Branding Strategy Insider

Brand Centric CEO's Will Rule The Day

On a wet and windy Manchester afternoon in 2001, Sir Roland Smith, chairman of Manchester United plc, welcomed analysts and journalists alike to Old Trafford.

He introduced chief executive Peter Kenyon and sat down. Kenyon surveyed the room. His presentation was short and consisted of a single slide that summarised the club's fortunes: turnover up, operating profit up, dividends up. Kenyon sat down and David Gill, his deputy, rose from his chair and began a more detailed, hour-long presentation of the figures.

It was a typical presentation of preliminary results, the kind delivered by every mid-sized company once a year. Except for what happened next. Kenyon returned to the podium with a slide entitled 'Liberating the brand'. He discussed brand extensions, co-branding, and creating brand affinity and brand loyalty. He talked with vision, ambition, and most surprising of all, he talked like someone who understood branding.

Reviewing his years as chief executive at the club it is hard not to be impressed. The foreign tours to support merchandising and the alliances forged with Nike and the New York Yankees are evidence of shrewd leadership.

But they are not the reasons that led Chelsea to make their decision to steal him from United with a £2m salary. Kenyon, unlike almost every other chief executive in the UK (and many CEO’s in the US), is brand-centric.

The CEO Must Drive The Brand

In the next five years, we will see a rapidly changing landscape across the globe, where the opportunities for businesses to benefit from corporate and product branding efforts will be larger than ever before.

The growing emphasis on branding will move up the boardroom agenda and I strongly believe that branding will become one of the most prominent drivers of value across the globe in the next two decades. Businesses with a sustainable business model and with a visionary and passionate CEO with branding talent will benefit from the rising opportunities for competing in the modern marketplace and potentially taking on the global scene. 

It needs to be no less than the CEO who embodies the branding efforts and serves as the company's and thereby the brand's primary advocate and nurturer. The approach is particularly well suited to companies whose top executives have a passion and talent for brand strategy, but in tomorrow's tough environment all top-executives must be able to represent and lead the brand. World-class companies like Sony, Virgin, Starbucks, Microsoft, Nokia, Giorgio Armani, Singapore Airlines, L'Oreal and Nestle all meet that description. Their top executives are directly involved in leading the branding vision, strategy and implementation, and spend a significant amount of their work hours to drive their brands forward and to achieve even better results.

Tomorrow's CEO must be a brand champion who leads corporate and product branding strategies, all strategic brand-portfolio decisions and constantly monitors the implementation of the brand locally, regionally and globally. A strong CEO has credibility and respect not only because of business talent and organizational power but also because of the depth of experience, knowledge, and insight. A suggestion from a visionary CEO with branding talent and managerial experience in branding and marketing is the key driver of the branding efforts and results in any successful organization - internally and externally.

Blazing Trails to Brand Leadership

How come some brands are great, while others just manage to be good? Is there a trick up the sleeves of those great brands – a trick that good sustainable brands can adopt to become great household names?
The answer is yes.

Happily, the financial investment required to adopt this trick is modest. The biggest investment has nothing to do with your marketing budget, and everything to do with your readiness to change the way you manage and grow your brand.

The ironic fact is that the key tool to building a great brand is your competition, because your competition makes your brand stronger. As my dad used to say, if you want to get ahead of the leader, don’t follow his tracks in the snow. Too many brands have become obsessed with their competitors, shadowing and imitating their moves and becoming nothing more than ‘me2’ brands. Often practicalities necessitate this apparent uniformity. You’ll know that milk, water, cheese and countless other items come in similar packaging. These are groceries which, undifferentiated, offer the same benefits as each other. Price often motivates the purchase. And then, from time to time, a product stands out.

Remember Listerine? The mouthwash your grandparents probably used? With a history of over 100 years – first created in 1865 - Listerine is a product which has seen nothing but steady increases in its market share of the mouthwash category. Yet, that category has been diminishing and, with it , Listerine’s revenue has been steadily decreasing. As Listerine’s competitors faded away, so did Listerine’s fortune, even as the leader, in a shrinking product category. Then things turned around. The company shifted its focus to concentrate on how it was actually delivering oral care to its consumers. With a century of trade to reflect on, the brand’s consumers of 2008 are the products of cultures that would be unrecognizable to their 1870s counterparts.

Profitable Brands Need Right Management Perspective

Brand management is a dynamic and a continuous process that needs consistent investment of time and money. The boardroom must ensure that brand management is allocated a specific budget as it is much more than mere marketing communications. Due to the intangible nature of branding, the results may not accrue in a short period of time a it takes time and reinforcement to build customer loyalty.

Many companies increasingly complain that financial markets focus on short-term results and give little credit for long-term value creation strategies. These claims are contradicted by empirical evidence.

A McKinsey study has shown that expectations of future performance are the main driver of shareholder returns. Across industries and stock exchanges, up to 80 percent of a company's market value can be explained only by cash flow expectations beyond the next three years. These expectations are driven by growth judgments and long-term profitability. An examination of stock prices of leading consumer product companies illustrated that future growth accounts for 54% of the stocks' total value.

Another study by McKinsey of Standard & Poors 500 companies from 1984 to 2004 illustrated that the average total returns to shareholders was 9.4 percentage points better among the companies that balanced short- and long-term performance compared to less balanced peers.

The best performers also survived longer in the market, the CEOs of these companies generally remained in office three years longer, and their stock prices were significantly less volatile.

Therefore, corporate management must align short-term and long-term objectives and expected outcomes of branding, and be committed to support it accordingly with well-balanced strategies and time horizons.

Sponsored By: Brand Aid

Agency Leadership Advice

Nine years ago, when I knew I was going to become CEO of this company, I spent three days with its legendary founder, David Ogilvy, at his château in France. It was March, it was cold and rainy, and we spent the entire time indoors talking about the business. At one point I asked him a question point-blank: David, if you were going to say one thing to me, what would it be? He didn’t hesitate in his response. No matter how much time you spend thinking about, worrying about, focusing on, questioning the value of, and evaluating people, it won’t be enough, he said. People are the only thing that matters, and the only thing you should think about, because when that part is right, everything else works.

I spend part of every single day hearing David speak that advice, and as a result, I devote a huge amount of time to asking myself: Am I doing enough? Who at Ogilvy do I have to worry about? Who needs another challenge? Who seems a little stale? Who needs a new view on life or a new country to run? David’s advice drives not only how I think about and mentor people but also how I form business strategy and make critical decisions.

In 1991, we got fired by American Express. They took away the big, sexy stuff—the brand work, most of the television—and gave it to another agency, leaving us with the little co-op stuff, the joint promotions with service establishments. American Express had been with us since the early sixties, and at one point they were our largest client.

But, as David Ogilvy noted when he phoned me at home that Saturday to tell me, the truth is that clients come and go: You’ll always win another one, and another will go away.

Saving the CMO

Chief Marketing Officers have a shorter tenure than NFL Coaches. In fact, as you can see by the chart, they barely get beyond two years before they are gone.

Average number of months at a position.

CEO………….44
CFO………….39
CIO…………..36
CMO………….26

As Business Week commented in a recent article on the subject, “The job is radioactive.” The problem as layed out in the article quoted a well known search company as stating that 70% of the companies don’t know what they’re looking for when they recruit a CMO.

Jeff Jones, who was the chief marketer at Gap for two years reported that he discussed 22 CMO positions over a five month period. Not one, he says, spelled out coherently for what he could be accountable for.

It’s gotten so bad that Advertising Age editorialized “Perhaps we should just call for the end of the CMO position”. They went on, “Put the job out of its misery. It isn’t really working anyway, is it?”

Survival and the CEO

Long ago Peter Drucker, the father of business consulting, made a very profound observation that has been lost in the sands of time:

"Because the purpose of business is to create a customer, the business enterprise has two--and only two--basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business."

Today, when top management is surveyed, their priorities in order are: finance, sales, production, management, legal and people. Missing from the list: marketing and innovation. When one considers the trouble that many of our icons have run into in recent years, it is not easy to surmise that Drucker's advice would have perhaps helped management to avoid the problems they face today.

Ironically, David Packard of Hewlett-Packard fame once observed that "marketing is too important to be left to the marketing people." But as the years rolled on, rather than learn about marketing and innovation, executives started to search for role models instead of marketing models.

Tom Peters probably gave this trend a giant boost with the very successful book he co-authored, In Search of Excellence. Excellence, as defined in that book, didn't equal longevity, however, as many of the role models offered there have since foundered. In retrospect, a better title for the book might have been In Search of Strategy.

Defining Brand Leadership

Every year Business Week publishes Interbrand’s updated list of the best global brands by value.  In 2007, Coca-Cola topped the list again at a value of over $65 billion. This list is based upon Interbrand’s assessment of brand asset value. This has always begged the question for me, “What is brand leadership?” Should brand asset value be its primary metric or is there something more to this leadership? To be able to manage brand leadership one must be able to measure it, which assumes one knows how to define it.

I think about it in this way. What benefits does a strong or leading brand provide to its owners? Here is the list I have compiled over the years based upon rigorous marketplace studies. A strong brand:

•    Has very high awareness
•    Receives a lot of free publicity/buzz
•    Is perceived to be unique in relevant and compelling ways
•    Is admired and has high purchase intent
•    Increases customer loyalty
•    Decreases price sensitivity
•    Enables the owner to charge a price premium
•    Results in increased market share, especially for the target customers
•    Provides increased bargaining power with business partners
•    Provides a platform for growth beyond the current products and product categories
•    Helps attract and retain talented employees
•    Helps the management team align employees in support of the brand’s promise
•    Often provides clarity for budgeting and capital investment decisions
•    Increases an organization’s sales, profit margins, stock price and market valuation

What are the most important measures of these benefits?

Leadership is No.1

I've received some push-back on my last post on "leadership" as a powerful differentiator. Several marketers felt that being the leader is not critical to success. All right, let's spend some more time on this subject.

First, let's start with the numbers. If you study categories, you will discover a simple but startling reality about market share: Your place in the market tends to be geometric. If the leader has a 40% share, the number two brand usually has half that, or a 20% share. Number three has half again, or a 10% share, while number four has a 5% share. Believe me, over time these numbers are very accurate. This means that number one is wonderful, number two can be terrific, number three is threatened and number four can be fatal.

Jack Welsh of General Electric fame made his reputation on the following principle. He said to his people, "I want to be a number one or number two. If not, I will sell the business." What he recognized was what I call "The Law of Duality." Most markets, over time, become a two-horse race.

The bottom line supports what we have always said, "Better to be first than to be better."

Let's continue to talk about why leadership is a powerful communications message. As I wrote in the New Positioning, my 1996 sequel to Positioning, the human mind tends to be insecure when it comes to purchasing things.

Brand Leadership: Differentiation Power

What most bewilders me in the marketing world are companies that don't exploit their leadership. Instead of "I'm lovin' it," McDonald’s could be, "The world's favorite place to eat." Instead of "Connecting people," Nokia could be "The world's No. 1 cell phone."

Leadership is the most powerful way to differentiate a brand. The reason is that it's the most direct way to establish a brand's credentials. And these credentials are the collateral you put up to guarantee performance.

Also, when you have leadership credentials, your prospects are likely to believe almost anything you say about your brand. (Because you're the leader.) Humans tend to equate "bigness" with success, status and leadership. We give respect and admiration to those that are the biggest.

Powerful leaders can take ownership of the words that stands for their brands' categories. You can test the validity of a leadership claim by a word association test.

If the given words are "computer," "copier," "chocolate bar" and "cola," the four most associated companies are IBM, Xerox, Hershey and Coca-Cola.

Astute leaders will go one step further to solidify their positions. Heinz owns the word "ketchup." But the company went on to isolate the most important ketchup attribute. "Slowest ketchup in the West" is how the company is preempting its product's thickness attribute. Owning the word "slow" has helped Heinz maintain a 50% market share.

Despite all of the benefits of being the perceived leader, we continue to come across leaders who don't want to talk about their leadership. Their explanation for not laying claim to what is rightfully theirs is often the same: They don't want to brag.