Monday, July 29, 2013
INVEST TO BUILD EQUITY REDUX
invest (verb) – contribute effort to something to give it a particular quality
equity (noun) – the value customers bestow upon your product or brand offering
redux (adjective) – revived
Rube Goldberg (adjective) – needlessly complex
steward (noun) - overseer
My home was built in 1892. At 121-years old that makes her really, really old. Ah, but as old as she is, she’s a grand old dame. My home is a three story Victorian that has hosted many families over her lifetime, and undergone numerous facelifts. Yes, my home is beautiful and my family is most comfortable and appreciative to live within her embrace. We have cared for her for nearly thirty of her 121-years. And she has sheltered us. It really is a symbiotic relationship. We invest in her and she repays us with a place we call home, and considerable equity (both monetary and quality of life). If we did not care for and invest in her she would deteriorate and break down. Every home and everything deteriorates with time, including brands.
There are things we have to do to maintain our home. Then there are things we do to improve it. There are things we do to maintain our brands. Then there are things we do to improve them. They require investment. But then if we care about them, and those they serve, then we’ll make the required investment. This revisits our DISPATCHES’ article of two weeks ago, “Invest to Build Brand Equity.” If you did not receive it click here and you will be able to retrieve it.
Why revisit this subject? Well, one of our readers and dear friends, Bill Weintraub, Former CMO of the Coors Brewing Company, offered the following:
“Nice piece, as usual. One aspect you may have added. Your Victorian home has certain, specific characteristics that are the essence of its being. You can't or won't violate that essence, by trying to turn the home into something it's not. You understand and appreciate its core being.
Same with a brand. You may evolve and update on the margin, but not stretch it too far. You don't want to impose elements of Frank Lloyd Wright into your Victorian abode. Let Victorian be Victorian, albeit identifying new aspects of Victorian that can be exciting and relevant.”
What does this suggest regarding the management of our brand?
1. Stay true to the Brand Idea and Positioning Strategy – It is important that our brands not be static. If a brand is static it will most likely degenerate, falling behind competition and out of favor with customers. However, we should not make revolutionary changes to our brand since it can undermine previous investments and it may also confuse and/or alienate current customers. Instead, we have to, as mentioned in the previous article evolve our brands. We do this by prositioning (i.e., proactive, evolutionary positioning when the rate of growth begins to slow) versus repositioning it (i.e., reactive revolutionary positioning when the brand is declining).
We also stay true to our positioning and build brand equity by engaging in “Power” Positioning. This is the disciplined practice of reflecting the brand’s positioning strategy in everything we do in marketing – every marketing mix element and tactic. It is staying true to its essence, the Brand Idea. In this way, all our communications and interactions with customers reinforce and build upon the brand positioning strategy to cultivate the Brand Idea with customers in the marketplace. It creates a virtuous cycle where the Brand Idea informs marketing strategies and actions, and, in turn, embeds itself with customers. If we do not practice Power Positioning our brand becomes a Rube Goldberg mindsore (needlessly complex concoction of mismatched elements that confuse, obfuscate brand meaning and alienate potential customers driving them elsewhere).
The Brand Positioning Strategy Statement is the starting point for all our marketing activities. We should not be engaging in packaging development or clinical studies or social marketing or product improvements or the development of line extensions without having, and following, the Brand Positioning Strategy Statement and being true to the Brand Idea. If whatever is being proposed is not consistent with the Brand Idea and Positioning Strategy Statement then regardless of its creativity it either needs to be tamed (so it is made consistent) or avoided. One of the areas where FMCG marketers need to be cautious is extending the brand beyond its Brand Idea. This is typically impelled for increased sales in the now! However, it can prove fatal to the new extensions or, at minimum, compromise the Brand Idea and undermine customer loyalty.
Just as my home must be true to its Victorian roots so must your brand remain true to its essence, the Brand Idea, and Positioning Strategy Statement.
2. Be a Responsible Steward of the Brand – Well, my children are grown and all have moved away. They have families of their own. So, this old home is more, significantly more than my wife and I need. (Although it is great when the grandchildren come and visit. They fill our home with pure joy!) All of this is to say that while we own this home we have really been its steward over the past 30-years for other families who will come to own it after us. We’re all stewards of our brands. Not because someone else will come along to manage it, although that will most certainly be the case, but because the real ownership is not with us but out there, with customers. For it is ultimately the customer that bestows value upon our brands just as others will bestow value on, with what they are willing to pay for, our home. Our role is to act as responsible stewards for not just the company and the brand but also for our customers. Without their loyalty our brands are mere products with little equity value.
There’s a biblical parable that comes to mind when I think of our role as stewards of the brand. It’s about a master who upon departing for an extended trip entrusts three of his servants with the stewardship of his funds. Two of the servants invest wisely and double their master’s money. The third buries the money to return the original investment. As you might imagine when the master returns from his journey he is duly pleased with the first two servants. They have been good stewards of his funds. However, he is furious with the third since he could have, at minimum, earned interest on the money by depositing it with bankers. We brand marketers have been entrusted with our brands and gifted with its equity. Stewardship is not about merely being a caretaker. Instead, as stewards it is our job to ensure we are able to further build equity to optimize the return on this valuable asset. We do this by investing in ways to better serve our customers’ needs than competition. The customer is the master of our brand and ownership resides with her/him. So care wisely for it.
Invest in your brand in a way that is harmonious with the Brand Idea, and better satisfies your customers versus competition, and you will build brand equity.
Richard Czerniawski and Mike Maloney
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