Brand Warfare [Secure eReader]
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eBook by David D'Alessandro & Michele Owens
eBook Category: Business
eBook Description: While more than a quarter of its traditional competitors were going out of business, John Hancock, under the direction of marketing wizard David D'Alessandro, transformed itself from a sleepy old life insurer into a leading financial services giant, with a sustained 20% annual rate of growth. In Brand Warfare much-quoted maverick D'Alessandro provides the secrets to his winning brand strategy that anyone in business can use to become a brand icon and incredible bottom-line success. D'Alessandro introduces his "brand first" philosophy and explains why brand must always take top priority over every other business consideration. He describes how that philosophy helped inspire the innovations in distribution, advertising, technology, and product mix behind John Hancock's astonishing transformation. And he reveals how through a daring combination of marketing savvy and street smarts, managers and executives, marketing professionals and business owners can build their own "killer brand." This book provides powerful lessons on how to build and sustain a successful brand, and a great company, in any industry.
eBook Publisher: McGraw-Hill Companies, Published: 2002
Fictionwise Release Date: July 2002
One of the best lessons I ever learned in business, I learned from one of my first public relations clients. Although I was just a kid out of college, I was working at a big New York City public relations firm and feeling pretty wise in the ways of the world. The client, on the other hand, was this little old guy from the Midwest with a bow tie, a center-parted hairdo that hadn't been seen since Alfalfa left "The Little Rascals," and the preposterous name of Orville Redenbacher. The Chicago office of my firm sent him to us to help him promote his product in the East, and one day he showed up in our offices in the big city to tell us why his gourmet popcorn would revolutionize the popcorn industry.
First of all, it was news to us that popcorn was an industry. At the time, there were only two ways to buy popcorn to prepare at home: the generic in bags and Jiffy Pop, a brand that was free of all gourmet tendencies. "As much fun to make as it is to eat" was the idea there.
Then Orville went on to explain in minute detail why the hybrid corn he had developed was better, how his kernels popped up almost twice as big, and how he personally guaranteed that almost all of them would pop. To say that Orville took his popcorn seriously was a severe understatement. He'd tell us conspiratorially, "Don't you hate it when the husks get caught in your teeth? Well, that's not going to happen as much with my corn. The husk is thinner." He anthropomorphized every kernel to the extent that the ones that refused to pop he called "the old maids." We thought he was insane. We literally thought he was insane.
Certifiable or not, however, his money was good, and we were his as long as his checks remained good. He clearly had his own game plan and would not be dissuaded from it. I remember someone at our firm trying to convince him to call his product the "100-Percent Better Popcorn." No, Orville said, they'd started out with a different name, but now he liked having his name on the jar.
Orville didn't spend a lot of money on advertising. He needed a public relations firm to get him some attention, so we threw a big party in New York City for hundreds of food editors. We weren't fools -- we made sure the liquor was free flowing and managed to get everybody smashed. At a certain point in the evening, we trotted Orville out in his little bow tie, and he made a little speech about how every kernel of his corn pops.
To our amazement, all those jaded and allegedly sophisticated New York food critics found the concept amusing. Suddenly, every newspaper and magazine in America was writing about Orville's obsessive search for the world's best popping corn. Not only that, but supermarkets and consumers signed on to the idea, too. It was the start of a whole new life for Orville Redenbacher, who became a pop-culture icon and sold the business a few years later to Hunt-Wesson for a considerable sum of money.
If this were a Hollywood movie, I would now say that this admirable old man opened my young eyes to one inspiring truth: Quality always wins in the marketplace. But actually, that was not the lesson I took out of this experience. My apologies, Orville, but I've always suspected that the incredibly precise instructions you gave for popping it were as important to your superior popcorn as the stuff you put in the jar.
The real lesson Orville taught me was the power of a good brand to trump all rhyme or reason in the marketplace. Consumers were willing to pay a huge premium for his popcorn, not, in my opinion, because the product features were so startlingly different, and certainly not because they were saving money over the generic brand by eliminating the "old maids" that wouldn't pop. Instead, they bought Orville's popcorn because they found Orville endearing.
What Orville Redenbacher did is the absolute definition of branding: He took what had been a commodity nobody thought twice about and gave it a voice. He convinced consumers his corn was worth more because, unlike its competitors, it had a personality. In the process, he created an industry out of nothing, just as he had told me he would.
The lesson was not wasted on me when, in 1984, I went to work for John Hancock Financial Services. The bulk of our business back then was a very old-fashioned product, life insurance, with one extremely new-fashioned aspect: The product itself is vaporware, as insubstantial as any service peddled by the airiest dot-com company today. The only thing the consumer is buying when he or she buys life insurance is the company's promise that it will pay up if it's ever necessary. And the only thing life insurers are selling is their reputation, because if consumers cannot trust the quality of that promise, better prices or better product features mean nothing. (This is particularly true because you have to die in order to trigger those product features.)
If ever there were a brand-based business, life insurance is it. But most life insurance companies, which tend to be run by number crunchers, fail to comprehend this essential truth. The management of John Hancock, however, was smarter. When I came to John Hancock as head of communications, my assignment was to take its sleepy old brand and turn it into something as appealing to consumers in its own way as Orville's bow tie. And management and our board, fortunately, gave me plenty of support.
Fifteen years later, we wound up on the New York Times' list of the 100 best brands of the 20th century. More important, a strong brand enabled us to outsell our competitors and to convince a generation of consumers that prefers investments to life insurance that we are an excellent place to buy investment products, as well.
Of course, there is nothing original in my understanding that brand counts. By now, most American businesses have figured out that consumers like strong brands better than weak ones. In fact, two factors have led in recent years to a kind of brand mania in American business. The first is the widespread realization that investors are willing to pay a serious premium for the stocks of the most popular brands. The brand consultancy company Interbrand ranks the world's most valuable brands each year and calculates the value of these brands as a percentage of market capitalization. In the case of 2000's number-one brand, Coca-Cola, more than half the company's value -- 51 percent, or some $72.5 billion -- is attributed to the brand.
The second factor encouraging brand mania is the incredible volatility that the Internet has contributed to the business landscape, as some of the dot-com brands have became towering giants overnight and some established brands have found themselves knocked to their knees equally abruptly. Taking a page out of the Amazon.com playbook, the startups of the great Internet surge of the late 1990s routinely fought first to establish themselves in consumers' consciousness and only second to make their businesses profitable. And, in the short term at least, this was not necessarily a stupid strategy.
Brand mania is by no means limited to business, either. More than any other business concept of the day, the idea of "brand" has infiltrated the culture. A movie star like Tom Hanks now talks openly about the importance of protecting the Tom Hanks brand. The State of Vermont thinks it's a brand, too, and is developing regulations to stop out-of-state companies from falsely appropriating the "Vermont" cachet. When the New York Times asked the official exorcist of the Cathedral of Notre Dame a few years ago why he was drawing customers from all over France when they could be exorcised just as well at their local churches, Father Claude Nicolas answered this way: "Evidently, they think Notre Dame is better. Of course, it has a certain brand name."
To say, then, to any group of professionals anywhere in the world that brand counts is to preach to the converted. So why bother to write a book about branding? Here's why: While the importance of a strong brand is widely understood, nothing is as misunderstood in American business as the question of how to use it.
Billions of dollars are squandered every year in the name of the brand. Businesses routinely milk their brands without investing in them, extend their brands without asking consumers what they think of the idea, buy up valuable brands in "merge-and-purge" binges, and then throw the brand names away in favor of corporate control.
Brand decisions are often treated as merely questions of advertising. But the stakes are much higher than that. Sears' move into the financial services business in the 1980s is a typical brand decision in that it determined how enormous amounts of capital, distribution, products, technology, and people were going to be used. Unfortunately for Sears, it turned out that consumers were not particularly interested in buying stocks from a store they associated with wrenches and undershirts.
Even some of the brand geniuses of the 1990s -- companies like Nike and Coca-Cola that have been extraordinarily focused on keeping their logos swimming in front of consumers' eyes -- have stumbled occasionally out of the failure to recognize one essential principle of branding: Brand is everything, the stuff you want to communicate to consumers and the stuff you communicate despite yourself.
By definition, "brand" is whatever the consumer thinks of when he or she hears your company's name. Thanks to the information revolution, "whatever" now includes labor practices, quality controls, environmental record, customer service, and every rumor that wings its way around the Internet. Nike is a prime example of a company whose brand has been affected by an issue that has nothing to do with marketing, namely, the working conditions in the third-world factories where Nike products are made. In a 1996 BusinessWeek story, when asked about the way the company's Indonesian subcontractors treat their workers, Nike Chairman Phil Knight said, "There's some things we can control and some things we can't control." That might have been true from a legal and practical standpoint, but from a brand standpoint, well, a corporation had better try to control everything, because there is nothing a brand cannot be held responsible for. Indeed, Nike suffered a relentless press pile-on over the labor issue and in 1998, Knight assessed the damage with refreshing honesty: "The Nike product," he said, "has become synonymous with slave wages, forced overtime, and arbitrary abuse."
Since everything a corporation does reflects on the brand, for better or for worse, every decision a corporation makes -- whether to cut back on customer service, to expand into new markets, or to indulge the CEO's jock self-image by sponsoring a sports team -- ought to be filtered through the prism of the brand. But too often, the brand is treated instead as an afterthought and ignored until it is in trouble. Why? Because, despite the lip service given to the concept of branding, the entire infrastructure of most corporations is hostile to brand building.
The truth is that even the best American corporations tend to be full of people who actually think they are doing their job by keeping the brand down. There are the lawyers who slow down a company's response in a crisis because they believe that short-term liability concerns ought to trump long-term brand considerations. There are the clerks who allow scandals to brew because they feel they have little to gain by reporting the dicey things they uncover. There are the financial types who allow good brands to atrophy because they resent the dollars it takes to build a brand. And there are the advertising managers who spend millions on campaigns that mean nothing to consumers because they fail to understand that the brand ought to drive the advertising and not the other way around.
As a result, most brand builders have to wage two wars at once: They have to beat competing brands into submission, at the same time as they hack through the corporate kudzu within their own organizations. By "brand builder," I mean anyone who is in any degree responsible for the care and feeding of a brand, from the enlightened CEO to the neophyte in the public relations department. To be a brand builder within a corporation is to risk being considered something less than a serious business player, because you will constantly be advocating that money be spent on what many people consider vaporous goals, such as establishing a voice and winning the goodwill of consumers. Whether you are the CEO or the new hire in marketing, it means constantly fighting the great skeptical "harrumph."
I wrote this book to help the brand builder win on all fronts, internal and external. It is not easy to build a great brand. It takes leadership to persuade the rest of the company to follow your vision. It takes an artistic sense of proportion and timing. It takes a ruthless willingness to distinguish yourself from competing brands and, hopefully, bury them in the process. It also takes a certain empathy with the people who buy your products and with humanity at large. To be a great brand builder takes some qualities that probably cannot be taught.
But whether you're a new economy player or an old economy behemoth, there are a handful of rules that can help you win the game. This book intends to lay them out.
Copyright © 2001 by David F. D'Alessandro