"What's your BRAND?" - Know more about this psychological aspect of wealth creation and marketing!
Litman and Dr. Mark L. Frigo explain this framework in detail in the book, “Driven.” We encourage you to read about RDS during your spare time. This framework offers lots of insights that will help you succeed in your business endeavors. Today, let’s focus on the sixth tenet of RDS: Brand Offerings. Keep reading to know what it truly means to brand your offerings and compel your target market to transact with your business.
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"What's your BRAND?" - Know more about this psychological aspect of wealth creation and marketing! What first comes to your mind when you hear the word, “brand?” Business logo? Company name? Advertising slogan? It’s easy to associate “brand” or “branding” with a firm’s identifiable marks. However, take note that these are just part of the definition. The term is actually an umbrella marketing concept that helps consumers recognize a business or person. Branding Your Offerings Tenet 6 (Brand Offerings) is the third of 3 “Competency Tenets” in Return Driven Strategy (RDS). According to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven,” “brand” is not only a noun but also a verb that describes what a firm should do to its offerings. This means proper branding activities build an indelible connection in the minds of customers between their explicitly understood need and the offering that uniquely fulfills it. A successful bridge with strong foundations on both sides—the offering and the need—will result in an exchange between the firm and its customers. This is critical in the creation of wealth. Important note to remember: Successful branding DOESN’T occur in TV commercials, print ads, billboard, product labels, or in any other marketing collateral. The branding process is PSYCHOLOGICAL and can only occur in the minds of consumers. This states everything else is just a tool for branding and so anything that affects customers’ views about an offering is branding that offering. … but beware! The psychological nature of the branding process can also create misconceptions about what exactly is happening in a firm. For instance: Some management teams say, “Our advertising campaign successfully created the need for our product.” Do you think there’s a problem with this statement? There is! Keep in mind that branding CANNOT create a need. However, when done properly, it can help customers identify and become aware of an existing pain point. Keyword: Existing. The need will always be there. Branding activities are merely tools to focus consumers’ attention on that need. Take a look at this example… The invention and development of the Internet has led to products and services that never before existed—emails, chat rooms, blogs, online auctions, etc. In their first few stages, there have been lots of advertisements and branding to promote their uses. Question: Did the branding create the need for these products and services—meaning, a need for them never before existed? NO. On the contrary, these new offerings simply targeted existing needs. Emails, blogs, and chats are just some ways customers meet their need for community, connectedness to others, and communication with others. See? The need for such communication tools didn’t have to be created or developed; it was always there. The branding and marketing merely elicited the awareness and how the new offerings could fulfill that pain point. Branding the Offering and the Need, NOT the Company Sometimes, firms spend millions of dollars on branding their names. Managers even believe customers’ awareness of their company name will lead to sales of their offerings. What’s more? Some publicly traded companies think awareness of their name could benefit their stock price! Oh no. This thinking clearly stems from a lack of understanding of what truly drives stock price levels. Let’s use a concrete case study… Webvan was a dot-com company and grocery business headquartered in Foster City, California.
As a business, Webvan sought to leverage the Internet to let customers purchase groceries online, then have the goods delivered to their homes. Similar firms found this business strategy viable and achieved success. Unfortunately for Webvan, that wasn’t the case. After 3 years of operation, the company filed for bankruptcy in 2001. Where did the business go wrong? A significant factor that hurt Webvan was frivolous spending in advertising. During its first few stages, the company spent millions of dollars to advertise its name on one of the top Internet portals and search engine firms. This enabled Webvan to advertise nationally across the U.S., yet most American consumers couldn’t use its offering. Why? The firm was only operating in a few of the top U.S. cities! So, while almost anyone who visited the online portal saw Webvan’s ads, only a handful of them were actually able to use the company’s offering. You might be wondering, “Why would Webvan advertise to every person in the U.S. when only a small fraction of them could actually use its service?” One belief was Webvan saw advertising as a way to communicate the firm’s stock to prospective individual investors. This clearly represents a misunderstanding of stock prices. There are lots of methods of investor relations that are far more effective and economical than advertising nationwide in online portals. Let’s now look at some businesses that focus on branding their offerings first before their names… Pharmaceutical companies spend billions of dollars in advertising and promotions to brand their products. As a result, many of them have enjoyed consistently high returns for decades. Example: Throughout the 1980s and 1990s, Abbott, Johnson & Johnson, and Pfizer became multi-billion-dollar revenue giants. However, how was it possible that only a few people knew that the popular nutritional bars called ZonePerfect were manufactured by Abbott… … that the Listerine mouthwash was once a product of Pfizer… … or that the antacid brand Rolaids was produced by Johnson & Johnson? The answer is simple: These companies focused on branding their offerings. They let their products or services deliver and make a positive psychological impact on consumers. Abbott, Johnson & Johnson, and Pfizer didn’t have to put in too much effort to make their names known. As their offerings consistently delivered good results, customers eventually took the initiative to know the companies behind ZonePerfect, Listerine, and Rolaids. — Professor Litman and Dr. Frigo say branding activities should brand both the offering and the need. Think about this: It’s not enough that customers have an unmet need. They should also be explicitly aware of it. No matter how much firms know about this existing need, they won’t be able to convince customers to buy if they aren’t self-aware of that pain point. Simply said, there must be strong foundations on both sides of the bridge (offering and need). Need awareness is as important as brand awareness. Keep these return-driven insights in mind! To achieve true wealth creation, you must brand the offering and the need first before your company’s name. This will help you advertise more effectively and economically, and be successful in the long run. Hope you found this week’s insights interesting and helpful. Follow us on LinkedIn.
Stay tuned for next Tuesday’s Return Driven Strategy! Have you ever been to a Uniqlo store? If so, what did you first notice about the place? Learn more about how this company was able to capture its share in the fast fashion industry in next week’s article! |
