Nov '21 (edited) in Resources
What is a brand? What role does a brand play in business?
Main branding video that covers, in easy Branding 101 terms:
- What a brand is
- Where brands come from
- What role a brand plays in business
- Two case studies of world class branding
Here is the full article:
What is a Brand? What role does a brand play in business?
If you've been asked the question, what is a brand? And what role does a brand play in business? Do I need a brand to make sales in my business? I'm here to answer these questions for you. Now the answers might not be what you think, let's get to the bottom of it..
In this article, we're going to cover:
· What a brand is.
o It's a full definition that not many people are aware of.
· Where this idea of brands and branding came from.
o Because what was true in the 1800s is still true today.
· What role a brand can play in your business.
· Two ‘best in class’ case studies of brand management.
What is a brand?
So, what is a brand? The short definition - the brand defines the product and company.
If you look at the image below, a brand is not just a logo, it is the sum of perceptions of everything a company does.
This encompasses its products, services, stakeholders (i.e., people that are not employees, or customers, for example, government interactions or investors), the social communities and investments charities that the company is involved in, employees, research and development, supply and operations. A brand covers ALL of these things - it's the sum of perceptions of everything a company does,
On a technical level, it can be broken out into rational product or service attributes, like this:
• Rational Product Attributes
• Quality
• Durability
• Reliability
• Price
So, if it's a product, you can look and feel and touch it, what is the quality, the durability, the reliability associated with the product? And what is the price? Even the price alone gives you perceptions, e.g., low price versus high or premium price tells you something about the brand.
Then there are emotional product attributes.
• Emotional Product Attributes
• Image
• Reputation
• Trust
• Gives Confidence
What is the image of the brand? What is the reputation of the brand and the company? What the trust does the brand give to you? And how much confidence does the brand give to you? What things are emotionally triggered when you look at each of these brands in the picture above? They will mean something to you in your head. There is a perception of each of these brands and therefore the company's products or services that these companies put into the market. And all of that together is what the brand is.
Where did brands come from? The answer is the Victorians. The people of Great Britain in the 1800’s.
The 1800s was a period of incredible development and innovation. The Industrial Revolution was in full swing, you had mass urbanisation and people coming from the rural areas and the farms to work in the factories in the cities. Consequently, there was an explosion of innovation. Just a quick side note, if you are interested the many things that the Victorians invented during this short space of our history, check the bottom of this article*. So, at this time, you had mass production and large populations living in the cities where previously, if you lived in a village and you wanted bread, you would go to Mr. Baker, who had his market stall in the market square. You would buy your bread directly from him. You knew him, you knew each other's families, everybody knew everybody, because it was a small village. Now suddenly, you have mass populations living in large industrial cities, and food was being mass produced. It was at this time, some unscrupulous manufacturers invoked the darker side of capitalism with a “money at all costs” attitude, and some practices started being invoked like, “bulking out bread”, with things like sawdust. This was so manufacturers could reduce their cost of production and sell more product at less cost and thus increase their profit. There were also examples of chalk being mixed in with ice cream, and all sorts of strange things bulking out food products. Of course, there was no food standard agencies back then, like they are today, to regulate food and ingredients. So as a result, there were cases of poisonings and a lot of people got sick. Naturally, people had a lot of anxiety about buying food products.
The answer was that some clever manufacturers then decided, “I will put my name on the product, I will stamp it with my name to say this is a family business. And if you buy from me and my company with my name on it, you can trust me.” This is how brands were invented.
If you look at chocolate, with the example of Cadbury's…that came from Mr. Cadbury. If you look at his ad from the 1800’s, it says “Guaranteed Absolutely Pure”. So Mr. Cadbury guaranteed that this was real milk cocoa and not something bad. And then you also had biscuits that Jacob’s brothers branded in the UK that is still very popular today. Mr. Coleman made Colman's mustard etc.
So, everybody was putting their names on things. As things developed, Mr. lever of Unilever fame, also realised, “Well, if we're putting this on the packaging, I could put something that relates to the product that people can relate in their minds that this is a superior product.” He called the soap sunlight soap. This was the first link between branding and advertising, i.e., “associating”, you're associating ‘sunlight’ with ‘soap’, which differentiates the soap - people think that particular soap is better, because it reminds them of sunlight, it's cleaner etc. And that whole industry started as well.
Over time, as the market developed further, people needed to differentiate even further. This is where made up names essentially came along, things like Oxo stock cubes. Kodak is a made-up name for a camera company to stand out. You could also trademark a name easier than “Mr. Smith's cameras”.
They then brought their focus to packaging, for example, Quality Street. The idea was to put innovative packaging colours with your name, to stand out in the marketplace and on a shelf.
Over time, all this activity converged into what made good branding principles; it was a unique name, a unique colour, ideally that you “owned”, and ideally, unique packaging. This was still in the early days. But those were the three key things.
The best embodiment of this (though not strictly Victorian) was Coca-Cola. If you look at Coca-Cola, the packaging that has been around for almost 100 years, it has a unique name: Coca-Cola, in unique script. They also have a colour they “own” -everybody knows the red, and a unique bottle.
This bottle was recognised universally because it was used everywhere in the distribution for 60 plus years, and it was trademarked. So that's the best embodiment. It's one example of how you pull everything together in a brand and how brands evolved from just putting your name on it to say, “you can trust me”, to standing out with colours, packaging, and pulling that all together. That is where branding came from.
On another side note, you might ask why the word “branding” was used for this type of activity? The answer was that back in the days when farmers were getting their cows stolen, it's very hard to prove that that was your cow, even if you caught the criminals. So, the answer that farmers came up with, was to physically brand them with a hot poker and an iron, to actually brand them with a mark and say “that is my brand. That is my mark on that cow!”. So, when manufacturers started doing this, they used the same term to say, “I am branding it with my name or my logo, so that you know that it's mine. This is my product, and I have my mark on it.”. That's what it came from. Another side note, obviously, they don't do this to cows today. They just have a little tag in their ear - so that's progress.
What role can a brand play in business?
A brand serves various purposes, as depicted in the picture below.
The first is related to the company’s product and service that goes to the external market - this is what most people associate with a brand.
The second is the advertising and promotion that goes into the market to sell more products and services.
A company also uses its brand for public relations, which is dealing with people like government and industry bodies, but that they are not actually trying to sell product to - just influence perceptions of the company and what it’s doing.
Then there's an internal space where the company deals with employee communications. Is the brand consistent within the company, for the employees to not be confused, but also to match up externally? A company cannot have its advertising saying one thing in the marketplace, and the employees getting a different message internally - it all needs to align.
The brand also plays a purpose around employees for the attraction and recruitment of good employees. Is it a place that people want to work? Do they want to associate themselves with that brand? Are they happy to talk to their friends and family about it, when they're not at work? Again, consistency and congruency is the aim of the game.
The final area is around product and service design that happens internally. For the same reasons, you can't have the company and its resources, particularly in research and development, developing new products and services completely misaligned to what the brand stands for - it's not going to work.
All these roles should come together under the “Brand Vision”. It's a mistake to think that branding is just advertising and promotion - making ads and seeing the latest ad campaign from a company or the new logo. That's not the case at all, remember – a brand is the sum of perceptions of everything a company does internally and externally. When this is done correctly, it all comes together under the brand vision.
As in the picture above. It fits together like a jigsaw, product and services, external and internal activities for the company. It should all be consistent and working like a machine.
Though it doesn’t happen by chance, the brand firstly must be developed and defined. Secondly, once the brand is in the marketplace, a company must keep investing in the brand. As soon as you stop “paying the rent” or investing in the brand, it's going to start getting displaced in people's minds, because as we said at the beginning, it's a perception; and if you stop investing in the brand, the perception either dies, or it gets replaced by someone else. This is why companies continue to invest in brands, and also try to keep it consistent over time.
So, to answer the question, what role does a brand have in business? Brands create a halo effect around the whole of the company that covers four key areas:
• Builds Customer Preference & Loyalty
• Supports Premium Pricing
• Enables Entry into New Markets
• Enhances Employee Recruitment and Retention
Two best in class case studies of brand management.
In this article series on branding, we will look at four case studies across four industries, as examples of who is doing branding well. In this article, we will look at two case studies; in the next article about branding, which is answering the question, “Can a brand drive business performance?”, we will cover two other industries.
The first case study is Apple, which has a brand value currently of $323 billion. An important point on brands, is that “brand value” can be booked in a company's accounting statements, so it sits on the balance sheet as an asset. What that means is that if the company is sold or the brand is sold, it has a real accounting valuation attached to it. If you wanted to buy the Apple brand, you would have to pay, according to the valuation, $323 billion. That is what that brand is worth. It has gone up 3,489% since 2006. If you ask at this point, “what is the link to business?”; well, their share price has gone up 6,000% since 2006. Obviously, that's not all because of the brand. Yet, in the next article, “Can a brand drive business performance?”, I'll show how there is some linkage there. You do need to have a good brand to help sell products.
And if I look at retail with IKEA, they have a brand value of $19 billion that has gone up 115% since 2006. Even though they're not the same scale as Apple, and they're a privately held company, as opposed to listed on a stock exchange, you can still see massive growth in the brand. Let's look at a bit more detail on each of these.
In the case study of Apple, the company comes from a design foundation and has evolved to a product and consumer proposition. They were focused on computers in the 80s and 90s that were about design excellence in form and function. However, they lost market share to the PC, mainly due to their business model. They didn't distribute widely, and they didn't licence their software. They were therefore relegated to the niche segments of education, graphics and videos. Nevertheless, the people who did use them, loved them, and they built a very strong brand identity. Apple's fortunes changed when Steve Jobs recognised the coming wave of digital connectivity early and envisioned Apple being at the centre of the consumers digital life. So, they understood the customer, what the customer wanted…the customer wasn't bothered about the details of the specs of the latest chip inside computers, but what they did want was e.g., “Put all of my music in my phone.”. Apple successfully merged technology with customer needs. On top of this, they built a very adaptive business model. With their clear customer insight, they were able to surround the consumer with everything digital they might need through innovative new products. But always, here's the key - with consistent brand execution.
If you look at the product range they've come up with in the picture above, there was the original iPod music player, which then evolved over time. The iPhone was a game changer in 2007. The iPad was a completely new product into the marketplace, They continued to evolve their traditional computers and iMacs, they went into TV, earbuds, wireless connectivity, watches. Now they could go into whatever they want. They have structured such a strong brand, and such a strong user base and history, if they came up tomorrow and said, “Hey, Apple glasses and Apple Car have launched.”, people would go and look at it. This is one of the few companies where people queue overnight to buy the latest version (e.g., iPhone) of a product they already have! The result is the number one brand in the world, and the most profitable company in the world. Their stock price has surged 6,000% in 15 years. With their brand and consistency, they can basically go into any product or service they want – a powerful position to be in.
The second case study is IKEA, who describe themselves as, “A world of inspiration for your home”. If you're living in a part of the world where you don't have IKEA, they make what's called ‘flat pack furniture’: you go to the shop, you buy it, or they'll send it to you comes in a like a couple of inches wide packaging, you take it all out, you lay it all out, you screw it all together. It's cheap, it's sturdy. It’s based on functional Scandinavian design. You can furnish your whole place at relatively low cost with good looking furniture. They have a business model that fuels growth and limits risk. They design and manufacture all the furniture themselves, they don't outsource it, they totally control the retail experience - you must go to an IKEA store. They don't have distributors and random retailers selling for them. If they have a franchisee for a market, it's tightly controlled. The result, if you've never heard of them, is that they are the world's top furniture retailer.
So, from starting with one man in one town in Sweden, the company has grown to a nearly $20 billion brand, up 115% since 2006, with over 222,000 employees in 52 countries. Here is an example of the power of the brand. The brand is very well-known to people, so when it comes to a new country - people are really excited about it. On the first day of opening of the IKEA store in Hyderabad in India in 2018 40,000 people showed up to a company that was not in the country before, because everybody just knew the brand and wanted to see it. So that is the power of a brand. Do you want to go to a new market and start building from nothing? When people have never heard of you? Or do you want to build a good brand in your home market and globally, and then go into a new market, and everybody already knows who you are? Again, the power of a strong brand.
These are two different case studies of companies that are doing it well with consistency in branding and execution. Look at what these two companies do and how they work - great advertising and promotion, executed consistently in the marketplace. They're able to have good conversations and public relations. For example, if they go to India, they want to talk to the Indian government. This brand helps them open doors. Employee communication is consistent - people want to work for these companies. In product and service design, it's easy to make new products for Apple or IKEA, that are already in line with the brand - you kind of already know what the design would look like, what the colour schemes would look like, etc. Consequently, customers are not surprised when the new products come out. And all of that comes into the brand vision…which must be written down, owned by the business owners with the senior management of the company, and everybody must know it, and believe it and live it for the brand vision to come alive, to get into your products and services and get into the market.
So does a brand drive business performance on its own? The answer is no...
The brand is an element of the overall marketing plan. It sits within the marketing plan, normally in its own section called the brand plan, but it does need to be linked to the overall marketing plan to make it work.
We'll be going into the specific elements of what makes up a brand plan and the contents of a brand plan in another article.
We hope you have found this short introduction useful. In the next article, we will cover can the second topic on branding: Can A Brand Drive Business Performance?
*The Victorians invented Victorians invented photography, the pedal bicycle, the pedal steamship, postage stamps and post-boxes, the Christmas card. Morse code rubber tires, tarmac roads, the sewing machine, the first glider flown by a pilot, public flushing toilet, steel, safety matches pasteurising process, the subway slash Underground trains, the typewriter, chocolate Easter eggs, mass railways, voice recordings, electric street lighting, the telephone, and my favourite…the weekend.
1
0 comments
What is a brand? What role does a brand play in business?
Public group
The place for entrepreneurs and business owners to grow their business through effective marketing plans and tools.
powered by