The explosion of digital platforms is causing many marketers to rethink how they engage with consumers. But sometimes in their hurry to embrace the digital world, companies often lose their way and forget the basic principles of good marketing and branding. We furtively deploy the latest or hottest digital innovation without fully considering the basics of brand strategy or message consistency. Consumers end up more confused and less loyal," as I write in my latest book, Twitter is Not a Strategy: Rediscovering the Art of Brand Marketing.
I propose a strategy combining the best of both worlds: the 'new' of digital marketing with the tried and tested fundamentals of traditional branding. In this wide-ranging interview, adapted from an article originally written by Neelima Mahajan and posted in CKGSB Knowledge, the magazine of the Cheung Kong Graduate School of Business, I address issues that keep marketers and brand owners awake at night.
Q. In the late 1990s Hal Varian and Carl Shapiro said that the power of big brands would shrink due to better access to information. In recent times in a book titled Absolute Value, Itamar Simonson and Emanuel Rosen argue that brands are needed less when consumers can access information through reviews and expert opinions. To what extent do you think that traditional branding, as we know it, is on the decline?
A. If you measure it in terms of percentage of media spend, clearly digital is widening and traditional is declining. The crux of [my] book is the alignment between the new and the so-called traditional. If you take a look at traditional as media channels, then of course, it is going to be declining as the role of data increases. That decline could be inexorable, though it probably won't go beneath a certain asymptotic plain. On the other hand, if you take a look at traditional branding as message clarity, as positioning, as the role of brands in life, and as the need for a compelling proposition and brand idea that forges order across different channels conceptually and executionally, then this is more important now than ever before as different engagement platforms proliferate. If you define traditional branding as mass media, it's going to be less important now than before, and it's declining in importance. But if you define traditional advertising as the conceptual craftsmanship that we have traditionally associated with building marketing propositions and enduring brand relationships with consumers, that's more important now than ever before.
The role of a brand is for loyalty. Loyalty allows you to charge a higher price. With so many options that consumers have access to and the transparency of prices, the ability to charge a price premium is more important than ever before. Both in terms of confusion elimination or minimization and also the loyalty question in an era of proliferating branded and cheap alternatives, branding--traditional brand building if you want to call it that--becomes more important than ever before.
Q. We sometimes find that consumers are less loyal to brands. Where do you think this will leave the idea of branding?
A. That is the $64,000 question and I wholeheartedly reject it. All you have to ask yourself is: are there still products that people are willing to pay a premium for? That premium ipso facto is loyalty. When you think about brand loyalty, and declining brand loyalty, what you're talking about on the flip side is increased price sensitivity. So perhaps it's true, that as consumers evolve they become less brand loyal in some sectors, but more brand loyal in other sectors, as you scale the Maslowian hierarchy of needs, a cleaning detergent could be high involvement for you when you're relatively poor and you need clothes to shine. [But] as you move up, what you wear in terms of a brand, your car or your mobile phone becomes more high-involvement for you and more relevant to your life and you're willing to pay a higher price premium for that. In emerging markets, you have waves of consumers entering different phases of economic development, so there will always be new consumers.
With urbanization in China people are owning homes or moving to cities for the first time. So their brand choices are high involvement and then there's loyalty. Societies are always evolving. Different segments of societies' engagement with different types of categories are always shifting as well. Even in the US--in the recession of 1989 everybody thought that generics would take over the store. They haven't because of the relationship that people have with categories and brands. So I don't quite buy it, but I will say certain pockets of commoditization do occur.
Q. Some experts are saying that people are often 'product loyal' rather than 'brand loyal' and it's easy to confuse the two. Is that a differentiation that we need to be paying attention to? A. I disagree. I'm not saying that product attributes aren't critically important. We have to define our terms: what is a brand?
A brand is the role of a product in life and it is the relationship that a person has with a product. That relationship is forged through both product engagement, but also from a clear proposition that is in many cases passively received and actively defined by the manufacturer. When you are engaging with Apple, you are engaging with the Apple experience. Ultimately a brand is an experience. So if that experience is not only multidimensional, but also consistent, that experience becomes a holistic brand. Take Lego. It's not just the fact that you have blocks that makes Lego a strong brand. It's that you have a clearly defined brand idea, a relationship between the brand and consumer of inspiring builders of tomorrow. So every time you come into contact with that brand--whether it's Lego Land, the Lego movie, the Lego retail experience, or the Lego toy itself--then you are reinforcing a predefined relationship.
Once you start defining a brand as a relationship, you stop talking as if the product and brand can be separated. They can't. The brand is a relationship that is an alignment of function, emotion and role in life, so that it's consistent. Of course if you don't have a strong and cohesive brand, then the product becomes very important. But that [would be] a very vulnerable product because people can simply out-innovate you very quickly.
This article has been reproduced with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China's leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge. To read the rest of the interview, please click here.