Four quick observations about Red Bull’s unique approach to brand building:

1. Red Bull’s brand building is largely based on associating its brand with an amazingly wide range of people, teams and events.
2. Red Bull believes in owning teams and events rather than being one of several sponsors.
3. Because of this ownership model, they can and have turned this buzz machine into a profit center.
4. Their on-brand activities reflect two very different personalities that live side by side.

The scope of Red Bull activities is overwhelming. It gets involved in a wide mix of sports such as wakeboarding and motorcycle racing, dozens of Red Bull music events, sponsoring athletes such as motocross racer Ashley Fiolek, teams such as the New York Red Bulls soccer team and much, much more. The Red Bull website has entertainment features such as the Red Bull Soapbox Racer video game, weekly rock music bulletins on the Rock Report, plus sections on movies and TV shows as well. The list of their entertainment features goes on and on and is captured on their Facebook Page, which has more than 37 million followers. With well over 100 potential points of contact, Red Bull will connect to their target market many times, in multiple ways. And more importantly, Red Bull becomes a big part of their customer’s lives.

Red Bull believes in owning teams and events so that they have control over the content and the cost. They do not subscribe to the normal sponsorship model where they would have their name attached to an entity they do not control. They own two professional soccer teams, two Formula One car racing teams, the Red Bull X-Fighters (free style motocross) World Tour, the Red Bull Air Race (an international series of air races in which competitors have to navigate a challenging obstacle course in the fastest time), the Red Bull Cliff Diving World Series and much more. Even when Red Bull backs an athlete, they get involved; it is not about a logo on a shirt. Their four year association with Shawn White, who ultimately won a gold medal in snowboarding at the 2010 Olympic Winter Games, involved building a half-pipe training facility in Silverton, CO, complete with support staff to help him train.

And then there is “The World’s Biggest Jump.” In mid October 2012, well over 10 million watched Felix Baumgartner rise more than 24 miles above the New Mexico desert in the 55-story ultra-thin helium “Red Bull Stratos” balloon, jump off, and reach 830 mph during a 9 minute fall, setting records for both the height of the jump and the speed of descent. Since then, more than 33 million have watched the YouTube video. With the pre-jump and post-jump news features, videos and documentaries there could have been over a billion quality impressions, which meant an incredible ROI, even though the cost might have exceeded $40 million.

Its ability to stage sporting and music events and manage special athletes means that their rich library of video content will always be fresh and will always be expanding. The Red Bull Media House, launched in 2007, creates and markets new and existing content through TV, mobile, digital, audio and print. For example, the 2011 film The Art of Flight showed hundreds of don’t- -try-it-even-in-your-dreams sequences. There are partnership deals such as the one with NBC, the Red Bull Signature Series, which is made up of 15 events spaced out throughout the year. The brand’s magazine, Red Bulletin  has a global distribution of 4.8 million. The media presence is extensive and includes the Red Bull TV channel in Europe and Red Bull documentaries elsewhere. There are versions of content in any length and form. The Red Bull mission, to fascinate, is compelling to content users and audience members alike.

Red Bull is exceptional in telling their brand story in so many compelling, involving ways. And though all of their activity is on-brand, it is far from a “focused” strategy. Taking the next step to building a profit center was not only a smart strategic move, it was the ultimate tribute to their brand building effort.

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The word “content” is the catchall term for brand communication, and companies around the world are hopping on “content creation” as the way to capture the hearts and minds of customers. Every day, consumers are inundated with brand generated advertising – around 5000 advertising messages compared to a mere 500 messages forty years ago.  Yet, this statistic doesn’t capture the various Tweets, Instagrams and other messages companies push out every day. Content is everywhere, and the impact is real – consumers are conditioned to filter and sort through the junk more quickly and easily than ever.

Content is not simply an article, audio piece, video or book to be shared for a specific reason or to express a particular point of view. Today content can be anything, from funny cat videos to whitepapers. In the 21^st century marketplace content is currency, but volume does not bring brand wealth. Marketers are struggling to keep pace with a changing world, and many miss the mark. The strongest brands deliver thoughtful and consistent messages that demonstrate an understanding of their consumers. Look to American Express as a great example. They’re deeply engaged in conversation on Twitter and yet also maintain a consistent, highly successful direct marketing presence.

So how can brands win with content? There are three rules to successfully harness the power of a content driven society to get consumer’s attention and drive relevance of your brand.

Rule 1: Customers are creators. Start listening

Countless brands ignore one simple fact: Your customers are content creators, too. Content generation isn’t happening in a vacuum. Brands need to recognize that game has changed. Brands are built in conversation. It’s as much about sharing your own point of view as it is about listening to the point of view of your consumers. And brands that do it right can capitalize on a conversation that’s already happening. It’s imperative to listen, watch and read the content that your customers produce and then notice opportunities to add value to the dialog. Mod Cloth’s “Make the Cut” campaign is a great example of brands using their customer’s input to grow the brand. The campaign allows customers to submit ideas and sketches for a new piece of clothing. The best designs are selected, judged and the winning garment goes into production and is sold on the Mod Cloth website. Leveraging the creative power of their customers allows Mod Cloth to engage their audience in a very unique way.

Rule 2: Be real

In traveling the two-way street of content generation, brands must ensure authenticity. Essentially, brands need to identify what they stand for and stick to their guns. If you’re all about world peace, that’s great. If you’re only about selling as much as you can, that’s fine too, but you have to own it and give your customers a reason to trust you. It’s not about being purpose-driven and having a do-good cause. What’s essential is that you are true to your brand purpose. Intel has taken their “belief in a better future” to new heights over the last three years through the Creators Project. Through partnering with Vice, Intel as explored the future of computing with artists from around the world. By exploring their belief in a better future through a unique collaboration, Intel stays authentic and has the opportunity to engage an audience they may not have otherwise.

Whatever your purpose happens to be, that’s the place from which you should speak. That should be the foundation of all your content. If your brand is scatter-shot – jumping from one conversation/belief system/fad to another – your customers are going to get confused and frustrated. They’ll lose trust, and you’ll lose them. However, if you stick to your core mission and purpose, your voice in the market will be authentic and trust worthy.

Rule 3: Consistency over volume

With so much talk about content, it’s easy to become anxious that you’re not producing enough. While volume is not the answer, consistency is key. Brands need to be a constant part of the conversations that match their purpose and positioning. This takes resources, personnel and a tolerance for risk, but if you can dedicate the necessary energy you’ll engage your customers and win more loyalty. Jet Blue uses Twitter brilliantly to engage their customers. They share consistently but not in a jam-your-feed, overwhelming kind of way. They strikes the balance effectively.  According to Morgan Johnston, manager of corporate communications, “Our goal is to make ourselves available, help whenever possible and to show that our brand is built by real people who care about our customers.”

Huffington Post, on the other hand shares hundreds of article-teasing Tweets everyday day, which eventually led one frustrated follower to create the spin-off profile HuffPoSpoilers. The profile spoofs the brand’s posts by spoiling the attention grabbing headlines posted on HuffPo usually posts on Twitter – link-bait headlines that often lead to fairly uninteresting news stories. When your content inspires such committed mockery, its time to check the mirror.

Content creation is essential in today’s market place. To make real impact and compel your customers to engage, your brand needs to create brand appropriate, consistent content in order to win. Ad man George Lois once opined, “Think long, write short.”

If you want to create the kind of content that adds value, think long about the messages that are right for you…then tweet about it.

Each controversy came with different reasons, different accusations, and different levels of fall-out, but they all ended with the same result: A public apology via printed word, viral video or TV ad.  The apology bandwagon seems to be on hyper-drive these past few years.  Apple , BP , Carnival Cruises, Tiger Woods, Lance Armstrong, StubHub…the list goes on and on. There is no shortage of mistakes being made. And there is no easier out than to run a 30 second and wash your hands of the mistake.

But in our ever-changing, hyper-connected world, words are just words. Consumers are smarter than ever, and only the authentic brands, the ones that have stayed the course over time and have timeless values are the ones that have the resilience to bounce back time and time again.

Johnson & Johnson’s new brand campaign celebrating “love”  is a perfect example of execution and humble contrition in an imperfect situation. Both the pharmaceutical and consumer products sides of the brand’s business have been plagued recently by a series of recalls and lawsuits, though their reputation seems to be in recovery mode - recent report have their stock price up by 22%.

In launching the new campaign, VP of Global Corporate Affairs Michael Sneed commented, “One of the things that we wanted to be sure to do is move to really get past some of the challenges we’ve had as a business,” he said. “We’ve made great strides in that, and we want to make sure we have a full conversation about who J&J is. We’re not perfect, but we want people to understand that when we do make mistakes, we own up to those mistakes and we want people to understand the values that are behind J&J.”

Brands become successful as a result of their deeds, not their words. I’m sure that Hyundai and Ford are ruing the day some rogue agency or internal marketing zealot made the choices they did. And regarding JC Penney, the bottom line is that no one cares.  And they won’t care until the brand rebuilds itself so that it’s relevant to a consumer segment that is under-served and ripe for a different type of buying experience. A commercial that tells me they are going to change does nothing more than remind me of how irrelevant they are today, and how far they need to go to build their brand back to being one that truly inspires and compels.

This post originally appeared on the Forbes CMO Network on Scott Davis’s blog, The Shift. To read related thinking from Scott on Forbes, follow his blog here. 

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Consider the higher purpose that the following brands that were all the subject of a blog post:

Dove: Achieving real beauty, building self-esteem

Tanita: Controlling weight, creating a healthy body image

Panera Bread: Looking to the build communities with “Panera Cares” model

Patagonia: Preserving the environment, sustainability in clothing

Disney: Attacking kid obesity

Asian Paints: Using color experimentation and building confidence

Crayola: Helping parents and teachers raise inspired, creative children

Purina: Creating special pet moments

Chick-Fil-A: Spreading Christian values

Muji: Promoting simplicity, moderation, humility, self-restraint, serenity and the natural environment

Whole Foods Market: Educating about organic, natural foods and nutritional health

Subway: Delivering healthy fast food

Nintendo: Activities for active families

Coca-Cola: Experiencing happiness

A brand is often, and with good reason, thought of as a vehicle to make profits by delivering functional benefits for customers with offerings that are better or as good as competitors. But there is evidence that brands with ongoing success are more likely to have a higher purpose that provides benefits beyond the functional to customers and provides satisfaction, and even inspiration, to employees.

What are the most impressive brand building efforts in last 15 years? In constructing such a list, it would be hard to leave out Dove. A $200 million soap brand in the early 1990s has grown into a brand that has been estimated to be worth nearly $4 billion dollars today. They play in an intensively competitive arena with large, smart and established competitors. And in my view, the Dove brand building effort played a big role in their success story.

Have you seen the latest from the Dove ongoing “Campaign for Real Beauty” that originated in Brazil and was done by Ogilvy & Mather in 2004? A forensic sketch artist draws several women, first based only on their descriptions of themselves (he does not actually see them) and then based on the descriptions of a stranger who has observed the women. The subject, seeing the resulting sketches side-by-side, realizes that the sketches inspired by strangers are much more flattering than the versions from their own self-descriptions. The tagline? “You are more beautiful than you think.”  The first two versions of these videos each got over 35 million views within two weeks of being posted to YouTube. Thirty-five million!!

The Real Beauty campaign involves substantive programs with girls as the prominent target. Since 2002, Dove has been collaborating with Girl Scouts of the USA to promote self-esteem and leadership programming among tween and teenage girls with programs like uniquely ME! and It’s Your Story – Tell It! An annual Dove Self-Esteem Weekend, started in 2010, aims to inspire moms and mentors to talk to girls in their lives about beauty, confidence and self-esteem supported by discussion aids. The goal is to reach 15 million girls global about self-esteem awareness by 2015.

The Real Beauty campaign resonates at several levels. It connects with an issue of deep concern within the customer base, their appearance and self-confidence. Additionally it addresses the insecurity and self-esteem issues of young women to which customers could empathize. It strikes a chord. It provides a higher purpose to the brand and a shared interest with customers.

The impact for some of Dove’s efforts has been estimated to be 30 times their expenditure. One if its ads, Evolution, showed how much effort goes behind creating the “model look” and won advertising awards as well as created unpaid exposure estimated to be worth over $150 million. There are anecdotes about dramatic sales increases tied to the campaign and surveys showing that those aware of the effort are more likely to use and recommend Dove products. But the creation of a huge business base is the best evidence to its impact.

The campaign has had its critics, though. In part, this scrutiny has been stimulated by and is a testament to its success and visibility. But during a panel discussion at the WEF at Davos once, Phil Knight dismissed critics to some controversial Nike ads by saying that the goal was not to avoid being disliked but to connect to the target. Exactly.

Dove’s success is, of course, driven in large part by a business strategy that involved brand extensions, product innovation and geographic expansion. The energized brand with its higher purpose and clear value propositions supported by branded innovations simply amplified a remarkable business strategy.

The extension strategy was to leverage the moisturizer heritage of the brand into new categories supported by meaningful innovation. The first extension success was the Dove Moisturizing Body Wash with the innovative Dove Nutrium technology that deposits lipids, Vitamin E and other nutrients onto the skin. This was followed with entries into deodorants, disposable face cloths, shampoos with Weightless Moisturizer, Nutrium soap, and lotions with Shea Butter. Dove also entered the male market with Dove Men+Care. Each extension success was based in part on compelling value propositions.

Additionally, an aggressive global expansion resulted in the brand, once a factor in only a few countries, now having a presence in some 80 countries. However, the business strategy would not have had its remarkable success without the brand building effort to support the offerings and to drive the higher Real Beauty purpose.

The Dove brand success didn’t just happen. It was research-based and employed a host of methods to understand the issues women face with respect to Dove products and perceived beauty. Customer research was supplemented with expert guidance. The Dove Self-Esteem Program, for example has an 11 person Global Advisory Board. The brand has the ability and the willingness to stimulate, access creative thinking from around the world and then push the best ideas into the marketplace.

Letting ideas emerge and then flourish is not a natural part of most organizations. Dove’s efforts are remarkable.

It’s not uncommon for social media to be praised as the ultimate key to unlocking meaningful customer relationships – and it’s certainly no secret that over the past few years, brands have rushed to “join the conversations” on Facebook and Twitter or risk being labeled as old-fashioned and out of touch.

While “likes” and “followers” are an indication of interest and loyalty, and sentiment analysis can help brands predict and act on customer trends, they are not a key reason behind brand and business failure. Factors integral to success are often more closely tied to strong management, sufficient capital and a focused emphasis on product quality and customer needs rather than the presence of a branded page.

In this article, Brian Solis explains that brands need to start to think about social media more creatively in order to create true business value. This comes down to three critical factors:

1. DESIGN – Today, brands can’t leave the customer experience up to chance, even in more restrictive branded channels. Companies need to understand what about their products and services evoke emotive responses and incent sharing in the first place, and harness and amplify these characteristics.
2. INTENT – Related to understanding the right metrics to measure for success, brands need a clear vision of what they want to get out of two-way engagement – and how the experience design can support these objectives.
3. IDENTIFICATION OF OPPORTUNITIES – Don’t send customers to Google with their questions. Brands should proactively direct consumers to the right answers, and understand which tools of engagement – be it posts, videos, etc – are going to keep them coming back.

Above all, storytelling is most important – brands need to weave a consistent story across all channels of engagement, acknowledging that at the end of the day, social media is only one channel for sustained investment. Noting that “the only way to build a community is to be communal,” companies need to start listening harder to consumers today to remain relevant when the next big technology or channel comes around.

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Oreo’s move wasn’t just mentioned because the Mondelez International VP of Customer Engagement, Bonin Bough was speaking at the event. Oreo’s Super Bowl moment was a hot topic because they epitomized something that great brands are doing these days, something that will be defining what makes your brand stand out in a crowded market: real time engagement.

The quick reaction time, the simplicity of the messaging and the platform on which it was delivered enable Oreo to leverage their playful voice and open up a conversation where their customers already lived. But it’s not just Oreo who is injecting their organization with this mentality and it’s not a one way engagement. Joseph V. Tripodi the Exectutive VP and CMO of the Coca-Cola Company brought this idea to life during the panel on “The Future of the Un-Startup.” In describing the importance of real time engagement Tripodi challenged “If your customer starts a conversation with your brand on Friday and you don’t engage until Monday, that interaction is over. You’ve already missed the opportunity.” Whether something happens at a major sporting event, your customer has a random thought they want to share or you want to let your market know of a new offer, your brand needs to be ready to have the conversation. There are far too many brands that understand, leverage and define themselves by this ability to ignore its importance. Positioning yourself to act, engage and respond is vital to maintaining success for any brand.

Earlier this year, Superstorm Sandy devastated Lower Manhattan. It took the hard work of city officials, service men and city residents to come through the storm, but the ability to engage in real time was essential. In a harrowing account of the storm Emily Rahimi, the Social Media Manager for the NYFD, described how it was her ability to engage in real time that made all the difference. “When people started tweeting at me saying they were trapped, my first response were to tell them to call 911,” Rahimi remembered on the first day of the conference. “But when I realized they had no other way to connect I knew I had to do something.” With the help of teams across the New York area, Emily used real time tools to triangulate the locations of victims, debunk rumors and communicate progress of rescue efforts. These efforts greatly impacted the city’s success in responding to the storm. As a result of the real time efforts of city officials and residents a new organization was established. Code Corps will allow the City to work with technology experts to quickly build and deploy crucial technology resources in the event of an emergency; adding new tool to the city’s real time arsenal.

It was uniquely powerful that Fast Company brought together so many accomplished, successful business leaders to talk about innovation. However, more powerful still was their alignment around the importance, and down right necessity, of real time engagement. From upstart new companies like Kiip to mega players like AOL, the evidence was clear that enabling your organization to react and engage in the moment is the essential way to impact growth and sustainability in today’s market.

In our next piece inspired from the Innovation Uncensored conference, we’ll explore the role “content” played in the event’s discussions and how we at Prophet see the conversation changing.

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Over the last two days, innovation came to life at Fast Company’s annual New York Innovation Uncensored. Held in a dark, chilly music venue called Terminal 5, the substance of the event was in stark contrast to the vibe of the venue. With a mix of humor, emotion and great storytelling the event was full of thoughtful material sure to be the stuff that shapes the businesses of the future. Through this series of articles we will dive into all the major takeaways and shine a spotlight on some of the things we thought really missed the mark.

While reflecting on the conference on the plane home (from yep, you guessed it – 40,000 ft), it became clear that all in all, Fast Company put on a great show. Innovative business leaders from around the world spoke passionately about the processes of making impact through bringing new ideas into the world, and Fast Company kept it interesting with inventive presentation formats, making the event feel well paced and full of variety. Hosted by the hilarious Baratunde Thurston – author of the satirical book How to be Black – this year’s Innovation Uncensored was a perfect intersection of creative inspiration and powerful new thinking in the world of business.

DAY 1

The event featured a fantastic list of speakers, but got off to an awkward start with a dialog between Robert Safian, editor of Fast Company and David Karp, president and CEO of Tumblr. Chock it up to show-opening jitters, but the conversation felt forced and was often punctuated with the two interrupting one another that was distracting to the admittedly interesting content. By the conclusion of the conversation Safian and Karp did find their rhythm, leading to a compelling dialog around the future of independent creators and their rise to prominence.

The day continued with one of the interesting short form presentations that were peppered throughout the conference. In her “7 Minute Master Class,” Sheryl Connelly, manager of Global Trends and Futuring at Ford Motor Company, discussed the history of innovation at Ford and their frequent reluctance to change. Most powerfully, Connelly pointed to the major change she’s seen within the organization: a marked shift towards research and trend watching to create cars that customers really want.

On the heels of Sheryl’s short presentation began the first panel discussion. “The Future of the Un-Startup” was a discussion with an impressive group. Christina Miller, SVP of Turner Sports and NBA Digital, Blair Taylor the Chief Community Officer of Starbucks and Joseph V. Tripodi the Exectutive VP and CMO of the Coca-Cola Company had a lively discussion around how to maintain agility from inside a mega-brand. The panel made it clear that without listening to your consumers, engaging quickly and personally, and pivoting when necessary big brands will be sure to lose out in the 21^st century.

Next up was another unique presentation format that could be best described as live journalism. Featuring Rachel Haot, the Chief Digital Officer of NYC, Jessica Lawrence, the Executive Director of NY Tech Meetup, Emily Rahimi, the Social Media Manager for the NYFD and Nigel Snoad the Product Manger of Google Crisis Response, the group explored what Superstorm Sandy looked like from a digital perspective. Narrated by one of Fast Company’s own, the panel took us on a captivating journey of the storm. The real time, flexible and socially driven response by the city of New York was impressively recounted, highlighting dramatic tweets and clever solutions in a major crisis. It was surely one of the most engaging pieces of the day.

The first day was rounded out by another 7 minute blast of inspiration from future-focused author and professor Jonah Berger who spoke about smarter virility in media, rolling into by a great conversation with Mario Batali who spoke about sustainability as innovation in today’s culture and capped off with a new way to look how media is changing with the Founder of BuzzFeed, Jonah Peretti and Steve Stoute, Founder of Translation.

DAY 2

Kicked off by the some masterful MCing from Baratunde Thurston, the second day of the conference got off to a fun start with a challenge from Matt Kingdon of ?What If! Innovation Partners who prompted a stranger-hugging extravaganza throughout the venue. A great way to start the day indeed.

We then took a step back to consider how to change the world with an engaging conversation between the very composed Umair Haque, Director of Havas Media Group and the charismatic, upbeat Nancy Lublin CEO of DoSomething.org. Through a thoughtful discussion we learned that when engaged around ideas they care about the youth of America is ready to dive in to change our world for the better. Brands that step up to the plate will earn their loyalty.

Another panel occupied the mid-morning that certainly got the gears moving. “Brands as Content Engines” featured a lively conversation about creating messages and conversations in today’s digital market. The power of great storytelling combined with highly responsive message was the clear take away from the great group. Bonin Bough, VP of Customer Engagement with Mondelez International, Deborah Conrad, Corporate VP and CMO with Intel and Steve Phelps SVP and CMO of NASCAR all brought their strong perspectives to the conversation.

The day featured four “7 Minute Master Classes.” Eric Whalforss, founder of SoundCloud, Alexa Von Tobel, Founder of LearnVest, Brian Wong, CEO of Kipp, and Justin Kan, Founder and CEO of Exec all shared brief but interesting presentations. Eric argued for the powerful effect of audio content in today’s market. Brian gave an energetic download on how his company, Kiip is changing mobile advertising. Alexa – the most unique speaker at the conference – discussed America’s last taboo: financial education for the masses. And Justin brought his entrepreneurial energy to talk about making your ideas happen. Overall, these small doses of insight throughout the event were a great way to break up the days and give some time to very unique and interesting speakers.

The day also featured two sessions where the experts interviewed one another. In the first of these conversations Jack Dorsey, Co-Founder of Square and Twitter chatted with Diane Von Furstenberg, Founder of DVF Studios. The two chatted about their origins, their love of family and how taking walks is their shared way to unwind. In the second of these discussions David Droga, Founder of Droga5 and Susan Lyne, CEO of AOL Brand Group explored the erosion of the wall between media engines and marketers. Echoing a mantra that pervaded the conference, they highlighted the fact that every brand and agency is a publishing house.

Lastly, the day featured two “Future of…” discussions that really pushed the innovation of the conference. In the first panel we looked at “The Future of Retail” and the way things will change for customers and brands. Featuring Rachel Shechtman, Founder of STORY, Gibu Thomas, SVP of Mobile and Digital at Walmart and VP of Innovation at eBay Steve Yankovich, the conversation touched on building community through retail, touch screen tech as the wave of the future and how driving prices changes everything. The second of these panels covered “The Future of Giving,” with Neil Blumenthal, Co-Founder and CEO of Warby Parker, Tal Dehtiar, Founder of Oliberte Shoes, Krista Donaldson, CEO of D-Rev and Melissa Kushner Founder and Executive Director of Goods for Good. The panel challenged the ideas of how companies give, the necessity of responsibility in modern companies and the emotional impact – or lack thereof – in social work.

In all, the conference was an energetic exploration of business, creativity and bringing ideas to life. Over the next few articles we’ll be exploring what themes were most dominant and how they relate to what brands need to do to keep up with the times. We’ll also dive a little deeper into what we believe to be some of the biggest missteps of content from the conference, and how some brands may be misguided.

Stay tuned!

There has been a significant amount of buzz recently about Ron Johnson, former CEO of JC Penney, and his failed attempts to turn around the struggling middle-market retailer. In a recent post, James Walker outlined how an unsuccessful SKU assortment and poor pricing and promotion decisions—not their new strategy of “everyday low pricing”—accounted for the company’s biggest losses. While this is certainly true, I believe it’s also worth evaluating the implications of these recent pricing moves and strategic decisions from an overall brand strategy perspective.

Ron Johnson and JC Penney: A History

In January of 2012, Johnson stepped in to reinvent the JC Penney brand. Drawing on his past experiences at Target and Apple, Johnson announced that Penney would do away with coupons and discounts in favor of “fair and square pricing,” while the store layouts would be overhauled to a format of curated mini-shops. A year ago, the stock price jumped at the Apple store pioneer’s bold vision, but today, Penney revenues have fallen by 25%, the stock price has fallen almost 60%, and the company has lost nearly a billion dollars.

So what happened?  Within this failure story are two important lessons in brand strategy:

Never Underestimate the Power of Analytics in Understanding Your Customers: Apple rarely conducted market research. Steve Jobs is famous for saying “We do no market research. We don’t hire consultants.” His theory was that people won’t know what products or features they want until you actually give it to them. While this may have held true for cutting-edge technology products, most companies simply can’t afford to take a similar approach. Through Penney’s decline, Ron Johnson has learned this the hard way. Selling Dockers pants isn’t the same as selling the iPhone. Johnson rolled out his “fair and square” pricing strategy without conducting market research or pricing analytics, and in doing so, completely failed to see how sensitive JC Penney shoppers are to price. The thrill of hunting out a discount or using coupons to get a great deal—especially at mid to low price tiers—can be an extremely powerful purchase driver. Without sound research to support his pricing strategy, what sounded like a bold move was really a blind move: Johnson failed to understand his customers and drove many of them away from the store as a result. Then, Johnson reverted to a pattern of regular and promotional pricing only to see even bigger losses due to an unsuccessful SKU assortment and poor pricing and promotion decisions.

Align The Touchpoints of Your Brand Strategy: When Johnson announced his new pricing strategy as part of his plan to turn around the Penney brand, he also announced a new store format. However, the two new touchpoints were not rolled out in tandem, and what happened?  The new pricing strategy drove away old customers who sought out discounts and deals, but there was no new store format to bring new customers in. Had Johnson waited to deploy the new pricing strategy in conjunction with the new store format, he may have seen better results. A brand strategy should be holistic; each strategic decision and customer touchpoint should work together to support a strong overall brand picture. By rolling out his strategy in piecemeal, Johnson tore up the picture that existing customers had come to like, without replacing it with a completed new one.

Despite his failure to turn Penney around, one can’t help but admire Johnson for his brazenness and determination. “To do things that haven’t been done before,” he said, “you have to trust your intuition.” Johnson’s intuition was right: Department stores today are quickly losing relevance, and bold action is needed to turn them around. Unfortunately, his execution was all wrong.

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My newest book, Three Threats to Brand Relevance is out this week in e-book form. It’s a shorter form book, and can be viewed as a supplement to my book released last year, Brand Relevance.

Brand Relevance explains that the only way to grow is to develop “must haves” through big innovation that will render competitors irrelevant. It is the path to winning. This new book shows the path to avoid losing. As markets become dynamic, there is a real risk that your brand will become irrelevant. The book explains the three threats to look out for and how to avoid them or deal with them.

The first risk is that you might be marketing an offering that an important and growing segment is no longer buying. It doesn’t matter if they love your SUV brand if they are now going to buy a hybrid sedan. You need to convince them that your category or subcategory is still the better choice, reposition your offering so it is relevant, introduce a parity product, leap frog the innovation to create an even better one, or disinvest.

The second risk is that your brand has lost energy or become bland without visibility. A brand without energy will tend not to be considered (and thus will not be relevant), will be considered to not be contemporary (and again, irrelevant), and will often have degradation on other image dimension. The solution is to energize the offering, energize its marketing or create a “branded energizer” and attach the brand to it.

The third risk is that your brand has developed a negative, a reason not to buy. One strategy is to deal with it directly, to negate the negative. Another is to change the conversation by introducing a positive that will compete with the negative in the customer’s mind.

All brands want to win. All brands want to stimulate growth. But the reality is that growth is hard to generate in the absence of big innovation. Accepting the challenge of avoiding losing by maintaining relevance is often the more important key to success.

photo credit: Ian Sane via photopin cc