Aaker delivered the following as an address to key members of the American Chamber of Commerce in Shanghai recently.
Brand is an asset
Marketing has always delivered customer insights, segmentation and value propositions. In the past, brand management was tactical and it was something that could be delegated in part to an advertising manager or agency because it was mostly about managing the image, creating an advertising campaign, managing a distribution strategy, developing sales promotions, supporting the sales force, getting packaging right and other such tasks.
Today, we know that any brand is around 15 to 75 per cent of the value of any business. When brands are considered assets, the role of brand management radically changes, from tactical and reactive to strategic and visionary. A strategic brand vision linked to both the current and future business strategies and providing a guidepost for future offerings and marketing programs becomes imperative. Brand management also becomes broader, encompassing issues like strategic market insights, the stimulation of “big” innovations, growth strategies, brand portfolio strategies, and global brand strategies.
In order to have a long-term impact, marketers today need to measure brand equity. Perceptions, loyalty, visibility and credibility are at the heart of brand relevance. Businesses that regard a brand as an asset have transformed and will succeed in the future.
Your brand needs to have a brand vision: an articulated description of the aspirational image for the brand; what you want the brand to stand for in the eyes of customers and other relevant groups like employees and partners.
You need to have an idea of where you are going. An idea that will provide a relationship with customers; that will inspire employees; that will chart a direction for the marketing effort; that will drive brand building programs.
To have a brand vision you need to have a model of the process to get you there. A brand is more than a three-word phrase. Brands are more complicated than a single thought to drive an advertising campaign. We need to allow multiple dimensions, each of which will drive their own set of programs. There is no filling the box model. There is no check-off list.
When the brand vision clicks—is spot on—it will reflect and support the business strategy, differentiate from competitors, resonate with customers, energize and inspire the employees and partners, and precipitate a gush of ideas for marketing programs. When absent or superficial, the brand will drift aimlessly and marketing programs are likely to be inconsistent and ineffective.
The world is going to change from brand competition to subcategory competition. Look at any product category (computers, cars, Greek yogurt, financial services, bottled water, hotels), when you see a growth spurt—an innovation is typically the cause. It creates a ‘must-have’ in the marketplace that defines a new sub-category, making brands that don’t have it unconsidered and not relevant. And then it is accompanied with efforts to make sure the subcategory also wins, and to make sure other brands remain unconsidered.
Brand portfolios are one of the really complex context-dependent and important things we do in marketing and branding to ensure there is synergy, clarity and energy. An important part of that is the concept of a brand differentiator. We want to differentiate our brand, and the best way to do that is through innovation.
Branded differentiation does not occur simply by slapping a name on an innovation. The definition suggests that there are rather demanding criteria that need to be satisfied. In particular, a branded differentiator needs to be meaningful in that it matters to customers, and impactful in that it is not a trivial difference.
Through innovation we have a point of differentiation; if we are really lucky we can use it to define a whole new subcategory. However you need to ensure that the innovation is a significant advance, that the customers do care and that it will merit investment over time because you don’t want to introduce a brand that is going to be around for a year and a half. You need to introduce a brand that will be around for a decade and a half and hopefully a lot longer.
Customer sweet spots
The role of marketing is usually to explain the offerings: to tell customers what we have and what are the specifications. It’s to try to get people to find a reason to like us, to tell about the attributes and how great they are. But this doesn’t result in higher visibility, higher energy or being liked. In reality people don’t care about our brand—not enough to listen and buy.
An alternative is to focus on the activities or interests that customers are involved with, their ‘sweet-spot’. Instead of focusing on the brand, you look at the customer and work out what are the customer’s interests and activities and how can we find a shared interest where we are an active, interested partner.
This can result in providing the brand with energy, likability, and credibility; the basis for a deeper relationship; and an activated social network.
The silo world is a wonderful concept because it leads to accountability, close to market, close to product and technology and it is easy to administer. Very large organizations have hundreds of product silos and hundreds of country silos.
Isolated product, country and functional silos are no longer a practical option, as they lead to a failure to create consistent brand messaging, leverage successes, scale programs, allocate brand resources optimally, build cross-silo offerings and develop needed competences.
Customers want silo-expanding offerings. They don’t want to deal with the individual brands and all their sub-units.
The goal should be to foster a culture of communication and cooperation rather than isolation and competition, which gets the central market group into becoming a strategy partner.
A strong brand sits at the heart of any successful global business. Focusing on these six key ideas will ensure marketing leaders succeed in today’s business environment.
David Aaker, vice chairman of strategic brand consultancy Prophet, is the creator of the Aaker Model and author of more than 100 articles and 16 books. Read more of his thoughts on brand and marketing issues at www.prophet.com/blog/aakeronbrands.