Saturday, September 23, 2006

The Finish Line for Nike?

For a number of years now, I've suffered the slings and arrows of the non-believers. I've stuck to my guns about what makes a brand a real brand, as opposed to an identity with no real value. Along the way, I've made the case against Wal-Mart and Coca-Cola.

People scoffed when I warned them that these weren't good brands. They were successful brands, whose good fortunes were due more to carnivorous sales teams and predatory pricing policies more than any thing else.

I said the same thing about McDonalds, about a year before the company posted its first quarterly loss. But to no avail. I was still labeled a heretic.

I warned how each was going to take a major hit, value-wise, when they ran out of favor, media money or both. A brand that relies on endorsements, celebrities, mass media promotions - anything that distracts the end user from the actual brand values that end users are looking for - is eventually doomed. The party simply can't go on forever. Sooner or later, it all catches up with you.

If you read this blog, you'll recall that one of my favorite victims is Nike, which has been readying itself for a fall in a major key. In my book, Revenge of Brand X, I take Nike to task for it not having any brand. Sure, it has an identity, but just ask anyone, anywhere, why they buy Nike and no two people will give you the same answer. At best, you're going to hear a brand's worst nightmare:

"Because (insert celebrity name here) wears them."

Bummer. Especially when you read articles like the one in the International Herald Tribune, which finally vindicates what I've been saying all along: No-brand Nike is beginning to crack. Sales and profits are down. In typical PR spin, Nike spokesman is quoted thusly:

"We have top teams and top athletes," said a Nike spokesman, Alan Marks. He said the James and Bryant shoe introductions in the past year have been "very successful."

But that's the high point for Nike in that article. According to finanacial analysts, the "let's hitch our wagon to the latest sports guy" strategy is backfiring big time:

Nike sponsors 14 of the world's 25 highest-paid athletes. Yet Nike shoes plugged by Michael Jordan, the retired basketball star, continue to outsell those of newcomers like LeBron James and Kobe Bryant. Revenue might increase in the 12 months through May at the slowest rate in four years, said Margaret Mager, a Goldman Sachs analyst.

Ouch. And believe me, when the financial analysts can see through your brand weakness, it's only a matter of time until the buzz hits the major media. Or has it? Just take a gander at the latter part of the same article:

The Nike chief executive, Mark Parker, faces an industrywide slowdown in sales of basketball shoes. Teenagers have been increasingly attracted to thin-soled sneakers for casual use, Spanbauer said.

Uh-oh. And if this wasn't bad enough, it seems the future isn't looking so rosy, either. Turns out that even with the latest overblown, hyped up young athletic talent, there just ain't enough star power to move the shoe-buying public anymore:

None has had the impact of Jordan, who helped propel the company to the top of the shoe industry in the 1980s. Retro styles of Jordan's signature models are the five top sellers in the basketball segment this year, according to SportsOneSource. James's shoe ranked 18th. "They are not resonating as well with Carmelo, Kobe and LeBron," said John Shanley, a Susquehanna Financial Group analyst. "There aren't any big guys out there."

Not exactly what you want to hear when your entire operation hinges on the hype of celebrity athletes. Tiger Woods get someting like $40 million a year from Nike, which sounds like a swell investment until you figure out that golfers aren't like your typical urban basketball fan. Golfers buy shoes for function, not fashion. Which means they buy far fewer pairs than the traditional Nike hype believer.

No brand. Oblique advertising. Declining fortunes with a burned out strategy.

Maybe there is a finish line after all.

Monday, September 18, 2006

Hit the road, Doctor Z

Unless you're a blind man with a hearing problem, there was no way you could have missed it: the think tank at Daimler-Chrysler finally decided to axe their chairman, Dieter Zetsche as their company pitchman.

Hey, is ANYONE shocked?

The geniuses at Chrysler's ad agency might be, seeing as how they didn't learn from their last time out using a celebrity spokesperson. Not that Dr. Z is a celebrity, but the last time Chrysler's marketing people took a spokesperson out for a test drive, they strapped none other than Celine Dione to the hood and sent her singing down the road to obscurity. The spokes-siren didn't do anything to move Chryslers; it did even less for her career.

But that didn't stop the folks at Chrysler. In a move that signifies pure desperation, their ad agency did what every ad agency does when the account is in jeopardy: flatter the CEO by putting him into their TV spots. Don't laugh, it really works. Try charting "stocks you should have shorted" against "companies featuring the CEO in their ads." There's a pretty scary correlation there.

What, you don't believe me? Hmm...ask yourself this: Exactly what has Ford's last two campaigns - both featuring Ford high level executives - done for Ford? Can you say "plummeting market share?" I knew you could.

It's bad enough when companies use a pitchman to hawk their wares, but it was even worse for Dr. Z. Imagine building decades of a career as a canny, knowledgeable and able automobile executive, only to go public and have it all trashed in a matter of months. Dismissed as purely amateur, the poor guy is going to have to live with the moniker of "the German guy who couldn't sell Chryslers on TV."

Additionally, you have to wonder why Chrysler would even need a pitchman. Are they so bankrupt of marketing strategy that they can't produce an idea based on their own brand's inherent qualities that will sell cars? The answer, unfortunately, is yes. That's exactly the problem. To be fair, however, it's not just Chrysler. It's the brain trust they employ as their ad agency, committee-driven pinheads that look everywhere but the factory floor to film their million dollar ads.

Well, now Dr. Z has found out just how cruel those little movie-makers can be. Just another heart crushed by Hollywood.

Of course, Dieter never really had a chance with the American public. In what could only be termed a case of complete and utter denial, those research-driven focus groups never told Chrysler's marketing hamsters what they need to hear: Americans simply weren't going to accept a foreigner as a spokesman. Not now. Not with the world in the shape it's in.

For one thing, the Angry American (see my previous blogs on that) is still smarting from job cuts and plant closings here in the USA. The only thing they hate more than an American closing a plant is a foreigner buying it. And Dr. Z was just one more prime time reminder that America was losing its competitive edge - rubbed in their faces every night, just after the network evening news. For another, the Angry American is just about fed up with the intrusion of foreign affairs into his daily life. Between radical islam, Korean dictators and Venezuelan musclemen, it's getting so that a man's fate is beyond his reach. It was one thing to have problems about which you could write to your congressman. Today, it seems that more media time is dominated by attentions turned to anywhere but America.

Put it all together and they spell trouble for anyone with a foreign accent selling anything to Americans. Bad timing. Really bad.

Ah, to be a fly on the wall during the ad agency's presentation when they toadied up to Dr. Z, proclaiming him to be "the next Lee Iacocca" -- and you just KNOW they did. How delicious to be in the editing bay today, where all the writers, art directors, creative directors and producers are hurriedly axing their Dr. Z spots out of their sample reels while they speed dial their headhunters for their next jobs.

Silly, silly people. Clueless to the end. They never understood that when Americans want to buy cars, they want compelling information. When they want to be charmed by Germans, they watch Hogan's Heroes.