The Brand Gym: A Practical Workout to Gain and Retain Brand Leadership

Introduction: Being a leader

It can seem exciting and challenging to be the number two or three brand, playing catch-up with the market leader. Indeed, being a ‘follower brand’ has been glamorized in some circles, portraying the valiant fight of the little guy against the big bully. An example of this is the loved and lauded Avis advertising campaign ‘We try harder because we’re number 2’.

We have a different view. We believe being a leader is better. ‘Leader Brands’ are better in terms of sales and profits. They are also better in their ability to recruit and retain the best people.

The mission of the brandgym is to help you gain and retain brand leadership. This could be outright market leadership, as in the case of Tesco or Wal-Mart in supermarkets. Or it could be leadership of a specific sector, defined by target group, channel or price positioning. The most profitable car company in the world is not the biggest. Indeed, General Motors and Chrysler are both going bust as we write, and Ford is also in trouble. Porsche produce the most profit per car: $ 28 000 versus $ 3200 for BMW and $ 1580 for Audi (1). They do this by being the Leader Brand of premium, high performance sports cars.

Being a leader is better

Usain Bolt of Jamaica is the fastest man on earth, winning gold at the Beijing Olympics; but who got the bronze? We all know Obama; but who was his running mate in the US presidential elections? And who was the third man on the moon, behind Neil Armstrong and Buzz Aldrin? Our struggle to answer∗ these questions illustrates the advantages of being a leader, not a follower. You stand out. People remember you. Last, but definitely not least, you make more money. And leadership works the same way with brands. Mayonnaise must be Hellmann’s. Shaving suggests Gillette. Name a nappy and it’s probably Pampers.

The business advantage of Leader Brands over follower brands is demonstrated by data from the PIMS institute (Figure I.1). Their extensive analysis of over 3800 companies shows that businesses with large shares (50%+) had rates of return more than three times greater than small-share businesses (10% or less), for a given level of quality (2). Let’s look briefly at the reasons for these superior returns.

Figure I.1: The benefits of Leader Brands: %ROI Levels.

Source: PIMS.

Economies of scale

The most obvious benefit of being a Leader Brand is the economies of scale that you can achieve in purchasing of raw materials and in manufacturing. In addition, fixed costs such as head office staff can be spread over a bigger volume of product or services sold.

Owning the central benefits

Leader Brands tend to own the ‘central benefits’ of their marketplace, the key factors people use to choose, thus making them the preferred choice. Rather than having a strong image for a specific benefit, they tend to score highly across a range of key attributes. For example, the Hollywood brand of chewing gum in France is seen as the best across the board, for taste, freshness, quality and innovation. Hollywood uses constant renovation and sustained investment to maintain and even strengthen its image, making it very hard to attack. This forces follower brands Freedent and Mentos to focus on the secondary benefits of oral care and fun respectively.

The key to being a Leader Brand is not differentiation, but rather distinctiveness: creating a memorable and fresh execution of the central benefits of the market. This is the case with Gillette, who have reinforced their leading image with a constant stream of product innovation, and consistent communication on the theme of ‘The best a man can get’.

Hard-wired choices

Leader Brands build over time strong ‘brand properties’, executional devices that aid brand recognition and reinforce communication of the brand idea:

• Visual devices: Dove have for many years used the ‘drop-shot’ showing a drop of milk splashing down to help communicate the brand truth of ‘1/4 moisturising cream’.

• Sonic branding: the Friesche Vlag brand of dairy products uses a whistle at the end of the commercial, which is recognized by over half of the Dutch population.

• End-line: Tesco have turned ‘Every Little Helps’ into a brand property used both with consumers and internally with staff.

• Music: 90% of people recognize the Intel ‘ding ding ding ding’ sound at the end of their commercials.

If used consistently over a long period these brand properties become shorthand for the brand idea, creating significant efficiencies in marketing spend, as reflected in our definition of a brand: A name and symbols associated with a known and trusted customer experience, appealing to the head and heart.

Neuroscience research shows that these networks of associations become ‘hard-wired’ into our brains, and so are very hard to change. This gives Leader Brands a key edge over follower brands when shoppers are choosing from a crowded shelf in the supermarket, or a crowded results page from a Google search.

Andy Knowles of design agency JKR makes this point well. He describes how an average supermarket has 30 000 items, but the average shopping basket has only 30. In other words, each time a shopper picks a product they are choosing ‘1 in 1000’, and rejecting 999 others! The way we do this, without spending all day shopping, is to ‘lock on’ to brands we know and trust like a heat-seeking missile. So, faced with a ketchup display most of us see the ‘keystone’ shaped Heinz logo and, ‘bang’, it’s in the basket. Move on. This almost automatic choice is shown by research done by the Superbrands Council, which compares likelihood to always buy Leader Brands vs. follower brands in different markets (3). As shown in Figure I.2, these loyalty scores are much higher for Leader Brands like Heinz and Walkers (Lays) versus their follower brand equivalents.

Figure I.2: Brand loyalty of Leader Brands vs. followers.

Bargaining power with retailers

The superior returns of Leader Brands also reflect the ability to negotiate with the ever more powerful retailers. Shoppers expect and want to see Leader Brands stocked, and so it’s important for retailers to have them; the same is not the case for weaker follower brands. This is demonstrated by data from the Superbrands research mentioned earlier, showing that 40%+ of shoppers wouldn’t switch to own label from the Leader Brands surveyed at any price.

Follower brands are in danger of being screwed for higher profit margins, or to be squeezed off the shelf altogether. This is especially the case in markets like the UK where retailers are pushing hard to grow their own label products. As Miles Roberts, chief executive of own-label product manufacturer McBride says, ‘Brands are consolidating, and even large manufacturers know their B brands are going to fall to private label’ (4).

Winning the ‘war for talent’

A final advantage for Leader Brands is the role they play in helping you attract the best people to work for you. This advantage is described in the book The War for Talent (5) as follows:

The company’s role in the market place, either as a product or market leader, can prove to be a major pull factor.

Leader Brands need brand leaders

Research over the last six years on over 100 brands who have gained or retained leadership has confirmed our belief in the importance of human side of branding. Behind most Leader Brands there is a strong brand leader. These brand leaders set an inspiring vision for the brand and then align and engage the organization to turn this into action that drive growth.

In our book Brand Vision we used the phrase ‘Brand CEO’ to describe brand leaders. This captures the idea of them being visionary, but at the same time focused on leading the drive for growth (Figure I.3).

Figure I.3: True brand leaders = ‘brand CEOs’.

The qualities that these brand leaders possess include:

Passion: brand leaders have a real passion about and belief in the brand cause they are championing. They bring their whole self to work, rather than hanging up their heart and soul along with their coat when they enter the office. When Silvia Lagnado was global brand leader of Dove she demonstrated her commitment to the brand mission of ‘campaigning for real beauty’ by championing the creation of a self-esteem fund for young women, to help address the problem of eating disorders. To sell the idea to senior management she took the bold step of filming their daughters talking about their own beauty worries and how they felt about their bodies.

Pragmatism: True brand leaders focus ruthlessly on those changes in consumer behaviour which can really benefit the bottom line. They recognize the importance of creating not just a superior brand, but also a superior business model. They place as much importance on excellence of execution as they do on smart strategy. This is shown in the comments of Tom Allchurch, founder and CEO of Pasta Italia:

We don’t really talk about the ‘brand’ or the ‘vision’. We talk about our company and customers and what we can do to meet their needs and create value for our business. The brand is the result of what we do not what we start with.

Persistence: True brand leaders stick around long enough to not only create a vision, but also to implement it and drive it through the organization. The passion and commitment we saw earlier means they want to stay on the brand rather than hopping to the next job. Peter de Kruif worked for many years on the Bertolli, Unilever’s Italian food brand, and made Milan his home. And when he was asked to move country and brand he took the brave decision to carry on his work in Italian food by leaving to start his own brand, Trattoria Guilia (brandgymblog.com).

Brand-led business

In summary, the passion, respect and stamina of brand leaders enables them to create an inspiring vision and then use this to drive change through the whole business. This is what we call ‘brand-led business’ (Figure I.4). This is in contrast to many marketing directors who spend their limited tenure on the ‘image wrapper’ of brand communication and visual identity. They neglect the more fundamental changes needed on the core product or service, either because this work is too hard, lacks the sex appeal of advertising or they lack the power to influence this part of the business.

Figure I.4: Brand as image wrapper vs. brand-led business.

Staying in shape

Gaining brand leadership is a big challenge in itself. But it’s only part of the battle. You then have to stay in shape to retain it. Leader Brands need to stay fit to stay ahead, constantly improving their offering. This is shown by ‘relative quality’ being the second key variable in the PIMS survey quoted earlier, after relative market share. Leader Brands who become complacent and neglect the need for constant renovation risk losing their leadership position. This is the sorry story of General Motors, whose share of US car sales dropped from 50% in 1962 to only 19% today. Japanese brands beat them on quality and by offering smaller, more fuel-efficient cars. Slowly but surely they stole share.

This is why the brandgym Workouts shown below are designed to help you not only gain leadership, but also retain in. We will finish this chapter by looking at one of the most impressive examples of gaining and retaining brand leadership: Tesco. This growth story brings to life the eight brandgym Workouts that make up the rest of the book. The first edition of the brandgym featured a case on the Tesco brand based on a review of available research on the brand. In this new edition we are able to add some real-life insight on this amazing business.

Inside Tesco

The first edition of the brandgym looked at Tesco’s growth during the 1990s, to take the leadership of the grocery sector from Sainsbury’s. This revival started in 1993 with ‘Every little helps’ being the rallying call for a total of 114 new service initiatives. These included mother and baby changing, ‘One in Front’ to open new checkouts at busy times, the Clubcard and a value range. Over the 1990s they built penetration, loyalty and brand image ratings and grew share from 9.1% in 1991 to 15.4% by 1999, taking the leadership from Sainsbury.

Since the publication of the first brandgym book Tesco has strengthened its leadership in the core UK supermarket business. Its share of the UK supermarket business has doubled to over 30%, and the edge over Sainsbury has increased as well (Table I.1). But that’s not all. Tesco has driven an eye-popping growth of the total business (Figure I.5), which has doubled since 2003, by stretching the brand into new regions of the world, and into new sectors such as mobile phones. Let’s look at how Tesco has been able to gain and retain brand leadership.

Table I.1: Tesco gaining and retaining leadership (UK market share)

Overall: Brand-led business

Tesco is the perfect example of a company where the focus is not only on smart strategy, but also excellent execution. The growth of the business is partly down to a clear, relevant and distinctive positioning summed up by the brand idea of ‘Every little helps’. But just as important is the unique Tesco way of doing things. They have been able to buy up more retail space, and are able to open stores quickly to improve return on investment. The Tesco Clubcard is a unique asset, giving them access to detailed data on several million customers, allowing for the tailoring of offers and vouchers to each member. Just how seriously Tesco take this data analysis is shown by them owning 83% of the company who manage the Clubcard, Dunn Humby.

Figure I.5: Growth in Tesco Group Turnover.

Workout 1: Follow the money

Never have we come across a company that lives our ethos of ‘Follow the money’ more effectively than Tesco. Whereas some companies track performance on a monthly or weekly basis, at Tesco the focus on the numbers is daily. And the business is streets ahead of most companies in acting on key performance measures that explain the business results. Their ‘Corporate Steering Wheel’ (Figure I.6) captures on a single page key performance measures under four headings: people, customer, community, financial and operational. Tesco themselves explain (6):

Throughout all our businesses across the world we measure our performance through the Steering Wheel, whether we work in distribution, head office or in stores. This helps maintain focus and balance in what counts to run each of our businesses successfully.

Zooming in on the customer part of the wheel we see five key things that Tesco believe are needed for a good shopping experience. Notice how each one is written in plain English that a checkout person could understand, not brand mumbo jumbo:

1. The staff are great.

2. I don’t queue.

3. The prices are good.

4. I can get what I want.

5. The aisles are clear.

Figure I.6: Tesco Steering Wheel key measures.

These service features are tracked in detail, and reported right up to the CEO Terry Leahy. Any drop in score is investigated in depth, and solutions to the problem implemented. It is also interesting to note how simple, even basic, these five factors are. This shows how being a brand leader is not about being different, but rather about being distinctive at delivering the core benefits people want. Tesco simply do the basics better than anyone else.

Workout 2: Use insight as fuel

Tesco is a company who customer insight genuinely drives the whole business through the annual brand planning process, as outlined in an interview with Simon Ford, Head of Market Research (7):

Step 1: Review

‘Each year we conduct a Brand Review looking at all that has been learned about customers in the past year and where they are going: are customers looking for healthy living; convenience; organic produce? Part of this exercise involves looking into the future, identifying trends in eating and shopping behaviour.’

Step 2: Summary and board approval

‘We cement all our findings in a Brand Review which is presented to the Board.’

Step 3: Customer Plan

‘The Review goes into a Customer Plan, which sets out the key initiatives for customers over the next year.’

Step 4: Implementation

‘Each Plan has a large budget and a Project Champion to ensure it happens.’

Workout 3: Focus, focus, focus

Tesco’s constant and deep analysis of business performance helps them focus on investment and people, in terms of both their brand and portfolios. On the brand side, they have kept the focus on the Tesco brand, using simple descriptors for new services, such as Tesco Mobile and Tesco Diets. They have avoided the temptation to create fancy new sub-brands that dilute the Tesco brand equity.

On the new product side, each business has to stand on its own two feet and become profitable, avoiding the risk of resources being taken from the core business. And when these new businesses don’t perform, action is taken to improve them or kill them. For example, in 2008 the Tesco Flowers business was closed down following poor results.

Workout 4: Build big brand ideas

Tesco is a company that has a crystal clear vision of what is stands for, and where it is going.