Random thoughts on branding

[gabrielng]

Shedding our labels

As our class shifts towards personal leadership branding this week, it allowed me an opportunity to reflect on what this topic means to me. In answering the question of what my points-of-difference and points-of-parity were, it really made me realize that it was up to me to define how I wanted to be "branded."

To me, leadership branding is not only about identifying what differentiates me, but also being aware of characteristics (or even stereotypes) that I need to be be aware of in this process. A couple of years ago, I had the opportunity to attend an Asian leadership conference, where there was an  emphasis on how Asians were viewed in the American workplace. The conference touched on some of these biases, such as how Asians tended to be more quiet, cliquey, or quantitative (versus qualitative). Several years later, I find myself pursuing my MBA at MIT, and our career development office similarly told us how Sloan MBAs have a reputation that largely dictates how we are perceived by companies and potential employers.

As I approach graduation, I realize that who I am will inherently lead to me be labeled a certain way unless I proactively take charge in crafting my own brand. Whether we like it or not, people look upon each of us and will have their judgements. It is up to us to shed these labels to differentiate ourselves from the norm and to get past these preconceived notions.

[gabrielng]

Real friends or FaceBook friends?

Over the past several years, we have seen a large contingent of companies embrace social media in an effort to transition to a new "relationship" era in brand building and customer engagement. However, companies who simply believe that creating a Twitter handle will lead to success have found that true relationship-building requires a consistent and holistic approach. Truly successful companies have always focused on building this relationship. It isn't as though we've only just started to talk about brand loyalty, brand authenticity, and brand identity and a need to focus on customer needs...(need an example? - look at Singapore Airlines from its origins to today).

Fundamentally, the reason for this more overt shift in mindset is that the rise of social media has given the perception that companies need to have a more direct and constant communication with their customers. But latecomers to the "relationship" era will find building relationships extends well beyond "followers" and "likes." We have seen countless examples of corporate Twitter posts that have proven disastrous in an effort to be "cool" or "edgy." These alienating posts not only destroy brand equity, but can be the antithesis of relationship-building.

True relationship-building extends beyond this shallow view. Twitter and FaceBook are merely tools that allow companies another channel to connect with their customers, but it does not preclude the need for companies to retain the foundational elements of branding. Thus, while it is notable that Apple does not have an official corporate Twitter handle, we shouldn't really be surprised given Apple's holistic approach to relationship-building through its imagery, mystique, and user experience. Hasn't Apple always been about the "crazy ones?"

Ultimately, companies that have always focused on shallow advertisements, mundane corporate slogans, and poor customer engagement will retain this position regardless of how many social media sites they join. Relationship-building with the customer is definitely here to stay, but was it really ever about anything else?

[gabrielng]

Inputs not just outputs

If you have ever lived in a rain or snow-heavy city, you will have probably encountered the brand above when you were shopping for a new coat. While the average consumer probably couldn't tell you specifically the technical details of what makes GORE-TEX fabric better than non-GORE-TEX fabric, they typically associate the former with higher quality and reliability. This perspective factors into a customer's buying decision even though the average customer will not ask for a GORE-TEX jacket by name.

Much like GORE-TEX, the "Intel Inside" campaign equally demonstrates how component-like products that were once thought of as simply the "no-name brand" guts of a product have been able to differentiate themselves through branding. Consumers no longer simply care about the output, or the end product, but also about what's under the hood, or the inputs to these products.

What the "Intel Inside" strategy was able to accomplish was to drive increased customer demand by disassociating itself as simply another "commodity" input. Initially, despite Intel having both the most reliable and advanced technology, it was not able to necessarily fully capture this value since it could not distinguish itself in the eyes of end users who either lacked the technical knowledge or simply did not care about the microprocessor within their personal computers. The "Intel Inside" campaign was able to change this perception by elevating the microprocessor as being just as important as the PC itself, and that those who wanted reliability would be best served by an Intel processor.

Nevertheless, the success of this type of branding campaign is predicated on the company actually delivering a high quality product. In the case of smartphones, the "Intel Inside" branding message has had lesser meaning to customers who do not necessarily identify an Intel powered phone as being superior or more reliable than a competitor's phone.

Image source: http://disenthrall.co/wp-content/uploads/2013/09/ingrediant_branding-e1379288789889.png

[gabrielng]

(Luxury) branding and a triangle

What does a triangle have to do with branding, let alone luxury branding? Over the long weekend, I found myself reading up about the rise and fall of A Bathing Ape (BAPE), a brand that once held the throne in the Japanese street wear scene. In this article, the author talks about imagining the elements of brand positioning in a triangle:

"...He drew a triangle on a piece of paper with the x-axis being number of consumers and the y-axis being brand cachet. He explained, “At the top point here are very cool but low-selling brands. At the bottom of the triangle are all the mass market brands with huge sales but no cachet."

The argument, as it went, was that what made BAPE so successful not only in terms of sales revenues but also in maintaining its mystique, was its ability to keep themselves right in the middle of the triangle. In time, BAPE felt that it could move to the bottom of the triangle yet still maintain its mystique. Instead, the brand found its once exclusive tried and true method watered down and diluted. By trying to appeal to the masses, BAPE lost its "cachet." Said differently, the company lost its authenticity

Relating this triangle back to Burberry, we can think of its revival in terms of this triangle. After the famous Burberry check came back under the company's control (with the termination of poorly conceived licensing agreements and a consolidation of SKUs), the company went back to its utilitarian heritage of classic British appeal. It was luxury, but it wasn't unreachable. Thus, at the bottom of the triangle were brands such as Ralph Lauren, and at the top, brands such as Gucci. Burberry was able to position itself in the middle of the triangle, in a position that BAPE so clearly dominated for so long in street wear. It was accessible, but it was distinctive.

Thinking about branding using this triangle can allow companies to see where they are relative to competitors, and how to avoid missteps. Among many managers, particularly untrained in branding, there is this belief that winning market share is everything. But do brands such as Burberry really want to proliferate its products to the point that it alienates its core customers? Never underestimate badge appeal or the triangle.

Article source: http://neojaponisme.com/2011/02/02/a-bathing-ape-takes-a-final-bath/

Image source: http://www.ahoodie.com/wallpapers/bape_mario_luigi_to_milo_baby_milo_wallpaper_1.jpg

[gabrielng]

The more things change, the more they stay the same

Any sneakerhead can rattle off a list of his or her favorite shoes. Regardless of who's list you are looking at, chances are you will find a few pairs of Nikes near the top of the rankings. We all have our reasons for why Nike remains a favorite among collectors, but a foundational reason is the company's ability to understand and execute based on the brand manifold theory.

Brand manifold is the idea that a brand's meaning is a function of temporal factors and is subject to the perspectives of multiple constituencies. From a temporal standpoint, brands are a function of its past, present, and future. The past defines not only what a brand is currently, but also shapes what the brand will become in the future. Thus, while firms are constantly evolving, successful brands find ways to retain its authenticity and its core roots that distinguish who they are (and are not). On the other hand, the concept of multiple constituencies recognizes the values and perceptions of both internal and external stakeholders. Both dimensions are critical in understanding how to manage a brand. 

So how does this relate to sneakers? When Nike launched its skateboarding sub-brand (Nike SB), it sought to bring forth innovative features that skateboarders demanded. From a functional standpoint, it had to leverage the internal brand meanings to connect with Nike's culture of design aesthetic and innovation. It also brought on well established pros to add credibility to external stakeholders (Lance Mountain, Paul Rodriguez, Eric Koston, etc.). However, fundamental to the success of Nike SB was Nike's ability to link the shoes it produced with its heritage.

Skateboarders wore Nike shoes well before the concept of the "skateboarding" shoe ever existed, and it appeared that Nike appreciated this heritage and understood that consumers would gravitate to designs that took into account this heritage. Accordingly, we saw Nike SB branded Dunks, and mash ups with popular and recognizable stylings such as the Air Max and the Jordan 1's. By anchoring this "new" sub-brand to the history of past shoes, Nike was able to retain its authenticity while moving into a new industry of footwear.

Perhaps what validates this positioning the most is the popularity of the Nike SB sub-brand beyond the skateboarding community. Nike SB has collaborated with many non-skateboarding companies, and its shoes have become highly sought after by collectors who value the historical linkage of these releases. I recall several years ago when I was wearing a pair of Nike SB shoes to work and my colleague stopped me and asked me if I was wearing a pair of Dunks. He recounted stories of his own pair of Dunk Highs from when he was younger. While he wasn't aware of Nike SB, he could instantly connect with the history and heritage of the shoes.

Photo source: http://cdn.hiconsumption.com/wp-content/uploads/2014/03/Nike-SB-Air-Jordan-1-1.jpeg

[gabrielng]

What you do is who you are

"Customer loyalty, not customer service." If you have spent any time studying Zappos, you know how customer satisfaction is a deeply engrained value in the company's DNA.

While we often think of good (or bad) customer service as being a part of how a company does business, successful companies are able to transcend this way of thinking. For example, firms that emphasize the customer, such as Zappos, make it a part of their brand and their identity. Simply put, what you do is who you are.

One can draw linkages to other firms who operate in a manner similar to Zappos. Singapore Airlines is another strong example of a company that has made exceptional customer service a part of its brand identity. Loyal customers identify strong customer service and the image of its flight attendants as not just an aspect of how Singapore Airlines does business, but a part of its brand identity.

How do we know that customer-centric values can come to define a brand? Think about companies with poor customer service. These firms may deliver high quality products (or adequate products that we can tolerate...), but we can all recall having a bad experience dealing with tech support or trying to return a product in the store. And we often walked away thinking not only that the customer service was poor, but also equating this to that company's image.

Thus, for companies such as Singapore Airlines to sustain this customer-centric focus, they must fully integrate it into its culture: through its hiring and training practices, through how they deal with customer complaints, through making tough decisions not only based on immediate costs and benefits. In turn, Singapore Airlines is able to ensure constant customer demand and high load factors, which translate to higher profits. In times of crisis, firms such as Singapore Airlines are able to look out into the competitive landscape and watch its competitors cut costs, scale back, and abandon "functional groups" such as customer service. All the while, Singapore Airlines looks to reinforce the source of its competitive advantage, and fundamentally, strengthening the message of who they are.

[gabrielng]

Confirmation bias and the wine industry

Confirmation bias is a tendency for people to interpret or use information in a way that confirms a firmly held hypothesis. In branding, this is critical since traditional means of reaching consumers may fall on deaf ears if this bias is particularly strong for a specific type of product. This partially explains the fanboy culture that exists for consumer technology products. If you are loyal to Apple, the iPhone 5 was revolutionary, and nothing anyone can say will convince you otherwise. Contrast that to the reaction of an Android loyalist...

While studying the case of Concha y Toro, I reflected on my own lack of knowledge when it comes to wine and how the confirmation bias affects me. Thus, although I am by no means a wine aficionado, if pressed, I would probably lean towards wine from France or Napa Valley. I couldn't tell you why specifically, but my tendency would be to believe that wine from these regions are of higher quality. As a result, for new wineries trying to break into the global wine market, this confirmation bias acts as a strong barrier to entry for those companies that do not come from a highly regarded wine producing nation or region. 

Thus, we see examples of Concha y Toro and other Chilean wines, which although are of high quality (evidenced by superior rankings by well respected publications), still struggled to fully penetrate the international wine market at a level that would be indicative of this quality. This demonstrates the importance for wine producers that are not from the more prominent regions to have clear strategies, since much of wine consumption is based on perception over actual quality. These factors are also coupled with the fact that advertising tends to be less impactful in the wine industry and brand loyalty is largely absent (for the mass consumer base in particular).

Given these challenges, how best could companies such as Concha y Toro proceed? First, one key turn of events was the establishment of the "brand of Chile." Since customers are largely agnostic to individual wineries and rather focused more on geographic regions, bringing awareness to the nation's wine industry collectively would likely resonate more with the average wine drinker. As they say, a rising tide lifts all boats. Second, at the firm level, I would argue that because brand recognition is not a strong force in the wine industry, Concha y Toro should adopt a top-down strategy and focus on building on the "brand of Chile," that is wine that is value for money. This strategy would thus focus on riding the wave of the growing presence and visibility of Chilean wine in the market, and emphasize scale and distribution.

Image source: http://www.eqhammer.com/sites/eqhammer.com/files/dilbert-confirmation-bias.gif

[gabrielng]

Product diffusion and the iPhone

When the iPhone was first released in 2007, hoards of people rushed to the nearest Apple store to purchase the product. Few could dispute the "wow" factor, but the launch of the iPhone can largely be seen as confirmation of the importance of relative advantage as it relates to diffusion.

It is crucial to remember that the iPhone came out at a time in which the smartphone market was limited to a few players, many of which were  clunky to use, and targeted mostly to the business community. But the iPhone had a broader appeal - it elevated the social status to those who got it on day one and its UI/UX was ahead of the competition. The phone was no longer simply a utilitarian tool used to make phone calls and check work emails (or to play brick breaker), but also an extension of the user's persona. Small wonder the iPhone was dubbed the "Jesus Phone."

While Apple faces many challenges today, few can dispute the relative advantage enjoyed by Apple when the iPhone first launched.

[gabrielng]

A slice of peanut butter

Product diffusion is a crucial concept in branding and can be defined as the number of adopters for a specific product within a defined period of time (e.g., within a year). To assess how quickly a product will be adopted it is useful to first look at market potential to understand which customer segments will most likely be willing to purchase and use the product.

Here, we take a look back at four specific products, and assess (with the benefit of hindsight) market potential and what could have been expected with respect to the rate of diffusion. We can assess the latter using a helpful framework introduced by Everett Rogers, which offers five perceived attributes of innovation. These include:

Relative advantage

Compatibility

Complexity

Trialability

Observability

1. Individually-wrapped peanut butter

Assessment - Slow diffusion, limited market potential

Individually-wrapped peanut butter ("IWPB") was marketed as being more convenient than traditional peanut butter. I personally do not see how making a PB&J sandwich is particularly stressful or inconvenient, and the whole notion of a slice of peanut butter is probably too foreign for most. Against Rogers Five Forces, it probably only ranks high against complexity, but the skeptic in me would probably conclude that spreading peanut butter on bread is not that much more complex. IWPB may appeal to those who have to mass produce sandwiches (soup kitchens, school cafeterias), but is making a normal peanut butter sandwich really that much more work compared to unwrapping a slice of peanut butter? 

2. Silver-coated bandages

Assessment - Moderate diffusion and market potential

The benefits of silver-coated bandages were quite clear, but the uses outside of the medical setting were probably quite limited. Using Rogers terminology, it could result in "overadoption," since the vast majority of people do not need silver infused bandages to treat minor scrapes and scratches. Furthermore, without broader education, potential customers will probably not understand the benefits of this innovation. Thus, while it does score relatively high across Rogers' forces, its broader application will likely come about within hospitals and clinics in which the users already know and value the efficacy of the product.

3. Satellite radio

Assessment - Slow diffusion and moderate to high market potential

Remember when we all said that we would buy satellite radio on day one so that we could listen to Howard Stern? That was before we realized we would also need to shell out several hundreds of dollars to install a satellite radio into our cars. History has shown that satellite radio has been successful; at last count, there were 20+ million Sirius XM subscribers (Source: http://www.forbes.com/sites/greatspeculations/2013/04/12/can-sirius-xm-tune-in-big-subscriber-growth-this-year/). But adoption could be predicted to be slow: people were uneducated on the technology, it was relatively complex to understand, and it required adopters to pay a lot of money upfront for a product that was largely unproven. Over time, its relative advantage over existing radio won out, and the observability factor has brought down the hinderances from some of the other forces.

4. The iSmell

Assessment - Slow diffusion, low market potential

There is something to be said about a product that is..."too innovative," shall we say. The iSmell has gone down as one of the most bizarre technologies in recent history (don't take my word for it, check out: http://www.complex.com/tech/2011/04/the-50-worst-fails-in-tech-history/digiscents-ismell). In my opinion, the product scores low against nearly all of Rogers' forces. Further, it would seem as though outside of a few die-hard Food Network viewers, who would want to smell artificial, chemically-induced oranges? Or maybe I am still stuck in the dark ages...

[gabrielng]

Authenticity in branding

Studying branding has helped me to better understand why brands position themselves in the way they do, and just how crucial this concept is. This past week, our class looked at Corona versus Heineken in the US market, and the importance of having consistent messaging directed at the consumer.

Pick your favorite company, or reflect on a specific industry that you follow closely. I'm sure that at some point, "Brand X" was mentioned with the term "authenticity" or "identity." While abstract, we all know what these terms mean. In practice, however, these messages are often lost, particularly as companies scale and try to appeal to broader markets while quickly losing the essence of what made them successful to begin with. Incumbents get lazy, upstarts get diluted.

The story of Supreme, a New York-based skateboarding company has long adopted a strategy focused on preserving its authenticity. I recently stumbled across this 2012 NYT article that articulates this strategy. Reflecting on my own experiences from waiting in line for the weekly 11AM launches on Fairfax in LA or on Lafayette in NYC, I now better appreciate what the brand is trying to achieve and who they are (and more importantly, are not) trying to appeal to. Supreme focuses on a very specific set of clientele, selling only the products that they believe in, and collaborating only with other companies (e.g., CDG, Nike, TNF, Spitfire, and Independent) that will enhance the brand's credibility.

Over the past 20 years, we have seen countless "lifestyle" or "street-wear" brands struggle with this authenticity. While some have rebounded, most of these companies continue to struggle, having previously "sold out" in the eyes of their most loyal customers.

Supreme does not rely on advertisement, and its founder rarely speaks to the media. This is perhaps best summed up in a quote from the above mentioned article:

"Passers-by in suits offered quizzical looks. But that’s perfectly fine with Supreme. No offense, but if you don’t know about Supreme, maybe it’s because you’re not supposed to."

http://www.nytimes.com/2012/11/22/fashion/guerrilla-fashion-the-story-of-supreme.html?_r=0

[gabrielng]

The thought of Corona beer conjures up images of its famous bottle, a wedge of lime, and time spent at the beach. For many, these images are synonymous with Corona, and the consistency in branding and advertising has supported the "Fun, Sun, Beach" theme that has been linked to Corona since its inception. The theme, although simple, is also powerful since it reinforces the messaging of the brand.

The takeaway? Simplicity + consistency = effectiveness

[gabrielng]

Black & Decker's branding struggles

The Black & Decker (B&D) case study from the early 1990’s demonstrates the importance of branding and positioning. Despite product research revealing that B&D’s “product quality was very strongly competitive in a large majority of product categories” (i.e., not a quality issue), the company found itself lagging behind Makita within the professional-trademsmen segment (~50% share versus ~9% share).

A few key insights should thus be considered in regards to this competitive environment in 1990. 

1) Product differentiation beyond quality: Attributes such as product color had a profound effect in distinguishing between consumer grade and professional grade. In this regard, B&D had largely kept the appearance of its products across different segments relatively similar.

2) Distinction of products between different segments: By offering products across multiple segments, and with branding that was largely indistinguishable among these segments, B&D found it difficult to demonstrate to professional-tradesmen the different tiers in its product offerings. The one distinguishing attribute, a slightly modified logo, was more similar to the consumer-level products than different.

3) Brand perception: All of the factors noted above, coupled with B&D’s success in the consumer market made it difficult for B&D to shed its brand perception that its products were geared more towards the “mass market” rather than to professionals. During B&D’s research, B&D was often grouped within the bottom half of companies based on brand perception, and consistently lagged behind Makita and Milwaukee.

Given these findings, B&D can turn to different branding mechanisms to help it grow out its professional-tradesmen segment. One notable potential solution would be the introduction of a sub-brand, which could provide a greater level of differentiation among its segment offerings, and could help B&D move away from the brand perception issues it faced in the professional-tradesmen segment. in particular, when compared to Makita, B&D ranked higher in ease of getting service and standing behind its products. Further, Makita’s position was not universally positive with retailers. These factors provide B&D an opportunity to leverage its high quality products and service, and enter with a relaunched sub-brand that moves away from the B&D branding, color palette, and logos.