lands’ End,
DieHard, Kenmore. We have to create reasons for
people to drive past a Wal-mart, past a Target, and
come to Kmart—proprietary brands are key.”
At press time, it’s still not clear how each store
will be branded when Sears Holdings—the new
parent company—begins formal operation,
presumably in March. At the time of the November
announcement, the company said it would keep
both brand names, but that several hundred Kmart
stores would likely be converted into off-the-mall
Sears Grand stores, accelerating a new one-stopshopping concept where Sears offers foods as well
as apparel and home appliances.
Kmart Chairman Edward Lampert, the
billionaire investor who was the largest shareholder
of each company prior to the merger, will be
chairmanof the new company; Sears CEO Alan
Lacy will be vice chairman and CEO; Aylwin Lewis,
hired as Kmart president-CEO a month before the
merger announcement, will be president of Sears
Holdings and CEO of Kmart and Sears Retail.
Until March, Sears and Kmart marketing efforts
are set to continue running on separate tracks.
Guyardo, Lampert’s hand-picked choice for the
Kmart CMO post, will continue in that position.
And Janine Bousquette, executive VP-chief
customer and marketing officer, will continue to
oversee Sears’ branding efforts.
CONTINUED ON PAGE 6
‘‘
Everything
is about
marketing.
Even how your
bathrooms
look is part
of marketing.
’’
About the author
Sarah Mahoney,
a contributing editor
to More and Parents,
often writes about
marketing. She lives
in Durham, Maine.
POINT DECEMBER 2004
5
COVERSTORY
‘‘
Our customer
will come in with
her list, and say,
‘I’ve got 20
minutes to get
all this stuff in
my cart.’ If
the store is
organized so
well, the signs
are so clear,
everything is in
stock, and the
associates are
helpful, maybe
she’ll get all that
done in 10
minutes.
’’
6
DECEMBER 2004 POINT
CONTINUED FROM PAGE 5
For Guyardo, that’s an alarm clock that will not
ring for a few months. The clock that ticks the loudest
right now is the same one that he’s been listening to
most attentively since he joined the company 10
months ago—it’s the one that starts ticking the minute
a customer walks into her local Kmart.
His idea of retail Nirvana? “Our customer will
come in with her list, and say, ‘I’ve got 20 minutes
to get all this stuff in my cart.’ If the store is
organized so well, the signs are so clear, everything
is in stock, and the associates are helpful, maybe
she’ll get all that done in 10 minutes.
“Then, if we’ve done our job, this customer will
be gracious, and give me that extra 10 minutes. The
impulse items she puts in her basket are my reward.”
But there’s a nightmare version as well: “If she
can’t find what she needs or if she is disappointed
with the quality of what she sees—she’ll just leave,”
says Guyardo, who spent eight years at Home
Shopping Network before joining Kmart Holding
Corp.’s turn-around team. “And then I’ve lost her.”
Holding her attention isn’t easy, and “my focus
can’t be anywhere else but on the consumer,” he
says. “We’re trying to move mountains here.”
The struggle is creating a marketing identity that
falls between cheesy (a niche currently dominated by
Wal-Mart Stores) and chic (a spot already taken by
the trendy Target Corp.). The secret, Guyardo is
convinced, is strengthening and revitalizing Kmart’s
proprietary brands, including Martha Stewart
Everyday, Route 66 and Jaclyn Smith for Women—
and the merger with Sears can only help.
But it’s clear that Guyardo’s clock-watching has
paid off: The company credited improvements in
advertising and promotion when it recently posted
third-quarter profits of fiscal 2004 of $553 million,
compared to a net loss of $23 million in the yearearlier period. (Same-store sales declined again for
the quarter, but the company said it was encouraged
by a 1.9% gain in same-store sales in October—the
first gain in six months.)
Whichever name prevails (the betting, of course,
is on Sears), Guyardo is still intent on transmitting a
constant and consistent message: “Our customer
needs to know that our stores and our brands stand
for high quality and good value.” For Guyardo,
marketing is the sum of every last detail of the
shopping experience. “Everything is about
marketing,” he says. “Even how your bathrooms
look is part of marketing.”
Of course, translating that message for a brand
that means many things to many people is
complicated. A trip to Kmart might find teens
shopping for trendy jean jackets just two racks away
from an octogenarian ooh-la-la-ing over markeddown jack-o’-lantern sweatshirts, or a young mom
stocking up on stunning new Martha Stewart
holiday ornaments, even while cracking wise about
Martha’s Christmas in the slammer.
It doesn’t help that Kmart has burned so many
shoppers in the past. Over the years, former Kmart
customers have become “unforgiving,” says Gary
Ruffing, a retail analyst with BBK, Southfield,
Mich. “She’s a reliable mom, and Kmart has not
been reliable, in terms of quality and value. Once
you let her down, it hard to get a second chance.”
But don’t expect Guyardo to come up with a
single-word mantra on how to get back in her good
graces. “It’s so easy for people to believe there’s a
DARRYL ESTRINE
silver bullet in this business,” says Jon Gieselman,
VP-advertising and public relations, who also
worked for Guyardo at Home Shopping Network.
“Paul often says that Kmart is like a car—many
different pieces have to work together. Is the
merchandise right? The people, pricing, location,
lighting, flooring? Are the carts lined up neatly
when people walk in? There’s no one thing we need
to do better, there’s hundreds of things,” says
Gieselman. “And we have to do them all well.”
Guyardo’s initial focus was on apparel,
marketing the contemporary new look Lisa Schultz,
Kmart’s chief creative officer, and John Goodman,
chief apparel officer, have given Kmart’s existing
product lines. (Before joining Kmart, both Schultz
and Goodman spent more than decade at the Gap.)
These revamped lines bode well for Sears Holdings:
“In the year following the bankruptcy, Kmart was
able to bring in a lot of talented people—like Paul,
like Lisa,” says Ruffing, “and now the merger will
allow it to reposition itself out of the discount
industry. With Sears’ respected brands and Kmart’s
talent and expertise in consumables and health and
beauty, it can become a whole new kind of megastore—a kind of Home Depot without wood.”
Also key to Kmart’s marketing strategy are the
working relationships Guyardo has built with
outsiders, including the WB Network, E! and
Telemundo. Such deals have given the company
market traction it might never have gotten on its
own. Take the WB, a juggernaut in communicating
Paul Guyardo
November 8, 2004
The bad news: The Sears
merger may mean a new
management team.
The good news: Guyardo
enjoys the passion and
excitement of a
turnaround situation.
CONTINUED ON PAGE 8
POINT DECEMBER 2004
7
COVERSTORY
BUILDING
A BETTER
CMO
For Paul Guyardo,
the classical training
of package-goods
marketing was ideal
preparation for his current
job as Kmart’s chief
marketing officer.
First
marketing job:
Tracy-Locke/BBDO,
Dallas: “They had me
work behind the counter at
a Taco Bell in Fort Worth
for a week—wearing that
uniform, making the tacos.
A few months later, a
friend told me I’d been
spotted. ‘He may be telling
you he works on the Taco
Bell account, but I saw him
behind the counter,’ an
acquaintance said to him.
‘That poor guy is working
at Taco Bell.’”
Best basic
training:
Brand management
at Johnson & Johnson:
“You have to work with
the people in R&D, the
people in sales, the people
in advertising,” he says.
“When you’re in charge
of P&L, it forces you
to thinks beyond
your own little world.”
Most eye-opening
experience:
Home Shopping
Network: “I got to work
with the great mind of
Barry Diller, and learn
that there are many ways
to talk to a customer—
through a catalog,
through TV, through
hsn.com. … It was a
whole way to understand
multichannel marketing.”
8
DECEMBER 2004 POINT
CONTINUED FROM PAGE 7
with the all-important 12-to-24 crowd. Kmart
already was a significant advertiser, but Guyardo had
a bigger idea: If the WB would pony up actors from
its hit shows, including “7th Heaven” and “Reba,”
Kmart would feature them in an extensive
advertising campaign.
The deal with Kmart was “one of the riskier
choices we’ve made, with one of the greatest
returns,” says Suzanne Kolb, exec VP-marketing for
the WB. “I’m not sure dressing our stars up in
clothes from Kmart would have been anyone’s first
instinct, but Paul had such a vision, and assured us
that the process would be collaborative. Nineteen
stars participated, and not one that we asked said
no,” she says. “We all love the way the ads came out.
For the WB, it was great exposure—our media
budget can only go so far.”
If the deal gave WB programming vital
exposure, the campaign, created by Grey
Advertising, gave Kmart a level of hipness it
wouldn’t have found on its own. “When we run
those ads in In Style, it helps our marketing message
break through the clutter,” says Guyardo. “There is
an element of borrowed equity. It has a nice halo
effect, and it elevates our brand.”
Similarly, Kmart is using its licensing agreement
with Latin songbird Thalia Sodi to reach out to the
fast-growing Hispanic market. But Thalia, who
started on Mexican soap operas and is married to
music honcho Tommy Mottola, lends Kmart
marketing sizzle that cuts across all demographics:
What woman can’t occasionally go for something
low-cut, see-through or at least leather trimmed?
And Kmart continues to be nothing but
enthusiastic about the performance of Martha
Stewart Everyday, recently extending its licensing
agreement through 2009. (Analysts estimate that
MSE products account for about $1.2 billion of its
annual sales, which were $23.3 billion in 2003.)
FINDING THE CUSTOMER
WHERE SHE LIVES
“The majority of our business is done with people
who live within three to five miles of their nearest
Kmart,” says Gieselman. So while the vast majority
of the chains’ marketing efforts are national, local
media—circulars, radio, outdoor and direct mail—
have become more important. “We have monthly
post-mortems on our Sunday circular performance,
looking at how well each item did relative to
expectations, but also what other items made it in
the way to the market basket. If they came in for the
advertised Coke special, what else did they buy?
And what else did they buy if they came in for the
battery special?”
If Guyardo sounds exceedingly hands-on, he is.
Considering how many ads, promotions, marketing
plans and research initiatives come through
Guyardo’s office, “I’m astonished at the level of
detail he can stay on top of,” says Gieselman. When
it came time to shoot the Jaclyn Smith print ads,
Guyardo flew out to the California set, where rock
photographer Matthew Rolston was shooting
Smith for the print campaign. “Paul felt we weren’t
pushing the envelope,” Gieselman says. “He was
right.” The resulting ads make Smith—now 57, and
still best known for her role in Charlie’s Angels—
look downright … vixenly.
Building his team at Kmart has been a
challenge—a downscale retailer with a recent
bankruptcy located on the outskirts of Detroit isn’t
exactly a recruiter’s dream. (The new company will
be based in suburban Chicago, but will continue to
maintain a significant presence in Troy.)
“But there’s a special person who is attracted to
turnarounds. You have to come to work incredibly
motivated. And it all starts with me. … You have this
whole organization looking to you, and you have to
have the kind of passion and enthusiasm that can rub
off on other people,” Guyardo says. But most of all,
he says, he’s been building a team—and a plan—
built on “tremendous respect for the customer, and
who she really is,” says Guyardo, who remains
understandably coy about the demographic specifics
of his target market. “You can’t develop plans for
who you want the customer to be.”
Or where you want the customer to be, and the
merger fully reflects that reality: “Right now, Sears
is where the customers aren’t,” says Ruffing.
Still, plenty of observers aren’t sure Kmart and
Sears can rescue each other. “Sears has been
struggling for years to solve its merchandising
problems, very unsuccessfully,” says Ulysses Yannas,
a retail analyst with Buckman, Buckman & Reid, in
Red Bank, N.J. “So now you’ve got two companies
trying to straighten themselves out—it’s a
monumental task.”
Ruffing, however, is optimistic: “It won’t be easy,
but there’s not a lot of risk. The company’s realestate holdings are invaluable,” he says. “The
merger has the potential to make Kmart something
more than the third wheel in the discount world,
and Sears something more than a struggling, lowertier department store. Why not give this a shot, and
create a brand new arena, with the best products
from both companies?” ■
STRATEGICINSIGHT
THE
POWER OF
CULTURAL
ACTIVISM
HOW LARGER-THAN-LIFE ICONIC BRANDS
LEARN TO SPEAK WITH DRAMATIC AUTHORITY.
By Douglas B. Holt
The concept of “cultural activism” begins with the understanding that certain powerful brands—
including Coca-Cola, Volkswagen, Nike and Mountain Dew—have developed into brand icons that
are cultural forces in society. In this excerpt from “How Brands Become Icons” (Harvard Business
School Press, 2004), Douglas B. Holt discusses how certain brands develop a reputation for “telling
a story that addresses the identity desires of a particular constituency.”
The single most debilitating mistake that managers
can make in regard to the long-term health of an
identity brand is to develop a strategy so abstract that
it yanks the brand out of its social and cultural
context. Product design and benefits are the platform
on which myths are built. A wide variety of myths can
be built atop any product-benefit platform, and most
of them are worth little to consumers.
What, then, is a strategy for an identity brand?
Cultural-brand strategy must identify the most
valuable type of myth for the brand to perform at a
particular historical juncture, and then provide
specific direction to creative partners on how to
compose the myth. Drawing from the cultural
knowledge described above, a cultural-branding
strategy should include the following components:
Target the most appropriate myth market.
With knowledge of the country’s most important
existing and emerging myth markets and the brand’s
cultural and political authority, managers look for
the best fit. The most opportune myth market is the
one that the brand has the most authority to
address. Mountain Dew’s equity made the slacker
myth market a perfect choice, while the indie myth
market was a natural fit for Volkswagen given its
cultural and political authority.
Compose the identity myth. Managers
CONTINUED ON PAGE 10
About the author
Douglas B. Holt is the
L’Oréal Professor of
Marketing at the Saïd
Business School,
University of Oxford. His
research applies a sociocultural lens to key issues
in branding, advertising,
and consumption. Holt
also has been a professor
at the Harvard Business
School (2000-2004)
and a brand manager
at Clorox Co. and Dole
Packaged Foods.
POINT DECEMBER 2004
9
DAN PAGE
‘‘
Too often,
the job of the
brand manager
is reduced
to adjective
selection—the
management
of meaningless
abstractions.
’’
10
DECEMBER 2004 POINT
CONTINUED FROM PAGE 9
shouldn’t usurp the role of their creatives, but they
must give specific direction on creative content if
they are to play a significant strategic role. The first
step in composing the myth is to prepare a myth
treatment: a synopsis of the myth that describes the
identity anxieties the myth should address and the
way in which the myth will resolve these anxieties.
Next, managers must describe the populist world
in which the myth will be located, and the strategy
for the brand to develop an authentic voice within
this world. To maintain legitimacy, the executions
of the myth must aim in part at the insiders who
control the populist world that the brand inhabits.
Brands win this authenticity with performances
that express the brand’s populist world literacy and
its fidelity to the world’s values. Finally, managers
need to work with their creative partners to
develop the brand’s charismatic aesthetic, namely,
an original communication code that is organic to
the populist world.
Extend the identity myth. When a brand
performs the right myth targeted at the right myth
market, consumers jump on board, using the
product to sate their identity desires. They come to
depend on the brand as an icon and remain fiercely
loyal, but only as long as the brand keeps the myth
fresh and historically relevant. Once established,
myths must evolve creatively and also weave in new
popular culture in order to remain vital.
Reinvent the identity myth. Even the most
compelling identity myths will eventually falter,
not because competitors attack, but because
societal changes drain their value. The seemingly
rock-solid value of a brand’s myth in one year can
come unglued the next. Socioeconomic and
ideological shifts reconfigure the identity desires of
the nation’s citizens, sending them searching for
new myths. These cultural disruptions create
extraordinary opportunities for innovative new
identity brands while also presenting treacherous
hazards for incumbents.
Even the most successful brands routinely
struggle to understand the cultural disruptions that
send their brands into tailspins. Witness
Volkswagen’s two-decade-long struggle to regain
its iconic stature and Budweiser’s dead-end
experiments that stalled the brand for most of the
1990s. Other brands, like Miller, Levi’s and
Cadillac, have yet to recover.
BRAND MANAGER
AS COMPOSER
Brand managers must act as composers of the
brand’s myth. Too often, the job of the brand
manager is reduced to adjective selection—the
management of meaningless abstractions. As
cultural activists, managers treat their brands as a
medium—no different than a novel or a film—to
deliver provocative creative materials that respond
to society’s new cultural needs. While they must
leave the actual construction of the myth and its
charismatic voicing to creative talent, managers
STRATEGICINSIGHT
must become directly involved in the composition
of the myth, or else they give away the strategic
direction of the brand.
Marketing organizations are today dominated
by spreadsheets, income statements, reams of
market data and feasibility reports. The rationality
and pragmatism of the everyday business of
marketing smothers cultural activism. Moreover,
the breeding ground for brand managers—M.B.A.
programs in business schools—conscientiously
socializes managers into a psycho-economic
worldview that runs directly counter to the cultural
point of view needed for identity brands. Many
business schools marginalize social issues as the
domain of not-for-profit ventures and treat the
texts of the culture industries superficially, if at all.
Most M.B.A.s leave their programs without even a
rudimentary ability to evaluate an ad from a
cultural perspective.
Iconic brands have broken out of this rationalized
mind-set to make contact with the nation’s culture.
They are exceptions to the rule, led by the intuitions
of ad agency creatives and the occasional marketing
iconoclast. Because companies have not nurtured a
cultural perspective and the talent that goes with it,
the primary architects of iconic brands have been
copywriters and art directors. Not surprisingly, the
members of the brand team with the greatest
cultural competencies take the lead. As a result,
cultural strategies have evolved haphazardly by the
chance engagement of talented creatives, rather than
through the consistent deployment of a brand
strategy.
For brand owners that seek to build iconic
brands, the challenge is to develop a cultural activist
organization: a company organized around
developing identity myths that address emerging
contradictions in society; a company organized to
collaborate with creative partners to perform myths
that have the charisma and authenticity necessary to
attract followers; a company that is organized to
understand society and culture, not just consumers;
and a company that is staffed with managers who
have ability and training in these areas.
Mind-share branding is today slipping out of
favor even among its most loyal stalwarts. And
commingling brands with culture seems to be in.
Procter & Gamble, Coca-Cola Co. and Unilever all
have made significant gestures of late to move in
new directions, often mentioning Hollywood as the
most likely destination.
In a speech to the Publicity Club of London,
Niall Fitzgerald, then chairman of Unilever,
proclaimed that the “interrupt and repeat” model of
advertising is in decline, and so marketers can no
longer push “messages and memorability into the
skulls of the audience.” In place of mind share,
Fitzgerald sees advertising moving into the space
occupied by other culture-industry products, such
as film: “Today we should conceive and evaluate our
brand communication as though it were content—
because today, in effect, that is what it is. We are in
the branded-content business.”
Fitzgerald is certainly right. Marketing
companies can no longer ignore that consumers
have become tremendously cynical about
advertising and can now act on this cynicism with
technologies like TiVo, which allows them to edit
out ad exposures. Instead, advertising is looking
more and more like entertainment. Madison Avenue
and Hollywood are becoming incestuous partners.
But how should companies, long enamored by
mind share, proceed? Fitzgerald seems to suggest
that branded content is a new-to-the-world
proposition. But, as this book makes clear, the most
successful identity brands have long focused on
delivering branded content, at least since the
beginning of the TV age in the mid-1950s. The
extraordinary successes of Marlboro and
Volkswagen in the 1960s; Coke and McDonald’s in
the 1970s; Nike, Budweiser and Absolut in the
1980s; and Mountain Dew and Snapple in the 1990s
were all the result of branded content. So managers
interested in new branding models would do well to
glean some lessons from their predecessors rather
than try to reinvent the wheel.
Fitzgerald’s provocations beg the question: What
branded content? If brands merely deliver
entertainment like most culture-industry products,
they will be handicapped from the start. We live in a
world oversaturated with cultural content, which is
delivered not just by the traditional culture industries
(film, TV, magazines, books and so on) but also
increasingly by video games and the Internet. How
can a 30-second ad compete with a film or rock
concert in terms of entertainment value? Or,
alternatively, why would customers seek out a film
when the plot is stilted by commercial sponsorship?
The greatest opportunity for brands today is to
deliver not entertainment, but rather myths that
their customers can use to manage the exigencies of
a world that increasingly threatens their identities.
To do so, companies would do well to follow the
lead of the most successful brands of the past halfcentury rather than throw their marketing budgets
at Hollywood. Brands become cultural icons by
performing myths that address society’s most
vexing contradictions. ■
‘‘
The breeding
ground for brand
managers—
M.B.A. programs
in business
schools—
conscientiously
socializes
managers
into a psychoeconomic
worldview that
runs directly
counter to the
cultural point
of view needed
for identity
brands.
’’
Reprinted by permission
of Harvard Business
School Press. Excerpted
from Chapter 9 of “How
Brands Become Icons” by
Douglas B. Holt.
Copyright 2004
Harvard Business School
Publishing Corp.; all rights
reserved.
POINT DECEMBER 2004
11
WE ARE WHAT WE SPEND
Over a few months, the American people spend more
than most governments do in a year. And our shopping
reveals much about our national psyche.
“In today’s consumer-driven society, satisfying consumer
needs has less do with the practical meeting of physical
needs and everything to do with gratifying desires based
upon emotions. The act of consuming, rather than the
item being consumed, satisfies the need.”
—Pamela Danziger, “Why People Buy Things
They Don’t Need: Understanding and Predicting
Consumer Behavior,” Dearborn Trade, 2004.
$608
Average individual gift investment in 2004
(4% increase over last year).
$219 billion
Total U.S. 2004 holiday-gift expenditure.
$96 billion
Amount spent on electronics gear
in 2003. Women accounted for
$55 billion (yes, more than men).
89
Percentage of electronicspurchase decisions
involving women.
27.7%
U.S. homes with
a digital camera
at the end of 2003.
End of 2002:
19.6%. Women
are the primary
users of digital
cameras.
12
DECEMBER 2004 POINT
$22.12
Average amount consumers will spend
on co-workers this holiday season.
Families: $406.52. Friends: $71.29.
$1.8 billion
U.S. sales for fur and fur-trimmed
apparel and accessories last year, a record
amount and a 7.5% increase from 2002.
$13.2 billion
Amount U.S. shoppers will spend
online this holiday season. The figure,
which represents 20% growth, is less
than the 31% 2003 increase.
$116.87
The amount men plan to spend
on themselves this holiday
season—almost twice as much
as women ($65.88).
$16.10
Average amount
consumers will
spend on flowers
this holiday season.
Decorations: $35.91;
greeting cards and
postage: $25.22;
candy and food:
$83.77.
OCTOBER 18, 2004
ADAGE.COM
CRAIN’S INTERNATIONAL NEWSPAPER OF MARKETING | U.S. $3.99, CANADA $ 5.00, U.K. £3.95
LATE NEWS
BK ties Subservient Chicken
effort to Fox Sunday lineup
[MIAMI] Burger King Corp. has ordered a
new Subservient Chicken campaign built
around Fox TV’s new season of Sunday
night programming, according to
executives close to the marketer. The
effort backs the launch of a salad as the
third item in its TenderCrisp chicken
platform and includes print ads, in-store
displays and a sweepstakes. Ads include
a teaser to look for the chicken on the
Sunday programs, which begin Nov. 7.
WPP Group’s MindShare, New York,
handled the media as an upfront deal.
MDC Partners-backed Crispin, Porter &
Bogusky, Miami, handled creative
THE IPOD Lowe’s, Tyson
■ TOO HOT FOR TV?
ABC’s
ECONOMY divorce
‘Housewives’
By BETH SNYDER BULIK
t’s the white, white world of the iPod economy, an exploding
universe in which marketers such as Hewlett-Packard, Kate Spade, Bose and
BMW are tapping into Apple’s portable music player to boost their own sales
and brand equity.
Apple last week wowed investors by announcing a 44% year-on-year increase
in profit to $106 million on revenue of $2.35 billion, up an impressive 37%. A
344% increase in sales of iPods, and a 600% increase in sales from Apple’s iTunes
music program, fueled the results.
See IPODon Page 37
But the iPod itself is just the beating heart of a growing
I
Others clamor for ratings hit,
fueling 100% hike in ad price
By CLAIRE ATKINSON
abc’s “desperate housewives” is fast becoming the
hottest show on TV, but it’s too hot for some advertisers to
handle.
The network is doubling ad prices for the series even as
some marketers pull out because of its racy plot lines.
Lowe’s Home Improvement and Tyson Foods pulled ads
out of the show because of content concerns.
Their moves underscore the growing conflict for advertisers as they strive to be in cutting-edge content that attracts a lucrative demographic at the risk of angering watchdog groups over issues of taste or decency.
Advertising Age’s Age Madison & Vine newsletter reported that S.C. Johnson pulled its sponsorship from the
cross-dressing reality show “He’s a Lady” just days before
Ford non-traditional
efforts rise to 20%
See ‘HOUSEWIVES’on Page 38
[DEARBORN, MICH.] Ford Motor Co.’s Ford
Division has increased its spending in
non-traditional marketing to 20% of its
total marketing budget this year from
just 2% a decade ago, said Steve Lyons,
president of the division. He said it could
go as high as a third in the near future. A
prime example, the redone 2005
Mustang will be integrated into several
broadcast network TV shows and
backed by a 60-second spot arriving in
theaters Nov. 1. That spot, from WPP
Group’s J. Walter Thompson, Detroit,
shows late actor Steve McQueen
recreating his Frank Bullitt movie role.
The late actor also appeared in a Ford
Puma spot in Europe from WPP’s Y&R.
Marketing primed
for a hiring spree
Freeze thaws at Fortune 500 firms
By JAMES B. ARNDORFER
fortune 500 companies appear ready to bolster their marketing departments in 2005 after years of keeping a lid on
headcount.
More than half the respondents in a new survey by
staffing firm CPRi said they plan to add staff in their marketing departments next year. The disciplines slated for the
biggest increases are several tied to return on investment:
project management, data analysis and market research,
along with brand marketing.
The study, and similar reports from recruiting and
training companies, are a strong indication that marketers,
which slashed staff before and after Sept. 11, 2001, are now
more comfortable with the direction the economy is going.
It also underscores how marketers are trying to keep up
See CPRIon Page 38
Hip-hop help
Hot blogs
Unilever convenes panel of
urban trendsetters, asks for
advice on Axe
PAGE 16
Boosted by presidential race,
top sites command
top dollar for ads PAGE 34
0
NEWSPAPER
71486 01024
1
42
See LATE NEWSon Page 2
LO
U BE
AC
H
[DULLES, VA.] America Online is launching a
national TV campaign for its dial-up
Netscape service, pitting it against rival
NetZero. Both services cost $9.95 a
JOE ZEFF
America Online rolls
Netscape dial-up spots
Publishes: March 28, 2005
Closes: March 7, 2005
Celebrate
the
top
75
advertising
moments
in
our
75th
anniversary
issue
© 2004 Crain Communications Inc
To advertise in the 75th Anniversary issue or to learn about other special
anniversary opportunities, please contact your sales representative or
Jeff Burch, Advertising Director, at 212-210-0280 or jburch@crain.com.
May we direct your attention to the original search engine?
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Truly trackable. Totally measurable.Virtually omnipresent.Yellow Pages has been delivering comprehensive
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So, plan accordingly and never underestimate the power of the Yellow Pages.
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