The Five Habits of Highly Effective Brands

The Five Habits of Highly Effective Brands

There are many ways to describe what a brand is and what it stands for. A brand has to be a coherent totality, not a lot of bits. The physical product, the pack and all the elements of communication – name, style, advertising, pricing, promotions, and so on – must be blended into a single brand personality. It has to be unique, and constantly developing to stay unique, because it is through its uniqueness that the brand can offer sustained profit margins. And the uniqueness will depend on both functional and non-functional values – appeals to the senses, the reason and the emotions. This blend of appeals must be relevant to people’s needs and desires, and immediate and salient. It must constantly stand out from the crowd; it must spring to mind in buying situations. The important part of course is what they do.

We live in a time of both abundance and choice. Brands help simplify consumer choice and accelerate our decision-making. That still leaves the question of how to build a highly effective brand. Why do some brands acquire market share at a disproportionate rate than their rivals? Why is the marketing of some brands so much more effective than others? It starts with purpose.

 

Highly effective brands have purpose

Highly effective brands focus on penetration

Highly effective brands build their prominence

Highly effective brands create participation

Highly effective brands develop portfolios

 

Highly effective brands have purpose

They have a reason to exist over and above making money. If you want to monopolize your category, you can’t simply focus efforts on incremental product improvement or better marketing. Your brand has to take a stand for something compelling. It must be a shared intent by everyone in the business, from the C-suite to junior staff. Take Coca-Cola, IKEA and Google as an example.

  • Coca-Cola = To refresh the world & inspire moments of optimism
  • IKEA = To create a better everyday life for the many
  • Google = To make the world’s information universally accessible

Admittedly these are lofty ideals. The key insight is that these powerful brands focus on markets, not segments. Peter Thiel writes in Zero to One: Notes on Startups, or How to Build the Future, ‘a great company is a conspiracy to change the world; when you share your secret, the recipient becomes a fellow conspirator’.  For those of us with a healthy dose of skepticism you might be wondering whether this is a bit of a beat up. Aren’t brand ideals just lofty marketing jargon? It turns out that couldn’t be further from the truth. Jim Stengel’s research from ‘Grow’ uncovered that purpose-driven brands financially outperform their rivals by a factor of up to 400%.

Highly effective brands focus on penetration

Byron Sharp, Professor of Marketing Science at the University of SA, writes in How Brands Grow; ‘focusing only on your current customer base is unlikely to drive true growth potential. Brands grow by increasing penetration – reaching as many category buyers as possible. Penetration-led strategies are highly likely to result in growth’. Even for Coke, the average annual purchase frequency in the UK is just once. Overwhelmingly, the evidence shows that the key to driving penetration is not through functional unique-selling-propositions (USPs) but emotional, purpose-driven activity. Functional USPs like price, size and quality appeal to our brains ‘System 2’ decision-making process – the mind’s slower, post-rational mode where reason dominates.

Emotional messaging on the other hand appeals to our ‘System 1’ fast, automatic and intuitive process. Daniel Kanheman, winner of the Nobel prize for Economics, wrote of these two decision systems in explaining both cognitively simple & effortful tasks. It should come as no surprise that emotion is both our preferred choice along with the being  proven as the most effective creative application to win the hearts, minds and share of wallets of our customers.

Highly effective brands build their prominence

Prominence means that a brand is easy to think of, chose and find. Highly effective brands tailor their marketing to make themselves famous – making it easy for consumers to bring them to mind in buying situations. Fame is often ignored as a marketing objective, yet it is the most effective goal.

Given the explosion of big data and accountability that’s been brought to the forefront of marketing decisions, we must balance the tension between short-term response activity and long-term brand building. If you measure success over the short-term, as the promise of big data will drive you to do, you will select marketing and communication strategies that deliver the best results in the short-term. Unfortunately these will undermine long-term success. The paradox is that without investment into long-term brand building, our short-term tactics will continue to diminish in influence and performance. To make matters worse, simply mining insights derived from big data can lead to overly rational messaging that underperforms on almost all markers of creative effectiveness (likability, memorability etc).

Highly effective brands create participation

When it comes to behaviour change, it’s said that action changes attitude faster than attitude changes action. To put that another way, consumers don’t use the brands they like, they like the brands they use. A good example of this principle comes from global ride sharing company, Uber. It was calculated that every seven rides generated a new user because of word-of-mouth recommendation. Participation created networks to market to on a lower cost.

If you can find a way to integrate participation into your brand consumers will value it more, and be more likely to consume. Such is the well established psychological principle known as ’The IKEA Effect’, where labour leads to love. The IKEA effect is a cognitive bias where consumers place a disproportionately high value on products they partially create. The challenge for marketers lies in convincing consumers to engage or co-create in the kinds of actions that will lead them to value products more highly. Creativity is the best answer to earn participation and overcome inertia. Think of the rise in co-creation (Share a Coke) and crowd-sourced campaigns (Thank You Chapter 1) as examples of how to shift from the single thing you want to say, to the single thing you want people to do.

Highly effective brands develop portfolios

Like venture capitalists, marketers should adopt a portfolio mindset rather than a static set and forget plan. Instead we should move to make many small bets, experimenting with different models until we find success before scaling our efforts. We have the tools to A/B test every single function of the marketing funnel. We have access to both deep & real-time market feedback to inform our strategy & tactical activities. Marketers should budget for these experiments, instead of betting the farm.

We know that there are certain activities that will always work well in a given situation, giving us a base level of performance. Our budgets need to reflect that mindset. At Coke, they understand the importance of experimentation to drive marketing innovation, which is why they adopt a 70 / 20 / 10 rule to allocate marketing budgets. Using this framework allows us to think big, start small and scale fast.

70% = Activities that are foolproof, guaranteed to deliver returns

20% = Activities we strongly believe will deliver returns 

10% = On the unknown, experimenting with areas that may provide significant upside 

The behaviours needed to deliver profits for a sustained period of time and outperform the market. Highly effective brands have a purpose. This purpose inspires innovation, drives share of mind and financially outperforms their rivals. They focus on penetration, knowing that emotional messaging is more effective than rational. They pursue prominence, focusing on salience to ensure their brands are brought to mind easily in buying situations. They create participation, especially for services and utility. Participation creates trial and expands networks. Lastly, they focus on portfolios. Experimenting with a range of insights, messaging and campaigns before scaling success.

Talk to us about your next project and learn how to apply these principles to build your brand.