The Brand Equity Maze
A brand is like a work of art, and not just because of the visual appeal of a logo, product design or packaging. It’s the impact a brand has in the mind of a consumer, manipulating their feelings. Like art, the brand’s consumer may admire the result while being barely aware of the tradecraft involved in achieving it. The purpose of this tutorial is to bring some of that craft into the light.
Brands defy close definition
The best description of a brand I’ve ever heard is from Caitlin Moran, journalist at The Times. Writing about Starbucks in 2013 she says:
‘When it first arrived in this country, Starbucks smelled of Seattle’s cold Pacific air, and internet start-ups, and the cast of Friends – mainly Chandler. Each branch felt like a podule dropped down on the world by the Sexy Future People: “Yeah, just getting my latte,” we would say to ourselves – thinking it sounded the equivalent of, “Just getting my keys to the CITY OF F*** YOU, CAVEMEN. I HAVE A SILVER 23rd-CENTURY CAPE.”’
If you remember Starbucks in 1998, you’ll know what she means. In the same article she goes on to describe Starbucks today as a ‘slightly shabby council facility… like a library with cakes’.
Another great description, this time of three different car brands, goes as follows:
‘A Mercedes is for people with money who want you to know it; an Audi is for people with money who don’t want you to know it; and a BMW is for people with money who don’t care if you know it.’
Descriptions like these illustrate why a brand is difficult to define but instantly recogniseable. It’s a feeling. An emotion. A story about you that you tell yourself when consuming it. In this respect, it’s not unlike our choice of what clothes to wear each day.
What is Brand Equity?
Brand equity is a term meaning brand ‘strength’ or ‘value’. Although they hide it well, marketing people feel very slightly self-conscious of their lack of financial credentials. Brand ‘equity’ just sounds better.
In theory, brand equity is the difference between the price of a product or service over a completely undifferentiated, commoditised equivalent. Now that cigarette manufacturers are forced into standard unbranded packaging, they’ll be able to value their brand equity very precisely. Petrol retailers already have this information because all petrol we buy is exactly the same.
A lot of different things are wrapped up in how much people will pay for products, not all of which are under a company’s control. In fact it is a bit of a maze. Navigating through the maze is extraordinarily difficult. It requires, above all, a clarity of intellect that is beyond many people, which is why there are so many misfiring brands out there. Although they are not as good at hiding it, many finance people feel very slightly self-conscious of the intelligence of their marketing colleagues. If you haven’t got the brain horsepower it’s almost impossible to build brand equity without outside help.
The Brand Equity Maze
The greatest challenge in developing a brand is disentangling all the myriad influences from multiple sources that influence consumer decision-making. It is, in effect, a process of distillation, of discovery, of prioritisation, until you are able to capture the essence of the brand in a single thought, idea or story.
Sounds easy? Try it. It’s like trying to produce any work of art. It’s very hard to come up with something original and engaging. Many firms or brand managers never escape the maze, getting disoriented or simply arriving at shallow insights that fail to capture the imagination. It’s difficult to exaggerate how important this process of brand definition is. Consumers don’t get to see it, but this is where the hard strategic thinking is done from which all else follows.
Each large consumer business or branding agency will have their own proprietary process for defining brands. Basically a series of questions, explored in a complicated, non-linear process of workshops, market research, analytics, trial and error, with – hopefully- a spark of imagination, the aim is to lead the client towards greater clarity of their ambitions for their brand. This messy process is often given a name that hides how difficult and messy the process is. It’s the firm’s in-house brand equity model. I call mine the ‘Brand Equity Maze’. You’re welcome to use it.
The word maze says it all really. You can easily get lost. There are multiple entry and exit points, short-cuts, dead-ends, and often you’ll return to an area you’ve visited before. In an effort to be slightly more helpful, there are four basic areas of the maze to explore:
Market Research; almost all branding exercises start by discovering everything you can about your customer through market research. This used to be a fairly straight-forward process of observation, questionnaires and focus-groups. Now there is a wealth of data analytic techniques that might reveal certain patterns of behaviour that were hidden before or, more interestingly, that your consumers were lying in the answers they gave before!
Product Development; a surprising number of consumer choices are made about aspects of the product or service that are over-looked by the sexier world of creative advertising or the more excitable world of viral marketing. Packaging design, the quality of the materials, colour, tactile qualities, even smell. These are just as important as any logo. Along with different price points, sales channels and service models, your product development and R&D experiences should give you lots of intelligence to feed into a brand building.
Data Gathering; Market research on the consumer is soft evidence: you can’t be sure of its conclusions. Your own sales data and the sales data available about your competitors is much more robust. This too is an area which is being transformed by the sort of analytical techniques that go under the banner of ‘Big Data’. No longer are you restricted by what data you can mine from your own systems and what is available from market intermediaries. The availability of large numbers of diverse data sets combined with computer horsepower and clever software means that your nice, organised data can be smashed against all sorts of seemingly random data just to see what happens. This is a hot area pushed hard by the big consultancies but there’s no doubt it has the possibility of throwing up some fresh insights.
Insight; if you’re looking for anything in the maze, it’s fresh insight. The point of answering all these questions is to force you deeper into your knowledge of your product, its market and its customers. This will only get you so far. An extra ingredient of human imagination and intuition is needed. A triumph of risk-taking might get you there in a few short steps, but more commonly it’s a thoughtful and persistent analysis by someone trying to answer the final question ‘What are we selling’.
Successful branding occurs when the image you want to project resonates with your target customer to such an extent they say, ‘That’s me they’re describing’. Get it right and a customer might so identify with the image they pass on other products that might actually fit their needs better, like walking passed an independent coffee shop to enter a Starbucks (or vice versa), or paying more for a car than, strictly, they need to.
Using the Brand Equity Maze
Using decision-making models like the brand equity maze is a process of asking questions, challenging the answers and kicking around ideas. In search of a flask of inspiration, it’s not uncommon to approach these questions sideways. One meeting I heard of spent hours debating which Greek goddess their brand was. In the end they couldn’t decide and decided it was half Athena and half Gaia (not being able to select a single goddess – not a good sign). This approach however can get out of hand. I knew of a whole product category where every brand had been defined as a sex act or sexual position (immaturity – not a good sign).
What these examples illustrate is that coming up with an exciting and engaging thought for your brand is not easy and can be an oblique process. If I haven’t already mentioned this, it’s art!
Consumer Decision-Making
Prior to a consumer choosing your product there’s an interplay of reasoning and emotion going on that filters everything the consumer knows or has heard about concerning your product, matched with everything the consumer ‘knows’ about what they want, comparing what’s on offer elsewhere, before, finally, a consumer decides yours is the closest match. Branding and the marketing activity that flows from it, is an attempt to nudge that delicate balance in your direction.
The marketing world is changing fast. It now seems monolithic but, until recently, once the brand positioning was fixed, the marketers job was easy; expensive, but easy. You engaged a creative agency, developed a campaign, and spent money buying time / space on a limited number of media channels. As a finance person, my jaw would drop at the sums being spent with no clearer purpose as to provide ‘support’ to a brand, ie keeping it in the public consciousness. It didn’t matter so much if there wasn’t anything particularly new to say, the idea was to keep saying it. All the focus was on the impact, cleverness and glossiness of the ads.
Now there are any number of product reviews on the internet, some by online journalists or bloggers, others by ordinary people on discussion threads, facebook or customer review sections of Tripadvisor or Amazon. I recently bought a digital camera. Knowing nothing about cameras I read lots of online reviews, watched a few Youtube recommendations, browsed in a couple of stores and was thoroughly confused. Eventually I bought a Canon S120, because a Youtube film-maker I subscribe to – Casey Neistat – described it as ‘almost the perfect camera’ during a video in which he was complaining about the microphone on the latest model. After that, I wanted no other camera. Canon is not a brand that I would have been drawn to when it comes to cameras. My choice was completely beyond their control and, ironically, prompted by a bit of product development that someone didn’t like. Welcome to the marketers new world order.
Is brand equity disappearing?
I first heard that brands were dead in 1992, a few years before I used the internet. At that time supermarkets such as Aldi had just arrived. Power was shifting to supermarkets. A few years ago marketing was supposed to be dead because of the democratisation of the internet: word of mouth being a much more trusted source than company advertising. Power was shifting to consumers. Today the marketing department is being over-run by a data analysts interrogating large data sets. Power is shifting to the geeks.
Brands first appeared in the 1930’s. Instead of cutting small bars off a large block of soap Mr Lever had the idea of wrapping the bars up and putting his name on the packaging. In that way, people would know it was his superior soap, and not some inferior alternative. They could trust the name. Things are changing, yes, but we still place a lot of trust in brands. If you don’t agree, just observe your own behaviour next time you walk into a supermarket in a foreign country.
Brands and Marketing
When people think of ‘marketing’, they think of ‘the creative’. They think TV and magazine adverts or viral Youtube videos. But these are just the tactics; the bits you can see. The brand strategy behind these adverts is where the clever and sophisticated thinking takes place. It is where the core of the sales proposition was developed. It’s invisible to the consumers but vitally important. If you don’t nail it, keep going until you do. Otherwise you’ll be relying too heavily on the blind luck of your creative agency hitting on a winner. More likely, your messages will be confused, or will fall flat, and you’ll fail to hook your target audience or just come across as another ‘me too’ brand. Either way you’ll have wasted your money.
And you do have to spend money. Branding is not cheap. Packaging redesigns, logos, advertising, big-brained data crunchers, market research, research and development; it all adds up to a significant percentage of revenue. It’s a good job brands build loyalty and create value for their customers. Otherwise you couldn’t afford it.
If branding is all about clarifying what you’re selling, marketing is all about communicating that message. Brand strategy is about defining what your brand is now, where you want it to be in the future, and how you plan to get there. Marketing strategy is about defining your audience and finding ways to reach them.
Words of Warning
The obvious challenge to branding and marketing is that it is ephemeral, costly and – in today’s world – unnecessary. Many marketing people don’t help themselves by using language, concepts and techniques that seem remote from sharp end of sales. The truth is that everything has a brand.
If someone questions the value of brands and marketing, I’d challenge them with the question, ‘How deeply do you want to understand your own business’. If you’re doing well on a shallow understanding, good luck. If things start going wrong through, you’re going to need to know why, and your going to need to look at your brand and marketing strategy.
Conclusion
A wonderful, clear and distinctive brand is a thing of beauty. Getting there requires navigating a maze of inter-dependent influences. It takes quite a high degree of sophistication to get there, and hard work across the whole organisation to keep it.