Q: We enjoyed reading in last Friday’s column the reaction of McDonald’s to your column about them two Fridays ago. As we were chatting about this during lunch, we asked our marketing VP about her thoughts. She surprised everyone when she took the occasion to bolster support for her recently submitted marketing budget when she said: “That’s what I’ve been saying about building our brand with heavy advertising, PR and sponsorship. As diamond is forever, so is an established brand. But you have to invest in establishing our brand.”
As you may expect, she was bombarded with lots of questions. Two questions stood out as unanswered and which we’d like to ask for your Marketing Rx. First, “Is heavy advertising, PR and sponsorship the way to build a brand?” Second, “Is brand like a diamond; is brand forever?”
A: If you look at the history of strong and successful brands, you’d be tempted to say “yes” to your two questions. But if you look at the much thicker history of failed brands, “no” will be your answer. So the truth is in a yes-and-no marketing reality.
When you ask scientists how to state this reality, they (or at least those we know) will say something like this: “Advertising, PR and sponsorship are a necessary condition but not a sufficient one. Brand is like a diamond sometimes but not most of the time.”
Let’s tackle your two questions in turn. “Is heavy advertising, PR and sponsorship the way to build a brand?” When we’re told that these marketing tools are a necessary condition but not sufficient, this means that they can build a brand but they’re not enough. So what is enough? What is it that must work with advertising, PR and sponsorship to build and establish a brand?
According to Professor David Aaker, the inventor and developer of the brand equity concept, sufficient condition is in the brand’s delivery to the consumers of its “value proposition.” If the brand does what it promised to do and do so to the consumers’ satisfaction, then consumers will build and establish that brand. So it’s the consumers who will build a brand and not the marketer. It’s basically wrong to say that you (the marketer or brand manager) will build your brand. The accurate statement is to say that you will make the brand’s target consumers build and establish your brand when it satisfactorily delivers to them its promised value.
The next reality check question is about consumer satisfaction. Does more satisfaction lead to higher customer retention and in turn, does higher retention lead to greater consumer loyalty to the brand? The research of Professor Roland Rust of Vanderbilt University in the mid-’90s had already shown that this cause-and-effect chain does not necessarily happen. Over time, even with continuing consumer satisfaction, the bulk of a brand’s customers settle at a 70 percent to 85 percent “merely satisfied” status and therefore come to belong to a “borderline retention-loyalty” segment. Only 5 percent to 10 percent become delighted with their brand and count themselves in the “raised retention-loyalty” segment. Sorry to disappoint you dear readers but that’s all that there is as pay-off to your investments in customer satisfaction and retention and to your loyalty programs!
So is brand like a diamond? Is the brand forever? This remarkable fascination with brand continues in the marketing community. It’s probably going to set a record as marketing’s longest-lasting love affair. The height of the brand celebration probably reached its peak when David Aaker published his 1995 book, Building Strong Brands.
And that peak never saw a decline, at least not in the Philippines. The larger and greater truth is that brands and brand equity die or can die. So what can make it last?
Professor Roland Rust’s rigorous research work on this issue is worth studying. His series of research has uncovered that a strong brand, a leader brand, can only last as long as it continues to resonate its consumer’s changing priority product values. The brand and its brand equity must therefore change with its consumers’ changing needs and wants. When it does not or when competition beats it to the draw, then it will begin to lose its equity and leadership.
It follows then that brand is not forever. According to his research series, it’s the customer who is forever. For as long as we maintain a “continuing conversation with our customers and learn how we can continue resonating with their changing values, we will eventually own customers or attain what Professor Rust called “customer equity.” That’s the needed shift in mindset from being brand or product-centric to becoming truly customer-centric. There’s a whole lot to learn about this in his 2000 book, Driving Customer Equity. And just look at this book’s sub-title: How Customer Lifetime Value Is Reshaping Corporate Strategy.
All this is not to say that brand is no longer important. It is but just as important is the “new” marketing mantra on customer equity. We put a quotation mark on the word new because customer equity has established its critical significance in the year 2000, some 12 years ago. And yet the Philippine marketing community has yet to recognize it alongside brand equity.