When Hugh Hefner announced his intention to take Playboy Enterprises private in July, the struggling company's stock climbed more than 40 percent in one day. Outside bidders suddenly emerged. Despite falling magazine sales and continued challenges in the Internet age, the legendary entrepreneur's move and the response to it served as an interesting reminder to the business world -- good brands are still worth something.
An effective brand isn't just one you can recognize. It should stand for something greater. On the most basic, Marketing 101 level, a brand is the symbol of a company -- a swoosh or a bitten apple -- that requires no explanation. But in the age of social media and free information, a clever logo doesn't cut it, and companies must do more to engage and appeal to consumers. Today's brands evoke emotion and symbolize not just a product, but a lifestyle, experts say. That's a rule, and a challenge, common to businesses both big and small.
"Brands are meaning-making machines," says Diane Stewart of Portland, Ore.-based ID Branding. She and partner Dennis Hahn contend modern brands are not just companies that provide products and services. Rather, the best brands engage with consumers and invite them to join the brand and make it more meaningful.
So how do companies build brands that compels people to feel, think or buy a certain way? We rounded up a panel of experts, who looked at brands through a variety of lenses, and asked them to identify the best and worst ones out there. Their picks may surprise you.
The Best Brands
Rob Frankel, a brand watcher, says the whole point of a brand is to be able to command a 20 to 30 percent premium for what could be perceived as a commodity. The perfect example, he says, is FedEx. While the U.S. Postal Service is perfectly capable of mailing documents and packages, there's a good chance that if you need to get paperwork from Los Angeles to New York, you'll be told to "FedEx it." Frankel says FedEx understands brand strategy -- and more importantly, how to implement it -- and is thus perceived as the only solution to a consumer's shipping problems. A catchy name and bold logo doesn't hurt.
"We are the Mac generation," says Adam Derry of Adam Derry Brand Development, adding that someone clutching an iPhone or typing on a MacBook at Starbucks is perceived to have an edge. And while Frankel says Apple's brand is diluted by the fact that it can't articulate the Apple brand and no two people will define Apple in the same way, many branders -- and probably Steve Jobs himself -- love the brand for its increasingly broad appeal. It's the electronic brand of choice for students, graphic artists, Web designers and musicians. And yet, all these people embrace a singular identity for owning these products. (And kudos for the aesthetic, as Apple products are generally considered prettier than the competition's, too.) Stewart and Hahn say that about four years ago, it was laughable to think Apple's market capitalization would exceed Microsoft's, but "today it's a reality" -- and you'll find Microsoft on our "Worst" list below. Apple consumers could not imagine buying the competition, but Apple's market share has grown mostly, according to Stewart and Hahn, because the company has "brilliantly designed products that convert the nonbelievers." And even though Apple makes mistakes, the company is generally forgiven by its zealous fans.
If you want tips for a happy healthy life, look no further than the Lululemon Manifesto. The company sells yoga apparel, mats and water bottles, but it promotes a lifestyle. (Case in point: "Dance, sing, floss and travel," part of the manifesto, has nothing to do with yoga.) "This brand has had an almost meteoric rise in popularity over the past two years," says Phil Moldavski, brand manager of the Washington, D.C.-based salad chain sweetgreen. Each Lululemon store is built around -- and embeds itself within -- the local community. There are free yoga events at stores, and each locale has a bulletin board covered with community events that would appeal to Lulu ladies. Lululemon's official brand ambassadors are individuals from the local communities who eat, sleep, and breathe the Lululemon lifestyle and are "empowered to create events and share the Lulu message." Lululemon also boasts a serious social media following (40,000 Twitter followers and 194,000 Facebook fans) with whom it shares inspirational quotes and health tips. "Lululemon has created an environment where people with a certain unique point of view thrive, and this vibrant community attracts like-minded people," Moldavski says. When women and men wear Lululemon, they know they're a part of a global community of thriving, lively and fun individuals. And it makes others want to be a part of it.
You might not know about New Belgium Brewery, but you've probably seen its Fat Tire tap at a local bar. Fat Tire isn't just a clever name, it's a nod to founder Jeff Lebesch's bike trip to Belgium -- and biking is a huge part of the New Belgium Brewery brand. In fact, the Colorado brewery "completely embodies biking culture and actively promotes alternative to cars and more sustainable lifestyles," says Raphael Bemporad, co-founder of BBMG, a New York- and San Francisco-based firm dedicated to the "intersection of branding, sustainability and social purpose." Bemporad believes a brand isn't just about the bottom line -- it's also about driving innovation and improvement.. It even uses a sophisticated water recapture system in the brewing process and makes every effort to be sustainable. It's "environmental stewardship," probably the first time you've seen that from a beer. New Belgium Brewery's "fabulous insane tribal culture" partakes in Team Wonderbike, the Tour de Fat, bike-in cinemas and scavenger hunts -- sustainable activities that "let inner child and joy run free." And it documents these bike-happy events on its YouTube page and website. It's a mission-driven beer with a purpose, and hey, it proves you don't need to use skimpy models or knucklehead bachelors to sell your beer. Just don't get a BUI.
There's only one drink that will give you wings, and despite a growing market of energy drinks, one remains ahead of the competition: Red Bull. Moldavski says Red Bull has "managed to stay relevant, keep market share and breed an almost cult-like following" united under the premise that you can "accomplish the seemingly impossible" (hence, the wings). Red Bull-sponsored spectacles showcase people achieving the near impossible, like motorcycle riders jumping a ramp onto the Vegas Arc, flying a rally car over a river into a floating barge and more. Moldavski says Red Bull's clear brand identity breeds success by attracting like-minded people who will tell their friends about the awesome stunts they saw at a Red Bull event. And an experience like that will make more of an impression than a 30-second television spot. Brandon Zeman of Lakeshore Branding says Red Bull has been doing its thing for 20 years -- promoting fun, extremeness and creativity with an inimitable sense of cool. (Oh, and the Red Bull car is pretty sweet, too.)
Who doesn't love discount stores, especially when you can give them a French-sounding elitism (i.e., "Tar-jhay")? The red-and-white bull's-eye brand has hit the bull's-eye with its brand, concept and marketing efforts. "Target invented a new category to stand apart from its competition: good taste on a big box budget," Stewart says. Hahn adds that the people who shop there are proud that they do and boastfully declare "I found it at Target." While shoppers know what Target is all about, they don't always know what steals they'll find there -- a leather sofa, DVDs, animal crackers in a bear-shaped container. Target was one of Forbes' most admired brands in 2009, and 96 percent of consumers recognize that bull's-eye (edging out Apple and Nike!), and it's likely because Target's brand's values resonate with the values of many Americans. And as Frankel says, the true barometer of a brand is whether its customers would support the competition. It's fair to say its brand values are, well, on target.
One For One is the guiding principle of Blake Mycoskie's TOMS shoes -- for every pair of TOMS bought, a pair of new shoes will be given to a child in need -- a child who's never had shoes before. Since its inception in 2006, TOMS shoes ("Tomorrow's Shoes") have turned shoe shopping (typically a guilty pleasure) into an act of giving and social good. By embedding a social philosophy into the heart of the brand, TOMS has cultivated a tribal following, says Bemporad, who refers to One Day Without Shoes and the company's Shoe Drops as social movements. "It allows people to feel part of something bigger than themselves, with a purpose." The TOMS shoe line has branched out beyond the Argentine alpagata style to include wedges and boots, and even hats and tees to help some kids along the way. TOMS wearers are encouraged to upload pictures of their TOMS outfit to the website's "How We Wear Them" -- a site that cultivates a sense of community and also markets the many TOMS styles, which spurs more purchases. "It's a triple-value proposition brand," Bemporad says. And $44 isn't a lot to pay for a pair of durable shoes, let alone two pairs and a feeling of giving.
Sure, five years ago, you probably would not have seen Walmart on a "best brand" list, but with great scale comes great influence, and no one's proven that like Sam Walton's baby. Since 2005, Walmart has sought to be a "good steward for the environment" -- the discount retailer is on its way to running on renewable energy, creating zero waste and selling sustainable products. The company pressured its detergent suppliers to use concentrated formulas that would require smaller containers (less plastic), less room on shelves and less gas and money for cargo and shipping. The "roll-backer" has begun to offer more sustainable and eco-conscious products on its shelves, and it's providing low-cost organic and fair trade products, like the Sam's Choice Fair Trade Certified House Blend brew. And when Walmart makes a change like that, it trickles down to mainstream shoppers in every corner of America, boasting the power to create a better life and a better environment. "If you can wire sustainability into an organization of that scale, the potential for positive impact on consumer society is immense," says Bemporad, whose sustainability-focused BBMG has worked with Walmart.
Free, unlimited snacks. Thirty-six channels of DIRECTV. No fee for your first checked bag. These perks compel people to try JetBlue. The thing that keeps them coming back? The brand. "JetBlue has humanized the travel industry," Moldavski says. Rather than pouring millions into traditional advertising, JetBlue invests its money into its workforce, recognizing that a pleasant flight and friendly staff is the best advertisement for its brand -- even when one of its crew members decides to jump out the emergency slide. "Essentially, every employee is a mini-brand ambassador," Moldvaski says. Every employee attends JetBlue University, where the Salt Lake City-based airline trains its staff and teaches them JetBlue's values and customer service. You can see its customer service in action on Twitter, where its 1.6 million followers (it's in the top 100 most popular tweeters) go for news, flight status and troubleshooting. Moldavski says JetBlue uses social media to engage in real-time, one-on-one conversations with its fliers -- an effective way to cultivate relationships and the loyalty of "True Blue" fans. After all, its slogan is "Happy Jetting!"
"Forget about talking somebody out of it," Frankel says. If someone wants a Harley, they're going to get a Harley. A Honda is unacceptable and a Vespa just won't do. Unlike many brands whose influence ebbs and flows over time, Harley-Davidson has mastered timelessness through reliability and trust. These machines have been built to last since 1903, which may explain the fanaticism among the rebellious bike owners -- 5 to 10 percent of Harley owners have been inked with a Harley tattoo. (Talk about brand loyalty!) But the brand doesn't rest on its laurels. Derry says large-scale rider events like Sturgis and Daytona "ensure that future generations of riders are born every day."
"Here is the grandfather of all brands that function like a culture," Hahn says. Patagonia was founded by the legendary climber, Yvon Chouinard, which lends the brand unmistakable authenticity. Chouinard even gives his employees surfing and snowboarding breaks when conditions are peak. "Patagonia has supported environmental and sustainability causes since before the word sustainability was ever used," Stewart adds. Bemporad lauds Patagonia's place as a beacon of transparency, authenticity, innovation and co-creation. Patagonia's Footprint Chronicles is a microsite where customers can track the environmental impact of an item from design to delivery, inviting customers to see the positives and the challenges within the supply chain. Then there's the Tin Shed, where people share stories about the outdoors and nature, sharing who they are and what matters to them. Even Patagonia's Facebook page is "almost entirely consumer driven," according to Bemporad, a plain example of the emotional connection the customers feel, and the pride they have in their sustainable, active lives. When customers buy Patagonia, they are supporting everything they care about.
Frankel says your product and services are not your brand -- they're proof of what your brand promised. Craftsman has mastered the art of crafting solid, durable tools, and if they ever fail, there's a lifetime guarantee to protect you -- that's a trusty brand. "If your grandfather bought a wrench in 1946, and it broke yesterday, they'll replace it for free," Frankel says.
The Worst Brands
You're probably gasping. Frankel says that while Coca-Cola may be a successful brand, it is not a good brand. The true test, he says, is that if you go to a diner and request a Coke and are met with, "Pepsi okay?" 99 percent of people will say, "Yes." A good brand would be irreplaceable. The same goes for Pepsi, because it works both ways. Both are iconic companies with great advertising, but both brands are watered down when you look at the actual product -- the soda.
It went from Kentucky Fried Chicken to the simple KFC, but that doesn't undo the fact that it serves fried chicken. And the "Pink Bucket" campaign might be its greatest folly, according to Bemporad. Each "pink bucket" purchase donates money to prevent cancer -- but let's not forget that eating fried chicken can contribute to obesity, another scary American health problem. "It's cause-washing," he says, noting that KFC is certainly not the only company to do it. "Brands co-opt a cause in ways that aren't genuine, to exploit market interest."
Our experts are not trying to pick on fast food, but as health concerns mount, these brands become easy targets. Bemporad takes issue with the "Drive-Thru Diet," a marketing ploy that "would make you laugh if it weren't so troubling." The BBMG team says brands run into problems when there's a gap between promise and practice -- Taco Bell's claim that eating Taco Bell for three weeks will make you lose weight is "grossly irresponsible." The Drive-Thru Diet website claims, "Eating better just got easier" and the fine print goes on to say the "Drive-Thru-Diet is not a weight-loss program." Brands have a responsibility to be honest with the consumer, brand watchers say, and while this marketing ploy may be a short-term gimmick, it will "diminish the brand equity" in the long run, Bemporad says.
Even though Microsoft products are widely in use, Microsoft lacks the tribal loyalty of Apple. (How many times have you heard someone declare himself to be a Microsoft person? A Mac person, on the other hand? There you go.) The team at ID Branding says tech companies like Microsoft never thought they needed to master marketing. "It's like a baby who goes from lying on its tummy to walking without learning to crawl -- sooner or later that person has to go back and crawl," Hahn says. And when you're learning to crawl as an adult, it can be silly and awkward. So even though Microsoft products dominate in many categories, the brand equity is missing and its customers don't feel pride or affection toward their PCs. "Even people who work there call it The Evil Empire," Stewart contends.
"No explanation needed," Zeman says. But if you would like an explanation, Stewart has one. "Remember the beautiful new logo that looked, depending on who you were, like a sun or a flower? Remember all the talk about caring for the environment? When a brand's actions contradict its words, you've got a troubled brand," she says. And when that brand irresponsibly lets millions of barrels of oil leak into the Gulf of Mexico, you've got a very troubled brand. "Values get tested in face of adversity and they either fail or succeed," Hahn says.
Goldman Sachs always wins. It's a moneymaking machine and probably the most successful firm on Wall Street, according to ID Branding. "But they never bothered to tell the world what kind of value they create, or why they're good rather than evil," says Hahn. Goldman CEO Lloyd Blankfein recently told NPR that his company's biggest mistake is not being transparent and telling its own story. "The question then arises, is there any story to tell?" says Hahn. "In the eyes of most Americans, the only meaning inherent to the Goldman Sachs brand is greed. If there's more, then they better tell us so."
"Ford didn't take bail-out money; GM did." Stewart says. "Enough said."
In July 2010, Facebook hit a huge milestone -- 500 million users. Sure, the brand has visibility, but high awareness is no longer the sole definition of a good brand. People use Facebook, but they don't self-identify with it, and many users have revolted over the site's privacy issues, putting the reportedly $35 billion site on thin ice. "What happened to MySpace could happen to Facebook," Hahn says. "No one seems to like what Facebook stands for, but everyone's using it. That's a brand problem."
The original version of this article appeared on AOL Small Business on 9/16/10.