According a recent earnings release, Coach operates 343 retail stores and 119 factory stores worldwide.  At one time fashion brands used factory stores or outlets to move excess merchandise from their regular stores.  Not so now.  Today, most of the offerings found at factory stores are made specifically for sale at outlets, including 80% of Coach’s “factory” inventory.  The more merchandise Coach makes specifically for the factory stores, the less regular merchandise it liquidates, leading to “significantly higher profitability.” The problem comes when people think they are dealing with a single, common luxury Coach brand.

Some retailers deliberately maintain separate brands for their outlet stores like Nordstrom Rack, Saks Off Fifth, Neiman Marcus Last Call, to help keep brand experience expectations in check.  For example, Nordstrom Rack offers customers a 30 day return policy that is certainly reasonable, but a far cry from the legendary leniency of the flagship Nordstrom return policy.  Others clearly delineate merchandise specifically manufactured for and sold only in outlets.  Brooks Brothers sells a separate “346″ line at a lower price (and some say significantly lower quality) specifically for its outlets, a common practice among retailers including  Ann Taylor Factory, Banana Republic, Gymboree and many others.

Coach, however, deliberately encourages conflation between full price and factory.  On a recent business trip, we had some time to kill before a flight and popped into the Coach factory store in Loveland, Colorado.  Seeing what looked like a “real” Coach design, logo, tags, etc., we picked up a bag.  Andrea Shaw Resnick, Coach’s Senior Vice President of Investor Relations and Corporate Communications acknowledges that the Coach factory stores sell different merchandise but with “the same excellent Coach quality.” Well, maybe not. Two weeks or so after our bag was put into use the, “turnlock” fell off.  Not a big deal, but certainly a defect that interfered with the essential function of closing the bag.

We trotted over a short hop from BrandCulture HQ to Coach’s Century City outpost where we encountered Brianna and explained the failure.  Brianna knew at a glance that we had a “factory bag” and explained that we were in a “full price” store where such a bag “would never be sold.”  To further amplify the point, she pointed out the Coach equivalent of the Scarlet Letter, a tell-tale “F” in the serial number designating “factory.” Accordingly, she would not be able to exchange the bag or issue a refund — even though we presented our original sales receipt.  Brianna did say we could ship our factory bag to Jacksonville Florida (at our expense) where a team of experts would determine within 4 to 6 weeks whether or not the bag could be repaired.

Just when this rigmarole seemed a bit much for a brand new defective bag, Brianna invited us to take a trip from Century City to the Coach factory stores in Camarillo (47.6 miles) or Barstow (126 miles) for a refund.  Returning an item to a Coach factory store is inconvenient . . . by design.  Normally Coach endeavors to locate its factory stores at least 60 miles or an hour’s drive away from the full-priced outlets.  One Coach brand, but two different businesses and very different brand behavior.

Full price Coach never has sales.  Factory Coach always has sales, sales and more % off sales!

Why does Coach do this?  We’re confident that Coach has reams of psychographic, demographic, market segmentation and focus group data — bolstered by the 70,000 customer interviews the company purportedly conducts each year — that show that the bargain-crazed, coupon-addicted factory store customers (like us) and the upscale full price shoppers are distinct cohorts and never the twain will meet.  Evidently Coach believes this is a representative factory store shopper:

. . .  and here are their “full price” shoppers:

Conventional wisdom and even outside experts agree, including Kit Yarrow of Golden Gate University, “Outlet shoppers are less fashion forward and more interested in saving money.” Outside of hard-core outlet shoppers, we suspect this is largely a load of piffle, and the reality is that sometimes people find themselves in factory store settings and sometimes not, and migrate freely between the two retail worlds.  But we’re even more confident that from a brand perspective this operating methodology moves more merchandise, but puts Coach and its brand on thin ice.

This is a dilemma of Coach’s own making, as the company sets a high bar for itself in its Mission Statement.  In addition to asserting that its brand “represents a unique synthesis of magic and logic that stands for quality, authenticity, value and a truly aspirational, distinctive American style,” Coach borrows a play out of the Lexus Covenant, in asserting that all Coach customers will be treated “like guests in our own home.”  You don’t see Toyota promising this for Camry and Scion owners.  In reality, the standards of hospitality among Coach’s 12,000 employees evidently differ considerably for factory store guests vs. those of the full price stores.

Coach makes bags and accessories — $3.4 billion of them over the last year.  But its business is its brand.  That’s what enables Coach to earn a gross margin that is not only among the very highest in the industry, but one that frequently approaches and even surpasses 80% (consider that when making your next Coach impulse purchase).  With margins like these, Coach should consider investing a few bucks in a seamless brand experience to mollify factory-shopping slack-jawed bumpkins such as ourselves who inadvertently stumble into a “real” Coach store.  Alternatively, instead of promising a common standard of quality and courtesy across its portfolio, create a more deliberate and explicit brand architecture with a “Coach Lite” brand (like Nordstrom Rack) where shoppers can still have the signature Coach C’s on their arms without quite the same expectation of quality or of a luxury brand treatment.  Either way, with an asset as valuable as the Coach brand, we suggest that Coach take care not to stretch the elasticity of its storied brand past the point of fracture.

In the meantime, if you’re heading out to Barstow will you swing by and pick up our broken Coach bag?

Yes indeed.  Because this is a “merger of equals” (aren’t they all — remember AOL-Time Warner?  DaimlerChrysler? Or even PriceWaterhouseCoopers?), we can’t have one airline appear to “acquire” the other, hence the merged carrier will keep a bit of this and a little of that from each.  The United name, Chairman Glenn Tilton and Chicago HQ stay, but the new airline will adopt the Continental livery, logo and CEO Jeffrey Smisek (who will have offices — you guessed it — in both Chicago and Houston)!  Does this placate various constituencies?  You bet.  Is this smart brand-building?  No.

Recasting the United name in the Continental typeface looks like, well, recasting the United name in the Continental typeface.  Sure, over time, people will grow accustomed to seeing the planes say “United” rather than “Continental” next to the stylized globe logo.  But it’s a missed brand-building opportunity.  Instead of creating a new visual identity commensurate with creating “The World’s Leading Airline,” this pastiche just looks like — and is — a hodgepodge of elements, rather than an integrated, cohesive entity that represents a unique, new assertion of value.

As anyone who has poked around BrandCultureTalk knows, we believe that great brands make tough choices.  We also believe that great brands have to start with an idea.  The most famous assertion of United’s idea developed way back in 1965 by Leo Burnett, “Fly the Friendly Skies” ran an unprecedented 32 years and became one of the most successful and memorable in the history not just of aviation, but branding.

After some less memorable intervening incarnations (Does anyone remember, “It’s important for the human race to stay United“?  Neither do we.) United most recently exhorted, “It’s time to fly.”  We’d argue that providing singularly friendly service beats the more vague temporal urgency of the current United slogan (although we admire the trailblazing pluck of United’s legal department in that they evidently felt this assertion to be of sufficient importance to merit not one giant registered trademark symbol, but two in a row up in the header of this web page).

Continental, on the other hand, currently uses the more aggressive “Work Hard.  Fly Right.“  This promise of honoring and acknowledging the realities of the present business environment — as well as the present realities of flying — firmly puts the carrier on the side of the business traveler.  As itinerant carpetbagging brand-builders who spend a good bit of time in the air, this assertion resonates even more directly with us.

Unlike what they did with the logo and livery, the United merger marketing staff didn’t simply jam the words together into a meaningless amalgam of “It’s time to work hard and fly right.”  Instead they created a new assertion of “Let’s fly together.”  While it may not rival the “Friendly Skies” for the branding record books, it does seem on strategy with the “together” part, and the “Let’s fly” portion feels inclusive, elevated, even vaguely anagogical, as it reaches out toward the limitless possibilities in the wild blue yonder that the carrier . . . and its customers can now seize.

Here’s another idea for how the new United’s brand should look:  start over.  After all,  if ultra-low fare carrier Ryan air can carve out a visually distinctive look, so can the new United.  Think about what the word “United” really means.  It’s fantastic from a brand-building perspective.  And consider the possibilities to dramatize what a new era of aviation (willingly suspend that disbelief!) that will be ushered in by this global colossus.

Now we acknowledge that our being in the business of drawing logos and developing brand lines (among other things) could make us appear less than completely objective in assessing the wisdom of retreading existing brand elements vs. creating new ones.  But we don’t exactly have a lock on the airline design business that, say Landor does, and we like to think we can still opine relatively uncorrupted.  So come on, new United!  Develop a new look worthy of your new brand.  After all, you can’t build the airline of the future based on the trade dress of the past.

…Huh?

With this ad, Burger King effectively commoditizes itself while positioning McDonald’s as the product/taste leader. While Burger King will undoubtedly encourage some switching (though how many people will change their routine to save a buck or so?), should the chain ever wish to raise the price of their knock-off, we suspect those customers they do convert will quickly return to McDonald’s to buy the genuine article.

And is it worth what they are giving up in terms of positioning the Burger King brand?

Television viewers: McDonald’s is “where it’s at” in fast food. How do we know? Because Burger King told us so in this ad. And based on our own work with McDonald’s in a previous life, we can bet the communications folks there are basking in this free publicity.

Here’s a little gratis communications consulting for any businesses/organizations/brands that aim to dethrone the number one player in their respective industries: don’t reinforce your competitor’s strength or commoditize yourself by promoting your products and services as cheaper, copied alternatives.

Burger King is the second-largest fast food chain in the world. With this ad, they appear destined to remain #2.

There a few activities in life less rewarding than waiting for the cable installer.  Waiting for phone service is a close second.  This time, however, Verizon offered speedy, friendly and fast service while setting up our new office phone lines. Not only did we have a dedicated representative we could contact via email at any time, Verizon even followed up by phone as well. They made the process infinitely more simple and convenient than our prior interactions with at&t, which featured the customary rigmarole of long hold times and inexplicable ping-ponging among different departments. Verizon was refreshing and our customer service representative, Chandra, was a perfect brand ambassador:  competent, polite and above all, efficient.

Napoleon Bonaparte noted in 1795 that an army travels on its stomach; so too does a brand-building strikeforce.  To help with the packing and unpacking, not to mention the settling in to new surroundings while simultaneously delivering exceptional client service, we commandeered a smorgasbord of sandwiches from the Corner Bakery.  Delicious!  Nutritious!  Attractively packaged!   And even giving a hoot whether or not we enjoyed the meal.  A few hours after we picked up the catering order for our office, a Corner Bakery rep called HQ to make sure everything was satisfactory with our order . . . and to see if they could help us with any other services for the rest of the week. We were impressed with their care for customer satisfaction — along with the appropriate, but tasteful cross-sell of future sandwiches.

Every new office needs new furniture.  That’s where CB2 comes in.  Although our taste runs more to Saarinen and Eames, our current TI budget is, well, less than Kozlowskian.  Happily, CB2 the younger, hipper sibling of Crate&Barrel, provides a reasonable simulacrum of high-end mid-century design at a price point that is decidedly less than princely.  Nikki, who assisted us with our sale at CB2′s Sunset Boulevard store could not have been more helpful or willing to work within our more modest means (in stark contrast to our recent experience at Heath Ceramics), outfitting the plupart of our new digs in short order.

And as surely as sunshine leads to sunburn, crumbs follow sandwich mastication.   To tidy our new carpet, we ordered a vacuum at BestBuy.com and went to the store to pick it up.  We’ve previously extolled the virtues of Best Buy’s “Results-Only Work Environment,” but we were even more excited to experience it in action.  Not only was the vacuum ready and waiting as promised, we were in and out of the store in approximately 5 minutes. After we picked up the order, we received a follow-up email inquiring as to our level of satisfaction as well as a solicitation for feedback to improve it.

Do four positive brand experiences a trend make?  Time will tell.  Nothing about them was earth-shatteringly innovative or even extraordinary, but they were notable in aggregate because of their collective competence — that they delivered in full on what they promised.  We take it as proof that sometimes saying what you mean, meaning what you say and following through is all a brand needs to rise above the rest.

At BrandCulture Company, we have been seeing and are helping clients take advantage of a desire among consumers to shift their purchasing decisions back to smaller, local businesses. During the 80’s and 90’s, the Coca-Cola Company grew immense global market share with its “Think Global, Act Local” philosophy, but found that it became increasingly disconnected from its local bottling partners and customers.  In the beginning of the last decade, Coca-Cola began to evolve its go-to-market strategy with a “Think Local, Act Local” philosophy.  Coca-Cola continues today with its local community through its “Live Positively” campaign and Virtual Community Center .

Today, ‘buy local’ campaigns have emerged in cities ranging from Santa Clarita, California to Boston, Massachusetts – localized efforts to tap into consumers’ sense of place and home.

The “Move Your Money” campaign, while emanating from a populist dissatisfaction with mega-banks’ influence, also taps into this sense of local community.  Interestingly, among “Move Your Money” targets is Bank of America, a company that has attempted its own localized community focus, with community message boards and support of community arts.

But walk into a Bank of America branch and finding a banker that can actually do something for you is another story.  Instead of a real community focus, Bank of America’s sophisticated technology infrastructure supports a network of faceless banking professionals interacting with customers, cutting off their credit while charging extraordinary services fees. Its no wonder the Bank of America Community Message Board in this blogger’s local branch is nearly empty.

“Move Your Money,” we will follow with interest your effort to use consumer choice to spark a redistribution of power from big banks to community institutions. But let’s not forget that while local presence is important, what matters to consumers above all else is that the products, businesses and financial institutions that they choose deliver what they promise.