From Coca Cola (1886) to Uber (2009) brands have been key to commercial success and instrumental in driving economic growth. But today in our hyperconnected, social–media savvy world, are brands losing their importance? Or conversely are they more important than ever in differentiating products and services in a crowded, highly competitive, always-on, globalized world?
Professor Tim Calkins, co-editor of the new book Kellogg on Branding in a Hyper-Connected World, believes that in a world of fake news and alternative facts brands are more important than ever. They help people distil information, simplify choices, and make decisions. And sometimes they even have a definable dollar value: when, recently, Nestlé paid $7.2 billion to license the Starbucks brand for use on coffee. It didn’t pay for the technology or sourcing or for any physical assets. Nestlé paid for the brand.
However, since 2005 when Calkins worked on the original marketing classic, Kellogg on Branding, the environment that brands operate in has radically changed. “It's a very different time for brands,” says Calkins “We wrote the first book at the close of the old world of branding. You could still control a lot of what your brand stood for, the advertising message, the distribution channel – working with some very big channel partners. And you could control the product and the experience of it.”
Join Prof Tim Calkins’s Kellogg on Branding program to creating, build and rejuvenating your branding strategy
Date: 22-27 September 2019 │ Format: In-class study │ Location: Evanston, IL
The concept of a ‘brand’, defined on the Kellogg branding program as a set of associations linked to the name, mark, or symbol associated with a product or service, has not changed. “What has changed dramatically, is the way we communicate, the way we interface, the way we access brands and products,” says Calkins. “And that has profoundly altered the task of building a brand, and the challenge of maintaining a brand over time. And to some degree, how brands create value, too.”
With online shopping and social media giving direct access to customers one might think brand management, or the brand creator's job was now a lot easier than it used to be. On the other hand, with hyper-connectivity, fake reviews and alternative facts it's a bit of a wild world out there. So, is it easier or more difficult?
“In some ways it's a lot easier, and in some ways a lot more difficult,” says Calkins. What's easier now, is that you're less dependent on having a huge marketing budget. There are things you can do that can generate a lot of attention, and build a brand, without requiring massive spending.” He quotes the example of Donald Trump (like him or hate him) who built his brand on simple brand messaging without spending anything like as much as his competitors.
What has changed dramatically, is the way we communicate, the way we interface, the way we access brands and products
Another thing that makes the brand manager's job easier is that brand enthusiasts, engaged champions of the brand, can do a lot of the heavy lifting, by talking about and extending the reach of a brand through their social media networks in a way that was not previously possible. Word of mouth has always been important, but the scope of word of mouth has grown considerably.
“The hard part is that things are much more out of your control now and much more unpredictable,” says Calkins. “Advertising and communications have changed so much, that the presence of a big budget doesn't guarantee you as much as it used to. Also, I think one of the things that's changed so much is the speed and the pace. Things can move so fast that you've got to constantly be responding and interacting. Which means you have to manage a brand fundamentally differently, because you need the systems that will allow you to respond.”
In the past, if a situation developed, the company could spend time thinking about the perfect response, checking it with the legal team, and after much consideration get the PR or marketing team to respond with a precisely crafted message – a process that might take a few days, even a week. Today says Calkins “you've got to move very, very fast. It's a new skill. It also requires something of a mindset shift.”
“Another challenge is that things are so fleeting now, that one of the hard parts for brands is that it's hard to come up with things that are constantly interesting, and worthy of attention right now. It's easy to put out content. But it's very hard to get people to notice it, and pay attention to it.”
Another development that can potentially ease the job of brand management, but equally presents difficulties, is the advance of data analytics, big data, and the coming age of machine learning. These technologies present opportunities in terms of targeting and understanding consumer behaviour, and how people are making decisions, and helping get the right message to the right person at the right moment.
“But at the same time, I think people can rely on analytics too much,” observes Calkins. “And they can miss a little bit how the brand works. One of the interesting things about brands is they're still hard to measure. With all the analytic horsepower we now have, it is still very hard to put a precise dollar value on a brand. And it is still not so easy to see how a brand's meaning is shifting. Those things are still very hard to pin down.”
What's easy to follow is sometimes not the most important thing
There is a risk that by focusing too much on what the analytics are showing we can miss the underlying mechanisms and coming trends. As Calkins points out, “What's easy to follow is sometimes not the most important thing. It's easy to follow how people are converting emails to clicks and open rates and conversion rates. How people are actually making decisions is much harder. To understand what's driving decisions remains a challenge. The data may even show marketing initiatives are working but if you don’t know why they are working it won’t help you build a brand.”
One of the things Kellogg on Branding in a Hyper-Connected World delves into is the concept of neuro–marketing. Using insights from neuroscience to try to understand what's happening in people's heads when they make their decisions. This of course reveals that the brain and its decision–making channels are extremely complicated, and that really understanding what's happening is a huge challenge.
If we are to believe what some pundits tell us, most people under 35 are opposed to market capitalism per se. Many brands have certainly been attacked by environmentalists etc., but on the other hand the evidence suggests millennials are both individualistic, accepting of commercial competition, and very brand conscious. To square this circle the concept of ‘brands with purpose’ has come to the fore, brand identities that reflect social good.
Again, there are two sides to this. For younger people in particular, the idea of a clear purpose that shows the brand has a positive impact on the world is a really important factor. But as Calkins points out, referencing a chapter in the book about McDonalds, “Brand purpose is not as easy as you would think. There's no question that purpose matters, and is important in attracting and motivating employees, and for some brands, to drive sales. But, you really don't want to overplay brand purpose. You have to be careful how you use and deploy it.”
“Understanding purpose is a critical task for a leadership team, who should communicate and embrace it. But a separate question, is how much do you want to lead with the brand purpose when you're interacting with customers?” Patagonia, for example, is brand where the idea of purpose is fundamental, a core differentiator, and partly what drives customer loyalty. But for other brands discussion of purpose is best avoided. When Mark Zuckerberg started talking so much about Facebook's purpose, it left a bit of a bad taste and a lot of bad press. “Because, as soon as you start saying that you're doing such important things in the world, well then you are really inviting people to challenge you on the integrity there,” says Calkins.
In his recent book, How to Wash a Chicken: Mastering Business Presentation, Tim Calkins addresses the sorry case that too many business people struggle to present well. Asked if he thinks organizations struggle to effectively manage their brands, he believes very many do. “I think there's a lot of similarities between communicating effectively and understanding your brand and building a brand,” observes Calkins. “What they both require is clarity of thought, discipline, and simple storytelling. In a presentation people often get lost in the data and the information. And end up making things too complicated.”
What's often missing is people stepping back to say…‘What really does this brand stand for? And what really is going to bring it alive?’
“What's often missing is people stepping back to say, ‘What really are we trying to communicate here? What is the flow of the logic? What is the story here that's going to work?’ And in a way, when people are struggling with their brand, they're often struggling with the same thing. They haven't stepped back to say, ‘What really does this brand stand for? And what really is going to bring it alive?’"
Something Calkins sees with his business school students is that they confuse the idea of complexity with convincing. “I hear students saying ‘It seems too simple somehow’. As if they are wanting an equation that is so complicated, they can hardly understand it, and that would be the key to success.”
“All of the decisions around brands are hard – how many brands do you have, and when do you kill a brand, and how far can you extend it – none of those are easy decisions. But we make better decisions when we simplify the facts and the arguments. So, we can really push and challenge the arguments. And it's not going to come from a very fancy equation, it's going to come from thinking it through, does the logic really hold?”
Finally, another reason companies struggle is because building a brand is about investing for the future, for 10, 20, 30 years ahead, and yet the business world still tends to reward people based on short–term performance, and value companies based on their latest results. Building brands for the future requires a capability for rapid short-term response but also a long-term strategic mindset.
Kellogg School of Management is seen amongst business schools as the leading centre for marketing expertise. Kellogg was a pioneer in using applied psychology to establish some of the earliest advertising and marketing courses in the first decade of the twentieth century, and more recently, Philip Kotler and Sidney J. Levy laid the foundations for an expanded understanding of marketing and a deepening of marketing research and scholarship. The ground-breaking work continues.