Checking the Brandbook - Statistical Data Included

In a sampling of their new book, The 22 Immutable Laws of Branding, the authors take frank, no-nonsense looks at what works and what doesn't in the modern era of brand marketing.

As illogical as it might seem, we can visualize a time when the marketing concept itself will become obsolete, to be replaced by a new concept called "branding."

What is accelerating this trend is the decline of selling. Today most products and services are bought, not sold. And branding greatly facilitates this process. Branding "pre-sells" the product or service to the user. That old expression, "Nothing happens until somebody sells something," is being replaced by today's slogan: "Nothing happens until somebody brands something." Today the fast-talking used-car salesman is being replaced by brand-name lots AutoNation USA and CarMax. In a low-key environment with literally thousands of cars to choose from, shoppers decide which one to buy with a minimum amount of help from salaried representatives patrolling the lot. In financial services, companies like Charles Schwab, E*Trade, Fidelity and Vanguard are brands that offer direct access, cheaper commissions and online customer service, giving traditional stockbrokers a run for their money.

There's a seismic shift taking place in the world of business. The shift from selling to buying. This shift is enhanced, accelerated, and caused by the rise of brands.

The power of a brand lies in its ability to influence purchasing behavior. The customer who stops at a 7-Eleven to pick up a loaf of bread and a quart of milk usually ends up purchasing two branded products. Yet there might be little or no brand preference in the buyer's mind. It's just a quart of milk and a loaf of bread. Yet the same customer might also buy a six-pack of beer and a carton of cigarettes. Chances are high that the customer will search out a particular brand of beer and a particular brand of cigarettes to buy. Conventional wisdom suggests that beer and cigarettes are different from bread and milk. Beer and cigarettes are brand buys. Bread and milk are commodity purchases. While this may be literally true, it overlooks an important consideration. You can build a brand in any category, including bread and milk, as long as you follow the laws of branding. Some companies already have done so with brands like Lactaid (in milk) and Earth Grains (in bread).

If there ever was a commodity category, it's water. Since almost every person in America has access to good, clean water out of the tap, there is no need to buy water from a store, but many people do. Evian is such a powerful brand that the last time we bought 1.5 liters, we paid $1.69. That same day, on a per-liter basis, Evian was selling for 20% more than Budweiser, 40% more than Borden's milk, and 80% more than Coca-Cola. That's the power of branding.

5 The Law of the Word

The most powerful concept in marketing is owning a word in the prospect's mind.

A company can become incredibly successful if it can find a way to own a word in the mind of the prospect. Not a complicated word. Not an invented one. The simple words are best, words taken right out of the dictionary. This is the law of focus. You "burn" your way into the mind by narrowing the focus to a single word or concept. It's the ultimate marketing sacrifice. Federal Express was able to put the word overnight into the minds of its prospects because it sacrificed its product line and focused on overnight package delivery only.

In a way, the law of leadership--it's better to be first than to be better--enables the first brand or company to own a word in the mind of the prospect. But the word the leader owns is so simple that it's invisible. The leader owns the word that stands for the category. For example, IBM owns computer. This is another way of saying that the brand becomes a generic name for the category. "We need an IBM machine." Is there any doubt that a computer is being requested? You can also test the validity of a leadership claim by a word association test. If the given words are computer, copier, chocolate bar and cola, the four most associated words are IBM, Xerox, Hershey's and Coke.

An astute leader will go one step further to solidify its position. Heinz owns the word ketchup. But Heinz went on to isolate the most important ketchup attribute. "Slowest ketchup in the West" is how the company is pre-empting the thickness attribute. Owning the word slow helps Heinz maintain a 50% market share. You don't have to be a linguistic genius to find a winner. Prego went against leader Ragu in the spaghetti sauce market and captured a 27% share with an idea borrowed from Heinz: "thicker."

The most effective words are simple and benefit oriented. No matter how complicated the product, no matter how complicated the needs of the market, it's always better to focus on one word or benefit rather than two or three or four. Also, there's the halo effect. If you strongly establish one benefit, the prospect is likely to give you a lot of other benefits, too. A "thicker" spaghetti sauce implies quality, nourishing ingredients, value and so on. A "safer" car implies better design and engineering.

Whether the result of a deliberate program or not, most successful companies (or brands) are the ones that "own a word" in the mind of the prospect. Here are a few examples: Crest, cavities; Mercedes, engineering; BMW driving; Volvo, safety; Domino's, home delivery; Pepsi-Cola, youth; Nordstrom, service.

Words come in different varieties. They can be benefit related (cavity prevention), service related (home delivery), audience related (younger people) or sales related (preferred brand).

What won't work in marketing is leaving your own word in search of a word owned by others. This was the case with Atari, which owned the words "video game." But the business turned out to be faddish, so in 1982 it sailed off in a new direction. It wanted Atari to mean computers. CEO James Morgan laid it all out: "Atari's strength as a name also tends to be its weakness. It is synonymous with video games. Atari must redefine its image and broaden its business definition to include electronic consumer products."

Unfortunately for Mr. Morgan's strategy, a host of other companies, including Apple and IBM, owned the word he was after. Atari's diversification was a disaster. But the real irony was that another company arrived in 1986 and took over the concept Atari walked away from. The company was Nintendo, which today has 75% of a multibillion-dollar market. Who knows where Atari is these days?

The essence of marketing is narrowing the focus. You become stronger when you reduce the scope of your operations. You can't stand for something if you chase after everything.

Some companies accept the need to narrow the focus and try to accomplish this strategy in ways that are self-defeating. "We'll focus on the quality end of the market. We won't get into the low end where the emphasis is on price." The problem is that customers don't believe you unless you restrict your business to high-priced products only, like Mercedes-Benz or BMW.

General Motors tries to sell quality at all price levels. "Putting quality on the road" is their latest corporate slogan. Every GM product includes the "Mark of Excellence." Guess what they're doing at Ford? The same thing. "Quality is Job 1," say the Ford ads. Over at Chrysler, Lee Iacocca proclaimed, "We don't want to be the biggest, we just want to be the best." This is great stuff inside the corporation. It makes a terrific theme at dealer meetings, especially with the trumpet flourishes and the dancers. But outside the corporation, the message falls apart. Does any company proclaim itself as the "unquality" corporation? No, everybody stands for quality. As a result, nobody does.

You can't narrow the focus with quality or any other idea that doesn't have proponents for the opposite point of view. You can't position yourself as an honest politician, because nobody is willing to take the opposite position. You can, however, position yourself as the pro-business candidate or the pro-labor candidate and be instantly accepted as such because there is support for the other side.

Once you have your word, you have to go out of your way to protect it in the marketplace. The case of BMW illustrates this very well. For years, BMW was the ultimate "driving" machine. Then the company decided to broaden its product line and chase Mercedes-Benz with large, 700-series sedans. The problem is, how can a living room on wheels be the ultimate driving machine? Not only can you not feel the road, but you'll also crush all the pylons in your driving commercials. As a result, things started downhill for BMW Luckily, it has recently introduced a new small BMW and is emphasizing "driving" once again. The company has regained its focus.

10 The Law of Extensions

The easiest way to destroy a brand is to put its name on everything.

More than 90% of all new products introduced in the U.S. grocery and drug trade are line extensions. Which is the major reason that stores are choked with brands. (There are 1,300 shampoos, 200 cereals, 250 soft drinks.) Scanner data indicates that many of those line extensions sit on the shelf and gather dust. Research from Kroger supermarkets in Columbus, Ohio, found that of the average 23,000 items in a store, 6,700 sold in a day, 13,600 sold in a week, and 17,500 sold in a month, leaving 5,500 that sold nothing in an entire month.

This plethora of line extensions, in our opinion, is the reason for the increased demands from retailers for trade promotions, slotting fees, and return privileges. With so many products to choose from, retailers can force manufacturers to pay for the privilege of getting their products on the shelf. If one company won't pay, the retailer can always find another company that will.

No industry is as line-extended as the beer industry. Before the launch of Miller Lite in the mid-seventies, there were three major beer brands: Budweiser, Miller High Life and Coors Banquet. Today these three brands have become 16: Budweiser, Bud Light, Bud Dry, Bud Ice, Miller Regular, Miller High Life, Miller Lite, Miller Genuine Draft, Miller Genuine Draft Light, Miller Regular, Miller Reserve, Miller Reserve Light, Miller Reserve Amber Ale, Coors, Coors Light and Coors Extra Gold.

Have these 16 brands increased their market share over that obtained by the original three brands? Not really. There has been some increase, but no greater than what you might expect. Big brands always put pressure on smaller brands, in the same way that Coke and Pepsi have eroded the market share of Royal Crown Cola.

Has the availability of these 16 varieties of Budweiser, Miller, and Coors increased beer consumption? No. Per capita beer consumption over the past 25 years has been relatively flat. (Cola consumption in the same period of time has almost doubled.)

When your customers are not exactly rushing out to buy your product, why would you need more brands to satisfy those customers? Logic suggests you would need fewer brands.

But that's customer logic. Manufacturer logic is different. If volume is going nowhere, the manufacturer concludes it needs more brands to maintain or increase sales. When a category is increasing in sales, there are opportunities for new brands, but manufacturer logic suggests they're not needed. "We are doing great, we don't need any more brands."

As a result, the marketplace is filled with line extensions in areas where they are not needed and is starved for new brands in areas where they are needed.

Another reason for the rise in line extensions is a company's natural instinct to copy the competition. Miller's introduction of Miller Lite was quickly followed by Schlitz Light, Coors Light, Bud Light, Busch Light, Michelob Light and Pabst Light.

It's painful to remember and so hard to forget. After the introduction of Miller Lite, we rushed around the brewing industry with a simple message: Keep your beer brand focused on the regular market. That will give you a leg up on Joe Sixpack, who consumes an awful lot of beer.

Maybe this concept is too complicated for the average CEO to understand, but isn't the Coors Light drinker more likely to come from Coors? And the Bud Light drinker from Budweiser? And the Miller Lite drinker from Miller High Life? Certainly the numbers substantiate this conclusion. Since the introduction of the three lights, the three regular beer brands have all declined substantially.

When the low-fat craze hit the cookie market, almost every brand rushed out with a line-extended version of its regular cookie. As a matter of fact, the first fat-free cookie and early leader was Fat Free Fig Newtons.

Nabisco took a different approach. Instead of launching a line extension, it launched a new brand called SnackWell's. Fat Free Fig Newtons were only a modest success, while SnackWell's became the eighth largest-selling grocery item, right behind Diet Coke. So what did SnackWell's do next? You already know the answer to that question. Put its name on everything except the kitchen sink. Prognosis: SnackWell's will do poorly in the future.

The issue is clear. It's the difference between building brands and milking brands. Most managers want to milk. "How far can we extend the brand? Let's spend some serious research money and find out."

Sterling Drug was a big advertiser and a big buyer of research. Its big brand was Bayer aspirin, but aspirin was losing out to acetaminophen (Tylenol) and ibuprofen (Advil).

So Sterling launched a $116-million advertising and marketing program to introduce a selection of five "aspirin-free" products. The Bayer Select line included headache-pain relief, regular pain relief, nighttime pain relief, sinus-pain relief and a menstrual relief formulation, all of which contained either acetaminophen or ibuprofen as the core ingredient.

Results were painful. The first year Bayer Select sold $26 million worth of pain relievers in a $2.5 billion market, or about 1% of the market. Even worse, the sales of regular Bayer aspirin kept falling at about 10% a year. Why buy Bayer aspirin, if the manufacturer is telling you that its "select" products are better because they are "aspirin-free"?

What are line extensions like light, clear, healthy and fat-free actually telling you? That the regular products are not good for you.

* Heinz Light ketchup? Don't you suppose this leads customers to draw the conclusion that ketchup is loaded with calories? (Today, salsa outsells ketchup. As night follows day, we are sure to see in the future a brand called Pace Light salsa.)

* Hellmann's Light mayonnaise? Same question.

* Campbell's Healthy Request soup? Regular soup is unhealthy?

* Crystal Pepsi? What is wrong with the color of regular Pepsi?

* Should Evian launch Sulfate-Free Evian spring water?

Let sleeping brands lie. Before you launch your next line extension, ask yourself what customers of your current brand will think when they see the line extension.

If the market is moving out from under you, stay where you are and launch a second brand. If it's not, stay where you are and continue building your brand.

11 The Law of Fellowship

In order to build the category, a brand should welcome other brands.

Not only should the dominant brand tolerate competitors, it should welcome them. The best thing that happened to Coca-Cola was Pepsi-Cola. It's ironic that the Coca-Cola Co. fought Pepsi-Cola in the courts over the use of "Cola" in its name. Fortunately for Coke, it lost, creating a category which has been growing like gangbusters ever since.

Choice stimulates demand. The competition between Coke and Pepsi makes customers more cola conscious. Per capita consumption goes up. Remember, customers have choices, even when there is no competition. They can choose to drink beer, water, ginger ale or orange juice instead of a cola Competition increases the noise level and tends to increase sales in the category.

Instead of welcoming competition, companies often feel threatened because they believe that future market shares will be based on the merits of the individual brands. They want an unfair advantage, a playing field tilted to their side. Therefore, they think, let's try to drive out competitors before they get too established. In the process, however, they fall victim to the laws of branding. Expansion, line extensions and other strategies that broaden a brand's appeal will ultimately weaken the brand.

When there is too much choice, consumption suffers. Take wine, for example. In California alone, there are more than 1,000 wineries and 5,000 brands. Wine Spectator magazine publishes an annual issue with rankings of some 24,000 individual wines.

With all that choice, you might think that Americans drink a lot of wine. But we don't. The per capita consumption of wine in the United States is one-tenth that of France and one-ninth that of Italy. Even the average German drinks three and a half times as much wine as the average American. With so many small vineyards, so many different varieties and a handful of connoisseurs with individual opinions about taste, the wine industry has yet to see the rise of any major brand.

One day some company will do in wine what Absolut did in vodka and Jack Daniel's did in whiskey: build a big, powerful, worldwide brand.

You can also see the law of fellowship at work in the retail arena. Planet Hollywood discovered that one of the best locations in a city for its restaurant was across the street from its arch rival, Hard Rock Cafe. People attracted to this type of theme restaurant are already drawn to the area thanks to Hard Rock and can easily be enticed to eat at a Planet Hollywood across the street. Similarly, the best location for a Burger King franchise is often across the street from a McDonald's restaurant.

Take Branson, Mo., which bills itself as the "music show capital of the world." Where one music theater in a town of 3,706 people might be hard-pressed to make ends meet, 40 music theaters are well and prospering. It's the power of fellowship.

19 The Law of Consistency

A brand is not built overnight. Success is measured in decades, not years.

The law violated most frequently is the law of consistency. A brand cannot get into the mind unless it stands for something. But once a brand occupies a position in the mind, the manufacturer often thinks of reasons to change.

"The market is changing," cries the manufacturer, "change the brand."

Markets may change, but brands shouldn't. Ever. They may be bent slightly or given a new slant, but their essential characteristics (once those characteristics are firmly planted in the mind) should never be changed.

If the market swings another way, you have a choice. Follow the fad and destroy the brand. Or hang in there and hope the merry-go-round comes your way again. In our experience, hanging in there is your best approach.

Tanqueray is the leading high-end gin. But Absolut and Stolichnaya have created a trend toward high-end vodka. So Tanqueray introduces Tanqueray vodka. Will Tanqueray vodka cut into the Absolut market? Of course not. Will Tanqueray vodka undermine the Tanqueray gin market? Ultimately, yes. Tanqueray should stick with gin and hope the market swings in this direction.

As people grow up, they often want to change their personality statements. When kids grow up, they inevitably want to make a statement about their newfound maturity by changing brands... from Coca-Cola to Budweiser, for example. If Coca-Cola decided to try to retain these customers by "moving with the market," it would then logically introduce a product called Coca-Cola beer. As stupid as Coca-Cola beer might seem to you, conceptually it's no different from Tanqueray vodka, Coors water or Crystal Pepsi. Markets may change, but brands should stay the same.

In the liquor business, bourbon and whiskey are known as brown goods and gin and vodka as white goods. There may be a trend from brown to white (and there is), but should Brown-Forman introduce Jack Daniel's vodka? We think not.

Of course it did introduce Jack Daniel's beer and Jack Daniel's coolers. The beer went nowhere and was killed. The coolers continue to hang on, but what does a sissy cooler brand do to Jack Daniel's core image?

There may be a trend to Mexican food (and there is), but should a French restaurant add fajitas to its menu?

Brand building is boring work. What works best is absolute consistency over an extended period of time. Volvo has been selling safety for 35 years. BMW has been the ultimate driving machine for 25 years. When people do boring work, they get bored. So every once in awhile, someone at a company like Volvo gets a bright idea. "Why should we limit ourselves to dull, boring, safe sedans? Why don't we branch out into exciting sports cars?" So Volvo recently launched a line of sports cars and even a convertible. What will a ragtop do for the Volvo brand? Nothing--except dilute the safety message.

Meanwhile, BMW introduces a station wagon version of the ultimate driving machine. "Hey, why limit ourselves to carefree yuppies? We need to have a vehicle for the young urban professionals when they grow up, get married, and have kids." (Have you ever driven a station wagon through the cones on a test track?)

What did the station wagon do for BMW? Nothing, except erode the driving image in the mind of the consumer.

Consistency built the Little Caesars brand and lack of consistency is in the process of destroying the Little Caesars brand.

"Pizza. Pizza," became the chain's rallying cry. Where else could you get two pizzas for the price of one? The power of this branding program made Little Caesars the second-largest pizza chain in America.

"Why should we limit ourselves to take-out pizza only?" the bored executives asked. So Little Caesars introduced "Delivery. Delivery." And promptly fell to third place in sales, after Pizza Hut and Domino's Pizza. In order to turn the chain around, Little Caesars went big. The small pizza became a medium-size pizza. The medium-size pizza became a large pizza. And the large pizza became an extra-large pizza.

Talk about confusion. "I'd like to order a medium-size pizza, please."

"Do you want a Pizza Hut medium, which is actually our small size? Or do you want a Little Caesars medium, which is actually a Pizza Hut large?"

"Uh. . . do I still get two pizzas for the price of one?"

"Pizza. Pizza? No, we don't do that anymore."

A pity. Little Caesars had one of the best brands in the pizza category. The only brand focused on takeout. The only brand with an identity and a message. (Pizza. Pizza.) And now it has nothing. Another victim of the law of consistency.

Actually, many Little Caesars stores are drifting back to the two-for-one strategy that the company should never have abandoned in the first place.

McDonald's has been a kid-oriented family hamburger place for decades. "Why should we limit ourselves to kid-oriented products? Why not introduce an adult hamburger to compete with Burger King and Wendy's?"

So the Arch Deluxe was born. One hundred fifty million dollars' worth of advertising later, the Arch Deluxe is declared a disaster. And McDonald's quietly decides to drop it from the menu.

Notice one thing. It's always the product that is declared a failure, never the branding concept. McDonald's is a kid-oriented, family restaurant. In such a setting, an adult hamburger might taste good in the mouth, but is not going to taste good in the mind.

Run up a red flag whenever you hear the words: "Why should we limit ourselves?"

22 The Law of Singularity

The most important aspect of a brand is its single-mindedness.

What's a Chevrolet? A large, small, cheap, expensive car or truck.

What's a Miller? A regular, light, draft, cheap, expensive beer.

What's a Macintosh? A home, office, cheap, expensive personal computer or personal computer operating system.

These are all burned-out brands because they have lost their singularity. They could, of course, remain on the marketing scene for many years because of the line-extension generosity of their competitors. But make no mistake about it. Loss of singularity weakens a brand.

What's an Atari? An Atari used to be a video game, the leading video game as a matter of fact. Then Atari tried to become a computer.

What's an Atari? A brand that has lost its life because it lost its singularity.

It's this singularity that helps a brand perform its most important function in society.

What's a brand? A proper noun that can be used in place of a common word.

* Instead of an imported beer, you can ask for a Heineken.

* Instead of an expensive Swiss watch, you can ask for a Rolex.

* Instead of a thick spaghetti sauce, you can ask for Prego.

* Instead of a safe car, you can ask for a Volvo.

* Instead of a driving machine, you can ask for a BMW

What's a brand? A singular idea or concept that you own inside the mind of the prospect.

It's as simple and as difficult as that.

COPYRIGHT 1998 BPI Communications, Inc.
COPYRIGHT 2000 Gale Group