Tag Archive for: branding

Att mäta marknadsföringens värde

18 Dec
18 december, 2017

Så här i årets slutskede brukar de flesta verksamheter göra bokslut och stämma av vad som åstadkommits under året, och frågan om att mäta marknads-
föringens nytta och värde brukar vara högaktuell så här års. Som många vet är detta en fråga som ligger mig varmt om hjärtat. Jag tänkte därför avsluta året med att ge några råd och tips om detta som kanske kan bidra till att göra 2018 än mer framgångsrikt för dig som marknadsförare.

Nyligen skrev jag om behovet av att ”marknadsföra marknadsföring” inom både den egna organisationen, och samhället i stort, och en del tips om hur man kan lyckas med detta. Det var en reflektion baserat på en rapport som såg utmaningarna för marknadschefen som tre olika områden: 1) Managing marketing, 2) Marketing marketing och 3) Measuring marketing. Egentligen behöver det här med effektmätning inte vara så krångligt. Det handlar i grund och botten om tre grundläggande frågeställningar:

1) Fokusera på att mäta det som är viktigt för dina kunder och för din affär
2) Se hur dessa egenskaper utvecklas över tid
3) Försök förstå hur olika insatser påverkar marknadens uppfattning och beteende

Jag har sammanfattat dessa i tio viktiga punkter.

1)    Det viktigaste effektmåttet är betalningsvilja.
Marknadsföringens syfte är att hjälpa företaget att sälja. Men inte bara att sälja mer, utan framför allt att sälja lönsammare. Att marknadsföra och bygga varumärke är att öka andelen av marknaden som både vill och kan köpa – och som är villig betala för det nöjet.

2)    Det som står i varumärkesplattformen är troligen inte så relevant för dina kunder som du tror.
De flesta varumärkesplattformar är skrivna inifrån och ut – ”vad vi vill att vi ska stå för”. Jag har sett forskningsresultat som visar att i de flesta fall är mindre än hälften av egenskaperna och associationerna som ska positionera varumärket relevanta för kunderna –  i form av att påverka köpintresse och betalningsvilja. Ofta är det så lite som en tredjedel, d.v.s. det mesta av det som kommuniceras har ringa värde för kunderna.

3)    Du kan inte fråga marknaden vad som är viktigt för dem.
Du har säkert redan sett David Ogilvys berömda citat om marknadsundersökningar. I stället krävs det lite mer analysarbete och insikter om hur marknaden beter sig. Drivkrafts- och beteendeanalyser kan vara värdefulla hjälpmedel för att hitta de egenskaper som är mest relevanta att lyfta fram för att varumärket ska driva försäljningen framåt.

4)    Många nyckeltal är bättre än enstaka.
Det händer att företag vill fokusera på ett enda nyckeltal, t.ex. ett intäktsmål. Men risken för sub-optimering blir uppenbar – om omsättningen är viktigast kan jag ge bort lite extra rabatter för att nå omsättningen, men riskerar därmed lönsamheten. Sätt hellre mål som utmanar varandra, eftersom dessa kräver större helhetssyn. Sätt t.ex. både mål i form av konvertering i procent, och i antal förfrågningar. Eller min personliga favorit, och två nyckeltal jag rekommenderar om man vill ha så få mål som möjligt: öka marknadsandelen OCH öka snittpris på erbjudandet.

5)    Följ nyckeltalen över tid – men med olika skalor.
Många har redan tagit till sig Les Binets och Peter Fields slutsatser att det finns två typer av effekter, som verkar på olika tidshorisonter. Attityder påverkas långsamt, men byggs på över tid, och är väsentliga för betalningsvilja och lönsamhet. Här bör man mäta och följa upp med en tidsaxel på minst 6 månader. Aktivering i form av erbjudanden och incitament skapar snabba beteendeförändringar, men ger sällan långsiktig effekt.

6)    Analysera tillsammans.
De flesta av våra valda nyckeltal kan vi mäta och följa över tid. Och ofta görs detta också, med hjälp av varumärkestracker, Google Analytics, Nöjd Kund Index, CRM-system och liknande. Men det är inte lika ofta som det görs en gemensam analys av de olika nyckeltalen. Och än mer sällan som man dessutom tar med yttre påverkansfaktorer som väder, prisändringar eller säljtävlingar – trots att det är enkelt att hitta den här typen av data. Och trots att det borde vara lika enkelt att skapa gemensamma rutiner för att redovisa och analysera de olika nyckeltalen, och vad som kan ha påverkat dessa.

7)   Håll isär varumärkesmätningar och kampanjmätningar.
Varumärkesmätningar över tid visar hur alla insatser tillsammans påverkar marknadens uppfattning. I detta ligger inte bara marknadskommunikationen utan också alla övriga påverkansmöjligheter som t.ex. produktens egenskaper, kundservice, distributionsleden och hur VD svarar på frågor i media. En kampanjmätning kan ge dig insikt om hur ett antal marknadskommunikationsenheter bidrar till att utveckla vissa egenskaper och associationer som varumärket representerar. Men kampanjmätningen är ingen bra metod att mäta varumärkets utveckling på, eftersom den mäter på en specifik del av marknaden under en specifik tidpunkt och fokuserar på en specifik påverkansmöjlighet.

8)    De vanligaste måtten är ofta de minst relevanta.
Jag har inga officiella siffror på det, men min erfarenhet säger mig att två av de vanligaste kampanjmåtten är observation/erinran och budskapsförståelse. Men observation är i hög grad ett mått på hur känt ditt varumärke är (oavsett kampanjen), och budskapsförståelse är främst relevant om du mäter en kampanj som syftar till att presentera ett erbjudande. Många av de mest framgångsrika varumärkeskampanjerna har inga konkreta budskap, utan ska bara få dig att tycka om varumärket ifråga. Två viktigare mått att utvärdera, framför allt för varumärkesbyggande, är om målgruppen gillar reklamen, och kan identifiera vem som är avsändare.

9)    ROI är fel mått för kampanjer.
I teorin låter det bra att vilja mäta avkastningen på investeringen i en kampanj. I praktiken är det mindre lyckat – men fortfarande vanligt. Det finns två problem med ROI-måttet. Det första är definitionsmässigt. ROI är en funktion över tid mellan vad jag investerar och vad jag får tillbaka. Här hamnar man lätt i tre definitionsproblem:
a) Vilken tidshorisont? Bara under själva aktiviteten, eller hur länge efter?
b) Vilka insatser? Bara kampanjkostnaden, eller även produktutveckling, ackumulerad varumärkeskännedom, säljstöd etc.?
c) Vilka intäkter? Bara ökning mot snitt/föregående period, för hela sortimentet eller bara utvalda modeller, o.s.v.?

Det andra är rent matematiskt. ROI premierar kortsiktiga intäktsökningar, vilka ofta kommer från någon form av rabatt eller incitament, men inte lönsamhet. M.a.o. ju högre ROI på kampanjen, desto sämre marginal på affären (andel av försäljning som kommer från rabatterade produkter). Och för den som hoppas på att dessa kunder kommer att utvecklas till lojala och lönsamma ambassadörer är risken stor att man blir besviken.

10)    Media är ett effektivitetsmått, inte ett effektmått.
Många kampanjer har med medieeffekter som ett nyckeltal, d.v.s. hur många som har sett kampanjen, hur mycket den har delats och gillats, och hur mycket PR den har genererat. Alla dessa mått är bra, men de är steg på vägen och handlar om effektivitet, d.v.s. sätt att få medieinvesteringen att räcka längre. Men hur många som sett en kampanj blir oväsentligt om inte innehållet påverkar mottagaren i önskad riktning.

Lycka till med marknadsföringen 2018!

Av Mats Rönne
mats.ronne@gmail.com

What is your customer willing to pay?

12 May
12 maj, 2010

One of the core issues for B2B marketing is often: ”What is the customer willing to pay?”

The answer is simple (at least in theory): the price the buyer can accept (P) is the product’s perceived value (V) divided by the perceived risk of buying from you (R).

Right Price formula in b2b

The perceived value (V) is the actual, rational value that your product or service can be expected to create for the buyer in the short- or long term. This value is almost always about your product’s or service’s ability to in some way contribute to higher revenues, lower costs or improved cash flow. And it is this value the buyer is interested in, as a B2B transaction almost always originates from a rational, defined need – to streamline a process, improve a product, etc. It is more the rule than the exception that the purchaser identifies the need and contacts those suppliers he or she believes have the ability to satisfy it.

The perceived risk (R) is the perceived value’s inverse. Just as rational as the value of your offer can be assessed, just as irrational is the buyer’s risk evaluation about buying from you. And just as easily as perceived value can be described, just as complex are the factors affecting perceived risk.

Let me generalize.

There are two kinds of risk variables in a B2B transaction: the degree of uncertainty concerning the transaction’s outcome, and the degree of negative consequence if a wrong decision is made.

The first variable, the risk of unwanted outcome, is very much a question of credibility – that is the buyer’s confidence in you as a seller. ”Can they really deliver what they promise? Are we really going to save 20% in material costs?”

The second variable, the risk of making the wrong decisions, is about dealing with the consequences for both the company and the individual. ”What is the result for the company if we make the wrong decision? How much does this risk expose me as a professional buyer?”

Examples of the perceived risk can be read about in Hawes & Barnhouse’s Study from 1987, in which they asked B2B buyers to rank the risks they perceived as most serious. ”That I feel professionally incompetent” came in first, followed by, for example, ”that the relationship with the company’s customers will be strained”, ”that this reduces my chances of promotion” and ”that my status among colleagues will be diminished”.

Risk assessment is substantially emotion-based. Fear of making a bad choice – a choice the buyer may subsequently regret. And, many times, the fear of making a bad choice is stronger than the desire to do good. ”What has worked so far has, despite everything, worked. And the companies I know I do, after all, know.”

According to the IMP Group, B2B-transactions are characterized by buyers being reluctant to sever existing business relationships, and their concern about all the technical and logistical problems that may arise in connection with a possible change of supplier. But also by B2B buyers being reluctant to spend too much time making detailed evaluations and comparisons of competing brands.

In addition, the perceived risk in a B2B business is seldom linked to a single individual. In the vast majority of B2B purchases, the choice of appropriate supplier/brand is made by a group, explicitly or implicitly. In the end, this means it becomes a compromise – the lowest common denominator of the group’s perceived risk. The choice becomes the option that everyone in the group can accept (or believes to be acceptable), rather than the option that one or a few in the group prefer.

Put simply, it is more convenient for B2B companies to choose a supplier that everyone knows and has sufficiently high regard for than a brand that is unknown to most, but which has the (rationally) better offer. Paradoxically, that makes it easier to later defend the purchasing decision, both for oneself and one’s colleagues.

The bottom line is that the B2B buyer is prepared to pay more as the perceived value of a good or service increases, but only so long as the risk is deemed acceptable.

And as more and more brands in more and more industries become more and more similar in their offerings, it can often be more profitable – especially in terms of ‘closing the deal’ – to try to reduce the buyer’s perceived risk than to try to increase the perceived value.

This post was originally published in Swedish on the blog The Brand-Man. There, you can also read about the price formula for comsumer markets (also in Swedish).

What is the product, and what is the brand?

26 Mar
26 mars, 2010

A product is a good, service or idea that caters to (of fulfills) the needs and desires of organizations, social groups or individuals. A brand is a diverse collection of thoughts, emotions and opinions that are channeled into conscious as well as subconscious expectations of the product.

Products can be described intellectually and compared rationally. The brand, however, comprises a whole range of mental associations which, by their nature, are much harder both to describe and to compare.

I like to simplify this argument by dividing each offering into three parts:

  • Function/Performance
  • Value/Benefit
  • Relationship/Trust

When I lecture salespeople, I often say that they prefer to focus their sales arguments on function, performance and price (the latter is the most basic part of Value/Benefit). Unfortunately, the same argument can be applied to how many brands communicate.

The dilemma is that that which makes the buyer want to buy, and spurs her to arrive at the decision to do so, is almost exclusively the benefits she believes she will gain and how she experiences her relationship with, and confidence in, the seller (and/or the brand). Science has in fact confirmed that basically all decisions – big and small, in B2B as well as in B2C – are based on emotional factors, not rational. We choose with our hearts, but justify with our brains, the proof of which brought Daniel Kahneman the Nobel Prize.

In addition, the salesperson – by focusing on function, performance and price – lays him or herself open to what I call intellectual competition, because the offering can be easily compared to any competitor’s. When that happens, there is always at least one other company which can surpass the salesperson’s offering on at least one point.

On top of that, since the offering can be measured, weighed and valued intellectually, the slightest mistake in delivery, performance or service is cause for the buyer to experience disappointment. Confidence is damaged. The relationship is weakened. The perceived value is reduced. And this also reduces the buyer’s willingness to pay the price (or incentive to buy again).

Product_vs_Brand

Mark Michalek is probably one of the world’s best car salesman ever. For a long period of time he averaged an amazing 37 car sales per month, against an average of maybe 10-15, and his record is 13 cars sold to retail customers in one day(!). He was once asked what he does that others do not, and replied that the secret is in his motto:

”Make a friend, sell a car, make money.”

What Mark Michalek intuitively understood, and managed to achieve in practice, is that people buy from people they like and trust. Mark does not sell cars by focusing on function, performance and price, but by focusing on (and answering) the buyer’s needs and desires, and by building and maintaining a strong relationship with each of his approximately 3 500 customers.

The same applies to brand building. Companies that focus on the customer-perceived benefits of their offering, and then build strong customer relationships, apply what I call emotional competition. This makes it much more difficult for other brands to offer an alternative that the buyer actually feels is ‘better’, because ‘better’ is a complex and subjective decision which, in most cases, is won by the brand the buyer likes most. This preference also makes the buyer considerably more tolerant of any errors or omissions in the product, because we always find it easier to forgive those we like. It’s a watertight strategy, because the purchase is not based on rational, measurable considerations (the product itself) but on emotional and un-measurable considerations – the perceived usefulness of the product and the buyer’s relationship with and confidence in the brand.

Function, performance and price are not irrelevant. A strong brand is most often anchored in a good product. However, the importance of function, performance and price is secondary – not least in all those industries where differences between different products’ actual performance (and price) are so arbitrary that the buyer does not perceive them as being relevant.

In short: distinguish the difference between product and brand. Between what it is and what it does.

And please don’t put all your effort into communicating what the buyer already takes for granted – that the product is what it is, and that it costs money to buy.

This post was originally published in Swedish on Micco Grönholm’s blog The Brand-Man.

About brand personality and archetypes

04 Jan
4 januari, 2010

To define a brand’s personality or character is often perceived as advertising hocus-pocus. One of the reasons is of course that we who work with brand development fail to convey the value of a well-defined brand personality. Another is that the result often seems vague and difficult to apply in practice. But the fact is that a strong brand personality can often be the crucial distinguishing factor that creates preference for your brand and long-term, profitable customer relationships.

What and why
Brand Personality, or brand character, is about the characteristics that your target group associates with your brand. It’s about conveying the emotional associations – not the rational. The whole point of Brand Personality is to add a (differentiating) dimension to a brand that the product alone cannot convey. The idea behind this thinking is that this particular dimension will contribute to strengthening the customer’s emotional relationship with the brand, which in turn strengthens preference and loyalty.

To identify and formulate a company’s (or product’s) Brand Personality often requires association- and word-choice exercises. The result tends to be a number of adjectives – preferably three if the consultant is to decide – that are expected to summarize and describe the very complex relationships that constitute a company or product’s personality traits. But what does it actually mean for the seller in Portugal that your company is a dolphin? Or that it is associated with BMW, rather than Skoda, and that the brand will be perceived as ‘Knowledgeable, Flexible and Dedicated’? And do these associations and adjectives communicate the same personality traits for employees and customers in Helsinki, New York and Beijing?

Usefulness
The concept of Brand Personality was originally conceived by the advertising agency Young & Rubicam (and is basically the same as ”Brand Character”, which is a registered trademark owned by Gray Advertising). If they are the font of the association games and word-choice exercises I have no idea. But I firmly believe that the phenomena, with very few exceptions, are a waste of time and money. Perhaps they mean something very specific and precise for the agency and marketing manager who did the job but, for the rest of the organization, they are perceived, in my experience, as so much corporate BS. And, if you change agency or marketing manager, the company’s Brand Personality will probably be one of the first things that appear on the ”we gotta do something about this” list.

Do not misunderstand me: Brand Personality is important. Very important. A strong brand personality can often be the crucial, distinguishing factor for your brand. The reason is logical: emotional relationships are stronger than rational, because the emotional relationships can create loyalty beyond rational argument. They make competitors’ rational arguments less important, your customers become more lenient towards your mistakes or substandard product performance, and you get recommended more enthusiastically and more often.

A better way
Fortunately, there is a more efficient way to identify and define a brand’s personality (which is also significantly better scientifically informed). Let’s call it ”Brand Archetyping”, because the starting point is the archetypes that we all carry within us.

If you study religions, myths and legends from different cultures and times you will discover that they contain roughly the same cast of characters. Compare, for example the gods of Hinduism and the Asa faith with the gods in Greek mythology. There are distinctive creators, rulers, heroes, virgins, explorers, lovers and at least one that portrays the common man.

It is these characters, or ur-types, which are called archetypes. According to Christopher Vogler, screenwriter for Disney (The Lion King, Aladdin, Hercules, etc.), they are used consciously and diligently by the film industry, because they facilitate storytelling:

” … As soon as you enter their world, you will be aware of recurring personality traits and relationships.”

The modern archetype theory was launched by Carl Jung. He analyzed and sorted archetypes, and claimed that they possess cross-cultural communication skills because, he said, they reflect our collective subconscious. In the archetypes we recognize our own impulses, needs, fears and desires. Archetypes, according to Jung, are hardwired in us all.

Each archetype is represented thus by a history and a pattern of behavior that we can relate to. These personality patterns, as we learn in early childhood and then pass on to the next generation, are processed very quickly in our brains. We uncritically accept the characteristics, because they reflect our world.

And so it is these immediate connections that you can use to give your brand an unassailably clear personality – a personality that conveys the same story for a salesman in Johannesburg or a customer in Jukkasjärvi.

What brands are archetypes?
All brands that affect us on a deeper level contain a story created around an emotionally charged character or personality. Without it, we would simply not be able to have an emotional relationship with the brand. In the transparent and global world we live in, where the rational characteristics of competing products are simple to compare, the story around the brand increasingly becomes the only relevant factor for the buyer to distinguish it by.

So we buy sneakers from Nike not because its shoes are the best but because we want to share the feeling of winning and crushing all resistance. And we buy a motorcycle from Harley-Davidson not because its bikes are better than everyone else but because it makes us feel like a rebel – a Hell’s Angel – whether we live in the suburbs of London or in the deserts of Nevada.

Nike thus represents the archetypal champion/hero, and Harley-Davidson the archetypal rebel/outlaw.

Other trademarks that may be linked to the archetypes is Disney the jester, 3M the creator, Jeep the adventurer, IBM the ruler, Haagen Dazs the lover, McKinsey the thinker, IKEA the universal  man and Virgin the rebel.

A rebel, a jester and a common man
That Virgin is such an obvious rebel, the company can thank its, founder Richard Branson for. It is his nature, business philosophy and values reflected in the brand’s personality. Unfairly simple, one might think. But the same principle applies in fact for most strong brand archetypes.

A company’s values and purpose are a consequence of the founder’s or management’s values and vision – even if they are all too rarely identified and formulated. And values, purpose and vision in turn create the conditions for the archetype the brand will (credibly) be associated with.

Disney’s jester archetype is recognized in the company’s purpose: ”Make people happy.” And what is the heart of everything that IKEA – the common man (everyman) – does? Well, to ”offer a complete range of homewares at prices so low that as many as possible will be able to afford them”. (Ikea’s vision is, moreover, “Creating a better everyday life for many people.”)

What is your brand archetype?
Unlike IKEA, Virgin and Disney, most companies do not have a story and narrative that offers a natural archetype. To identify the genuine and true archetype for your brand needs a systematic structure.

One of the most useful archetype models is Carol S. Pearson’s system consisting of 12 prime archetypes. Carol S. Pearson is a professor of leadership studies at the University of Maryland at College Park, and is author of books like “Awakening the Heroes Within: Twelve Archetypes to Help Us Find Ourselves and Transform Our World”  and “The Hero and the Outlaw: Building Extraordinary Brands Through the Power of Archetypes”.

Pearsons_Archetypes

Her system, which is based on Jung’s work, consists of two dimensions: self-focused vs. group-oriented and order vs. change. For example, if the culture of your company is to strive, or to offer, good order – to have control – you are likely an archetype in the upper semicircle. If you also tend to focus more on what is possible to make than what the customers think they need or want, your correct archetype will be on the right side. The truth is thus the archetypal ruler, creator or innocence.

The names of the archetypes can vary. Warriors may also be called champions and heroes; the rebel might be called outlaw or anti-hero; the joker a jester or rogue; adventurers could be called explorers or pathfinders; sages can be called wise ones or gurus; innocents can be called naïf’s or saints; the creators can be called innovators and artists, and so on. But the meaning of each archetype is always the same.

The most notable magician
The magician is for example an archetype who makes things happen, who brings visions to life. Magicians can be framed in many different forms, from the obvious Gandalf in Lord of the Rings to Vianne in Lasse Hallström’s film Chocolat. But regardless of the guise, we are fascinated by the magician’s ability to make the impossible possible. A Magician’s motto is ”I make things happen”, his goal is to realize dreams, and his strategy to articulate an exciting vision. And then follow it.

A magician brand is characterized therefore by its power to open new horizons or opportunities for customers. Its product or service may be in constant change, but it is user friendly and it drives development forward. Apple (as well as the company’s founder Steve Jobs) is probably one of the most notable magicians.

Make your mark to a legend
Pearson’s system is therefore an excellent tool for identifying the real and true archetype for your brand. But before you tackle it, ask these five questions of yourself:

  1. How well known is our story today?
  2. How consistent is it?
  3. Do people understand its meaning? Does it convey the same meaning for everyone?
  4. How credible and motivating is it?
  5. Which famous character, or archetype, fits into our story?

If you manage to connect your brand to an archetype, and thus to a strong and rich story, you have laid the groundwork for something powerful – you have given birth to a legend.

Or, as Scott Bedbury, former marketing director at both Nike and Starbucks, said:

“A brand is a metaphorical story that … connects with something very deep – a fundamental human appreciation of mythology…”

Companies that manifest this sensibility invoke something very powerful.

Sources: Books mentioned above, by Carol S. Pearson and Margret Mark, article by Jon Howard-Spink, What is your story? And who is your brand?. Originaly posted in Swedish on The Brand-Man, here and here.

Is a brand really a promise?

11 Nov
11 november, 2009

Probably the most commonly accepted definition of a brand is brand guru Walter Landor‘s:

”A brand is a promise. By identifying and authenticating a product or service it delivers a pledge of satisfaction and quality.”

I agree. But I’ve also long had a nagging feeling that the logic of his definition is shaky. Until recently I couldn’t say why, but now I think I’ve got it: his definition is inside out.

Brands are made in the minds of the customers – not in the marketing department, management team or boardroom. Brands should therefore be defined from the buyer’s perspective, not the seller’s.

In that case, a brand is not what the seller promises about it, but rather what the buyer expects of it. In short:

”A brand is expectations.”

A brand is, after all, whatever people know, think and feel about a company, organization, product, service or concept. It is an aggregate of snippets of viewpoints, feelings, myths, rumors and experiences that become anchored in the mind of the buyer.

Consequently, a brand is not the product or service you buy. Nor is it your relationship to the seller or his company. However, your experience of the product or service – as well as your contact with the seller – affects your experience of the brand. This, in turn, affects your expectations of it, positively or negatively.

Strong brands make promises they can keep. And, at the very least, they always deliver what you expect, making you a loyal (and probably profitable) customer.

Weaker brands try to deliver what they promise. In practice, however, they meet expectations only rarely. They might sell goods or services in high quantities, and may even make money, but their customers have no abiding loyalty, and will switch to another brand the moment a better alternative comes along.

Weak brands promise many different things. Or they promise things that don’t concern us. We experience them as fragmented or irrelevant, which means that we either cannot or do not want to build any real expectations of them. They may sell on price or performance, but they are always vulnerable to any competitor who can stir exciting, relevant expectations in the mind of the buyer.

This is logical, but not at all rational.

The fact is that our expectations are rarely (if ever) about the product itself. Our needs and desires have to do with what the product or service results in – not what it is. My expectations of Apple are not a powerful laptop, a cheap music source, a spacious mp3 player or a cell phone with good sound quality. What I expect of Apple is to always give me a great (and intuitive) user experience, compared to goods and services from competing brands.

Moreover, the strength of our expectations varies depending on how important the benefit of the product experience is to us. For example, if I am buying a new car, my expectations are primed with many strong emotions, linked to what I think I need and want, and my expectations of my chosen brand are equally important. However, when buying toilet paper, my expectations of its performance are much less emotionally charged.

The comparison is certainly unfair, insofar as a car is a much larger financial investment. Quite simply, the potential consequences of my choice will be greater. But not all consequences are financial.

The fact is that the price is not necessarily directly proportional to the product’s emotional value for us – at least not automatically. Think Coca-Cola, Google, Lego, Absolut and Cheap Monday.

The point is that our feelings to, our expectations of, and even our experiences of a band can be manipulated. Nike makes its sports shoes into something much more than just sports shoes by addressing our desire to win and crush all competition. When we buy Nike, we see ourselves as part of the winning team. Harley-Davidson never just sell motorcycles. It speaks instead to the 43-year-old lawyer’s desire to encase himself in leather, glide out in the wilderness and, if only briefly, feel dangerous, rebellious and free.

Which brings us to the key point.

If a brand creates expectations linked to what its products or services are, it will find it very difficult to always keep its promises. Every time something in the product, delivery or service fails, the recipient experiences the brand’s broken promise.

If, on the other hand, a brand creates expectations about what its product or service results in, it will have every opportunity to make promises it can keep. Customer tolerance level for occasional errors and weaknesses in the product, delivery or service is very high – as long as the customer believes he is getting the expected experience or benefit.

This is easy to say, but difficult to achieve. And the less important your product category is for the customers, the more difficult it is.

But difficult is not the same as impossible.

The first step is to accept that your brand is a metaphor for something quite different from your product or service. It is people’s expectations of a benefit or experience. And this is something you can influence.

The next step is then to answer the question: What does every person, on every occasion, have a right to expect of your brand?

Depending on your brand’s product category, and the expectations currently placed on it, you can then select one of the following five strategic alternatives (the simplest approach first):

  1. Focus on and refine what your brand results in (and what differentiates it from competitors).
  2. Strengthen the perceived importance of what your brand will result in.
  3. Reduce the perceived importance of what your worst competitor’s brand results in.
  4. Add a completely new benefit or experience.
  5. Modify the decision rules, i.e. the selection criteria by which buyers make their decisions.

In conclusion: A brand is not an isolated promise. A brand is what people expect to receive in terms of utility, value or experience as a result of choosing it.

Therefore, make sure the expectations of your brand are always realistic in relation to the perceived delivery. Never promise more than you can deliver. If you do, your promise will be a burden to you, rather than an asset.

Brand strategist Marty Neumier summarized it brilliantly:

”A brand is a person’s gut feeling about a product, service or organization.”

(This post was originally published in Swedish on The Brand-Man.)

How important is price?

21 Sep
21 september, 2009

If you ask your customers what their most important criteria are for choosing a supplier, most will say: “Number one is ‘price’. Number two is ‘quality’.”

They’re lying.

But it’s not a deliberate lie. We humans answer the question asked, and this is simply the wrong question to ask. The only time it has any relevance, and the only time it will be answered truthfully, is if everything else is identical between all competing alternatives.

Which, of course, never happens.

But, if you ask which brand on the market customers prefer, and then identify what customers believe makes that brand better than the competition, you will come much closer to the truth. Their key differentiating criteria will revolve around factors like ‘confidence’, ‘relationship’ and ‘service’. Price will be ranked further down the list.

When your sales force or customers start insisting that you must lower prices, it is therefore not necessarily your price that is wrong. The problem is more likely to be that customers do not feel they are getting sufficient value for the price you charge for your product.

What each buyer is really interested in is value. And the value of anything is the sum of the benefit divided by the price: Value=benefit/price.

You can choose either to reduce your price, and thereby increase relative value (”I may not be getting much, but I’m not paying much either”). Or, you can enhance the perceived benefit (”I am really getting value for the money I pay”).

The thing is that customers always strive to pay as little as possible. And a good salesman always does everything possible to justify the highest price he can possibly get.

This does not necessarily mean that all customers want to pay as little as possible, and all salesmen want to be paid as much as possible. The price range – which both seller and buyer are already mentally equipped with – is based not only on which business category your brand is associated with, but also its perceived market position within that category.

In short: You get the customers you deserve.

By that I mean that, if your customers are only interested in your price, it’s because you haven’t given them something else to be interested in. Your customers feel that your main competitive advantage is your price tag, and that your company is more or less offering a commodity.

But, if your business for instance is recognized as more competent in its field than any other company – i.e. the competence leader (implying high credibility and a good reputation) – you can be much better paid for delivering an identical product or service. The customer, quite simply, perceives a greater business value.

Your job as a salesperson, and that of any marketing communication, is therefore to convince customers that your brand offers more value; and that that value differs in a relevant way from any other competitor’s offering. But you must also get the customer to really believe that the promised value will be realized. Last, but not least, you must get the customer to like your brand.
If you manage this entire chain, any price discussion will be marginalized.

Finally: Remember that, the moment a client asks for the price of the product, you have a very strong buying signal.

And that you’re actually selling value.

Om varumärkets roll vid fusioner och förvärv

02 Jul
2 juli, 2009

I filmen American Psycho får den sinnessjuke huvudrollskaraktären Patrick Bateman – en Wall Street-stekare med massmord som makaber hobby – frågan vad han sysslar med. I’m into murders and executions, svarar han utan tvekan. De andra karaktärerna reagerar inte på hans medvetna felsägning, utan fortsätter diskussionen som om han sagt mergers and acquisitions (M&A).

Den här ordleken har sitt ursprung i effekterna av många företags fusioner eller förvärv. Någon, eller alla, dör på slutet.

Det som ofta händer är nämligen att respektive bolags första kärlek glöms bort: Kunden. Det nya, sammanslagna företaget blir på kort sikt både finansiellt starkare och större räknat i marknadsandelar, men på lång sikt försvagas konkurrenskraften eftersom kundernas förväntningar inte uppfylls och farhågor elimineras.

Trots allt: Utöver de arvoden och gratifikationer som tillfaller styrelserna, ledningsgrupperna, finansrådgivarna och affärsjuristerna, är motivet bakom en fusion eller ett förvärv att addera värde för aktieägarna. Huruvida sammanslagningen adderar värde för kunderna är mer tveksamt. Alla stordriftsfördelar som ekonomer och ingenjörer dreglar över är nämligen ytterst sällan lika sexiga för kunder. Tvärt om. Och inte nog med att kundernas förväntningar och farhågor brukar glömmas bort, dessutom ignoreras oftast det faktum att kunderna helt plötsligt får ett alternativ färre att välja mellan (om de bolag som slås samman verkar inom samma bransch).

Kundens åsikter och känslor ges kort sagt inte nämnvärd uppmärksamhet. Åtminstone inte förrän varumärksröran resulterat i någon form av kris som hotar varumärkespreferens, marknadsandelar, kassaflöde och vinstmarginal.

Därför är det marknadsförarens förbenade skyldighet att vid fusioner och förvärv föra kundernas talan. Och det arbetet börjar med att förstå de inblandade varumärkenas styrkor och svagheter, och sedan att staka ut en strategi och plan på hur de bäst skall användas (eller inte användas).

Vad tycker och tänker till exempel kunderna om det faktum att de två företagen tidigare var bistra konkurrenter? Hur reagerar kunderna om det ena företaget står för en nischnytta, medan det andra strävar efter bredd och volym? Finns det en naturlig koppling mellan företagens varumärken? Kommer köparna att fokusera på bolagens styrkor eller svagheter? Finns det en risk för att det svagare varumärket (alltså det vars varumärkesimage i mindre utsträckning motiverar volym- eller prispremium) kväver det starkare?

Dessa frågor, och många fler, måste ställas och besvaras för att de inblandade företagen skall få maximal effekt av sammanslagningen. Kunders lojalitet är trots allt en nyckfull och emotionellt betingad historia, och de rationella stordriftsargumenten räcker ytterst sällan för att övertyga om sammanslagningens förträfflighet.

Följande fem frågeställningar anser jag är de viktigaste för varumärkesarbetet vid fusioner och förvärv (du får gärna kommentera eller komplettera):

  1. Hur skall de inblandade varumärkena förenas på bästa sätt?
    När varumärken skall fusioneras finns en rad olika handlingsalternativ, från att fokusera allt på ett enda (företags)varumärke till att skapa en portfölj av starka (produkt)varumärken. Vilket alternativ är bäst på kort sikt? Vilket alternativ är bäst om fem år? Och hur når vi dit?
  2. Vad tycker, tänker och känner kunderna?
    För att kunna fatta de rätta besluten måste du veta vad kunderna tycker, tänker och känner om de olika varumärkena. Dessa varumärkesassociationer skall giftas samman med affärsmålen, och utgöra ledstjärnan i det nya bolagets varumärkesarbete. Starta en dialog med kunderna. Låt dem tycka, tänka och känna inför öppen ridå. Det är oändligt mycket bättre att diskutera  eventuella negativa känslor och åsikter tidigt i processen, än att behöva ta hand om dem när de utvecklats till cementerat missnöje.
  3. Hur påverkar sammanslagningen det nya bolagets positionering?
    Varje fusion eller förvärv målar om konkurrenslandskapet. Därför måste du vara på det klara med hur det nya företagets positionering påverkas av de gamla företagens positioner. En noggrann analys av den här frågeställningen kan många gånger leda till en helt ny och mer konkurrenskraftig differentieringsmöjlighet. Våga tänka annorlunda.
  4. Hur kan företagens historier och historik utnyttjas på bästa sätt?
    Starka företag består av starka historier och spännande historik. Det är i dessa historier som kunderna finner mening och samhörighet, och som i slutändan kanske är det viktigaste skälet till varför dina kunder valt att göra affärer med dig. Efter sammanslagningen måste du skriva ett nytt kapitel – ett kapitel som lika trollbindande som trovärdigt binder samman respektive företags historik med det nya företagets framtidsvisioner.
  5. Vad tycker, tänker och känner de anställda?
    I de allra flesta företag är personalen den enskilt viktigaste varumärkesbäraren. Hur ställer sig organisationerna till sammanslagningen? Hur motiverade och engagerade är de i den nya konstellationen? Hur entusiastiskt berättar de ditt nya kapitel? För att sammanslagningen skall bli framgångsrik måste de anställda behandlas med den respekt de förtjänar. Fråga dem. Involvera dem. Diskutera med dem. Det är trots allt de som håller i dina kundrelationer före, under och efter köp.

Alla kundrelationer bygger till syvende och sist på uppfattningar, eller image om du så vill. Och dessa uppfattningar baseras på känslor mer än på kunskap. Därför är kundernas känslor om sammanslagningen det viktigaste att verkligen förstå, respektera och arbeta vidare med. Vinner du deras hjärtan, vinner du också deras hjärnor.

Kort sagt, att inte betrakta varumärkesaspekten med samma seriositet som t.ex. den industriella eller finansiella, är att riskera en värdeminskning som blir mycket, mycket svår att återställa.

Inlägget publicerades ursprungligen här.

Lovemarks and B2B branding

08 Jan
8 januari, 2009

Is the idea of B2C Lovemarks transferable to a B2B context? If so, how should a B2B Lovemark be characterized? Based on the theories of Saatchi and Saatchi CEO Kevin Roberts, and a Master’s thesis conducted in 2008 at the University of Lund, Sweden, we explore the possibilities of using Lovemarks in B2B branding with the aim of boosting brand preference and creating customer loyalty beyond reason.

In consumer markets (B2C), the importance of branding has been widely recognized for quite a while, but little research has been done on branding in business-to-business (B2B) markets.

Even today, some B2B marketeers think that the decision-making process of professional customers solely depends on hard facts like functionality, price and quality. Soft emotional facts, like empathy and enjoyment, are seen as more or less irrelevant.

If that’s the case, then how come some of the world’s most valuable brands are B2B brands? According to BusinessWeek/Interbrand (2008), IBM ranks as the world’s 2nd most valuable brand, General Electric 4th, Intel 7th, American Express 15th, Cisco 17th, Oracle 23rd, HSBC 26th, UPS 28th and SAP 31st. In fact, of the world’s 30 most valuable brands, 11 are B2B brands.

Several scholars (Mudambi, 2003; Lynch & de Chernatony, 2004; Kotler & Pfoertsch; 2006) have started to research the relevance of branding in B2B. According to their respective findings, they agree that brands serve exactly the same purposes in B2B markets as they do in consumer markets: they simplify the decision-making process and establish a competitive advantage, price premiums and long-term profitability. As such, they must be seen as strategic assets – even in a B2B context.

Creating an emotional bond
Branding is, in short, about drawing seller and buyer closer to each other on an emotional level. This is becoming increasingly important, particularly in B2B markets, since customers are better informed than ever about competitors’ and substitutes’ offerings. The business environment of the 21st century is ultracompetitive; customers are flooded with brand messages and are increasingly more time-pressured, stressed and confused with the vast array of choice. Simply put: competing only on a functional benefit level is short-term oriented because the development of technology is so fast and imitation so common.

According to Kevin Roberts, CEO of Saatchi and Saatchi (and the one that coined the term Lovemarks), the world is shifting from an Information Economy via an Attention Economy to an Attraction Economy. Customers seek individuality in their relationships with brands, they want interactive involvement and entertainment, and they seek brands they can bond with. And by doing so, they are able to ”neglect” all other possible choices.

Neurologist Donald Calne claims that people are 80% emotional and 20% rational. In branding and marketing, the essential difference between emotion and reason is that emotion leads to action while reason leads to conclusion. So, the more emotion that is involved, the more action can be expected. Or, as novelist Maya Angelou has said:

”People will forget what you said, people will forget what you did – but people will never forget how you made them feel.”

But is it possible to create strong emotions in B2B relationships? Is ”love” truly realistic?

What is a Lovemark?
In his book, Lovemarks – the future beyond brands, Kevin Roberts captures the term “Lovemark” in many different ways. Based on all his descriptions, a tentative definition could be:

“Lovemarks are strong emotional relationships or bonds between brands and customers that are based on great performance and which are identified, owned, loved, defended, advocated and forgiven by customers. Lovemarks create loyalty beyond reason.”

Roberts identified a combination of three qualities that draw the line between ordinary brands and Lovemarks: mystery, sensuality and intimacy. He further argues that brands have been ‘captured by formula’ and are too stiff to adjust to the fast-transforming customers of today. These customers look for more individuality, personal relationships, experience and outstanding performance – which is true for both orientations, B2C and B2B. Roberts concludes that ”A Lovemark will always be a great brand, but not all great brands are Lovemarks”.

A Master’s thesis conducted in 2008 at the University of Lund, Sweden (The Potential of B2B Lovemarks), sought to answer the following three questions:

1. What role do intangible factors play in B2B branding?
2. Is the idea of B2C Lovemarks transferable to a B2B context?
3. How should a B2B Lovemark be characterized?

According to the authors, the main contribution of the thesis is to fill the knowledge gap regarding B2B Lovemarks by creating a framework for how B2B brands can be established as Lovemarks. The thesis aims to verify the general idea of the Lovemark and show which brand attributes sustain Lovemark status and contribute to it by studying Lovemarks from a managerial perspective – which had not been done in the past.

The thesis concludes that Kevin Roberts’ theory of Lovemarks can, in fact, can be adapted to B2B branding, but the definition of what constitutes a Lovemark may need some adjustments.

The problem in most B2B categories is that as soon as a brand/company becomes a market leader (which suggests a high level of customer loyalty), customers are in fact less willing to ”love” it. The simple reason being that, in B2B, obvious market leaders often charge an extra premium and are just as often perceived as being a bit cocky and overly self-confident. Since ”love” is generally interpreted as a purely warm and positive feeling, many market leaders in B2B can be regarded as disqualified with regard to brands that are loved. They are however often highly respected, liked and, especially, highly trusted.

But what is love? And what kind of love is Kevin Roberts referring to?

The eight faces of love

Robert J. Sternberg, American psychologist and psychometrician, claims that love consists of three components:

1. Intimacy (refers to feelings of closeness, connectedness and bondedness)
2. Passion (encompasses drives that lead to romance, physical attraction and sexual consummation)
3. Decision/Commitment (refers to deciding that someone loves someone else and a long-term commitment to maintain that love)

Intimacy is seen as “warm” (emotional investment, empathy), passion as “hot” (motivational involvement, arousal) and decision/commitment as “cold” (cognitive interest). In a love relationship, these three components have different weights. For instance, in a short-term romance, passion is rated highest, while in a long-term close relationship, commitment and intimacy play the most important roles. The combinations of the components that constitute “love” allow eight different emotions, summarized by Sternberg in the table below (Taxonomy of Kinds of Love, Sternberg, 1986).

In relation to Lovemarks, Kevin Roberts most likely refers to “consummate love”. In the B2B context, however, love should probably be considered as the kind of love where bonds and long-term commitment are most valued. Minor failure and shortcomings can be forgiven, and physical attraction is of relatively least importance. Consequently, Lovemarks in B2B branding should be that of “companionate love” – which can become a powerful foundation for “loyalty beyond reason”. Or, as psychologists H. T. Reis and A. Aron summarize it:

“Much evidence indicates that love in long-term relationships is associated with intimacy, trust, caring, and attachment – all factors that contribute to the maintenance of relationships over time.”
Finally, Sternberg stresses the fact that love ceases to exist unless expressed, “Without expression, even the greatest loves can die”.

Related to Lovemarks, this means that companies need to constantly express (communicate) what they ‘feel’ for their customers.

Is your brand loved?

Lovemarks

Customer-Based Brand Equity model (CBBE, Keller, 2002, & Kotler/Pfoertsch, 2006), modified by Pyramid.

If we accept that Lovemark refers to companionate love in a B2B context – brands that have created loyalty beyond rational/intellectual reason – there are quite a few possible examples of Lovemarks:

Bluetooth (technology)
Has persuaded more than 10,000 companies to sign a technology standard agreement and gone from 1 product to 3 billion (!) in only 8 years, making it the fastest growing technology brand ever.
Caterpillar (heavy machinery)
Same story as with trucks – dependency and reliability to the brand seems to be far beyond rational product features and benefits.
DeWalt (handcraft tools)
As with trucks and heavy machinery, handcraft tools are most often chosen based on brand preference (and loyalty) rather than on actual product features. In many construction companies a “preferred tool brand culture” is obvious.
Financial Times (newspaper)
Perceived as the no. 1 authority in financial news coverage.
IBM (consultancy)
One of the most valued brands in the world. Not because IBM employees are in fact the most competent consultants, nor because of the numerous methods developed by IBM.
McKinsey (consultancy)
You trust them. Period. Companies make strategic decisions based on McKinsey recommendations.
Reuters (news service)
A strong brand in its category that comes with a huge amount of credibility.
Scania (trucks)
Haulage contractor companies, and especially the truck drivers, tend to have very strong emotional relations to a specific truck brand.
Symantec (IT security)
This expert in IT security has steadily established itself as one of the big technology brands through excellent products and service, and is now a real rival to the likes of HP, Oracle, etc.
Tenon (accounting)
Voted in 1995 as the UK’s best B2B brand in a survey carried out by B2B Marketing magazine, beating high-profile brands including Accenture, HP and Cisco. Tenon focuses on close partnership with its customers, using a more personal, welcoming approach.

In the above-mentioned Master’s thesis, the authors suggest a fairly simple “Lovemarker Model”, based on Kevin Roberts’ model introduced in his second book about Lovemarks. According to Roberts, the model should be regarded as a guide on how to build Lovemarks. The tool is a questionnaire that specifies the aforementioned categories of love and respect, and that help evaluate a number of performance and perception components according to ”hot”, ”warm” or ”cold”.

If you are interested in finding out whether your brand has Lovemark potential, you are welcome to give us a call for a personal presentation.