Eventually, the rise of merchants, brokers, and other resellers added another dimension to the concept of the “brand,” making possible the divorce of the maker and the seller. The distribution channel created another level of marketplace sophistication and transformed the two-way relationship between maker and buyer into a threeway association of maker-seller-buyer. The development of brands and the separation of maker, seller, and buyer are what now distinguish the modern marketplace. One cannot exist without the other, and all are mutually dependent.
The emerging marketplace of the 21st century is infinitely more complex than that of the ancient potter or the toolmaker, or even the maker-seller-buyer structure that is in place today. However, the primary function of the brand-that of differentiating one seller or one vendor or one organization from another-remains largely unchanged. The ultimate goal of branding is still to establish a powerful, relevant identity in the minds of customers in order to encourage their initial purchases and nurture an ongoing relationship between the marketer and the end user.
While brands and branding have been with us, in one form or another, since the dawn of commercial enterprise, it is only within the past 20 years or so that manufacturing organizations in North America have shown so much interest and perceived value in their brands. While brands historically have been within the purview of manufacturers, today all levels of distributors, intellectual property holders, value-adding organizations, and the like are attempting to apply branding principles to distinguish themselves from competitors. Thus, brands and branding have taken on broad new meanings in the emerging interactive information age that we are entering. Never before has so much emphasis been placed on the contributions of the brand in establishing and maintaining a competitive advantage. For the most part, the modern marketplace is characterized by intense price competition between products with few distinguishing features, attributes, or distribution advantages. Or if such competitive product or distribution advantages are developed, because of the transferability of technology, those advantages quickly disappear. Thus, many marketers have seemingly moved beyond tangible advantages to embrace the intangible but powerful advantages that can stem from brands and branding. Thus, the brand becomes the latest focal point of competition, and the one area where an organization can achieve meaningful and sustainable differentiation among target customers and prospects.
A fundamental assumption of this study is that a strong brand is far more than a recognizable name, a memorable mark or logo, or a catchy tag line. In fact, a brand is also more than a distinguishable product with practical physical advantages for the purchaser. While a brand is crafted in part from these basic building blocks, it is the customer who attaches meaning to these visible cues based on his or her own experience and perceptions. Ultimately, it is the customer who determines the true value of the brand. This value is derived from his or her knowledge of the brand’s functional and emotional attributes from the associations he or she makes about the product, its category, and its parent organization and from the interactions that customers have with the brand’s representatives, such as employees, franchisees, channel customers, and other brand owners and users.
The modern organization is faced with the challenge of finding ways to invest its brand with a rich and vibrant identity that resonates with customers and to align its internal operations, including employees and channels, with the core promises it makes to external customers. In addition, the modern organization must then support those identities and promises throughout the value chain.
The study was conducted in two phases:
1. Preliminary Mail Survey: A two-page questionnaire was sent to members of the
American Marketing Association and other marketing executives in early 1998. The purpose of the preliminary study was to identify broad practices, policies, and processes deemed by these practitioners to be important in the development, communication, and evaluation of successful brands. The survey also sought to establish a general framework on how marketing organizations approach matters of brand development and management through communication. This formed the foundation for the benchmarking study that is the basis of this report.
2. Consortium Benchmarking Study: A 44-company consortium benchmarking study kicked off April 28, 1998, and its results are reported here. This study is an in-depth examination of the best-practice factors most associated with branding success in the initial, preliminary research phase. This study also investigates how leading practitioners develop organizational structures that help build branding success. Companies participated in the benchmarking phase of the study by attending a series of planning sessions, completing data-gathering surveys, and attending or hosting on-site interviews. Of those 44 companies, 28 sponsored the study (“sponsor companies”) and 16 were identified as having strong brand building and communication programs in place. These 16 were invited to participate in the study as benchmarking partners (“partner companies”). The total number of respondents to the quantitative portion of this study is 26 sponsors and 16 partners. (Two sponsors did not participate in the quantitative portion.)
Drawing input from Agora, Inc., leading brand practitioners, and research literature, the study team identified three key areas for research. These areas guided the design of the data collection instruments and were the base from which findings have been developed. A brief description of the three areas is provided below.
- Understanding customers’ perceptions and images of the brand
- Assessing core and extended brand identities
- Developing relevant brand value propositions
- Creating a unique brand position and identity
- Communicating the brand’s identity and promise
- Aligning internal and external communication activities
Measuring Brand Results
- Monitoring changes in customers’ brand awareness, perceptions, associations,
loyalty, and satisfaction
- Determining appropriate levels of brand support
- Creating approaches for financial measurement of brand equity
Study KEY Findings
The partner and sponsor organizations participating in this study exhibited many significant differences in the processes, policies, and approaches used in brand development, management, and evaluation.
The partners represented in this study are all major, global organizations, typically much larger than the sponsor firms in terms of annual revenues. Despite their larger size and scope, however, partners tend to have fewer separate and distinct brands. Additionally, the brands they have are usually closely aligned with and tied to the corporate umbrella brand, rather than being separate, independent identities. Partner companies appear to be masters of both consumer and business-to-business marketing. While branding is often associated with consumer marketing, the partner companies in this study employ brands and branding practices in both markets and do not seem to distinguish between consumer and industrial brand strategies.
The topic of brands and branding has generated enormous interest in the business community in recent years. While brands have been with us since the dawn of commercial history, and are believed to have been the engine driving the marketing train throughout much of this century, little formal attention has been paid to the question of how organizations build, maintain, and evaluate strong brands. Much of our current knowledge is based on individual case studies, practitioner recollections, and anecdotal evidence. Importantly, there has been a dramatic shift in focus regarding brands and branding. Previously, brands were considered to be topics of concern primarily for marketing and communication professionals. In recent years, however, because of the growing interest in intangible assets, senior management has increasingly become involved in matters of brands and branding. There appears to be a growing recognition that an organization’s brand or brands have a value that can far exceed that of the firm’s more tangible assets such as manufacturing plants, equipment, real estate, and investment holdings.
Indeed, as we learned throughout this study, senior management’s involvement with and commitment to the brand is a key enabling difference between partner and sponsor companies. Central to this study is the belief that a strong brand is far more than the components used to identify it to customers and prospects, such as logos, jingles, tag lines, icons, and other communication cues. In the past, the study of branding focused primarily on how organizations create and communicate these distinguishing identity elements effectively in the marketplace. While this is still an important aspect of branding, there is an increasing understanding of the larger strategic context of the brand’s role, value, and organizational purpose. In many cases, organizations have begun to consider the brand as the embodiment of the relationship among the organization, its employees, and its customers. As such, the brand is being used by leading practitioners to drive the organization in all aspects of its interaction with customers, including product development, pricing, customer service, distribution, and operations.
As organizations have sought to become more customer-focused, the brand has become the means by which many weld meaningful, sustainable relationships with their constituents. Throughout this study we uncovered key differences between our best-practice partners’ and sponsors’ brand building and communication philosophies and activities. Although both groups have similar goals for their branding initiatives-that is, to create a differentiating presence in the eyes of their customers and prospects that will increase customer loyalty and repurchase rates, maintain price premiums, and leverage the brand into new arenas-they commit different amounts of resources, use different tools, and experience varying levels of success. This report will explore these and other issues.