Naomi Klein's observations are excellent. Her views are very much in line with what I've seen as well. The rest of the interview is well worth reading and full of insight. From What Are We Fighting For?:

Lakshmi Chaudhry: What is your take on why the Democrats lost in 2004?

Naomi Klein: The Democrats didn't fully understand that the success of Karl Rove's party is really a success in branding. Identity branding is something that the corporate world has understood for some time now. They're not selling a product; they're selling a desired identity, an aspirational identity of the people who consume their product. Nike understands that, Apple understands that, and so do all the successful brands. Karl Rove understands that too.

So what the Republican Party has done is that it has co-branded with other powerful brands — like country music, and NASCAR, and church going, and this larger proud-to-be-a-redneck identity. Policy is pretty low on the agenda, in terms of why people identify as Republicans. They identify with these packets of attributes.

This means a couple of things. One, it means people are not swayed by policy debates. But more importantly, when George Bush's policies are attacked, rather than being dissuaded from being Republicans, Republicans feel attacked personally — because it's your politics. Republicanism has merged with their identity. That has happened because of the successful application of the principles of identity branding.