Patrick Barwise, Professor at London Business School – Brand strength
What is the key to building a strong brand?
The key actions are easy to say but hard to do well. You first need a clear brand strategy that spells out who you are aiming to serve and what you are promising to do for them; and you then need to deliver (or even over-deliver) on the brand promise really reliably over time. Customers will then be satisfied, come back to you again and again, and recommend your product or service to others. To do all that profitably, year after year, requires ruthlessly managing your costs while also constantly improving and innovating to keep on top of technology trends, what your competitors are doing, shifts in customer preference, and so on. Great brands built this way are the foundation of all long-term business performance.
When we hear ‘brand’ we tend to think of consumer markets like packaged goods and luxury products and services. Are you saying brands are equally important in business-to-business (B2B) markets?
Yes. In the past, B2B companies tended to think brand strategy was irrelevant to them – but they all knew that reputation was important. I think they are now more comfortable with the word ‘brand’ (which includes the firm’s general reputation for quality and reliability) and the idea that, like consumer brands, B2B brands too need to be constantly measured and managed for the long term. My first job was with IBM – a long time ago! – when IT was still mainly about mainframes. It was one of the first B2B companies that really understood the importance of the brand. Our products were always priced higher than the competition but, as people said at the time, ‘no one ever got fired for buying IBM’. That shows the value of a strong B2B brand.
You say brand-building starts with defining the target market and the brand promise. Can you please say more about that?
The target market and the brand promise go together and they need to evolve together over time. What matters is that the brand promise is, at all times, relevant to, and valued by, enough people willing and able to pay for the product or service – and to choose it over the competition – to create long-term value for the business.
Is this the same as textbook ‘Segmentation-Targeting-Positioning’ (STP)?
Textbook STP, if it’s done sensibly, with a true customer focus, can certainly lead to the same brand strategy as what I’m describing. Unfortunately, however, some marketers – especially those with an advertising background – are so obsessed about differentiating the brand from the competition that they unnecessarily limit their potential market by targeting only a narrow segment and/or a distinctive position within the market based on a ‘unique selling proposition’ (USP) – that is, a feature or benefit customers can only get from their brand.
So you’re against market segmentation?
Not necessarily. In some cases, it does make sense to focus on a narrow set of customers and meet their needs better than the competition can. But there’s a big trade-off: the narrower your target market, the smaller your potential sales and, in most cases, the higher your unit costs. And if you segment the market into lots of different segments and try and serve them all with tailored offers, you will add a lot of complexity and cost to the business. My general advice is to keep it simple, offering the best value for money to the biggest and most valuable group of customers. As always in marketing, there are exceptions, but not many.
What about USPs?
USPs, in the sense of distinctive features and benefits, can be ‘nice to have’ but play only a small role in long-term brand and business performance. There are two reasons. First, customers rarely buy a product or service because it offers something unique. Usually, they buy the brand that they expect to meet their basic needs from the wider product category – accounting software, mid-sized family cars, flights to Paris – a bit better or more conveniently, or just more reliably – than the competition, and at a reasonable price. USPs are usually much less important to customers than the basics. The second reason is that, in the few cases where a USP does add value to a significant number of customers, it’s usually easy for the competition to copy it, especially in service businesses. What most customers want is simply better products and services; they don’t care about whether these are distinctive. This is the rather revolutionary argument of my 2004 book Simply Better, co-authored with Professor Seán Meehan (IMD), which the FT described as ‘a marketing book for people who have read too many marketing books’. It was the first non-US book to win the American Marketing Association’s annual Berry-AMA Book Prize.
In Simply Better, you distinguish between (i) the brand offer itself – a combination of the product/service and the way it’s priced and distributed – and (ii) communications associated with the brand offer– the brand name, packaging and advertising. Why is that an important distinction?
Our key argument was that the brand offer itself should aim to be ‘simply better’ by delivering the basics better than the competition, rather than obsessing about being distinctive. But brand communications do need to be distinctive in order to ‘cut through’ all the noise and clutter in today’s markets and wider society. That’s why really creative advertising, that looks and feels different and captures customers’ attention, is so valuable. And it’s why the ‘look and feel’ of packaged goods needs to be bold and attractive to stand out from the crowd on the supermarket shelf. The problem comes when marketers mistakenly think that, because brand communications need to be distinctive to be effective, the same applies to the underlying brand offer. If you really focus on what matters to customers, you won’t make that mistake.
Which is more important for building a strong brand, the brand offer itself (product, price, distribution) or the brand communications (branding, advertising and packaging)?
In almost all cases, brand value is mainly created by the underlying offer being ‘simply better’ than the competition at delivering the basics, year after year – reinforced by great branding and advertising, but with these playing only a supporting role. That’s true of almost all service brands and B2B product brands, and most consumer product brands too. The only exceptions are when (i) the underlying product itself is identical between brands, (ii) all the brands are widely and easily available, and (iii) consumers aren’t buying only on price. For instance, once an over-the-counter drug comes off patent, other companies can sell it under their own brand name or, at a lower price, as a generic. But many consumers will still pay more for the branded product, such as Bayer aspirin (and there’s even some evidence that Bayer aspirin is more effective, even though the molecule is generic). There are also examples from beverages, where most consumers’ find it hard to distinguish different brands in a blind taste test (and, even when they can – as in the famous ‘Pepsi challenge’ – the results are not a good predictor of sales in the real-world market). The classic example is a product invented by the Poles – wodka. Wodka – or vodka, to the Russians – consists only of ethyl alcohol (C2H5OH), a commodity; water (H2O), another commodity; trade marketing (not a commodity, but all the main drinks companies have pretty similar trade sales and distribution arms); and brand communications (branding and advertising). Almost all the value of a brand like Grey Goose is created by brilliant branding and advertising. But, to repeat, these examples – Bayer, Coca-Cola, Grey Goose – are exceptions. The usual rule is that brand value is mainly created by the offer itself.
In The 12 Powers of a Marketing Leader (2016), co-authored with former McKinsey partner Thomas Barta, you argue that most leadership books are missing at least half of what matters to marketing leaders. Could you say more?
All leadership books discuss how to build and lead a team. The best ones also talk about the importance of understanding and managing yourself, to play to your strengths. Of course, both of these are important. But, for CMOs and other marketing leaders – and, we think, leaders in other functions like operations, IT and finance – they are only part of the picture. For The 12 Powers of a Marketing Leader, we surveyed 1,200 senior marketers in 80 countries and analysed one of the world’s largest 360-degree databases, covering both marketing and non-marketing leaders – over 68,000 individual assessments. The main finding was that over 50 per cent of marketing leaders’ business impact and career success was explained by their leadership skills and behaviours – more than all the other factors we measured combined (technical marketing skills, company context, personality, gender). And their leadership success was as much about managing relationships with their bosses and their non-marketing peers as with managing their teams and themselves. All four dimensions are important, and we think much the same applies to all leaders below the CEO.
What is marketing’s role in the company?
‘Marketing’ refers to two things. ‘Narrow’ marketing is, essentially, about how to spend the marketing budget for maximum benefit. It covers everything controlled by the CMO – customer insight, advertising, promotion. Getting this right involves technical marketing skills. It’s getting increasingly complicated and difficult – but also interesting! – because most of the traditional tools (like TV advertising and market research) are still important but we now have more and more additional tools (like online advertising and data analytics) and we need to find the best combination to enable the company to achieve its short- and long-term objectives – all within a fixed budget. Even more important in most cases is ‘broad’ marketing, that is, marketing’s role in helping the company develop and reliably deliver a ‘simply better’ offer. That is a collaborative process in which marketers, inevitably, have limited power to tell other people what to do. They need to listen to their non-marketing colleagues’ views and issues and work with them, drawing on their own customer understanding and expertise, to enable the company to keep expanding what we call the ‘Value Creation Zone’ (‘V Zone’) – the crucial overlap between the customers’ needs and the company’s needs. And they need to support this with great ‘narrow’ marketing.
What’s changing in marketing, and what’s the same?
The fundamentals haven’t changed, especially for ‘broad’ marketing, although the way companies deliver value is constantly evolving because of technology and market trends, and also the constant pressure on costs. Because of Covid-19, many of these trends, such as online shopping and working from home, have been accelerated in the last year. ‘Narrow’ marketing is also constantly changing because of new digital technologies and media. Most of my work in marketing is about the longer and broader issues that don’t change much, but I also have a long-term interest in media, especially television: my PhD looked at some of the patterns (attitudes and routine choice behaviours) in both consumers and TV audiences. But my long-term interest in media is as much from a societal perspective as from a marketing perspective.
You’ve just published another book on media, could you say more about it?
It’s called The War Against the BBC. It’s co-authored with Peter York, a British cultural commentator, management consultant, author and broadcaster (best known for co-authoring an iconic book in the 1980s called The Official Sloane Ranger Handbook). It analyses the external challenges now facing the BBC (Netflix and all that) but focusing mainly those within the UK, overwhelmingly on the right, seeking to weaken and undermine the BBC for a mixture of commercial, political and ideological reasons. It’s highly political and rather controversial!
Further reading: [the four books]
Patrick Barwise is Emeritus Professor of Management and Marketing at London Business School. He joined LBS in 1976 after an early career at IBM and has published widely on management, marketing and media. He is also former Chairman of Which?, Europe’s largest consumer organization; Chairman of the Archive of Market and Social Research; an Honorary Fellow of The Marketing Society; a Patron of The Market Research Society; an experienced expert witness in international commercial, tax and competition cases; and an advisor to, and early investor in, several successful online business start-ups.
Last Updated on April 13, 2021 by Karolina Ampulska