BRAND REBOOT

How do you reinvent a brand? Learn valuable lessons from brands that have gone
through tough times, but are still standing.
By Eileen C. Ang
(Published in Entrepreneur PhilippinesSeptember 2012 issue)

Whats in a brand? According to the Marketing Accountability Standards Board, a US-

based organization, a brand is a name, term, design, symbol, or any other feature that
identifies one seller's good or service as distinct from those of other sellers. In short, a
brand is all about standing apart from the crowd.

Differentiation, however, is the easy part. Creating a brand that can withstand the test
of time is the more daunting task. Its a myth to think that all a brand needs to do is to
stick to its rules and whatever it does best, says Jrg Dietzel, who runs a brand-
consultancy firm headquartered in Singapore. He adds, A brand can only be successful
in the long run if it has very strong foundation. It needs to answer some kind of need, so
it should be relevant to the target audience. I think more and more, it has to be credible
in the way it presents itself.

For Jeannie Javelosa, co-founder and director for creative strategies at communications
company EON, a brand is made up of intangible emotional connections that, in turn,
inspire loyalty. She adds: Branding is a romance that you create. Its psychological.
You'll say, I like it no matter what. Youll ask, How does it make me feel? It's all about
your relationship to it: how do you personally plug into the experience of the brand?

But love inevitably fades, and consumers are a fickle bunch: theyre forever on the
lookout for the new and exciting. If leading brands are unable to keep up or edge out
the competition, the expected happenstheyre knocked off their lofty perch. Being
down, however, does not mean being out. It simply means that the rules of the game
have changed, and brands must adapt swiftly in order to remain a player.

As Dietzel explains, When it comes to brand longevity, its important that a brand can
evolve. It shouldnt get stuck in the past, or when it was very successful because it was
in sync with the times and consumers expectations. A brand needs to constantly
reevaluate itself and the market.

ENTREPRENEUR Philippines picked two brands beloved by Filipinostelecoms giant Nokia

and ice cream maker Magnoliathat have struggled with changing fortunes, but are
fighting fit to regain lost groundand then some. Read on to find out how are recasting
themselves to be better, stronger, and readier to take on the future.

[STORY 1]
NOKIA: FROM LEADER TO CHALLENGER
For a certain generation of Pinoys, their love affair with cellphones started with Nokia.
The Finland-based company launched its first digital hand-held GSM phone in 1992.
Seven years later, it came out with the Nokia 7110, which could handle email and other
rudimentary Web-based functions. By 2005 it sold its billionth phone in Nigeria,
cementing its reputation as the telecoms company to beat. (Please refer to the Nokia
timeline for more detailsEditors.)

The Power Shift:

As a market leader, Nokias big advantage was success. As brand guru Dietzel points out,
With success comes not only high earnings, but also high awareness. Chances are, the
brand leader will be the first name that comes to mind in a purchase situation. In a few
short years, however, Nokia saw its number-one ranking slip away as new industry
players upped the ante by giving consumers options they didnt even know they could
have.

2007 will be remembered as the year of the Great Disruptor: Apples iPhone. It allows
you to do the basics: text and call. It can also connect you to the Internet, capture still
and video images and play music, films and other forms of media. And yes, it has a
virtual keyboard instead of a physical one, which is only fitting for a multi-touch screen.
With killer apps that make everything from shopping to work some much more
convenient and fun, it came to define the smart in smartphone.

By 2011, Apple announced that it has sold its 100 millionth iPhone unit, and its updated
iterations just keep coming. Over one million sets of iPhone 4Sthe latest model as of
press timewere sold on the first day it was launched in October 2011.

Google also threw its hat in the telecoms ring in 2008 via its Android platform. By the
end of 2010, around 32.9 million smartphones in the world were running on this
operating system, according to data from Canalys, a global research organization. And
because more and more mobile-phone manufacturers are adopting this OS, it appears
that Androids growth is unstoppable.

By the second quarter of 2011, Apple took over Nokias place as the largest smartphone
manufacturer by volume. Nokia shipped 16.7 million phonesmarking a drop of 34
percent from its record during the same period in 2010while its US competitor sold
20.3 million iPhone units.

The Turning Point:

In 2010, Nokia appointed a new CEO: Stephen Elop, the first non-Finn to take on the job.
He lost no time in letting the company know its precarious situation by sending out the
now-famous burning platform memo.

Elop admitted there are multiple points of scorching heat that are fueling a blazing fire
around the company. He also discussed how Apple and Google are dominating the
market, going from strength to strength while Nokia wasnt looking. We fell behind, we
missed big trends, and we lost time. Theres also stiff competition from the low-end
part of the market, especially in China and the developing world, he added.

It wasnt all doom and gloom, however, as Elop also stressed the companys plan to
rebuild our market leadership. The strategy? In February 2011, Nokia announced its
team-up with Microsoft to make smartphones powered by Windows.

By November of the same year, the fruit of this partnership was revealed: the Lumia
smartphone series. The Nokia Lumia 900, the most-high end product in this collection,
was first unveiled during the Consumer Electronics Show in Las Vegas in January 2012. It
entered the Philippine market in May 2012.

The Now:
Nokia is zeroing in on three key areas to pull itself up, according to Dharmesh Goshalia,
the general manager and head of sales for Nokia Philippines.

First, the company is banking on its Microsoft-supported units to regain its market
leadership in the smartphone space as it builds a complete ecosystem and creates a
user experience that carries the fun element and amazing experience that have
always been associated with Nokia, shares Goshalia.

Second is connecting the next billion people to the Internet or giving them access to
information. Third is to introduce more disruptive technologies like the Nokia
Pureview 808, a smartphone equipped with a 41-megapixel camera. The Pureview,
which uses the Symbian OS (Nokias original OS), has Carl Zeiss optics, full-screen
viewfinder, and Xenon flashfeatures that belong to a DSLR camera instead of a
touchphone.

Whats the rationale behind gadgets like this? Nokia seems to be drawing on to its
innovative roots. As Goshalia puts it: Its more to test the market, to see what people
think and feel about different technologies. [To find out] whether it could be something
we could use in the future or not. We want to bring things to people to give them an
experience of what something could or couldn't be.

While data from research firm GfK Asia showed that in the first quarter of 2012, 30
percent of all mobile phones purchased in the Philippines were smartphones, there are
still consumers who dont want or cant buy such a device. Nokia is targeting this
segment by offering affordable options and phones with capabilities like dual SIM and
touch-and-type function, Goshalia notes.

It has also narrowed its focus to help consumers decide in a market with ever-expanding
options. We've really downsized the number of products we're bringing in. The
features won't really overlap with each other. For example, in a specific price band, we'll
have one or two models instead of three or four, says Nikka Abes, corporate
communications manager for Nokia Philippines.

The Fix:
What can a brand in this situation do? Dietzel recommends that Nokia reinvent itself
into a challenger brand. He warns, however, that a mindset adjustment could prove to
be a big obstacle. He explains: Its hard to change the culture of the organization to
reflect new realities. Its almost like inventing a new brand: new attitudes, new products
and services; looking forward rather than back.

Brands making this transition should build on its history and equity. As Dietzel explains:
The advantage of having an established name is that anything new it does will attract
immediate attention, so awareness is not an issue. The challenge is to project what
consumers will want and need tomorrow. With productions cycles being what they are,
this will always be risky, and there is no crystal ball that can make the right predictions.

Nokia, at least, a long track record of major market transitions. It began in 1865 as a
wood-pulp mill. Over the years, it has shifted to rubber, electronics, and finally, mobile
telecommunications. In the Philippine market, the brand is still very strong in the
hearts and minds of many Filipinos, according to Goshalia. He also says that when
talking to consumers, he keeps encountering one question: "When's the next Nokia
phone coming?" That people still ask about whats new with company means theres
anticipationalways a good sign.

As he observes, Since we opened our office here in 1994, Filipinos have adapted to the
brand and made it their own. Even though we might not be as fast or as loud about
showing the games and apps that we have, we have them all. Were bringing products
faster and faster to market. Weve heard them (consumers), and were back a lot
stronger. The Nokia brand is resilient, just like Filipinos.

[STORY 2]
MAGNOLIA: RELEVANCE IN HERITAGE
Since 1925, Magnolia Ice Cream has lived up to its reputation as the first name in ice
cream. Generations of kids grew up waiting for the Magnolia cart to dispense Pinipig
Crunch, Twin Popsies, and other frozen delights. Its Flavor of the Month provided a
steady stream of limited-edition treats by the gallon. By the 1970s, there was also the
Magnolia Ice Cream House along Aurora Blvd. in Cubao, Quezon City: a landmark for
some, a fun place for all. Memorable items on the menu included Ernie and Bert, choo-
choo train, and banana split fudge. (Please check the Magnolia timeline for more info
Editors.)

The Tie-Up:
Decades later, Magnolias parent firm San Miguel Corp. (SMC), ran into financial
problems. In 1996, SMC entered into a deal with the Philippine unit of Nestl, the Swiss
food conglomerate. The brand was renamed Magnolia Nestl, reflecting the new
partnership.

Despite the boost, the joint venture was short-lived; SMC sold its 45 percent stake to
Nestl Philippines in 1998. Because of a non-compete stipulation in its contract,
Magnolia exited the ice cream market, and SMC leased out its Aurora Blvd. property to
its former partner.

The Comeback:
Magnolia was relaunched in 2004 and had to start from zero, according to Mauricio
Mayo Alcon, the brands general manager. During its absence, the market was taken
over by Selectaa joint venture between local manufacturer RFM Corp. and
multinational firm Unileverand Nestl Philippines. As Alcon puts it, When we came
back, all we really had was the brand. We could easily find people who know how to
make ice cream, and we had some of the old formulas. But to make the business viable,
that was different.

Manufacturing was another challenge. Because Magnolia had rented out its production
facility to Nestl, it couldnt make its own ice cream. As such, it opted for toll
manufacturinga business practice that allows one company with specialized
equipment to create finished or semi-finished products for another firm.

Its first toller couldnt handle the production volume, so Magnolia tolled with Nestl for
the next three years. But by May 2010, Magnolia opened its own plant in Sta. Rosa,
Laguna, effectively ending its arrangement with Nestl. Magnolias 1.4-hectare facility,
which cost around P350 million to build, has a manufacturing capacity of five million
gallons of ice cream yearly.

Name recall was another concern. Magnolia was practically synonymous with ice cream
during its heyday, even though its also the brand for SMC goods including chicken
products, fruit drinks, and dairy essentials like milk and cheese. But nowadays, Alcon
observes that based on research, the brand is more associated with chicken.

The Now:
Despite these hurdles, Magnolia has been growing by double digits. In 2008, Selecta
had 40 percent market share, followed by Nestl at 35 percent and Magnolia at two
percent. This year, however, Alcon estimates that Magnolia has 10 to 11 percent of the
market, nipping at Nestls heels, while Selecta remains on top, with about 50 percent.

Magnolia is determined to push harder. The secret to a really successful operation is

distribution, so we're improving ours. Were present in supermarkets and convenience
stores, but we feel we can do better. We're in Cebu, Davao, and other key cities. In the
next phase, we'll go to Palawan, Mindoro and other smaller islands, Alcon says.

Its also working on research and development. We look at our portfolio of flavors and
compare it to competition. We look at the trends and ask, What do people want? Not
just in ice cream, but across categoriesin cakes and other desserts. We also look at the
commercial and technical viability of the flavor, if our machines can handle it, he
shares. After Magnolia considers these factors plus consumer feedback, it selects two to
three to launch for a certain season. This entire process takes around six months.

Magnolia is drumming up marketing as well, especially with its Best of the Philippines
campaign. Alcon explains, The strongest thing you can say about Magnolia is that it's
Filipino. We're in a unique position to claim that, but it's hard to execute. How do you
say it that people can relate to it, na di ka naman nagyayabang [without being
boastful]? Dapat may kirot sa puso. [It should speak to the heart.]

The brand teamed up with the local governments of provinces that supply it with
ingredients like ube from Baguio/Cordillera region, mangoes from Guimaras, tsokolate
tablea from Batangas, and coconut cream from Laguna. By using sophisticated
technology called in-mould labeling, Magnolia highlights the best attributes of each
region on its scratch-proof tubs.

When we feature them on our tubs, meron na agad kaming loyal base. Tinutulungan
namin sila, tutulungan din nila yung produkto namin. [We help them, so they will also help
our products], It also ties in nicely with the Department of Tourisms Its More Fun in the
Philippines project, so its no surprise that Magnolia got support from the agency.

The Future:
Alcon is aware that Magnolias storied past can be a double-edged sword. Its a liability
because it's an old brand; it's my mother's and my father's ice cream. The advantage is
its known; its closely linked with the Filipino identity.

The brand is keen to relate more to the youth by releasing products targeted at them.
Examples include Fizza rootbeer-flavored ice lolly with vanilla ice cream at the
centerand Cookie Monster, an ice cream bar wrapped in chocolate from coating to
filling. Magnolia also got Elmo Magalona, a rising young star, as its endorser. He has
thousands of Twitter followers, and hes a very wholesome guy. The uptick in our
volume is as we expected, reveals Alcon.

A revival of sorts is under way with the planned launch of an ice cream parlor at the
Robinsons Magnolia Mall, which is located at Magnolias old facility. According to Alcon,
They built a special place for us in the middle of the park. We'll bring back some of the
old favorites on the menu, but we will also have twists and new items. It will become
the flagship store. The high-end mall is expected to open in mid-2012.
The Fix:
Dietzel, who has a Manila office for his consultancy business, suggests that a heritage brand
like Magnolia be re-interpreted to reflect its new, more modern positioning. It all goes back
to discovering the brand essence. Then its a question of finding current ways to fulfill the
same need, and to communicate that the brand hasnt changed at its core.

EONs Javelosa, who is a culture and sustainability advocate, agrees, noting the folly of
leaning too much on the past. Our attention span is so narrowed down because of the
speed at which we're going. In time, people get bored with nostalgia because they like
looking to the future. She also thinks Magnolia can develop a line that's aligned to a
holistic way of living because everything is going in that direction.

Alcon says that for the company, its more important to deliver on its brand promise
than to be on top again. We always want to give consumers the best, to make ice
cream worthy to be called Magnolia.

[SIDEBAR 1]
The Philippines: Walk the talk
Its more fun in the Philippines, according to the DOTs latest campaign. It would be
more fun, however, if we got a bigger slice of the tourism pie. Based on data from the
United Nations World Tourism Association (UNWTA), the Philippines got 1.7 percent of
international arrivals (roughly 3.5 million tourists) in the Asia-Pacific region in 2010. In
comparison, China leads with 27.3 percent, followed by Malaysia with 12.1 percent,
Thailand with 7.8 percent, Singapore with 4.5 percent, Taiwan with 2.7 percent, and
Vietnam with 2.5 percent.

Tourisms place in our economy shouldnt be underestimated. This industry is a major

job generator, responsible for an average of 9.7 percent of total employment from 2000
to 2010, according to the National Statistical Coordination Board (NSCB). During the
same period, the NSCB also found that the sector accounted for approximately 5.8
percent on average of our gross domestic product (GDP) annually. In money-speak,
tourisms contribution to the 2010 GDP is worth P518.5 billiona 13 percent increase
from P459 billion in 2009.

Things seem to be looking up, if recent figures from the DOT are any measure. From
January to March 2012, the Philippines welcomed 1,148,072 visitors, breaking previous
records. In contrast, we only had 989,501 tourist arrivals during the same three months
last year.

In addition, Boracay topped US-based Travel+Leisure Magazines 2012 Worlds Best

Awards, a reader-based poll. The popular beach destination, famous for its crystalline
waters and fine white sand, got a rating of 93.10, edging out Indonesias Bali, which
came in at second with 90.41.

These encouraging developments, however, are not enough, so how can we improve
our branding? Javelosa reasons that we should start at the beginningourselves
because the first touchpoint is a Filipino, in any part of the world. She adds, Carry the
country because you're representing it. Just going by that, you are an ambassador.
Tourism is the responsibility of everyone.

Dietzel, himself a frequent visitor to the country, agrees. I think Filipinos are, overall,
the best of the brand. Whether theyre working as a domestic worker in Singapore or as
staff in Europe and America, theyre easy to recognize, especially when they talk to you.
That kind of friendlinessyou cannot see in anybody else. It goes a long way in making
people around the world go, Wow, this is really a place I want to visit.

While he finds the It's more fun campaign clever and very relatable, he warns that
infrastructure problems are hurting the Philippine brand. Many want to come, invest
or work here because the people are great and the country has a lot to offer. But at the
same time, whats holding them back is that whole infrastructure. They think, Oh, Im
going to be stuck in traffic. I cant just take a taxi; maybe Ill get kidnapped. The rough-
and-tumble style of Philippine politics, which is always in the news, also doesnt help.

Javelosa stresses that the government should go beyond tourism and create a proper
country brand. To do that, setting up a branding council is a must, and it should have a
multi-sectoral, multi-industry approach. It's not just about a slogan. It's how we position
ourselves for better competitiveness in the world ranking of countries. Whenever there's
something international, there must be a clear message that we project.

She explains further, A country brand is something that everybody should be able to use. Its
created by all experiences of the country. So our brand is really us, the people. Everything
about us is relational, so we keep going back to our values, to the DNA of the Filipino.

[SIDEBAR 2]
Nokia timeline
1871 to 1898
Fredrik Idestam, a mining engineer, opens his second wood-pulp mill on banks of the
Nokianvirta River, which inspired the name of his enterprise, Nokia Ab. Around two
decades later, Eduard Poln establishes Finnish Rubber Works. It eventually becomes
Nokias rubber business, making everything from waterproof boots to car tires.

1912
Finnish Cable Works, set up by Arvid Wickstrm, opens. Later on, it becomes the
foundation of Nokias electronics and cable venture.

1967
Jointly owned since 1922, Nokia Ab, Finnish Cable Works and Finnish Rubber Works are
consolidated into one company: Nokia Corp. Its involved in five sectors: cable,
electronics, forestry, rubber, and power generation.

1982 to 1984
Nokia launches Mobira Senator, the worlds first car phone, in 1982. Nokia DX200, the
companys first digital telephone switch, also becomes operational. Two years later, the
company introduces the Mobira Talkman, a portable car phone that looks like a military
field telephone.

1987
Europe adopts the Global System for Mobile Communications (GSM) as the standard for
digital mobile technology. Offering high-quality voice calls, text-messaging support and
international roaming, GSM sets the stage for a mobile revolution.

1992
Nokia 1011, the companys first digital hand-held GSM phone, enters the market. Nokia
also decides to concentrate in making mobile phones and telecommunications systems.
Its cable, rubber and consumer electronics units are eventually divested.

1994 to 1998
The 2100 seriesthe first phones with the Nokia Tune ringtoneis launched in 1994.
An estimated 20 million phones will be sold worldwide, exceeding Nokias target of
400,000. Four years later, Nokia is the global leader in mobile phones.

1999 to 2001
Nokia releases products that redefine what phones can do. The Nokia 7110, a phone
equipped with basic Web-based functions like email, hits the market in 1999. Two years
later, consumers get their hands on Nokia 7650, the companys first phone with a built-
in camera.

2002 to 2005
The 3650, Nokias first video capture phone, is introduced. Shortly after comes the 6650,
the first Nokia phone with third-generation (3G) technology. 3G phones allow users to
surf the Net, download music, and more. After three years, the company sells its
billionth phone in Nigeria.

2009 to 2010
For two years, Nokia is hailed as the worlds most sustainable technology firm by the
Dow Jones Indexes. At the same time, the company struggles as smartphones become
dominanta development it didnt see coming.
In September 2010, Stephen Elop becomes Nokias president and CEO, the first non-Finn
to take on the role. He releases a memo calling on the staff to join the company as it
takes a bold and brave step into an uncertain future.

2011
LumiaNokias smartphone linecarries the Microsoft Windows 7 operating system.
The Nokia-Microsoft partnership aims to create an ecosystem to compete with Apples
iOS and Googles Android.
2012
The Nokia Lumia 900, its top-of-the line smartphone. In the Philippines, celebrity Kris
Aquino is chosen as the Nokia Lumia brand ambassador.

[SIDEBAR 3]
Magnolia timeline
1925
San Miguel acquires the original Magnolia ice cream plant at 526 Aviles St., Manila.

1926
Magnolia finds a new home on Echague St. in Quiapo, Manila. Shortly after, Magnolia
opens ice cream parlors across the country, igniting the Pinoy love affair with the
creamy treat.

1952
The company expands its plant and begins to produce popsicles. This will be followed by
other iconic frozen delights like Twin Popsies, Pinipig Crunch, and Drumstick.

1954
Magnolias Flavor of the Month concept is introduced, and helps establishes the brand
as a champion of new flavors and exciting concoctions.

1970
The company completes a 5.22-hectare complex along Aurora Blvd. in Cubao, Quezon
City, housing its ice cream and dairy production line. The facility is also home to the
Magnolia Ice Cream House, which eventually becomes a favorite destination among
generations of Filipinos.

1996
Troubled by financial woes, San Miguel Corp. (SMC), the firm that owns Magnolia,
partners with global ice cream giant Nestl. The resulting brandMagnolia Nestl
lasts for only two years.

1998
SMC exits joint venture with Nestle. After this, the company leases out the Magnolia-
Aurora Blvd. lot to Nestl Philippines. In keeping with the non-compete clause in its
agreement with Nestl, Magnolia leaves the ice cream market.

2004
The non-compete period lapses, and Magnolia is re-launched in October. This time
around, the first name in ice cream finds itself competing with tough rivals Selecta
owned by a joint venture between international conglomerate Unilever and local firm
RFM Corp.and its old partner, Nestl Philippines.

2008
SMC sells its Aurora Blvd. property to Robinsons Land Corp. (RLC), a unit of taipan John
Gokongwei Jr.s JG Summit Holdings, in a deal worth P1.5 billion. RLC plans to turn the
old Magnolia site into a high-end residential and commercial complex.

2009
Magnolia signs up boxing great Manny Pacquiao and his family to endorse its ice cream
and other dairy products.
It also comes out with ice cream tubs emblazoned with renowned paintings by National
Artist Fernando Amorsolo. The featured works, which include Mango Vendor (1930) and
Planting Rice with Mayon Volcano (1949), are paired with distinctly Pinoy flavors like
macapuno ube swirl and quezo primero.

2010
SMC opens its own ice cream plant in Sta. Rosa, Laguna, effectively ending its toll-
manufacturing arrangement with Nestl Philippines. The 1.4-hectare plant, which cost around
P350 million to build, can produce five million gallons of Magnolia ice cream a year.

2012
Magnolia signs up teen star Elmo Magalona as a brand ambassador, endorsing Fizz Rootbeer
Float and Cookie Monsterthe newest products under its Frozen Delights line.
The company is expected to open a new ice cream house in Robinsons Magnolia, which
is slated to open this year.