in any such intangible, therefore, must rest in part on a conceptual model of the business that affirms these intangibles represent key success factors underlying the business strategy.
One conceptual basis for brand investment is to contrast it with its strategic alternative, price competition. It is not a pretty picture. Managers, especially those representing the number three or four brands, respond to excess capacity and price competition by lowering price. Competitors follow. Customers begin to focus more on price than on quality and differentiated features. Brands start resembling commodities, and firms begin to treat them as such. Profits erode.
The choice is between building brands or managing commodities. It does not take a strategic visionary to see that any slide toward commodity status should be resisted. Further, it is usually not inevitable. Consider the price premium paid for Morton’s Salt (few products are more of a commodity than salt), Charles Schwab (a discount broker), or Emirates Airline. In each case, a strong brand has been able to resist pressures to focus on price. Management guru Tom Peters said it well: “In an increasingly crowded marketplace, fools will compete on price. Winners will find a way to create lasting value in the customer’s mind.”4
How should brand-building efforts be measured given that such programs will be expected to pay off over years and there are multiple drivers of success? The answer is to use measures of brand equity—awareness, key associations, and loyalty of a customer base. The relevance of these brand-equity measures requires a compelling conceptual business strategy model that shows that building brand strength is essential and will result in a competitive advantage that will pay off financially in the future.
SETTING AND ALLOCATING BRAND-BUILDING BUDGETS
The budget for any organizational intangible is difficult to create, allocate and defend. But some observations about the process can be made.
First, the role of a brand in the conceptual business strategy model needs to drive the budgeting process. What is its role and how crucial is the brand to the strategy? What are the strengths and weaknesses of the brand and where does the brand need to go? Is the priority to enhance awareness, create or change perceptions, or increase loyalty? How do the segments differ? What budget is likely to accomplish those tasks or at least give the strategy a chance to succeed?
Second, the quality of the communication program is much more important than the budget. One classic study found that quality of advertising (as measured by pre-post TV advertising exposure) was several times more able to explain variance in the market impact (as measured by sales gain) than the change in the advertising budget.5 An implication is to spend more resources on creative ways to discover home-run ideas. It is possible or even likely that a $5 million budget behind a brilliant idea will be superior to a $20 million budget behind a mediocre idea. It is not just about spending money.
Third, measurement and experimentation can help. Experimenting with different brand-building ideas and budget levels takes a lot of the guesswork out of it. Beware, however, of using short-term sales to evaluate (although sometimes the absence of a short-term sales effect may signal a weak long-term effect). Using short-term sales as a criterion can lead to an over-emphasis on price deals, which can damage brands and thus long-term strategy. If running an experiment for a long time period is not feasible, measures of brand equity can be used as a surrogate for long-term market impact.
THE BOTTOM LINE
Brands are assets with strategic value. That assertion changes everything, but it needs to be communicated in a convincing way to motivate an organization to invest in brand building and in protecting brand assets. Case studies, brand-value estimates, and quantitative studies relating brand assets to stock return are reassuring, but the case still needs to be made in a specific context. That means developing conceptual models of the impact of brands on business strategy and by using “test and learn” experimentation.
PART II
Have aCompellingBrand Vision
Chapter 3
CREATE A BRAND VISION
Customers must recognize that you stand for something. —Howard Schultz, Starbucks
Yogi Berra, the fabled Yankee baseball player and manager, was said to have pointed out, “If you don’t know where you are going, you’ll end up somewhere else.” That is so true about brands; you need to know where they are to end up.
Your brand needs to have a brand vision: an articulated description of the aspirational image for the brand; what you want the brand to stand for in the eyes of customers and other relevant groups like employees and partners. Brand vision (sometimes labeled brand identity or brand values or brand pillars) ultimately drives the brand-building component of the marketing program and greatly influences the rest. It should be one of the centerpieces of the strategic planning process. In prior books, I labeled it brand identity, but brand vision captures the strategic, aspirational nature of the concept and avoids confusion that is introduced because, for some, identity refers to the graphic design surrounding the brand.
When the brand vision clicks—is spot on—it will reflect and support the business strategy, differentiate from competitors, resonate with customers, energize and inspire the employees and partners, and precipitate a gush of ideas for marketing programs. When absent or superficial, the brand will drift aimlessly and marketing programs are likely to be inconsistent and ineffective.
The brand vision model is one structural framework for the development of a brand vision with a point of view that distinguishes it from others in several ways.1
First, a brand is more than a three-word phrase; it may be based on six to twelve vision elements. Most brands cannot be defined by a single thought or phrase, and the quest to find this magic brand concept can be fruitless or, worse, can leave the brand with an incomplete vision missing some relevant brand vision elements. The vision elements are prioritized into the two to five that are the most compelling and differentiating, termed the “core vision elements,” while the others are labeled “extended vision elements.” The core elements will reflect the value propositions going forward and drive the brand-building programs and initiatives.
Second, the extended vision elements provide a useful role. They add texture to the brand vision, allowing most strategists to make better judgments as to whether a program is “on brand.” The extended vision affords a home for important aspects of the brand, such as a brand personality, that may not merit being a core vision element, and for elements, such as high quality, that are crucial for success but may not be a basis for differentiation. Such elements can and should influence branding programs. Too often during the process of creating a brand vision, a person’s nominee for an aspiration brand association is dismissed because it could not be a centerpiece of the brand. When such an idea can be placed in the extended vision, the discussion can go forward. An extended vision element sometimes evolves into a core element, and without staying visible throughout the process that would not happen.
Third, the brand vision model is not a “one size fits all, fill in the box” model with pre-specified dimensions, where all brands in all contexts need to fill in each box even if the box does not apply to them. Nor are brands excluded from using a dimension that lacks a “box.” Rather, the dimensions are selected that are relevant for the context at hand. And contexts vary. Organizational values and programs are likely to be important for service and BtoB firms but not for consumer package goods. Innovation is likely to be important for high-tech brands but less so for some packaged goods brands. Personality is often more important for durables and less so for corporate brands.
