As a former MD and Chairman of Beamish & Crawford Plc, for over twelve years and current chairman and director on a number of Boards, Alf has a tremendous depth of experience in both the financial and branding arenas. This combination of skills is particularly unique and it's inspiring to hear one of Cork's most respected business leaders recognising the importance and value of brands.
In an insightful and thought -provoking post he outlines why in our tumultuous economic landscape, business as usual has become irrelevant and how companies need to to "inspire and mobilise people around a common purpose." He goes onto explain,"I firmly believe that it’s through innovation, the re-invention of existing brands, and the creation of new brands that will create the climate for business success going forward."
Branding in Ireland is a relatively new and often misunderstood business discipline so it's uplifting to read that branding should play a leading role in Ireland's economic recovery and re-invention. After all branding is strategic tool that can be used by both big and small businesses alike, to not only to grow margins, awareness and loyalty but also to fundamentally change the way people think, feel and behave.
In the article, Alf goes onto discuss the interesting concept of Brand Damage and how many of Ireland's most trusted and respected institutions have lost Brand Value and trust with the Irish public. This lack of trust means that companies will have to work that much harder to regain brand equity and credibility with their customers.
"Over the last two years many companies, of all sizes and across all sectors, have often unwittingly damaged their brands. We have seen a huge amount of brand damage, and even destruction taking place before our eyes during this time. It is very clear that some of the big Irish Brands in both the private and public sectors are in serious difficulty, including household brand names like FÁS, the HSE, the Irish Banks, Irish property companies, and even some of the big political brand names. I would even put Brand Ireland Plc Inc into the mix. Trust and confidence in these brands have been seriously eroded."
In many respects Ireland's massive economic boom and subsequent growth masked many underlying fundamental business problems. With 15 years of successive economic growth most companies didn't really have to think about their business models or invest in branding and innovation.
Now that the tide has gone out many businesses have been left exposed and are faced with the challenge of having to go back to really understanding what made them successful in the first place, re-envisioning their futures and really understanding their value propositions, in a resource constrained and recessionary market environment.
"It has been survival mode for the vast majority of Irish companies over recent years, and ‘discretionary’ spend like marketing investment has been significantly reduced and often eliminated. This can only continue for so long. Owners and managers will need to find more time in 2011 to seriously review all aspects of their brands (positioning, pricing, promotion and markets), and also the strength of their customer relationships through those brands. As the economy turns, and hopefully we’ll see this in 2011, companies will need to play catch up, and begin to repair and restore the health of their brands, and to re-create a trusting relationship with their customers. This will require a highly focused approach and a new mindset which puts brands centre-stage, and a business model which recognizes the absolute necessity for properly targeted marketing investment."
It is no accident that some of the most successful companies in the world invest heavily in building their brands. That's because they know that there is a proven correlation between investing in brands and increases in profit margins, operating earnings, stock returns and market capitalization.
One of the biggest challenges with branding is where do you start and beyond the theory how do you practically go about building a brand.
With so much noise in the local arena about PR, design, social media and tactical marketing, clients are often confused about where to begin. With this in mind ThinkTank sat down to map out 5 key things things Irish companies can do to practically build their brands. We hope that this gives you an insight into what's required to build really strong brands.
1. Top Management needs to view brands as assets
In many respects branding is too important to be left the marketing department. No longer is branding a subset of marketing to be managed as a communication problem. Your brand is the public face of your business strategy, both reflecting and enabling it internally with staff and externally with customers. For this reason company owners or senior management needs to take ownership of the brand and invest in it - just as you would invest in people and other assets that can generate a return. Strong brands always start internally and an internal understanding of how branding works is probably more important than understanding your customers.
This means that brand strategy needs to be developed in tandem with your business strategy, both need to be clear on vision, value proposition, target market and investment. Top management can use the brand as a catalyst to excite, recruit and retain employees while at the same time building trust, likeability and loyalty with external customers. This process begins by distilling what's truly excellent about your organization and then developing a story around it that offers directional and aspirational qualities going forward.
2. Brands need to be differentiated not just designed
Branding is far more than just image and awareness. So many companies get misled changing the surface elements e.g signage, logos and then wonder why people don't really connect with and respond to the brand. In today's hyper-competitive market place most brands are failing to differentiate. In a 2007 research report, management consultancy Bain & Company, highlighted the fact that 80% of CEOs think their brands are differentiated but only 8% of customers agree. This shows a huge disconnect between operational decisions that are being made on the marketing front Vs how consumers are responding in the real world. So companies can chose to either be a commodity and compete on price or become a brand and compete on value and innovation. A competitor cannot copy your brand and it becomes increasingly difficult for them to compete against you if the innovation is branded and becomes established over time. Customers have choices, so in order to build defendable differentiation you need to be able to understand the relative market positioning of your brand so that you can determine where and how your brand is positioned in the competitive context.
3. Move beyond functional features to emotional engagement
Many companies get locked into the idea that the product is the brand when in actual fact the product is something functional and the brand is something conceptual and lies beyond the physical product and exists in the minds of consumers. There is a tendency to focus on functional features and attributes because they are assumed to be what customers are buying and because market research is often functionally focused. The fact is, customers are not logical and functional benefits rarely provide a basis for sustainable differentiation or a deep customer connection. With so much parity between products - there is not a whole lot of difference between products, their actual quality or even pricing. Advances in technology have made it possible to emulate just about any kind product. Eventually, someone comes along with a better widget for a whole lot less. Or worse a new technology makes your widget totally obsolete.
So marketers need to start by emphatically understanding their customers by looking towards building meaningful emotional and self-expressive benefits for customers. This enables people to feel adventurous driving a Harley Davidson, cool by buying clothes at Tommy Hilfiger, successful by driving a BMW and creative by choosing Apple. In this arena marketers need understand the art of building meaning and engagement through developing and designing innovative products, communicating on-brand messaging in a creative and engaging way and building memorable user experiences that make your brand irresistible.
4. Think brand relevance and not brand preference
We're constantly amazed at how many large Irish companies are obsessed by what their competitors are doing and stuck in constant "my brand is better than your brand" jockeying for position. This type of brand preference competition involves constant incremental product enhancements to improve attractiveness, price discounting, trying to sway customers with "New and improved' and a constant plethora of promotions and PR aimed at short term wins. The reality is that this approach is self sabotaging and is a slippery slope towards discounting where your product ends up becoming a pure commodity.
By contrast Brand Relevance requires companies to bring transformational innovation to an existing category through creative disruption. This starts with sensing changes in market dynamics, understanding trends and what's really going on in customers' lives. It means putting the customer at the forefront of the your business strategy and being willing to invest in research to enable you to extract insights so that you can develop foresight about 'white space' and innovation opportunities that exist. By investing in imagination and innovation instead of process repetition and efficiency -you will start to unlock opportunities that could enable you to develop a whole new lucrative market category or segment that will end up making your competitors irrelevant.
5. Become obsessed with spreading the idea behind your brand
Brands don't exist in a vacuum so the "Big idea" or over-arching concept behind your brand needs to be effectively propagated into the market place so that you can reach a critical mass of the right type of customers. Brands that are relevant and resonate with customers and that are build around a distinct and compelling advantage are far more likely to gain traction and response in the market place than brands that are bland and boring. The cost of the investment required to build awareness around brands that have sound fundamentals is significantly cheaper than brands that have no meaningful difference. In this phase it's very important to understand how to reach your target audience and key influencers in a synchronized way that maximizes word of mouth communication. This is far more than functionally setting up a Facebook page, designing a print ad or starting a Blog. It's about developing a heightened understanding and sensitivity about the market, trying to build genuine human connections by treating customers as real people and building a platform for the brand that exponentially spreads your message and turns brand advocates into brand disciples.
In closing, there seems to be an increasing openness by business to investigate how they can use branding principles and there are several green shoots appearing in the local market. Many future thinking companies are starting to realise that there is an interdependence between business and brands that can no longer be ignored.
In 21st Century marketing the customer needs to be at the heart of your business system and effective marketers will need to be able to demonstrate how they can work across disciplines in a way that delivers real growth and returns to the business. Marketers will need to shift from a 4P approach to a multi-disciplinary, strategic mind-set that gives them an equal seat at the boardroom table and demonstrates their abilities to use imagination and ideas to build brands that result in a strategic pay off for the company and create value for customers.
All quotes in this post are in italics and are attributed to a post that appeared in the Quintas Blog www.quintas.ie and subsequent newsletter that was written by Alf Smiddy. The Beamish photograph was taken by William Murphy and appeared on Flickr. Please add your thoughts, comments and questions on branding below.