A few years back, I was invited to “blind test” a new Rum that a company was planning to launch in India. Now I wasn’t picked at random for this test. I was chosen because I had claimed to be a major Rum fan and loyal to a certain brand (I distinctly remember saying that I could identify my brand of Rum from among a 1000 other Rum brands. Like a needle in a haystack, I had claimed!) . So, as expected, I was blindfolded when I arrived at the venue and made to taste some 6 different Rum products. When asked which one was my Rum brand, I confidently said, “Sample No. 3”. It was raw, hard, and bitter (more like a cough syrup!). Just the rough-‘n’-tough stuff that I was accustomed to drinking. Surely, it had to be my brand! Surely, I was wrong!

I was wrong because I had never consciously tasted the product! The brand of Rum I used to drink – Old Monk – was popular in India as “the Rum that army men drink”! The brand never positioned itself as such but it was the popular perception nevertheless. So throughout my Rum drinking days, I always preferred “Old Monk” because it made me feel rough & tough! The unique design of the bottle and the content inside (Rum) reinforced that feeling. It wasn’t the suave and smooth Bacardi that college students drink. Nah! Bacardi was boyish. Old Monk was manly!

So did I change my loyalties from Old Monk to “Sample No. 3”? Surely I didn’t! In fact, I can’t even remember what brand of Rum that was! It tasted rough & tough alright, but didn’t make me feel as such. Old Monk did that!

So ask yourselves this question – what is Old Monk? A hard, bitter Rum? An alcoholic beverage? Or a rough & tough, manly brand? Ask a die-hard Old Monk fan if he (not being sexist here but it’s definitely more likely to be a “he”) would accept an Old Monk beer and you would get a resounding NO!

By now you might be asking what point I am trying to make. Well, for starters, I am simply making a case for brand-led thinking instead of product-led thinking. And rest assured, this is not fluffy stuff. Nor is it theoretical bullshit with little practical relevance. After all, how many times have we encountered product managers talking excitedly and animatedly about a product that they’ve conceived without actually understanding the product’s brand-fit? Coca-cola coffee? Really? Frito-Lay Lemonade? You gotta be kidding me…

Point is, most “brand extensions” are hardly brand extensions. They seem logical product extensions but hardly fit the brand. And since a brand is what customers think of you, they won’t buy your logic! Hence, Xerox shouldn’t wonder why its “Data Systems” didn’t work. Well, it didn’t because for a customer, Xerox is a photocopier, not a “technology-based office solutions provider”!

To justify my claim (in fact, the test my hypothesis!), I conducted a small, unscientific show-of-hands survey on Facebook. In the survey, I asked participants which new products they would accept from established brands if they were to launch them tomorrow. Brand names such as Apple were followed by options such as a) Internet enabled wrist watch b) New OS c) Memory chip for human brain d) Intelligent car e) Stereo system. Now OS is a logical extension for Apple but here’s the twist. Surprisingly (or not!), the new OS ranked 3^rd in the acceptance list whereas the internet enabled wrist watch was most acceptable. So was the intelligent car. Now what does an intelligent car mean is anybody’s guess but Apple’s core brand values of “innovation, imagination and simplicity” together with convergence and interactivity of its products are so ingrained in people’s brains that the logical extension for them has to be a car that redefines the driving experience! The same was true for most other brands that the participants responded to – FedEx = pizza delivery and time machine, Durex = A book on Kamasutra and sex toys, and Coca-cola = fast food restaurants! The participants didn’t look at what products/services these brands offer today; they went with what these brands stand for!

This reinforces the point that for brand extensions to be successful, they must emanate from a core brand idea more than from operational synergies or market opportunities. They must follow the brand logic more than the product logic. I am not saying that operational synergies are not important but what good are these operational synergies if the customers don’t accept your brand extensions in the first place? In fact, the operational synergies would automatically fall in place if you follow the brand logic effectively. And that’s the whole idea of brand-led thinking.

The same goes with New Product Developments (NPDs). How many times have you seen the R&D and the Brand/Marketing teams working together? More importantly, how many R&D teams look towards the brand teams for direction/insights? Hardly ever! Most products are developed either because they could be developed, or in some more marketing savvy companies, to fill a need-gap. Does anyone ever ask whether those products really fit the brand?

The biggest drawback of this product-led thinking is that at worst, such ill-conceived products – and there are many (Harley Davidson perfumes, Bic underwear, Marmite crisps, Smith & Wesson mountain bikes and on and on!) – would simply fail and at best they would succeed but dilute the brand in a big way. You could imagine how much money these companies would’ve lost in developing, producing and marketing these products. Such failures affect your bottom-lines, demoralize the employees and devalue the brand.

Brand-led thinking, on the other hand, inspires new products. Because products are conceived from a core brand idea, they are innovative, fit the brand perfectly, bolster the brand’s positioning and feed into each other, and ultimately increase the brand value. That’s how brands such as Google, Apple, 3M, and Lego became, and still remain, the greatest in their business. It’s the brand-led thinking that made Virgin into the company that it is. Prima facie, trains, telecom, music, gymnasiums, banking and so on, have nothing in common and yet, looking at them from the Virgin perspective, they do! The Virgin brand is all about “making a difference” – shaking the markets where customers are getting a bad deal and stepping in and giving them a good deal! (www.virgin.com). The company extend its brand only to industries if there is a potential to restructure the market, serve customers better and add value! Simply put, Virgin is the “Robin hood” of the corporate world! It’s a strong brand idea and that’s why its extensions simply work!

Brand-led thinking also engages the customers and employees alike. The cult-like following that Red Bull has cultivated amongst its customers, and maintained over the years, is spellbinding. Red Bull’s core brand idea – “to revitalize body and mind” – is central to its recruitment strategy too. Red Bull was one of the first companies to realise the power of Student Brand Managers (SBMs). The brand manager role is an informal one, with students chosen for their outgoing personalities and only those SBMs are recruited whose personalities match with those of Red Bull! This way, Red Bull not only ensures that the brand is lived by its recruits but also creates brand champions in the process.

All in all, brand-led thinking enables innovative organisations, engages customers and employees, creates a clear, unique and consistent positioning in the market and ultimately improves bottom-lines. It is, ultimately, the difference between sustainable success and otherwise.

There’s an awful lot of debate going on about the (inter)relationship between products and brands. One theory suggests that products evolve into brands at some stage, another argues that products themselves are brands; the better the products, the stronger the brands. According to some others, brands exist to sell products and their primary job, if not the only job, is to promote and create awareness for the products they are meant to sell.

The basic problem with all these theories is that a lot of people still don’t understand what brands really mean. As I’ve already made clear in my earlier post, I am not a big fan of “defining” brands but I would still go with the “set of emotions and feelings” definition, which a lot of people seem to agree with. But what I’ve seen is that people don’t understand that these emotions and feelings are not for the products that companies try to sell under their respective brand names. Contrary to what engineers, product managers and (unfortunately) some brand managers would like to believe, people don’t have any feelings for the sound of a car’s engine, the feel of snickers or the taste of a cigarette.

In my opinion, the fundamental difference between products and brands is that products, by and large, satisfy functional needs whereas brands cater to emotional needs. Products are meant to clean our teeth, take us from place A to place B, quench our thirsts, and help us communicate and so on. But wearing a pair of comfortable snickers does not give us a killer instinct and drinking a fuzzy drink does not give us joy and happiness.

Brands do that. Brands give us a meaning, an identity. In that sense, brands attain an almost philosophical level of existence in our lives. Brands, and not products, make us feel happy, confident, sexy, smart, in control, secure and so on. I could never tell a difference between shaving gels but I always prefer to buy Gillette because I just feel more like a man! No girl has ever felt attracted to me because the way I smell but I still rely on Lynx every time I go clubbing! I have never missed a date or an appointment because of my ‘Titan’ watches but give me enough money and I would junk decades of association with them to buy a Patek Philippe!

What this really means is that products, on their own, have very little, if any at all, role to play in making us feel the way we feel about the brands under which they are sold. And great brands outperform, outlive and overshadow the products. Less than 50% of Apple’s revenues today come from its computer business. Nike’s Footwear division contributes just over 50% to the company’s overall revenues and whilst Harley Davidson’s motorcycle division is showing consistent decline in revenues, its general merchandise division is recording a steady growth.

People buy brands; not products. Customers pay a premium for the way certain brands make them feel. I would never buy a tangy drink if it doesn’t make me feel ‘cool’ and ‘non-conformist’, I would never buy a motorcycle if it doesn’t make me feel part of an exclusive ‘riders’ club’ and I would never wear a deodorant if it doesn’t make me feel like a Casanova. How better the product is or how well it satisfies my functional need (or not) is almost insignificant.

So the point is very simple. Products don’t evolve into brands but a strong brand idea could translate into great products. Strong products do not lead to strong brands but a strong brand idea could lead to great products. And great products led by a strong brand idea could lend credibility to, and play an intrinsic part, in the overall brand experience.

Moreover, the concept of brand has considerably evolved over the last decade or so to include not only product brands but also service brands, place brands, people brands and so on and in my opinion, the above argument applies to these brands as much as it does to product brands.

Clearly differentiating brands from products is extremely important from a strategic perspective and could have significant implications to the business as a whole. Exactly what those implications are and how a strong brand idea is central to the overall business follows in the next blog.

At one level, Brand Valuation does make a lot of sense. Brands are undoubtedly one of the biggest, if not THE biggest, assets a company has and it’s only logical for them, like any other assets, to have some monetory value. This number is apparently quite important for balance sheet reporting, tax planning, securitization, M&A, budget allocations and so on.

But then again, is putting a financial value on brands all that sensible? After all brands are emotional relationships customers have with products, services, events, places, people etc and the mere suggestion to put a financial number to these relationships is rather absurd. Could you financially value the emotional bond that exists between a mother and her child, between two lovers, friends, between you and your pet, your old car… You get the idea? How could my feelings for Red Bull, for instance, be translated in monetory terms really beats me.

 Proponents of Brand Valuation practices claim to have devised, and to an extent, perfected the valuation methodology. According to them, brands could indeed be valued and put on the company balance sheets. Now even if we assume for a moment that brands could really be valued, how is it possible that different valuators assign radically different values to the same brands? Coca-cola itself is valued at $66 million by Interbrand (www.interbrand.com), $45 billion by BrandFinance (www.brandfinance.com), and $58 million by Millward Brown Optimor (http://www.millwardbrown.com/Sites/millwardbrown/). Does that not make highly subjective what should otherwise be a very objective process of brand valuation? Which value should the accountants at Coca-cola really put on their balance sheet? Is it really, as Wally Olins puts it whilst ridiculing the concept, ‘as meaningful as sticking your wet finger in the wind and shouting out a number’?

 Most of the valuators seem to agree that brand equity is an important brand value measurement. It’s therefore obviously logical to believe that those brands that enjoy stronger brand awareness, brand loyalty, brand preference etc should be more valuable. Now I would expect Coca-cola and Pepsi to have pretty much the same level of brand equity in most markets; we all know both the brands, we all recognise them and we don’t care which one of them we get as long as we get a cola drink! Yet, according to the respective brand valuation reports, Coca-cola is the most valuable brand whilst its close competitor Pepsi languishes at 26^th, 21^st and 39^th positions. Isn’t it strange that the most valuable brand in the world can’t even command a penny’s worth of price premium over a brand that’s considered to be only half as valuable as it is?

 Again, the financial measures that the valuators use in their brand valuation processes forecast the current and future revenues specifically attributable to the branded products. I wonder how do they do that! How do they determine how many songs sold by iTunes are directly attributable to the Apple brand for instance?  More importantly, how do they determine how many songs iTunes would sell in the future because of the Apple brand? At the speed that the technology is moving, isn’t it possible for a disruptive brand to come in and destroy all that Apple has today? Hasn’t Steve Jobs single-handedly destroyed the entire walkman/diskman industry? How would the Brand Valuators have valued Sony when it was still selling those walkmans like hot cakes?

 Talking about Apple, do these valuation studies take into account the huge impact associated brands have on the main brand? What’s Apple worth after Steve Jobs, for instance? Would it be worth as much as it is today? And if the indicators are anything to go by (Apple’s share prices fluctuate according to even the rumours surrounding Steve Jobs’ medical conditions!), Apple may not be Apple without him. Same goes for Richard Branson and Virgin. It could be argued that other brands have survived long after their charismatic owners have gone e.g. Ford, but the difference here is that whilst Henry Ford was a charismatic boss, Steve Jobs or Richard Branson are much more than that; they themselves are brands in their own rights. And we haven’t known these brands without their owners’ names associated with them.

 In some other cases, brands’ equity/value does not depend only on one or two people but on each and every individual working for that brand. This is true especially in the case of B2B service brands – consultancies, agencies, law firms and so on. Clients are loyal to the consultants/agents they work with more than they are loyal to the firms and agencies those consultants/agents work for. How could then anyone determine such brands’ value when they are built or destroyed at every customer interaction, everyday?

 All in all, although the need to put a monetory value against brands on the balance sheets is logically understandable, the very concept of brand valuation appears to be highly subjective, impractical and bizarre.

Yet, hundreds of people have already posted comments about what they thought was meant by the term ‘brand’. Needless to say, we now have a collection of definitions ranging from ‘brand as a promise’ to ‘brand as a differentiator’ to ‘brand as an experience’. One of the more enterprising gentlemen from the group even volunteered to put all these ‘definitions’ together in an attempt to give a holistic idea, if you like, of the concept of brand.

So what then is a ‘brand’? How could one define it? I know if this question is thrown open to another set of individuals, we most likely would get another set of definitions. But however tempting it is to jump in with our own definitions, I would like my readers to stop and take a step back for a moment. A ‘definition’ of a ‘brand’? Really?

Brand is perhaps one of the most, if not the most, intangible assets a business has. And a definition, by definition is extremely tangible. How could then one use something as tangible as a definition to describe or express something as intangible as a ‘brand’?

But could ‘brand’ be expressed in any other way than in words? I think it could be. And when I think long and hard about it, it starts to make perfect sense.

I think that a brand could be better expressed not in words but in metaphors. Some pioneers like Kevin Roberts (of love marks fame) have already done that. And I think this is the best way to go forward. I, however, think that successful brands are more than love marks. My biggest problem with love marks is that they are not long-lasting. Love marks is a good beginning; we now just need to build on it.

I would like to think of a brand as a wedding ring (not the tangibility but the concept, the idea of a wedding ring). Love marks are all about leaving loving memories, even of a one-night stand, or from a brand’s perspective, a great experience delivered once at one of the many touch points. And perhaps that’s the reason why most of the latest top 50 love marks (www.lovemarks.com) are flash-in-the-pan brands. How would you otherwise explain the ‘lady Gaga’ brand at number 6 on that list?

A wedding ring, on the other hand, is a commitment to that love. It’s about delivering on the brand promise at every touch point every single time, forever. And great brands do that. They are extremely committed to their customers and consequently enjoy their intense loyalty. Red Bull has done that unfailingly for the past two decades. It promises to revitalise body and mind and does it exceedingly well through not only its unique product but also through all other antics – the X-games, the music, the underground culture, and the ‘tasting’ drives and so on. Apple, Harley Davidson and McDonald’s are the few other brands that have managed to remain committed to and in turn won ferocious loyalty of its customers.

Just like a wedding ring, successful brands symbolise trust. And by trust, I don’t mean the oft-mentioned ‘trust of quality’ but a lot more than that. This is about trusting the brands with your life, or something on that scale. For instance, I have myself witnessed uneducated Indian farmers leaving a sack full of money (perhaps their only annual earnings from the harvest) in a State Bank of India (SBI) branch to be counted and deposited by the branch staff. Although SBI is by no means at the cutting-edge of banking, it still commands the respect and trust that any banking group anywhere in the world would love to command. Contrast this with most of the UK banking brands, some of them the biggest banking brands in the world, who saw their customers desert them during the credit crunch by withdrawing all their savings. Clearly, contrary to these banks’ claims and despite their advertising and CRM efforts, they only managed to maintain a transactional relationship with their customers, which is so not the concept of ‘brand’. 

That elusive emotional relationship, built over time through enduring dedication to customers, is what a strong brand all about. And when people connect with the brand emotionally, they will flaunt it openly to declare their affection for the brand and in extreme cases, differentiate themselves from others, just like happily married couples who proudly wear their wedding rings. Again, Apple, Harley Davidson and Patek Philippe stand out as perfect examples to demonstrate the point. Ardent Mac users, and lately iPod and iPhone users, not only show off their Apple gadgets but can’t even get enough of talking about them. I have heard so many Apple users tell me that ever since they started using their Apple products, they just can’t use other ‘ordinary’ products. It’s a ditto case with Patek Philippe. The Patek Philippe customers practically don’t wear their watches to know time; they use it to flaunt their status and taste. To me, these customers are ‘happily married’ to their beloved brands. On the other hand, a lot of the ‘most valuable’ global brands don’t enjoy this emotional connect. People really don’t care whether they get a Coke or a Pepsi as long as they get a cola drink. Perhaps that’s the reason why these two brands still compete heavily on price and distribution.

Having said all that, brands are as fragile as the wedding rings. Although people who love their brands might overlook some of their shortcomings and give them another chance, they could as easily discard them from their lives as they would remove the ring from their fingers. Great brands understand this delicacy. That’s why they constantly talk and listen to their customers and endeavour to improve themselves. No doubt they make mistakes but they are also quick to learn from those mistakes and put significant efforts in order to win their customers’ back. Nike after its ‘sweat shop’ scandal or Cadbury’s after the ‘insect’ scandal undertook genuine changes in the way they operated to show their honest concern for their customers’ opinion about them. Some brands on the other hand, such as General Motors never bothered about their customers and eventually lost them to better competitors.

The point that I am trying to make throughout this blog is that brands mean much more than what words could define. But brand managers could do a lot of justice to their brands if they try to look at them metaphorically. All they have to do is to translate the concept of a wedding ring and everything it stands for into brands. They could and indeed should endeavour their brands to mean to their customers what a wedding ring means to married couples. And while doing so, they must remember that it is always a two-way relationship. And just like in a marriage, brands will only get out of that relationship with their customers what they are willing put in.