7 Truths About Branding

Lessons learned in the trenches as a senior brand strategist.

I have directed/lead countless branding initiatives for my clients over the past 25 plus years that have confronted complex business challenges such as acquisitions; market entry; global expansion; new products, audiences and channels; repositioning; brand revitalization; and integrated digital and traditional media communications. While I have been fortunate to see the majority of these projects result in double-digit increases in sales, profitability and brand equity, not all of them have been as successful. This article summarizes the top 7 truths I have learned through all of my experiences, including the good, the bad and the ugly projects. It is my sincere hope that you as a business leader or marketing professional can apply these learnings to improve your own business outcomes and avoid some of the pitfalls that plague traditional business thinking today.

1. Ignore the real issues at your own peril.

This sounds simple enough, but in reality procrastination can happen even in the C-suite. For example, when sales erosion issues occur, there is a tendency to react quickly. Promotions or discounting are often implemented tactically to stop the bleeding, but it ends there. The heart of the issue remains unresolved due to competing priorities, limited resources or a host of other distractions. Overtime, ignoring the real issues erodes brand value, followed by shrinking margins and market share.

Think of brand value as an equation: “Brand Value = (Product Benefits + Service Benefits + Channel Benefits + Brand Equity) – Costs.” [i] Brands with the highest perceived brand value usually win in their categories. This requires a holistic evaluation of the brand value equation to develop strategies that leverage the combined strengths of all five elements. Maximizing brand value in turn drives consumer choice leading to sustainable competitive advantage and profitable growth.

2. Storydoing brands outperform storytelling brands.

All the hype lately has been about storytelling. However, it is a proven fact that storydoing companies that place strong emphasis on “living their brands” outperform storytelling brands that merely “tell their brand stories” (via marketing communications).[ii]  This is largely true across all sectors, but I think it is especially important in retail, healthcare and service-related industries where frontline employees are the face of the brand. Organizations that have inculcated their brand promise and core values deeply into the fabric of their culture and have empowered their employees to deliver “authentic, branded service encounters” always stay on top. Think Zappos, Mayo Clinic and Southwest Airlines as examples.  But there are no magic bullets. Storydoing requires continual focus, hard work and sometimes foregoing short-term profit gains to achieve sustainable competitive advantage and future ROI.

3. Brand irrelevancy is today’s biggest business challenge.

These days, disruption happens at lightning speed. Companies must continually reinvent themselves or risk brand irrelevancy. But, most organizations are either unaware of the looming signs that their business models are under siege or, unfortunately, underestimate the magnitude. Digital disruption can drive dramatic changes in market dynamics, such as the emergence of new categories/subcategories that raise the bar on consumer preferences, as well as create an onslaught of new, non-traditional competitors. It has been estimated that companies are now forced to redefine their business models about every six years on average or face brand irrelevancy. The problem is exacerbated by the fact that many organizations do not see it coming until it’s too late. Or they are unable to confront these formidable realties with forward-looking, game-changing strategies. Brand irrelevancy occurs when consumers choose a target category or subcategory to buy and a particular brand (even if it was once the category leader) has slipped from the consideration set, resulting in shrinking margins and market share.[iii]

4. Incremental innovation does not create sustainable competitive advantage.

While ongoing lean process improvement and incremental enhancements made to the offering are important, today’s market realities often dictate the need for transformational change.  But antiquated organization structures, silo thinking, traditional mindsets and fierce P&L pressure to defend a brand’s existing turf are among the chief barriers that prevent business model reinvention. Many corporate leaders choose to take the easy path by making incremental enhancements to their core competencies instead of driving category-changing transformation. They argue that it is better to “stick to our knitting,” “keep our focus,” “avoid diluting our energies. However, traditional thinking such as this can be dangerously short-sighted in today’s dynamic and volatile business climate. David A. Aaker in his book titled Brand Relevance argues that creating a new category/subcategory can result in a first-mover advantage and the potential of earning significant ROI because, with little or no competition, margins can be very attractive. Tenure of this marketing position then depends on the barriers the firm creates, including customer loyalty, an image of authenticity, scale economies, preemptive strategies and competitor inhibitions to name a few. Companies like Google, Best Buy and Zipcar have won the brand relevance battle by boldly creating breakthrough offerings that form new categories/subcategories, and have effectively managed them to become the undisputed exemplars. But this takes vision, courage, relentless focus and a willingness to explore blue ocean opportunities that may even extend beyond an organization’s core competencies.

5. Brand Equity is your best offensive strategy when transformational business innovation isn’t an option.

A second strategy for creating or maintaining brand relevance is to look beyond the offering and focus on specific brand equity attributes that strengthen the emotional connection that consumers have with your brand and make it unique from all others. Frankly, for companies in many types of service industries or in highly commoditized business segments where it is easy for competitors to copy the features of your offering, this becomes the only sensible strategy that can be pursued to create competitive advantage. According to David A. Aaker, this makes competitors irrelevant because they lack these “essential” elements. Brand equity attributes that build trust and/or deliver powerful self-expressive benefits can include:

• Shared interests that are as meaningful to customers as the offering itself (e.g., Pampers, which has positioned its brand’s category to be associated with baby care as well as being a disposable diaper brand)
• A distinctive and enduring brand personality (e.g., Asahi Super Dry, which has a western, young and modern personality that contrasts sharply to its archrival, Kirin, which is the classic  “your father’s brand”
• Organization values and culture, such as innovation (3M), customer-driven (Nordstrom’s), quality-driven (Cadillac) and concern for the environment (Toyota Prius)
• Passion (e.g., Apple because of its passion for design and commitment to delivering innovation and an over-the-top user experience)
• Social programs (e.g., The Body Shop through its visible endorsement of third-world ecology and workforces and Lay’s SunChips through its visible use of solar power and compostable packaging)[iv]

6. Three-way communication and relationship building is the name of the game.

A lot has been written lately about the power of big data. The fact is that most companies have a plethora of data points available to them. What’s missing most often (especially among small and midsize businesses) is an essential IT infrastructure required to command a 360 degree view of the available data via all channels and customer touchpoints, as well as the expertise needed to glean rich consumer insights from all that data. Additionally, many companies are challenged to keep up with the rapidly evolving media landscape and find the ideal media mix. This is because the market is constantly being redefined by emerging digital media technologies, yet traditional media still dominates in most industries. Furthermore, optimizing the full potential that each channel has to offer and delivering a unified customer experience across all of them creates yet a new set of challenges. Winning the battle for customer attention and loyalty today requires investing in the right tools and skill sets to develop new, consumer-centric strategies to drive meaningful three-way communication and relationship-building initiatives (i.e., brand-to-consumer, consumer-to-brand, and consumer-to-consumer). Sadly, most marketing organizations still approach communications with a traditional mindset focused on selling rather than relationship building.  While metrics and KPIs associated with acquisition are still important when measuring marketing ROI, increased weight must also be placed on measures focused on retention, loyalty, advocacy and brand equity.

7. High visibility by the top leader is the most essential requirement.A Harvard Business School research team recently conducted a study of the top B2B global brands and found that they shared a common characteristic: The CEO was a highly visible brand cheerleader and storyteller and understood the benefits of a great brand. In short, the top leader of the organization must view branding as a crucial business strategy for driving increased ROI, as well as long-term growth and brand equity. And without strong leadership endorsement and visibility, I have learned that it is futile to attempt a rebranding project or other multifaceted branding initiative that requires cross-departmental cooperation, buy-in and behavioral change.

Endnotes:

[i] Value Creation: The Power of Brand Equity, by William Neal and Ron Strauss, published by SOUTH-WESTERN CENGAGE Learning, copyright © 2008 by Texere, page 127

[ii] Storydoing™ (http://storydoing.com), managed by co:collective, copyright ©2013

[iii] Brand Relevance – Making Competitors Irrelevant, David A. Aaker, published by Jossey-Bass, copyright © 2011 by John Wiley & Sons, First Edition, page 297

[iv] Ditto iii, page 315

The Relationship between Online Customer Reviews and Brand Equity

The Relationship between Online Customer Reviews and Brand Equity.

Today’s Biggest Business Challenge

Today’s Biggest Business Challenge.

Today’s Biggest Business Challenge

These days, disruption happens at lightning speed. Companies must continually reinvent themselves or risk brand irrelevancy – the biggest problem facing most businesses today.

The simple truth is that most organizations are either unaware of the looming signs that their business models are under siege or, unfortunately, underestimate the magnitude. Digital disruption can drive dramatic changes in market dynamics, such as the emergence of new categories/subcategories that raise the bar on consumer preferences, as well as the onslaught of new and non-traditional competitors. It has been estimated that companies are now forced to redefine their business models about every six years on average or face brand irrelevancy.

The problem is exacerbated by the fact that many organizations do not see it coming until it’s too late. Or, they are unable to confront these formidable realties with forward-looking, game-changing strategies. Brand irrelevancy occurs when consumers choose a target category or subcategory to buy and a particular brand (even if it was once the category leader) has slipped from the consideration set, resulting in shrinking margins and market share.

Antiquated organization structures, silo thinking, traditional mindsets and fierce P&L pressure to defend existing turf are among the chief barriers that prevent business model reinvention. Many corporate leaders choose to take the easy path by making incremental enhancements to their core competencies instead of driving category-changing transformation. They argue that it is better to “stick to our knitting,” “keep our focus,” “avoid diluting our energies. However, traditional thinking such as this can be riskier today!

So how do organizations create/renew brand relevance in today’s volatile business climate?

Transformational Innovation

 One strategy, according to David Akker in his book titled Brand Relevance, is to create transformational offerings that form new categories/subcategories and make the competition irrelevant. He argues that creating a new category/subcategory can result in a first-mover advantage and the potential of earning significant ROI because, with little or no competition, margins can be very attractive. Tenure of this marketing position depends on the barriers the firm creates, including customer loyalty, an image of authenticity, scale economies, preemptive strategies and competitor inhibitions to name a few.

Akker’s book, which I highly recommend reading, provides a powerful framework for finding new concepts, picking the winners, defining and managing new categories/subcategories, and creating barriers to ensure sustainable differentiation. It also offers an array of in-depth case studies on companies, such as Best Buy, Toyota, Zipcar and Apple. These companies have won the brand relevance battle by boldly creating breakthrough offerings that form new categories/subcategories, and effectively managing them to become the undisputed exemplars.

Brand Equity

A second strategy for creating or maintaining brand relevance is to look beyond the offering and focus on specific brand equity attributes that make your brand unique from all others and drive consumer choice. Frankly, for companies in many types of service industries or in highly commoditized business segments where it is easy for competitors to copy the features of your offering, this is the only sensible strategy that can be pursued to drive sustainable competitive advantage. This can make competitors irrelevant because they lack these “essential” elements.

Brand equity attributes that build trust and/or deliver powerful self-expressive benefits include:

• Shared interests that are as meaningful to customers as the offering itself (e.g., Pampers, which has positioned its brand’s category to be associated with baby care as well as being a disposable diaper brand)
• A distinctive and enduring brand personality (e.g., Asahi Super Dry, which has a western, young and modern personality that contrasts sharply to its archrival, Kirin, which is the classic  “your father’s brand”
• Organization values and culture, such as innovation (3M), customer-driven (Nordstrom’s), quality-driven (Cadillac) and concern for the environment (Toyota Prius)
• Passion (e.g., Apple because of its passion for design and commitment to delivering innovation and an over-the-top user experience)
• Social programs (e.g., The Body Shop through its visible endorsement of third-world ecology and workforces and Lay’s SunChips through its visible use of solar power and compostable packaging)