Branding Part One

One nice thing about teaching is reviewing basics with a new crop of participants.  The question of branding came up from two separate sources at once, so this monograph is a review informed by two separate questioners at the same time.

One of my theses is as a start up or mall business, stay away form branding, defined as :

A service or type of product manufactured by a company under a particular name; kind, grade, or make, as indicated by a stamp or trademark. 

Here is a more developed explanation, (link removed at request of website holder, who would rather suppress ideas than engage them) and the likely reason people consider branding:

To understand branding, it is important to know what brands are. A brand is the idea or image of a specific product or service that consumers connect with, by identifying the name, logo, slogan, or design of the company who owns the idea or image. 

So far so good, except I think it is pointless to “own” an image since in the real world others using “your” logo causes you the originator no distress.  But to continue,

Branding is when that idea or image is marketed so that it is recognizable by more and more people, and identified with a certain service or product 

There is the problem:  “image or idea is marketed so...” Marketing costs money, does it get you customers?  (The answer is no, as you will see.) 

So what, no marketing?  Correct! You have limited capacity as a small and start up business.  When you sell your product or service, you earn a profit.   You are working to get enough orders from customers collectively to cover the supplier’s minimum, in a workable amount of time, profitably.  This is necessary, and sufficient.  That effort builds business like no other, and that work creates the profit to do it again.  Get your product in your customer’s stores. If you have customers, and you are building a business, you are learning what your business is as you grow.    

How?  Get your product in front of customers and get their reaction.  

And then this:

when there are many other companies offering the same service or product. 

But we compete on design, we have no “same”  service or product. You learn, as you redesign each iteration, what it is customers believe you do for them.  Any belief you know what you provide to customers before you start is delusional.  After a few iterations, your understanding is rock solid.  Why risk branding a particular concept when you are likely wrong as to what you will be offering?

Why brand when it gets you nothing expect delusional potential?

Why brand when customer is necessary and sufficient.?

When you pay people to look at your logo (marketing) you get no profit.

I think part of the impetus toward branding is summed up in this paragraph:

Advertising professionals work on branding not only to build brand recognition, but also to build good reputations and a set of standards to which the company should strive to maintain or surpass. Branding is an important part of Internet commerce, as branding allows companies to build their reputations as well as expand beyond the original product and service, and add to the revenue generated by the original brand.

I hear this kind of argument, and if you read it carefully, you see it is incoherent.  “branding... to build good reputations”? A reputation may become associated with a brand, but a brand cannot build a reputation.  So note there is another run at this idea “branding allows companies ... expand beyond the original product and service...”  In other words, once you have a good name as epitomized by your brand, then it is easier to sell new things to your old customers and old things to new customers.   But that begs the question, how did we build the brand name?  

Did we pay for a winning logo and marketing?

Or did we pursue a series of successful sales and reorder and redesign, working with the first rate in all efforts, and build a company, like say Apple?

I think people throw logo and branding in with “business license, cpa, lawyer, bank account...” all sorts of things they’ve always heard they need, so they assume it is true.  No it is not.  You need customers.  They are the most important thing.  Get them first.  Getting the product or service right  is the hardest thing, you get those with the customers.  There is so much to do along these lines that you should not put one minute nor one dime into logo, branding, image, licenses, lawyers, etc.

Seth Godin is felicitous:

Here's my definition: A brand is the set of expectations, memories, stories and relationships that, taken together, account for a consumer’s decision to choose one product or service over another. If the consumer (whether it’s a business, a buyer, a voter or a donor) doesn’t pay a premium, make a selection or spread the word, then no brand value exists for that consumer. 

A brand's value is merely the sum total of how much extra people will pay, or how often they choose, the expectations, memories, stories and relationships of one brand over the alternatives.

Design is essential but design is not brand.

That’s why Seth Godin is rich: well said.  But note this assumes, again, that one is selling undifferentiated product. And we are selling differentiated products, we compete on design.  and what is Seth’s parting comment?

Design is essential but design is not brand.

Right.  

We build brand by selling product, build brand one customer at a time at the beginning.  We get customers by design of the product, not by logo or brand or image.  With each sale we have further established our reputation and image, etc, and we have turned a profit.  Branding obliges us to pay for putative image and reputation, which is unlikely, but it can be formed as a hypothesis:

People say branding and advertising increases sales.

Prove it.

Ogilvy branded and marketed for a living, and demanded any such hypothesis be proven.  if you follow Ogilvy, the only advertising, branding etc you will do is that which gets you immediate return, at least ten times your investment.  Which means you will do nearly no advertising in business.

If not, then what?  Selling into first rate stores is necessary and sufficient.

Is the problem start-ups assume their ideas will sell well immediately, yet wonder reasonably “why would anyone buy from me, when I have no experience?  If that is the question, then the answer may be “brand.”    “Bob’s Better Buttons”  “Advanced Accounting Systems”  There, that should beat out the competition!

People working from this premise also often answer “i will compete on quality” or “service” on the absurd premise that those in the business presently fail to meet the customers requirement for service or quality.  Place an ad that shows a logo and says “We offer better service and quality than our competition..  Remember that!”  Good luck.

One cannot compete on service or quality since they are standard elements, not competitive elements.  You can only compete on price or design.  If you offer less quality or service than your competitors, then you an charge a lesser  price since your costs are lower.  Indeed, less service is one way Walmart got big, and they did cut the price concomitantly.  but  you’d have to time-travel back to July 2, 1962, when Sam Walton opened the first Walmart store in Rogers, Ark. to recreate the conditions where you can compete on price as a small business and grow, the right time and the right place, where the interstate freeway system provided for the gigantism that led to Walmarts success.

End of part one.

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