What a Bratz

Apparently, dolls can fight dirty.

Designer Carter Bryant came up with the original concept idea for a new line of urban, hip, and flirty dolls sometime in the late 1990s. In 2001, MGA Entertainment picked up the line, christened them "Bratz," and launched a marketing phenomenon.

Anyone with young girls at home knows the rest of that story.

But there was a bit of a legal problem. During the time Bryant came up with the designs, he was under contract with Mattel - the owner of the uber-successful Barbie doll franchise.

Anyone with even a cursory knowledge of intellectual property and contract rights can guess the rest of this story.

A few weeks ago, a California court ruled in Mattel's favor.

So what happens now? From a branding perspective, it is what has already happened that is significant for Mattel. But more on that in a moment. Understanding the legal ramifications of the court's decision will provide some needed context.

For that, I contacted Adam Soffer - an IP law specialist at local boutique Soffer Charbonnet.

Typically, he said, the court has two options. First, the court could issue an injunction, essentially stopping sales of the infringing product. That could happen, but it's tough. Pulling offending product off the shelves involves a higher burden of proof than the second option: Awarding monetary damages. Of course, the court could do both. That is yet to be seen.

On its surface, the "money" option appears the easiest path, until you start to think about how you come up with a number. The court has to determine past damage - in other words, what profits would Mattel have earned had Bratz not been on the market - plus profits the line earned above and beyond aforedetermined cannibalized profits. Needless to say, that gets complicated. Expert witnesses will need to determine the extent to which Bratz sales impacted Barbie sales. What is the total market size? What were the two lines' respective market share? What do the trendlines look like? Very complicated.

Finally, (unless an agreement has been reached to this effect) the court must also determine future damages. In other words, what will Bratz earn into the future that Mattel - as part-owner of the IP - has a right to. Probably some percentage of earnings. Even more complicated.

And just when I thought I had a handle on this one, Adam brought up the inherent problem with "simple" IP. Intellectual property such as computers, cell phones, or heart monitors are what is called "complex" IP. In other words, you can't just "look at it" and make a reasonable argument that come up with that unique idea out of thin air. But dolls are different. You could make the claim (and doubtless MGA tried) that Bryant simply "thought it up on his own." Had it not been for the contract employment issue, they likely could have won. Not that uncommon, Adam says.

A brief warning (Adam's words, not mine): IP, employment, and contract cases - like this one - are always complicated. This one is no different. It should go without saying that if you find yourself or your company in any sort of similar situation, don't try this at home. Seek professional legal advice.

But as I mentioned earlier, whatever the court determines, the marketing damage already has been done.

To find out why, we need to ask ourselves a couple of important questions.

First, what made Bratz so successful? And second, how was this new product able to outflank the 50-year veteran Barbie so easily?

A quick comparison between the two dolls begins the discussion. Barbie is a classic. She has done it all and "been" it all. For many young girls of that generation, Barbie was the epitome of style and beauty. But "hip" and "modern"? No. That's where Bratz comes in. While many commentators used to lament that Barbie dolls were a bit - shall we say tactfully - out of proportion, Bratz dolls instead feature oversized heads, expressively painted eyes, and luscious lips. They are dressed in the latest urban streetwear. They are flirty, gritty, and shall we say, bratty.

Now, let's take a look now a the brand focal point - the emotional connection the audience has with the product. For girls (not collectors - they are a different animal), the emotional anchor to Barbie is, well, Barbie herself. Yes, she has "friends," but Barbie is the singular star of the show. Bratz dolls, by contrast, have no single focal point. That means a young girl can find the doll she most identifies with and still remain "in the club" of Bratz fans among her peers.

And did we mention "identification"? This is the most damning criticism of the Barbie franchise. While many attempts have been made to "multi-culturalize" Barbie dolls, for all intents and purposes, the popular image of Barbie comes in one color: White. Caucasian. I have news for Mattel. The latest estimates put non-Hispanic Caucasians at a minority of the U.S. population by 2042. By contrast, Bratz launched as an ethnically diverse mix of girls - a much better reflection of her target market and much better positioned into the future. In simple terms, that means a girl can find a doll who looks like her. That's a pretty powerful emotional hook, and a key to the success of the Bratz line.

All of that rationale comes down to this: Whether their moms approve of exposed navel rings or not, girls like Bratz dolls. Better than they like Barbie dolls. To the tune of half a billion dollars per year for Bratz and a 21 percent decline for Barbie in 2007.

It is pretty clear: Mattel got caught sleeping. And that's not too surprising; with a 50-year undisputed queen of dolls in the product line, why would you listen to an upstart designer with a gritty, multi-ethnic, urban concept?

But as it happens so often in the marketplace, the sleeping giant was caught off guard. In less than a decade, Barbie has been made largely irrelevant - old, stodgy, and completely repositioned out of the top spot.

It seems like Barbie has finally started to look her age.

Pro Cycling is No Dope

When you think of illicit performance enhancement in sports, what comes to mind?

Pro baseball, certainly. Plenty of "enhancement" there. Pro football? Sure. Olympic sports? Of course; it's hard not to notice the occasional byline about an expelled athlete in the lead up to the Beijing games.

But one sport has them all beat: Professional cycling. The guys with the bright tights and fast bikes.

In fact, public perception of the sport is so linked to doping, even the recently completed Tour de France couldn't overshadow an undercurrent of doping allegations. (Can you even name who won this year? Can you remember the doping stories? Enough said.)

[A word about semantics. The terms "doping" and "steroids" essentially refer to the same practice - performance enhancement - only with a different focus. "Doping" typically refers to enhancement in endurance sports - cycling, running, etc. Doping compounds help the body transfer oxygen to the blood, extending normal endurance thresholds. "Steroids" typically refers to enhancement in strength sports - football, baseball, etc - where bulk strength is key. Steroids allow muscles to recover from punishing workouts faster. The quicker the recovery, the faster you get back into the gym.]

But wait a second. Major League Baseball had congressional hearings. There was a time last year that you couldn't read the sports page without a baseball steroid allegation. There was even the damning Mitchell report, naming the names of some of today's (and yesterday's) biggest stars.

Yes, all of that is true. But what about today? As soon as new storylines emerge, steroid allegations fade into the background. Yes, there is new "testing" in baseball, but the players' union fights hard to keep results out of the public eye. And they seem to know what they are doing. They know, from a public relations perspective, steroid allegations are a "flash in the pan" crisis: High intensity, but little staying power. Just be patient, they counsel players, and you can get back to the business of earning endorsements.

So that got me thinking, why do performance enhancement allegations seem to dog professional cycling like they do no other sport? It doesn't seem fair.

My first thought was the international focus of the sport, versus a primarily American perspective for baseball and football.

That could be part of it. International pressure certainly shines an intense spotlight on competition. In American sports, the outcome prevails. If a player "juiced," but went on to win it all, Americans tend to remember (and reward - like it or not - with glory, endorsements, and hard cash) the latter. The same can't be said on the international stage. Competition and fair play hold a stronger procedural footing.

But even there, the logic did not seem to add up.

In the Olympics, the international stage on which many might claim doping and steroid use is rampant, one Olympic gold medal tear-jerker story pushes all of those allegations out of the public eye.

So the question remains. What is it about pro cycling that can't shake its bad vibe?

Being at a bit of a loss, I called on local road cycling guru Blayne Puklich of excelcycle. What he said surprised me.

I came to learn that professional cycling actually wants it this way. Riders see it as a badge of honor that their sport places so much emphasis on cleaning up its act. Average riders talk about doping allegations, sure, and they realize that most people outside the sport must think all pro riders juice, but they don't care. They know the truth.

Blayne reminded me of American Tour de France winner Floyd Landis (remember him?). After he was caught doping (allegedly), pro cycling not only stripped his title, but also banned him from the sport for two years.

In pro baseball, that would be the equivalent of catching Barry Bonds using steroids (allegedly), expunging his home run record, and banning him from play for two years. Could you see that happening?

Even Lance Armstrong, pro cycling's greatest American hero in a generation, has been trailed incessantly by doping allegations. They won't even leave him alone.

Then it occurred to me: Pro cycling is bringing this on themselves. On purpose. Let me explain.

Pro cycling is taking the long view. It wants to be seen as pure sport. To do that, it needs to take illegal performance enhancement seriously. And the only way to be serious is to crack down hard. No games of chicken. No riders' unions. No fooling around. If you are caught, you are tainted, and you are out.

And if you think about it, this makes sense. Professional sports have been slipping more and more into the "entertainment" category for the past two decades. League marketers haven't failed to catch the intense popularity, ratings, and money-making ability of pseudo-sports like the WWE. If you've noticed, they've worked in similar tactical elements. Personal drama. Love triangles. Emotional backstories.

While pro sports in the United States haven't quite sold their soul, they are on a very slippery slope. If they are not careful, they will lose their grounding in reality, and become yet another entertainment phenomenon to rise and fall with the fickle tide of public tastes.

Now think about what pro cycling is doing. They might be taking it on the chin now, but in 10 years, the sport's image will turn around. By contrast, the image of other pro sports is likely to deteriorate.

Branding is all about authenticity - in this case authenticity in pure competition - and cycling will have it. The others won't. And that's a truth they will be able to build a successful business model on.

By the way. Spanish rider Carlos Sastre won to '08 tour. Clean.

Reverse Mortgage: Hero or Villain?

Perhaps it is just poor timing.

Just as the word 'sub-prime' became part of the everyday vernacular, just as mortgage industry giants fell, and just as the Federal Reserve wrested new authority over the market, we have a new mortgage product on the scene.

It is called a 'reverse mortgage,' and it is not really that new.

In the days of heady profits and rapidly escalating home values, no one saw much value in selling them. No wonder, really. Reverse mortgages are reasonably complicated financial instruments. By statute, they apply only to a narrow segment of the population. They were simply too much trouble. But that has changed.

For a primer, I tapped Tony Weick, the resident expert on reverse mortgage products at Bell Mortgage.

Tony reminded me reverse mortgages are not, in and of themselves, 'good' or 'bad' products. Just like FHA, Jumbo, VA, and sub-prime, reverse products fit certain buyers under certain circumstances.

In short, a reverse mortgage is exactly what it sounds like. Instead of you making payments to the bank to earn back the equity it owns, the bank pays you each month to earn the equity you own.

A few caveats (aren't there always?): Reverse mortgages are only available to homeowners aged 62 and over who own - or mostly own - their own property. Also, homeowners cannot 'buy into' a reverse mortgage; it must be a refinance (although just-signed legislation may ease some of that burden). Finally, buyers must complete HUD-authorized coaching session before they are allowed to begin the process. On the surface, smart precautions.

On the plus side, reverse mortgages allows homeowners to stay in their home and access its equity without selling the home outright. Another major bonus, reverse mortgages are non-recourse annuities. Essentially, you and the bank enter into a sort of grim game of chicken. Based on your age, the bank determines your life expectancy, and uses that number to set a maximum dollar payout and monthly payment. If you live past your life expectancy, you win. The bank must continue paying you each month, even if the amount they pay goes beyond the value of the home itself. In the end, they are left holding the bag. But if you expire early, you also "win" (or more specifically, your estate "wins"). The bank has only the lien on your property for the amount it paid out to that point. In other words, the game is loaded in your favor.

Not bad.

So what does the bank get?

For one, the up-front fees are a bit heftier than 'forward mortgages' (Tony's word, not mine). Yes, you never make a payment, but that means the interest and fees capitalize, essentially limiting the total amount you could access. In other words, you (or your estate) could feasibly get more money out of your home if you waited it out (read: you died) or sold it early (read: move into another home/assisted living arrangement/etc.). Of course, all this depends on your tax situation.

Tracking so far?

If not, I don't blame you.

Tony and I spent 45 minutes on the phone working through the details. Any errors or omissions in the above description are mine, not his. And believe me, there are a lot more details.

And therein lies the issue.

To get good at reverse mortgages - from a professional's perspective - takes time, patience, and training. Bell takes it pretty seriously. As do many other organizations. But can you envision a scenario in which loan officers looking to survive in today's market will cut corners to open up this potentially lucrative market? I can.

The image of a few bad apples in the market, however, is nothing compared to risk when you begin to market to seniors.

That game is fraught with peril.

First, you need to spend considerable energy building trust. That takes time and money. And while there may be many more seniors in the coming years given demographic changes, they also are savvier about money than at any point in history. Add to the mix involved and financially adept adult children, along with the emotionally charged inheritance/family issues they bring, and you have an unrivaled marketing challenge.

More vexing, however, is the risk the industry takes the more it promotes this product. Coming off the heals of the sub-prime mess, mortgage players always could claim, "we should not have lent to unqualified buyers, but hey, they lied on their applications too."

Not so when marketing a financial product to seniors.

You have what I call the "swampland in the Sunshine state" image problem. Whether the industry likes it or not, consumers have a long memory of real estate scams targeting seniors throughout the 1970s and '80s. Fair or not, as a financial product for seniors, reverse mortgages have been greeted with more than a healthy dose of skepticism.

Senior Lending Network (as seen on TV), among many others as of late, is running up against this problem. Heavily promoting reverse mortgage products, it places its entire industry at risk if word gets around that seniors are getting the short end of the stick.

This time, there would be no shared blame. The public would consider itself fooled twice, and would likely not take kindly to the charge of "bilking grandma out of her home."

Talk about an emotional pressure cooker.

Mortgage types had best tread very carefully here.

From Breast Implants to Flat Roof Repair

Everything old is new again.

The rough economy blues have spawned the resurgence of a very old idea. Only this time, the classic barter network is back with a new twist. Reincarnated as a way to drive new business, firms such as Pittsburgh's Green Apple Barter have gained considerable airtime as of late touting itself as a path out of broader economic woes.

It works like this.

Barter networks are - essentially - closed commerce networks. As such, when you join, you have a direct incentive to do business with others in your group. For illustration, let's pretend you are a roofing contractor. When you perform the service for another member of the barter network, you don't receive money. Rather, you receive "barter credits". (Each network works a bit differently, but this is a common approach). The member who receives the service pays for it in cash - or if they have them - barter credits of its own. In turn, you can use the barter credits you receive for goods or services you need within the group. The network manager takes care of the tax implications of the transaction, sending 1099 forms to each member at the end of the fiscal year, as well as takes its own cut (somewhere between six and 10 percent).

Got all that?

I know what your thinking. This doesn't sound like a "barter" at all. I remembered bartering quite differently. When I was a boy, we had a barter network (of sorts) for baseball cards and the like. You had a player's card I wanted. I had a player's card you wanted. We struck a deal. End of transaction. That was a barter.

But this is different. Webster's defines "barter" as "the exchange (goods or services) for other goods or services without using money." And by that definition, they are (technically) correct. However, that same dictionary defines money as "a current medium of exchange in the form of coins and banknotes" and secondarily "the assets, property, and resources owned by someone or something." I think barter bucks qualify as money. But that's just semantics.

What is really going on here is somewhat of a rebirth of micro-economies - groups of people getting together, separating themselves from the larger economy, and transacting amongst themselves.

The benefits, on the surface, are clear.

The barter network is, as it is being promoted, a closed system. Psychologically, we are wired to want to "belong," and the barter network plays to that need. The larger the network gets, the more choices you have (yes, Green Apple Barter sports plastic surgeons as well as flat roof repair, funny as that might sound). That means, in contrast to my baseball card story, you and I do not need to have exactly what the other wants. Finally, and perhaps most alluringly, if your company has unused capacity (read: missed opportunity cost) you can sell services to the barter network rather than see them go unused. It is not money, but at least you get something.

From a "green" perspective, localized barter networks could also reduce the micro-economy's impact on the environment by reducing transportation and fuel costs.

Still sound a bit fishy? Yes. But.

Closed buying networks can work. Case in point: I have a client in a niche B2B industry. Their company is a member of a semi-secret closed buying network. At first suspicious, my client has enjoyed considerable success. The network is well organized, well managed, and tightly knit. In stark contrast to the vast variety of goods and services promoted in other barter networks, this group handles only goods and services directly related to their specialized industry. In other words, they are not trying to remake the broader economy, only make their niche more efficient.

Outside of situations like that one, does the barter network tickle your suspicious bone?

It should. Here's why.

Companies drawn in by barter networks at this economic time are likely to be struggling (especially given the way barter networks are promoting themselves). In much the same way multi-level marketers prey on people down on their luck, barter networks seems to be dredging the bottom of the barrel for those firms capitalism would consign to failure.

It comes down to this. The real economy defeated the older barter economies for good reason: Efficiency. Not just in the dollars and cents, but in weeding out companies, products, and services that compete poorly.

If you are having trouble selling your product or service in the real economy, a secondary barter economy is unlikely to help. Problems in your business likely are fundamental: poor market targeting, value proposition, ineffective sales, product/service issues. All of the above.

So before you're tempted to join a barter network to improve your business prospects (and burden your financials with an additional 6-10 percent "tax"), take a hard look in the mirror. And fix what you see.

Commonplace Differentiation from Wells Fargo

We sure have come a long way from the dreaded "green screen" automated teller.

Without much fanfare, Wells Fargo's reintroduced ATM user interface sports a number of visual enhancements to speed common transactions, make the process more intuitive, and personalize the experience - all without scaring off the technophobes among us.

If you aren't a Wells Fargo customer, the changes may be a bit hard to visualize, but the payoff is worth it.  Let's hit a few of the high points of the design.

Overall, the user interface features a cleaner and decidedly "less technical" look.  Key to accomplishing that objective is a reduction in contrast between the background imagery and the action buttons themselves.

At first glance, that seems a bit counter-intuitive.  Why would you want to decrease contrast?  Simple: Small screens can accomplish only one outcome at a time.  When each button is bordered by a bold gold line on a uniform black screen (as it was in the previous interface), a visually cacophony ensues, increasing the transaction time as users fumble through the array of competing options.  By reworking the contrast ratio, the interface quickly delivers only pertinent information.

But that singular focus would be in vain would it not be for predictive functionality.  And here, Wells Fargo's designers did not disappoint.

A large array of banking options is available - as you would expect - on the right two-thirds of the screen.  The left third of the screen, by contrast, features common transactions gleaned from your own transaction history.  Clearly deliberate, Western readers (of Germanic and Romantic languages primarily) begin looking for key information as they scan left to right, top to bottom.

For me as a Wells Fargo customer, that means my most common cash withdrawals and most common deposits appear visually distinct in exactly the location where I begin looking.  Bottom line: Once logged in, most of my transactions require only one touch to complete.

I could go on, but I think you get the idea.

[If you are interested in a more detailed visual review, visit http://physicalinterface.com/view/that-design-is-money for a screen-by-screen review of the user experience from former Pentagram designer Holger Struppek, the San Francisco firm that completed the project.]

The deeper significance comes from what the user interface means for the Wells Fargo brand position.

According to a Wells Fargo spokesperson, the bank always looks for new ways to give customers faster, easier, and more convenient service.

Wells Fargo, in a critical step farther, put its money where its mouth is.  I learned from my contact that the bank tested the interface for over a year, and found its customers really took to it.  Test groups found the ATM faster, more convenient, and more personal.  Exactly what Wells Fargo and its design team wanted.

From a positioning perspective, Wells Fargo is creating a personalized experience for its automated interactions.

And that's significant.

Many bank customers struggle with a removal of "people" from the financial process.  Anecdotally, I find myself among the few people willing to use the (near empty) ATM line at the bank while most others cram teller lines for their chance to speak with a real person.

From the bank's perspective, the financial reality is stark.  People (read: tellers) are expensive.  In fact, they are a huge expense: Recruitment, training, retention, and benefits to name just a few.  Their hours are limited, and as anyone familiar with peak demand staffing understands, having enough people at the correct time proves exceedingly difficult.

Moving to technology (read: more ATMs) makes financial sense.  A significant up-front investment to be sure, ATMs can serve more people, faster, for less money per transaction.  However, increasing your reliance on technology comes at a price.  Less personalized service means less of an emotional connection with the bank and the potential for reduced brand loyalty.

It seems to me Wells Fargo wasn't willing to risk it.  They wanted it both ways.  And they were willing to invest the money to get it.

They had good reason for optimism.

If done correctly, technology interaction can engender brand loyalty.  On the (very) small screen, think Nokia versus iPhone.  Think "like" versus "love".  In other words, to make it work, the visual interface matters.

While I am not sure the Wells Fargo ATM experience compares exactly with Apple's UI genius (nor does Wells Fargo claim that it does), it does not have to.  In the banking world, providing lightning fast, intuitive transactions is exactly what people want from their ATM.

In this case, Wells Fargo has used something as commonplace as user interface - something most banks consider an afterthought - to drive a competitive wedge.

That is what is so refreshing.  That a large, conservative bank would allow itself to invest real money in something as "squishy" as good design.

Although moves like this (even if it were replicated among the entire banking sector) will not stop the industry from hemorrhaging market capitalization, Wells Fargo gives us a clear reminder that smart design is not irrelevant, is not just for looks, and is not a poor investment.

For Wells Fargo, being pretty pays dividends.