The word "Nike" doesn't just conjure up the image of a shoe--it asserts an attitude. The word "Amazon" doesn't describe an actual bookstore; it reads low prices, great selection and no waiting.
As companies change the way they interact with their customers, they need an evocative symbol to position their promise and guide their customers' expectations. Brands are expanding their role from emblems of companies and products, to icons of lifestyle and experience.
The story of X
When brands first appeared during the industrial revolution, they were used to evoke the personal connection that had become difficult for purveyors of goods and services to maintain when mass production and mass marketing expanded companies' customer bases to millions. Brands became a substitute and metaphor for relationships that companies couldn't actually have anymore. Martha Rogers, partner at Peppers and Rogers Group in stamford, Conn., says, "A lot of the brands that were dreamed up by people who... understood the industrial age and understood mass marketing first are still first in their category."
Now we are experiencing another technology revolution--the information age. "Brands in the new era will have to be considered not only in terms of image and introduction, but also in terms of relationships," Rogers says. "The old debate... over whether the umbrella brand was more or less important than the sub-brands... is less important now than whether we should be branding the relationship that customers have with the company.
"When I think about brand, it's the entire experience between the customer and the company.... The brand is now representing the relationship whereas before it was replacing it."
Geoffrey Bock, senior analyst at Patricia Seybold Group in Boston, doesn't see relationship branding as exactly new, but says "it's absolutely a critical element of branding." Digital Equipment Corporation had a strong brand in the mid '80s and early '90s but it failed to deliver on its brand promises, and the company suffered financially, he says. "Branding is the ability to create a relationship and to deliver on the promise of that relationship. It's a way of helping people understand what you stand for beyond simply the things that you want to give them... at any one moment."
Brand New Game
Whether or not relationship branding is new, some of the rules have changed. "Amazon was really the first to challenge the entrenched ideas of brand," says Bock. "Jeff Bezos understood that you could actually change the relationships that customers have with you, that you can have with your customers--that you don't have to be physical anymore.
"In book selling, we all of a sudden had a brand new brand," says Bock. "And the new brand had a whole lot of equity--[on Wall street] but also among the general public. The Amazon brand stood for something in consumer's minds; it also had a number of attributes. First of all, you could get stuff cheap [and] tax-free. You had a seamless customer experience--so you didn't have to wait in line, you could always find what you wanted and you could easily send gifts to your friends and family.... Amazon was able to capitalize on the fact that shopping for books and music are a function of time."
Poetry in Notions
Branding stretches beyond a tactical and reactive position to a corporate marketing strategy when it promises a relationship. "A company like Dell," Bock says, "spends a lot of time and money managing its brand, because that brand is its fundamental value proposition. It [also spends a lot of time creating] the understanding and the link between selling what the customer wants and selling multiple times by cultivating customer loyalty.... So Dell is able to command a premium price based on its customer relationships."
Bock points out that Dell has gotten away from having to manage the production of any of its established brand of high-quality computer systems on its own. Instead, it has become a sales and marketing organization, which buys systems from seemingly invisible third parties that are then sold through the Dell channel to the Dell consumer.
Dell has been able to do this by leveraging advanced information technology, says Bock, because it can communicate effectively with the people who are doing the manufacturing. It can control the specifications of the devices it wants to sell in a very detailed way, without actually having to own the manufacturing resources.
Bock notes that in the hardware computer industry, there are three or four major chip manufacturers, a single basic keyboard design, maybe three or four ways that you can deliver a pointing device and a limited number of screen displays that one can have on a machine. "A marketing company can come along and mix and match and build systems very effectively. It would then try to distinguish itself on basis of the quality of service and the channels in which it is willing to sell the machines. This is all a part of the brand management issue, that you only sell the products in certain predefined ways, to certain partners, at certain prices. [Dell] actually revolutionized the way computers are sold by being the first to sell them mail order--and that's all part of building up a brand."
"[An organization wants to] command a premium price for a commodity product," says Gareth Herschel, research analyst at GartnerGroup. "It can do that through... branding--or by being able to provide a lot of other services [such as repair or replacement] as part of the product mix. The service elements would contribute to a feeling of security or reliability about the product."
But as organizations lose control of their channels, says Herschel, they also tend to lose control of the service elements. That is particularly true of suppliers when they are going through retailers and distributors who are aggregating several different suppliers' products into a single Web site. With such a standardized product experience, a lot of the extra service elements may get stripped out. In some cases companies are working more closely with their service partners to be able to offer these service elements with the product mix.
"You have to be very, very careful about your partnerships," Rogers says, "We are no longer just partnering brand to brand. We're partnering relationship-building capability to relationship-building capability. This is extremely more complex.
"We have find to find companies who really are as dedicated as we are to protecting privacy, building [trust] with customers and making a long-term valued customer instead of a quick buck," Rogers says. "I have to be absolutely responsible for all the things I put on my Web site--they will be a part of my brand. If I am branding the relationship, instead of just my product, then other people's products that I bring you are, ironically, part of my own brand.
"If you are trying to establish a relationship with a customer and then try to find products for that customer, then you need to brand your entire relationship. So then the brand is about whether the name will hold up to a complaint, fulfillment, privacy problems, all the other issues that are raised by trust. You brand your products if you want to sell them to your least valuable customers, you brand your relationships if you want to sell to your most valuable customers."
Coming of the Internet Age
Perhaps the biggest challenge to the role of branding comes from the Internet. "For a lot of existing brick-and-mortar companies facing the dilemma [of leveraging brand equity over the Internet], they don't really know what to do," Bock says. "Some of them are simply putting up marketecture (marketing architecture) sites--such as IKEA.com, which tells me a lot about the IKEA brand and helps me find the nearest IKEA store, but has no e-commerce capability."
Branding can be stretched by leveraging the customer's expectations of product service levels across multiple channels and multiple products. Herschel looks at Amazon: "They had a particular brand position and set of customer relationships for the online book-selling world. What they've done is use that same brand to try to leverage those customer relationships into online music selling."
The issue is maintaining a consistent level of expectations, Herschel explains. "With Amazon, price is their defining driving mechanism. Therefore, I would expect all of their channels to have an emphasis on low price. Nordstrom is focused more on service, and you pay more for that service. Therefore I would expect Nordstrom online also to have a focus on service. The challenge is to understand what an emphasis on service means for the Web site, compared to what it has meant in the store. It's a matter of maintaining the consistency of those expectations, but managing the expectations at the appropriate level for each particular channel."
Douglas Turk, senior vice president of customer experience management at Inforte, an e-business integrator, says, "What clients are asking for at the pure dot com is a vision of what the company is going to be, translated into the different channels. They have to think about building their infrastructure from the sales, the service, the marketing perspective, from fulfillment, order management. In each of those functional areas there has to be a consistency of the interaction that relates back to that original brand.
"In the online world, the e-customer experience is