Issue: As Wal-Mart’s Investigation Practices Hit the NY Times, Wal-Mart Pays a PR Price for Authoritarian Policies
Commentary by: David Vinjamuri

Last Summer, an epic struggle for control of the board of Hewlett-Packard exploded when it was revealed that HP Board Chair Patricia Dunn had authorized pre-texting to investigate its own outside directors. The news cast a cloud over the comeback story of Hewlett-Packard, and the scandal was far worse in PR terms than the leaks the investigation was intended to uncover. As this advertising blog commented at the time, the real lesson of the scandal was that any corporation should understand that treatment of (and trust in) its own emloyees is directly connected to the equity of the brand with its consumers. By that we meant that if a company does not trust its own employees, it should not expect consumers to trust them. Some employees will always misbehave and either break the law or the company’s code of ethics. But when the company fosters an atmosphere of mistrust, it ensures that this mistrust will be transferred down to consumers, either through employees or the media.

Today, a scandal brewing for the past four months hit the front page of the New York Times, virtually ensuring a publicity nightmare for Wal-Mart. The source? In January of 2006, Wal-Mart hired marketing star away from Chrysler Julie Roehm to lead the push for a new agency and new image for the Bentonville giant. On December 7th, Wal-Mart publicly fired her, stating that she had violated company policy by having a relationship with a subordinate, accepting unethical favors from agencies vying for agency-of-record status (most famously a ride in Draft FCB chairman Howard Draft’s Aston Martin) and broke expense rules.

It is unusual for the departure of a senior executive to be positioned as a ‘firing’ (even former HP CEO Carly Fiorina had to insist that her termination be made public as such) and much more unusual for the corporation to reveal the reasons behind the dismissal. To do so courts negative publicity and a lawsuit. In this case Wal-Mart got both – Roehm sued and the story was picked up by the business press.

Wal-Mart has one of the best publicity teams in the World, (run by Edelman PR) but it’s difficult to understand what they thought they might accomplish by treating the termination of Roehm as a war. Certainly any financial loss to Roehm in a lawsuit (or any gain in a counter-suit) will be dwarfed by the negative publicity surrounding the case. Wal-Mart does not carry the presumption of innocence in the public mind, so this kind of story weighs even heavier on them than it might on other brands.

The very public battle over Roehm’s termination created an even bigger risk for Wal-Mart: that it would reveal a pattern of behavior on the part of the retailer that could make for more interesting and more mainstream story for the press. That happened today with the New York times expose piece on Wal-Mart’s surveillance practices.

Whatever the truth of this story, the damage has now been done. And it is clear that what invited this story was Wal-Mart’s aggressive approach to ending its employment relationship with Julie Roehm. Whether or not Ms. Roehm merited this treatment, whether or not Wal-Mart was ‘right’ in factual terms, it has certainly hurt the brand. When senior Wal-Mart employees consider their everyday actions in light of whether they are ‘adding value’ they should consider the health of the Wal-Mart brand and not just the shelf cost of the products.  And, as with the Hewlett-Packard incident, the suspicion of employees – even when justified – hurts the brand far worse than their misdeeds.

Issue: Consumers learn that expensive and store brand pet-food are not very different
Commentary by: David Vinjamuri

One of the most disturbing aspects of the national pet food recall is the illusion of superiority it has shattered for buyers of expensive pet-foods. Processor Menu Foods not only makes store brand petfood for stores as diverse as Wal-Mart, Winn-Dixie and Wegmans but also premium brand pet-foods including two Procter & Gamble brands, Iams and Eukanuba. In all, 53 brands of dogfood and 42 brands of catfood are affected.

Why is this so disturbing to consumers? Not just because Fluffy or Sparky might die from kidney failure. The other bad news from the consumer point of view is that the premium food that they have been lovingly feeding to these extended family members is no different from generic store brands.

How did this happen? A combination of greed and laziness was to blame. For much of the petfood industry, co-packaging (or producing generic products using a third party manufacturer alongside branded products with identical ingredients and a higher pricepoint) has been a fact of life for years. This is greed plain and simple, and the brands engaging in this practice surely deserve the fate they will experience

Procter & Gamble is a slightly different case, however. AdAge quotes a Procter & Gamble spokesperson as noting that “Iams and Eukanuba dry products are not manufactured at Menu Foods and are not affected by this recall. Only a small portion of our wet canned and foil-pouch products for dogs and cats are affected by this recall.”

Iams was popularized by Clay Mathile who purchased the company from its founder in 1970. The brand was sold through veterinarians who promoted it as a scientific solution to pet diets. This vastly increased the strength and credibility of the brand, so much so that it attracted the attention of Procter & Gamble, who purchased Iams in 1999.

The Iams brand survives on the belief that it is the best brand for pet health and further bolstered by the P&G introduction of Eukanuba, which is sold through veterinarians.

All of this has been endangered by the news that the brands are co-packaged with generic pet foods. The question is, why did Procter & Gamble, one of the worlds pre-eminent brand companies, allow this to happen?

Most likely, a brand manager recommended that a wet-food line extension for Iams and Eukanuba be subcontracted out to Menu Foods to spare cost and manufacturing complexity. Nobody watching the brand asked the question – is this manufacturing practice consistent with our brand promise for these premium pet-foods? And now, even though the majority of Iams and Eukanuba branded products were not packaged by Menu Foods, they are going to be tarnished by the same brush.

Issue: Bono’s Red Campaign Has Not Burst
Commentary by: David Vinjamuri

AdAge set off a firestorm this week by suggesting that the RED campaign has yielded just $18mm for the Bono charity which benefits the Global Fund to Fight AIDS, Tuberculosis and Malaria. RED CEO Bobby Shriver fired back that the total number was now $25 million, that there were a lot of other publicity benefits for the charity and that the promotional partners also saw incremental profit and sales from the campaign.

From a brand standpoint, the much more interesting question is this: Why did a campaign with six huge corporate sponsors, dozens of celebrities and an enormous amount of publicity get beat by a simple yellow band promoted by one athlete?

That’s right, that simple yellow band brought in over $50 million for LiveStrong, the Lance Armstrong foundation which benefits people affected by Cancer. One celebrity, one SKU, twice the results.

This advertising blog doesn’t think that is any accident. Lance Armstrong did four things right:

1. Simple – The LiveStrong campaign was easy to understand – pay a buck, take a stand, fight cancer
2. Shareable – The LiveStrong campaign had a shareable message – wear the yellow and join the fight
3. Self-Reinforcing – When a consumer became aware of the campaign, every yellow wristband reinforced the message.
4. Sustainable – With simple execution, low manufacturing costs and no need to keep multiple partners on board, this campaign has been easy to maintain.

The RED campaign hasn’t surpassed the Yellow campaign for just one reason – Execution. RED sounds like a brilliant plan and when it hatched in Bono’s mind, it probably was. But it was compromised in several ways in its execution:

1. What is RED and what is just red? – Because the RED campaign had multiple partners, it was harder to distinguish at a glance which products were RED sponsored and which merely sported a similar color. This created consumer confusion and cost the campaign valuable momentum.
2. Commercial motives – To entice partners, 60% of profits were retained commercially with the remaining 40% going to RED. This compromised the integrity and authenticity of the movement and made it a promotion instead. A movement (as LiveStrong was) has much stronger brand equity than a promotion.
3. Too much noise – Multiple partners and multiple products also racheted up the noise. To understand the promotion, consumers had to pay attention and investigate. The extra work required of the consumer made the campaign much less appealing.

We believe that RED is pursuing noble goals. Unfortunately, the meager results have left the ground open to critics from the nonprofit sector who claim that this is the inevitable result of the privatization of charity. The hurt feelings created by the Gates Foundation stealing the limelight from more established players are resurfacing in this debate. But a privatization of charity and more stringent application of business principles to keep charitable giving effective are desperately needed. The lesson of RED is that it has to be smart business, and strong branding.

Brand: CarMax
Execution: TV
Target: Used car buyers
Rating: ****
Reviewer: David Vinjamuri

Description:
A Clint Eastwood-voiced cowboy rides into a corral in a dusty Western town, saying “I need another horse,” to the man who greets him. The horse salesman says, “You ever been to a HorseMax?” “Nope,” says the cowboy. “Come on, I’ll show you around.” Then the salesman explains the HorseMax policy, “see, at HorseMax we’ll buy your horse whether you buy one of ours or not,” he says as they pass a ringing cash register. “… even if she ain’t in good shape,” he adds as the men see a horse with a brace of arrows planted in it (the ASPCA disclaimer about the horses not having been harmed flashes at the bottom of the screen at this point). “See that filly there?” the salesman asks, “We’d never sell you that horse.” The horse the salesman is pointing to is obviously a horse costume with two people inside. “You know why?” he asks and as we see the man at the head take off the horse mask and shake his head, he answers the question himself, “It ain’t right on the inside.” “We even got a money back guarantee,” the salesman concludes. At this moment the spot shifts scenes seamlessly to the modern day as two similar men walk conspicuously in front of a CarMax. “Oh,” the man who is the customer says, “It’s amazing no one’s thought of this before.” The spot cuts to a car max logo with the tagline, “The way buying should be.” [emphasis from spot copy].

What Works:
We like this spot because it carefully lays out the brand positioning (‘a better buying experience’) while maintaining visual and story interest. The western set adds entertainment and intrigue to the spot but doesn’t distract from the message. Indeed, the obvious perils of trading in a used horse underlines the unsatisfactory state of the used car buying experience in the prospective buyer’s mind. This is a good example of a spot which is able to work in a number of relevant copy points without feeling too slow or looking like too much of a sale pitch.

What Doesn’t:
CarMax doesn’t actually make its appearance to the end of this spot, which could make brand recognition harder although we believe most consumers will think of CarMax when the HorseMax name is first spoken. The pacing of this commercial is good, but not exceptionally brisk.

Branding Bottom Line:
CarMax would really have something if they could line-extend to SpouseMax, ChildMax and In-Law-Max.

Issue: Taco Bell’s insufficient response to rat video compounds earlier e-coli woes
Commentary by: David Vinjamuri

Taco Bell owner Yum Brands this week has found itself on the wrong end of another public health crisis, this one stemming from a video filmed at the Greenwich Village Taco Bell/KFC showing a swarm of rats scurrying around the restaurant. Kate MacArthur at AdAge reports:

No crisis is just a local crisis. The rats running amok at the Greenwich Village eatery were first reported on early-morning TV news by a New York station, WNBC-TV, following a consumer call to its tip line. But by the time Yum Brands put out a statement addressing the issue on its home page and media wires — 2:06 p.m. EST — the stomach-churning video had already raced over the internet and made it to numerous other TV stations.

Taco Bell & Yum’s response to this crisis highlights the problem we have previously addressed with modern crisis management plans: they don’t account for the speed of the Internet and the visceral impact of viral video. The seven hours that passed between the early-morning airing of the video on WNBC and WCBS and Taco Bell’s response allowed the story to run nationally without any expression of regret from the company and made the whole mess look worse.

The response itself was not much more helpful, crafted as it was to stress the isolated nature of the incident and the safety of Taco Bell and KFC cooking in general.

Now, Yum will face further dropoff in Taco Bell business (already down since the e-coli crisis) and continued erosion of the brand. Why? Because Yum has not demonstrated that it really passionately cares about consumers or safety. Showing passion in the response means going beyond dealing with the immediate health issue caused by e-coli or rats and addressing the breach of trust created by this type of adverse event. Taco Bell should have made a more heartfelt statement of distress and then thought carefully about compensation for consumers – what about making the restaurant free for a weekend after reopening?

Just to be absolutely clear, this is our four-step primer for dealing with crises – rodent or otherwise:

To respond effectively to a crisis, brands need to have a plan which can be implemented in a matter of hours. It should include the following steps:

1. Accept Responsibility – Even if events subsequently prove that the brand was blameless in an outbreak or tainting scandal (think of the finger found in a Wendy’s salad which was planted by a customer, for instance), stonewalling will hurt the brand. It is far easier to act as if it is a problem you’ve created and take responsibility for making it right. If later events prove the brand was blameless, its ethical reaction to the problem will increase brand loyalty. If it was the company’s fault then the brand will retain consumers with its forthright, straighforward acceptance of responsibility.
2. Protect the Consumer – Closing restaurants or recalling the product early can limit the damage done to the brand. Stubborn refusal to immediately recall their contact lense solution almost cost Bausch & Lomb its entire ReNu franchise.
3. Find the Truth – Getting to the bottom of the problem is critical, even if it is not always possible.
4. Prevent a Replay – Tylenol returned to the market not when the person who had adulterated the product was apprehended but when Johnson & Johnson could be sure that another person could not do the same thing. This is the best standard for knowing whether its time to step back into the water, and one that Taco Bell has likely failed.

To these we would add “Make Reparations.” Taco Bell needs to clean up and think of a creative way to erase the horror from the minds of its consumers.