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John Fraim, GreatHouse Company


Loyalty and Brand Equity

One of the key reasons for the decline of the TV networks is the failure to create and sustain brand equity. This failure has been matched by the incredible rise of brand equity contained in media content. As we noted in a previous post, as a general rule, the broader the media and less targeted the market, the less brand equity resides in the media and more brand power in content. Conversely, the narrower and more focused the media the greater brand equity power resides within it and less power in its content.

One of the great challenges to the TV networks, as well as other mass media content providers in the entertainment industry, has been to create an allegiance to brand. But loyalty has so far been an elusive prey.

But the TV networks are not the only sources for declining brand equity. Certainly the major film studios and book publishers have also failed to create or maintain brand any type of profitable brand equity.

Just as there is little brand switching costs from following your favorite TV program to another network, the same holds true with movies and books. The only branding done by film companies seems to be that spinning globe or charging white horse before the opening credits. For publishers, it is often no more than that small logo on the front page or outside cover of the book.

Content in the form of star actors and writers possess almost all of the brand equity as well as percentage of the profits in most deals involving books and films.

But lessons can be learned from those few who have been able to place brands on film companies and publishers. The Disney Corporation always comes up in brand leadership investigations. Disney comes close to ownership of the family entertainment film position/brand as well as the children's market. No matter that some of the film companies under its massive umbrella are a far cry from family entertainment. Just like the major beer brewers do with their extensions into the "micro" category (Millers Plank Road) you hardly ever see any evidence the extensions are part of the same family. These non-family entertainment parts of the Disney film family act somewhat like James Carville does for the Clinton Administration. Going out into the world wearing "clothing" very different from the big family and seeing what new recruits might be gained into the family and if it calls for an increase (or decrease) in this type of behavior.

In book publishing companies like Hoover, the "dummy books" of IDG and Harlequin come to mind as strong brands. You think of business data when you think of Hoover, the friendly Cliff Notes yellow and black "dummy" books at IDG and the entire romance genre at Harlequin.

One idea from publishing that is a candidate for import into the film business might be the genre one whereby content of film companies might be branded with particular genres. Disney again comes close to ownership of the family genre but there seems little effort to own other genres by film companies.

In this sense, a reasonable question is whether greater brand equity is achieved via the strategy of genre branding. Can a competitive position in the film industry be gained by positioning certain film companies towards say romance genres like Harlequinn does in books? Might there be a logical extension of Harlequin books into a Harlequin film division?

George Lucas branded the modern science fiction genre in the 80s and Speilberg the fantasy and adventure genre. The 90s efforts of Speilberg, though, with films like Schindler's List, Saving Private Ryan and Jurassic Park dilute the once strong branding of Speilberg.

* * *

The battle of brand equity, though, is certainly not a battle confined mostly to entertainment media. It is definitely cross-sectional with battles in all part of the business world and economy.

One of the most fierce battlegrounds is in the retail environment. The large "everything-to-everybody" stores such as the big discount warehouses are similar in many respects to the TV networks. To the extent that there are a number of players (competing networks) in the game, switching costs are similar in ways to the low costs of switching channels to another network.

In retail, though, a number of additional subtle considerations come into play creating greater switching costs. A change of retailer does not involve a simple press of a remote button but that vague but important emerging notion of the "shopping experience." Here, different drive time as well as socialization patterns are involved. For instance, a big warehouse club may maintain a power not because of its brand but because of its location near another niche store or a restaurant that the wife or kids like going to after the shopping experience.

Shopping at the particular warehouse becomes associated with going to a particular restaurant. The "shopping experience" almost becomes the brand with the various shopping stops during this experience under its brand umbrella. Put the discount warehouse together with the restaurant in a mall and weak brand members gain strength they wouldn't have as stand-alones because of the synergy of the shopping experience.

In the media environment of the 70s, there were few cable niche players. The same has been true in the retailing environment with its movement from the "general store" to the niche store. The 70s were the final decade of the modern general store with the 80s and 90s have bringing about specialized and niche stores.

Category killers such as Toys-R-Us and Borders Books have been a relatively recent development. But in the late 90s, there is evidence that the category's chosen might themselves be too broad. Take the declining fate of Toys-R-Us. Originally seen as a convenience center for parents, it now seems more convenient to visit an Imaginarium, Learning Smith or even a Warner Brothers or Disney store in the malls. While it might have once been nice to have all of the selection of Toys-R-Us, who has time to make all the choices today? And also, its nice to know (and a key part of the brand) that someone out there has taken the time to make the selection for us. Maybe there is someone other than only that old "wizard" behind the curtain after all. Its nice to think so and the retailers that suggest this to customers today have much greater brand loyalty than those that dump boxes twenty feet high into combined retail warehouses.

On the extreme side of the brand issue, there are those magical retailers like Tiffany & Company where the content is really the store itself. There may be those little turquoise boxes inside the store but the true "package" and big turquoise box is the store itself. Here, the "media" maintains the brand power with less power to the content providers, or the jewelry manufacturers for instance.



© Copyright 1998, 1999, 2000 John Fraim - Greathouse Company
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