BOOK EXCERPT

Hard times create amazing successes. Despite all the talk today of an oversupply of goods and services, industry consolidation, menacing imports, stalled prices, and shrinking margins, a few remarkable businesses have discovered how to make their brands irresistible to more and more customers. What is the secret of their success? More to the point, how can you apply what they have discovered to your business to make your products and services irresistible to customers?

After studying these thriving businesses, these contrarians, I've identified their key strength -- a new approach to branding that beats the competition because it's infinitely faster and less expensive than any of the traditional methods. As this book will demonstrate, it is also far more accessible.

For reasons that will soon become clear, I call this approach TouchPoint Branding. As you read the following cases, see if you can figure out what they have in common. (You'll have the answers before the chapter is finished.)

· How do you sell 10 million dolls with a conspicuous lack of national advertising?

That's the breathtaking breakthrough of American Girl, a business that started as a tiny direct-mail operation in Middleton, Wisconsin, in 1986, and now sells more dolls than anyone except Barbie. American Girl's first retail store, near Chicago's Magnificent Mile, grosses far more than either of its mighty neighbors, Ralph Lauren and CompUSA. Some 50 million people receive company catalogs, millions more visit the Web site, and, altogether, American Girl sales for 2003 came to $344 million. For girls between the ages of 7 and 12 and their families, this company has become a unique source of entertainment and education, a brand that has achieved nationwide recognition and approval.

American Girl doesn't simply sell handsome, 18-inch-high dolls. It offers the "whole world," as the corporation's literature puts it, of each of its eight fictional characters -- their clothing, furniture, all sorts of accessories, a series of books for each doll that tell her life story and adventures, and a selection of preteen clothes that match those worn by the characters. The Margaret "Kit" Kittredge doll, for example, is a nine-year-old growing up in Cincinnati, Ohio, during the Great Depression. The Kit books describe the hardships she and her friends encounter, the plucky way they solve their problems, and how "Americans opened their hearts" to help one another survive the terrible economic slump. Other dolls include Kaya, an eighteenth-century Native American, and Samantha, from the Victorian era. Signing up your child for the entire Samantha package -- doll, books, furniture, and clothing -- will set you back $995, and that doesn't count the upkeep. If your daughter wants her doll to have a new hairstyle, for instance, the price at the Chicago store, and at its new sister store in New York City, is $20.

It's an expensive proposition, yet American Girl has sold more than 10 million dolls and more than 100 million books since its founding. And it has done so without peddling the dolls at other stores and with a bare minimum of paid advertising, largely local-store ads. How, you may well ask, is that possible?

Pleasant Rowland, the founder, tapped into a long-ignored but obviously rich vein among preteen girls and their mothers by firmly grounding the enterprise on the premise of wholesome, girlish innocence. Rowland, a former educator, was convinced that girls these days grow up too fast, and that an antidote was needed to the girlhood role model represented by the likes of Britney Spears. She wanted her Pleasant Company and its line of dolls to teach history and inspire girls to learn strength and resourcefulness from the dolls' stories, which Rowland calls "the heart of American Girl." (Rowland sold her company to Mattel in 1998.)

The books are carefully researched and well written. The story of the doll Addy, for instance, was written by respected novelist Connie Porter. Set in 1864, it tells the tale of an African American girl who experiences both slavery and emancipation. In general, historians praise the research and authenticity of the American Girl books, but lament their simplification of history and muted treatment of conflict and violence. Another kind of complaint comes from feminists, who bristle at the dolls' stereotypical roles and emphasis on beauty. But from the beginning, the line struck a chord with its intended audience, and the marketing, almost entirely by catalogue and word of mouth, has been astonishingly successful. Less than 20 years after its founding, the organization claims that 95 percent of all American girls between 7 and 12 know about its dolls and books.

The home store in Chicago has become a shrine for the 7 million girls and their mothers who have visited it from around the world, and the New York store, opened in time for Christmas 2003, might well surpass it eventually. Both stores are huge, lavishly appointed, and beckoning "girl places" -- appealing strongly to girls of all ages and descriptions. They feature smartly decorated restaurants offering classic teas and luncheons, comfortable rest rooms, sleek marble floors, and lush red velvet couches that invite mothers and daughters to read a book or simply share a quiet moment.

In addition to the historical dolls, the stores offer a line of contemporary dolls in 21 combinations of skin, hair, and eye color, as well as the popular Bitty Baby and Angelina Ballerina dolls and accessories. Each historical doll inhabits her own miniature world flanked by nearby glass showcases that display authentic period artifacts to make the doll's world seem real. Each doll also comes with countless accessories. The "girl of today," for example, has (among her many things) a computer that works, a karaoke machine, a martial-arts outfit with various colored belts, a picnic spread, hiking equipment, and skis -- not to mention a cast in case she "breaks" her leg while skiing. There's also a full line of clothing that allows girls to dress like their dolls. And the displays are backed up by stacks of complimentary, brightly colored, postcard-sized pictures of each item that are suitable for saving at home or handing to Grandma when she asks for gift ideas.

Girls and their mothers flock to the stores for "A Day at American Girl Place" that begins with cucumber sandwiches, cinnamon buns, and chocolate mousse, followed by a fashion show with preteen models. Then they go downstairs to the 150-seat theater for a musical production featuring both modern characters and figures from the historical dolls' stories. The performers sing and dance and reinforce the American Girl themes of resourceful heroines behaving admirably in compelling situations. A girl and her mother can have these experiences plus a CD of the songs, a doll T-shirt, and $120 in store credit, but it will set mom back $250.

Few stop there, however. A recent visitor from Wisconsin, her eight-year-old in tow at the Chicago store, bought two $90 dolls, several books about each, and an array of accessories. The bill came to $650, more than twice what she had planned to spend. "It's a racket, but it's a good racket," she cheerfully told a reporter. "The kids get strong historical role models and stories that teach them a lot about life. You actually feel good spending the money."

So of all these tactics, which is the real secret of American Girl's success?