How Motorola Squandered a Brandbuilding Opportunity
It Focused on the Razr as a Product Rather Than a Brand
ByAl Ries
Published: January 22, 2007
Motorola stock recently fell 12% after the company warned of disappointing holiday sales. "The trendsetting Razr has lost its buzz in the marketplace," reported the
By focusing on the Razr as a product rather than as a brand, Motorola made a mistake. | ALSO: Comment on this column in the 'Your Opinion' box below.
Associated Press, "and Motorola's efforts to come up with a new killer product have so far not paid off."
Better brands
Like many companies, Motorola has focused its efforts on building better products, not on building better brands.
If you just build a better product, eventually some other company is going to build a better product than yours, and your stock will fall like Motorola's did. If you build a better brand, it doesn't matter whether somebody else builds a better product or not. A better brand has the perception of being a "better product."
Nor does it matter whether another company copies your product and sells it cheaper. Most consumers won't buy the cheaper product because "it can't be any good."
Would a watch company become successful by trying to build a better watch than Rolex? Would an energy-drink company become successful by trying to build a better energy drink than Red Bull? I think not.
Initially an enormous success
By focusing on the Razr as a product rather than as a brand, Motorola made a mistake. Introduced in 2004 as the first ultra-thin cellphone, the Razr initially was an enormous success. By 2005, the company was on a roll, with a net income of $4.6 billion and a net profit margin of 12.4%.
Then Motorola launched a blizzard of products, along with an assortment of brand names. In addition to Razr, Motorola introduced Krzr, Slvr, Pebl and Rokr. To add to the confusion, the company has changed those names to MotoRazr, MotoKrzr, MotoSlvr, MotoPebl and MotoRokr. There's also MotoSlim, MotoMing and Motorola Q.
That's not what Apple did when it introduced the iPod, the first brand of high-capacity MP3 player to get into consumers' minds. Apple markets many different MP3 models, but the brand name is always the same: iPod.
'But it's not an iPod'
Today you can't compete with Apple by building a better MP3 player. Too many consumers would say, "It's nice, but it's not an iPod."
Furthermore, consumers buy brands, not companies. Unlike Motorola's MotoRazr, Apple didn't try to drag its corporate name into its MP3 product by calling it the APPiPod.
This is the second time Motorola has made the same mistake. In 1996, the company introduced StarTac, the first clamshell cellphone.
What builds a brand, anyway? Invariably, it's an initial burst of publicity that puts the brand into orbit. Once there, it can stay in orbit for decades with a little advertising help from time to time.
That's what happened with Motorola's StarTac. PR turned the brand into a status symbol with the celebrity crowd. PC World listed StarTac at No. 6 among its 50 greatest gadgets of the past 50 years.
Potential of StarTac
StarTac should have become a brand name, not a model name. Furthermore, Motorola should have used the name for its entire cellphone line. StarTac could have been just as powerful a brand as iPod, PlayStation, BlackBerry, Palm or Nokia.
Multiple names are not necessarily better than a single brand name. Multiple names cause confusion.
Should Nike have called its basketball shoes "Bike" or its soccer shoes "Sike?" Should Rolex have called its diamond-encrusted watches "Dolex" or its women's watches "Wolex?"
That would have been Krzr.
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Al Ries is chairman of Ries & Ries, an Atlanta-based marketing-strategy firm.