Part one is here, and I continue my essay based on interaction with two people who presume branding is part of startup.
One of the problems has to do with categories, branding vs advertising, wholesale vs retail. One advertises brands. A retailer advertises in the sense where there is some sort of display ad, and the ad will feature a brand. Wholesalers do not.
if a wholesaler is selling to retailers, then of course the wholesaler may desire to do a ad allowance, as outlined in my book. In the case of an ad allowance, the name of the wholesaler is included in the ad. The name of the wholesaler functions as a brand, but in these cases no one recognizes the name. The wholesaler requires the retailer to include the wholesaler’s name not because the wholesalers name draws retail sales, but because the retailers competitors will see the name of the wholesaler and contact that very wholesaler about buying goods from the wholesaler for the retail store. here again, the brand development, such as it is, is organic and cumulative.
So a start up wholesaler under no circumstances should be actively branding and advertising. So that leaves the startup retailer. Although it is debatable, I think the start up retailer is ill served by depending on advertising. here again, the smart way is build customer loyalty, and then open your business.
If you have not proven you have customers, how could you be confident a brand would reach them? One correspondent replied:
You are absolutely right - where are my customers? I can't even answer that question at the moment.
And another -
Ever consider branding? IMO, branding builds equity, it creates consumer loyalty.
How did you form the opinion branding builds equity? How does branding create consumer loyalty? Is the assumption not getting the cart before the horse? Doesn’t the sum total of customer experience and the concomitant word of mouth establish brand? Or is the idea that you can design a logo and advertise it and people are somehow mysteriously drawn to it?
Why do people choose to buy Adidas over Nike and visa versa? Brand loyalty. Why do people buy Grey Goose Vodka as opposed to the cheaper Costco Vodka even though it is made from the same factory in france and distilled the same way? People want to be seen drinking the Grey Goose name, which is created through branding.
This begs the question, whence the brand loyalty? is it gained organically, deal after deal, overtime? Or was it money bombed in? Ben & Jerry's, Costco, Lululemon, Ferrari, Sudoku and Body Shop are all well known brands that have never put a dime in advertising. They all grew brand organically. Lancome did not for its first fifty or so years. Coca Cola blew one billion dollars advertising new formula coke in the 1980s and its brand loyal customers failed them.. Washington Mutual, Enron, Worldcom and every politician puts immeasurable sums into “branding” only to go bankrupt. And then Patron Tequila was slapped together by hairdresser Paul Mitchell out of Vegas. So have you built a billion dollar hair care business, and you are at the right place and time to drop another billion making people think your product has been around since Columbus? Or not?
1.) Once you have developed a new product, created a product line, have gained orders from retailers, trade shows, etc. and are all set to carry out production with your overseas supplier; what is your marketing/branding strategy? Do you license/private label the products you design to companies and alleviate the pressure of marketing the product or do you take control of the brand and try to build more equity? i.e. logo, website, social media, brochures, catalogs, etc?
Do you see the pattern where brand seems to have this power that must be harnessed or shared? I reject the premise. You start the Mine Name Company. Done! I've said nothing about IPR in the book because I wanted to develop that separately. I am anti-IPR, pro-contract. Yes to licensing/private label, branding after your own name, everything happens, everything that makes money.
The customer is most important, getting the product right is the hardest thing. marketing is in essence your job. You do all the other not so much to alleviate pressure, but to extend into all markets.
Why is it a dentist will clean your teeth, charge you, and lo! your teeth are clean. A painter will paint your house, charge you, and lo! your house is painted. Why is it advertising is the only field in which youa re told “advertising will increase your sales, “ but if and when it does not (which is the case in almost all instances), too bad. You already paid! Is there any legitimate business that works on that model? Only casinos (and society does not enforce gambling debts), state lotteries palm readers and such work on that basis. Even stock brokers only buy and sell for you, and tell you up front “past performance is no indication of future returns.”
No one should start a business or continue of they have not read Ogilvy on Advertising. it was his teaching that proved accurate, and why I have spent nearly nothing on advertising (or SEO) yet have more business than I can stand and have high SEO rankings. Ogilvy says to advertiser and branders, "prove it." The TV series MadMen is based on Ogilvy, the revolutionary.
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