Module 1: I Believe The Future Of Brands Will Be...

I believe the future of brands lies in the rebirth of belief by Tom Darlington, June 2011
Since their introduction, brands have always been a consumer centric device. Whilst the function, and indeed role, that brands play in the world may have evolved and changed over time they live or die by the strength of the relationship they establish with their customers. In the modern capitalist era, however, the brand has been hijacked. Its new master, the company shareholder, is using the brand as a device with which to extract the maximum value possible from their investment, whilst offering increasingly less in return. Consumer trust and consumer love is dwindling. For brands to succeed in the future, they must refocus on their customers.

A brand is simply a collection of perceptions in the mind of the consumer

(Feldwick, 2002, p. 4) The role which brands play in peoples lives has shifted and grown over time. Originally, brands provided consumers with reassurance, reassurance which a modern consumer would probably take for granted (i.e. consuming this product wont kill you). Secondary, and complimentary, to this reassurance, is a promise of performance (Feldwick, p. 5) that the consumer can be assured that the product they are buying or consuming is the same as it was the last time.

Module 1: I Believe The Future Of Brands Will Be... As society has moved from agricultural, through to post-industrial these attributes have not disappeared, but instead have become a foundation of the understanding of brands which live inside the minds of the consumer. In the modern era, built on top of the qualities of reassurance and performance, are more intangible benefits brands have become mood enhancers (Fig.1), they have become status symbols (Fig.2), they have become an expression of a persons ethical code (Fig3). In the modern age brands have created differentiation for standardised and homogenised products. Value is exchanged between business and consumer via the conduit of the brand. This exchange forms a contract of sorts, which can be expressed as:
Tangible Value (Product Quality) + Intangible Value (Brand Function) Transactional Value (Price)

What happens when CEOs swear allegiance to maximising shareholder value? (Martin, 2010, p. 3)
Since the 1970s, the dominant school of thought in business has been centred on maximising shareholder value (Martin, 2010, p. 3). This quest, whilst appreciated by shareholders, has some negative and damaging side effects for businesses and their brands. Firstly, it creates a culture in which the customer is not your main priority Levitt would suggest it moves you toward selling, rather than marketing (Levitt, 1975, p. 7). The former concerned with the need to shift product, the latter with consumer need. Secondly, chasing shareholder return creates a short term culture within organisations. At the point where you are still making a healthy profit, it becomes hard to plan for a day when you may not. Thirdly, and most crucially for brands, once an expectation treadmill (Dobbs F.C & Koller M, 1998) is established, it becomes harder and harder for business to generate the same returns for shareholders as they have in the past. The more the market expects from them, they have to pound the treadmill ever faster to keep up (Dobbs F.C & Koller M, p. 34).

Module 1: I Believe The Future Of Brands Will Be... This has led to many businesses essentially plundering the trust imbued in their brands by means of altering product quality, along with other cost cutting exercises. Brands used to be a means of guaranteeing what you were buying; now they are often used as a means with which to sell you less. Philosopher Slavoj iek notes how Hershey Chocolate bars gradually reduced the weight of the product, then made it larger again (though not as large as it was originally) and raised the price, then diminished it (iek, 2010, p. 210). He suggests that if you extrapolate this trend, you can identify the moment when the physical item disappears altogether to nothingness, this nothing is the signifier without a signified (iek). At this point, customers are paying for the intangible brand alone, receiving nothing physical in return.

Too big to fail?

Banks and Financial brands, long the flag bearers of the corporate mission to enrich shareholders, are very familiar with the notion of signifier without a signified. The complicated Collateralised Debt Obligation (CDO) instrument is a perfect example. Banks would sell these to customers, yet what was the customer actually buying? The answer is nothing. These financial instruments were so abstract, that the sellers themselves didnt truly understand them (Lewis, 2010, p. 143). What the banks did understand though was that CDOs created huge wealth, and enabled them to keep up with the expectation treadmill, however, they were ultimately responsible for the greatest destruction of wealth in history (Sells, 2011).The creation of these products removed the core brand qualities of trust and assurance from the equation, trust which in most cases had been accrued over hundreds of years. Dedication to enriching the shareholder in this instance, led to the worst recession in living memory. Could brand owners be heading toward a similar fate?

Module 1: I Believe The Future Of Brands Will Be... Shareholders and analysts increasingly value brands more and more, as rewards from harvesting consumer trust and loyalty become manifest. In the thirty years since CEOs began to swear allegiance to maximising shareholder value, brands have gone from accounting for 5, to 30 per cent, (Gerzema & Lebar, 2008, p. 12) of Americas S+P 500 index. What has happened over the same period to consumers valuation of brands? Theyve decreased. Scores for saliency, trust, awareness, respect and willingness to pay a premium have all fallen (Gerzema & Lebar). Gerzema and Lebar believe a Brand Bubble is forming. If you follow this trend to the nth degree it doesnt matter how much shareholder value analysts deem there to be, negative sentiment amongst customers will be so great, that the brand, and its business will cease to be worth anything at all.

Fig. 4 Brands incurring the wrath of the public

The recession, and the subsequent media and government investigation into its causes, has thrown into stark relief the way in which corporations work (Fig4). Ruthlessly chasing profit is not an admirable quality for consumers, especially for those dealing with severe economic problems.

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A roadmap for regaining the belief and trust of the consumer

If brands are to avert this terminal crisis of faith, they must take action. To regain the belief of the customer, they must do the following: Clearly define the brands purpose Place the brand at the heart of their organisation Measure everything against a single, consumer focused metric

Following these steps begins to sow the seeds of trust again with the consumer, creating long term value for business in the process.

Clarity of Purpose: To foster belief, there must be something to believe in.

It is the role of businesses to be profitable, not the role of brands. Brands, however, can enable businesses to be profitable (Doyle, 2000). To remain relevant in a world cynical of corporate motivations, businesses must rationalise the existence and purpose of their brands, detaching them from the overall business objective of enriching shareholders; its important to remember is that money isnt a philosophy (Hegarty, 2011, p. 215). Clarity of purpose has benefits for both consumers and businesses. In terms of the consumer, brands with a clear purpose act as a navigation tool, helping people make decisions in a world full of standardised products. People use these mission statements as a means of aligning their own belief with the brands they consume. Being clear as to why you exist, therefore creating reasons as to why consumers should choose you begins to build trust. It is this purpose which will ultimately divorce a brand from consumer suspicion of unadulterated profiteering. Defining purpose is also a useful exercise for brand owners. It allows them to remain relevant, and can act as a guiding principle as to how you traverse a consumer landscape which is constantly in flux.

Module 1: I Believe The Future Of Brands Will Be...

Fig.5. To Establish Liberal Journalism in Perpetuity

Rapid changes in consumer behaviour causes problems for a business focused on shareholder return. Many companies fail, because they are too preoccupied with harvesting profit from a successful business to anticipate changes to the consumer landscape. In the Guardians case (Fig.5), it was one of the first newspapers to develop an online version of its product it sees itself as a news brand, not a paper brand and so when newspapers began to lose popularity with consumers in favour of online news, it was able to build foundations for its future.

Placing the brand at the heart of the organisation: Practice what you preach
The age of information has brought with it a need for total transparency (D Build, 2011). Once the brands purpose has been defined, it needs to run through the heart of the company its values must be lived and breathed by all employees at all levels. The brand can no longer be an appendix to your main focus of creating profit; it must be the sole lens through which you do everything. The responsibility of Chief Brand Officer must lie with the CEO (Bedbury & Fenichell, 2003). This not an easy task for many companies, as the route to CEO is largely through finance a company looking to maximise shareholder wealth values the steady hand of the CFO, over the lighter, softer approach of a CMO (Stillman, 2008).The brand becomes projected from the top down, central to every decision made, and motivator and unifier of the people employed. The brand should be something that drives the company forward, an expression of a unique world view (Fig.6).

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Fig6. The doorstep of the building once owned by two Iraqi born immigrants who took on the white, middle class world of UK advertising and redefined it

Fig7. Inside Mike Parkers Office at Nike (Freshness Magazine, 2011)

The CEO of Nike, Mike Parker, clearly believes in the brand ideology. His office (Fig.7) is a museum to the companies achievements, and embodies the brand values of bringing inspiration and innovation to every athlete* in the world. Companies such as Nike understand the value of focusing on brands and their consumers. By placing the brand belief

Module 1: I Believe The Future Of Brands Will Be... at the centre of the organisation you bring to life the ideology internally, as a means of enhancing brand value (Ind, 2003, p. 393) externally. When a brand, the consumer facing identity of a business, is placed at a companys heart, it creates focus (everyone knows why theyre there), helps future proof the organisation (how should we behave) and creates a unity of experience for anyone interacting with the company at any time. Consumers, who increasingly have a plethora of information at their disposal, will want proof that you truly believe what you say, and that you not only believe it, but that you live it. Brands must now be part of the DNA of the business, and evident at every touch point with the consumer (Fig.8)

Fig8. Brand diffuses to customers from CEO via employees and brand assets. Source: Author

Measuring Success: Keeping the faith As Stephen King points out, how can a company focus on its consumers and its brand if every department within an organisation has a different set of metrics? (King, p. 37). Share price, must be a secondary measure of a brands success. Success for a business which cherishes consumer trust above all else, should be judged against consumer opinion. Many companies have begun to do this, using the Net Promoter Score (NPS) as a means of

Module 1: I Believe The Future Of Brands Will Be... gauging how well they are received by their customers. Fred Reichheld has conducted studies around this metric and has concluded that by focusing singly on increasing the numbers of people who would recommend your product or service, business growth (and, therefore, shareholder return) follows (Reichheld, 2003). The metric is also broad enough to fit across every discipline within an organisation from marketing (and their agencies), Finance, R+D, all the way up to board level directors and the CEO. Hugely successful brands such as Apple, eBay and Dell all use this method of measurement, and have either created or sustained huge customer loyalty, as well as high market capitalisation as a result. Focussing on consumer belief is not mutually exclusive with rewarding shareholders. Business needs to move away from focusing merely on the shareholder and place customer satisfaction back at the centre this metric provides a way to do that, and ultimately proves that an improvement in customer regard pays back for businesses.

To succeed in the future, brands must win back the belief of their customers
Belief is vital to a brands survival. For too long the business community has valued the shareholder above all others. Businesses in the modern era can no longer simply harvest from an ever decreasing pool of consumer loyalty. Instead they must place consumers back at the heart of their organisations. Brands must take a stance, and clarify their purpose in peoples lives. By making this purpose central to their existence, and measuring success via a consumer focussed metric, companies will create stronger bonds with consumers that will guarantee their future existence.

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Bibliography
Bedbury, S., & Fenichell, S. (2003). A New Brand World. Penguin. D Build. (2011, May 31). Transparency Killed The Brand Star. Retrieved June 6, 2011, from D Build: http://d-build.org/blog/?p=2502 Dobbs F.C, R., & Koller M, T. (1998). The Expectation Treadmill. McKinsey Quarterly, 32-43. Doyle, P. (2000). Value Based Marketing. Chichester: Wiley. Feldwick, P. (2002). What is Brand Equity Anyway? Oxford: World Advertising Research Centre. Freshness Magazine. (2011, May 24). An Inside Look At Nike CEO Mark Parkers Office. Retrieved May 24, 2011, from Freshness: http://www.freshnessmag.com/2011/05/24/an-inside-lookat-nike-ceo-mark-parkers-office/ Gerzema, J., & Lebar, E. (2008). The Brand Bubble. San Francisco: Jossey Bass. Hegarty, J. (2011). Hegarty on Advertising: Turning Intelligence Into Magic. London: Thames & Hudson. Ind, N. (2003). Inside Out: How employees build value. Brand Management, 393-402. King, S. (2007). What Is a Brand? In J. Lannon, & M. Baskin, A Masterclass in Brand Planning: The Timewless Works of Stepen King (pp. 27-40). Chichester: John Wiley and Sons. Levitt, T. (1975). Marketing Myopia. Harvard Business Review. Lewis, M. (2010). The Big Short: Inside The Doomsday Machine. London: Penguin. Martin, R. (2010, Jan-Feb). The Age of Consumer Capitalism. Retrieved May 21, 2011, from Harvard Business Review: www.hbr.org Reichheld, F. (2003). The One Number You Need To Grow. Harvard Business Review. Sells, P. (2011, January 7). Advertising, Mobile, the Fall of Capitalism and Slankets. Retrieved January 15, 2011, from Vimeo: http://vimeo.com/18528044 Stillman, J. (2008, May 15). In the UK, the CEO Path Runs Through Finance First. Retrieved May 30, 2011, from Bnet: http://www.bnet.com/blog/bnet1/in-the-uk-the-ceo-path-runs-throughfinance-first/415 iek, S. (2010). Living In The End Times. London: Verson.

Word Count (Excl. Bibliography, titles and captions): 2000

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