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Inverting brand paradigms

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Inverting brand paradigms

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A challenging presentation about brand issues, challenges, paradoxes, questions and trends - issues that underlie brand development, brand evolution, the relationship of brands with their diverse stakeholders, the impact of social media upon brands and how brand meaning is created and managed.

A challenging presentation about brand issues, challenges, paradoxes, questions and trends - issues that underlie brand development, brand evolution, the relationship of brands with their diverse stakeholders, the impact of social media upon brands and how brand meaning is created and managed.

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Inverting brand paradigms

  1. 1. Inverting Brand Paradigms 14/ 06/ 2013
  2. 2. Is business still about the creation of investor value?
  3. 3. No! But also yes… value is still about creating more than we consume… • Increasingly, brands are being questioned about their environmental, societal and labour ethics, fundamental purpose, values, profit margins and integrity. • This means brands have to find a balance between their diverse stakeholder interests – one that satisfies all interest groups. • Yet, reciprocity of interests was never how business was defined – it therefore fundamentally questions the global economic paradigms. Yet, there are no clear answers to it. • It means business needs to find ways to be more productive, without incurring greater labour or other costs or making staff work too hard; charging too much for their brands that it distorts the competitive context or value delivery equation; use inferior materials in the process of production; distort the value equation for brand users - or do anything that distorts the input: throughput: output balance. • It is arguable as to how a brand can do this sustainably… it will rely upon a very fine balance of interests of value created and value delivered. And all have to be totally transparent. There is even a limit to what the very best value delivery can charge.
  4. 4. What value? Value for whom? How is value created?
  5. 5. The Brand Providers of capital Producers of brands Value & Meaning Price & Cost Competitive & comparative context. Balance of power & interests. Depth of authenticity & integrity. Longevity & sustainability. Society.
  6. 6. Can true reciprocity between the owners of capital and society ever exist? It will require a new mindset! And greater levels of transparency and engagement. Yet, we need to create more than we consume, otherwise we will consume the planet, as we are doing in some ways today! All resources are part of this equation, capital, natural resources, clean air & water, people skills, etc.
  7. 7. Most brands are parity offers, they do very little that differentiates. Consumers even see them as being the same.
  8. 8. Real functional innovation will define consumer and investor value. • This undermines value in categories, i.e. airlines. • This undermines consumer choice, because even if there are many brands, the lack of discernment makes choice almost incidental. • This undermines category value. • Over-time, it erodes brand value. • The only way out of this remains innovation, hence the battle between Samsung and Apple. • Innovation will drive higher demand – but it will arguably only be able to do that up to a point. • Transparency sets a theoretical limit upon what innovation can charge.
  9. 9. The paradox of innovation. • Innovation holds the seeds of its own demise, just look at Apple today: innovation “re-sets” consumer expectations to accelerate at an ever increasing rate. • The more you innovate as a brand, the more you need to innovate to remain competitive. I call it the “paradox of innovation”.
  10. 10. How brand development evolves. Customer needs & wants. Current customer behaviour. Technological capabilities. Current competitive context. Convergent industries & lateral competitors. THE TREND LINE Copying/ traditional differentiation. Imagination. Solving basic problems people have. Creating meaning around ideas/ concepts. Brands that solve basic problems. Traditional research useful Exploratory, experimental, pilots
  11. 11. Understanding people, patterns and how they create meaning and engage. • Despite fears of “1984”, we are now able to understand: – Who, where, how, when and why people use brands. – What works, what does not. – What they do to engage with brands and other people. – What they do to create and destroy meaning for themselves and for other people. – What issues, patterns, viewpoints, new brands and new trends are out there. – What is talked about and why it matters to people. – These patterns are critical to understand how to create brands that will deliver the meaning they want. • We need to use the data, digital footprint and information at our disposal to really understand our customers, track their behaviour, understand how they engage, become part of their frame-of-reference in a natural way. • This is why data insights will be the new competitive advantage.
  12. 12. Will we still have brands around, or will they die?
  13. 13. As long as people have needs; products & services get named = yes. • I find the debate about the future of brands ridiculous: whilst people have needs and companies make things to satisfy these needs, there will be brands. • What has changed, is that brands have to balance their price against their value delivery, unless that is fair, these brands will die. Social media accelerates that. Industries that have no differentiation and that have become commodities, are under threat. Yet, even in highly commoditised industries, there are better and worse players. • So if there are products and services that service needs better than others, they will bear a name, hence they will be brands. A good name will distinguish itself from a bad name – and that remains the essence of branding. • So I find the “no logo” debate a bit futile, even if I buy the sentiment that underlies it. • Whilst integrity is now more important for brands; and having a purpose or ideal to strive for as a brand – one that is more than just profit, as brand custodians, we can only be the catalyst to remind of and ensure integrity.
  14. 14. We have the rise of the notion of “no value”.
  15. 15. The Internet has created a widespread notion that great content is “free”. • Whilst there are important exceptions to this rule, it is a fact that the Internet is dominated by free content. • Beyond this, there is widespread copying of content, by people who would never consider themselves being “thieves”. • Price is no longer a definitive determinant of the quality of content. • This places serious demands upon marketers and brand owners. • Whilst the the notion of “value” is endless, the notion of “margin” is finite. • Why pay for a small, local newspaper brand when you can get a global medium for free? • The historic logic of value delivery is totally distorted and there is no clear answer all agrees to. • This is a fundamental shift for business with no clear answer.
  16. 16. Consumer decision making is brand focused, not product focused.
  17. 17. This argument is not new… • The famous article by Levitt, “Marketing Myopia”, is old, yet most companies still define their brands within set industries. • This means we remain parochial as brand owners in how we view competition. This restricts innovation and brand value. • Competition is always from the viewpoint of consumer-choice, and often bears little relationship to traditional competitive boundaries. • Apple redefined many “categories”, again reinforcing that traditional categories are often irrelevant to consumer decisions about brands. – An Apple iPod is an MP3 player, a replacement for CD’s, a replacement for a music store and many other things… it transcends many existing product categories. It very being made many other things obsolete. – As convergence grows, this is true for brands like Google, etc. • Prof Gary Hamel states that 90% of innovation will come from outside of your industry, so there is little point in reviewing trends within your industry, you need to look at other industries.
  18. 18. This argument is not new (cont.)… • Industries are overlapping, replacing one another and converging. • Consumers are making buying decisions between, alongside and across industries – very rarely even thinking within traditional industry boundaries of brands. Consumers find solutions to their problems or yearnings, regardless of where they come from. • Brands and their value delivery are thus more important than products or industries, as brands can transcend categories of needs or given sets of competitors. • Yet, most brands are not defined this way. • This gives rise to what I call “concept brands”, brands whose value-set is greater than the traditional boundaries of industries. Some brands are more able than others to transcend categories, i.e. Apple and Sony versus Nokia or Toyota.
  19. 19. To re-construct value, you need to de-construct how customers solve problems & reconstruct how value is created. Then you need a serious overlay of imagination. Useful toolkit from Osterwalder&Pigneur.
  20. 20. You then need to re-construct value logically.
  21. 21. All of what a brand will ever do, is to retain and grow the revenue and margins from the customers we have; and acquire the customers we want, at the margins we require and consumers are willing to pay. This is true for any business. Acquiring new customers. Increased customer value. More products, same segments. Building brand value/ business value. This is detailed overleaf.
  22. 22. The number of clients. The lifetime value of these clients. The profit margin of these clients. ÷ At the same or a lesser cost to acquire, retain and service than rivals. Actual revenue. Cash-flow. Actual profit. Company value. Profit margin. Share price. Growth potential/ sustainability of revenue & profit stream. Leveraging customers to create company and brand value. Adapted from: MIT Sloan Management Review, Can Marketing Lift Stock Prices? Summer 2011. Is a function of:
  23. 23. 1. Whatever we do is designed to build company value for stakeholders, both internally & externally. This may change, but capital will only be available if the trade-off makes sense to those who have capital. Stock market value
  24. 24. 2. The tools we use to do this, are revenue and margin derived from customers: acquiring them, keeping them and growing them. At the same or less costs than rival companies. Leverage the lifetime value of the consumer Stock market value
  25. 25. 3. This means retaining the right customers, growing their revenue and margins, and acquiring the desired customers. Leverage the lifetime value of the consumer Medium customer lifetime value Low customer lifetime value High customer lifetime value Negative customer lifetime value Potential high consumer lifetime value Stock market value
  26. 26. 4. To do this, we need to identify the right market opportunity; the right target customers; the right strategy & the right marketing communications/ media and brand delivery. At the same or a lesser cost than rivals. Leverage the lifetime value of the consumer Medium customer lifetime value Low customer lifetime value High customer lifetime value Negative customer lifetime value Potential high consumer lifetime value What must be done, and how must it be done, to achieve incremental growth. This sets clear and measurable objectives, enables accurate specs and outlines key activities. It ensures all activities and resources are aligned to achieve business growth. Stock market value
  27. 27. Creating & managing customer value is a function of various elements that systematically and incrementally build: it is unlikely that this equation will ever change. Brand Communications expression Brand Trade expression Infrastructural & marketing costs to deliver the brand Market opportunity or GAP Value proposition & strategy The alignment of those elements that construct brand value for the customer X X X Brand sales; brand margin Brand delivery Market, industry and competitive factors X The marketplace results achieved Growth is incremental and multiplies results: the greater the alignment, the better and more efficient the outcome, conversely, the non-alignment of an element undermines the process of value creation. Optimal alignment = optimal resource alignment.
  28. 28. Brand relevance lies in an ongoing dialogue in which “brand meaning” is defined and re- defined.
  29. 29. From one-way communication to interactive engagement. • The traditional notion was that brand names & identities were “short-hands” for the brands and what they offer. • Today, I believe they are instruments of reciprocal engagement between brand interest groups. • This means they are: – Active, not passive. – Variable. – Not just identifiers. – They become the “language” by which a brand engages, not just a name and identity. The more a brand can create a new language, the stronger it will be. The more it can create its own set of symbols, dialogue, words, associations, new terminology, new icons, new set of meanings, the stronger it will bond with contemporary issues and people. This means brands will either evolve - or they will die. – They become “creators of meaning” (compare Roberto Verganti), hence a process of value creation where the brand constructs meaning and value through its ongoing engagement with customers and other stakeholders. – This inverts the traditional brand paradigm, where “meaning” is owned by the brand owner. Now meaning and its related value is in constant flux and gets redefined all the time.
  30. 30. “Meaning” is a function of the information contained. That in turn, is a function of the “new-ness” & “meaningful-ness” of the information. That means the process of engagement, determines the value of the meaning created. So much of the value of a brand lies in how it engages with me… in brand design terms, this means the traditional concept of “information- design” gets far greater traction.
  31. 31. Meaning gets created in an ongoing dialogue… Real dialogue depends upon true reciprocity… authenticity depends upon the mutual give of meaning... “Meaning” will only be “meaningful” if it is rewarding to all.
  32. 32. Google redefines the relationship and degree of relevance it has every day… outside of defining the brand, it defines its access, accessibility, authenticity, IQ and EQ. Google becomes “me”, and I become my own Google. This means it awakens fresh interest in, a new relationship with, a growing expectation from the brand every day, hence it redefines the brand meaning every day. The brand listens & responds & grows… hence its value gets redefined.
  33. 33. Value in what places? Value in what spaces? Value at what trade-off of interests?
  34. 34. Value is exponential to the degree of engagement that takes place. More = Better. Greater quality = Better. More meaningful (new) = Better. More personal = Better. More unique = Better. Too structured = Bad. Too inflexible = Bad. Too “me” = Bad. “I” = Good.
  35. 35. Truth & authenticity = integrity, without that no value or meaning is possible.
  36. 36. Conclusions. • The paradigm is shifting. • A new context, content, demands a new way of working. • This means: – A new reciprocity between the interest groups, one that has no simple and clear answer about how reciprocal value will be created yet. – Increased emphasis upon brand value creation. – A more complex environment where most content is free, undermining the definition of value further. – Redefining the ways in which brands are created, managed and how value is delivered to consumers. – A change in how brands engage with consumers and in how meaning is created. • Defining an era of meaningful brands, engaging in meaningful ways, delivering meaning to all stakeholders in a manner that is reciprocal. • Underlying this, will remain consistent ways in which a brand is managed, but it will require greater insights, use of information and imagination: to create meaning in which all stakeholders will benefit. • Meaninglessness will have no value and no role. • As brand custodians, what is our role in creating this new meaning?

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