Unless you work for a brand-centric organization, you may still not appreciate the impact certain brand-related decisions might have on your company’s commercial performance.
Our post today is about three common brand management mistakes which can undermine any business.
Every seasoned brand strategist understands the difference between various brand architecture types (read more on that topic in our two blog posts: Part 1 and Part 2). However, the two extreme brand architecture variants, namely, branded house (products sold under one brand) and house of brands (products sold under separate brands) are often presented as a choice between two equal options.
This couldn’t be further from the truth.
Building your business on the house of brands framework, that is, owning a number of different brands and marketing them separately, can be done effectively only with a substantial budget (think Unilever, Nestlé, L’Oréal or P&G). This is because achieving a satisfactory level of brand awareness takes a great deal of time and a lot of money. If you have, let’s say, 10 brands in your portfolio, to reach this goal for each of your brands, you will essentially need a marketing budget 10 times higher than for one brand only.
It’s much more cost-effective if you focus on building just one, strong brand. There is a commercial rationale underlying Apple’s placement of its logo on all its products, Amazon extending its brand in so many directions and Google renaming some its offerings to increase the prominence of the main brand. It just makes financial sense.
Surprisingly, companies with small marketing budgets often refuse to take this piece of advice and insist on launching new brands with separate visual identities whenever they have anything new to offer. In most cases, it’s a costly mistake.
Although according to the 4P marketing mix theory, the product should constitute part of a wider marketing discipline, this is rarely the case nowadays. Product and marketing departments are often two separate business units and for some reason, product departments seem to be more successful than marketing departments in building trust among senior stakeholders. As a result, they are granted higher budgets, find it easier to get additional costs approved and are rarely asked to prove how their work leads to a positive ROI.
It’s a different story for marketing teams. They need to prove a positive ROI on every single activation they run, additional expenses are rarely approved and if there are company-wide budget cuts, brand marketing budgets are the first to go. It is also not uncommon for senior management to believe that a good product will sell itself (meaning that marketing support is not really necessary).
This leads to situations in which businesses spend a disproportionate amount on product development and innovation (tech businesses investing in the latest tech, media companies buying too much new content, B2B firms developing more and more business solutions, etc.) and not enough on communications activities designed to build a strong brand and remind customers why in fact they should buy the product. Brands without regular marketing support decline.
Investing in product development is not a bad thing – it’s absolutely crucial. However, it should never be done at the expense of the marketing spend.
We have previously covered this topic in our post about the advertising mistakes that can kill your brand. However, it is so important (also outside of advertising) that we will write about it again. One of your key objectives as a marketer is to ensure that your brand can be easily recognisable in various environments. This can be done only through effective branding and being highly strategic about how it is used. Achieving recognisability through branding allows your customers to locate your product on the shelf, your viewers to quickly find your TV channel when the EPG gets changed and your salespeople to obtain a higher response rate to their cold emails.
Byron Sharp in his book How Brands Grow argues that distinctiveness (delivered through strong branding) is much more important than differentiation (delivered through unique positioning). He even said: “Rather than striving for meaningful, perceived differentiation, marketers should seek meaningless distinctiveness. Branding lasts, differentiation doesn’t.”
It’s worth mentioning that this is not an opinion, but a conclusion from long-term rigorous scientific research in multiple product categories conducted by The Ehrenberg-Bass Institute for Marketing Science.
Read our post “Brand differentiation vs. brand distinctiveness – what matters more?”.
Yet, for reasons beyond our comprehension, some companies choose to act against these findings. They don’t have any brand assets which could be associated with their brand, they simplify their logotypes, making them indistinguishable from those used by the competitors (e.g., a recent trend among some high fashion brands), give up on any brand personality which could be delivered through colours, shapes, fonts, sounds, smells, etc., and change their visual identity as they wish without paying attention to any equity it has already managed to build.
There are three brand-related pieces of advice we would give to any business:
1. Focus on one brand, build its awareness and don’t launch any other brands unless you have a budget to support them.
2. Spend more on making your brand more famous. Never assume that a good product will find an audience by itself and remember that if you cut your brand marketing budget, you are most likely decreasing the size of your business in the long run.
3. Ensure you have a wide array of branding assets, both mechanical and emotional, and apply them wherever you can.
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Magda Adamska is the founder of BrandStruck.
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