The critical issues of branding...
Many business people have a very one-dimensional view of the “Brand”. It relates somehow to customer perception, satisfaction, sales and communication. It is almost definitely, for most business’s, measured anecdotally, and rarely viewed as contributing to equity in a financial sense.
The brand most certainly is a multi-dimensional beast. Indeed it is intrinsically linked to the above issues but more than that it is driven by the whole customer experience - end to end.
Foremost it is your product or service, the way it is distributed or sold, the price that is charged, the timing, your employees, your infrastructure, and the process from idea to market.
Investing in sophisticated marketing and branding endeavors may bring the customers to try your wares but do not expect them to return if the service they receive, and all that took your product or service to that point is not working to present your brand in concert with your communication. In fact negative word of mouth will do more damage to your brand, than had you shut up, fixed your other issues, and communicated nothing.
The brand is multi-dimensional. Value it based on these factors, invest in getting it right, and then tell the customer.
Think of a brand you recently dealt with. It may have been dry cleaning or awarding a preferred supplier deal to a parts manufacturer. What contributed to your “view” or “perception” of that brand? It was certainly the communication your heard / saw / experienced or a sales person you dealt with. It probably also included:
- Reputation of the company / product / service
- Referral from others that you know who made a similar purchase
- Your treatment during the transaction
- The physical product or service
- Price / value
Subsequently you develop a more detailed view of the brand through:
- How the product / service performed
- Responsiveness to your issues
- Service
The fact is these two apparently disparate examples differ only in levels of decision involvement. In reality people broadly build brand perception using similar basic criteria. It is after all the same person buying a soft drink and making a business decision.
The brand viewed in this light is what a business is, it’s very existence. It is therefore interesting to analyze the management of brands, particularly in the business-to-business arena.
This evolution of a brand may well be called the “paradox of the brand ”
Let us look at a typical cycle of a business-to-business brand:
The business has invested in people, process and infrastructure, built a solid reputation with customers over time and communicated to the market well. The economic cycle that drives demand in this industry has begun to decline and sales start to fall. Discretionary spending is cut and marketing is the first to be reduced significantly. We stop communicating with our customers. We analyze sales and conclude that sales have declined proportionately as a result of the downturn.
This in fact, is the first mistake we make as many customers are switching to use competitors as a result of reduced communication and a lower level of service. The problem worsens as results continue to decline and we cut further into expenditure on both marketing, but more importantly, other customer facing areas such as outlets, staff and service personnel. We have also reduced our sales force in-line with forecasts.
While the general economic indicators start to pick up our sales continue to decline. We realize that we have not communicated to our customers for some time; we have reduced service levels, through outlet and staff rationalization. We notice the growth in some competitors, as the economy is experiencing growth. We continue to flounder.
Closer analysis shows a reduction in total brand investment has become a self-fulfilling prophecy. We resolve to recruit more sales staff and increase our marketing spend to try and win back market share. There is no immediate effect.
The lagged nature of investing in a brand along with the longer-term decline in service and customer perception is harder to turnaround.
The result is that we expected business to decline, we made contractionary changes, and not only did sales decline disproportionately to the economic cycle, but the brand was also significantly diminished. The challenge that now faces the business is to prove to customers that have left, that things are now different and undertake the Herculean task of getting them to switch back.
You can see from this example that the lagged effect of brand investment is often unseen and always difficult to rectify.
While this was a business-to-business example similar issues face the consumer brand. In a business-to-business environment your brand often performs the function of getting you past a minimum participation criteria, i.e. without a relevant brand you may not even be considered to participate, tender, etc.
While in a consumer setting switching brands may be easier, it is more often an emotional connection with a brand that drives loyalty. This is difficult to establish and if a negative emotion is developed toward the brand sometimes impossible to rectify.
So, what are the critical issues of branding?
- Look at the brand in a multi dimensional way. Measure its worth, and value it
- Be aware of the relevance of your brand to customers, and its impact on business performance
- Know that the equity in a brand often lags changes to business value levers
- The effect of the brand on customer relationships differs across purchase situations. The level of decision involvement is a key driver
- The customers connection with the brand is often more rational in a business-to-business context, and emotional in a consumer one