The politics of attack advertising.

According to the definition by the US Centre for Media and Democracy in it’s SourceWatch www.sourcewatch.org/, an attack advertisement is a short, 15-60 second piece of political advertising usually on the electronic media and almost always aired during an electoral campaign, but maybe as a third party ad. It is a key feature of negative advertising and is often used to discredit a political figure or message. An attack ad is negative advertising but it also consitutes a new form of advertising, using some of the elements found in propaganda.

The most recent examples are those which have been used by both parties and independents during the recent mid-term elections in the United States and in Australia by the Labour Party, as part of an advertising campaign criticising Prime Minister John Howard’s trustworthiness and honesty over interest rates. There is also some talk attack advertising will be a feature of some of next year's State elections in Australia by the Labour Party.

The current campaign features billboards and commercials which portray John Howard as Pinocchio (see picture), whose nose has grown longer with each of the past seven interest rate rises. The campaign mocks his 2004 election pledge "to keep interest rates at record lows" and asks: "Who do you trust now?"

Common features of such an attack ad include conceptual metaphors that can serve to smear opponents (hence John Howard as Pinocchio), memorable sound bites intended to be repeated by the public on the street and in discussions about how to vote and to avoid libel claims, using deliberate ambiguity, fatuous and extreme assertions, which go beyond legal liability

All of this can also be delivered with a degree of humour.

So if the attack ad fails, an attack ad campaign can be "spun" into "good fun" by simply extending the conceptual metaphors or extreme assertions to humorous lengths.

Attack ads utilise a variety of familiar propaganda techniques to influence opinions. Attack ads may be presented through a variety of broadcast or print sources but usually are intended to deliver a specific message to a select audience. Rather than support a position held by the advertiser, attack messages target an opponent's platform, track record, background or character.

But for an attack ad to be really effective, the message probably needs to be believable. Repulsive imagery conveyed in attack ads might reinforce allegations or mask outright character attacks. The ads often rely on the resonance of the message to attract the attention of target audience members to a message most other listeners or viewers will ignore.

Let’s judge later the effectiveness of current attack advertising after the US mid-terms and maybe even see if Australian Prime Minister John Howard starts to develop a credibility gap. But according to Wikipedia http://en.wikipedia.org/wiki/Attack_ad some believe that attack ads are useful in shaping public opinion with some analysts claiming the effects can be as great as five percent change. However, it’s a fine line if an attack ad may fail in its intended purpose and backfire against the group which first used it. For example, if an ad is seen as going too far or being too personal the voters will turn against the party that put out the ad. There will be examples of this to be found in the mid-terms.

In the US, research has consistently found that negative advertising has positive effects. Finkel and Greer (1998) said negative advertising “is likely to stimulate voters by increasing the degree to which they care about the election’s outcome or by increasing ties to their party’s nominee.” This is an important feature of negative campaign advertising because it can solidify a candidate's support going into an election. The finding was repeated by Goldstein and Freedman (2002), who found that negative campaign ads raise interest in the election as well as raise the perceived importance of the election, which increases voter turnout (an important factor in non-compulsory US voting).

Here at DIFFUSION we don’t expect attack advertising to remain the sole property of political parties and their advertising agencies or even of political campaigners. What we see is the wider application of attack advertising into more general fields, designed to attack competitors or to dispute product or service claims. Either way, the ground has been established for their use and their effectiveness to mobilise a purchase decision has been proven.

Heinz HP sauce goes dutch.

One of Britain’s most iconic sauce brands is likely to become another victim of a point of origin fraud with company owners Heinz announcing the brand is going to be made by the Dutch.

HP brown sauce (yes, we even have it in Australia) famously features the Houses of Parliament on its label and the announcement last month that it US parent Heinz wants to close its plant in Birmingham and move production to Holland has sent shockwaves through Britain. The sauce has been made in Birmingham for 103 years and the move will likely result in the loss of both jobs and the brand's most favoured status as the UK parliament’s brown sauce of choice.

Even more interesting is the proposal by rivals Branston to consider adopting the same symbol on their own Branston brown sauce bottle. Heinz' move has sparked off another round of hand wringing by the British about the importance of “Britishness” and point of origin as an emotional and pivotal part of culture.

Here at DIFFUSION we’re both defenders of point of origin and truth in labelling as important elements of brand heritage (see blog 7 February 2006 Points of Origin)

Is McCann set to give Coles a Walmart?

Why is that when a company has a weak or non-existent brand strategy they try and fix it with advertising?

Coles seems to be desperately trying to bolster what is widely regarded by the market as a flimsy brand strategy, by drafting the help of senior New York McCann Erickson advertising executives, according to the Sydney Morning Herald last week.

McCanns' is working alongside their Interpublic Group stablemates, FutureBrand, on a reported combined monthly fee of $750,000 and the team includes some Walmart account veterans - so we think we know where this is going. Coles had previously only made a few quiet asides about FutureBrand's involvement in the rebranding, unveiled at its much maligned strategy presentation at the end of August.

DIFFUSION thinks maybe the reticence by Coles Group chief executive, John Fletcher, to provide more details on the strategy was because it hadn’t really been worked out. Now that McCanns' have weighed in, it’s likely any strategy will be one led by massive brand advertising rather than the much needed fundamental brand analysis.

Yet there’s going to be a lot more work to be done on the proposed “everyday needs" monolith before Coles puts it in front of shareholders at the next presentation in November. The Coles Express, First Choice, Liquorland, Vintage Cellars, Kmart and Theo's Liquor names are all set to be axed for the single disingenuously named brand.

We’re still scratching our heads about the decision to axe both Express and Vintage Cellar brands. Express has been the bulwark for Coles' hugely successful foray into forecourt marketing and with the sale of Myer, Vintage was the only premium brand left in the portfolio with neither Target or OfficeWorks filling that space. It’s all down market from here; which leads us to ponder...

While Walmart's business model, as the 'king' of low prices, makes it the envy of retailers around the world model, DIFFUSION hopes Coles will not be following in its path. Consistently ranked in the top 10 of most crisis prone organisations in the US, Walmart's human resource, social and environmental policies have left its public in uproar.

In addition, we believe that international trends (aside from the US who still seem to be locked into the bigger-brighter-better-is-best notion) are indicating a move away from monolithic brands towards portfolio brands, with which customers can build more intimate relationships; it's also a smarter risk management strategy - if one brand fails, it will not affect the rest of the portfolio.

The advice we hope McCann is giving Coles is culturally sensitive to how, and from whom, we want to purchase in Australia. They should acknowledge the mistakes monoliths such as Walmart have made and base the new strategy on international best practice that is simply not US-centric.

Polo Ralph Lauren goes immersive.

We've been talking about it for some, well ever since THAT Tom Cruise movie...yes the 2002 blockbuster Minority Report...and it seems like we were not the only ones who thought that immersive marketing was not too far away. First Eyecorp (see blog 18 March 2005, 'Minority Vision') and now Ralph Lauren.

Polo Ralph Lauren have just launched a new interactive window in their Madison Avenue shop that allows shoppers to choose and purchase an outfit projected on the shop window, even when the store is shut.

“After watching Steven Spielberg’s Minority Report, I really wanted to find a way of making that amazing technology a retail reality. We are thrilled to offer such a unique and exciting way for our customers to further explore the world of Ralph Lauren; with this initiative we are reinventing the concept of shopping anytime” said David Lauren, Senior Vice President Advertising, Marketing and Corporate Communications of Polo Ralph Lauren.

It's a classic case of life imitating art.

Coles tries on a new lite strategy.

On Monday 1 August the Australian supermarket giant Coles went public with the results of their eagerly awaited nine month internal review. They were greeted by a lukewarm market reception and bewilderment as to the scope and nature of their new brand strategy.

Coles CEO, John Fletcher, said the newly named 'Coles Group Limited' (as we predicted in our blog on 13 July 2006) complete with a bright curly cue logo would "drive sales and earnings growth by further simplifying its business to invest in stores and customers’ shopping experience" by focussing on "customers’ everyday shopping needs".

The most interesting part of the announcement was the decision to integrate the existing food, liquor, fuel and general merchandise businesses (Coles Supermarkets, Liquorland, Vintage Cellars, 1stChoice Liquor Superstore, Coles Express and KMart) into something vaguely called "everyday needs".

While the Sydney Morning Herald's coverage on the same day seemed to interpret this to mean that everything would be called "Coles", our understanding is that while the Coles name would feature prominently in the newly branded business, this is not necessarily the case...

In addition, we are not convinced that calling something "Coles Everyday Needs" is particularly evocative of anything. Perhaps really what they are trying to do is simplify the group structure so that the process of marketing, supply chain and management can be centralised and significant savings made by reducing head office numbers and duplication at various management levels of the existing brands.

Fletcher claims that the Group will be spending $60 million to improve the customer experience in supermarkets and increasing investment in Target and Officeworks, which they have chosen to retain. Yet, why announce such a large spend working on what is demonstrably a poor experience (which you will be inevitably looking to rebrand over the next two years)?

“We have spent the last nine months researching our customers, team members, suppliers and the world’s best retailers to ensure there is overlap between our current and next strategic direction,” Fletcher said in the company release.

This is a very strange claim when both DIFFUSION and most market analysts remarked that the Group lacked any real strategic direction.

“During this time it has become clear that two key themes – customer intimacy and simplification – will drive future growth, enabling us to direct additional resources and focus to engaging our customers with better service, more convenience, and better products and rewards.”

Similarly, Fletcher's claims that these two themes are the bulwark of any future growth are also odds with a culture that to date has seemed to shun any notion of better service by reducing the ratio of staff to customer numbers, defined 'convenience' by opening hours, marginalised suppliers by screwing ever better deals and increasing its reliance on own brand products (see our blog on 18 March 2005) and vastly diminished rewards for customers by increasing eligibility thresholds.

Fletcher is now working on the idea that the "key to the new everyday needs business will be the creation of a lean and innovative culture in which stores are ‘heroes’, and where team members are empowered to deliver great service and products to customers.”

Fletcher's description of the new stores in terms of both "innovative" and "heroes" seem a contradiction in terms. Under his stewardship, the Group's brands have been denuded of any real intrinsic value and supported by bland propositions. The "everyday needs" proposition is equally fraught. Will the new store formats that Coles will invest something like $850 million in, become hypermarkets, along the lines of Carrefour or WalMart?

We don't know the answer because Coles and Fletcher is still working out the details of what can only be described as a strategy that not only views brand as the sum of a capital spend but also takes for granted the notion that customers are more interested in logos and fascias, rather than details of how they might actually get better service.

DIFFUSION talks brand at PRIA.

Discussion points from the 'Senior Practitioners' Cocktail Roundtable Event', 1 August 2006, Public Relations Institute of Australia.

DIFFUSION director Stephen Byrne discussed the importance of developing a brand strategy as a primary business requirement against the context of effective public relations and communication planning.

Brand strategy within business and communication planning

The idea of integrated communication, which holds that all communication emanates from a single strategic platform, has largely failed. A number of underlying currents have been largely responsible for this:

1. Agencies are constrained by their media bias
2. Business structures don't mirror integrated communication planning
3. Development is too far down the value chain to be effective, and
4. Brand strategy is silo-ised by being viewed as a marketing and communication activity

Most companies are focussed on action and tactics, rather than an actual brand or communication strategy. The need to demonstrate branding success through empirical evidence, often replaces planning. So a brand strategy, if it exists at all, becomes synonymous with a set of tactical communications developed by tactical specialists often working in isolation.

A holistic business strategy, with brand as an essential part of it, provides strategic intent which can help unite and integrate all communication activities - such as public relations, advertising, investor relations, interactive or internal communication.

Any brand strategy must begin with understanding the role of brand within the business model and determining how best brand can help grow and sustain the business. Brand strategies should engage the highest level of management because it brings strategy, finance, marketing and communication together, to manage the brand.

Towards a business brand strategy

Ten steps necessary to build a successful a brand–based communication program:

1. Understand, formally define and acknowledge brand in your business planning; have a formal brand strategy
2. Understand those factors that contribute to the creation of brand value
3. Identify and understand all your audiences
4. Define your point of difference and build value propositions around that
5. Work out how you can clearly enunciate your point of difference so that audiences understand it
6. Create messages
7. Identify and define the role of each medium in changing perceptions and sustaining communication momentum
8. Determine an appropriate communication mix
9. Only develop those communication activities that support brand
10. Review and revisit from 5.

Brand’s role in holistic business planning is an organic process. Always return to your strategy to check whether all the assumptions you have made are still valid and correct.

http://www.pria.com.au//events/id/227

Is Coles still Myer for Xmas?

Picking up a bottle of wine in our local Vintage Cellars this week, DIFFUSION was interested to notice a flyer for casual positions available at Coles Myer brand stores during Christmas 2006. While we are not sure about the copy, “Be more than just a decoration…Be a star” (what exactly does this mean?) we were more interested to note the inclusion of the MYER logo on the flyer. Now we know that festive season recruitment starts early but with the confirmed sale of MYER happening in March, we'd like to think that by mid-July they might have had an opportunity to think about a reprint? That said it's nice to see Coles Myer with a new cleaner, brighter and more functional website (with not a MYER logo in sight)!

Cadbury appeal: short a full glass and a half.

It seems Cadbury's love of the colour purple knows no bounds [see DIFFUSION blog 28 April 2006, ‘Cadbury see red, not purple’]. According to the Sydney Morning Herald the company is lodging an appeal “against a Federal Court ruling that it does not own the colour purple”. The justification used by Cadbury according to its Corporate Affairs Manager, is the significant investment “in marketing our products using Cadbury purple in Australia”. Once again, the target of their ire is Darrell Lea, who no consumer would accidently put in the same shopping basket as Cadbury. At DIFFUSION we believe that Cadbury would see a better return on their now considerable legal fees if they focussed on developing marketing activities that encouraged ownership of the colour purple in the consumer's (rather than the Court's) mind. This was, in part, one of the comments made by the judge in the original suit. Surely this would resonate more with customers and is, after all, what really counts. But then perhaps if that fails they could return to their original shade of 'lavender'.

Tsubi begets Ksubi.

Following our 18/4/06 post 'A Fashion in Names: Tsubo vs Tsubi', the wacky boys at Tsubi have reached an out of court settlement with US shoe label Tsubo following a trademark infringement dispute.

Tsubo argued in a New York court that Tsubi's use of the first four letters of its name was a breach of its trademark, which was established in 1998 and had been registered in Australia in March 2000, two years before Tsubi.

The dispute settlement terms means Tsubi will keep its name in Australia but will now be known as Ksubi in the rest of the world.

It's an interesting result as DIFFUSION shared the view that Tsubo's case was, in part, mischievous, as both operated in very different parts of the fashion world. However, now Tsubi faces the daunting task of rebranding for the rest of the world and creating a new identity and name recognition for the new brand name, Ksubi. Let's hope they did their homework this time on the new name.

Opening up communication with doctors.

We were pleased to hear about the “new wave of students upon whom educators have pinned their hopes for a generation of communicative, motivated and engaged doctors” (Sydney Morning Herald, 5/7/2006). After our critique (see blog ‘Doctoring language’ 16/9/2005) of doctors who practice what we referred to as ‘ethnocentric’ communication; a view of the world where members of their own group [other medical and related health care practitioners] are valued and understood, while nonnatives/others [patients] are as seen as “fundamentally different and therefore deserving of different treatment” (Grimes & Richard 2003).

While University of NSW Professor Rakesh Kumar points out that the new entrance interview procedures have produced “students who are much more willing to get engaged in the learning process” and according to Newcastle University research, students who are “more likely to perform well”, DIFFUSION would like to know if communication (as a professional practice) is an integral part of the course?

It is commendable that, as Professor Tiller states, the interview procedures gauge if “they (the students) have an ethical background… they (can) decide what's honest and dishonest", here at DIFFUSION we know that being an effective communicator is much more complex than this.

And we're sure that if you asked the majority of doctors if they practiced their profession without prejudice, they would say resoundingly ‘yes’. Yet, as we have pointed out, ethnocentric communication is much more complex than this…it acts to keep others [patients] behaviour predictable (and safe) through the use of simplified scripts. As a result, we often feel ‘spoken down to’ or ‘discriminated against’ when visiting our local GP. Often without realising, doctors make a pre-judgement about their patients, based on the learned doctor/patient societal roles. It is these roles and related communication that needs to be challenged.

Here’s hoping that the new breed of doctors take their communication as seriously as their Hippocratic Oath.

The irony of Coles' Liquorland.

Does the Coles Group (we’ll call them that because in the wake of the finalisation of the Myer sale they haven’t gotten around renaming themselves yet) understand irony? It seems not if we are to understand this sign prominently displayed out the front of one of their newly renovated Liquorland stores. While EBIT and sales are up by 5%, the chain has been in constant state of brand repositioning since 1996, when the new logo was launched. Now Liquorland is going further down-market with prices to match.
While this hints to some degree of strategy within the Group and might seem a good thing to some people (Coles), it’s not so for those suburban markets where Coles and rival Woolworths control many of the liquor outlets and deem that a single suburban area cannot support BOTH their premium liquor store offerings, Dan Murphy and Vintage Cellars.

All the more reason for the ACCC to keep a close watch on the territorial carve ups that have resulted from their aggressive entry into the lucrative Australian wine and liquor trade industry.

Will Coles and Woolworths pump for TV?

Brandweek reports US companies, Murphy Oil and Gas Station TV have announced the signing of a joint agreement for broadcast television at petrol pumps. The deal includes ABC programming including local news, sports, weather and traffic with some original content and advertising. In the wake of a planned rollout of instore TV channels by both Coles and Woolworths and their successful petrol company partnerships, DIFFUSION sees this as an obvious new opportunity for the dynamic duo-poly. Harold Mitchell will be happy.

Labor needs a mirror in AWB rebranding call.

Australia’s Labor Opposition has jumped on the renaming and rebranding bandwagon.This time it's over the controversy surrounding the Iraq kickbacks scandal and the Cole inquiry.

According to Federal opposition foreign affairs spokesman Kevin Rudd, the future of Australia's wheat farmers must be considered in any name change and makeover of embattled wheat exporter, the Australian Wheat Board (AWB).

Rudd said the reputation of Australia's wheat farmers must not be affected during AWB's change process.

Strangely enough Rudd seems to have got it wrong when he issued the announcement before the release of the AWB’s half-year profit result.

According Labor, AWB was expected to unveil a management clean-out, several board resignations and a name change to distance the company from the controversy. Nothing has happened, well at least not yet.

And while AWB’s half year results were poor, it dismissed the effects of the Cole enquiry on its brand, describing it as "solid" and said that wheat exports were only one part of its business and it was repositioning itself as a provider of financial services to the rural sector.

DIFFUSION thinks that the AWB would do well to examine the impact of the Cole Enquiry on both its domestic and international brand through brand equity analysis and measurement. Successive blunders from senior management seem to point to a real failure to develop more robust internal and external crisis communication planning and tracking.

More so, Rudd’s comments seem rather disingenuous considering Labor, suffering from a prolonged crisis of identity compounded by successive electoral failures, has itself failed to effectively rebrand and reposition.

What is diffusion?

It seems that a lot of our blog traffic here at DIFFUSION is actually trying to find out what the term 'diffusion' is all about. When we started and named the company in 2002, we were interested in how ideas and consequently brands were created and spread, hence the name, DIFFUSION.

But here’s a ready reckoner of terms. We’d be interested in hearing about others.

1. According to the Oxford English Dictionary there are five meanings for this noun (incidentally, the word has not changed from its Latin generation). The first three all relate to the idea of “outpouring”, “spreading abroad” and “dissemination”. The fourth meaning refers to prolixity (something we at times are unfortunately prone to) and the fifth is a scientific term which formed part of our initial inspiration. This is the idea that light when reflected is scattered via diffusion and atoms, molecules and ions are randomly moved from one site to another through the process of diffusion.

2. The French word “bricolage” is closely related to how we envision the idea of diffusion. The random assembly, construction or creation of things and ideas, also occurs through an act of diffusion. This term is now being used by a diverse range of professions from filmmakers to researchers in the humanities.

2. In marketing terms, we bow to those knowing folks at the wikipedia (http://en.wikipedia.org/wiki/Early_adopter), diffusion is the process by which a new idea or new product is accepted by the market. The rate of diffusion is the speed at which the new idea spreads from one consumer to the next. Adoption is similar to diffusion except that it deals with the psychological processes an individual goes through, rather than an aggregate market process.

3. The American Marketing Association defines it in advertising terms (why are we not surprised?) They describe it as a model representing the contagion or spread of something through a population (we hoped we were contagious). Diffusion models in marketing are often applied to the adoption of a new product, or the exposure of potential customers to some information about a product (hence, the advertising message).

4. Diffusion in fashion seems to work the same way as marketing models…originally fashion design, as we know it, was centered on Paris and the salons of designers like Chanel, where clothes were created for local clients, but the styles were diffused to many other countries. This highly centralized system changed with the onset of mass production and then mass media and has now been replaced by a system in which fashion designers in several countries create designs for small publics in global markets, but their organizations make their profits from luxury products other than clothing eg. LVMH, Gucci, Armani, Hermes. Trends can now be determined by fashion forecasters, fashion editors, department store buyers and even bloggers. Manufacturers and retailers are increasingly consumer driven and market trends originate in many types of social groups, including subcultures. Consequently, fashion now emanates from many sources and diffuses in various ways.

Cadbury sees red, not purple.

A colour can function as an important part of a company's brand identity and in some cases can even be seen as intellectual property. A colour adds to brand value in a variety of ways, including aiding brand recognition, differentiation and evoking consumer emotion (e.g. the name and colour "Orange" for the British mobile company and the colour and word "brown" for the global courier company UPS). Colour can also become a rallying point for a company seeking to create a seamless brand experience and be used to stimulate consumer behaviour as in Apple's adoption of white for the original Ipod (see our blog on 16/8/05 Silver is so turn of the century.).

So can a company or organisation own a colour? It seems so but not always.
In 1987 Owens Corning made legal history as the first company to trademark a color, in this case, pink, and as far as fiberglass insulation goes it seemed to set a benchmark for the corporate ownership of colour. The difference was that Owen Corning was granted the trademark because limiting others from using pink as a fibreglass colour wouldn’t create a barrier to entry to others, but it seems that some companies aren’t able to ostensibly see this point of view.

Which brings us to Cadbury; "All brands and logos/images accompanied by ® or TM, and the colour purple are Cadbury Group trade marks in Australia. © Cadbury Schweppes Pty Ltd 2004." However, this week Australia's Federal Court has told Cadbury’s, again, that it does not "own" the colour purple in Australia, as its latest attempt to secure use of purple by suing rival Darrel Lea in a protracted trademark dispute failed.

This is the second time Cadbury has attempted to trademark the colour. Cadbury’s original trademark application was made in November 1998 and was described as follows:

“The trade mark consists of the colour PURPLE the said trade mark being adopted as the substantial colour of packaging used in relation to the nominated goods.

The colour is the shades of purple corresponding to the following references in the 1997-1998 PANTONE Colour Formula Guide: 2597c, 2607c, 2617c, 2627c, 266c, 267c, 268c, 269c, 2685c, 2695c, 273c, 274c, Violet C, 2735c, 2745c and 2755c”

At the time the application was only for chocolate and chocolate confectionery.

In 2002 the Australian Trademarks Registrar rejected the company’s attempt on the basis that the evidence presented in the hearings “simply does not show that the purple packaging was functioning as a trade mark at the relevant date, nor that it distinguished Cadbury's chocolates from those of other traders,” said Senior Examiner Deirdre O'Brien. She added that she was not satisfied that, at the date of filing, “if consumers had seen a chocolate block in a purple wrapper, they would have known that colour as a Cadbury trade mark.” Seems nothing much has changed and as far DIFFUSION is aware, the trademark is still pending and hence the decision by the Federal Court.

But Cadbury already claim the dark shade of purple as a global trademark after successful registration in both the UK and New Zealand and launched its action in 2003 to sue Darrell Lea for "passing off" (hard to see how it could do this when it has no trademark in Australia).

Cadbury had objected to Darrell Lea's use of various shades of purple in the rival store’s signage, uniforms and product packaging and claimed that in its original trademark application it applied to have included the colour for use in 17 categories including soaps and perfumes, jewellery, kitchen utensils, clothing and leathergoods (not what you'd expect a chocolate company to claim!). DIFFUSION guesses they were thinking of some very wide brand extensions here.

But Federal Court judge Peter Heerey found that Cadbury, as in the 2002 trademark ruling, had no exclusive claim to the colour and ruled the case against Darrell Lea or any one else Cadbury had threatened, could not proceed. He said he was "not convinced" Darrell Lea had attempted to pass off its goods as Cadbury products or that it would attempt to do so in the future.

Which brings us back to ownership of colour. In the case of Cadbury, while it may not be possible for the company to trademark the colour purple in Australia, perhaps they should have been looking for other ways to enforce the use of colour? Marketplace recognition doesn’t take place overnight and it's probably missed the boat on purple.

Now it seems companies have yet another reminder that attempting colour ownership can make you see red.

A fashion in names: Tsubi vs Tsubo.

Fashion naming and branding is sometimes a complex affair or is made out to be. Often companies in different markets compete for the same or similar names without anyone batting an eyelid. In Sydney everyone knows that there is a Hermes Leathergoods who make handbags in St Peters, yet they are allowed to exist by the Hermes conglomerate, who own the more luxurious moniker among other names. So when two marginal funky brands - Tsubo, out of Los Angeles and specialising in shoes and Tsubi, out of Sydney and originally a jeans maker venturing into clothing and accessories - start arguing, you wonder if this a beatup by Tsubo or the Sydney Morning Herald http://www.smh.com.au/articles/2006/04/17/1145126056425.html, who report it.

In what seems a parochial story, the Herald’s article claims that Tsubo's founders think the Tsubi name is “too similar to their own brand name, established in 1998 and registered in Australia in March 2000”. So what we ask? Registering a name in a foreign market does not give necessary exclusivity, nor does it mean passing off as the name goes through domestic business name and trademark checks for any similarity. According to the Australian Securities and Investments Commission (ASIC) Tsubi registered its company name in November 2000 and its first trademark in 2002. Tsubo, on the evidence of our ASIC search, is not even registered in Australia as a business name or a company.

However, it seems that the matter is likely to play out in U.S. courts where, the Herald reports, that “after years of informal requests for Tsubi to change the name, Tsubo had started legal proceedings” against Tsubi in the Federal Court in New York. And surely this is perhaps where the money is and the real issue lies.

Also at dispute is the similarity between the two logos, with Tsubo claiming both brandmark fonts and logo design are similar. Interestingly, Tsubi’s logo is only registered in Australia for use on it’s newly launched sunglass range. Again, DIFFUSION wonders whether there is anything to dispute here. We know Tsubi only registered a mark for it’s eyewear label but otherwise the mark has been somewhat fluid (we couldn’t even find a definitive version on tsubi.com), so only have these two to compare.

The important thing is that both brands operate in distinct sections of the fashion market and while both are marketed and sold in Australia and U.S., any name confusion is going to have to prove some level of economic damage. It’s going to be difficult for Tsubo to prove that either its name or logo are being either traded-on deliberately by Tsubi or that Tsubi has deliberately copied aspects of the Tsubo logo as Tsubi’s mark, has been up to this time fluid and is not, as far as we are aware, registered for use in the U.S.

However, Tsubi, which probably has more of an international brand name to protect, would do well to look at both name registation and trademark registration in all markets it operates in and intends to market in, otherwise this action is likely to continue. Perhaps Tsubi’s owners are either being naïve or deliberately so?

Newbridge look for value in Myer minus Coles.

New Myer owner, Newbridge Capital must have recognised something in the ailing Myer chain that others didn’t.

With an extremely modest $A60M estimated EBIT for this financial year, the $1.4B Myer sale price seems pretty high. However, Newbridge [www.newbridgecapital.com] believe in “unlocking value; recognising that value is often hidden in companies”. An item of great value that has been overlooked by Coles Myer Limited is the Myer brand. But "overlook" is perhaps not quite the right word as it implies neglect and Coles Myer can be accused of so much more than negligence.

Single-handedly Coles Myer has re-positioned the Myer brand to a place that has no resonance with its customers or communities, no differentiation from its competitors and no personality [see blog 8/2/06 ‘What’s the real value of the Myer in Coles Myer?’]. In addition, its heritage both as an intrinsic part of the Australian retail landscape, the community significance of the Myer family itself [thankfully now part owner] and in NSW, the richness of the Grace Bros. brand has been ignored [see blog 14/10/2005 ‘No one will save Myer now’].

Myer’s brand is valuable and with some TLC can be resuscitated. New Myer boss Wavish’s starting point of hearing “...what both the staff and customers have to say about the brand before we finalise any of our plans” [Sydney Morning Herald 13/3/2006], is vital. But what DIFFUSION would like to know is how this information is going to be collected, managed and translated into a real, meaningful and living brand?

Newbridge and Wavish need to treat the Myer brand as if it has been through a crisis [which in some ways it has], developing a brand recovery strategy that takes into account the past, the present and the future. The looking back and then forward process should uncover meaning and value that will stand the company in good stead for the long term – an imperative of Newbridge who “focus on investing in companies that have a sustainable long-term advantage over their competitors”. From this, a brand strategy should then be developed as an integral part of the business planning process, to place Myer on target to achieve their real potential of $240M EBIT [The Age 17/3/2006].

As we note in our previous NAB blog, the process of brand valuation is not achieved by a mere whip around to see what everyone thinks but is complex, overarching the whole of business and needs to be properly managed if it is to provide a real and lasting return.

NAB's new brand of wishful thinking.

Last month Australia's largest lender, the National Australia Bank (NAB), unveiled its revamped corporate logo and a new take on what is a decidedly uninteresting but functional name, 'nab'. Like most rebrands, NAB’s is no different - a redesign can cost millions, most of which is spent on standard roll out of a new mark. Buildings, websites and a whole lot of collateral, are reshaped and shredded to suit the new look (don’t get us started on the fact that even their new brochures still apply the superior case!). Cheques, letterheads, pens and business cards are binned and replaced. However, what is disappointing about this latest corporate makeover is how much it seems more of an attempt at papering-over the cracks in the organisation, than a radical re-envisioning.

One of the reasons cited for the rebrand was the NAB’s 2004 foreign exchange desk scandal, which saw it lose $360 million and consequently it’s CEO and much of its senior management team.

Interestingly some sections of the market have taken a completely different view of the makeover. Analysts seem to have a view that these kinds of spackfilla jobs “win no leverage”.

"The brand name and image is something that is more important to its customers - particularly retail customers. It's not a fact that is likely to drive a price-earnings model", said a Citigroup analyst quoted in the Sydney Morning Herald.

DIFFUSION finds comments like this somewhat disingenuous. Most company valuations always take an account of brand equity and in the case of NAB, there was a significant loss of equity when the FOREX scandal hit.

Traditionally brand valuation consists of four main strands covering fundamental financial and balance sheet analysis, contextual market and consumer analysis, brand analysis examining brand as a determining factor in the future earnings and the value accorded the brand and mark as intellectual property. A number of factors can be added under these headings and weighted according to their importance or relevancy. Consumer analysis, for example, should include customer satisfaction, brand preference, quality perceptions, value for money and good service while market analysis should include share of market, share of voice and growth statistics. Any financial analysis would include profitability, sales and margins forecasts. All of these can be combined to give total brand value and as such a price-earnings model does take account of the impact of customer sentiment on overall earnings.

Secondly, while NAB CEO Ahmed Fahour acknowledged during the week of the relaunch, "I've got the number one business bank in this country I've got the wealth management business. I've got a smaller but turning-around retail business. And the fact is that I can have one consistent conversation with you and we are all singing from one hymn sheet," there is also the need for organisations such as NAB to use their brand to be one of the determinants of their dialogue and interaction with customers. It’s not good enough to just trot out what is rather poorly realised signifier alongside the diminutive name; in NAB’s cade, the follow up to their rebrand, the new brand promise needs to be sold through the organisation.

When DIFFUSION talked to one of the nice NAB counter staff after the re-brand, they acknowledged that they had no real involvement in the process and didn’t know what what the new brand promise “We believe in people with ideas and dreams. Helping you fulfil yours is at the heart of everything we do” really meant.

So will customers see a different organisation and feel any different? Can a bank, or for that matter any institution or organisation, really help you to realise your “dreams”?

Coles without Myer, still short on strategy.

Coles is now without Myer. Most market speculation is that the group will continue as before but with the capital inflow benefit of the sale used for other acquisitions, a share buy back or special return to shareholders.

DIFFUSION thinks one of the main reasons why Coles continues to lag behind Woolworths has been Coles' CEO John Fletcher’s inability and unwillingness to develop a coherent brand strategy for the whole group. As far back as 2004 Fletcher was telling people, like the ABC’s Alan Kohler, that he thought the group’s “brand strategy is something the rest of the world have already been to”, except it is clearly something that he hasn’t been to. In May 2004 DIFFUSION, along with a major Sydney advertising group, developed a group brand strategy as part of mulitmillion dollar pitch but was roundly dismissed by Fletcher as not a requirement for the company “right now”.

Now the same question IS being asked of Fletcher with market analysts in recent days wondering what’s next for the group. Sure, at this stage we don’t anticipate any radical renaming and there's not even speculation about that – it will likely become Coles Group and they will just redo the logo and the stationery (a quick flick across to the corporate website and they still haven’t dealt with the issue, a week after the sale went through) but we think it needs far more than that. Coles has blamed the worse than anticipated slow growth on “customer service problems at some of its supermarkets” (what service we ask?), fuel price rises and increased competition and promotional activity by Woolworths”. These seem to be excuses and illustrate how clearly Coles’ and Fletcher’s problem is one of strategy.

Now more than ever Coles needs to decide who it is. What is the brand? What does it stand for? How will it be described now that Myer is no longer part of the group brand structure? How any halo or gloss from the name Myer and it’s department stores association will change both customer and other stakeholder’s perception of the group? Of its existing companies, which will be lead brand vehicle for group? [There’s not a lot of sexiness in supermarkets.] These are important issues that need to be dealt with and not passed over. People never understood what Coles Myer stood for apart from a federated group of companies, now there’s even more reason for Coles to start working it out. Growth for growth’s sake is not enough anymore, expected sales growth of 9 per cent versus Woolworth’s 22 per cent might pull the fiscal heartstrings but it doesn’t sing anymore in the hearts of the customers. And that’s been the case for some time.

What's the real value of the Myer in Coles Myer?

With a mooted $1b sale price likely for mid-tier Australian department store chain Myer, parent company Coles Myer has obviously taken its eye off the game. Its latest “All that I want” campaign launched this week, takes the embattled store (see blog No one will save Myer now) down to an all new low. Competitor David Jones' boss Mark McInnes has described Myer's heavy advertising and discounting campaigns as "irrational"”… but at DIFFUSION we think he’s being polite. With retail turnover continuing to fall in Australia (according to a Australian Retailers Association report in the Sydney Morning Herald 8 February 2006), Myer has obviously decided to continue its “irrational” approach by launching an expensive and brand damaging campaign. The full colour catalogue DIFFUSION found in its weekend paper seemed highly reminiscent of another ‘low budget’ Coles Myer brand, Kmart (see image above). According to Coles Myer, Kmart’s brand position is “low cost, discount department store” while Myer’s is “pleasurable shopping experience/service, great brands”. However, we're struggling to tell them apart. The new owners, whether CVC, Newbridge or Edgars, will not only have their work cut out for them in working out how much of the $1b is brand valuation, but will also have a long and expensive climb back up the slippery slope of re-asserting that value to investors, employees and customers alike, as Coles Myer has done a pretty good job destroying it.

P.S. The Kmart catalogue is on the left.

McKinsey & Co: we like it when the stars align.

McKinsey & Co (www.mckinseyquarterly.com) recently published their ‘Ten trends to watch in 2006’ and DIFFUSION was interested to see how many of their 10-year predictions matched ours, see blog Marketing futures: 10 brand and marketing trends for CEOs to watch in 2006. While our specific focus was on Australia, it is obvious as all Western businesses function in an increasingly global environment, companies here will experience similar challenges and opportunities.

Specifically six of our trends were significantly echoed in the McKinsey report: the separation between personal and work lives changing due to technology (trend 1); the emergence of Chinese brands (trend 3); the increased scale and reach of Government (trend 5); consumers becoming business participants with increased power and the growing importance of business ethics (trends 7 and trend 8); the importance of ritual and community for creativity (trend 9).

According to the McKinsey report they correspondingly identified that: “technological connectivity will transform the way people live and interact”; within the next 20 years economic activity will be equally aligned between Asia and Europe (with China and India being important players); “public-sector activities will balloon”; “the role and behaviour of big business will come under increasingly sharp scrutiny” (specifically the level of suspicion and acceptance from society towards big business will increase); the growing importance of communities, as these will increasingly “become responsible for innovations”.

The McKinsey article sums up by urging companies to look at the implications of these trends, especially in relation to their customer’s needs and competitive developments. DIFFUSION can't agree strongly enough with our colleagues at McKinsey & Co and have gone as far as making some practical suggestions for CEOs to consider. We might be visionaries but we're pragmatists too.

Points of origin: putting premium beer makers in their place.

As we noted in our July 2005 blog Re:Place and the Specificity of Brands, place is becoming critical to the identity, authenticity and uniqueness (or the specificity) of a brand. Place provides an aesthetic counterpoint to the “generic” of the chain. The authenticity of a product, is determined by purity, tradition and the aura of history – all elements that are determined by place and which can both define and bring value to a brand. Yet, brand owners are willing to re/place and subsume identity, determining authenticity only by logo and thereby destroying uniqueness and hence value with an authorised non-specificity - all because, in the short term, it preserves margins and retains profit. To date consumers seem only to willing to go along with this charade.

A case in point is the tendency for domestic beer brewers to buy local brewing licences for international premium brands and then sell them into domestic markets labelled as “imported” brands with imported prices.

Let’s take the case of Sapporo. According to the Sapparo USA website (www.sapporousa.com) the beer has a brand built on distinct place and heritage values, dating back to 1876 with the founding of the Kaitakushi Brewery in Japan. The site says Sapporo's been in the US since 1984 and has established itself as the most popular Japanese beer imported into the US market (all true). Here we need to note the use of the word “imported” because in the case of Sapporo, the beer on the Premium Imported packs which loudly proclaims it is “imported” IS not from Japan but from Canada. Not even the water used in the beer is going to be same in Canada. Just as Sapporo itself makes Guinness beer in Japan for Diageo, it all seems rather incongruous and somewhat a case of a questionable trade practice with some long term implications.

So what’s going on here? We think we’re buying an imported beer with a brand heritage. We think the place of origin is Japan and we think we should be paying more for the specificity of the brand. The problem is that Sapporo, like so many other “imported” beers in the premium category, is engaging in what can only be described as authorised non-specificity, they are counterfeiting themselves.

Do customers care or even bother to read the label?

At DIFFUSION, we pride ourselves on thoroughness, so of course we read the labels. And we think it’s unfair consumers are being asked to pay premium prices for “imported” beer brands brewed domestically. Yet, according to an interview in Japanese Gourmet with Sapporo Beer USA president Mikio Masawaki, Sapporo still shipped over 2 million cases of beer in the US in 2005 and is now the US market leader by a wide margin.

Sapporo is a very simple and powerful example; but we’re finding this trend not just limited to beers, it’s in clothing and accessories, cars and other consumer categories. People are buying what they think is an internationally originated product but which is actually domestically produced or produced outside the place of origin. In the end, what will be the worth of place of origin, of national distinctiveness? What will be the point of difference? What will be the worth of the brand?

We think the idea of brand specificity is being overlooked by both brand owners and consumers. Brand owners need to carefully rethink current brand strategies built on strong customer recognition, derived from place of origin and manufacture. Consumers need to start thinking about why they are paying premium prices for products no longer attached to and manufactured in their place of origin.

What do we see coming? In many cases, consumer backlash against inauthenticity and a return to the type of purchasing behaviour that reinforces and supports genuine national identity and industry. It’s the reason why companies like clothing manufacturer American Apparel (www.americanapparel.net) are thriving. American Apparel now runs the largest garment factory in the United States, employing over 3,000 people at one location in a market where 96 percent of all clothing is imported. Strongly branded by its place of origin, locally manufactured and with sales projected at $400m from its 100 stores and overseas distribution, it proves the case for value in the point of origin.

News Ltd stumbles into a true local piracy debate.

TrueLocal (www.truelocal.com.au), the new Australian online search directory from Rupert Murdoch’s News Limited, seems to have stumbled at launch. The problem seems to be that a search directory sharing the same name was launched in Canada last November(www.truelocal.com).

It’s a case of either real ignorance on the part of News and its naming agency (if they even bothered to go through the process), commercial arrogance, or even a form of cyber piracy.

According to a Sydney Morning Herald report hundreds of Australians had already tried to sign up to the Canadian-based service, mistaking it for the same one offered by News. Even more serious is the claim by TrueLocal president Jake Baillie, who told the Sydney Morning Herald that News Ltd was made aware of TrueLocal's existence and expansion plans for Australia prior to the launch of News Ltd service. Baillie is threatening action.

DIFFUSION checked with Melbourne IT, a domain name registrant which lists truelocal.com.au as being registered by News Ltd on 14 November 2005, while a WHOIS.net search for truelocal.com sees it originally registered in May 2003 and operative from 15 November 2005. This means that the original domain name owners could assert their rights through the Internet Corporation for Assigned Names and Numbers(ICANN), which administers international domain names. Melbourne IT is an international registrant for ICANN and would presumably have an obligation to assert the original registrant’s right to the name.

According to ICANN’s policy on company name copying “disputes over entitlement to a domain-name registration are ordinarily resolved by court litigation between the parties claiming rights to the registration.”

ICANN’s policy states that once the court rules on who is entitled to the registration, the domain name registrar will implement that ruling. Where disputes arising from registrations allegedly made abusively (such as "cyber-squatting" and “cyber-piracy"), companys can then invoke a simple administrative procedure by filing a complaint with one of the dispute-resolution service providers.

At DIFFUSION we believe naming, which includes domain names, is not a haphazard process but requires careful domestic and international business and trademark checking. But when an international media monolith like News gets into some murky waters, we just have to wonder how much they really know.

The top logo is the true true local and the second is News Limited's.

Marketing futures: 10 brand and marketing trends for CEOs to watch in 2006.

The start of each year for us at DIFFUSION is an important time for reflection…we normally look back at the year just past, write ourselves a report card and talk about and plan for the coming year. In this vein, we thought it would be good to share what trends we believe may be impacting business in 2006. Specifically, our focus is on brand, marketing and communications, but we believe the trends below have much broader implications, both personally and as business leaders.

1.TECHNOLOGY WILL DESTROY THE SEPARATION BETWEEN PERSONAL AND WORK LIVES

Technology will cause and enable overlap in our social, work and personal lives.

Example: Finding jobs is not an out of home activity, employees will do it at work. They are no longer dependent on newspapers but technology and social networks.
Implication: People will cache their time even though they will overlap it via their use of technologies.
Brand/marketing impact: More permission based and pull-marketing. Brands built around maintenance of whole-of-life will succeed.
DIFFUSION tip: Concentrate on more permission based marketing, focus on a whole-of-lifetime offer.


2. BRAND WILL BECOME MORE ABOUT BUILDING AND MAINTAINING EXPERIENCES AND LESS ABOUT MARKETING AND ADVERTISING

Increasingly brands will develop and survive by maintaining a long term relationship with customers, who are re-examining and re-evaluating products and services for value and usability.

Example: Casella Wines - non-traditional approach to marketing makes it No1 wine export for Australia and dominates US market. Reidel glassware - repositioning as the Wine Glass company creates illusion that wine is better drunk from its stemware and meets customer desire.
Implication: Key product differentiators will be not be what marketing employees and advertising agencies tell you but what your customers tell you.
Brand/marketing impact: Marketing and advertising will become less meaningful. If you don’t give customers what they want, someone else will.
DIFFUSION tip: Concentrate on brand strategy that encompasses a long term customer experience.


3. CHINESE BRANDS WITH THE POTENTIAL TO DOMINATE MARKETS WILL START TO EMERGE

China’s government has been preparing the top 150 companies to go overseas and expand. Over time China, like Japan, will change it’s image from cheap manufacturer to premium quality manufacturer at a value price.

Examples: Lenovo is now third largest PC maker in the world. Haier's bid for whitegoods manufacturer Maytag, would have given it 30% market share in the US. TCL is the world’s largest television manufacturer. China’s share of worldwide LCD market doubles in ONE year.
Implications: Via brand name acquisition, Chinese companies will gain access to global distribution markets, sophisticated R&D and recognisable brand names.They will be a threat.
Brand/marketing impact: Brand differentiators on price and quality will continue to erode, customers will go to the cheapest offer.
DIFFUSION tip: Develop stronger and more specific brand place and point of origin strategies for your business.

4.CUSTOMERS WILL NOT ONLY DISINTERMEDIATE YOUR INFORMATION, THEY CAN DISINTERMEDIATE YOUR BUSINESS

The demand economy gives customers the tools they need to demand immediate, personalised fulfilment whenever and wherever they desire.

Example: Personalisation offered by Amazon, Dell, eBay and TripAdvisor means we can customise, configure, self select, review and critique, buy, sell, trade and destroy businesses and traditional business models in one go. HMV in UK, effectively disintermediated itself within its own market.
Implication: Customers will find other retailers and suppliers if you don’t give them what they want, when they want and in the way they want. It’s more of a global market than you think.
Brand/marketing impact: Whole of brand experience needs to focus on satisfaction elements. Don’t ignore personalisation.
DIFFUSION tip: Develop customer advocacy within your business.

5. THE SCALE, SCOPE AND REACH OF GOVERNMENT WILL CONTINUE TO INCREASE

We are subject to increasing government scrutiny, not just in the guise of national security concerns, but in our everyday activities such as the cost of running and maintaining business.

Example: The Australian Public Service has grown by 16% since 2000. Capital spending on defence alone will be $52b in the coming years; Australia’s taxation laws run to 10000 pages and it costs $30b and 80000 people to defend and avoid it.
Implication: We will become increasingly isolationist, defence will continue to eat up government spending and against the grain of globalism the idea of national sovereignty is being emboldened and becoming increasingly jingoist. Personal freedoms and the ability of business to operate freely has become more difficult. We are now subject to more red tape than ever.
Brand/marketing impact: Opportunity to provide more 'protection': brand messaging; products that lessen bureaucratic impacts
DIFFUSION tip: Concentrate on messaging that provides safety and security messaging. Traditional and Australian is good.

6.TRADITIONAL MARKETING MANAGERS ARE DEAD

Marketing Managers roles are diversifying and changing to the point where their validity needs to be questioned.

Example: Executive marketing section of seek.com only listed 16 of 74 jobs for marketing managers.
Implication: Selling has become much more complex and diverse expertise is required across increasingly specialised areas.
Brand/marketing impact: True marketing departments will no longer exist, businesses will need to be more flexible employing a range of ‘experts’.
DIFFUSION tip: List what skills your business needs, assess your Marketing Manager and put in place strategies for accessing experts you really need.


7.CONSUMERS WILL BECOME PARTICPANTS IN YOUR BUSINESS

Consumers are becoming increasingly participant in business, but there is a catch.

Example: Participant consumers have increased power through the internet, consumer protection laws and access to mass media.
Implication: Unhappy participant consumers can do your business major damage.
Brand/marketing impact: Honesty, scrutiny and open communication are vital.
DIFFUSION tip: Don’t just have a complaints policy, have a meaningful and closely tracked customer feedback process in place.


8.ETHICS WILL CONTINUE TO GROW AS A PRIORITY

Historically, aiming for shareholder satisfaction has meant that ethics takes a back seat…not any more.

Example: Strategy + Business magazine, ethics voted third most important concept of last 10 years. Practicing ethical communication has been stated as the “greatest challenge in the 21st century”.
Implication: The public, broader community, employees and business itself is demanding that companies act ethically.
Brand/marketing impact: Changing role of those responsible for communication in your organisation.
DIFFUSION tip: Allow communication (and marketing and customer relations managers etc) to provide real advice and critical feedback; don’t make them simply corporate mouthpieces.


9.RITUALS ARE BECOMING INCREASINGLY IMPORTANT (AGAIN)

Increased secularisation and loss of community has lead to a need for rituals.

Example: The rise in urban or consumerist rituals spread primarily by the mass media.
Implication: These rituals sustain, but do not transform. What we need is 'communitas' – a social structure based on common humanity, not hierarchy – brought about by liminality.
Brand/marketing impact: Liminality, a ritual of change, contains, according to theorist Turner “the seeds of the future.”
DIFFUSION tip: Seek to encourage opportunities for liminal events in our organisations and encourage those who are creative thinkers. Richard Florida also has a lot to say on the role of creative thinkers within society.


10.FIRST CAME PUSH, THEN PULL, NOW ADVOCATE

Push marketing, replaced by pull marketing or push/pull combinations is being replaced by customer advocacy.

Example: Due to growing customer power and lack of response to traditional marketing models, Glen Urban is urging a model of advocacy… “truly representing your customers’ best interests”.
Implication: Advocacy will become the norm for business behaviour, if your not practicing it, your competitors will be soon.
Brand/marketing impact: Review of much more than your CRM system…this trend requires a major overhaul in approach.
DIFFUSION tip: Look for ways you can provide open, honest and complete information to your customers now, including products that are not yours!

The future is hard to predict…and we don’t recommend the fortune cookie method as a way to plan for business. A way forward is to sit down in your business, pull together a cross section of employees (people whose opinions you trust) and brainstorm what trends are going to impact you and how you are going to tackle them both as threats and opportunities for the future.

This formed part of a presentation to the CEO Institute of Australia, 17 Januray 2006. For the full text of this presentation email ideas@diffusion.com.au

Is it time for airport cinemas? You could ask Mark Cuban.

The New York Times recently published an article on Mark Cuban’s Landmark Theaters in its Digital Domain section. Entitled “Is Mark Cuban Missing the Big Picture?”, the article amounted to a mild (?) condemnation and questioning of Cuban’s dedication to digital cinemas. While Cuban, with a net worth estimated by Forbes at around US$1.8 billion, might “enjoy the presumption of possessing impeccable credentials as a business strategist and a technology futurist”, his foray into digital cinema is under question by the industry.

Not only do we belive Cuban is on the right track, we think he could get even bolder. The digital cinema market is about to get even bigger!

Around the globe airports are seeking to meet the ever increasing demands of transumers for new airport leisure experiences that mirror non-travel experiences. In addition, cinema advertisers, exhibitors, distributors and content providers are looking for untapped market segments that delivers growth similar to their entry into shopping malls/centres in the 70s.

DIFFUSION has been working on a digital cinema project with a select group of cinema and entertainment industry veterans for the past three years; approaching and meeting with a wide variety consultants, private equity firms, venture ca italists and suppliers in Australia, the United States, New Zealand and the United Kingdom to develop an extensive business case and plan.

We call it CINÉAIR (www.cineair.com), the world’s first airport cinema chain.

CINÉAIR is based on the current cinema multiplex model and much like Cuban's approach, each multiplex includes a number of fully automated digital cinemas. The big difference is that CINÉAIR cinemas are located AIRSIDE at selected international airport hubs, delivering a potential market of 8.5 billion people annually (1.2 billion more than the entire global cinema market). Cinema entry is via a self automated kiosk and turnstile system, priced on a Pay-Per-View (PPV) basis or through a Pre-Paid arrangement with major airlines, so it can be incorporated into airline tickets [...we note with interest that the EU has ruled that from February, airlines landing within the EU will need to provide meals and other compensation for delayed flights]. CINÉAIR Programming includes first-release major motion pictures and location-specific (i.e. tourist information services) or time-sensitive programs (i.e. major sporting events).

CINÉAIR is in the final development stage. We’ve been seeking an investor/s to help us develop the initial infrastructure and to launch the first site. We’ve done all the spade work, run the investment scenario, the development costs and the forecasts [...with attractive returns within five years]. Finally, we know which airports it can run in, we’ve identified them and we know many airports are already forseeing cinema as an important part of the new development mix for the future of airport retailing.

After the New York Times article we contacted Mark through his blog http://www.blogmaverick.com/ The maverick is yet to respond. Can you let him know we hoping to hear from him soon..

Are we wired for brand choice?

According to a new study by California Institute of Technology, reported by New Scientist our liking for a particular brand name could be wired into a specific part of our brains.

Using new neuroimaging techniques Caltech identified two regions of the brain – the ventral striatum and the ventral midbrain – as having an important role in identifying our preferences for particular products based on our access to previous learning.

“The key message of our study is that we are able to make use of neural signals deep in our brain to guide our decisions about what items to choose, say when choosing between particular soups in a supermarket, without actually sampling the foods themselves,” study leader John Doherty told New Scientist.

“This is because we can make use of our prior experiences of the items through which we fashioned subjective preferences – do I like it or not?”

“The next time we come to make a decision we use those preferences.”

DIFFUSION believes the study has important repercussions for our understanding of how our first experiences and exposure to products and services can be deeply ingrained into our behaviours and therefore our responses and choices.

More importantly, it means companies and businesses need to address consistently, the total brand experience of customers and clients. It signals a warning that later attempts to alter or modify brand experiences through the use of public relations and advertising, may have no effect whatsover on these first impressions and experiences.