Ten years ago, Lego "seemed to have lost its way," but now it is enjoying "a sharp revival" of its fortunes, reports Kim Hjelmgaard in the Wall Street Journal (12/24/09). In fact, in the first half of this year, Lego's sales were up 23 percent, compared to a five-percent decline in toy sales globally. This still places Lego, at $1.83 billion in sales, as the third-largest toy company after Mattel ($5.5 billion) and Hasbro ($4 million). But its robust position is somewhat surprising, given that its toys tend to be a bit complicated and expensive.

Sean McGowan, an industry analyst, explains, "The fact that Lego is relatively expensive is secondary to the fact that it provides many hours of repeatable joy ... Parents remember that, which makes a $40 purchase a better value than $20 toy that may lose its appeal by the time Christmas leftover sandwiches are served." The company's chief executive, Jorgen Vig Knudstorp, says the company's success is also a function of its perceived virtues, particularly where its licensing deals with Star Wars are concerned.

"We take the virtues of Lego and the virtues of Star Wars and create something more optimal out of it," says Jorgen. "Here you have a category [videogames] where many parents perceive it as not really creative and not very good for their children, but when it becomes Lego ... it has the benefits of both worlds." He compares playing with Legos to reading books, suggesting that the toy "teaches children to be systematic, creative problem-solvers." Jorgen has also embraced the virtues of cost-cutting, having "cut jobs and outsourced manufacturing to far-flung places like the Czech Republic, and, more recently, Mexico."

Loyalty grows when brand values and strategy align.  By Scott Osman. (more)

Green Hills Market builds loyalty where the shopper, product and store converge. By Richard Guha. (more)

Illy, the Italian coffee brand, is moving in on Starbucks by "joining forces with independent coffee shops," reports Julie Jargon in the Wall Street Journal (11/3/09). Illy calls its program Artisti del Gusto (Artist of Taste) and brought it to America last year, having launched the concept in Italy three years ago. Illy's idea is simply to "get its name in front of more customers without having to buy or rent its own shops."

In exchange for signing a three-year exclusive with Illy, the shops receive "Italian espresso machines, coffee cups, artwork, drink recipes and intensive training, after which the cafe becomes a certified Illy purveyor." Sean Lupton-Smith, owner of Cafe Nineteen in Atlanta, says the program is working well for him. Where he previously sold a no-name cup of coffee for $1.60, he now sells Illy-branded cups for $3.00. He says his coffee sales have tripled.

Sean feels the Illy imprimatur helps him "offer a consistent experience ... and be strong enough to stand up to the Starbucks around the corner." Hanna Suleiman of Caffe Greco in San Francisco meanwhile reports her "sales have increased by 10 percent and profits by 3 percent since the shop signed up with Illy a year ago." So far, Illy has inked 28 U.S. cafes, "plans to add 100 more in the next three years" and expand into Mexico and Canada. Starbucks currently has more than 11,000 U.S. stores.

Tony Hsieh whips up a happy culture and enviable loyalty for Zappos.  An exclusive Q&A interview by Tim Manners. (more)

"We don't need to draw in others who don't shop with us because the biggest opportunity is with our loyal customers," says Kroger chief David Dillon in a Cincinnati Enquirer article by Laura Braverman (10/8/09). David says Kroger realized this almost ten years ago, and has been on a path ever since "to put the customer first, and permanently." Most famously, Kroger engaged with London-based dunnhumby to build a database of 45 million shoppers, using the data to "create advertising campaigns and provide targeted coupons to its most loyal customers."

Kroger's loyalty program has avoided turning its "customer into someone always looking for the next deal" by creating "anticipation and excitement over savings, letting its customers experience great value," according to Chris Allen of the University of Cincinnati. The database has also taught David Dillon "that even Kroger's best customers are still buying many items that the retailer sells somewhere else ... To him, that translates into adding tiny details to the shopping experience, such as sending a Jif peanut butter coupon to a mom who buys only Jif, or giving extra fuel rewards to families that are loyal to Kroger."

Kroger has also grown loyalty by building "larger stores with more products at cheaper prices ... cleaner aisles and short lines ... $4 generic prescriptions, organic food selections, Murray's Cheese counters and a 3-cent reward for using a reusable shopping bag." It has also tightened bonds by "launching breast cancer awareness campaigns using local women, and giving away its Deluxe ice cream to loyal Twitter followers." Ultimately, David says creating loyalty is all about "the importance of honesty and accepting feedback," saying, "You can't grow if you don't recognize the need for that ... We were not as good as we thought we were."

This month, the Tatler magazine has 408 pages, 224 advertisements, and turns 300 years old, reports Eric Pfanner in the New York Times (10/5/09). True, its circulation is only "85,000 copies, down from a peak of about 90,000 in 2007," but even that is considered part of its success formula. "The audience is so niche and perfectly formed that advertisers love it ... there is a kind of glass ceiling to how many people can read it," says Nicholas Coleridge, managing director of Conde Nast in the U.K., which currently owns the Tatler.

The Tatler actually has had a total of 50 owners since it was founded in 1709, ten of which have gone bankrupt over the years. In fact, the original Tatler "lasted only two years, but the name was adopted by a succession of Tatlers over the centuries." As the name would suggest, the Tatler is mostly about gossip, and its culture is mostly rooted in the pleasures of the printed page. "I'm rather tired of all this business about the internet," says Patricia Stevenson, the Tatler's publishing director. "Magazines are wonderful things to have with you and to take around with you."

Accordingly, the Tatler keeps most of its content "off its spartan website." Last year, the Tatler did expand with a Russian edition because so many wealthy Russians were showing up in the original magazine. And the Tatler has delved into weightier topics recently, such as the demise of Lehman Brothers. But it continues to serve up the same kind of gossip it always has, such as a story in its very first issue "about three sisters who married advantageously." Says Nicholas: "Despite the fact that the writing style is old-fashioned, I can't help thinking that it's exactly the kind of article our editors would like to run today."

"Vietnam is one of the most exciting beer markets in the world today," says Walter Bocker in a Wall Street Journal piece by James Hookway (9/15/09). Walter is with Gannon Group, which is "Anheuser-Busch's Vietnam-based partner." He is joined in his enthusiasm by Carlsberg, Heineken and SAB Miller, each of which has a joint-venture going in Vietnam. Collectively, these foreign brewers have put Vietnam's state-run beer enterprises on the run, but not for long, perhaps. Never underestimate the potential of socialized beer.

Local, "state-invested Vietnamese brewers," such as "Hanoi-based Habeco and Ho Chi Minh City's Sabeco are readying themselves for a fight." Their strategy centers on providing something the imports do not -- specifically a local specialty called "bia hoi, which translates as 'fresh beer,' a relatively low-alcohol, bitter brew with a shelf life of a few days that makes up 30 percent of the beer market" in Vietnam. Bia hoi costs "about a third the price of an international brand," and first became popular during the U.S. Vietnam war, when there wasn't enough glass to make bottles.

To this day, Bia hoi is "sold only in kegs, delivered early each morning to hundreds of side-street restaurants in Hanoi. By lunchtime, people are tossing back chipped-glass-tumblers of the beer while munching dried squid, fried tofu and other snacks." Habeco, founded in 1890 by French colonials, has seen its sales double between 2004 and 2007. Sabeco's sales have increased to 900 million litres from 500 million between 2006 and 2008. However, foreign brewers see in bia hoi only a quagmire of "low margins and different route-to-market characteristics," and plan to continue to rely on "deep pockets" and traditional marketing techniques.

What started as a mom-and-pop store and mimeographed flyers ended up as Talbot's -- a 586-store chain and a 55-million-piece catalog business, reports William Grimes in the New York Times (9/4/09). "Mom" in this case was Nancy Talbot, who died August 30th at 89, and her husband, Rudolf, who's been gone since 1987. The venture got started in 1945, when Rudolf grew disenchanted with a Johnny Appleseed franchise store he had inherited from his father.

He and Nancy opened up the first Talbots, which they "soon moved to an antique clapboard house," its front door painted red, "a trademark of all Talbots stores today." Rudolf was in charge of growing the business, while Nancy shaped its identity: "Our customer wants to conserve what is good and right for her in fashion," she once wrote. "We look for clothes that are timeless because they are ladylike, simple but not contrived, gimmicky, or extreme, smart but not faddy, fashionable but not funky - chic and understated, the hallmarks of good taste."

Robin Sackin, of the Fashion Institute of Technology comments, "They appealed to the woman 35 and older, college-educated, who might want to buy Ralph Lauren but finds it too expensive ... The look has always been classic but affordable, with great tailoring." The Talbots sold their enterprise, consisting of four stores and 10 million catalogs, to General Mills in 1973. Now owned by Aeon, Inc. and publicly traded, the company last year reported revenues of almost $1.5 billion, much of it from catalog sales.

Hewlett-Packard CMO Michael Mendenhall says the future of media calls for blue skies with lots of clouds.  An exclusive Q&A interview by Tim Manners. (more)