BRANDING IS ALL ABOUT THE PRODUCT

A brand is much more than just the product alone. A brand is a composite of hundreds of activities designed to form and occupy a space in the customer’s mind.

This myth is very fashionable. Not only do you hear people regularly assert that brands are just ‘puffery’, unnecessary and inconsequential, but they will also cite disruption caused by technology as effectively sounding the death knell for brands. Now that we are able to instantly compare everything online, all that really matters is the product itself.

This is a very big myth.

Brands are about so much more than just a product or service. And if they are about to be made irrelevant by technology, then how is it that seven of the top ten most valuable brands in the world (according to Interbrand) are actually technology brands? It doesn’t add up.

A brand is a composite. It is the consequence of hundreds of individual decisions and activities and while a product or service usually sits at the heart of a brand it is far from being the only thing that matters.

Brands confer significant advantages

This example taken from the automotive sector will serve to illustrate the point. If we were to find a selection of equivalent cars from a range of different manufacturers, list their key performance criteria on a basic grid and then remove all references to the individual models and brands, we guarantee it would be virtually impossible to tell the models apart. We also suspect you would feel very uncomfortable using the grid as the sole basis for a purchase decision potentially running into the tens of thousands of pounds. The truth is that in nearly all markets, most of the leading companies will be offering customers performance parity. While the product (or service) is important, its characteristics alone are rarely that instructive when it comes to making a choice. The same applies to the ability to instantly compare features and performance: do you think that this means businesses will be more or less likely to seek parity with each other?

Brands matter because they offer an opportunity to compete on more than just the product or service alone. They are also far more difficult to copy. If a brand has managed to occupy a space in your mind, it is going to be difficult to dislodge and is unlikely to be shifted by a competitor brand attempting to copy the same approach. Brands are an important source of differentiation; they foster vibrancy and originality and help brand owners build positive and valuable associations with their customers.

It is very difficult for any brand to differentiate solely on the basis of how good its product is. Features are generally very easy to copy and even innovative brands usually find that competitors are quick to play catch-up. This doesn’t mean that the quality and variation in your product or service are unimportant, it’s just that without a patent for a specific ingredient or technical innovation a brand is unlikely to keep its particular product benefit unique for very long. There are exceptions, of course. KFC and Coca-Cola have kept their recipes secret for years. Nothing drives quite like a Porsche and no one delivers as comprehensively and as fast as Amazon. Nonetheless there are thousands of examples of product and service innovations that were quickly and effectively copied. The majority of mid-market cars now all contain very similar features. Technology like ABS or Bluetooth connectivity that was once the preserve of just a few high-spec vehicles are now more or less standard across manufacturers. Voice-activated technology like Apple’s Siri has been quickly emulated and arguably surpassed by the technology of other providers like Amazon.

Innovative products and services can provide short and sometimes even medium-term competitive advantage, but it is rarely sustainable. Even Intel, who designed and patented its own semi-conductor technology, was only able to stay ahead by utilizing the power of an innovative branding approach, positioning itself as a vital ingredient inside other people’s machines.

Great brands help differentiate great products

Great businesses are usually centred on a great product or service, but they are sustained by their brands and the power that they give the brand owners to generate demand and sustain revenues. Let’s stay with the automotive sector for a moment. When you choose a car, you do look closely at the performance of the product, including where it is strong relative to the competition, but it is highly likely that your decision to purchase will also be influenced by the strength of the manufacturer’s brand. As you whittle down your choices you will be thinking (consciously or unconsciously) about which of the brands you prefer and this preference will be formed from the summary of all of the different interactions you have had with that brand. All that you have ever known about the manufacturer – the advertising, the design of the cars, the dealer experience, the ratings and reviews, the sponsorships and associations as well as personal recommendation and much more – will all combine to leave an impression in your mind. The strength of that impression will dictate the extent to which you are able to identify with, and hence see yourself in, that particular car. Building a brand is about setting an expectation, delivering consistently against that expectation and then finding ways to reinforce the positive experience such that you can be persuaded to buy again.

Whether a customer is buying toothpaste or a smartphone, the role of the brand may vary (in comparison to other factors) but in both cases the customer is buying into much more than just the functional efficacy of the product. Let’s take one brand from each of these categories to make the point.

A tale of two brands

Sensodyne (owned by GSK) is one of the world’s leading premium toothpastes, just as the iPhone (manufactured by Apple) is one of the world’s leading premium smartphones. Both companies deploy similar techniques to help build their brands. Both start with a high-performing product. Sensodyne has proven efficacy around reducing sensitivity and whitening teeth and has a range of innovative technologies designed to further enhance effectiveness. Similarly, Apple starts with a suite of high-performing devices that arguably lead the way in terms of integrated hardware and software performance. Although at very different price points, brand exerts a high degree of influence on both categories – but for different reasons. We need to trust in our toothpaste and believe that at this price point it will deliver proven efficacy. When spending upwards of £600 for a new smartphone we need to feel that the spend is justified and that we will feel good about carrying the device.

So in both cases the brands are deployed to help address this core requirement. Let’s look at how else the brand contributes to the product. Let’s start with the advertising and communications. Sensodyne always presents itself as the choice of the professionals; this way it can both justify its premium price and get additional support for its core efficacy. Apple does something similar; it is well known that its products are the choice of the professional creative community and it reinforces this message in its consumer advertising. Apple’s ads are vibrant, simple and enigmatic. Turning next to availability and on-shelf presence, both brands closely control their availability and distribution. Sensodyne will take great care to ensure that its products are made available at the dentist’s and will exert a high degree of control over how and where the product is sold. Apple is famous for controlling availability and distribution. Apple’s products are only available through its outlets and online stores and then through a very limited number of premium resellers. Apple wants to control the whole retail experience because it is here that it can reassert what it is that makes the brand distinctive – no one has a store as unique as Apple’s.

Then there is the packaging itself. Sensodyne uses premium cues, including lots of white space and carefully drawn graphics to reinforce the associations with professional dentistry, whitening and the patented technology contained within its products. Apple also does this brilliantly. Apple has realized that with a very high-value item, the experience of unwrapping the product is as important as buying it. By modern standards Apple’s packaging is both high quality and a marvel of intuitive cardboard design. None of this is by accident. The packaging is designed to hero the unique premium qualities of the product you have bought and to reinforce the creativity and Zen-like simplicity of the Apple ethos.

In these examples we have touched on just three specific touchpoints, sometimes referred to as ‘moments of truth’, but there are many, many more. What you have hopefully been able to see is how different elements of the brand combine to support the product and the price premium.

Like products, brands will continue to grow in sophistication

As the understanding of how our minds work continues to increase, so will the sophistication with which brands will seek to influence our perception and opinion. Daniel Kahneman in his influential book Thinking, Fast and Slow has helped to transform our understanding of what we know about how people think. Kahneman asserts that all of us have two primary modes of thought. He labels these modes System 1 and System 2. The first mode of thinking is largely to do with the intuitive part of our brain that helps us to quickly estimate people and situations and form connections between things. The second mode of thinking is associated with things like solving complex problems or checking the validity of a logical argument. Kahneman acknowledges that he didn’t invent these modes but what is new is the extent to which he believes System 1 influences us. This is important to understand because System 1 thinking likes to use heuristics. Heuristics is a term used in psychology to mean mental shortcuts that help us make decisions faster; once you understand these heuristics you can use them to influence customer behaviour.

Practitioners will use these heuristics to help shape your perception of a brand. A good example of this is called ‘anchoring’. It turns out that what a person is prepared to pay for something varies according to whether or not that person is given an anchor point. What may have seemed expensive to you may appear less so if you are given an indication of the last price that was paid for that product or service, or if it can be demonstrated that other people with your requirements paid on average a very similar price. Heuristics can get very sophisticated. As well as things like price perception it can be used to shape areas such as perceived quality or efficacy. There is a reason car manufacturers spend a lot of time getting the sound of the door closing just ‘right’. A weighty clunk is used by many customers as a heuristic, a shorthand indication of all-round product quality. Brands are about much more than just a good product or service. Today’s practitioner must use all of the tools at their disposal to shape and influence customer perception and behaviour.

What then about technology elevating the importance of the product to such an extent that it ushers in the death of the brand? Well, right now this argument doesn’t look very convincing.

Technology is providing new opportunities for brands

It is undoubtedly true that in today’s world (more than possibly at any other time) a brand will struggle to survive with a fundamentally flawed product or service. What technology has done is magnify the power of customer opinion exponentially. In the past a brand could probably get away with being poor because a disgruntled customer would struggle to tell more than a few people about their experience before they forgot about it and moved on. Not any more. A disgruntled customer can now share or tweet their negative experience to thousands (and sometimes millions) of people in just a few seconds. This has profound consequences for brands. According to research conducted by Adobe, 72 per cent of millennials research and shop online before going to a store, and (according to Time) 74 per cent of US customers identify word of mouth as a key influencer in their purchase decision – positive customer testimonials can also increase sales by as much as 34 per cent. For a business to thrive today it must offer (at the very least) an acceptable level of product or service quality. But like many things this also affords brands a fantastic opportunity. If they are able to better understand customers and make effective or well-timed interventions then they also stand a good chance of being celebrated by customers.

Technology has helped to close the gap between what a brand says and what it actually does (or provides) but if anything it has also given good brands more opportunities to be celebrated by their customers for getting things right.

Technology has also made it easier to compare products and services (as well as swap) between competing brands. While this has undoubtedly made things more uncomfortable for some of the established brands, it has also helped to bring a renewed competitiveness to previously moribund markets. The UK energy market is a case in point. While this market is still dominated by the large energy companies the last few years have seen a plethora of new brands entering it with over sixty different brands now competing for your business. Some of these new entrants are bringing new propositions to the market and they are beginning to get traction. Customers are beginning to understand that it pays to shop around.

Don’t confuse transformation with demise

Another phenomenon currently underway appears to be the hollowing out of the mid-market opportunity. It appears that to thrive in today’s economy, brands need to be either fast-moving and cheap or innovative and expensive. With brands like Amazon transforming speed and delivery and powerful search tools like Google enabling us to find and review products instantly, customers seem much less inclined to want to spend time wandering the isles of mid-market retailers looking for reliable but ultimately unexciting products. Even outside retail, customers appear to want their everyday brands to be cheap and reliable so that it leaves them with room for more indulgent and transformative experiences. Yet while these changes are interesting, it is both lazy and palpably untrue to use them as evidence that brands are being diminished and all that matters now is the product. While technology is definitely disrupting established business models and, in the process, putting some well-known brands under pressure, it is also helping to give birth to new business models and new brands.

It is true that in today’s economy few brands can afford to offer their customers consistently poor products and services. But it should be remembered that products and services are just one (albeit important) component of a brand. A brand is much more than just the product alone. A brand is a composite of hundreds of activities designed to form and occupy a space in the mind of the customer. Technology has not removed the need for a brand, nor has it elevated the product to an exalted status. A brand, much more than any individual product or service, is still the best way of building and protecting long-term competitive advantage.