Marketers recognize the importance of strong brands, but brands are far bigger than a function of marketing and should be treated as such. When cultivated well, brands have the ability to drive new value in the marketplace and boost a business’s bottom line.
Product Marketing Community’s Rowan Noronha sat down with David Kincaid, Founder of Level5 Strategy, to hear how companies can harness the power of their brands to transform their businesses and drive growth and why strong brands have never been more valuable than they are right now.
Rowan: I was fortunate enough to have you as my mentor early in my career and you taught me about brand: the concept that your brand is not marketing, the brand is your business strategy, and moreover, the brand is your business system. Can you kindly introduce yourself and your perspective regarding brand?
David: Everything I'm going to say is sector agnostic. The basic concepts that I want to talk about apply to B2B, B2C, startups, blue chips, everything.
Quickly, a little about me, I've spent 40 years in the world of brand management and I've been fortunate to work with some of the top brands.. I was fortunate enough to have been a beneficiary of the training programs that were available in the late 1970s and early 1980s when I started, and those allowed me to really develop and hone this concept and understanding of what a brand is. I started at General Foods and then went to American Express. I spent many years at Labatt helping create their Canadian, then North American and global brand management systems.
I then started Corus Entertainment with four buddies, which was a complete shift into the media and entertainment space, before starting Level5 Strategy almost 20 years ago. Across all of that work, whether it was financial services, packaged goods, entertainment, sports or beer, the one common denominator was the market capitalization growth and the multiples that these companies traded at as a result of being brand-focused and brand-driven. That really captured my attention when I started Level5 because I had been exposed to great business management.
I started Level5 because most people don't think of brands as assets, they think of them as marketing efforts. That's great, but marketing is marketing. Brand management is not marketing management. You market brands, but it's a different thing. It’s about how you integrate and focus your promise to the market and your ability to deliver it. That's why we say at Level5 that the definition of a brand is the asset value of a promise consistently kept. That's why I say it doesn’t matter whether you're talking about a B2B brand or a B2C brand, a public or a private sector. The fact is, it's your reputation. You have said, “This is the value I'm going to bring you in the market.” Then, do you? And, do you do it consistently? Because great brands don't drop out of the sky.
Great brands develop over time because they consistently keep their promise to the market. Let's face it, do you think everybody stands in line outside in the pouring rain to get the new iPhone from Apple because they just need a new smartphone? It's because it's an Apple iPhone. It says something about the person buying it. As much as the product does, it says something about who they are, and it's that emotional and functional set of benefits that really create value for a brand in the market. I grew frustrated in my early days because I watched brands quickly confuse their brand with marketing. It’s not about marketing, it’s about the misunderstood and under-leveraged assets sitting on your balance sheet.
Rowan: For the upcoming book, “The Brand-Driven CEO: Embedding Brand Into Business Strategy,” you state that it's becoming essential for executives to harness the power of their brand if they want to seize market share and boost their bottom line. Why is this true? Why is it true in today's current environment, especially during the period of uncertainty we’ve been going through since March?
David: I'm glad you added that last question because let's face it, owning and managing a strong brand has never been more important than it is today. Great brands stand and sustain the test of time. Over that time, you're going to encounter moments when everything is going in your favour and you're going to get moments when things don't go in your favour. Great brands and their reputation are what marketplaces trust; their resilience is really what drives value. The market comes to know what to expect. Great brands are beacons. They attract loyalty, and they attract trust, and that's because they have consistently kept their promise to the market over an extended period of time.
Rowan: How have people’s expectations of brands evolved over time?
David: Right now, people want to engage with brands, they want to buy more brands, but brands need to be something bigger and different than they used to be. That's why I say in this new book that it's up to the owners or the C-suite leadership of a company to really own the brand. People, especially the younger generations, are looking for the brand to not only continue to deliver it's quality product or service and create great value for them, but they're also looking for those brands to do more in their life. People are asking, “What's the purpose? Why does this brand exist?” It exists to do more than simply sell you a cell phone. Many companies that don't consider themselves a brand have never even bothered considering that question, let alone answering it. But right now, that's what people want to know.
Consumers know brands that make great cell phones or great microwave popcorn or whatever product may be, but they want to know why brands make these as good as they do. And to what end? What value does it create? Not just for consumers or shareholders, but what value does it create for partners? What does it create in terms of respect around diversity or respect for our environment or respect for trade and open, global thinking and markets? You have to stand for something more than what you make, because that's how people value you today. I would suggest looking at some of the organizations like Kantar or Brand Finance that have recently published ratings of the most valuable brands in the world. When you look at the top 10 most valuable brands, those are the brands that stand for something much bigger than what they make or sell you. It really does come down to creating value by standing for something bigger than what you can produce.
Rowan: Our executive audience is in the midst of 2021 planning and there are four things that they're focusing on: building out (and managing and measuring) the product marketing function and their teams; determining which markets, segments, buyers and competitors to target; recalibrating their go-to-market strategy with the right positioning, messaging, pricing, packaging and enablement efforts; and finally, orchestrating net new products and releases to market. As they think through all this, how can they leverage the power of their parent brand or their product brand to unlock value for their prospects and their existing customers?
David: I think it's safe to say most people believe a key to business success is the ability to continue to evolve and innovate as the market changes and to always be at the forefront of that change, if not to lead that change. Having that first-mover advantage is something that creates new revenue streams, cost efficiencies and margin enhancement. All of that power really comes down to being able to manage your business in a more flexible and adept way. The beauty of looking at your business as a brand is it forces you to get out of what I call the budgeting process: the process of simply asking yourself, “How much money or time or human resources am I going to put towards doing this task?” That process is fine if you're growing by double or triple digits and you're just trying to keep up with demand.
Right now, given everything we're going through, there's not many companies or sectors that have that benefit. So, the beauty of looking at your business through the lens of your brand is that it forces you to step back and ask some very important strategic questions about the business. Not just, “How can we do what we do and make it more efficient?” Or, “How can we launch a new product that is a good extension off of what we've already built our reputation around?” But you start with a key question, and it’s a question that we ask every one of our clients at Level5 before we start a project. It’s one of the simplest questions in the world but one of the toughest to answer: what business are you in? When I ask that, I'll often get a lot of confused or baffled looks from clients. We’ll often get answers such as, “We make coffee cups” or, “We make cell phones.” That’s fine, but the question wasn’t what you made or what you've produced or what you sold. The question was what business you’re in, and your brand allows you to step back and, through the lens of that brand, ask that question.
Rowan: Wow. So simple, yet I can imagine a lot of brands struggle with that question. Where do your conversations usually go from there?
David: Often, they will shrug their shoulders and say, “I'm not following where you're going with this.” And I'll answer with the fact that I don't know very many businesses that can survive without creating value. If you don't create value for the owner, the board, the shareholders, employees, consumers, whoever it might be, you probably don't have a business. Most of our clients will agree with that. The next question then is: what creates value?
Does your ability to produce 10% more of that coffee cup or that widget actually create value? It increases your sales, but does it increase value in the eyes of the market? Because what really creates value is benefits, not items or transactions, but the benefits that those things create for the market. It allows you to step back and consider the larger context in placing your business and your brand, based on its equity and reputation in the market.
I always tell a quick story of when I worked through this with Crayola Industries. I started by asking what business they were in, and they told me they made crayons. I said, “I didn't ask you what you made. I asked you what business you were in.” Well, an hour and a half later with all of their senior leadership around the table, we came to the conclusion that they were in the business of enabling creativity. It had nothing to do with what they produced or made. What their Crayola brand stood for in people's hearts, minds and wallets was enabling self-expression and creativity, all through a writing instrument.
The woman who was responsible for their product development at the time said, “That's quite interesting, so I could actually take our competencies, our manufacturing and technical skills and possibly use them to develop a whole new line of product for architects, drafts people, engineers or musicians.” Those types of ideas weren't even on their radar when we asked what business they’re in and they said, “We make crayons.” That limits your opportunity. Brands give you the opportunity, managed appropriately, to create new value in the market. With value comes great opportunity, new products, innovation and capabilities. You stretch your brand’s reputation and suddenly you're making more money.
Rowan: So just by answering that one key question, brands can understand what value they bring and the spectrum of value creation that they can go after.
David: Only benefits create value, not the fact that they make crayons and that they make 25 colors and put them in a mixed pack. That’s good, but that's not why I'm buying it. I'm actually buying that 25-color mixed pack of crayons so my kids can express their creativity.
Rowan: Fantastic. I have one last question, Dave. In the B2B world, more often than not the product strategy guides the brand rather than the brand guiding the product strategy. You just alluded to that with the Crayola example. How do you reconcile this in a way that identifies your concept of brands’ strategic value? What should this audience take away so they don't rely on their product strategy and think that that's their brand strategy?
David: As you know, we're all going through the biggest single change in our lives, let alone our businesses. So, what good is there coming out of this? For many product-driven companies, the impact of this change in the global market has forced us to step back and think differently. One lesson that I tried to put in this book is that many organizations, especially in the B2B sector, start from what I call a product-fed business strategy: this is my product, and this is how I’m going to make it better or cheaper or first in its sector year-to-year. This strategy assumes the world is going to beat a path to my door to buy it.
The difference is, because of this pandemic that we're all going through, many B2B businesses understand the world is changing but aren’t very sure where the world is going. At Level5, one of the things that we always tell clients when we hear this is it is because the world is becoming not product-fed but market-led. How has the world changed? How has the market changed? How has your customer changed?
To bring it home, I’ll give you a perfect COVID-related example that’s happening in the B2B technology space right now. Over the past several years, platforms such as Slack have started to grow in popularity as a tool to help teams work and collaborate. As is typical for innovation such as this, startups tended to be the first to adopt these new capabilities and integrate them into their day-to-day businesses. Now in 2020, the world was turned upside down, and with work-from-home becoming the new normal, companies scrambled to empower their teams and technology companies quickly moved to support them.
If we compare two platforms – Slack and MS Teams – from a customer needs perspective, in theory they check the same box. I’m not suggesting they are identical, but on the whole, they are close enough that as an executive considering each tool one won’t create materially more productivity than the other. However, what we’ve seen is a clear divide in what type of companies are actually embracing which solution. The startup space, which Slack is more strongly associated with, continues to grow as the primary user-base for the tool, while MS Teams is starting to dominate the enterprise space. This divide is clearly as a result of each brand recognizing and understanding the market they are serving, and what the specific needs of each market are. Slack will continue to emphasize how easy it is to setup, and how quickly teams can onboard, integrate, and start working together – playing well to a startup’s need for speed.
MS Teams will continue to emphasize trust, controls, and familiarity for enterprise users – playing well to the CIO/ CISO who wants to enable their organization, but not risk any sort of breach. While it’s tempting to line these two players up and create a typical checklist of features to compare the two products, that’s simply not what’s driving decision-making. The real driver is each company truly understanding the needs of their market, and building strong brands that resonate with those needs.
Rowan: Fantastic, Dave. Thank you so much for your time.
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