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Branding is Overrated! Why not all companies need to be brands

 

 

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This may sound like blasphemy in an age where every organization, person, and product seems to be chasing after the right branding. If you have ever studied for an EMBA anywhere in the world you will be in agony now. What's more, you may think this is a weird title for a blog on the website of a branding and marketing expert.

 

The heydays of branding in the 1960-80s were based on the simple idea of standing out in an increasingly large crowd of competitors. Building customer loyalty was based on the basic principles of branding: identification. See Which Ketchup? on the origin of branding and branding in the digital age.

 

Back then, branding was essential, whether for the corporation or the product. Creating a memorable brand was key to gaining a share of the customer's mind … and wallet. Yet in the digital age of easily accessible information, price comparison, diminishing brand loyalty and ultimate customer experiences, it is becoming increasingly hard to create new brands that stand out.

 

We're unapologetically redefining what it means to be a brand,” said Tina Sharkey, cofounder and CEO of the startup CPG company Brandless, in a recent interview with Fastcompany. More and more startups go for plain packaging and intrinsic value rather than flashy logos and corporate design.

 

It makes sense. Consumers are overwhelmed by choice in the digital and physical space and cannot keep up with the carefully constructed, convoluted narratives brands have built around themselves. Who has ever read a brand vision statement? 9 out of 10 companies in a particular industry share the same values and  "mission statement". So what's the point?

 

“After decades of new brands rising by virtue of storytelling, some upstarts are turning down the noise and letting their customers color in the lines,” says Sharkey.

 

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What Makes Brands Less Relevant

But what exactly is it that makes brand less relevant, and what should companies focus on instead? Let's examine the main factors one by one; they hold the key to understanding what startups and established corporations can and should do in lieu, or in addition to, branding.

 

Easily Accessible Information

Easily accessible information about products and organizations means that the brand itself is much more than its image, however diligently constructed over multiple decades. No manner of branding and marketing by United Airlines can erase the stain of seeing a passenger removed from a plane. What would have been a single news report in a local newspaper 50 years ago is now forever on the internet, Youtube and Co. tarnishing the brand for years to come.

 

What is hurting businesses the most are review sites. It does not matter how much you spent on your logo, CIS, and package design, a string of negative reviews on Amazon will destroy your product. Restaurants are losing business over negative reviews on Google Business. The new store sign, the new uniforms, and the new DMs the dentist recently produced do not change the fact that on Google Business he has only 2 stars from 170 reviews, many customers calling him "aloof" and "arrogant". The actual customer experience is far more important than any branding.

 

Quick Price Comparison

Established, aspirational brands such as Apple or Nike may still command irrational loyalty, but for new entrants, there is one major hurdle to conquer: the ability of consumers to quickly compare prices over a wide range of products. Some companies would be better off spending money on lowering product costs than on branding because for many products price is all that counts. If you can't make a better product, make a cheaper one; branding won't save you if you can't do either. A client recently contacted us with a request for toilet paper branding; we focused instead on designing better sales promotions and home-delivery services.

 

Diminishing Brand Loyalty

Because of the easy access to information, strong competition, and bad experiences even with the best brands, brand loyalty is diminishing across the world. With a few exceptions, customers will easily switch between brands after just one negative experience, or simply because they are looking for something new and exciting. Particularly in Asia, brand loyalty is almost zero: we buy the new, the cheap, and the novel. Bombarded by a constant stream of new product information on Facebook and Youtube, consumers switch between brands based on recommendations from influencers and friends; they see no reason for loyalty.

 

Customer Experience

Ultimately, the  "user experience" or UX is the experience that counts, whether online or instore, from first contact to final purchase. The experience consumers have with a particular brand is far more important than the brand itself. Too many fields in a form and the purchase funnel will be abandoned; long delivery times or extra charges for additional features and customers will turn away for good. I love Apple's Airpods because of their ingenious design, quick charging time, and great sound quality — but I have no love for the "brand"Apple. I enjoy banking with HSBC because of the way I am treated at my local branch – quick, efficient, with a minimum of forms to fill in. That doesn't mean I love the HSBC brand; I just enjoy the experience at my local bank.

 

Brands should not confuse success with a particular product, asset, or locality, with brand affinity. Your brand is only as strong as the worst experience customers have with it. 

 

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So What Should Companies Focus On in the Digital Age?

In the face of these strong headwinds, what should companies focus on along with basic branding?

 

Management Consulting: Train the C-suite

Very often the problem is not the marketing strategy or the brand, but the understanding and attitude of management. There is no point in spending millions on a new look if the C-suite keeps making the wrong decisions, doesn't understand the marketplace, or only works for its own benefit. Owners must make sure the people in charge of strategy understand the importance of customer experience. They should also be familiar with the basic concepts of digital marketing and inbound marketing; too many companies have fancy websites without good SEO, or Facebook pages with embarrassing posts or no ad strategy.

 

It was feasible in the last century to silo off marketing and advertising into separate departments; in the interconnected digital age, everyone from copy editors to the CEO have to understand the basic concepts of digital marketing and digital processes in the enterprise.

 

Most of all, the C-suite has to manage the balance between actually improving customer satisfaction and marketing: the best advertisement, after all, is a happy customer.

 

Business Development Strategies

Good business development is very often the key to keeping companies in the black. Every electronics company that ever contacted my agency wanted to go to market in Europe and the US and asked for branding and marketing advice for these markets, while most of them would be much more successful in the Middle East or South East Asia. Good business development, with sound inbound marketing strategies,  may be better for your bottom line than branding. This means understanding consumers, distribution channels, and consumers behavior.

 

Understanding Markets & Technologies

Knowing which markets and technologies have potential is key to business success, but very few companies spend the time and money to do proper research. Market research will show up countries or market segments you never considered before. Technology research will show which products sell and why, and where the next threat is coming from. All these efforts together may be more essential to a company’s bottom line than a strong focus on  "branding."

 

One of our clients spent 10 million on logo, CIS, a corporate video and fancy packaging design for a medical product whose technology was about to be made obsolete by a disruptive invention. (Hashtag #nomoreneedles) 10 thousand USD in market & technology research would have saved them a lot of money.

 

Business Transformation Strategies

Sometimes the cure is a complete overhaul of the business strategy. When the time for small fixes has passed, you need help from a consultant with an eye on the big picture. Is what you are doing still relevant, and will it be relevant tomorrow? How can you transform your company, embrace digital technologies, and find a new purpose? How can you leverage existing assets in your enterprise that may lie dormant due to managerial inefficiency?

 

The "extended workbench" (moving to a new country and continue the same business model) is no longer working, mostly because we are running out of countries. China and Vietnam are becoming as expensive as Japan, Korea, and Taiwan. Additive manufacturing, 3D printing, robotics, and automation will make manufacturing cheaper and possible practically anywhere. It doesn't matter where you do it, what matters is what you do, and how. A review of your core business strategies and competencies should be part of any (re-)branding exercise. Before you can "brand" it, you have to understand it.

 

Finding New Uses for Old Assets

Manufacturing companies in transition often embrace branding as a last resort, thinking that after decades of contract manufacturing only their own brand can save them. This may not be true. Faced with dwindling demand, an iron auto-parts manufacturer came to me with the idea to make iron-cast pots and pans and create a new brand; after doing careful research we convinced them to find a different and much more profitable use for their old manufacturing plant.

 

Finding New Consumer Segments

Aging populations and fickle millennials mean that there are consumer segments out there you have never thought of profitable extensions of your brand. Whether it's coding for kids, phones for the elderly, an app with larger fonts; home delivery of bulky items, offering help with installation and setup; there are a million options to improve the customer experience for new segments that companies overlook in favor or empty, meaningless branding.

 

Competing on Real Value

Many startups are choosing to forgo expensive branding and marketing in favor or offering real value. Kickstarter and Indiegogo are full of bright ideas. Optimizing products, gathering extensive customer feedback, and continuous product improvement may be far more important for your new venture than getting the best-looking logo and coolest slogan. Consumers simply aren't as gullible as they used to be.

 

Ultimately, of course, all of these exercises are part of branding. A brand is only as good as the customer experience it provides.