MARKETING FOCUS: The new establishment - Microsoft, Nike, The Body Shop and Virgin have joined the establishment they set out to challenge Amanda Richards reports on the problems of rebel brands that have grown up.

Three weeks ago, Microsoft faced the threat of a dollars 1m a day fine in the US for allegedly using unfair business tactics and breaking a 1995 promise not to abuse its monopoly in computer software. The US Justice Department’s claims have yet to be proven, but there are already reports that many of Silicon Valley’s leading lights are closing ranks against the computer software giant.

Three weeks ago, Microsoft faced the threat of a dollars 1m a day

fine in the US for allegedly using unfair business tactics and breaking

a 1995 promise not to abuse its monopoly in computer software. The US

Justice Department’s claims have yet to be proven, but there are already

reports that many of Silicon Valley’s leading lights are closing ranks

against the computer software giant.



Bill Gates won the hearts and minds of many in the computer world by

taking on IBM and winning. But his many fans might not take so kindly to

this latest development.



Like other rebel brands formed in the 70s by charismatic entrepreneurs,

Microsoft has become a member of the ’new establishment’ - part of the

monolithic system of big business that it set out to challenge.



Arguably, this is also true of Nike, Virgin and The Body Shop - all

formed around the same time as Microsoft and now well into responsible

adulthood.



These brands are all experiencing image problems, which poses

interesting questions for companies setting out on a similar path.



When being ’new’ and ’anti-establishment’ and therefore ’better’ was the

source of your success, how do you protect yourself when you lose the

newness and have become part of the very establishment you rebelled

against in the first place?



Nike has recently attracted criticism on several fronts, all of which

result from it flexing its corporate muscle too hard.



Articles and programmes critical of the company’s employment practices

in Asian factories have appeared in the US press and on television, and

the Internet has become a hotbed of anti-Nike activism. There is a

’Boycott Nike’ Web site, dedicated to consumer criticism.



One article, in the Wall Street Journal, headlined ’Nike Labor Woes

Leave Image Muddied’, highlighted this quote from an American image

consultant: ’Nike is a dollars 6bn company that sells dollars 140 shoes

made by people earning dollars 1.50 a day - that’s difficult for the

public to reconcile.’



Another article in the New York Times, ’Youthful Foes Go Toe To Toe With

Nike’, concentrated on ’dozens of young people planning to dump their

old Nikes at a Nike store to protest at what they say is the shoe

company’s double exploitation of the poor.’



Earlier this year, Nike attracted further criticism for allegedly

attempting to influence the transfer of Romario, the Brazilian football

star, from Barcelona to Inter Milan. The company has strenuously denied

that it was involved in the negotiations, saying that the fans would

have resented it for doing so. But the rumour and the impression of Nike

as ’control freak’ persists.



Evidence, perhaps, that the company is starting to believe in its own

mythology and is becoming too arrogant. Some observers certainly think

so. US market researcher Hazel Kahan, who does work for IBM, says: ’I

think we are seeing a backlash here against Nike. You have got to

respect the consumer and I think there are signs that Nike is not doing

that.



It is becoming too arrogant.’



Victim of success



Patrick Smith, marketing director of Sampson Tyrrell Enterprise, who

worked on Nike in the mid-80s, says that it could become a victim of its

own success: ’You can soon lose your credibility in the youth market if

your brand has too much exposure. With Nike, it’s got to the point where

you don’t want to see another ’swoosh’.’



A Nike spokesman says such criticism is par for the course when you are

the biggest company in the sector. ’We employ 500,000 people across 31

different countries. Occasionally, you are going to get something

wrong.



What is important is that you rectify the situation.’



He says Nike has no problem keeping its original proposition fresh.

’Nike is about great products and being passionate about sport. Every

sportsperson wants to improve on their previous performance. We are the

same and we employ people who share the same philosophy.’



In the UK, Virgin - that archetypal anti-establishment brand - will be

looking closely at Nike and Micosoft’s problems. Virgin is different to

Microsoft and Nike in that it does not dominate any one market and can

still play the underdog fighting the establishment across all the

sectors in which it operates.



But according to Creenagh Lodge, chairman of brand consultancy CLK,

Virgin has reached the stage in its life where its honeymoon with

consumers is in danger of ending. ’I think people are beginning to

wonder if Virgin can continue to deliver on so many fronts. It’s only

going to take one or two big failures for serious questions to be

asked.’



Virgin’s West Coast Line train service, which is beset with reliability

problems, is seen by some as taking the brand into this danger zone.

Such was the state of the line when Virgin took it over from BR that it

has struggled to work its magic and the service is still unpopular. New

rolling stock - and the interim solution of using spare Eurostar trains

- could soothe the wound, but lasting damage to the brand may have

already been done.



Virginal values



Virgin, however, is addressing the issue of keeping its brand values

fresh as it grows and becomes more successful. James Kydd, marketing

director of Virgin Trading, says the company has a decentralised

structure with lots of small units or companies where people are given

more responsibility than they would normally get. ’We work to keep an

atmosphere where people are having fun and generating ideas.’



Kydd admits that arrogance is an issue in any successful

organisation.



’You have to have it in the front of your mind. It is easy for people to

start thinking that they should have bigger offices, bigger BMWs and so

on. It’s like a disease and we try to protect people from that

mentality.



It only causes more politics and we think it is better for people to

have greater responsibility.’



Of course, all anti-establishment brands are sitting targets. The

marketing spin they are able to put on their rebellious or

consumer-championing credentials means that they must be prepared to

suffer in the same way when they get it wrong. And the more successful

the company, the bigger the hit will be.



This is a natural human reaction, says Lodge. ’Whenever a crusading

innovator becomes mega-rich, then people get suspicious. Their eyes

narrow, their ears prick up, and they look out for mistakes.’



Equally, the more reliant the rebel brand is on one visionary leader -

whether Bill Gates, Richard Branson or Anita Roddick - the more open to

personal attack it becomes. Gates’s immense wealth might already be

damaging Microsoft’s image and Anita Roddick’s stance on opposing animal

testing has been an open invitation to opponents hoping to find

discrepancies.



In September 1994, Jon Entine launched an attack on the company’s

ethical stance in Business Ethics magazine. The article sparked a storm

of controversy and revealed a vulnerable chink in The Body Shop’s

armour.



Like any successful brand, anti-establishment ones have to be built on

sustainable values, which must be integral to the company’s

business.



If you start out as a revolutionary then you have to remain one. Merely

serving your audience once you have captured its interest is not

enough.



Pam Robertson, director of strategy at Interbrand, says:

’Anti-establishment companies can remain successful provided they keep

moving the brand on and are sensitive to what consumers are

thinking.’



She believes that The Body Shop failed to evolve its brand and paid the

price. ’The ethical positioning was great, but then it started to be

eroded as other organisations adopted similar policies. The company was

too narrowly focused and not thinking enough about where the business

was going next.



It had a one-product idea.’



Robertson argues that one of the toughest markets faced by

anti-establishment companies is the internal audience. ’Staff can become

seriously disaffected if their company does not keep in touch with their

expectations. The result is that the company loses its energy,’she

says.



This might serve as a lesson to New Labour, which sold itself on the

idea of a new, more accountable and caring government but now faces the

danger of not being able to live up to the new, firebrand image both in

the local and the national party. Its anti-sleaze stance has already

been put to the test and some pre-election promises, including banning

all tobacco sponsorship of sport, are beginning to crack.



Bad for one’s image



Provided there is an underlying vision, companies which challenge the

status quo, are rebellious, and promise to serve the consumer better can

be hugely successful. It should not be forgotten that despite their

shortcomings, Microsoft, Nike, Virgin and The Body Shop are meteoric

brands and an inspiration to others.



But if the anti-establishment brand becomes too arrogant and is involved

in anti-competitive behaviour, its image can be fatally undermined.

These companies can only afford a couple of mistakes.



Rebellious companies can trip up by becoming too wrapped up in their own

mythology and believing themselves to be invulnerable. The pride and

courage of the young upstart must not be allowed to turn into arrogance

in later life.



Bill Gates should not forget that someone, somewhere, will be planning

how to do to Microsoft what he did to IBM.



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