The Predictable Recipe Of Branding
August 18, 2020 / /
From an interview/podcast I just made with the great Chiara Covone on Marketing & Branding. Great discussion. Today we are going to talk about brands, brands from today and tomorrow. You worked with many well known brands over the years, in very different industries. What do you think all successful brands have in common? I agree with the definition of Professor Sharp, which is very clear in this respect. Successful brands usually command a vast market share, generated by mental and physical availability. Which means (1) they are able to offer, at scale, good value-for-money product propositions, (2) they go to market in an aggressive way (Trade Marketing, so to speak), and (3) they invest consistently in Marketing – ideally with decent content, to make sure people know they exist. In a nutshell, successful Brands share the same way of operating. Having a visionary founder, a strong brand/company purpose, or a full 360-degree sustainability agenda is in no way a predictor of in market success. It’s very often a burden, or at best a PR gig. We measure success according to the KPIs of a linear model: produce – buy – waste, repeat. We don’t buy Coke or apple for their purpose. They don’t succeed thanks to their transcendent values. Coke just released their last campaign, which is heart-warming. It is unfortunately only excellent Marketing. The role of people in the success of a brand People is the first step to build a successful company and brand, before product and before processes. The order with which to structure an organization should be: (1) amazing people – rallied around the same business ambition; (2) lean processes; and, (3) products that do solve people’s real problems. Also here, let’s be pragmatic. Problem solving beats emotions in the long run for most categories (you can get excited about toilet paper, a mattress or a frying pan, but there is an objective limit to being ‘sexy’ for most of the categories that we buy). Individual needs vs. local, regional and global. What are the 3 trends and the patterns we can identify? The key challenges for the future are all global: (1) adopt new tech and the right user cases (from AI applied to retail stores to the health industry of the future); (2) embrace sustainability without disrupting supply chain and pricing especially; (3) completely outsource brand narrative, thanks to the magic of the digital world. Media will be more and more centralized, and so will Trade, leaving local and regional nuances to a very marginal role. Regional and national are mind constructions, which come from the past century. Besides very few local shopping festivities (think of Ramadan) or local needs (Asian Women are smaller; silicone or leather accessories sell less in warmer markets), assortment and new trends will speak to a global audience, and, on the other side, Marketing and execution will cater to the individual, with nothing in between. Think of health in the future, as we said. While innovation will be dominated by investment scaled up globally, therapy will be individualized – n = 1, thanks to solutions like AI & Block-chain. There will not be an ‘us’ any longer, besides ‘us’ being unique individuals or a part of global challenges, like saving our planet. You worked in many global roles – we see many developing countries leap-frogging their development path. Which markets/regions are the biggest source of inspiration for you and why? Fashion, for example, looks at Asia as the only engine of growth and innovation for the near future. India is probably the largest opportunity that we all have in the near term. China has not yet unlocked its full potential, being dominated by Chinese players, who are protected by the state. Africa could be an opportunity only for the long term. Europe, Middle East and Americas will be less of an inspiration -and I repeat ‘inspiration’, due to their declining economic trajectory and ageing population. Purpose driven brands – should brands have a POV around global issues? Brands will need to sit on the right side of history and shouldn’t brag about it. Being sustainable or diverse will just be hygiene factors, and not differentiators. Brands don’t need a purpose to succeed. Brands need a bold ambition. You have to answer the question: why the hell do you exist, and are you able to stand out? Are we moving away from democratization? Yes, thanks to technology. Brands treated everyone the same way. Brands democratized quality and service, for all. The future will look different. Coming back to my health example, therapy and insurance will be individualized, and really tailored to our individual needs. The question is: if brands are not the same for everyone any longer, how do we ensure that there is no discrimination? How can I correct my mistakes and not be penalized for my unsafe behaviors? Is it fair to pay a different price, for different services, and when? People at the margin of society will remain marginalized. What does it mean to be a luxury brand in 2020? Two trends here. There has been an increasing integration or enrichment of product with experience. Think of the apple or Hermes stores. Product alone doesn’t mean anything. Due to Covid-19, luxury brands are moving online for the first time. So, the next level of luxury will be an integration of the physical experience with some mind or virtual experience, plus a superb customer service, almost like a VIP club on steroids. The ultimate luxury, in a world full of technology, will be to have our butler – our alter ego always there for us. Alexa 2.0 will be our ultimate luxury. The opposite is also true. Luxury can be found in ultra-niche experiences, which are not scalable and not digital by choice. Think of the artisanal Chef, who has 10 tables only, or the small shop in Florence, who rediscovers the beauty of the zero-km bottega. Let’s talk about brand longevity (McKinsey statistic). How do companies have to adapt to this evidence? They have to adapt fast. Speaking of Fashion, McKinsey predicts that 70% of brands/companies will be on the edge by the end of this year. I believe this is accurate. This will boost the global concentration and the luxury trends that we discussed. A few global powerhouses will survive – at both ends of the pricing spectrum (premium and cheap), plus a network of niche players. Most brands are reacting to the current stress in the same way: assortment rationalization (once again, same trend of limiting local heroes), Marketing cuts, org adjustments, brands clean-up. The right things to do short term. There is no better moment for market leaders. There is no better moment for major changes in new tech, sustainability and Marketing. We almost have permission to make the boldest moves now. From Linear to Circular Economies? What is your POV? Linear will die, giving way to circular and decentralized. Not because circular is better or more profitable or it has a higher impact. It’s only because we can’t afford the old system any longer, if we want to survive as human beings on this planet. Brands who will move first on circularity, even before any government, while keeping their Marketing mix intact and as compelling, will win. The larger industries will need to adjust first and fast: energy must go first (fossil fuel). Then, health, transportation, clothing, food & beverages.
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