Making your Mark!

Samit Sinha, Founder and Managing Partner, Alchemist Brand Consulting, writes on the science-and art-of brand building. Interestingly, the vocabulary of branding has much in common with construction and infrastructure development. Take, for example, the term ‘brand building’. This is not coincidental. However, to fully appreciate the analogy, it is worthwhile tracing the evolution of branding. The origins of branding Branding is actually quite an ancient concept, though in its modern avatar it is less than a couple of centuries old. The use of indelible markings on domesticated animals to identify them and establish ownership has been around for millennia, and is considered to be the forefather of branding as understood today. The word ‘brand’ itself probably has its origins in the Norse word brandr, which literally means to burn, from which the term got strongly linked with the practice of searing a mark, in the form of letters and symbols, on the hide of an animal in the cattle ranches of the America sometime in the 17th or 18th century. An interesting aside: the term ‘maverick’ literally means an ‘unbranded’ calf, named after one Samuel Augustus Maverick, a Texas rancher, who decided to not brand his cattle to differentiate from all the rest, which were branded! So while cattle branding is the direct precursor of modern branding practices, it’s useful to remember that its initial purpose was only to establish proof of ownership, linking the product to its rightful owner. This was the earliest form of a trademark, essentially a means of legal protection, rather than its later use as the most important marketing tool. With the advent of the industrial revolution and the era of mass manufacturing, there was a need to address a wider market. Factory-produced goods had to vie for consumers’ trust on a considerably larger scale, competing with more familiar local offerings. Consequently, branding evolved as a marketing concept, from a trademark to a ‘trust mark’, sometime in the latter half of the 19th century. Companies like Coca Cola, Colgate and Kellogg’s were some of the early exponents, who soon realised the value of increasing familiarity, faith and trust to establish a long-lasting relationship with their consumers. The creation and fostering of a strong loyal relationship has remained the foundation of all modern branding principles, applying as much to products and services as to corporations. Branding today Today, branding works on three levels. At the first level, as an identifier, helping people distinguish one offering from another. Next, as a discriminator, associating certain unique tangible attributes to the offering, making it seem more desirable than others on a particular dimension. And last, as a basis for a long-term and mutually rewarding relationship with its consumer based on perceived psychological benefits and other intangible associations of values, meanings and beliefs. But, securing loyalty is ultimately the brand’s true purpose. As the concept of brands and branding has evolved, the principles have been successfully applied across categories of products and services, and even to companies as a whole. In fact, branding is being increasingly regarded as the most critical strategic business tool. But it is important to understand the distinction between branding as applied to product or services marketing and the more recent phenomenon of corporate branding. While in both cases the ultimate aim is to build the platform for a strong and enduring relationship, the crucial difference lies in who is being addressed. In the case of the former, the branding effort is primarily directed at the customer - the purchaser and/or the user of the products and services. And a company may own several brands targeted to different consumer segments and across product categories. Corporate branding is inherently more complex, given that the company has to attempt to build relationships, not just with its customers, but also with other important stakeholder constituencies, such as financial investors, trade partners, the government, current and future employees. Unlike product branding, where the brand attempts to establish associations with a particular category-related benefit or the needs of a specific segment of customers, corporate branding is an inside-out approach, and more about articulating its vision, values, strengths, accomplishments and character to establish its reputation or brand image among all its constituencies. This process takes longer and depends upon a consistent approach to everything the company says or does to delivering an overall experience and meeting the expectations of all stakeholders. The aim in both cases is to create higher value, provide stability and ensure future income. The greater assured income comes from the brand’s ability to attract more customers, increase usage, encourage repeat transactions, and secure a premium and overall foster supportive behaviour. A simple way to compute brand value is to subtract the debt, replacement cost of all its tangible assets (including staff) as well as the value of intangible ones like patents and intellectual properties from the company’s total market capitalisation. The remainder is really the value derived from the brand and a strong indication of the market’s faith in the company’s future earning potential, which obviously means that investors are betting on something that is above and beyond the company’s underlying ability to make and provide a product or service. That something is the clearest indicator of the brand stock, a number that signifies the totality of all the impressions created over time about the product, service, distribution channel, people and communication. Virtual vs real estate Regardless of product or corporate branding, consistency is the key in branding, as is constant value addition to stay relevant and competitive, much like developing real estate. This metaphor is particularly useful in understanding brand building, especially if we see brand building as developing virtual estate, rather than real estate. In other words, developing a property in the mind space of the consumer as opposed to, say, land, bricks and mortar. Imagine, two real-estate developers, who begin with identical plots of land on either side of a road in the same locality; each builds a similar apartment complex facing the other, using comparable materials and quality of construction and providing the same infrastructural facilities. Let’s also assume they are both equally successful at selling all the individual apartments at more or less the same price. Now Builder A decides to plant trees, add a garden, a park and a playground. Subsequently, a coffee shop comes up, followed by a clubhouse and a gymnasium. Soon the place becomes an extremely attractive option to live in and begins to attract a highly respectable group of residents and, in time, houses a thriving community. In the meantime Builder B thinks his job is over the moment he is able to sell off the last apartment; riding on the back of his success, he now shifts his focus on building the next apartment complex, neglecting to further develop the current one. In the meantime, its owners see no compelling reason to shift there themselves and instead look for tenants to rent out their apartments. Unable to find ready and willing takers, they lower their rent expectations. This does bring in a few tenants, but they are of a lower socioeconomic stratum than the ones across the road, which further brings down rental rates. Fast forward to the future. Again, both builders are in the market to sell their next residential complex, accompanied by a huge advertising and publicity campaign, with large billboards dotting busy thoroughfares, full-page advertisements in the leading newspapers, glossy brochures depicting opulent lifestyles. In fact, no expenses are spared to create awareness of the new property. For the moment, let’s assume that both builders have spent approximately the same amount of money promoting their respective offerings. But no prizes for guessing who will attract more customers, who will be able to sell faster, and who will be able to command a higher price. Builder A, naturally, even if he had invested less than half of what Builder B would have on advertising. Builder A invested in building brand value, while Builder B did not. Brand value is built as an ongoing, painstaking, brick-by-brick process of continuous incremental improvements in the experience and, most critically, consistently delivering on the promises made. There is no short cut, but the rewards can be huge, especially when loyal customers become voluntary and active evangelists and spread positive word of mouth, the most credible source of knowledge about the brand - which is why it is so important to have ongoing communication with existing customers. Unfortunately, what many marketers fail to realise even after so many examples of successful brands, is that indelible impressions have much more to do with people’s experience with the product or service or company, and them sharing it with others, rather than a slick and clever advertising campaign. While communication is an important marketing and brand-building activity, all it really does is set up people’s expectations. It also helps generate awareness, a level of interest in the offering and to some extent can succeed in creating a degree of predisposition towards it, but ultimately it’s all too transient. In the long run, it is far more profitable to invest in the delivery of the promise, rather than on the promise itself. This quote below from Stelios Haji-Ioannou, Chairman, easyGroup, illustrates the point quite vividly: “You can spend £ 15 million on advertising and go bankrupt and your name can still mean nothing to people. Your brand is created out of customer contact and the experience your customers have of you.” About the author: Samit Sinha founded Alchemist Brand Consulting in September 2001. He has conducted brand management and creative skills enhancement workshops in Australia, Malaysia, Sri Lanka, Thailand and UAE, besides India for organisations like Avaya, Bates, BILT, CRY, Escorts, Frito-Lay, Hewlett-Packard, Godfrey-Phillips, Grindwell-Norton, IndianOil, Intel, Mudra, Modi, National Geographic, NTPC and Samsung. He is also the board member of Wortal Inc, USA and Aspire Human Capital, India