The Importance of a Brand

What do you think of when I say Coca-Cola, Microsoft, IBM, GE, Intel and Nokia? Well, if you said they are all big companies, you'd be right. But they are also the six top rated global brands as judged in a survey conducted by Business Week earlier this year.

Why is a brand important? Obviously, a brand provides recognition. A brand sends a message to the market. The "brand" clearly identifies what can be expected from the company.

How can a company name such as IBM or GE achieve all this?

Obviously a set of letters such as these, on their own, are meaningless. It is the cumulative history and sum of the relationships the company has developed over the years that gives the brand any meaning.

A brand creates associations and expectations, not because it is a brand, but because the brand encapsulates the expectations which the company has built in the past and which can reasonably be expected to be continued into the future.

There is a lot of confusion when it comes to marketing, advertising and branding for small and medium size businesses. Many businesses approach marketing and advertising with the intention of developing their brand.

They expect to use advertising to brand their business. Some talk about this approach as "getting their name out there." Many small and medium size businesses spend their entire marketing budget on this type of branding, or image building.

Let me say this right now. If this is how you approach marketing, you may as well take the money you are spending doing this and burn it. You will make more of an impact if you do this in public. If you run a small or medium size business, using advertising to develop your brand is a total waste of money.

This statement may seem totally opposite to what you believe and to what you have been told by advisors in the past, and may be hard to accept, but I know it is correct and deep down, you probably do to. Haven't you had suspicions about the value of your advertising?

There are many people who want to sell you image type advertising. That is what the big advertising companies do. However, while their advertising may sometimes win awards, what you really want it to do is win you sales. How effective can you honestly say that your image building advertising has been in doing that?

Now I'm not saying image building advertising does not work. After all, Coca-Cola, Microsoft, IBM, GE, etc. spend millions of dollars doing this. However, that is what it takes to make it work - millions. If you have that sort of money to throw around on an unknown quantity such as image advertising go right ahead. But if you don't have that much to spend on building your brand, your advertising expenditure will only be like a drop in the ocean in terms of the effect that it has on your brand recognition.

So what if people see your business name "out there?" What does it communicate to the market? So much advertising is just one meaningless name after another. It is like shouting your name into the air hoping someone will hear and pay attention.

There is no way, unless you have millions, to effectively communicate what you and your business have to offer, if you advertise in this way. Coca-Cola and the like can only get away with it because they have already established a brand image and their advertising is so frequent that they can perpetuate that name recognition. However, if the company fails to deliver on the promise that has been established in the past, no amount of advertising can overcome the backlash of the consumers' voice. Remember "New Coke?"

Let's make this clearer.

Do you recognise these names: Starbucks and The Body Shop? These are two quite well known companies. Although not quite in the same league as Coca-Cola and Microsoft, their brands are acknowledged world-wide nonetheless. How much do you think they would attribute the impact of their image building advertising towards building their brand.

If you guessed "nothing," congratulations.

These two companies spend virtually nothing on branding type advertising. However, the strength of their brand cannot be disputed. How can this be? The answer is that their relationships with customers and the market in general has been built over the years by the consistency of their quality and message achieved by the way they operate in their stores and interact with the world, without the need to spend money on advertising. The customers have delivered the brand message.

This is the answer to the questions raised above. The brands of Coca-Cola, Microsoft, etc have not been built by advertising.   The brand is based on relationships and consistency of quality and message to the market. These companies’ successes have led to massive growth which has enabled them to have the financial resources to use to increased advertising to reinforce the existing brand.

Some companies try to use advertising to change the market perception and create a new brand. But this approach is flawed. Advertising can only reinforce that which already exists. If the advertising contradicts the actions and public perception of a company, only the very gullible will believe it. Actions always speak louder than words.

What then, does this mean for the small and medium size business? Is branding not important? On the contrary! Building a strong brand is one of the most important and beneficial tasks any business should have as an objective. The problem is the way most businesses go about it.

The brand has to be built first, before you spend money to promote it. A good brand is built over time by the quality of the products or service your business offers and by the quality of the experience you consistently provide to your customers. An inconsistent experience delivers a message of inconsistency, which will communicate an inconsistent brand which will erode quickly. No amount of advertising will help. It will only get the word out faster that your products and service are poor.

To build a strong brand, you and your team need to exemplify the brand message in all of your work and especially in your interactions with customers. To do that, you obviously need to know what you stand for and what you want your customers to be able to expect from you and your products. This is much more onerous than simply spending money on one vehicle or another to "get your name out there." To achieve consistency, you need to have defined your mission and business objectives. You need to understand how your people's need to relate to your customers to achieve that mission and ensure they deliver the consistent quality your customers will come to expect.

You also need to understand the importance of marketing and advertising your business in effective ways to make sales and build the brand, rather than wastefully spending money to try to build your image. Far too many business owners waste money on advertising because they have been led to believe that "getting your name out there" is an acceptable strategy. However, there is only one acceptable strategy when it comes to marketing and advertising and that is to promote your business in the way that achieves the lowest cost of acquisition per customer and the highest average customer lifetime value. These are two measures you should be intimately acquainted with in your business and should be the basis for every marketing decision you make.

Thoughts about branding should be related to operational performance and customer relationships, not advertising, until you can afford to spend millions like the best known brands can. In a small or medium size business, you should not consider using advertising to build your brand. You should advertise in ways that directly increase customer interactions and sales and use those customer interactions to help build your brand.

You should not consider using advertising to build your brand until you have so much cash you can afford to throw it all away. Even then, you should think hard about whether spending money on image advertising is the best use of your cash. There are many better ways to do it.

By Greg Roworth

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