Law of Relevance: a product must create something of value for a contemporary and sizable consumer base

Individual brands, or even whole categories, that were once important for a particular consumer segment, become irrelevant as society evolves and tastes change. In the past, one of the most common situations in which “brands aged badly” revolved around strong associations with national pride. Many brands, such as US automakers Ford and GM, once successfully owned this space. Over time, however, the kind of brand attributes that they were associated with lost their importance as purchase drivers. This was due to a diverse set of realities. More relevant attributes emerged such as the rise of the Japanese manufacturer Toyota’s reputation for quality in the US, the lack of relevance in national pride to new generations of consumers and even the emergence of a “global” mindset in which consumers were willing to try new things from other markets.

The rise of new generations of consumers—with new ideas and evolving needs and wants—meant that although these legacy national pride associated brands retained their distinguishing characteristics from their competitors, their attributes were no longer relevant. This situation has been faced by a lot of European brands in categories such as retail, air travel, telecommunications, and many others in which strong brands differentiated themselves by emphasizing their origin and roots: brands like France Telecom, British Airways, or Marks & Spencer.

A current example of this situation is observed at Waitrose, the upscale UK grocery retailer. With the credit crunch, mainstream consumer segments are moving away from premium price products as they recognize that acceptable quality exists elsewhere. The ethical and “British grown” part of the equity of Waitrose is not relevant enough to consumers, who are switching to cheaper and even to “foreign” brands such as the European hard discount retailers, Aldi and Lidl, that are performing quite strongly in the UK market.

Brands such as Waitrose now face a tough question: Should I completely lose my current brand equity association so I can become relevant to new consumers? The answer to this question is usually no. Brands need to evolve their legacy to make sure the things that differentiate them from their competitors are complemented by more relevant purchase drivers. They need to upgrade the different touch points of the business, create new product brands, eliminate others, and launch new product lines.

Recent corporate history is littered with examples of brands needing to adjust their brand image to cope with new scenarios and a new generation of consumers. When telecommunications companies evolved from public-sector businesses to multi-service providers, first expanding into mobile telephony, they created new brands. These were not completely independent from the traditional fixed line operator branding but incorporated new attributes that were relevant to this new line of business. Again, the beneficial aspects of the legacy of the aging brand which provided scale, reliability, and trust were complemented by the personality of the new mobile brand. This meant that old fixed telephony brands were able to compete with strong, young attacker brands.

One of the most successful examples of this was the launch and consolidation of Telefónica’s Movistar brand in Spain and Latin America. The Telefónica brand had a strong trust in its core Spain and Latin American markets, and it leveraged on its equity as the big, traditional, and Spanish national incumbent. The Spanish side of this equation lost relevance in Spain and even became negative in Latin America, where the company wanted to move away from a perception of “here comes the Spanish colonialism again.”

Also, the emergence of mobile communications required it to have a more emotional relationship with consumers. In this context, Telefónica evolved its legacy brand to dial up the aspects of its equity that were relevant to residential and corporate consumers, such as quality, innovation, and any other magnitude related attributes that would build trust.

Also, its Spanish roots were shifted into emphasizing its corporate spirit of progress essence, which highlighted the positive impact that the company had in developing the economy in emerging markets. In parallel, it developed the younger Movistar brand. This brand would be supported by the equity of Telefónica but would allow communication with consumers in a language that was more relevant in the mobile business.

But the problem of aging brands is not limited to those with a patriotic tradition, as can be seen from the example of Burger King.  Burger King was an “old” brand that consistently underperformed its category. The essence of its message was ”We make better burgers, have them your way,” and this became irrelevant to its consumer base worldwide, who felt much closer to the more emotional approach to the fast food consumption experience that McDonald’s was communicating.

It took Burger King time and multiple changes to its ownership structure, advertising campaigns, management teams, and go-to-market strategies before it finally understood that its brand had become irrelevant to males 18–35 years old. After it recognised this and took appropriate action, the fast food giant never looked back. It reshaped its brand, tapping into its roots and embracing innovation across the four Ps—Product, Price, Promotion, and Place. Burger King’s brand evolved its “better quality burger” approach into a rule-breaking, politically incorrect positioning in which it almost tells the consumer, “Yes, we know it is fast food, we know it is red meat, but this is what you like, you like our big and greasy burgers, and nobody needs to tell you what is and isn’t good for you.”

Coupled with bold advertising and innovative social media campaigns, this put Burger King back on the map with more than13 straight quarters of sales growth. In the UK, we have recently observed how complete product lines at aging brands have died and then reinvented themselves. This situation is quite different from the previous scenarios outlined above because it assumes that the equity that existed needs to be completely wiped out before a brand is able to become relevant to a different segment of consumers. This is probably the reasoning behind the radical branding shift visible at the retail chain from Virgin Megastores to Zavvi.

Management of the CD-retailer-turned-video-game-shop thought that its strong legacy brand, Virgin, was not appropriate for the new directions they wanted for the business. This is quite interesting as it implies that the irreverent Richard Branson part of the equity of Virgin – that has worked so well in expanding the brand into new territories – was no longer relevant for the new consumer segment that the chain wanted to target. In this context, they completely wiped out all the brand equity and develop a new brand and a new mark.

Not all cases are necessary so dramatic. Sometimes brands just need innovation-driven tactical solutions to rejuvenate themselves and become relevant. For example, the alcohol industry noticed that consumers loved to drink from martini glasses, so you had Sex and the City’s cosmopolitan, bringing vodka and triple sec back on to the scene; or how about putting some Baileys on your coffee? From these examples, we can see the different directions that companies with aging brands can take.

Telefónica kept its stronger functional attributes and developed a new brand that benefits from it but that can talk to consumers in a more relevant language; Burger King made its brand edgier around its core quality attributes and invested across the four Ps to reshape its image; and Zavvi became a completely different brand with little leverage on its legacy brand (Virgin).

To make these decisions, all these companies needed to understand the purchase drivers of their consumers and which parts of their legacy brands, if any, were still relevant and differentiated them from rivals. Brands aging badly is a reality in multiple industries. Once the company acknowledges the need for change, which is often difficult given their legacy and strong brand equity, the most important decision is to decide which part of the old equity, if any, can evolve—or whether a completely new brand is needed. With the right decisions on these points, most brands can live long and healthy lives.

Law of Collaboration: a product connects well with and to all other relevant parties

As the leader in charge of growth and innovation, the Chief Marketing Officer is often responsible for generating demand of the company’s product after it has been developed.  He or she is counted on for having all the answers on how the product should be sold.  But if the job of marketing is to push the product, what happens when customers just aren’t biting?  In most cases, regardless of the true reason behind the lack of sales, the head of marketing is left to fend for herself.  It is no wonder then that the average tenure of a CMO is less than two years.

Back in 1964, Walter Landor proclaimed, “products are built in the factory, brands are created in the mind.” As a result, brand management should begin at the inception of a product idea.  Long before the product is ready to be shipped, the marketing team needs to be on the ground floor crafting and designed just exactly what product should be made in the first place. This team should play a critical role in determining the values, benefits, and features of the product the company will eventually manufacture.  In the instance that the company offers a service, the marketing team must determine not only what type of services should be offered, but also what type of people will be delivering on those services as well.

The problem with most companies is not so much that the marketing team doesn’t play a role in the research and development process, but rather that the marketing team fails to add any value to this process.  Their lack of personal insight isn’t their fault though since being in charge doesn’t mean they have all the answers.  Real marketing geniuses don’t pretend they know it all themselves, but instead work hard to find the people who do.  Thus, the Law of Collaboration partly means that ideas come from everyone, not just the CMO.

The Law of Collaboration states that a great brand connects well with and to all other relevant parties.  These other parties usually consist of customers, employees, and external partners.  Customers should have a say because they are the ones who will eventually be benefitting from the product.  Employees should have a say because they are the ones who have the most knowledge about the product.  Lastly, external partners should have a say because they are the ones who will ultimately be producing and distributing the product.

Collaborating well with customers starts with creating a dialogue.  Companies must actively engage in consumer research to find out what they want, even when the customers don’t know it themselves. This data should be treated as a strategic asset and used to put the customer at the forefront of building the brand.  Traditional research methods include online surveys, focus groups, or research panels.  And while these systems should not be ignored, marketers should be ready – perhaps even excited – to take it to the next level.

Social media and Web 2.0 have created an entirely new medium for marketers to spread their messages.  For those doing it right, the beauty of social media comes not in giving companies another way to reach their audience, but rather in giving companies a way for their audience to reach them.  Therefore, this opportunity should be seen a unique chance to join the conversation, not dominate it.  Whatever website, tool, or service the marketing team chooses to deploy, the important thing is to listen.  Good news or bad, firms should be ready to take it all in.

Connecting with employees means allowing the natural energy and enthusiasm people have for their work to shine through.  That is why creating a community of engaged employees is a highly effective mechanism for driving both brand awareness as well as product innovation.  While few companies hinder their employees from voicing their opinions, very few companies take those opinions seriously.  Even fewer have formal systems in place to allow those ideas to create real change.  With the proper support, employees easily can become a brand’s most passionate advocates and developers, which is not an opportunity to be disregarded lightly.

Connecting to external partners comes down to handling the brand with respect.  First, keep in mind that the lessons of welcoming input from others also applies to external partners.  In addition though, the Law of Collaboration here means that those connected to the brand should treat it with the respect it deserves.  When VARs or other channel partners are selling the product, they should know focus and differentiating aspects of the brand as well as anyone else.  When partners up the stream are manufacturing the product, they should show as much care in putting together the product as the brand manager showed in putting together the brand identity.  If one cannot find a partner willing to put in the effort, then perhaps it might be time to bring that function in-house. Ultimately, external partners often serve as the brand representative when the customer finally comes face to face with the brand.  Therefore, collaborating well with them is definitely worth the time, since working so hard just to drop the ball here would truly be a shame.

In its network of customers, employees and external partners, a company has the greatest set of brand ambassadors and brand architects a CMO could ever hope for.  So before rolling out the next blockbuster product, it might be wise to pay some attention to these people have to say. To look at it another way, it is their brand to begin with.  So why not let them have their cake and eat it too!

Law of Customer Experience: a great product is built through superior customer experiences and the satisfaction of consumer needs

Creating the “Wow” moment, generating a great user experience, utilizing design thinking, these are all various phrases ultimately driving at one goal – building superior customer experiences.  To see the importance of such a mindset, one needs to look no further than the world wide web.  As an increasingly commonplace presence in our lives, the Internet has transformed many traditional customer experiences while simultaneously leveling industries that failed to adapt to the new reality.  For example, ubiquitous access to the Internet has led to the explosion of email (Gmail), online shopping (eBay), and book shopping (Amazon) because these services offer a superior customer experience over other traditional counterparts.  As a result, these innovations have led to the downfall of the postal service (USPS), certain retail stores (K-Mart), and brick & mortar book stores (Borders), respectively.

For a product to succeed in the marketplace, it must provide a superior customer experience – that much is obvious.  What is much less clear is how this ambition might be achieved.  If one looked to examples above, we can see that one way is allowing the user to perform their tasks faster and more efficiently.  But improved user experiences aren’t limited to improvements in speed alone.  Building a superior customer experience is about satisfying consumer needs better than any competitor on either a functional, emotional or ideological level

Function

Great products must start by providing value through a substantial functional benefit, which are often found on Maslow’s Hierarchy of Needs. For example, at it’s most basic level, a car should reliably take a person from one point to another (ie. Ford Focus). Similarly, a restaurant should serve food that satisfies hunger (i.e. DiGiorno), and a pair of shoes should provide the owner’s feet protection from the environment (i.e. Champion). With the days of the Industrial Revolution and Total Quality Management behind us, the vast majority of products today easily meet this requirement.

Sometimes, reaching just this level of competency is all that is needed for success. Generic brands such as Eating Right (Safeway), Great Value (Costco), and Up&Up (Target) are all million dollar brands that offer a no frills product coupled with low prices. What these businesses lose in premiums, they make up for in volume, allowing them to carve out significant portions of market share in their respective industries. Of course, most brands aspire to stand for something greater than the low-cost provider.

Emotion

To provide the next level of customer experience, a product must also satisfy a need emotional want. A car brand for example could stand for safety (i.e. Volvo), eco-friendliness (i.e. Prius), or excitement (i.e. Mazda). A restaurant could stand for convenience (i.e. Pizza Hut), freshness (i.e. Papa John’s), or speed (i.e. Domino’s). Finally, a shoe could stand for comfort (i.e. Crocs), fashion (i.e. DKNY), or fitness (i.e. Reebok). For all of these product categories, there are numerous more emotions not mentioned, which showcases the proliferation of opportunities in any given industry at the level of emotion.

A product’s ability to create an emotional connection with their customers can be judged by using a system called the Net Promoter Score. Using this method, products are assigned a certain score based on their percentage of Promoters, Passives, Detractors. Generally speaking, products that are more meaningful to their users lead to a higher likelihood for them to recommend it to others. This in turn leads to a higher Net Promoter Score. In the end though, the greatest brands go beyond just being liked by their customers.

Lifestyle

The world’s top brands come to represent their users and become an expression of their users’ personality and lifestyle. At the point that a consumer doesn’t quite live a certain lifestyle, the product represents that consumer’s inner desires and aspirations. Within the car category, a Lexus owner is trying to say that he or she is relentless about the pursuit of perfection. Going into any high-end restaurant, such as Zachary’s Pizza, customers are clearly paying just as much for the atmosphere as they are for the food itself. Finally, there is no shoe brand in the world that represents a user’s aspirations as much as Nike does. More than just helping the user jump higher (function) or making the user feel more athletic (emotion), wearing a pair of Nike Air Force 1′s means the user is communicating that they are straight-up baller (lifestyle).

At this level of customer experience, product relevance is elevated to connect with the user on multiple levels. As a result, an applicable framework for studying the ability of a brand to follow this law is to look at the Phases of Consumer Interaction. Essentially, a product must create wins on all customer touchpoints with the brand. This starts with Discovery, goes on to Exploration, then Purchase, Initial Use, Ongoing Usage, and finally Post-Sale.

Within the discovery phase, competencies such as advertising, public relations, and social media should be developed. In the Exploration phase, a brand needs to worry about having a great website and word-of-mouth. During the purchase phase, a brand should offer a great in-store experience while guiding the user to the point of purchase. In the Initial Use phase, issues such as packaging and first-time experience become paramount. Ongoing Usage is where the true quality and durability of a product are tested. Finally, Post-Sale includes topics like customer service, warranties, and user communities. Mastering all these areas is obviously very difficult, but it explains why so few products and brands enjoy the cachet of Apple, Nike, or Harley Davidson.

In conclusion, a exceptional product starts with providing a basic functional benefit, grows by creating an emotional connection, and reaches greatness by becoming an extension of their consumers’ lives. Most productivity apps live at the lower end of this spectrum, which means there is a ripe opportunity for awesome product manager to make a tremendous difference.

A product becomes stronger when you narrow its focus.

Nearly 750,000 patents are granted around the world every year, with over 150,000 granted in the United States alone.[1] Furthermore, an estimated 627,000 new businesses were opened in 2008 within the US.[2] Perhaps most germane to brand management, around $250 billion dollars is spent on advertising per year in the US, even when taking into account one of the worst recessions the country has ever seen.[3]

With so many companies making so many new products and spending so much on advertising, it is nearly impossible for the average citizen to objectively choose one item over another. To help customers break through the clutter, smart brand managers will simplify the decision process by creating cohesive brands that have exactly one focus.  In return for saving them from the chaotic arena of advertising, customers will reward these brand managers with repeat purchases and higher than average returns.

Therefore, as stated by the Law of Focus, a brand becomes stronger when you narrow its focus.  By adopting just one meaning, brands can serve as a heuristic that instantly conveys the meaning and reputation of a product.  On the other hand, if a brand takes on too many attributes, the consumer is unable to easily classify the product and quickly becomes confused, dramatically reducing the likelihood of purchase.

To understand why this happens, one must first recognize that brands exist solely in the mind of the consumer.  A brand is not a company’s advertising or its logo.  Instead, it is more like the reputation of the company as determined by whoever comes in contact with the company.  In other words, it’s not what you say it is, it’s what they say it is.  Thus, since a brand is limited by the consumer’s mind, a brand managers must cater to those limitations of that space.

The more focused a brand is, the easier it becomes to comprehend, which then increases the chance that the mind will actually make the effort to understand it.  From a scientific perspective, this occurs because the human brain has a cap on its available cognitive resources and will naturally prefer any route or function that contains the least complexity.  Or to put it in more simply, it’s hard to think, so people sometimes just choose whatever’s easiest.  Therefore, in order to grow, a brand must forget about its laundry list of positive attributes and make the effort to choose just one.

Choosing a Focus

In deciding the focus of a brand, a company should be guided by the three following criteria: profitability, leadership potential, and passion.  To start, a brand’s focus must satisfy a unmet need important enough to generate a demand for the brand.  In addition, the audience with that need must be large enough to bring in an adequate amount of revenue to support a business.  While developing a brand that has profit potential seems obvious on the surface, countless start-ups are formed each year based off a wild idea that the founder personally thinks is great.  This idea never gets tested by an independent panel until the first prototype hits the market.  And by then, it’s too late.

Secondly, a brand’s focus should stand for a core competency the company is the best at doing, or at least can become the best at doing.  Conversely, if a company decides to continue with what they are already doing – even when it is something they can’t win at – then they can’t win at it!  Theoretically, not going down a path of known obsolescence is easy. In practice though, there is immense difficulty in learning to swallow one’s pride and recognizing what the company’s – and thus the brand’s – limits are.

Finally, a brand’s focus should represent something that excites the people working to develop the brand. A brand’s focus will encourage employees to work harder than they would otherwise. It helps guide all their actions because they have a clear understanding of the overall goal and mission of the business.  Additionally, in every business, there are always periods of trial and tribulation when it becomes hard to remember the purpose of the company.  It is exactly in these instances that a great brand will remind the company why they’re fighting in the first place.  Consequently, choosing a proper focus will not only empower the company’s founders and its employees to work hard in general, it will give them the strength to make it through the tough times as well.