Branding Strategy Insider

The State of Branding

Dave Goetz from Brand & Strategy interviewed me in May of 2006 on the state of branding. This is the conversation that transpired...

What, if anything, has changed over the past thirty years in marketing strategy?
Essentially, the only thing that has changed is the level of competition. Competition today is intense. It’s what I call the “tyranny of choice.”  There is now so much choice that if you make a mistake, your competitors quickly get your business, and you don’t get it back. It’s the General Motors problem. They made a lot of mistakes and market share continues to drop.

Has your thinking about positioning changed since you coined the phrase?
No, not at all. My stance on positioning has become more important in the scheme of things because of the level of competition.  My first article in 1969 about positioning pointed essentially to the “me-too-marketplace.”  The concept of positioning was necessary because of the arrival of more and more competitors saying, “Me too.”  My premise was based on the rise of competition. But did I realize in 1969 what it would be like in 2006? Not at all. At that point, there wasn’t global competition.

Are there a limited number of positions?
Remember, we’re talking about positioning as a science.  It’s the science of the mind—psychology. One of the things we talk about in positioning is the Rule of Seven.  In other words, in any category there are no more than seven brand names that anybody can remember, and those are only high interest categories. Harvard psychologists figured out that generally the finite number of brands that stick in people’s heads is seven. But there’s also the law of duality. If you look at every category, only two brands eventually rise to the top.  It’s Coke and Pepsi, Kodak and Fuji. The remaining brands—3, 4, 5, 6, and 7—are working in a fairly small market share.

The Rising Power of Private Label

One can make a very persuasive argument for private labels being the strongest brands in Britain these days.

Stores' own brands have come a long way from their budget origins and today occupy an important part of many consumers' lives. In fact, there have been seven ages of private label, the latest of which is only just emerging.

The first age of private label was as a simple, budget purchase for hard-up consumers. In 1919 a young demobbed soldier called Jack Cohen used his serviceman's gratuity to set up a market stall in London. It flourished, but Cohen was ambitious and wanted to sell his own products. In 1924 he signed a deal with tea producer TE Stockwell to sell its tea under his firm's brand. Taking the first three letters of the tea company's name and the first two of his surname, he gave the Tesco name to Britain's first private-label product.

The second age of private label was a move upmarket. Marks & Spencer began to sell its own products under the St Michael brand in 1928. Named after the founder of the company Michael Marks, the brand came to stand for quality and value to three generations of British shoppers and demonstrated the potential of private labels to provide more than simply a budget offering.

The third age began in 1992 with the launch of Sainsbury's Novon washing detergent. Rather than representing a cheap, budget equivalent closely aligned to the store master brand, Novon was a standalone product. Thanks to in-store promotions, Novon quickly doubled Sainsbury's share of the detergent category and proved that private labels could stand on their own merits.

The fourth age marked a period when private labels became brazen in their attempts to replicate and replace manufacturer brands.

The Enemy of Innovation

Mindless habitual behavior is the enemy of innovation. - Rosabeth Moss Kanter

Have you noticed that every time the economy goes through its correctional dip the business press hops on the innovation stump?   So do most business leaders, and more and more they inappropriately cry “be innovative” when what they really mean is “be resourceful” (probably because it sounds more inspiring): “Times are tough people. We have to look for ways to do more with less. Let’s innovate!”  It certainly sounds more scholarly than, “Let’s make do!” or “Buckle down!”  But it’s still wrong. Innovation is not a mandated, disjointed course of action for optimizing daily activities. It’s a collaborative, strategic endeavor designed to add value to marketplace offerings, while increasing the value of ones brand over time.  And there’s the rub: “over time.”   

I remember reading something prophetic in an entertaining tome by Mike Daisey called 21 Dog Years. In the book, Mike recounted his short-lived time working in a call center at Amazon.com. If memory serves me right, he was routinely reprimanded for poor stats, i.e. average number of calls handled per hour, average minutes per  call, etc., and at one point was told, in no uncertain terms, to improve his numbers—to become more productive—or else.  So how did Mike respond to that request? He did what any misdirected, time-starved and pressured employee would do. He innovated!  From that point forward, on every fifth call that Mike answered he immediately hung up in the customer’s ear.  His numbers soared!

What is Innovation?

Ask ten people to define innovation and you’ll get eleven answers. 

Three Telltale Signs of an Agency's Ineptitude

Like many business school professors, I often find the things I teach in the classroom contrast with the things I experience in the boardroom. Last week provided me with the latest in a long line of contradictory experiences.

In the classroom, my MBAs are coming to the end of their Marketing communications class. The group work for this class will culminate in the students pitching competitively against each other and in front of a real client. So, I ended the session by listing three concepts that they should not even consider using in their pitch because they would instantly signal a lack of expertise and strategic naivety.

Throughout the week, I was also working for a client and helping them to select a new advertising agency. Lo and behold, all three of the concepts I had counselled my students against were prominently on display in all the pitches I witnessed.

First up is Maslow's Hierarchy of Needs. Back in 1943, when Abraham Maslow published 'A theory of human motivation' in the Psychological Review, he was probably unaware that the central model of his thesis would one day grace thousands of PowerPoint charts. However, his claim that human beings must first fulfil basic physiological needs, such as water and shelter, before they can be motivated by higher goals such as safety, friendship and eventually truth has proven to be a stalwart of many tired, old presentations.

The fact that there is no evidence to support Maslow's contentions, and that plenty of experimental psychology suggests his theory is wildly wrong, is neither here nor there. He sounds foreign and therefore clever, and big words such as 'hierarchy' imply some form of scientific rigour. If you are walking into a client pitch with nothing more than a first in history from Oxbridge and a dodgy big idea, you'll take what you can.

The Research Trap

One of the pitfalls of the multibillion-dollar marketing research industry is that researchers don't get paid for simplicity. Instead, they seem to get paid by the pound. A true story may be in order.

The scene: The office of a brand manager at Procter & Gamble. The problem is what to do with one of their largest brands. I ask a simple question as to the availability of their research. I'm surprised by the answer: "Research?" We've got a computer full of it. How do you want it? In fact, we've got so much of it that we don't know what to do with it."

A flood of data should never be allowed to wash away your common sense and your own feeling for the market. You'll never see that obvious solution. It's worth reviewing what this flood is washing ashore. I checked in with Robert Passikoff of BrandKeys, my favorite research company. Here are some of his and my observations.

Awareness studies neither link to real customer behavior nor reinforce (let alone create) brand differentiation. In fact, although the phrase, "That's nothing that a whole lot of awareness won't cure" has become something of a research industry joke, those studies keep getting done. Note to everyone: Everybody is aware of General Motors and few are buying their cars.

Segmentation studies get fielded by the sector. True, segments are ultimately identified but are they segments you really want? Or need? Or can actually market to? Often these studies end up identifying individual segments that you can't actually reach via any known media. But there they are. And then there's the problem of changing your strategy to appeal to different segments. When you become everything for everybody, you become nothing in the mind.

BrandQuote - May 26

"Perception is reality in the absence of experience."

                  - Tom Martin

Sponsored By: Brand Aid

The Power of Being One

Farewell Norwich Union. After more than 200 years, it is about to be buried in the big brand graveyard. As we speak, a plot is being dug, right next to Midland Bank and opposite British Rail.

Whenever a company buries an asset that has been two centuries in the making, questions will be asked. However, what seems like a radical move actually makes perfect marketing sense for parent company Aviva.

For starters, Norwich Union, like most financial-services brands, is no longer an organically built, single-branded house. Recent consolidation in the sector has seen Norwich Union merge with CGU, which was created by an earlier merger between Commercial Union and General Accident.

Consolidation makes sound strategic and financial sense, but often leaves a mess when it comes to brand architecture. The residue of remaining brands, combined with the continued acquisition of other international brands, can make coherent brand strategy virtually impossible as the company suffocates under the weight of so many different, yet allied, brand equities.

Aviva's major competitors have streamlined their brands into single global operations. To build awareness and distinct associations against these big global players, it has recognised the need to create a single global brand and pump its resources into it.

The strategic advantage of uniting an organisation around one brand is huge. Most big companies struggle to manage one brand well, and as you add more to the portfolio, the chances of market leadership and differentiation fall. As Aviva chief executive Andrew Moss put it, 'one Aviva, twice the value'.

It is no coincidence that the key leaders and growers - Vodafone, Tesco, Goldman Sachs, HSBC, McDonald's, Toyota, McKinsey - all operate a virtual single global brand operation. One positioning. One employer brand. One global marketing strategy. One brand tracking system. One culture.

Competitor Repositioning

In positioning your brand sometimes you discover there are no unique positions to carve out. In such cases I suggest repositioning a competitor by convincing consumers to view the competitor in a different way. Tylenol successfully repositioned aspirin by running advertisements explaining the negative side effects of aspirin.

Consumers tend to perceive the origin of a product by its name rather than reading the label to find out where it really is made. Such was the case with vodka when most vodka brands sold in the U.S. were made in the U.S. but had Russian names. Stolichnaya Russian vodka successfully repositioned its Russian-sounding competitors by exposing the fact that they all actually were made in the U.S., and that Stolichnaya was made in Leningrad, Russia.

When Pringle's new-fangled potato chips were introduced, they quickly gained market share. However, Wise potato chips successfully repositioned Pringle's in the mind of consumers by listing some of Pringle's non-natural ingredients that sounded like harsh chemicals, even though they were not. Wise potato chips of course, contained only "Potatoes. Vegetable oil. Salt." As a resulting of this advertising, Pringle's quickly lost market share, with consumers complaining that Pringle's tasted like cardboard, most likely as a consequence of their thinking about all those unnatural ingredients. It is usually a lost cause to try to bring a brand back into favor once it has gained a bad image, and in such situations it is better to introduce an entirely new brand.

Repositioning a competitor is different from comparative advertising. Comparative advertising seeks to convince the consumer that one brand is simply better than another.

Sponsored By: Brand Aid

Don't Be Evil - Unless It's Profitable

The British Airways pilot sounded calm, but he urgently needed a decision. Shortly after taking off from LAX one of the four engines on his Boeing 747, had exploded. With 5000 miles to fly and 351 passengers on board, should he return to Los Angeles or continue the flight to Heathrow?

Senior BA managers on the ground faced a crossroads. If they considered BA's brand values, the direction was clear: the airline that defined itself as 'reliable' and 'reassuring' would obviously advise the pilot to turn the plane around and head back to LA. But if the management team started to look at the financial implications, the decision became more difficult.

Turning the plane around would cost the airline upward of £100,000 in reimbursement costs. Should they take the brand path or the profit path?

At 29,000ft somewhere over Northern California the pilot's radio crackled into life and his orders were conveyed. Continue on to London. The pilot was probably not surprised. In 15 engine failures since 2001, BA had made the same decision. For all the fine identity work, advertising and PR, when a pile of money is put on the table, brand values cease to be relevant.

Business comes before brand - economics before equity.

An even bigger brand has been facing an even bigger crossroads.

When Line Extensions Can Work

Despite the disadvantages of line extensions, there are some cases in which it is not economically feasible to create a new brand and in which a line extension might work. Here are some of those:   

•       Low volume product - if the sales volume is not expected to be high.

•       Crowded market - if there is no unique position that the product can occupy.

•       Small ad budget - without strong advertising support, it might make sense to use the house name.

•       Commodity product - an undifferentiated commodity product has less need of its own name than does a breakthrough product.

•       Distribution by sales reps - products distributed through reps may not need a separate brand name. Those sold on store shelves benefit more from their own name.

Sponsored By: Brand Aid