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Brand Management

6 Influencers Of Brand Prosperity

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There’s an increasing temptation to see technology as the harbinger of hope and hazard. Every day, the trendy press and commentators on social media carry reports of the next “it” technology together with their recommendations on what every business needs to be doing to ride the wave. Many of these wonder-techs seem to live a few days longer than their press release in the collective conscious. Some though will indeed change the world we live in and how we interact. This report by McKinsey for example identifies 12 such technologies that the company says could have a potential economic impact of between $14 trillion and $33 trillion a year by 2025.

But should our assessment of the risks and opportunities that sectors, and the brands within those sectors, face focus just on emerging innovations and their expected functional impacts? That seems simplistic.

In a report of its own from a couple of years back, KPMG pondered the impact that ten interconnected and interacting sustainability megaforces will have on business over the next 20 years – broadly speaking, a parallel timeframe to the era being considered by McKinsey. Decoupling human progress from resource use and environmental decline, KPMG suggested, represents both the central challenge of our age and one of the biggest sources of future success.

So yes, while there are forces that are clearly pushing economic opportunity forward, there are also clear constraints and restraints that will work to hinder the growth plans of many.

A temptation is to isolate these macro-forces from the everyday competitive realities that strategists grapple with – to deal with the immediate threats and opportunities and to some extent put off addressing the longer and broader term issues until they loom into view. Some might indeed argue that many of these issues are beyond their direct control or influence and therefore should be addressed on an as-required basis in order to protect brand and company alike from unnecessary distractions.

I understand that. But the brand graveyard is filled with the detritus of companies that considered themselves immune from what was going on around them, didn’t keep pace in markets where pace is everything, starved waiting for the tide to return in their favor, bet the bank balance on a sure thing that turned out to be very unsure, or simply fell away when their market collapsed beneath them.

Putting aside for a moment the risks most of us can only stare into the teacups to imagine, here’s my take on six forces influencing brand prosperity that brand strategists cannot afford to ignore. While the potential impacts of some are quantifiable and others not, all are at play on a brand at any one time.

Let’s start with the external forces: those that play out in the marketplace and often involve brand rivals.

Divergence – This pivots on your brand’s ability to judge how far your brand equity will spread. It takes judgment, confidence and insight to strategize your brand to the point where it is disruptive to your competitors but aligned with what your customers will be delighted by. Marketers need to be able to find and stay on the right side of that delicate balance between breakthrough and breaking point. That means having the courage to resist “best practices” that simply replicate what everyone else is doing at the expense of their own brand’s competitiveness. Getting that right, this study suggests, is a balancing act between coolness and autonomy: “Warren and Campbell find that autonomy and coolness have [a] curvilinear relationship which means that the relationship between coolness and autonomy is positive up to a point; after this point, it becomes negative. The authors suggest that what is perceived as cool is somehow deviant in order to be innovative and interesting.  However, if autonomy is perceived as too extreme (e.g. threatening or harmful), it will be perceived as uncool.”

Convergence – There’s fallout (good and bad) when sectors collide. Increasingly, these sectorial intersections are becoming less and less predictable. Take for example, this panel discussion on the convergence of finance and telecoms. It’s speculation at this point, but fascinating in that threats and opportunities can indeed come from anywhere. The key challenge is to remain true to who you are as a brand whilst carving a clear route through the merging traffic. As this article in the Financial Times observes, converge with caution: “companies can no longer depend on the old sector definitions as a way of distinguishing themselves in the market. Instead, they must develop a distinct strategy and value proposition – a “way to play” – that is closely aligned with their most important capabilities, the products and services they offer, and the markets in which they operate.”

Credence – Consumers look for brands but at the same time they actually believe in brands less and less. In other words, having a brand in an age of brands is no sign of success and no guarantee of performance. (However, not having brands can only mean your products  are destined to become commodities.) An econsultancy article quotes these two wake-up stats from a Havas Media report. Most people worldwide would not care if more than 73% of brands disappeared tomorrow. And consumers believe that only 20% of brands worldwide make a significant, positive effect on people’s well-being. It’s a point also made by Mitch Joel in an insightful article on the current state of branding. We should distinguish, he cautions, between the profile of brands in the internet age and the inclination that consumers have for them. Brands can matter, but only if they are prepared to focus on the consumer not themselves. “The opportunities to connect and build a direct relationship with consumers has never been more promising. The challenge – for most – is that they are bringing a very traditionally-based advertising mindset to the fold, instead of spreading their wings and seeing the bigger opportunity in smarter marketing mixed with better consumer experiences. These next few years are going to be even more challenging for most brands, because consumers are becoming more connected and are consuming media in such new and interesting ways.”

(Re-)Emergence – The world loves a comeback, which means the end of a brand is not necessarily the finish. This is in many ways the other side of convergence – when a rival appears (or re-appears) from inside the sector you think you know so well, funded up, revitalized and ready to grab back market share. Here’s an example from France where the Schiaparelli brand has returned, transformed, after a 60 year absence. Comebacks and revivals are a reminder to all of us that branding is a volatile environment; that brands that have ceased to be counted as competitors can, at times, return to a market bringing new ideas and energies with them. There’s some great examples in Steve Rivkin’s interview with Garland Pollard.

Internal forces also influence a brand’s ability to prosper.

Invergence – The propensity of cultures to lose their way. And when that happens, the consequences can go a lot deeper than just churn and a loss of overall morale. For example, in this article in The Guardian about the failure of The Royal Bank of Scotland, one of the key contributing factors was a culture where the balance between risk and growth was not taken as seriously as it should have been. We all talk openly and regularly about the fact that brands must work inside-out but in my view more monitoring of cultural health as a factor in maintaining brand value needs to be done, both in terms of empirical evidence but also in frameworks that lay out for managers detailed guidelines of what to watch for. To me, that’s about two requirements of management that are often lacking in disillusioned cultures – the ability to espouse and encourage soft values, and the willingness to balance the emphasis on performance with an equal emphasis on encouragement. Here are seven tell-tale signs that all is not well.

Revergerence – The temptation companies have to stick with what they know. This is, to my mind, the most difficult issue facing strategists – knowing what to stick with, why and when in a world where change is constant. I’m sure there’s a link between this and invergence – that as a culture declines, people inside the organization feel less inclined to innovate and more motivated to focus on what they and those around them do feel they know for certain. In this analysis of brands that have disappeared, the Huffington Post points to three clear reasons why brands vanish. Significant mismanagement and industry pressures, they observe, combined to sink Saab and Sony Ericsson. Brands like Compaq were acquired and disappeared, perhaps because they thought they would continue as is under new owners. Financial institutions like Lehmans never saw the financial crisis coming. Everything they assumed and acted on failed that stress test. Here’s some more telling reasons for why brands find themselves caught between what they know and a market that is moving, or has moved, on: they invested in flawed technology or ideas; they somehow didn’t see a declining market as applying to them; they didn’t shift core competencies fast enough; they over-expanded on an unsustainable model; they tried to fundamentally change something that customers continued central to why they were loyal; consumer tastes changed and they were caught napping; their history took them one way while the market went another.

Where are we going with this?

Collectively, these forces and those identified by McKinsey and KPMG point to three revolving spheres of influence, each turning at different speeds and with varying degrees of immediacy.

a)     The long-term macro factors – those changes that will impact how we work and live in the decades ahead.

b)    The short – medium term competitive factors – those changes that prompt us to act and react in order to grow markets and meet targets in the months and years ahead.

c)     The internal factors – those attitudes, behaviors and ideas that people bring to work and/or work within on a daily basis.

So what are the take-aways for strategists? How should we realistically plot futures for our brands that make sense now and yet make allowance for ideas and issues that are often founded but unproven.

To me, brand prosperity depends on four actions:

  1. Building and maintaining a purposeful, vigorous and curious, values based culture that is motivated to resist revergence.
  2. Creating and implementing strategies that cement customer loyalty and generate areas of leadership. I say areas of leadership in the context of marketplaces because I don’t believe that a market leading brand needs to lead in every aspect of that market. It must however own the rights to a clear, sustainable and distinctive direction. “Own the rights” is not about IP. It’s about having permission from consumers to forge ahead with an idea and to take them on that journey.
  3. Developing a flexible portfolio of strategies to address potential and actual competitor behavior across the four external forces (divergence, convergence, credence and re-emergence)
  4. Funding research and development programs not just to develop product improvements but to look to prepare the brand to leverage emerging technologies and address pending issues in ways that correlate with the brand’s purpose.

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3 Comments

ionut franga on February 27th, 2014 said

Too many companies focus excessively on the competitive factors and totally ignore the other ones. It’s one of the biggest mistakes in marketing nowadays, in my opinion

Serge
Twitter:
on February 27th, 2014 said

Great insights! I found them very comprehensive.

I share your view that one if the main goals to achieve prosperity companies should resist revergence. Plus, they should definitely identify their local and global purposes and functions in order to deliver the right services to right people at the right time. This will lead to prosperity.

Hilton Barbour
Twitter:
on February 27th, 2014 said

Mark – spectacular writing as always. Like you I remain surprised that Scenario Planning (as described in Peter Schwartz’s “The Art of the Long View”) is not a more utilized tool in many organizations. Shell used it to great advantage determining how to react to the volatilities in oil exploration in the 70′s and 80′s. That volatility seems to be playing out in many other categories as you article highlights. Do you have a POV on why Scenario Planning has fallen so out of vogue?

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