Brands—who needs them?

One of our clients sells ingredients to the food industry and, over the years, his organisation has become the most knowledgeable and helpful in the business.

The client had a salesman who could do no wrong. He was meeting ever tougher targets with ease. He knew all the buyers in the top customer companies, he got on well with them and they lapped up everything he said. Eventually, he felt that his career prospects would be better served elsewhere. So he got a highly paid job in charge of sales at a middle sized company with a brief to turn things around. If he could, he would be rich.

A few weeks later he complained that no one was returning his calls. They were out, or busy, or forgot.

A few weeks later still he rang to say he realised the problems. The customers felt they had had a relationship with the brand which was his previous employer, not with him. Now, he did not have that magic any more. This is a viewpoint about the magic of brands.

What is a brand?

We use the term ‘brand’ as part of our daily vocabulary, often misdefining it without reflecting on its real meaning. For example, people say:

• how is the brand doing? (how are sales?)
• is it well branded? (do we see the product clearly?)
• please increase the branding (make the logo bigger)
• it’s one of our important brands (it’s a product grade, or a trade mark we’re used to

Here are some thoughts as to the nature of what a brand really is:

Branding is the active and consistent projection of the qualities which differentiate an organisation, its product or service, from the competition.

A brand is the intangible sum of a product’s attributes, its name, its packaging, its price, its history, its reputation, and the way it’s advertised. It’s defined by impressions of the people who use it, as well as their own experience.David Ogilvy

A product is something that’s made in a factory; a brand is something that’s built in the mind.

Every brand contains a product; not every product is a brand.

A brand is developed in people’s minds over time, rarely instantly, through the many ways in which they experience the brand. One quotation sums this up:

We build an image of a brand as birds build nests. From the scraps and straws we chance upon.Jeremy Bullmore, WPP

Why do I need one anyway?

After simple functionality, the brand is the most potent influence on the buying decision. Many would agree that building a brand is the only sensible option for these purposes:

Short term

• to establish an advantage over the competition
• to add the values which entice customers
• to reassure existing customers
• to attract new ones
• to build and hold decent margins

Long term

• to transfer a company from a faceless bureaucracy into an entity that is attractive to work for, or with. Where everyone knows why they are coming to work, and what is expected of them
• to build stable perceptions
• to assure long-term demand
• to gain lasting advantages in price, volume and market share
• to provide a base for expansion into product improvements, line extensions, new services, new territories
• to provide a defence against competitive attack

In competitive global markets, the strength of the brand is probably the only real ground upon which companies can compete.

Without branding, a product is a commodity, risking serious penalties:

• customers believe they can switch suppliers, without risk
• buyers tend to choose the cheapest, with little or no loyalty
• marketing effort becomes concentrated on price, not quality
• profits are squeezed, leading to a downward spiral of cuts in marketing effort and product quality, thus making sales ever hard

A strong brand gives:

• reduction in price elasticity, enabling a higher volume at the same price, or a premium price for the same volume
• easier sales negotiations/less acrimonious complaints
• easier price increases
• easier line extensions or new product introductions
• differences can be protected so that competitors will have difficulty in matching up without seeming to be a pale copy
• greater resilience against competitive launches

What about business brands?

Primary Contact is a business agency and our concern—like yours—is with building business brands. Surely the rough tough world of selling products and services to seriously minded business people is a world apart from selling baked beans or washing powder? Let’s look at some of the differences and similarities:

Differences
Business brands are different in five main ways.

1. There are many points of contact throughout the lengthy business buying cycles, all of which can support or undermine the way the brand is seen. (For a typical FMCG brand, the points of contact between brand owner and consumer are simply the ads, the packs, the point of sale material and the consumption of the product.)
2. In business, the brand has many more dimensions. The way the telephone is answered. The way the brochure is sent in response to an enquiry. The exhibition stand ashtrays. The seminar speaker’s tie. The chairman’s statement in the annual report. The signing at the site. The quality of the invoicing paperwork. The cleanliness of the delivery van.
3. Business brands are seldom bought on impulse by a single individual. The Decision Making Unit can be made up of as many as 20 or 30 people, all with the power of veto. Distribution channels are often less straightforward than in modern consumer retailing.
4. The products themselves are usually so much more complex. A new computer operating system, for example, is technically more sophisticated than, say, a brand of cola and so are the benefits it delivers. These need to be fully understood.
5. The senior management of significant industrial organisations tend to have achieved success through excellence in disciplines other than marketing. Often, while they instinctively feel supporting their brand, or the company which might become one, is important, it is not so pressing as, for example, investment in a new manufacturing facility.

Similarities
But there are two big similarities.

1. Contrary to rumour, business people also possess emotions! Today’s increasingly busy customers no longer have the time to evaluate 7 or 8 possible suppliers. Recent research into buyers of computer equipment showed a consideration set of just 2.2 brands—one of which is usually the incumbent. So emotional preferences can be hugely important in narrowing the field and ensuring your brand gets you the chance to tender for the business.
2. In most business-to-business markets, there is increasing similarity between rivals, who all have access to similar expertise, technologies, market research and so on. It is very difficult to find a product with a clear technical advantage. And when one does exist, it does not take very long for competitors to copy it.

As rational factors become less useful, the emotional ones (they are a good company, I like and trust them) become more so. In Regis McKenna’s Relationship Marketing, he interviews a computer engineer who had mandated the use of Intel chips in his company’s product. Had he evaluated the current chip against all those offered by the competition? "No, we just tend to buy from Intel because... we know where they are going and trust the company. In fact, Intel’s specifications are sometimes inferior."

Soon after Intel launched their use of the ‘Intel Inside’ line, realising that this was their strength.

Conclusion

Increasingly, it is the company brand which is the main differentiator. Yes, the product delivers the effect. But it is the company behind it which drives the constant improvements, delivers the service and takes care of the customer. In business, it is usually the corporate entity which achieves brand status.

If the purchase of business brands is accepted as a process of justification, rather than a simple and rigorously rational selection, and products are increasingly at parity, then the emotional dimension provided by the brand plays a crucial part.