Branding Strategy Insider

The Law Of Perception

Recently, the famous "Six Sigma" management technique came into question as Bob Nardelli was blown out of Home Depot. He had left General Electric, where Jack Welch made this quality-boosting methodology famous, and applied it to Home Depot with a vengeance. It didn't seem to help things as their competitor, Lowe's, nailed them with the simple but powerful concept of "improving home improvement." They brought this to life with neater stores, no messy contractor business and playing to the lady of the house.

This is a vivid lesson in the simple fact that a quality program is not a differentiating idea. It's not what marketing is about. In my last post, I wrote about "The Law of Division." This post is about "The Law of Perception." Marketing is a battle of perceptions.

Still, many people think marketing is a battle of products. In the long run, they figure, the best product will win. Thus, Mr. Nardelli's Six Sigma push.

Marketing people are preoccupied with doing research and "getting the facts." They analyze the situation to make sure that truth is on their side. Then they sail confidently into the marketing arena, secure in the knowledge that they have the best product and ultimately the best product will win.

It's an illusion. There is no objective reality. There are no facts, no best products. All that exists in the world of marketing are perceptions in the minds of the customer or prospect. The perception is the reality. Everything else is an illusion.

All truth is relative. Relative to your mind or the mind of another. When you say, "I’m right and the next person is wrong," all you're really saying is that you're a better perceiver than someone else.

Most people think they are better perceivers than others. They have a sense of personal infallibility. Their perceptions are always more accurate than those of neighbors or friends. Truth and perception become fused in the mind, leaving no difference.

It's not easy to see that this is so. To cope with the terrifying reality of being alone in the universe, people project themselves on the outside world. They "live" in the arena of books, movies, television, newspapers, magazines and the Internet. They "belong" to clubs, organizations and institutions. These outside representations of the world seem more real than the reality inside their own minds.

People cling firmly to the belief in such a reality, with the individual as one small speck on a global spaceship. Actually it's the opposite. The only reality you can be sure about is in your own perceptions. If the universe exists, it exists inside your own mind and the minds of others. That's the reality marketing programs must deal with. Most marketing mistakes stem from the assumption that you're fighting a product battle rooted in reality.

Some marketing people see the natural laws of marketing as based on a flawed premise--the product is the hero of the marketing program and you'll win or lose on the merits of the product. That's why the natural, logical way to market a product is invariably wrong. Only by studying how perceptions are formed in the mind and focusing your marketing programs on those perceptions can you overcome your basically incorrect marketing instincts.

Branding Snapshot - April 29

“If you have an important point to make, don't try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it the third time - a tremendous whack.” – Winston Churchill

Was Winston talking to marketers when he said this? Probably not, but I think we’ve followed his wisdom and hit a few points this week on Branding Strategy Insider. I know I've discovered many well-made points around the blogosphere. Looking back…

Martin on Building Brands & Building Traffic
What's more important: the chicken or the egg? Both. Far too many brand builders believe traffic is secondary to site development. Wrong. Unless you have an unlimited budget, you can't afford not to think creatively.

Jack on Trouble and the CEO
Jack Welch types are an anomaly, as today's new CEO has no chance to match Welch's longevity. That's because a CEO probably faces no more difficult a task than attempting to transform a core business threatened by a new technology.

Brad on Building Winning Brands
One of the most difficult tasks in brand management is transforming the organization from one that does not understand the scope or importance of brand management to one that embraces and actively builds the brand as a critically important source of sustainable competitive advantage.  Key to this transformation is the organization’s brand promise.

Jack on the Law Of Division
Instead of understanding this concept of division, many corporate leaders hold the naive belief that categories are combining. "Convergence," "synergy" and its kissing cousin "the corporate alliance" are the buzzwords in the boardrooms of America. The fact is categories are dividing, not combining.

Elsewhere…

A thanks to the good people at Six Apart for selecting Branding Strategy Insider as TypePad's Featured Weblog for April 25th.

More worthwhile reading:

Name Wire
Marketing Blogger Portal
Lastly, will blogs be the Death of News?

Next week, more points to whack…

Sponsored By: Brand Aid

Branding Trivia

We don't have extra time, but we'll always make some for branding trivia...

•Coca-Cola was originally green.
•Iceland consumes more Coca-Cola per capita than any other nation.
•A can of Diet Coke will float in water while a can of regular Coke sinks.
•7% of Americans eat McDonalds each day.
•Colgate faced a significant obstacle marketing toothpaste in Spanish speaking countries. Colgate translates into the command "go hang yourself."
•All hospitals in Singapore use Pampers diapers.
•Levi Strauss first intended to sell his denim material to the miners who were searching for gold in 1850, in order to make tents and covers for their wagons.
•The wristwatch was invented in 1904 by Louis Cartier
•Ben and Jerry's send the waste from making ice cream to local pig farmers to use as feed. Pigs love the stuff, except for one flavor: Mint Oreo.
•The Ramses brand condom is named after the great pharaoh Ramses II who fathered over 160 children.
•American Airlines saved $40,000 in 1987 by eliminating one olive from each
salad served in first-class.
•When KFC first translated its advertising slogan "finger lickin' good" into Chinese, it came out as "eat your fingers off."
•In 1921 advertising manager Sam Gale of General Mills created fictional spokeswoman Betty Crocker so that correspondence to housewives could be sent with her signature.
•Pepsi spent a lot of money on an advertising campaign in China with the slogan “Pepsi gives you life” – unfortunately, it was translated as “Pepsi brings your ancestors back from the grave.”
•Over 275 different PEZ heads have been designed, with some 48 models on the market at any one time. The most popular dispensers of all-time are the Mickey Mouse and Santa Claus models.
•Inventor Joshua L. Cowen, created the first battery, which spawned American Eveready. He also created Lionel trains.

Sponsored By: Brand Aid

Branding Commodities

We recently conducted a workshop on branding commodities in Dubai, United Arab Emirates. A commodity, per one Merriam-Webster dictionary definition is “a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price.” By definition, commodities lack the differentiation and ability to charge a price premium that strong brands have. Several participants in the workshop represented different energy companies. Each one wanted help in being able to charge a 10-20% price premium for his or her “commodity” products.

Here is the good news -- a colorless, odorless, relatively tasteless alcoholic beverage (vodka) has been branded and commands a price premium -- one brand (Absolut) due to its consistently advertised bottle shape alone. And, of course water has been branded. I remember paying $23 for a bottle of Voss branded water at a restaurant in La Jolla, CA several years ago when that brand was first introduced. And bananas and pineapples are branded. Frank Purdue fed his chickens marigolds and ground carrots to give them their differentiated, healthy looking coloring.

I am a firm believer that everything can be branded/differentiated. I have never encountered a product or service that I could not brand/differentiate. So if it is possible, what are some of the tactics for doing so? For B2B brands, you can pursue any combination of the following to provide differentiation:

The Law Of Division

I noticed recently that soda has lost its fizz. For the first time in decades, volume has declined in 2005 and even more in 2006. Consumer demand for bottled water, sports drinks and energy drinks is exploding, and contributing to eroding sales. Even milk did better than soda, with volume slightly up in 2005.

What's going on here? Well, dear reader, the law of division has struck again. To those of you who haven't read about the 10th Immutable Law in my book The 22 Immutable Laws of Marketing, it goes like this: Over time, a category will divide and become two or more categories.

Like an amoeba dividing in a petri dish, the marketing arena can be viewed as an ever-expanding sea of categories.

A category starts off as a single entity. Computers, for example. But over time, the category breaks up into other segments: mainframes, minicomputers, workstations, personal computers, laptops, notebooks and pen computers.

Like the computer, the automobile started off as a single category. Three brands (Chevrolet, Ford, and Plymouth) dominated the market. Then, the category divided. Today, we have luxury cars, moderately priced cars and inexpensive cars. Full-size, intermediates and compacts. Sports cars, four-wheel-drive vehicles, RVs and minivans.

In the television industry, ABC, CBS and NBC once accounted for 90% of the viewing audience. Now, we have network, independent, cable, pay and public television, even online television.

Beer started the same way. Today, we have imported and domestic beer. Premium and popular priced beer. Light, draft and dry beer. Even nonalcoholic beer.

The law of division even affects countries (witness the mess in Yugoslavia). In 1776, there were about 35 empires, kingdoms, countries and states in the world. By World War II, the number had doubled. By 1970, there were more than 130 countries. Today, around 200 countries are generally recognized as sovereign nations. Coming soon: Iraq in three parts.

Each segment is a separate, distinct entity. Each segment has its own reason for existence. And each segment has its own leader, which is rarely the same as the leader of the original category.

Building Winning Brands - 10 of 16

The Tenth most important thing to know about building winning brands is that internal brand building is one of the hottest topics in brand management today.

One of the most difficult tasks in brand management is transforming the organization from one that does not understand the scope or importance of brand management to one that embraces and actively builds the brand as a critically important source of sustainable competitive advantage.  Key to this transformation is the organization’s brand promise.

The following comment is typical of what I hear from marketing executives at more and more companies these days: “We conducted exhaustive consumer research.  We carefully positioned our brand.  We developed and instituted comprehensive brand identity standards and systems.  We are running our new advertising campaign.  Now what do we do?  How do we get the rest of the organization to understand and care about the brand and its promise?  How do we get the organization to deliver on the promise?  How do we make the brand promise real?”  These questions pose a particularly difficult problem for large, decentralized organizations.

Certainly, the brand promise drives your marketing communication and your brand identity standards and systems.  But it must do much more than that.  Your products and services, every point of contact your brand makes with consumers and the total consumer experience your brand creates must reinforce your brand’s promise.  This has tremendous organizational implications – from alignment with organization mission and vision, HR systems (such as recruitment, training and performance management) and internal communication to operational systems, resource allocation and strategic planning.

Trouble Begins And Ends With The CEO

In the old days, a big company CEO was far behind the firing line. When things went bad, there were people to be blamed and asked to leave. But today, it's a different story. The buck stops at the office of the CEO.

In recent times, hundreds of chief executives unwillingly have left their jobs. Among them were some big names from big companies having trouble. They didn't last very many months on the job. Take a look: Richard McGinn (36 months at Lucent), John McDonough (35 months at Newell Rubbermaid), Dale Morrison (33 months at Campbell Soup), Michael Howley (17 months at Gillette), Durk Jager (17 months at Procter & Gamble) and Lloyd Ward (15 months at Maytag). And I didn't even mention the likes of Worldcom or Enron.

This kind of turnover is unprecedented. After all, Jack Welch survived the disastrous "factory of the future" fiasco that sank without a trace in the sea of technical snafus and erroneous projections of customer demand. The late Roberto Goizueta of Coca-Cola survived the New Coke disaster--the poster product of bad ideas. Today, those executive would have been toast, as there appears to be zero forgiveness for mistakes.

First, The Bad News

There are no superheroes, and top executives have to realize that the impossible is impossible.

Jack Welch types are an anomaly, as today's new CEO has no chance to match Welch's longevity. That's because a CEO probably faces no more difficult a task than attempting to transform a core business threatened by a new technology. George Fisher and others have tried that at Kodak, and it doesn't appear that they will find much happiness in the digital age. And if CEO's get trapped in the great expectations of future growth, they will most probably fail.

What's at the heart of all this is that many big-company CEOs are barely in control of their company's fate, much less their own. There is a growing legion of competitors coming at you from every corner of the globe, and technologies are ever-changing. The pace of change is faster, making it increasingly difficult for CEOs to digest the flood of information out there and make the right choices.

Now For The Good News

Building Brands & Building Traffic

Some years ago, an Australian takeout pizza place used the Internet in an attempt to boost sales. Traffic was slow. Hardly anyone visited the site. The need for an increase in traffic was urgent. If traditional online media planning had been used, banners and links would have been purchased and the URL added to the shop's phone-book entry. It might even have invested in some traditional ads.

The pizza place went a different route. Instead of spreading money between off- and online ads, it spent the entire budget on radio. The spots were simple but extremely effective. So effective, the restaurant's increased business caused most of the local competition to shut down.

How did they do it?

Instead of offering discounts or merely promoting its URL, the pizza place's radio ads asked listeners to tear out all the pizza-restaurant pages from their yellow pages and bring them in. In return for the pages, customers received a free pizza of their choice and a sticker with the restaurant's URL.

Very clever!

Because the contact information for all the other pizza joints in town disappeared from customers' primary reference source, only one set of contact details was left in households that complied: the URL for the restaurant that dreamed up the promotion. That single outlet is now a franchise.

Creating traffic is not necessarily a matter of buying ads or taking a traditional approach.

Branding Snapshot - April 22

“Time is the most valuable thing one can spend.” - Theophrastus

I spent a mint this week. And I’m happy with the return.

A look at a week of posts on Branding Strategy Insider and elsewhere reveals the days were shaped by…

Brad on ‘Inside Out’ Branding
In the mid to late 1990s, I was Hallmark’s first official chief brand advocate. In that role, I was responsible for increasing Hallmark’s brand equity and market share. I approached this with my team a number of ways…

Jack on the Mandate of Differentiation
In this global killer economy you have to find a way to differentiate yourself. To do this, here are the steps you must follow…

Derrick on Brand Extension
An exploration of successful and unsuccessful brand extensions as well as other angles on the topic…

Comment(s) of the Week
Goes to Robert Price who is helping us set the record straight on the health of Buy.com in: Of Brands and Naming.

Elsewhere…

Seth Godin (Next months Marketers For Charity co-author here on BSI) offers insight on why bad or bizarre ideas are more successful at getting attention than boring ones. And early adopters, not the mainstream's bell curve, are the new sweet spot of the market.

Greg Verdino zero’s in on Shopdropping -- the act of placing doctored product packaging (often calling attention to the disconnect between a brand's stated and actual values) alongside the real thing on retail shelves.

More to come in the minutes, hours and week ahead – guaranteed.

Sponsored By: Brand Aid

Brand Quote - April 21

 

"Products are made in factories. Brands are created in the mind.”

                            – Walter Landor, Landor Associates

Sponsored By: Brand Aid