Branding Strategy Insider

Darwin's Theories And Marketing

Why did Delta, Northwest, US Airways and United Airlines go bankrupt? Why were C2 and Pepsi Edge such notable failures? One answer might be "divergence." Over time, every category breaks up into multiple categories, creating chaos for companies that try to keep their brands in the mainstream of the market.

Charles Darwin

Divergence is the least understood, most powerful force in the universe. In his book The Origin of Species, Charles Darwin called divergence the driving force that creates a new species.

In our book The Origin of Brands, we use Darwin's concept to describe the process that takes place to create a new category. What starts off as a single category (the mainframe computer, for example) winds up as multiple categories -- mainframes, mid-range, desktops, laptops, handhelds, servers, etc.

Each of these developing categories represents an opportunity to build a new brand. Digital, Compaq, Dell and Palm, for example.

There are two forces at work in nature, according to Darwin. One is a gradual change from an ancestral to a current condition. (A process biologists call "anagenesis.")

Brand Positioning For A Better Night's Sleep

A Hilton senior vice president for brand management and marketing was recently asked by a reporter, ‘So what is a Hilton?’

‘People can’t necessarily articulate it,’ conceded the senior vice president for brand management and marketing. The brand is defined, he suggested, “if we collectively give people an experience that says, yes, I’m proud of what it says about me to stay here, it makes me feel good; I’m in charge of my stay.’

‘I’m proud of what it says about me to stay here?’ That’s a Hilton? That’s what differentiates a Hilton from a Hyatt, a Marriott, an Omni, a Radisson, a Ramada, a Sheraton, a Westin or a Wyndham?

Mind you, this is the response from a senior vice president for brand management and marketing of an organization that is spending $45 million a year on advertising.

What is the role and function of marketing anyway? To collectively give people an experience that makes them proud of what it says about them? I thought that was the role and function of the hotel itself.

Sure, you want your product to give people a good experience. Without that, most marketing programs are certain to fail. But beyond a good experience is the need to position the brand in the mind of the prospect.

Management Consulting: Help or Hazard?

While no one has the real number, it has been estimated that management consulting has a global market of more than $50 billion. Consultants are drawn to money like bees to honey. So naturally, big rich companies are surrounded by all types of consulting firms, trying to collect as much as they can to feed their expensive teams. (It costs about $250,000 a month to have one of McKinsey’s consulting teams on site.)

An Army of Consultants. But No One to help.

I’ve seen many big brands in trouble. In fact, I wrote a book about them - Big Brands, Big Trouble: Lessons Learned The Hard Way (Wiley, 2001). Can you guess what common denominator bound them all? They were each surrounded by consultants who took their money but apparently offered no real help with the problems threatening to overwhelm them. From their performance with these big brands, one could accurately portray these folks as modern-day Robin Hoods: They rob from the rich and keep it.

Two Examples

A look at Levi’s and AT&T begins to prove my point. Levi’s spent $850 million on Andersen Consultants to reengineer the company to serve the customer better. All this did was create chaos that made things worse. The board of directors finally had to stop the nonsense.

Tackling A Town With A Brand Identity Crisis

Freedom? Winthrop? New Prospera? What should we call it?

This American town was founded by ex-slaves and was named Freedom. Decades later, a barbed-wire factory brought jobs and the town adopted the founding family’s name, Winthrop. Today, an internet mogul is preparing the community for an influx of white-collar workers, and wants to re-brand it as New Prospera.

Truth or fiction? Fiction, actually, in a novel titled Apex Hides the Hurt by Colson Whitehead (Doubleday).

Marketing, advertising and other media creatures have long been the centerpieces of literature that comments on American consumerism. A classic in the field is Sloan Wilson’s The Man in the Gray Flannel Suit.

But this novel may be a first: Its protagonist is a naming expert (excuse me, he prefers “nomenclature consultant”) who remains adamantly nameless throughout the tale. His claim to fame is the Apex brand of the book’s title: The world’s first multi-culturally hued Band-Aids, perfect for any skin tone. (The tagline delivers the punch: “Apex hides the hurt.”)

The author sees company and brand names as a tethering force, connecting people, places and objects to some shared history. Here is his take, with a dollop of scorn, on the process of naming:

Brand Naming Humans Proves Promotional

The Globe and Mail newspaper in Toronto called it “a marketing stunt that takes branding to a new extreme.” What’s the news? Humans have now been branded.

Four Canadian citizens legally changed their surname from “Dunlop” to “Dunlop-Tire.” Each wacky Mr. or Ms. Dunlop-Tire pocketed $6,250 – their share of the $25,000 in prize money offered by Goodyear Canada Inc., which markets the Dunlop tire brand in Canada.

For the company, this brash stunt generated more publicity than half a dozen ad campaigns, and cost a relative pittance. When the company announced the contest, the story was picked up by international media and became part of a bit on Conan O’Brien’s late night TV show.

Sure, marketers have slapped their names on everything from coffee mugs to sports stadiums. But human beings?

The Anti-laws Of Luxury Marketing #9

9. The role of advertising is not to sell

Look at Tag Heuer's advertising. One side features the endorsing celebrity, the other the model of watch. No commentary, no description of the watch, no sales pitch – just the cryptic line: ‘What are you made of?’

Nothing is more alien to traditional marketing than this declaration; in traditional marketing the first step is  to discover a sales proposal, to have a unique selling proposition  – the text is there to make the sales pitch. In luxury, the dream comes first. The explanations of the salesmen are simply post-rationalizations. If you go to a Tag Heuer shop you are handed a thick brochure the size of a book, which says everything there is to say about the Tag Heuer brand, its origins, its finely tuned processes, respectful of a unique design, etc. Then it goes on to describe the various models, one by one…

If you go to a Porsche dealer they will talk to you about racetracks, about road-holding, about everything that feeds the myth of the hero, after which they will tell you about reliability, etc – by way of post-rationalization. American society being what it is essentially compels people to justify spending dollars by adducing qualities that can be presented publicly by the owner of a luxury item, even if it is the dream that is the major selling point. The purchaser of an impressionist masterpiece could say that it’s a good investment.

Saturn’s Marketing Lesson Is One To Remember

Fundamentally, there are two ways to increase sales: (1) Expand the brand, or (2) Expand the brand’s market share.

Most companies focus on the first way, expanding the brand. While this might seem to work in the short term, expanding the brand will eventually weaken the brand and leave it in worse shape than before the process began.

While it’s more difficult to expand a brand’s market share, this is the better way to go. The larger the market share, the more powerful a brand becomes. When a brand reaches 50 percent or more market share, it becomes so dominant that it is almost impossible for a competitor to overtake.

Consider Microsoft Windows, with a worldwide share of the personal computer operating system market of 94 percent. How is the No. 2 brand, Apple’s Macintosh, going to compete with Windows?

By building a better operating system? Macintosh already has the better operating system. Here’s what the country’s foremost technology expert (Walter S. Mossberg of The Wall Street Journal) has to say: ‘Macs have better hardware, a better operating system and better bundled software than Windows PCs.’

Even with better hardware, a better operating system and better-bundled software, Mac has only 3.4 percent of the market.

Digital Marketing: Economic Recovery And Insight

If you have recently searched for "Kenya safari," "gold jewelery," or "insurance price comparison" lately, you are responsible. Responsible, that is, for an article published last week in the Financial Times that claims how these search terms and others like them "suggest that consumer confidence is perking up." According to the FT, search query patterns suggest that "consumer sentiment in the UK is up 6 per cent since the beginning of the year."

These figures are based on data from Google's Barometer, which tracks a basket of 50 positive keywords and 50 negative keywords to gauge the health of the overall economy. Created in response to the recession, this type of trend spotting within Google search data is part of a wider effort at Google to demonstrate how patterns in search queries can not only alert marketers to emerging trends but also accurately model real-world phenomena. For example, whether you're interested in monitoring Flu Trends, learning about today's hot trends, or each year's Zeitgeist, small teams of Google engineers have been able to discover deeper consumer insights using data on the web.

What does all this mean for marketers? Put simply: it will be increasingly difficult for advertisers and planners to ignore the web when making media mix decisions. Furthermore, it should lead marketers to question the interaction effects between online and offline spend relative to consumer behaviour. From our perspective, the companies that get ahead in this new digital environment will be the ones that find clever ways to harness the web to work in conjunction with their existing offline campaigns but also for generating new consumer insights. Unlike other traditional forms of gathering consumer insight, online insight tools are often cheaper, based on much larger sample sizes, and are quicker to deliver results.

Brand Perceptions, Slogans And The Mind

Any successful brand is successful by standing for something in the mind. Changing what you stand for is almost impossible unless you don’t stand for anything at all. In other words, a brand that is nowhere in the mind is a brand that can be changed. A brand that stands for something in the mind is a brand that is forever locked into its position.

In the cemetery of failed launches are thousands of products like Xerox computers, IBM copiers, Tanqueray vodka, Listerine toothpaste, Coca-Cola clothes, etc. These products didn’t fail in the marketplace, they failed in the mind. They tried to stand for something that didn’t fit the prospects perceptions about the brands.

Mind first, market second. You can’t short-circuit the process by taking a good product to market to demonstrate its superior performance and then, in the process, changing perceptions in the mind.

I have been in more meetings than I can count where a CEO or a CMO has said, 'Here is our product which out-performs our competition. Now it’s your job to communicate that superiority to prospects.'

Forget reality. Forget product superiority. Marketing is a game of perceptions. The perception is the reality. Start with the mind of the prospect and figure out a way to deal with those perceptions, even if those perceptions are negative.

Creating The Brand Halo Effect

Marketing and psychology are closely related. If psychology is the systematic study of human behavior, then marketing is the systematic study of human behavior in the marketplace.

Good-looking people, for example, tend to be perceived as more intelligent, more successful and more popular.

That’s the halo effect in psychology.

The halo effect also works in marketing. What key product is behind the phenomenal success of Apple Computer? In a word, the iPod.

In fiscal year 2005, Apple Computer sales were up 68 percent over the previous year. Profits were up 384 percent. And the stock was up 177 percent. And Apple’s net profit margin increased from 3.3 percent to 9.6 percent, an astonishing jump.

The good news from Apple Computer wasn’t just the success of the iPod. As a matter of fact in 2005, the iPod and iTunes together accounted for only 39 percent of Apple’s sales. The other 61 percent of Apple (computers, software and services) also did well.

Apple’s computer and related businesses were up 27 percent in 2005 over the previous year. And, according to industry reports, Apple increased its share of the personal computer market from 3 to 4 percent. That’s the halo effect in marketing.