July 20, 2014
Usually when I ask “what makes a great brand”, the first answer I get is “they have a great product”. That’s not an untrue answer, but it’s just a starting point really. The best PRODUCTS start out solving an actual problem, but as we’ve seen the best BRANDS evolve beyond just the product eventually becoming a Big Idea. Yes, products can be very successful, without laddering up to a Brand, but they usually take a price strategy only–like Walmart, Expedia or Mcdonald’s. If you treat your product like a commodity your consumer will treat you the same.
Companies really only have four strategic choices: you can be better, different, cheaper or not around for very long. Better implies you have some ACTUAL and MEASURABLE performance advantage versus your competitor and different implies that there’s a PERCEIVED difference versus the average products. Both better and different require you to act like a brand, with a defined idea that can help defend your position. If you choose to act like a PRODUCT, that really just leaves CHEAPER as your strategic option. And choosing the strategy of being cheaper leaves you at the mercy of using pricing fluctuations, by purely supply and demand, and very rational decisions. When you start managing a brand, consumers start to use more emotions in the decision, thinking a bit less.
So why do we have Brands?
I love asking this question. Usually I get a bunch of marketing type answers like driving loyalty, conveying consistency or maintaining ownership over trademarks. All good answers. But the best answer is about profit, not marketing. Companies only invest to create a Brand if they think they can make more money from a brand, than if we just had a Product. When you create a brand, there are 4 main ways to use the P&L to drive more profit for your brand:
- Use the connectivity between brand and consumer to leverage premium Pricing to drive profits: By creating a brand idea that connects, you can try to command a premium or once you have a loyal consumer, you can look for innovative ways to trade your consumers up. When consumers are emotionally connected to a brand, the price becomes more Inelastic. We can see in the market, that loyal brand fans pay a 20-30% price premium for Apple’s iPad.The more engaged employees begin to generate an even better brand experience. For instance at Starbucks, employees know the names of their most loyal of customers. Blind taste tests show consumers prefer the cheaper McDonald’s coffee but still pay 4x as much for a Starbucks. So is it still coffee you’re buying or are they paying for the Brand?
- Use your brand’s power to drive Lower Costs: A well-run Brand can use their efficiency to lower their cost structure. If you are a hot brand, suppliers will cut their cost just to be on the roster of a beloved Brand. A brand that becomes popular will benefit from the free media through earned, social and search media. They may even find government offer subsidies to be in the community or partners willing to lower their costs to be part of the brand. For instance, a real estate owner would likely give lower costs and better locations to McDonald’s than an indifferent brand.
- Leverage the bond with consumers to Increase your Market Share: Crowds draw crowds which spreads the base of the loyal consumers. I was walking past a store the other day and they had a line up to get into the store. We immediately became curious as to what that store offered. Competitors can’t compete–lower margins means less investment back into the brand. It’s hard for them to fight the Beloved Brand on the emotional basis leaving them to a niche that’s currently unfulfilled.
- When you have an idea bigger than your product alone, you can enter into New Categories that fit with your idea: We see many beloved Brands enter into new categories knowing their loyal consumers will follow because they buy into the Idea of the Brand. Starbucks has gone far beyond Coffee to where it’s now one of the biggest fast food chains in the world. The idea is no longer tied to the product or service but rather how it makes you feel about yourself.
Running a Brand can feel a bit less Certain than a Product
I work with Brand Leaders all the time at every level, and with many, I can sense an uneasy feeling when we shift the conversation from product to brand. It’s almost like the uncertainty of skating on ice, instead of the certainty of just walking on pavement. Managing a product is easier, but managing a brand can generate higher growth rates and margin to drive profits for your company.
Challenge yourself to shift your thinking from a product leader to more of a brand leader. As much as it can feel uneasy, shift your thinking to be more conceptual. Try to figure out the big idea of your brand. We believe that a Brand is an idea that is worth loving. Our definition of a brand: “A Brand is a unique idea, perceived in the minds and hearts of the consumer, consistently delivered by the experience, creating a bond, power and profit, beyond what the product itself could achieve.” The challenge I have for you is that if the best brands eventually evolve to defining a Big Idea for their brand, then why not just start there? You should figure out your brand’s Big Idea and then everything in the company should feed off the Brand’s Big Idea. The Big Idea (some call it the Brand Essence) is the most concise definition of the Brand. For Volvo, it’s “Safety”, while BMW might be “Performance” and Mercedes is “Luxury”.
Once you have your Big Idea, you should then use it to frame the 5 different connectors needed to set up a very strong bond between your brand and your consumers. Brands are able to generate love for their brand when the consumer does connect with the brand. I wish everyone would stop debating what makes a great brand and realize that all five connectors matter: promise, strategy, story, innovation and experience. The first connector is the Brand Promise, which connects when the brand’s main Benefit matches up to the needs of consumers. Once knowing that promise, everything else feeds off that Promise. For Volvo the promise is Safety, for Apple it is Simplicity and FedEx it might be Reliability. It’s important to align your Strategy and Brand Story pick the best ways to communicate the promise, and then aligning your Innovation and the Experience so that you deliver to the promise. To make sure the Innovation aligns to the Big Idea, everyone in R&D must be working towards delivering the brand promise. If someone at Volvo were to invent the fastest car on the planet, should they market it as the safe-fast car or should they just sell the technology to Ferrari. Arguably, Volvo could make more money by selling it to a brand where it fits, and not trying to change people’s minds. As for the experience, EVERYONE in the company has to buy into and live up to the Brand Promise. As you can start to see, embedding the Brand Promise right into the culture is essential to the brand’s success.
Think like a Brand Manager
As you’re challenging yourself to think about going to Brand Thinking, here are some of the differences you might notice.
- Think of a Brand as an idea with many intangibles, whereas a product is usually tangible to the senses. This is where you as a Brand Leader must begin to think more conceptual and think of ideas.
- If we think of a Product as solving a Problem, then try to think of a Brand as fighting your consumer’s enemy.
- While managing a product, you’re always focused on trying to figure out the THINKING part of your consumer, and you offer very rational product features and claims, you might need to shift to start figuring out the EMOTIONAL decisions your consumer makes and finding more emotional benefits that connect with them.
- Instead of thinking of just the consumption of your product, start thinking of the EXPERIENCE. When I was a Brand Leader, I honestly didn’t pay too much attention to the experience. We tend to think of that for service brands. But look at the EXPERIENCE of a product brand like Apple and see the difference it can create.
- Brand becomes a reputation you must manage, going well beyond the legal entity and trademark. Every brand should be using Public Relations to become part of the news cycle, helping to go beyond Advertising. Look to your most loyal consumers as a potential influencer of your reputation through social media.
- Start to think about becoming part of your consumers life, as a ritual, which goes beyond a routine. Be a favorite part of their day, or be an enabler to great things that happen in their life. Adjust to the days of the week of the time of the year. Leverage the calendar as a call out to how your brand might be used.
- A product can be debated, but a Brand will be defended. Provide your most loyal consumers with enough love so that they love you back enough to defend you at the lunch table.
The more Love you can generate for your Brand, the more Power and Profits you will generate.
How loved is your brand?
We believe a brand’s source of power is the emotional feelings it generates. With that power comes added profitability.
In the consumer’s mind, brands sit on a Brand Love Curve, with brands going from Indifferent to Like It to Love It and finally becoming a Beloved Brand for Life. At the Beloved stage, demand becomes desire, needs become cravings, thinking is replaced with feelings. Consumers become outspoken fans. It’s this connection that helps drive power for your brand: power versus competitors, versus customers, versus suppliers and even versus the same consumers you’re connected with. The farther along the curve, the more power for the brand. It’s important that you understand where your brand sits on the Love Curve and begin figuring out how to move it along towards becoming a Beloved Brand. With the power of connection, the brand can leverage that power into increased growth and profits. To read more, follow this presentation.