Thursday, June 7, 2007

"Brand Building" - June 2, 2007

Launching a product is not as straightforward as simply putting it into a box and onto store shelves. Products are bought by consumers based on a preconceived preference formulated within their minds about that specific product. They buy “A” over “B” because of practical or emotional reasons, or sometimes both.

These dish soaps all do the same thing, yet consumers prefer Dawn over PalmoliveConsumer preferences are affected by strategic marketing communications, most likely in the form of advertising, created by the company that sells the product. Companies create and steward brands to represent their products in order to guide consumer preference. A brand is intended to symbolize the product’s value set and create preference and differentiation for that specific product in a saturated market environment.

The end goal is to get consumers to repeatedly pay a premium for a product, hopefully, because of what the brand contributes to the product’s uniqueness.

There are literally hundreds of corporations around the world that sell the same product, however, some are more successful than others. Why? Is it because their product is superior? No! The answer is that the companies who are succeeding have managed to create a brand that represents their product’s heart and soul. They build, shape, and utilize the characteristics behind the brand to build preference for their product. They are then able to externally communicate that brand to their target audience.

Take Apple for instance. Anything that has an Apple logo slapped onto it is immediately considered to be innovative, artistic, and different. Think about it, the iPod doesn’t play music any better than the Zune or SanDisk, but iPods make up more than 75% of the music player market.

I believe that a brand is like an iceberg. The top, or visible part of the iceberg, represents a consumers’ gut feeling about a brand. It is an initial reaction. The submerged part of the iceberg that is not visible, but makes up 90% of the iceberg, substantiates the real reasons why a consumer feels a specific way about the brand. These feelings can be deep seeded rationale.

Corporations typically take two directions when they begin to formulate a brand. See the charts below.
Being a “Branded House” is a great way to go about building a brand. Firstly, they develop a “Masterbrand” that is responsible for guiding the positioning of any products launched within the corporation. It is important the products are positioned in consideration of the Masterbrand, as they are inevitably going to represented by it. Secondly, this set-up ensures that no sub-brands within the company are created. Finally, with this brand structure, consumers will never form a disconnect between the Masterbrand and the value it brings to the products it represents. This is great because in the long-run, people will develop trust around any product represented by the Masterbrand.

A House of Brands on the other hand, like Procter & Gamble, has many brands contained underneath one massive corporate “hood.” This set-up is good for the individual brands underneath the “hood” because they maintain a certain independence from another, and they can provide different values and positioning to a variety of target audiences. It is a smart approach, because unlike having a Masterbrand, if one brand within your “House of Brands” goes bad, then the entire product portfolio isn’t affected.

In comparing the two, I believe in the Masterbrand. I think that taking the time to invest in building depth around a brand from every angle (internal and external communication) makes more strategic sense then attempting to guide a dozen different brands under one “hood.”

The chart above aptly shows how a Masterbrand that is continually invested in over time will positively affect any products that are represented by the brand. Remember, in the end, it is only about getting consumers to repeatedly pay a premium for a product, and it is the brand that is responsible for coaxing them into doing so.