BRANDWORKS UNIVERSITY® 1998
STREETWISE BRANDING FOR COMPETITIVE ADVANTAGE
Presented by Marsha Lindsay
President/CEO, Lindsay, Stone & Briggs
July 15 & 16, 1998
Are you streetwise?
I mean, some of the old rules of thumb you and I learned growing up may be a little naive
in the late ‘90’s...
Come on-- phone call for a dime? A telemarketing call costs a lot more than that today!
And hitchhiking? Why today, co-branding is big. Really big.
Ask for directions? Good luck. A lot of us wish someone could tell us which direction to
go with our distribution--with mega-grocery stores, convenience stores, Home Depot,
traditional lumber yards, traditional hardware stores, Sears, Wal-Mart, and hundreds of
specialty shops and catalogs all telling us what we can or should do.
And get a map of the marketplace? It would have to be a pretty BIG map: Because as of
April 1998 there were reportedly 320 million web sites out there (320 million!), with
estimates of 1000% growth over the next 5 years!
Mapping is made all the more complicated by a proliferation of media options, and a
soon-to-be-digital world where phones and TV’s and computers will all be connected,
giving us faster access to even more information. More information on what? Why, the
hundreds of additional products and brands that come on the market each year! It’s no
wonder the customer -- whether they be homeowners, business purchasing agents, or
company executives -- are more pressed for time, more stressed and more overwhelmed
than ever with clutter and information.
Come to think of it, how would one even hope to craft a map of today’s marketplace.
YOUR MAP TO THE STREETS
Well, there IS one way to craft a map. It’s a map complete with symbols and a legend on
how to read the road signs along the way.
What is this map that can make you so streetwise?
The “map” is your “brand identity.” Now, don’t confuse that term with the way it was
defined a decade ago. Today, brand identity does not mean crafting a new logo or
corporate brochure. It is that analysis of what your brand stands for or COULD stand for
that will differentiate you from the competition, in relevant ways, with high perceptions
of quality in the eyes of your customer. It is those singular core values you can be famous
for that will transcend this year’s product, next year’s personnel changes, and new
competition entering the market.
LSB Brand
Genetics®
Profile
Utility
What the
Brand does
Physique
Tangible
Marketing
Persona
Who the Brand is
Your map is that focused brand
positioning that indicates where true north
is in the eyes of your customer, based on
a deep understanding of their needs,
aspirations, motivations, perceptions,
values, and how your brand speaks to
those things.
This map will give you directions for
getting where you want to go without
falling in the gutter, having your brand
held up in an alley, or finding yourself at
a dead end. To begin, let’s start with some
historical perspective.
1950s – ‘60s: THE AGE WHEN INFORMATION AND POWER WERE WITH
THE MANUFACTURER AND SERVICE PROVIDER
The ‘50s and ‘60s were the birth and thus codification of the basics of classical branding.
It was the age of BRANDING TO THE FIRST POWER, as we at LSB call it. A time
when communication was one- way -- manufacturer or service provider to the customer.
The reason communication was one-way -- company to the customer -- was because
information and power was with the manufacturer or service provider.
You’ll recall the circumstances easily enough:
It was the age of the post-war, baby boom economy. There was high demand for goods
and services. In fact, there was more demand than supply. The value of a company was
determined by its ability to meet this demand, and conventional wisdom dictated that this
ability was determined by a company’s plants and equipment. Thus, hard assets were
valued on a balance sheet.
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Due to high demand, there was little price competition. There
were, in fact, few competitors, which translated into relatively
few brand choices for the customer. With
little choice, what was in style or obsolete was determined by
the manufacturer or service provider. There was no Consumer
Reports, little investigative journalism, and there were few
sources of information other than what came from the company
who supplied the goods and services.
The situation meant that it was the manufacturer or service
provider who decided what a brand could stand for. So the
company talked TO the customer and communication was one
way, thus the term, branding to the first power. Conventional
wisdom said that all a company needed to do to succeed was
spend enough on one-way communications -- mass media
advertising and PR -- to make people aware of their product or
service.
Ahhh. Life was simpler then.
You know it was simpler then because you know it’s not that way today. Today, power
has shifted from the manufacturer and service provider to the distribution channel.
1970s -- ‘80s: THE AGE WHEN INFORMATION AND POWER SHIFTED TO
THE CHANNEL PARTNER
It was in the ‘70s and ‘80s that power
started to shift to the channel, as they
developed more information than the
manufacturer or service provider on
what customers wanted, what was and
was not selling. Consequently,
BRANDING TO THE SECOND
POWER evolved as manufacturers and
service providers tried to directly engage
customers in two- way communications
in an effort to wrestle some kind of
control from the channel.
How did manufacturers and service
providers get into this wrestling match?
A proliferation of products.
A price war. Technology. And taking their eyes off the ball.
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The boom economy of the ‘50s and ‘60s fueled an increase in the provision of goods and
services -- a proliferation of choice for the customer.
With this widespread choice came price competition. With price competition came a
downturn in profits, the deification of the quarterly P&L as we know it, and downsizing.
You remember, the manufacturer and service provider tried to cut their way to
profitability even by cutting out some of the things that provided customers with value.
Yes, many companies took their eye off the ball. If manufacturers had been listening to
what customers wanted in the midst of all this choice, and then built that intrinsic value
INTO their products to differentiate them, they could have charged for that value. Stayed
in control. And distributors might not have such a stranglehold today.
But while manufacturers remained so inwardly focused, technology played into the hands
of the channel partners. It allowed channel partners to know more about the customer
through new capabilities like customer databases, scanner data, and computerized
inventory. The distribution channel was filling in the information vacuum of what the
customer wanted, where, and when.
And, because the one who has the information has the power, we started to see some very
bold moves on the part of the channel partners: Agents started to tell the home office how
to run their businesses. Dealerships and franchisees started to refuse to do things that
corporate headquarters asked them to do. With more customer information, wholesalers
and dealers were able to tell the manufacturer what SKUs to make. Retailers started to
demand slotting allowances, and even told companies what could and couldn’t be put on
the shelf. Today 20% of P&G’s sales go through Wal-Mart. Now you tell me who is in
control of that situation?
How did manufacturers and service providers react to this power grab? They tried to
wrestle back power from the channel partner. First they tried price incentives to get
customers to buy -- discounts, contests, coupons and two for the price of one. They
essentially said, “We’ll sell the customer what he doesn’t want for less!”
But price deals couldn’t buy customer loyalty. It only trained customers to think one’s
regular price was over-priced, which further hurt the P&L.
The second strategy to try to wrestle back control? Manufacturers and service providers
tried to bypass the channel partner and forge direct links with the customer.
Branding Squared evolved to engage customers by circumventing the channel – mailing
and calling direct, trying to divide and conquer with niche marketing and media.
You see it all around you today: Window brands sell directly to the homeowner via
telemarketing. Manufacturers of contract furnishings telemarket to businesses.
Manufacturers bypass the dealer and retailer with catalogs. Manufacturers and service
providers are getting into distribution themselves.
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But many of these efforts still have a missing link. A focus on what the customer wants
and needs.
Thus, just like street conditions changed from the ‘50s to the ‘80s, and branding to the
first power evolved to the second power, so too, is there a new kind of branding evolving
for the 21st century.
THE LATE 1990s AND 21ST CENTURY: THE AGE WHEN INFORMATION
AND POWER ARE SHIFTING TO THE CUSTOMER
BRANDING TO THE THIRD POWER™ is evolving out of the marketplace conditions
of the ‘90s.
Why? Because once again, marketplace power is shifting, but not back to the
manufacturer and service provider. Marketplace power is shifting from the channel to the
customer.
Power is shifting to the customer because so much information is now available to them.
Because of technology and the proliferation of media options, neither the manufacturer
nor the service provider can be in control of all of the marketplace information on their
brand. Nor the channel partner.
Information on your brand and on competitors’ brands is now readily available from far
more than your ads, PR, sales literature, point-of-sale, or 800 number. Customers can
access the web sites of your competitors for how their brand differs from yours. Compare
rates. Even get a price quote on a product or service.
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And chat rooms, ahh, the great resource of information, mis-information, and disinformation. With thousands reading along, your customer get information that is
accurate or downright untrue. You see, your brand IS in the hands of customers, friend or
foe.
And it’s not just web sites that are booming with information. Between 1992 and 1996
alone, two NEW networks entered the market. And the number of cable channels rose
from 82 to 193. While in the ‘50s there was just a handful of magazines that everybody
read (like the Saturday Evening Post, Life, Readers Digest and Time), today there are
reportedly over 18,000 magazines published. In 1997 alone, there were 332 new
consumer publications and 399 new trade publications.
More information. Sometimes inaccurate information. Fast information. Media and
information in the hands of customers everywhere: 20 million Chinese people are
predicted to be on-line by the year 2000. The poorest huts in third-world countries, have
a TV set turned to CNN news on business, Paris fashion, lifestyles, and advertisements. (I
know. I peeked in the window.) On Mount Everest people can tap on to the internet via
satellite. And with virtual reality -- coming soon to an internet site near you -- your
customer can put on some goggles, handle a joy stick, and feel exactly like they are
shopping some furniture showroom in Milan.
All this information in the hands of the customer due to new and niche media, some of
them replacing the channel partner.
Thus, in order to survive and thrive on the cluttered streets of this virtual world, a new
definition of branding for the 21st century has evolved:
-- Branding now is the process by which a sustainable relationship is built
between the customer and the organization --- based upon a deep understanding of customer needs, motivations, perceptions,
and values --- which utilizes all relevant points of contact between the organization, its
employees, channel partners and customers (Agora Group).
Notice several things about this definition compared to past definitions of branding.
Things like the goal of sustainable competitive advantage has been replaced by the goal
of a sustainable relationship. In order to get the customer to seek you out in a world of
clutter your competitive advantage lies in developing a relationship with them.
Also, things like meeting customers’ values replaces meeting customers’ functional needs
because, in today’s world, anyone can duplicate your functional advantage in a matter of
months. So, while you still need to aggressively meet the functional needs of your
customer, this will just keep you at parity. What will attract and retain customers are
values they identify with that you can own in their eyes.
Most strikingly, the definition says customers must perceive not just that you are credible
or nice, but that you have a deep understanding of their needs and values. Not merely that
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you know how and where they live their lives, but why. For example, take Lucent
Technologies. Lucent is a business-to-business marketer, but they use TV to reach their
business target on shows like Seinfeld. When asked why, they say it’s because it is
important that customers know Lucent understands the customers’ cultural “savvyness,”
how their customers spend their time, and what they find interesting.
And this final note on the new definition of branding for the 21st century: That the
customers knows you understand them the way each and every point of contact with your
brand communicates to them. With so many ways the customer can get information about
you, many of which you do not control, it is incumbent upon you to be consistent across
all the mediums of communication you do have control over. This means everyone who
comes in contact with your customer or communicates with them must have that deep
understanding of your brand and how to help the customer experience it.
This new definition of branding for the 21st century marks the difference between simply
having two-way communication with your customer and having a relationship with your
customer.
This is Branding3, or Branding Cubed™, as we sometimes call it. It has evolved out of the
late ‘80s and early ‘90s as an outgrowth of 1) the fact that technology not only put
control in the hands of the customer but crafted new and often interactive media; 2)
manufacturers’ true understanding of what building value into ones; products can do, or
branding; and 3) branding that transcends an art form to become a behavioral science.
First, technology and the media. Three years ago, how many of you had e-mail? Today
how many of you have it? Three years ago, how many of you regularly accessed the
internet? Today? How many of you have a computer at home? Two? How many of you
get three magazines at home? Five? Eight? Ten?
How does a manufacturer or service provider take this media revolution and use it to his
or her advantage? When phones ,TV, and the internet are one, manufacturers and service
providers will HAVE to find ways to link the customer and the brand with the media in
order to develop any kind of customer relationship amid all the clutter.
For “customers are using their power to never again settle for anything other than
precisely what they want when they want it." Or so says Regis McKenna, author of the
new book Real Time, who was hailed the best-known marketer in the Silicon Valley by
The Wall Street Journal.
Ironically, in this information-rich culture, branding has become more important. In
1996, Fortune magazine stated that branding today is just as important for increasing
margins as cutting costs. For how does a customer make sense of what to buy in all the
clutter? They don’t have the time to sort and compare functional benefits or shop all the
choices. So they turn to brands they believe in and to manufacturers and service
providers with whom they already have a relationship. They turn first to web sites that
have brand value. It’s undeniably true: A 1997 survey by Yankelovich found that a
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known and trusted brand name strongly influences the buying decisions of 63 percent of
respondents, dramatically up from 51% three years earlier.
And the Yankelovich findings probably reflect the depth to which manufacturers are
departing from a low price/promotional sales strategy to a branding strategy, and are
making an effort to truly understand what constitutes lasting value in the customer’s
mind so they can build it into their products and services. (As Confucius says: “The small
man understands profits. The wise man understands equity.”)
By using a branding strategy, manufacturers and service providers are finding they can
ask for a relationship with the customer, develop some predictable demand, develop
some predictable demand, achieve a more predictable revenue stream and equity to the
company’s balance sheet. (This suggests that, unlike the ‘50s when equity was
determined by hard assets, the value of manufacturers or service providers in the 21st
century will be determined by the depth of their customer relationships.)
Thus, it is not coincidental that with the rise of branding as a means of relationshipbuilding, the practice of branding in the ‘90s has become much more sophisticated. It has
become a behavioral science that is researched, studied, practiced and analyzed for
improvement. There has been founded a coalition founded for brand equity, national
benchmarking research (with which LSB involved), textbooks dedicated to branding and
more.
And what does this branding science teach us? It teaches us that you need to find a
marketing strategy that links the consumer, the media, and the brand. Or, as we at LSB
call it, branding to the third power, or branding cubed.
Here are some examples to show what we mean.
House and Garden: A magazine, yes, but also a brand. If you are a subscriber like me,
you probably received an extensive survey inquiring about your favorite brands,
shopping habits, hobbies, travel interests, education and income. In return for mailing in
this information, which filled 20 pages, they offered an exclusive club of sorts: The
chance to sample new home, fashion and cosmetic products first, and to get special deals
on purchasing my favorite brands. It’s a community where I feel special. In creating a
detailed profile of customers like me, they are building a road map for a relationship with
me. They’re getting insights to link my needs with House & Garden – related
experiences, using their magazine, the web, and direct mail.
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The Body Shop. This is a British company that specializes in cosmetics and personal
care items, with a catalog and retail shops around the world. They have built strong
relationships with people whose environmental values are so strong that they can easily
become evangelistic about them. How? For one thing, they live according to their
customers’ values -- they do not do test their products on animals. They buy as much as
they can from developing third world countries. And, as a means of branding to the third
power, they provide customers ways to manifest their environmental values, beyond
simply using Body Shop products. For example, The Body Shop leveraged its strong
relationship with customers to get 500,000 of them to take a stand on the burning of the
Amazon rainforest and write to the president of Brazil.
Then there is Tango. Tango?
Tango was a sleepy mid-pack soft drink brand until 1991, when it decided to engage in
branding to the third power--the strategy that links the customer, the media and the brand.
The challenge? To sell against Goliaths like Coke and Pepsi, and somehow reclaim
Tango from the brand graveyard. Their first step? Get young people’s (16-25) attention
for Tango via bold mass media advertising. Note how, in each of the TV spots you’ll see
that they demonstrate the sensation one gets from drinking their product, which is their
brand’s competitive difference.
Having earned people’s attention with creativity and media weight, Tango’s next step
was to get customers to experience the brand. Things like the orange man making random
appearances in Tango territory, the creation of a hotline for new Tango drinkers to
interact (fanatic users could call and leave a recorded message for others), ads that
included a phone number to call and order an orange man doll, and to learn about Tangosponsored concerts or soccer matches, and more.
All in all, Tango connected its customers to the brand via TV, telemarketing , the
Internet, merchandise, direct mail, motion picture trailers, posters, events, and a web site
as crazy as their TV spots. The result? Tango surrounded customers with brand expertise
at every point of contact.
The results?
• 300,000 “free” dolls were “sold” – sold because the call to order the doll cost $2.99.
• Overnight, weekly unit sales increased 300,000 cases.
• Total volume has increased 30% since the campaign began.
• They now have a database of over 4.5 million customers and tremendous customer
information. Because each time a customer called the help-line or to order an orange
doll, Tango interviewed them. So even though the Tango customer has information
and power in the marketplace, Tango has a richly detailed roadmap of customer
information to drive smart decisions.
• And they are out of the graveyard--now the # 3 brand in Britain.
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Tango is a terrific example of what Branding to the third power stands for -- a strategy
that links the consumer, the media, and the brand.
But Marsha, you may be saying, I’m a service company. Or, I’m in business-to-business
marketing. Or my company is small. This branding to the third power is not possible on
the streets where I live and work.
Au Contraire.
And you are living proof. Are you not here for two days as part of an exclusive club,
experiencing the LSB brand, providing us with your questions, conversation, and
evaluation forms with data to better serve your needs?
Whether consumer or a business-to-business marketer, large or small, we believe you,
too, will have to engage in branding to the third power to survive and thrive on the streets
of the 21st century.
So let’s take a look at some guidelines that will be helpful you in the practice of branding
cubed....
GUIDELINES FOR STREETSMART BRANDERS
1) Don’t be all things to all people. Be everything to some. Have a detailed map of
your customer base. Can you answer who is the right customer for you, with the greatest
lifetime value? What 20% of your customers provide 80% of your margin? What
customer segments are best for you based on their attitudes about what your do or
provide? What information sources are they passionate about and what role do they play
in their lives? Today, knowing WHO the right customer is requires more than just
demographics. It requires an investment in research, like the House and Garden survey of
their subscribers. Like Tango’s extensive interview of its hot-line callers, it requires the
kind of sophisticated databases Masco has developed. In addition to an accurate analysis
of your best customer, streetsmart branders also map their customers by getting into their
heads and hearts.
2) Get into the heads and hearts of people who know and love your brand for
insights your competition does not have. Proprietary insights -- that is the goal. This
may mean using seemingly odd research techniques, like asking customers to describe
your brand and its competitors as if they were tools or animals. (Of course, it is not so
important WHAT tools or animals they name as the insights gained from asking WHY
they named the tools or animals that they did.) To get insights the competition does not
have, streetwise branders are starting to use techniques such as deprivation research,
which is taking the brand away from your most loyal customers and discovering along
with them what that loss means to them.
3) Getting customer insights about the differentiating and relevant values you could stand
for is critical for being streetwise. These are needed to focus the positioning of your
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brand with core values that transcend products and people and time. Such a singular
focus is the only way you can hope to be famous for anything in the customer’s cluttered
mind. We live in a world where all the traditional forms of competitive advantage
(product, price, distribution, and promotion) are virtually at parity, which means nearly
everything can be replicated by a competitor within a few months. You have to stand for
some core value or higher benefit that your customer seeks.
4) Have your brand strategy drive your business strategy. Once you know what
timeless and differentiating core values you want to be famous for in the customer’s
mind, make sure that your entire marketing mix manifests them. The Body Shop, Saturn,
and Tango are classic cases of taking customer insights and crafting products, pricing and
distribution that fulfill their brand’s genetic profile.
5) Rather than ramble or communicate multiple messages, stick to communicating the
singular thing your brand stands for, consistently, at every point of customer
contact. Like Tango, have one look, one voice. That is to say, integrate your message in
all your communications -- ads, PR, sales promotion, packaging, telemarketing,
stockholder reports, events, signage, showroom decor, and more. And please, please note,
that communicating what your brand stands for does not necessarily mean you go out and
do advertising that only talks about your brand identity and not your products. For 95100% of the time, you will be communicating what your brand stands for by wrapping
your product communications in it. But whether it is image advertising or product
advertising wrapped in the brand, you must be consistent and singular in that one thing
your brand stands for.
6) Never underestimate the value of creating visibility and awareness. This is, in fact,
what branding to the first power is all about--the creativity that breaks your message
through the clutter of competitor’s sameness, the sound plan for reach, frequency and
share of voice across all of today’s media, be it TV or the Internet, events or direct mail.
Such branding to the first power is a prerequisite to any other kind of branding, because
as any memory research (Newsweek, June, 1998), marketing research, brand research or
real life experience from Levi’s, Miller and Brett Favre’s agent will tell you,
• Simple recognition can affect perceptions positively.
• People tend to automatically prefer brands they’ve heard of, even if they’ve never
used them.
• Prospects equate brand visibility with brand leadership, quality, success and more,
even before the product comes into play.
• And on a practical note, if they’ve never heard of you or don’t have some notion of
what you stand for, why should they search for your web site rather than the other
7000 web addresses that offer what your do? And without your advertising and PR to
convey your web address, how will they even know where to find you among the 320
plus million web sites out there? How can you link with the customer if they don’t
know where or how to find you?
7) Provide linkages for a dialog with your customer. This is what branding to the
second power is all about. Direct-response vehicles, 800#s, direct distribution
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opportunities, nice, live, knowledgeable customer service people. Don’t just create these
linkages. Make sure your customers are aware of them. And give customers an incentive
to use them as Tango did--useful information, contests, or entertainment value.
8) Surround your customer with your brand and what it stands for. Like Tango, look
for ways, at every point of customer contact, to actively link the customer with your
brand. Brand experiences of the third power can take many forms--a Harley birthday
party, The Body Shop enlistment of customers to evangelize about the environment, or a
useful workshop for your clientele.
As Regis McKenna has said, “Brands, once seen as fixtures of identity, will become
dynamic, evolving through rich, real time interaction between seller and buyer.” The
customer interaction starts with the media they turn to for information. From there, it’s up
to you to give the customer meaningful experiences that relate to what your brand stands
for.
9) Streetsmart guideline # 9? Seek to develop a sincere relationship with your
customer, not just a sale. Create a sense of friendship. As Susan Fornier, Associate
professor at Harvard notes in a recent Harvard Business Review, ‘True relationship
marketing only happens when the marketer does a lot without always expecting much in
return or expecting much right away. It sometimes requires that you put others needs
before your own.
So, there you have it, the 50-year evolution of the digital world, examples of how your
customer is the ruler of that world, how there are countless media roads and point of
customer contact in the streets of this world. To get your brand where you want it to go,
you’ll need a map of what the customers value, what media they use and when, and what
kinds of experiences feed their souls. Then you need to make sure everyone in your
organization follows this map.
Because, like that old marketing truth from Alice in Wonderland, if you or your people
don’t know where you are going, any road can take you there.
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