Successful Brand Marketing

With an increase in trust deficit world over, here is what brand managers need to weed out of their environments to retain their brands’ trust

MARKETING’s greatest invention is the brand. In effect unheard of 100 years ago, brands and branding now march triumphant. Everything and everybody — places and destinations, political parties and social movements, people (first celebrities and politicians, now, it appears, all of us) — are brands.

Yet, aside from a few usual suspects such as Apple, in the branding heartlands, all is not well. Y&R executives John Gerzema and Ed Lebar highlighted the problem in 2008, when they reviewed longitudinal evidence from Y&R’s Brand Asset Valuator research programme. In their book The Brand Bubble, they charted a ‘precipitous’ decline in brand trust since 1993, along with sharp falls in consumer perceptions of quality, brand awareness and ‘brand esteem’.

In 1993, for example, consumers trusted 52% of the brands researchers asked them about. Fifteen years later, the figure had fallen to 25%. Gerzema and Lebar pointed out that stock markets may have been pushing up the value of brand-owning companies, but brands themselves were being ‘hollowed out’.
Then came recession. Halfway through, Promise chief executive Charles Trevail observed that “according to every survey and index on trust in institutions and organisations from around the world, trust is in terminal decline”. Even when the recession was supposed to be lifting, Alterian chief executive David Eldridge commented on his company’s latest research: “Consumer trust is at an all-time low.”

So what’s the problem? How can brands and branding be so successful, yet so sickly at the same time? The answer may lie with the occupational diseases of brand management — diseases that are generated by the daily working lives of brand managers.

MASKING THE PROBLEM
Brand management as ‘mask management’ is the most common of such diseases. Because brands are all about external communication, many brand managers find it hard to resist the temptation to paint ‘lipstick on the gorilla’ — telling customers what the brand manager knows they would like to hear, rather than keeping to the truth of what the organisation can, or actually intends to, deliver.

In reality, the most important part of the brand manager’s job is one of internalisation: bringing customer views and perceptions from outside the organisation inside, so that the organisation understands, responds and resonates to customers’ changing demands. Yet, activity-wise, the minute-by-minute focus of the day job is external communication. When changing the external message is easy (and fun) and changing the organisation inside is hard (and painful), the lures of lipstick-on-the-gorilla mask management can become irresistible. In fact, they can even be dressed up as a new theory. Remember when we were told that punters didn’t buy the beer, but its advertising? Remember George, the Hofmeister bear?

Next on the list is brand hubris. Not long ago, it was fashionable among brand consultants to show their clients a chart depicting the relative prices of different T-shirts. Some sold for a fiver or less, while branded ones were at least £50. “Which T-shirt do you want to be?” the consultants would ask. The difference between being able to charge £5 and £50 lies in “branding”, they would say. “We can help you become experts at ‘branding’.”

Well, they may have been experts at branding, but they were dunces at economics. If you sell 1000 T-shirts for £5 with a £1 margin, you make £1000 profit. If you sell 10 for £50 with a £48 margin, you make £480 profit. By implying that the supply/demand curve could be ‘branded’ away, these consultants were usually doing their clients a real disservice. While they were doing the rounds with their presentations on ‘branding’, full of impressive words such as ‘intangibles’, the brand that romped it on the high street was Primark.

That is not to say that discounting is always the best strategy. Rather, it is to challenge the widespread belief that it’s the ‘extra stuff on top’ — the stuff added by ‘branding’ — that is the source of brands’ margins and profits. The fact is that, apart from some special cases such as luxury goods, if you look at most successful brands — such as Amazon, Apple, Dell, easyJet, Facebook, Google, IKEA, Nike, Starbucks, Tesco, Toyota, Virgin and Wal-Mart — what marks them out is not superb ‘branding’ (sometimes it’s superb, but very often it’s not) but that they deliver outstanding customer value, often via breakthrough innovations, technology and/or underlying business models.
‘Branding’ alone hardly ever makes a business successful. It is businesses, including their culture and ethos, that make brands successful. And as soon as the business drops the ball on innovation, service, quality or price, or forgets its cultural roots, the brand quickly loses its lustre.

CLARITY OF PURPOSE
Brand narcissism is our third, closely related, occupational disease. Brand narcissism works on two levels. At the first, every brand manager desperately wants their target audience to recognise their brand, love it and be loyal to it by, for example, acting as an unpaid yet enthusiastic brand advocate.
There is nothing wrong with these dreams per se. They are natural. What is wrong is when we morph the wish into a ‘strategy’ of ‘success by being popular’ — where getting people to talk about and ‘love’ the brand becomes an end in itself, pretty much divorced from the value it’s supposed to be delivering.

The second level of this brand narcissism, which is even more dangerous, is where the brand manager forgets the underlying purpose of the brand and starts acting as if it’s the job of the customer to add value to the brand (by paying a price premium or being its advocate, for example), rather than the job of the brand to add value to the customer.

An obvious point, perhaps, but it can be difficult to remember in a world where your every passing thought, and key performance indicator, is about how well-remembered you are, how preferred you are, or how many people are talking about you.

Our final occupational disease is toolkit myopia. Brand managers are surrounded by a dizzying array of sophisticated tools and techniques for research, testing, data-gathering and evaluation. They are on an endless quest for the breakthrough insight and the sparkling creativity. It’s difficult to master all these things and the quest easily becomes obsessive. So much so, that it soon seems as if excellence at these diverse technicalities lies at the heart of successful branding — when it is not.

You can, for example, use exactly the same technical toolkit, excellence, to build a brand that perfectly communicates a brand’s unique value.
And to hide the fact that the brand is nothing more than a me-too mediocrity. You can use technical excellence to articulate specialness and hide sameness, but content-wise, they are opposites, having an opposite meaning to the customer.

The one thing that branding as mask management, brand hubris, brand narcissism and toolkit myopia have in common is that they destroy trust. They are potentially catastrophic mistakes, yet they are in the air brand managers breathe, growing naturally in their working environment. So they have to be combated on a daily basis.

How? What’s the antidote? To remember that a brand’s real job is to build trust, and that everything the brand does must be tested against this yardstick. It’s this simple human understanding that successful brand managers never let anyone forget.

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Wireless Carriers: Your New PC Retailer?

Consumers on the prowl for new PCs may soon find themselves heading for the local wireless carrier instead of a big-box retailer. In a move that could dramatically change the way people shop and pay for computers, AT&T and other mobile-phone service providers are swooping in on the PC retailing business.

One of the earliest signs of this shift came Apr. 1, when AT&T began selling small laptop computers in Atlanta and Philadelphia for as little as $50 to people who also signed up to get at-home and mobile broadband services for two years. It was no April Fool’s joke. AT&T, the biggest U.S. phone company, is “very pleased with the early results” and is considering introducing the offer nationwide, says David Haight, vice-president of business development for emerging device organization at AT&T. He wouldn’t provide details on the results so far. Rival Verizon Wireless plans to offer small, inexpensive laptops called netbooks to customers this quarter. Other carriers are expected to follow suit.

With the market for cell-phone service saturated, the PC market represents a way for mobile-phone carriers to get more people to buy monthly wireless Internet-access service plans. Consumers who buy wireless Web access can save money on the up-front purchase price of a computer and, in some cases, the price of monthly access to high-speed Internetservices. But the shift in who sells PCs could also mean lower revenue for computer makers if it lures buyers toward lower-priced netbooks and away from big-ticket machines. It could also crimp demand for smartphones.

Bundling Netbooks with Service Plans

Wireless service providers are already emerging as big PC vendors in Western Europe, where companies like Vodafone and Deutsche Telekom’s T-Mobile International began selling netbooks last fall. Carriers already account for 20 percent to 25 percent of all small laptops sold there, estimates Richard Shim, a research manager at consultant IDC. The U.S. may not be far behind. PC maker Dell and retailer RadioShack began selling netbooks for use with AT&T’s wireless network several months ago.

Carriers are willing to absorb $200 or more of a netbook’s cost to get more people to sign up for related wireless data-service plans as well as other offerings. AT&T, for instance, offers discounted netbooks to people who also sign up for a $60-a-month bundle of its at-home Digital Subscriber Line Internet access and its on-the-go broadband service. In one of several deals, AT&T sells the Acer Aspire One netbook, which normally retails for $300, for $100 up front.

The emergence of carriers as computer distributors could spell changes, good and bad, for PC suppliers. On one hand, consumers who may not have bought a $500 PC may be tempted by a $50 one. “It’s about getting the next billion people online,” says Anil Nanduri, director of netbook marketing at chipmaker Intel . “We see this as a definite opportunity for additional volumes,” especially in emerging markets, he says. Researcher IDC expects netbook sales to rise from 19 million units this year to 32.6 million units in 2012.

Mobile-phone service providers and their marketing muscle could also help their computer making partners grab market share quickly. T-Mobile, for instance, has sold 60,000 netbooks since making them available in September. “You could get quick market share, provided you work well with a telco provider,” says Shim. Such companies as Acer, Dell, Samsung, Hewlett-Packard , and LG — which have announced wins with AT&T, T-Mobile, and Vodafone — could end up climbing the market-share charts.

Downward Spiral of Prices and Margins

The deals with carriers could also make it easier later for PC makers to market other electronics, such as smartphones and mobile Internet devices [MIDs, which are slightly smaller than netbooks] through the carriers. Already, Acer and several other PC makers have announced smartphone models, and Dell is rumored to have developed one. “They’ll establish some brand presence and then slowly introduce a smartphone [in the following 12 to 18 months],” says wireless consultant Chetan Sharma. “This gives them expertise in the ecosystem.”

By the same token, faster sales of netbooks could mean diminished demand for more expensive computers. “The [PC] industry overall gets pulled into this downward spiral of [lower average selling prices] and margins,” says Roger Kay, founder of consultant Endpoint Technologies Associates.

And as netbooks take off, what happens to demand for smartphones made by such vendors as Nokia and Research In Motion? Some consumers may opt for a netbook — or its smaller cousin, the MID — instead of high-end smartphones that cost about as much. A netbook offers greater battery time of 10 to 16 hours, while a phone typically conks out after five. MID screens are larger and more conducive to watching video. The category could receive a boost if, as expected, iPhone maker Apple releases a MID-like device with video capabilities.

Why Not Multiple Mobile Devices?

Carriers also may wish to steer consumers away from smartphones and toward netbooks or MIDs. Today a smartphone brings more profit to carriers because it uses data as well as voice services; a netbook merely gobbles data. But this might change: Users of netbooks or MIDs may be willing to pay more for access to additional bandwidth so they can surf the Web and watch movies online. T-Mobile believes consumers may also pay for such extra services as a subscription to Microsoft Office and Norton AntiVirus software or to virtual storage services. Some users may buy display insurance and additional tech support from carriers.

Handset vendors such as HTC don’t foresee danger. “We see netbooks as being a new and emerging segment that’s expanding the pie,” says Steven Seto, executive director of marketing for HTC North America. After all, people buy multiple TVs for their homes. So they may buy multiple mobile devices. “It’s the inspiration for what one day might happen in our industry,” he says.

Carrier-sold netbooks are bad news for traditional electronics retailers such as Best Buy and Wal-Mart. “They are undercutting Best Buy by several hundred dollars [in up-front costs],” says John Spooner, an analyst with Technology Business Research. “Companies like Best Buy and Wal-Mart are under some pressure because now they have a competitor.” Best Buy did not respond to a request for comment.

Cable companies such as Comcast, which did not return a request for comment, could suffer as well. Instead of hooking up to fixed broadband from a cable company, some consumers may opt for wireless or bundled wireless-home offerings from a telecom provider instead. What’s more, some 5 million to 10 million Americans already connect wireless notebooks to the TV and stream movies from Hulu.com and video from Google’s YouTube, says Phil Leigh, president of consultant Inside Digital Media. “The cable TV operators will discover their audience is using mobile video and will, over time, begin to cancel their cable subscriptions,” he says. “Beyond a shadow of a doubt, it’s going to have big impact.”

Dell PCs arrive at Tesco

One desktop and seven laptops available in 160 Tesco stores

As of today, Tesco customers can now pick up a Dell computer in over 160 Tesco stores and online through Tesco Direct.

The launch range consists of a desktop PC priced at £399 and seven different laptops starting from the same price. Two Dell XPS laptops are available exclusively through Tesco Direct.

Commenting on the new range, Graham Harris, commercial director at Tesco said: “Since we announced our partnership with Dell in December we have been working hard to get the PC’s on to our shelves.

We are delighted to now offer this award winning brand and our customers can expect some exciting special offers and additions to the range in the coming weeks.”

“Previously our customers could only buy Dell computers by going on to the Dell
website. Now they can buy the products when they’re doing their weekly shop either
online or in store.”

Dell computers are also available to buy from DSGi stores throughout the country

Source :PC Retail, by Christopher Dring January 28, 2008

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