The Winner:

Kraft.

Kraft?  What am I talking about?  In this world of financial crisis and alarm, how can I pick a packaged goods company?

Easy.  Kraft just replaced AIG (one of this week’s brand losers) as a component of the Dow.

It’s about time.  Kraft is one of the pre-eminent packaged goods companies.  In a world where everyone is talking about how this or that financial model doesn’t work, it’s great to see a marketing-based powerhouse that is chugging along with vigorous, dependable revenues.

Kraft is the world’s second biggest foodmaker.  It’s no surprise to me that Warren Buffett’s Berkshire Hathaway is this company’s largest shareholder.  The ultimate value investor knows value.

As one money manager, Christian Andreach, observed about a Dow stock: “You think of a company with a stable, solid business model and an enduring franchise representative of the American economy.  Kraft clearly fits that bill.”

Amen.

And I’d like to make this observation. 

As I often find myself telling clients, marketing is not smoke and mirrors.  It is about meeting needs and hitting your target market.  

In other words, marketing keeps a company honest.  Yes, I know this goes against the anti-marketing grain and I can hear the folks at NPR groaning at their microphones, but I repeat: marketing keeps a company honest.

If you are a packaged goods company, you know darn well that you can never create a need for a product —you can only try to satisfy the needs of your customers.  

A company like Kraft or P&G, built on a dynamic and responsive marketing model, always needs to keep their customers and market in mind.  If they don’t, they lose fast, and they lose big.  There is no way to conceal the numbers when your product or service doesn’t sell.   This is the marketing concept.

The Loser:

Without a doubt, this week’s loser is AIG.  

What is especially tragic here is that the vast majority of the company was healthy.  But there was one part that wasn’t, and it took down the whole shibang.

In addition to the sheer size of the collapse, AIG is this week’s loser because of a brand reality: it wasn’t true to its brand.  AIG was the world’s biggest insurance company.  Insurance is at the core of this brand.  Yet it didn’t even insure itself.   This was a brand in direct contradiction to itself.  It was about risk reduction, yet exposed itself to almost inifinite risk in the financial markets.  

AIG is a classic example of how not following your brand’s core characteristics can destroy your brand.

AIG —and the rest of Wall Street’s financial debacle —supports my point that marketing keeps a company honest.  

Think about it —the Achilles' heel in this crisis wasn’t the products that the average investor knows so much about through marketing.  This wasn’t about the stocks, the bonds or the mutual funds.  

This was about financial products that even experts can’t fully explain or price and products that are not marketed to the public.  

Tellingly, marketing was never involved.  You can be sure there was a lot of direct selling by investment houses to big investors, but no comprehensive marketing that would have forced the creators of these complex products to test them against a larger target market.  

This situation is very complex, and I’m not going to pretend to comprehend things that others do not.  But I will say this: if the rigors of good marketing had been applied to these complex financial products, I wouldn’t be surprised if some of these problems had have been avoided.  

In the financial world, it’s called transparency.  In the marketing world, it’s called knowing your product’s core characteristics and then explaining these characterisitcs in a way that your target market can understand.  As you explain them to the target market, and as the target market responds  —either positively or negatively— you learn more about the strengths and weaknesses of your product.

A good marketer is flexible and constantly testing his or her assumptions against the realities of the consumer.  

And remember, it’s always easier when you keep marketing and branding in mind.