The Six Mythsof Branding

Agnieszka M. Winkler

In Warp-Speed Branding, an Adweek Book recently published by John Wiley & Sons, technology marketing veteran Agnieszka Winkler argues that the rapid time-to-market requirements of technology brands have obsoleted many long-held branding tenets of conventional packaged goods--even for the packaged goods companies themselves. On the way to positing the new truths of a "warp-speed world," Winkler, in the chapter excerpted here, demolishes six persistent myths of classic branding, ranging from unrealistic views of the power of television advertising to the mistaken notion that the product, not the company, should bear the brand. Winkler, founder and CEO of Winkler Advertising, S.F., has advised such major technology clients as Sony, Hewlett-Packard and 3Com.

Technology has spread its little tentacles everywhere, and the forces that have shaped technology have begun to affect virtually every other industry in most of the industrial world. Fluid by design, technology is invading and restructuring the way whole industries operate. With 40 to 50 years of brand identity built into the modern consumer's psyche, products such as Procter & Gamble's Tide offered the ad agency and the marketing team the time and leisure to test and retest any small or subtle modifications. Careful analysis of consumer reaction, chain-of-command approval, and launch programs as calibrated as moon shots were the norm.

If product introductions for washing detergent or television sets were orchestrated in a linear kind of slow-march shuffle into the future, it's because the very tools used to create these campaigns were part of a traditional linear process. Most of all, it is because there was the luxury of time. The whole process of rolling out a global product might have taken years, without fear of obsolescence. When large U.S. consumer companies engineered their plan of attack, the world was expected to fall in line, and mostly it did. That's ancient history.

Technology Marketers: At Odds with Marketing

Brand building in the technology world has grown up with an entirely different set of assumptions stemming from the very nature of innovation. To accommodate its inherent need to move quickly, to thrive on ambiguity, and to be open to experimentation with a range of approaches, technology companies ignored the rules of brand building, as we know them.

In doing so, they have been continuously criticized. Traditional marketers have called technology companies unsophisticated and unfocused. Actually, in the halls of corporate America's marketing departments and large advertising agencies, the feelings expressed are often ones of disgust. There are complaints about how awful the advertising looks. There is much talk about how the consumer is completely forgotten in the equation. There are constant comments that marketing is a stepchild at engineering-driven companies and that the prevailing attitude is one of 'build a better mousetrap." Everything is so chaotically fast that there is no time to craft a brand properly, say these critics.

Finally, they complain that people with no skills in marketing, and often little business experience, are making major advertising and marketing decisions. All of these points of view are right, and they are wrong.

Are They All Wet?

Yes, things in this new high-tech world move fast. Yes, people inexperienced in marketing will be part of the decision making, just as marketing people will be taking part in product design decisions, and manufacturing may be contributing to pricing decisions. This is the natural outcome of companies organized to get to market fast, in which work is integrated and decisions are collaborative.

Yes, the consumer is often left until last. This is also the natural outcome of new-age companies organized to respond to market change by creating a stream of innovations. It reflects the very nature of innovation, which demands imagination and creative breakthroughs, inspiration and tinkering, as opposed to the research-based facts and knowledge about consumer behavior, which drives decision making in the more traditional model. Decisions in these high-tech companies are based less on consumers answering the question, "What do I want?" and more on, "What if?"

"What if?" is by nature ambiguous, not really rooted in need or reality. It's visionary people like Ted Hoff, the coinventor of the microprocessor; Bill Gates of Microsoft, developer of the now ubiquitous software operating system adopted by the IBM PC; and Marc Andreessen and Jim Clarke of Netscape, who recognized what an Internet browser could do, who have produced real breakthrough products that changed the way we work and think. Their "what ifs" created new companies, new industries and billions of dollars of valuation and they have already impacted business, society and global culture.

Yes, in an innovation-driven company, whatever group is responsible for the innovation will be its driving force. At Sony, it is the design team in Tokyo, the "digital dream kids," as Sony's Chairman Nobuko Idei likes to call them. At Apple and Intel, it is the engineers. At any fashion house, it will be the designer like Donna Karan or Calvin Klein. Contrast these forces creating innovation in high-tech industries with what's happening in the HMO industry today, for example, in which the driving force tends to be either an interest in community service, or regulatory pressure from government and you get a sense of how different the determining force may be. Most HMOs have not figured out yet how to take control of their destiny and bring the driving force inside; as a result, they are playing catch-up. In the meantime, their margins are disappearing and the public and the press vilify them at every opportunity. In a get-it-now, the-way-I-want-it world, HMOs are looked at as an anachronism-- packaged in bure aucracy.

Yes, the advertising for technology companies has not always been that memorable. The reason why high-tech has lagged behind other sectors in the power of its promotional communications reaches back to the 1970s, when the marketing conversations of technology were almost exclusively engineer to engineer.

We were still developing revolutionary ideas like computers, databases and cellular technology. The high-tech industry was focused on creating the enabling technologies that would eventually lead to killer products and applications. With deep-tech products to talk about, there were no mainstream advertising agencies equipped to translate this engineer-speak into high-concept advertising. When a CEO comes to you and says that by using his new ASIC (application-specific integrated circuit) chip, his customers can make a thousand new workstations with more computing power and more cheaply than their competitors, how many creative people sit up and say, "Wow--I can't wait to sell people on that message?" These people were truly technology pioneers in the days before technology became chic. These people were orphans and they proved to be wonderful clients for us in those early days.

Then, as the enabling technologies became more readily accessible in the 1980s, the focus of marketing conversations tended to shift to the engineer talking to the business buyer. Companies began to invest millions in information technology (IT) at an ever-increasing pace. A strategic new position was developed and entered the ranks of senior corporate management--the chief information officer (CIO), who more recently has given growth to another specialty, the chief knowledge officer (CKO). The industry was focused on building infrastructure. Most of the advertising in the technology field was clearly business to business, but still with engineering trying to explain to the chief technologist of the customer why this particular mousetrap was better. As the industry evolved, by the middle to late 1980s professional marketers began to take over the conversations and, as the investment in technology began to stretch into the billions, the advertising began to move into general business books and occasionally on to television. Finally, general advertising agencies began to take high tech seriously and made an investment in people who had some familiarity with it.

The early agency leaders still tended to be clustered around Silicon Valley--names like Hodskins, Simone and Searle (which was recently acquired by Publicis), Tycer Fultz Bellack (which was acquired by BBDO and disappeared), Winkler Advertising, Anderson Lembke and Saatchi & Saatchi all helped build great high-tech brands working out of offices around San Francisco and San Jose. Further afield, what is now TBWN/Chiat Day and BBDO/West proved effective at building Apple; Lord Einstein Frederico and more recently Ogilvy & Mather Worldwide in New York, took on building the IBM brand around the world. Intel turned to a Salt Lake City-based agency, Euro/RSCG Dahlin Smith White; Compaq relied on Ammirati Puns Lintas in New York and more recently DDB Needham to build its brand. All of these first-rate agencies shared one attribute in common: They knew how to celebrate the mainstreaming of technology.

As the technologies on which business began to depend--computers, modems, color printers, graphics software, fax machines, cell phones, online services--became even cheaper, we saw consumers begin to buy. Now, with the sub-$1,000 PC, the $200 printer and the free cell phone, price is no longer a deterrent. As the products became easier to use, technology graduated from being regarded as a niche category to being considered a major advertising category.

Now the question arises, How should agencies and clients define the target audience for high-tech products for the mass business market? Saying you want adults "25 to 49" doesn't work. Kids buy pagers and cell phones with their own money. Grandparents buy computers and subscribe to America Online to communicate with their grandkids. An example of mainstream technology is the Motorola Wings TV. With high-tech companies spending an estimated $5 billion, no one can say any more that technology advertising is niche or second-class. The media spend has even fueled some wonderful advertising--which is beginning to win gold at major international advertising competitions like Clio and Cannes. Just look at the AT&T ad for the mom taking a "meeting" at the beach, and her young daughter asking, "When can I be a client?" or the recent Apple "Think Different" work from TBWA/Chiat Day--including a TV ad that won an Emmy and the print campaign that won a gold at the Clios. These are wonderful commercials, no matter what c ategory.

Over the past 15 years, I've had the opportunity to observe 50 or more technology companies with which we have worked--from little start-ups (like LSI Logic, who became the world leader in ASIC chips and is still our client, and Ascend Communications, with their firm foothold in networking equipment) to large multinationals (like 3Com, Sony and Hewlett-Packard). We have watched the traditional myths of brand building being deconstructed. Add to that the years of experience our staff has accumulated before joining the agency--working for blue-ribbon brands like Apple, IBM, Intel, Compaq and Microsoft--we can say, unblushingly, that we represent the new culture of knowledge economy marketing.

It has not always been pretty, nor always graceful. However, things usually aren't when they are brand new. Even the new principles of branding have required a little debugging over time. Let's examine the myths to see where we stand.

Myth 1: A Brand is Built over a Long Time

It is written in stone that it takes a long time--years, in fact--to establish a brand in the national psyche. I've even included this truth in lectures to business schools around the country. What is time? Ivory Soap is 125 years old; Tide, 50; Crest, 40. Apple is only a little more than 20 years old, a mere child in the brand sandbox, but it certainly has developed a fanatical following. The important thing, however, is that Steve Jobs and company accomplished that feat within Apple's first few years, when they introduced the Macintosh computer in 1984. America Online, with awareness in American households as high as 80%, and Yahoo! are still very young companies, strong as they already are, and their brands were built in a handful of years. Then, of course, there are Amazon.com, and the Palm computer, both of which became sensations almost overnight.

With the advent of new communications technologies, it is now possible to spread the word, like a village drumbeat, to all corners of the world in months, weeks, or even days. The drumbeat is often carried by the users themselves--a more believable source of information in our jaded, skeptical society. Satjiv Chahil, one of Sony's marketing people and a highly respected member of the digital community, put out an electronic drumbeat for the new Sony subnotebook. Prior to the introduction or even the availability (a common practice in technology is a preannouncement months before the product is available) of the notebook, he used his personal Rolodex to send personalized e-mails to the Who's Who of technology influencers. He then gave them a chance to have a PC first, at a special price, all because they were in the know and they were friends. I was fortunate enough to get one of those e-mails, and like almost everyone else who got one, I responded with an immediate yes. The result? A substantial number of di rect orders were delivered very early in the cycle, and the "right people"--the digital influencers, flying around on airplanes with the cute little purple metal notebook--created a buzz everywhere they went.

Amazon.com, founded in 1995, became the leading Web commerce site, and arguably the best-known Web brand, in the space of two years. Word of mouth, public relations and publicity, programs to influence the opinion leaders, and a highly positive I-know-what-this-brand-is-all-about experience with the Web site itself, all combined to build a brand initially before any paid advertising.

America Online began to build its brand by using the technique of mass giveaway. I recall sitting on my RenoAir flight and receiving a diskette with my snack. They also put diskettes into Rice Chex boxes and poly-bagged them with magazines. As a result, they went from less than a million subscribers to over 16 million in a handful of their early years, and today can promise the biggest single paid audience of any service on the Web.

Netscape, on the other hand, built an entire company in less than two years also on the concept of the giveaway. Their browser became the de facto standard by being distributed free on the Internet, while they made their money on the server side. Only when Microsoft began a similar program, going a step further and embedding its browser in the operating systems of its Windows software, did Netscape begin to understand that, although its company was a digital household name, it hadn't really created a brand yet.

The Palm computer, the handheld electronic organizer developed by US Robotics and then acquired by 3Com in Silicon Valley, took little more than a year to sell its first million units. It was able to do so both with an aggressive advertising campaign and an "influence the influencers" program. By demonstrating the product at select industry conferences and offering the product at half price to opinion leaders, the enthusiasts became a sales force by example. No paid sales force could have done as well as quickly at any price. In less than three years, we were already on version 5 of the Palm computer itself. Last week, I received in the mail an entire catalog from other companies offering accessories and software to go along with it. The Palm computer has developed a very loyal, almost cultish, following and a strong relationship with its customer. It is unquestionably a valuable brand--built in almost no time at all.

Apple itself, it can be argued, was launched with a single high-impact creative event. The now famous "1984" commercial with the blond woman runner throwing a hammer at a screen ran only once as paid media, on the Super Bowl. The pr that this exciting and controversial spot garnered, and the consequent rerunning of the commercial by commentators for free, was phenomenally successful in building excitement for launch of the Mac. In typical Jobsian fashion, Apple didn't rely only on the commercial. It blanketed every seat of the Super Bowl stadium with Apple seat covers, so that all of America could see the logo in the pregame coverage and it made sure that certain treasured members of the trade press were present when Jobs previewed the commercial at a sales meeting.

Therefore, yes, brands are built over time, but time for high-tech products can be measured in nanoseconds. Marketers are now as impatient as our young consumers. Even venture capitalists, who 10 years ago funded only development talent and technology, now fund branding campaigns. They know that building excitement for the brand is directly related to the value of the company--hence, higher valuations at the IPO, the magic "exit strategy" of the venture capitalist. If building the brand can be done now, as proven by successful companies, then why wait?

Myth 2: A Brand is Precisely Crafted For a Tightly Defined Target

Think back to brand briefs some years ago, or even to the way companies used to use MRI and Neilsen audience-tracking data. The brand's target was defined demographically--"women 21 to 34 with one or more children, in households with $25,000-plus annual income "--a simple definition reflecting a simpler world. Then, what was called psychographics began to find its way into the brand audience definition, expanding beyond simple demographics to add such descriptors as "upwardly mobile" or "empty nesters." This was a way of noting that people were more individualistic, even though their life patterns were very similar.

Although the brand definition, "women 21 to 34" sounds exceptionally broad to us today, it didn't when this practice was developed. Going back to our earlier discussions of society and culture, we were a more unified society and culture then, with value systems and social rules that people generally accepted and followed. Life patterns were more predictable: get married in your early twenties, have kids, work, retire and die. Concepts such as life-long learning, multiple careers, households other than the nuclear family were generally unknown. Houses didn't sport two master bedrooms, and they weren't built following the principles of feng shui--why in the world would you need that?

Information flow was narrower. The TV networks and print media reinforced social and cultural expectations for Americans who were by and large isolated from the rest of the world-America becoming the world's most populous island. In the manufacturer's world, building the brand was a simple proposition, too. Companies tended to be vertically integrated, and every step of the branding process was easily under their control. In those not-so-long-ago days, it was pretty easy to focus on one stakeholder, the narrowly defined target customer, and make the brand strategy work.

Today, things are very different. The speed of change, the abundance of available information and the new ways it gets disseminated, as well as different ways of organizing corporate work, have made it necessary to view stakeholders in a brand differently. Today's brand must be crafted with its future in mind. Remember, everything is changing. For example, Apple's "the power to be your best" brand strategy, although extremely powerful with individuals, was probably one of the contributing factors to its singular lack of success in the corporate sector.

The brand must be more expansive, not just in terms of time, but also in terms of stakeholders. It has to not only embrace a more splintered society, it must also accommodate the much more complicated group of stakeholder relationships caused by the virtual corporation. Today's brands exist in a complex, fluid amalgam that encompasses the manufacturer, the distributor, the consumer, alliances, partnerships and joint ventures, employees, investors and analysts. The simple structure of "one brand, one brand audience" has been replaced by a constantly changing, flexible, sometimes multibranded environment in which a brand must be broad enough to touch all its constituencies, yet simple enough to be understandable to all. Rich enough to stretch, yet specific enough to be personal.

The questions that consumers and brand builders alike must answer seem bewildering at times. If I buy a new cell phone, am I buying AirTouch cellular service, the Motorola StarTac phone, or even the service and postsale support of Quality Cellular? When I buy a new PC, do I care most about whether it's a Compaq, Dell, HP, Sony or IBM product--or am I more concerned that it contains an Intel microprocessor instead of AMD or Cyrix? When I'm launching a new company, am I more interested in carving out a clear company brand positioning in the minds of my customers, or for the market and financial analyst community, or for those behind-the-scenes influencers who can make or break me?

The answer is, in fact, "All of the above." Now the brand begins to look more like our new consumer and to behave more like our new-age company. Brands are becoming more collaborative and fluid, more intangible, and more emotional, because they need to transcend their physical attributes to survive.

Myth 3: Advertising is the Major Creator of a Brand

In the world of mass manufacturing, mass marketing and mass distribution, this was absolutely true. P&G, Colgate, GM, Ford and Chrysler spent vast amounts on advertising because it was the key way to assure brand contact with their consumers and, in many cases, with lots of middlemen in the distribution chain. Without the information technologies we take for granted today, advertising really created the brand, and other elements of marketing played a significantly less important role.

In today's world, the brand is created in many additional ways. How did we get here? Mostly, it is because technology has allowed the manufacturer to find the specific individual consumer and deliver the brand promise directly. Thank you databases, data mining, automatic computer dialing and of course, e-mail, just to name a few.

Technology has enabled marketers to create a buzz about a brand and get it noticed in an unbelievably short time. In 1996, Kinetix, a San Francisco multimedia company owned by Autodesk, developed an animation software package. Part of the demo package was a funky dancing baby character. Somehow, the Dancing Baby got sent as an attachment in an e-mail, and made such a hit that it started getting passed around, usually with music added, from friend to friend, all over the world. In a handful of months, the Dancing Baby began appearing on Web sites almost like a cult icon. The New York Times ran a story on it, and the Baby hit prime time in a January 1998 episode of the hit show Ally McBeal. Ally McBeal won two Golden Globes, the Baby clip was shown, and Kinetix was launched into the big time.

Public relations has also taken on a whole new role in brand building today. Technology companies have grown up knowing that. They are masters of influencing the influencers. Again, this is a natural outcome of technology. It's not difficult to understand why. You want someone you trust to make a recommendation; therefore, you turn to your "geek in the know." How does your geek become familiar with brands he or she has never yet touched or tried? They find out from influential gurus they trust, like Esther Dyson and Dick Shaffer, who put on conferences and send out newsletters at several hundred dollars a pop, keeping up the image of exclusivity and being in the know.

MC, a well-read monthly about high-tech marketing, puts out an annual ranking of the hottest media (the Wall Street Journal is No. 1), the top influencers (Walter Mossberg, a columnist for the Journal, is No. 1) and top journalists (top spots have gone to Jesse Berst, editorial director of ZDNet Anchor West, for the Web; Spencer Katt, columnist for PC Week, for gossip; Eric Lundquist, editor-in-chief of PC Week, for the trades; and Stewart Alsop, columnist for Fortune, for pundits). These are the kinds of people that technology companies work hard to court and to impress. It's all part of the influence--the-influencers approach to building a brand that technology companies understand so well.

This technique of influencing the influencer, heavily used by technology companies, is now finding its way into the marketing of ordinary consumer companies. The technique works well with the skeptical consumer in an information-rich society. Hennessy, a brand of cognac, hired young good-looking people to sit at bars all over the country ordering a Hennessy martini drink, creating conversation about it--the buzz. It made the Hennessy brand cool--by creating a group of influencers.

In 1998, Daewoo Motor, the Korean car giant, recruited 2,000 Daewoo campus advisors. They are young, enthusiastic students hired to create a buzz about a new car. These Daewoo campus advisors will be talking up the cars as they drive them around campus for free. They'll be holding Daewoo events and collecting a commission of $300 to $500 for each car sold.

Technology companies, however, gravitated to pr as a brand-building tool because it was fast, it influenced the opinion leaders, and it was less costly than advertising. Public relations takes advantage of the value of the media as a news and information dissemination vehicle, with greater credibility than paid advertising, to create and nurture brand positioning. Some pr firms even evaluate their success on the basis of the "equivalent advertising value" of the brand's pr coverage, based on column inches or television minutes, and the ratio can be staggering--the value of an impression can run 10 or 20 times the actual cost of pr against advertising.

Technology Solutions, New York, the public relations agency for IBM, came up with the Deeper Blue computer-versus-Gary Kasparov chess match in 1996, a pr coup that captured the world's imagination.

The rematch in 1997 was a carefully orchestrated media event, which included things like personality marketing to infuse the Deeper Blue computer with the personalities of the system's designer and IBM research consultants from the chess world; creating a media sports center for the match, designed to provide the press with human interest, "color comment," and move-by-move coverage; and close cooperation with IBM's Internet Division to create on-line opportunities for media outreach, ticketing and on-line match news tracking. The program resulted in a campaign that reached over 3 billion readers, listeners and watchers worldwide. The IBM Deeper Blue Web site received over 74 million hits during the nine-day match, and IBM stock reached an all-time high of 177 1/8 during the course of the match, attributed by the media, USA Today and The Wall Street Journal to the Deeper Blue match.

Fresh Express Farms (a leader in packaged salads), handled by the San Francisco public relations firm Fineman Associates, had results as strong for their client. Using a series of pr tactics, Fineman secured some 330 story placements about Fresh Express and two appearances on the Today Show in the space of nine months in 1995. This positive pr coverage helped achieve an increase in annual sales over that period of time from $189 million to over $300 million.

Another vehicle for brand building in which technology companies excel is customer service. Their help lines are always busy. Customer service can help you configure your computer. In-house telemarketing people, whose databases are linked to the help line and customer-support database, can suggest another piece of software you could use based on past conversations with you. How you are treated at each of these interactions is a vital part of the brand.

Take United Airlines, for example. Want to check your frequent flier miles account at 11:30 p.m. on a Sunday? No problem. Want to order that special kosher meal for your next flight? Just click here. In this example, UAL is able to combine the process of selling a service with the collection of data in a seamless set of keystrokes. By doing it so well, it is enhancing the brand with every one of those keystrokes.

This is just a first step. To access the United System via its Web site, the user must enter a host of personal data about his or her flying preferences. So, say good-bye to all those expensive focus groups in which people--usually down on the ground--answer questions about air travel. Now, passengers can tell United exactly what it needs to know to provide better service and a better product. The Internet site that lets customers literally get a window seat represents a sea change in the way producers of products and services are connecting with their customers. This will continue to grow as consumers get more comfortable with the experience. The technology that permits companies to communicate and share data in vast quantities internally is now approaching the level of sophistication and simplicity that offers all individuals the same opportunities.

Transacting business on-line with an airline appears natural now, but many worried it would change the relationship of the customer to the brand. They were right, but not the way they suspected. The response was overwhelmingly positive. Cathay Pacific Airlines hosted several on-line auctions for airplane tickets from the United States to Hong Kong in 1996. The event was so successful that the airline has repeated the effort with a "Cyber Traveler" promotion. These promotions connect travelers with offers in which they have already indicated an interest. The link between buyers and sellers is fostered on the basis of predisposed need rather than one-directional marketing. The happy result is that the brand becomes more personal, the relationship more lasting, and the financial value of the brand increases exponentially.

When mass manufacturing and mass marketing forces prevailed, advertising was a central component in building a brand. In this era, network television dominated the media scene and delivered huge audiences--more by far than any other medium. The top-rated television shows like Cosby and Bonanza could achieve 35-plus ratings, reaching nearly one out of three homes with a single TV commercial. Brands were built and sustained on the basis of advertising dollars and advertising impressions. The question clients wanted answered was: How many gross rating points are we delivering? "We'd better achieve at least 400 GRPs with an 85 reach and a 4.7 frequency to reach our audience effectively," was typical client-speak.

In the traditional model, advertising was the key spending component of new brand introductions (with the exception of the huge cost of delivering initial product samples by mail or door-to-door to vast numbers of homes). I remember, as a young mother, coming home from work and finding a small bottle of Wisk hanging on my doorknob. It has been a long time, though, since I've seen another one. There are too many more efficient and less costly ways of delivering samples today. Now, I find them in little packages glued to the pages of magazines or in the rain wrap on my newspaper. America Online diskettes were delivered through various channels--even placed in cereal boxes. As for software, I can sample it by a quick click and a download from the Web. The software will come to me with a built-in expiration date. I can try before I buy--but eventually, I'll have to plunk down my money.

Another case history, and one of the most successful case histories of branding in technology, is the "ingredient-branding" story of Intel. Intel reportedly spent $500 million a year in advertising to promote a semiconductor chip inside the computer--a part the consumer didn't see, didn't know, or didn't care about. The program was called "Intel Inside." On the surface, it looked like a classic branding program supported by an unheard-of level of ad spending for the technology world.

Intel had a brilliant hidden strategy. Although Intel achieved very high worldwide name recognition, our research told us that, by itself, the Intel ads did little to build the brand. Consumers knew that Intel makes good chips and that's about all. In human terms, Intel became an "acquaintance," but not a "friend"--as one would expect of a high-profile brand.

The brilliance of the strategy lay in the "Intel Inside" program. If, as a computer manufacturer, you ordered enough Intel chips and put the "Intel Inside" logo on your ad, Intel would underwrite a significant portion of the media expense. This was, in effect, a disguised discount on the chips. The chip price stayed the same, keeping revenues and stock prices high, whereas a volume discount was applied to advertising. As a result, computer manufacturers began cobranding their computers with the Intel name, the logo got even wider recognition, and consumers began to perceive it as a benefit in performance and reliability of their purchase.

Advertising would stimulate demand for each of Intel's customers, and of course, Intel also benefitted. Once the computer makers got hooked on the millions of dollars of advertising, like junkies, it was hard to kick the habit. Compaq tried, claiming Intel's brand diluted its brand, but eventually came back. It was just too good of a deal.

The impact of the program continues to this day. Intel went to every publisher and network, and negotiated fabulous volume discounts for everyone who participated in the program. Publishers were excited because the program appeared to bring them many new advertisers and helped prove the value of advertising. The computer manufacturers got better rates through the program than they would have buying rate-card prices, and Intel substantially reduced the total cost for its own advertising while maintaining high exposure for "Intel Inside."

Cobranding is an interesting means for reducing the cost of building brands through advertising. If you can trade on an established brand name, the cost of creating your own brand can be less. The credit card industry, a relatively new technology industry, is full of such cobranding situations--combining Visa or MasterCard with any one of hundreds of financial or other retail organizations, and sharing database lists to appeal to each other's customers. Use your General Motors-affiliated MasterCard and accumulate credits for your next GM car or truck. Use your First Bank Visa and you'll receive frequent flier miles on United, or use your Citibank Visa for miles on American Airlines.

Today, everything you do shapes the brand. With the United States moving increasingly toward a service-dominated economy, even the personnel or technology performing the service contributes to the brand-building activity. A clean, efficient order taker is part of the brand of In-N-Out, a Southern California hamburger chain that has expanded into Northern California. The menu is short, the traffic high and the operation highly mechanized, so no hamburger lays around for even a minute. The impression is that each hamburger is cooked to order. It's a fresh-tasting hamburger--the meat and the bun are hot; the lettuce and the tomato are cold. Whereas you see people lining up at In-N-Out, the McDonald's next door is empty. In-N-Out has advertised over time, but modestly. What they have relied on most is "the buzz"--happy customers sending their friends over for lunch, dinner or a hamburger snack at all hours of the day.

Today, advertising dollars are not as important as they used to be. In fact, significant brands have been built with no advertising dollars at all. Amazon.com became a household word in the rapidly growing world of Internet users without spending a penny in traditional media, as did Netscape and Yahoo! They relied on word of mouth, on creating buzz in the market and on the opinions of influential market gurus and analysts. They paid significant sums to link to sites on the Web, and they paid for banners. Perhaps most important, they relied on the actual experience of consumers who tried their product or service, and became loyal, repeat customers.

Myth 4: Brand the Product

Once upon a time, the prevailing wisdom was that the consumer relationship was based on the product alone, not the company that produced it. So, the logical extension to this thinking was that Procter & Gamble wasn't an important brand in the consumer's mind; it was Downy and Crest that got all the attention. General Motors even went so far a few years ago as to stop emphasizing its five main car divisions, such as Chevrolet and Buick, in its advertising; rather, it started considering each model the brand that mattered--such as Lumina or Skylark. The corporation regarded itself as merely a holding company with a portfolio of brands.

Technology companies, however, found that they could not operate this way. With product lifecycles routinely as short as nine months and some creeping into the six-month range, it simply was not cost-effective to brand just the product. With brands being established at warp speed and with less dollar expenditure, it made sense to brand something that could carry the equity forward or possibly transfer it to another product. Just as fire was discovered by accident when someone rubbed two stones together, technology companies discovered a new way to think about a brand. Instead of branding a fleeting product, it might make more sense to brand the company, which would be around for a longer time, or perhaps a technology platform that could be carried for future products.

The revelation for high-tech advertisers came when they realized they could brand the idea behind their product, as well as the product itself. That's why more of the activity is being slanted toward "bigger ideas," such as "Intel Inside," "Powered by Cisco" and Apple's "Think Different." Microsoft has done a great job of extending its operating system brand to a slew of applications software products, including "Microsoft Word," "Microsoft Works," "Microsoft Explorer" and hundreds of others. It even tried moving into the media business with MSNBC, Slate and Web sites like Sidewalk and Expedia. Whatever Microsoft touches--and it's plenty--you know it has got Bill Gates' Big M thumbprint behind it.

Contrast this with Software Publishing, a since-forgotten company, which acquired software titles and tried to use the standard packaged-goods branding approach to sell them. When the company became dependent on Harvard Graphics, a presentation software, as its major source of revenue, and Harvard Graphics fell behind in technology and lost ground to Aldus Persuasion, Software Publishing tried to move into other software areas. By then, however, the company had become synonymous with Harvard Graphics, and presentation software. Software Publishing by itself was nothing. The marketplace would not allow the company any maneuvering room. We saw this sad, but not uncommon, story replayed in the media again and again: The board removes the founder; the new management tries to restart the company; the stock tanks; the company sells off some remaining bits of intellectual property to someone else; and the stockholders have new wallpaper for their bathrooms.

Intel helped itself deal with technology churn by branding a technology platform. The whole x86 family, from 286 chips through 386 and 386SX to 486, became a brand that lasted a decade. Then all that equity was successfully transferred to the Pentium processor, which is likely to have an even longer life, if Intel continues to be smart.

Consider for a minute the mutual funds industry's story. The industry has seen remarkable growth in the past 10 years, fueled by phenomenal increases in IRA, 401(K) and similar retirement plan investments, and by the decline of traditional pension plans. The longest bull market in U.S. history hasn't hurt either. Baby boomers have been flocking to mutual funds as the issue of retirement began to enter their thoughts.

This push into mutual funds has caused a massive proliferation of new product lines. Today, there are hundreds of fund families and over 9,000 mutual funds, which use almost every conceivable investment approach: aggressive growth; balanced, growth and income; small-cap, mid-cap, large-cap; index funds; European, Asian and emerging markets; and more. Change in the industry, even turmoil, is constant with new funds, new directions and new managers. Add to that mergers, acquisitions and new debates about passive index funds versus actively managed funds, about investing based on company fundamentals versus overall market trends and momentum, and you get a sense of all the diverse forces driving this industry. Yet, in this confusing morass, some strong brands have emerged very quickly. Among the leaders are Vanguard, Fidelity and Janus.

Now, let's look at Vanguard. First, it's a prime example of a powerful new brand that was based on a company, not an individual product. How is it possible to recoup the dollars spent behind a single product offering when it is likely to be obsolete within a couple of years or even months? The answer is don't brand the product; instead, brand the company, the platform, or the family or philosophy on which it's based, whatever is extendable. Sure, Vanguard may be best known for its indexed stock and bond funds, but the Vanguard brand goes beyond any particular fund to achieve an overarching brand promise as the low-expense, long-term investment choice, and the brand delivers. It is grounded in the bedrock of strong, long-term performance, some of the lowest fund expenses ratios in the country, and the clear vision of its senior management. This brand promise is communicated across all Vanguard marketing and investor communications programs. No loud hype, no boastful claims, just straight talk about an investo r's objectives and investment timeframe, the track record of appropriate Vanguard funds over the long term, and the considerable importance of low expenses over time. This message is delivered consistently--to the individual investor and by the CEO to major players in the financial community. It has worked. Vanguard has grown to some $400 billion in mutual fund assets, and it has established what is arguably the most powerful brand in the mutual fund industry.

Visa is also pursuing the single-brand approach with subbrands to distinguish new types of Visa-branded products and to extend Visa's brand equity to get the new products started on a strong footing. Visa has elected to introduce VisaCash and Visa Electron, unlike MasterCard, which is introducing Mondex for cash and Maestro for debit cards, a whole new set of brand names that don't carry the halo effect of the Master brand.

The lesson to be learned now, when looking to build a brand, is that it is important to look beyond the tangible product, which is more than likely to change over time, and think about what can be the sustaining deep core of the brand, the essence, which is virtually unchanging.

Myth 5: The Brand Needs a Manager

Yes, the brand manager can determine the brand promise, the brand character and the brand personality. He or she can decide what is the optimum price, the best distribution and how many cases should ship. The brand manager can direct the agency to get the kind of advertising that will best resonate with the target. It's the brand manager's responsibility to plan and execute the test market. Those are the kinds of decisions that were expected from a classically trained brand manager.

But wait! We've already agreed that things are different today. The brand is no longer being launched into an orderly world. Today, the marketplace has become a topsy-turvy, bouncing world-like the deck of an aircraft carrier in a Force 10 gale. The issue, therefore, is how do you launch in this turbulent new world? This brings us to our next "reality."

Factors such as globalization, partnerships and alliances have complicated the life of a brand manager. These are brand--influencing factors that are essentially out of the brand manager's control.

If you look at the history of American brands, you will note that they were generally launched in the United States, became established and then went overseas for expansion. Bits of phrases like "non-U.S.," "foreign markets," "expat," "copy translations" and "home office" pepper the language. When examined, it's apparent that each of these phrases reflects a very U.S.-centric focus. Technology companies, on the other hand, have historically launched globally almost immediately. It is typical in this industry for an early-stage company to have 45-55% of its early revenue from outside the United States.

It was in the mid1980s when I remember meeting Wilf Corrigan, the founder and chairman of LSI Logic, a leading semiconductor manufacturer in Silicon Valley. Corrigan corrected me when I referred to an "international market." He instructed me that the correct word was "global." That was the first time I had heard "global" used in conjunction with business, and it felt strange on my tongue. Today, we've learned to think global, and the word represents a larger perspective.

In such a global marketplace, what exactly does a brand manager manage? Our historical approach of exporting U.S. brands overseas has been providing lots of entertainment on "Bloopers and Blunders" lists for many years. The very popular Ford Pinto had to readjust its marketing strategy in Brazil in the late 1970s when it realized that pinto was a Portuguese slang word for "tiny penis." The Chevy Nova meant "no go" in Spanish--not an ideal brand for an automobile. Parker pens advertised a ballpoint pen that promised "It won't leak in your pocket and embarrass you." The translation in Mexico, erroneously using the word embarazar for "embarrass," had ads running with "It won't leak in your pocket and make you pregnant." Frank Perdue's slogan, "It takes a tough man to make a chicken tender," showed up in Spanish as "It takes a virile man to make a chicken aroused."

With little firsthand knowledge of the changing marketplace, and less and less control over where the brand will end up, over what does the brand manager in the new Knowledge Economy preside? The targets are all over the place, the messages aren't as crisp as one might like, and things are moving quickly.

To complicate the situation even further, technology companies have pioneered, in a big way, the concept of strategic alliance. This has taken many forms, from joint technology developments like Intel and Hewlett-Packard on the Merced chip, to comarketing arrangements like ZDNet and MSNBC, to ingredient branding like the Intel Inside program that we discussed previously or the Cisco Powered program (an Intel copycat but with less muscle). It reaches from industry consortia like Sematech, a consortium of U.S. semiconductor companies; the Power PC consortium of IBM, Apple and Motorola; and the Home Phoneline Networking Alliance (Home PNA), which includes heavyweights such as AT&T, Compaq, Hewlett-Packard, IBM and Intel. There are outsourcing agreements (like Intel-manufactured Sony PCs), second-sourcing agreements (like Intel's early agreements with AMD to build 386 chips), and even whole new companies set up with equity participation by the infrastructure providers.

Globalstar, for example, a new satellite telephony company formed by Loral Space and Communications, is an example of this kind of business model. Loral owns about one-third and provides the satellites and satellite technology, working with other equipment and aerospace systems manufacturers who are both equity and strategic partners. Telecommunications service providers like AirTouch, France Telecom and Vodafone will provide global service and are also equity partners. Qualcomm, the second-largest owner, will provide phones and will also manufacture ground control centers. In this model, the customer gets the whole service; the brand manager gets a headache. What should the branding system be? With at least three, and maybe four, brands each with their own strengths and weaknesses coming together to produce the service, whose brand should be allowed to rise to the top and create a lasting relationship with the customer? Brand is value. Who should pay for building that value? Who should get the ultimate bene fit?

With all these different stakeholders, many elements swinging far out of the brand manager's control, constant ambiguity being added to the brand-building process, the brand manager ends up feeling like she or he is herding cats. Cats don't herd, but sheep do. For that reason, I prefer to call the brand manager the "brand shepherd." Keep the flock intact, keep the flock safe. Take it to new pastures when needed, and bring it home. The brand shepherd's primary role is to define the core of the brand--the most universal truth--not its style or window dressing, which is likely to change with time, task and geography. Then the brand shepherd must evangelize the brand strategy to all the constituents, all the stakeholders.

What is a brand? When I talk to people about what is a brand, especially people outside of the marketing world, like my husband's banker and lawyer friends, I find it helpful to use the analogy of a person. A person has character, personality, interests and hobbies. A person goes through stages as he or she matures and as life events work their changes. In the 1960s, I wore Birkenstocks, burned my bra and was a teaching assistant at San Jose State. In the 1980s, I wore Joan Collins power suits, did lunch and drank only wine and designer water. Today, the office environment is dress down; I'm a little wiser (hopefully) and a little more philosophical. My character and fundamental value system, however, remain the same.

A brand can change its clothes, too (have different ad campaigns, packaging and so forth) and it can do different things (make different products and services), but its core values and character should be virtually unchanging.

A brand, in its relationship with the consumer, must move from the acquaintance stage to the friendship stage to achieve its full power. Why? If you have only brand recognition, it's like having an acquaintance-someone you know by name, but won't go much out of your way to engage. However, if the brand can be elevated to the level of becoming a "friend" . . . ? Well, you'll overlook your friends' imperfections. They may irritate you at times, but you'll still welcome them. They may even disappoint you, but you'll forgive them.

Apple would probably never have survived the recent transition from John Sculley to Gil Amelio to Steve Jobs without the friendship and affection it developed in the hearts of users over the years. The powerful bond that the brand created gave Apple the breathing room to develop a slew of new products, including the imaginative iMac, which was introduced in the fall of 1998 with astonishing early success. That, my friends, is the power of the brand. That's why the role of the brand shepherd is important, so important.

Myth 6: The Brand is a Marketing Concept

All of our conversations about brands have to do with consumer perceptions and attitudes, advertising and marketing activities, competitive positioning and all kinds of other marketing-related concepts. The people who care about brands are the brand or marketing managers, the advertising department and the agency. People who talk about building or extending brands are writers and art directors, package and identity designers, researchers and account planners. Therefore, the logical conclusion is that the brand is a marketing concept!

I'd like to challenge your thinking. There's another way to look at a brand. It's been increasingly recognized that brands have immense financial significance, and it can be argued that the whole concept of the value of a strong brand is primarily a financial one. Consider these facts:

* Brand equity (defined as the value of a corporation with its flagship brand names minus its value without them) is more and more viewed as a balance-sheet item. In fact, in Britain, accounting principles allow brand equity to be classified as an asset on the balance sheet. As Alfred King, executive director of the NAA (the British equivalent of the U.S. Financial Accounting Standards Board), wrote in Management Accounting in November 1990: "Brand names are more suited to balance sheet recognition as separate assets rather than as goodwill."

* Financial experts have calculated that the Marlboro cigarette brand alone represents about 40% of the entire valuation of the Philip Morris Company. That's some $40 billion of market capitalization attributable to the Marlboro brand itself!

* When Grand Metropolitan acquired Pillsbury a few years back, it paid over six times book value. Sure, Grand Met was buying property, plant and equipment, along with cash flow, revenues and profits. However, it seems clear that a huge contributor to the acquisition multiple Pillsbury brought was the proven power of brands like Pillsbury with its Pillsbury Doughboy, Green Giant and Haagen-Dazs.

Here's a question: If you were to cut the Coca-Cola Co. into two parts--one part that had all the plants and equipment, all the bottles, all the trucks, and all the other physical assets; and the other part with just the brand name, the logo and the secret formula--which one would you want to own?

Let's look at some more recent examples. Take Amazon.com. In the first six months of 1998, the company's revenues were $204 million and they lost more than $30 million. But the market valuation of Amazon.com was about $5 billion! True, some of the valuation comes from the glamour of the Web, and some comes from investor euphoria, which will wear off in the morning; however, a good part of that valuation comes from the brand. 3Com paid $8.5 billion for US Robotics, a company with revenues of about $2 billion. Yes, it was buying access to broader distribution channels, more consumer-friendly products, and a stronger overall networking offering, but a significant part of the purchase price was for the PalmPilot brand, which subsequently became the Palm computer after a trademark dispute. (It is now heading for a spinoff in the next year or so.)

Every major example I have cited--Dell Computer, Intel, Microsoft, Sony, Hewlett-Packard, IBM--has created substantial financial value for stockholders by paying attention to its spectrum of brands. If the brand is more a financial asset than a vague marketing concept, shouldn't it deserve a little more respect? If it can add that much shareholder value, shouldn't the CEO have brand issues on his or her executive staff agenda?

With each of these myths I've addressed, I hope that you can see the power of the brand and that you are beginning to think about how you can apply the thinking in your own work.

                        386/AT CHIP SET COMPARISON

                                             G-2        C&T
CHIP COUNT                                    3          7
PROCESSOR SPEED                             25 MHz     20 MHz
ADDITIONAL CHIPS NEEDED FOR FULL SYSTEM      14         33
MAXIMUM MEMORY                              24 MB      16 MB
REGISTER PROGRAMMABLE CONFIGURATION OPTIONS
MEMORY MANAGEMENT                            106   NOT EVEN CLOSE
HARDWARE OPTIONS                              28   NOT EVEN CLOSE
I/O CONFIGURATIONS                            30   NOT EVEN CLOSE
CLOCK OPTIONS                                 26   NOT EVEN CLOSE
                         THE SIX MYTHS OF BRANDING

THE MYTH...                   THE NEW REALITY
1. A brand is built over a    A brand can be built at
   long time.                 warp speed.
2. A brand is precisely       A brand is expansive.
   crafted for a tightly
   defined target.
3. Advertising is the major   Advertising is only one arrow
   creator of a brand.        in the quiver.
4. Brand the product.         Brand a bigger idea.
5. The brand needs a manager. The brand needs a shepherd.
6. The brand is a marketing   The brand is a financial
   concept.                   concept.

COPYRIGHT 1999 BPI Communications, Inc.
COPYRIGHT 2000 Gale Group