In an age of hyper-competition, commoditization, globalisation and rapid technological obsolescence, marketers are struggling to find new conceptual bases on which to design and deliver their marketing programs. The haunting truth is that traditional marketing is not working. Top management now see many mass advertising campaigns as losing money. They see sales promotion campaigns as boosting sales temporarily but being largely unprofitable. They experience direct mail campaigns as barely delivering a 1% response rate. Their new products are failing at a disturbing rate.
There are two answers to the marketing challenge facing today’s companies. One is to know your customer better and to get closer to them. The other is to differentiate your offering through your branding work so that the offering stands out as relevant and superior in value to a clear target market.
Branding is much more than attaching a name to an offering. Branding is about making a certain promise to customers about delivering a fulfilling experience and a level of performance. Therefore branding requires everyone in the supply chain – from product development to manufacturing to marketing to sales to distribution – works to carry out that promise. This is what is meant by ‘living the brand’. The brand becomes the whole platform for planning, designing, and delivering superior value to the company’s target customers.
Philip Kotler
Perception or reality?
Brands have a remarkable ability to impact the way people view products. Consumers rarely just see a product or service; they view the product together with the brand. Perception becomes that person’s reality and is far more important than the absolute truth. The question then isn’t which product or service is best, but rather which product or service do people think is best. Is Dom Pérignon the best champagne in the world? Does Tiffany sell the best diamonds in the world? Does McKinsey do the best strategic thinking? Perhaps yes, perhaps no. But the fact that most people believe, this is what matters.
Back to the top >
To highlight this concept here is an excerpt by Tim Calkins from the book ‘Kellogg on Branding’:
To demonstrate the power of a brand to shape expectations, I conducted a simple study with MBA students. I first asked a group of students what they would expect to pay for a pair of good-quality, 18 carat gold earrings with two 0.3 carat diamonds. I asked a second group of students how much they would pay for the same earrings, only this time I added the words “from Tiffany”. I asked a third group the same question, but this time changed “from Tiffany” to “from Wal-Mart”.
The results were striking. The average price of the unbranded earrings was $550. With Tiffany branding, the average price increased to $873, a jump of almost 60%. This increase was solely due to the addition of the Tiffany brand. With the Wal-Mart branding, the price expectation fell to just $81, a decline of 85% from the unbranded earrings and a decline of 91% from the Tiffany branded earrings.
The study by Calkins highlights the power of the brand to shape perception. But perception goes further than just pricing expectations. The experience of wearing earrings form Tiffany will almost certainly be different from the experience of wearing earrings form Wal-Mart. And the distinction in this case is not just conspicuous consumption. Diamonds are more or less diamonds. No one can really tell a Tiffany earring from a Wal-Mart earring from a distance.
Which brings us to the most important concept in branding - Positioning >