Friday, January 30, 2009

Does Branding Kill Your Profit?

I just finished reading Geoffrey James point of view in his latest blog post.

Here's a quick excerpt for Geoffrey's "How Branding Can Kill Your Profit":

"I also believe that developing “Awareness, Interest, and Desire” (aka “Branding”) inside B2B firms is mostly just an excuse to spend money.

In fact, branding is overrated in B2C firms, too. Marketeers frequently cite examples, like Coke, where corporate branding appears to command customer preference and a premium price.

But Coke’s “brand equity” is the result of a century of providing a higher quality product combined with an efficient distribution methodology with extraordinary reach. Those are far more responsible for the popularity of the Coke “brand” than the marketing, which has frankly been cookie-cutter SPAM just like every other consumer product."

Nice polarizing post.

I might agree that a lot of 'branding' campaigns are more about waiving a company’s own flag than closing sales. But that's the fault of THAT company, not ‘branding’.

There are examples that come to mind where either branded product placement (E.T. and Reese’s Pieces), non-sales messaging (i.e. Community sponsorships on a hyper local level), and simple consistent messaging on why Brand X = need fulfillment, that have shown the benefits of 'brand' messaging.

The statement that nobody would by an LG over a lower priced Samsung may be accurate (because it’s an LG) - but pose the same questions with Samsung vs Sony. Harley-Davidson vs Yamaha. Or Whopper (world's best tasting burger - with less market share) over McDonald's.

The answers rarely lie in a consumer being logical in their choice (every sales person knows this, and marketers should to). Yes - the product must be good, priced right and distributed properly -but with all things being equal our emotions and experience often override logical choice. If all you need is 'well made, well priced, and easily accessible' then 8 of 10 new products wouldn't fail within the first 3 months.

Branding, when done properly, leverages company history, logo, color, design, fragrance, consumer memory, consumer experience, and sales impact to override logical thought and increase the chance that in that 2.5 seconds a consumer is forced to pick a jar of peanut butter in the supermarket their choice comes easy.

Hat-Tip to Martin Lindstrom. He explores the emotional brand connection much more in-depth in his latest book Buyology...and Randy Ansems for sending me Geoffrey's post.