From the Publisher

What does it really take to succeed in business today? In A New Brand World, Scott Bedbury, who helped make Nike and Starbucks two of the most successful brands of recent years, explains this often mysterious process by setting out the principles that helped these companies become leaders in their respective industries. With illuminating anecdotes from his own in-the-trenches experiences and dozens of case studies of other winning-and failed-branding efforts (including Harley-Davidson, Guinness, The Gap, and Disney), Bedbury offers practical, battle-tested advice for keeping any business at the top of its game.

Product Details

• ISBN: 0142001902
  
• ISBN-13: 9780142001905
• Format: Paperback, 240pp
• Publisher: Penguin Group (USA)
• Pub. Date: February 2003
• Edition Description: Reprint
• Sales Rank: 46,489

• Table of Contents
• Read an Excerpt

Table of Contents

Read an Excerpt

A New Brand World

Penguin Books

Chapter One

Relying on brand awareness has become marketing fool's gold.

You've probably noticed in the past couple of years that once-arcane phrases like "brand dilution," "brand synergy," "brand equity," and "brand recognition" have begun tripping lightly off just about every tongue in the business punditocracy. Such glib terms and phrases are typically uttered not only with a straight face but also with a solemn pursing of the lips and no detectable trace of irony.

"In the landmark 1967 film The Graduate," the New York Times business reporter Joel Sharkey recently wrote, "there is the famous scene at the cocktail party where a helpful older man whispers this single word of business advice into the ear of a callow, befuddled young Dustin Hoffman: 'Plastics.' Remake the movie today, and you'd have to change the line to 'branding.'"

These days, the term "branding" is being uttered in the same pious, reverential tones formerly reserved for buzz words like "synergy," "leverage," and "strategic planning." The brand idea is no longerconfined just to packaged consumer products. Today the word "brand" has become part of the vernacular within every department of any progressive company. It is on everyone's radar screen, though not everyone really knows what it means. Personally, and speaking as something of a brand fool, all this loose talk makes me nervous. For it was only a few years ago that everyone had given brands up for dead.

Brand Awareness Versus Brand Strength

Step back to the spring of 1993, when Marlboro, one of the world's most recognizable brands (if not the most recognizable) stunned the marketing world when it announced that it would have to aggressively cut its cigarette prices to stay competitive. The move was prompted by an onslaught of lower-cost, less-known competitors. Some of these were essentially generic, without any real brand sensibilities or public recognition in the market, other than that they were cheap. Others were barely brands in their own right. Wall Street analysts hammered Marlboro's parent company Philip Morris's stock, and several business magazines heralded the death of branding the very next week. According to them, it was price, not brand image, that would matter in the future. Building a strong brand was a concept that had run its course.

My friend Watts Wacker, a professional futurist, had it right when he stated at an Association of National Advertisers conference that year, "I believe the nineties officially began with Marlboro's inability to sustain its price. When the number one brand realized that its value proposition (what the brand was really 'worth' in the minds of the customer) was out of sync, that underlines the difference between a pig and a hog."

Asked by one conference participant to define that difference, Wacker gamely replied, "You feed a pig, but you slaughter a hog. Brands can be piggy, but they can't be hogs."

To me, the Marlboro Man had not fallen off his horse because the limitations of branding had finally revealed themselves. What sent him plummeting to earth, spurs pointing skyward, were two things: the product had lost any real differentiation in the marketplace from the equally blurred identities of a growing number of competitors, and its marketing strategy had become entirely predictable. By simply resting on past laurels, which was acceptable in the Old Brand World, the Marlboro brand eventually rejoined the larger pack, if you will, of all the other brands of cigarettes. It began to look like one more player in a very large, mostly unremarkable commodity market. The only distinction between Marlboro and its competition was Marlboro's heavier marketing and higher price, something that must have perplexed more than a few smokers.

To Marlboro's credit, it had established strong emotional connections with millions of core users, thanks to decades of rich imagery of the open West: vibrant vistas of cowboys, cattle, campfires, and coffee. Transcending a product-only relationship and connecting the brand to powerful and often timeless emotion-"emotional branding"-will continue to be important in the New Brand World, but it can never replace meaningful product innovation. Emotional branding merely augments and extends a powerful product or service platform by recognizing that some of the most important product benefits are emotional rather than physical. What is new is the need for greater innovation in both product development and marketing communications. In the future, standing still will be lethal to any brand.

Not unlike Marlboro, Nike also wove its brand into timeless emotions by becoming the category protagonist for competitive sports and fitness. But unlike Marlboro, Nike never stopped reinventing its products and its marketing. It is safe to say that Nike Advertising took a thousand different creative tacks on the same core brand positioning during my eight-year watch, from 1987 to 1994. While Nike Advertising was constantly refreshing the marketing and brand positioning, Nike Design became one of the world's premier product design and development organizations. Speed of change was also important to Nike. Just when Marlboro was beginning to falter, Nike was introducing so many new products and marketing campaigns that it had reduced its average product life cycle from one year to three or four months.

Relevance and Resonance

But change for the sake of change can also be marketing fool's gold. The best reason for change is to expand brand relevance and brand resonance, two measures of brand strength that are much more valuable than mere brand awareness can ever be. Perhaps this is the greatest single change in the concept of "brand" in recent years. Where we once looked at brands on a surface level, we now view them in more intimate and multidimensional terms. We plumb their depths, looking for reassurance that they are good, responsible, sensitive, knowing, and hip. Never in the history of business has there been such scrutiny of brand performance.

'So how do brands become more relevant and resonate more deeply with customers? One of the most rewarding strategies for achieving this goal has been mass customization, the process of creating a broader array of "niche" products that emanate from one central brand position like spokes on a wheel. Executed properly, mass customization enables large brands to build and retain relationships with smaller subsets of a mass market while growing the entire brand franchise.

Consider Harley-Davidson. Yet another brand with a timeless emotional position-the open road, personal freedom, and rebellion-Harley-Davidson also understands the value of providing customers myriad ways to customize its core product or embrace its brand. For FY 2000, Harley posted $2.2 billion in revenues from its motorcycles. It also posted $600 million in revenue on parts, accessories, and general merchandise. The latter delivered more than just high profit margins to the company. It also enabled consumers to customize their own Harley-Davidson brand experience.

Another brand historically hell-bent on change has been Intel, with its "self-cannibalization" of Pentium technology in the nineties. Intel was well aware that with every new, faster chip, it was essentially killing its young, but it recognized this violent act as a form of what Intel chairman Andy Grove called "creative destruction." (This term was originally coined by the early-twentieth-century Austrian economist Joseph Schumpeter and was later popularized by both Grove and General Electric's CEO, Jack Welch.)

Marlboro's plight gave the big, traditional, Old Brand World brands much to ponder, especially the \ber-brands like U.S. Tobacco, Unilever, Procter & Gamble, General Foods, and Nestli. For them, "Marlboro Friday," as they called the day the price cuts came down, threatened the foundation of trillions of dollars' worth of merchandise and services derived from their brands-brands that had by then apparently grown too similar, too complacent, and too reliant on outdated and conservative marketing practices. The notion that a brand could survive for years, even decades, without significant change to its product or marketing had to be abandoned. Branding had become a game of fast-break basketball. The fastest and most innovative team would win. Branding, it also became clear, was no longer a straightforward concept.

Fortunately for Nike, it never looked to the postindustrial brand juggernauts for best brand-development practices. In fact, we steered clear of anything that felt like Old Brand World logic. Nike committed a form of "creative destruction" comparable to Intel's by creating literally thousands of products and hundreds of print ads, billboards, and television commercials every year. It aggressively began to mass-customize with new "collections" of products that amounted to sub-brands within categories like basketball and tennis. Each sub-brand and collection beneath the Nike brand umbrella was geared to a particular customer segment or distribution channel. The overall effect of Nike's brand segmentation was to burnish the brand in the mind of the consumer in more creative, more relevant and dynamic ways. Like Intel, the Nike brand became as much about change as about continuity. Both brands kept consumers happy and on their toes, and grew into global powerhouse brands by constantly refreshing and reinventing themselves-remaining forever the same, yet forever new.

The Value of Brand for the Commodity

Nike and Intel had succeeded brilliantly in precisely the area where Marlboro had so dismally failed: the fertile mind of the consumer. Marlboro had been forced to cut prices to match Brand X inferiors and no-name interlopers because cigarettes were increasingly perceived by consumers as commodity products-goods that are essentially "fungible," or mutually interchangeable and undifferentiated, like wheat, pork bellies, or sugar.

This dreary perception of what marketing people call, with justifiable dread, "product parity" erased the value created by literally billions of dollars expended on marketing, promotion, and advertising over the years. Marlboro had spent billions building up the global image of the Marlboro Man as the epitome of rugged American individualism and free-wheeling masculinity, yet this great American icon was being increasingly regarded as representing "just another cigarette." At the same time, Nike and Intel accomplished precisely the reverse. They took what for decades had been considered commodity products, athletic shoes and computer chips, and transformed them into something not merely different, but better.

Almost every brand in existence today can be reduced to the status of a commodity if it fails to effectively evolve both its products and its marketing communications. You can't do just one or the other. The most innovative product line will grow stale in the minds of potential customers if the marketing has become static, undifferentiated, or-even worse-irritating for lack of change. Even the best marketing campaign will be run into the ground when it becomes so repetitive that it wears out its welcome. Stay with a marketing campaign too long and it will send your brand into reverse as consumers lunge for the remote control, change radio stations, or flip past your print ads the nanosecond they recognize that it's just you, again. On the Web it's no different. Consumers will curse your Web banner, too, at some point. Even "permission marketing," a method of marketing where customers "opt in" to be contacted by companies (usually on the Web) for new products and services or to participate in promotions, will wear out its welcome for many unless it is respectful and kept vibrant. Unsolicited e-mails and "notifications" are only marginally more acceptable than unsolicited telemarketing to your home phone during dinner.

The issue of branding has become topical in nearly every business, and in recent years it has become even more critical to industries where competition is particularly fierce and where technology has become a disruptive force. We have witnessed the effects of information technology on stock trading, travel, and even shopping (not necessarily on buying, though that will evolve). But this pales by comparison to the technological changes in the telephone, cable, and wireless industries. An exponential expansion of capacity (thanks to fiber-optic, cable, and wireless technologies) has dropped prices as well as barriers for entry to potential competitors. At the turn of the century, it became a price-driven war for survival. Profits have crumbled and many question what the future holds for some of the biggest and once-strong brands in the world. In the March 19, 2001, issue of Forbes magazine, the publisher, Rich Karlgaard, put his thumb on the plight of a number of large companies with enormous brand awareness but downward-spiraling profits in a column that illuminated many of the shortcomings of traditional brand thinking.

"The 20th-century idea of a brand is inadequate protection these days-a castle wall in the age of cannons," Karlgaard writes. "Needed is fresh thinking on a brand's new responsibilities." Why, he wonders, are the brands that enjoy the greatest awareness facing such a hard time in the marketplace? The answer is simple: awareness is just about all that some of them have to show for themselves anymore.

This complacency is not limited to the tired old brands that have been sitting on their "old economy" butts. Also at the turn of the century, quite a few newer brands sought to create brand awareness and ended up with only that. The failed Internet brand Pets.com built huge brand awareness with its admittedly cloying sock-puppet mascot, and eToys also created enormous name recognition for itself en route to bankruptcy court. Massive levels of brand awareness will not correct a flawed business model. Excessive marketing spending will only accelerate the demise of any poorly conceived company.

These companies are mere blips on the screen when compared to a massive, established juggernaut like AT&T, but even AT&T has been having its own brand troubles lately. By the turn of the century the phone industry had become a textbook case of what happens when a product or service becomes invisible at best, frustrating at worst, and so omnipresent that it generates excitement in no one. And the overabundance of capacity created a marketing war that none of us could possibly have missed.

Continues...

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Excerpted from A New Brand World by Scott Bedbury Copyright © 2003 by Scott Bedbury. Excerpted by permission.
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