The word "Nike" doesn't just conjure up the image of a shoe--it asserts an attitude. The word "Saturn" doesn't just bring a car to mind, it drives home the idea of effective service. The word "Amazon" doesn't describe an actual bookstore; it reads low prices, great selection and no waiting when choosing books to buy.
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
Brands first appeared, as Martha Rogers tells it, during the industrial revolution, when mass production and mass marketing expanded companies' customer bases to millions. Brands were used to evoke the personal connection that had become difficult for purveyors of goods and services to maintain. By introducing an image or projecting quality, brands became a substitute and metaphor for relationships that companies couldn't actually have anymore. Rogers, partner at Peppers and Rogers Group in stamford, Conn., says, "A lot of the brands that were dreamed up by people who 'got it' first, 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. "Throughout most of the twentieth century, we've thought in terms of branding companies and branding products. The old debate was over whether the umbrella brand was more or less important than the sub-brands. That issue, while it's still interesting, 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, which sounds like we're talking about a relationship. 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. Look at a company like DEC, Digital Equipment Corporation. It had a very strong brand in the mid '80s and even the early '90s, yet it was not able to deliver on its promises to its customers, so the brand equity wound up being worth about as much as a cup of coffee in New York City.
"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 vicinity, 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. "You could have a major bookstore come out of nowhere, and all of a sudden the existing book providers could be Amazoned. I think that was a real wake-up call, because 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--certainly the ability to raise cash on Wall street in humongous amounts, but also among the general public as a whole. 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. You could buy your New York Times bestsellers at or below the price you would pay at Barnes and Nobles, and you could buy them 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 would take care of the wrapping. Christmas and birthday shopping suddenly became much easier. Amazon was able to capitalize on the fact that shopping for books and music are a function of time. This changed the fundamentals."
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 trying to manage and enhance its customer relationships and the lifetime value of its customers. It has created the understanding and the link between selling what the customer wants and selling multiple times by cultivating customer loyalty. That's a very different approach to positioning itself in the market than a local reseller of a white-box system, where people are buying simply on price and the brand means little. So Dell is able to command a premium price based on its customer relationships. As long as it can deliver on those customer relationships, it can make a profit."
In the computer industry, Bock points out, Dell has spent a lot of effort building up its brand as a supplier of high-quality computer systems. At the same time, Dell has gotten away from having to manage the production of any of those systems on its own. 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 that build boxes.
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. "Because we have a lot of very special-purpose components, 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. The last thing that Dell wants to do is to allow its machines to be sold at auction. In Dell's case, it 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."
"Really what an organization wants to do is command a premium price for a commodity product," says Gareth Herschel, research analyst at GartnerGroup. "It can do that through warm fuzzy feelings customers may have--basically branding--or by being able to provide a lot of other services as part of the product mix. The actual product becomes a much smaller component of the overall product experience. The service elements would contribute to a feeling of security or reliability about the product--that no matter what the problem is, you know the company will take it back or offer a replacement until it is fixed."
The problem that organizations have is that as they 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 potentially aggregating several different suppliers' products into a single Web site. That tends to create a very standardized product experience and a lot of the extra service elements may get stripped out, which can contribute to the commoditization of the product. 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, "as we always have had to do. You have to be even more careful now because there's a lot of that partnership that could be exposed later that's not obvious now. We are no longer just partnering brand to brand. We're partnering relationship-building capability to relationship-building capability. This is extremely more complex; fortunately, we have a lot of computer help, and we always have lots of lawyers to help, too.
"We have find to find companies who really are as dedicated as we are to protecting privacy, building collaborative trusted agent relationships with customers and making a long-term valued customer instead of a quick buck," Rogers says. "If I have a Web site, I want to make things easier for my customers, and I want them to always be coming back to my Web site because I am giving them things they can use. Some of those things are things I'm selling them and some are things I am bringing them that really are someone else's. If I have one or two duds, and I apologize for that, then that's probably going to be okay. But if I send them off to a bunch of sites and it turns out that I'm just sending them there because I'm getting paid by whoever's site they're on, then they're going to stop coming to the site--they're not going to trust it. It will affect the relationship. 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."
Partners may have their own demands for brand positioning, too. Bock explains that the Intel Inside campaign was a very explicit decision taken in the mid '90s to brand the Pentium processor and make sure that people would know that their processor was powered by Intel. The company was virtually unknown in the computer marketplace even though its chips were powering most of the PCs at that time. Intel created a logo and took part in the contracts, insisting on being labeled on devices. To make sure its buyers could use Intel chips in their products, Intel trained them how to design their products, insuring that they had adequate access to information about its products. Intel wanted to create a win-win situation, and it was able to do that by managing the flow of information. So that meant that Intel not only shipped its products, it also shipped the intellectual property associated with the products. "There is a business relationship, there's an exchange of money, there's an exchange of goods and services and there's also an exchange of know-how. Branding is a way to manage the entire value chain," Bock says.
Coming of the Internet Age
Perhaps the biggest challenge to the role of branding comes from the Internet. "There's a great deal of gnashing of teeth," Bock says, "as companies attempt to leverage brand equity over the new channel of the Internet. For a lot of existing brick-and-mortar companies facing the dilemma, they don't really know what to do. 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. They're bringing all those things such as convenience and low prices that were associated with their brand for book selling into the brand for music selling online. An alternative through a different channel might be a bank or an insurance company that offers the same relationship online as offline. Perhaps the service at the call center was popular because it was quick and easy to use. The company would offer the same kind of service at the Web site."
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."
Jeff Lapatine, senior consultant, director of naming and branding at Siegelgale, an Internet branding consulting company, describes the start-up or existing player in the field that is interested in using the Internet to become a vortal--a portal for a particular industry. The customers who would be typically interested in the goods and services of this company can now access a leadership or expertise or lifestyle experience involving this industry by visiting the site. They could use it to access Bloomberg or vacation information, but it's all geared toward the particular slant of the intended discipline. "Often there needs to be some branding distance to create credibility and to open up channels so that you can attract partners to participate in this community. You would create an independent brand and have links you provide access to. This points out the incredible adaptability of branding on the Internet--that there are places where you can access the brand and there are places where the brand can be invisible," says Lapatine.
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