Monday, November 08, 2010

Brand Deposits and Brand Withdrawals

I found this exchange between a Wall Street Journal interviewer and Disney CEO Bob Iger to be quite interesting:

WSJ: You're spending $1 billion to overhaul Disney California Adventure, Disneyland's less-famous neighbor. Why?

Mr. Iger: [Apple CEO] Steve Jobs is fond of talking about brand deposits and brand withdrawals. Any time you do something mediocre with your brand, that's a withdrawal. California Adventure was a brand withdrawal.

We debated, "Should we make it one park?" Raise the price at Disneyland, and suddenly one ticket buys you the whole thing. I even had Imagineers design that.

[But] we would have had to put in transportation systems. It would have cost us so much money to put the monorail in. And to do other things to create one park. That didn't make sense.

We all concluded that the only way we would improve returns on that park is if we made it better and we made it bigger. And we decided to put what is now [around] $1 billion into that.

The exchange proves interesting, because it stresses that few moves by a successful differentiated brand are "neutral" - you are either adding to brand equity or you are diluting it. If you are accustomed to providing "wow" experiences, and charging premium prices for it, then you can't just settle for providing an "ok" experience. That can detract from the brand overall, and it can affect customers' willingness to pay for a wide range of your products.

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