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Where to start?

There is no single approach to brand extension, but what are the factors that drive success? Let’s start with a short story.

The Rowntree story

In 1881, Rowntree launched Fruit Pastilles, and then in 1893, Fruit Gums. Their success allowed them to launch new chocolate products, including chocolate beans. However, through the early 1900s, Rowntree struggled to make milk chocolate to match the quality of market leader, Cadbury’s Dairy Milk. Then in 1931, George Harris became marketing manager for chocolate products. So mining his knowledge of marketing and consumer research gained in America, he launched Rowntree’s Chocolate Crisp, later renamed KitKat (Figure 1). As a result there are over 200 KitKat brand extensions today.

Rowntree's Chocolate Srisp brand extension became Kit Kat in 1937

He also transformed Rowntree’s Chocolate Beans into Smarties.  As a result, brand extensions now available include large Smarties, Fruity Smarties, and ice cream Smarties.

While launched as ‘fruit confectionery’ brand extensions, KitKat and Smarties, grew into discrete, and successful new ‘chocolate’ brands. As a result, Harris became Rowntree’s company Chairman in 1941. He is also now recognised as a father of modern marketing (Figure 2).

George Harris, Rowntree's - a father of marketing
George Harris, Rowntree’s – a father of modern marketing

Benefits of brand extension?

Let’s look at the benefits of brand extensions to better define ‘success’. In summary brand extensions are a source of growth, or reputation, or both.

Growth by increasing market penetration or share, for example by increasing usage, attracting new customers, or entering new customer segments or markets.

Also reputation, by boosting awareness, rational or emotional perceptions.

Brand extension strategies

These fit nicely with the brand managers’ role to maximise profits and brand equity. Of course, none of these aims are mutually exclusive. What seems apparent however, is that the further a brand extends, the greater the dissonance from the core. While this implies greater opportunity, and potential for a ‘new’ brand, it also implies greater risk. (Figure 3). Of course, it is not always the brand manager that drives innovation, but often the R&D department. The question then, as George Harris understood, is whether a brand extension or new brand strategy, will inspire greater success.

Brand extension vs. launching a new brand?

So is it better to extend a brand, or launch a new brand? Here’s a summary of the pros and cons of each option (Figure 4). In summary, extending a brand allows it to benefit from its existing brand awareness and equity, thus potentially reducing launch promotion costs. Conversely, launching a new brand, builds new equity, though at higher cost.

Pros and cons of brand extensions vs. new brandss

How to extend a brand?

There are two principal ways; either brand extension by evolving from the brand core or to realise a vision.

Brand extension by evolving from a core

Boots No7, launched in 1935 as a retailer own brand. Originally it was a skin care line, though cosmetics followed and then took off after the war (3). Over the years the brand had many make-overs: both changes in livery (blue, terracotta, brown, grey, black etc). Also many brand extensions, though growth was impeded through a close association with Boots. Thus in 1971, the decision was made to build an independent fashion brand, though exclusive to Boots. Product innovations also added to the ‘skin care’ equity, with (Special Collection) Positive Action Cream (1980) (designed to compete with upscale skin care brands). In 2007, No7 went a step further by launching Protect & Perfect Serum. A BBC Horizon documentary declared it the only product on the market to have proven anti-ageing effects. As a result it caused a storm in Boots’ aisles with stock selling out in just two weeks. Today ‘Protect and Perfect’ is a sub-brand extension in its own right. It sells well beyond Boots’ stores (Figure 5).

Brand extension from the core requires understanding on the nature of the brand equity, its strengths and weaknesses, and then building on those strengths, or eliminating weaknesses.  

No7 in 1935 and today

Brand extension to realise a vision

Olay, a pink beauty lotion, (or Oil of Ulay, Olaz, or Ulan), as it was originally known, launched in South Africa in 1952 (4). Promoted as ‘the secret of younger looking skin’, it eventually became global category leader. While largely a single product brand, it was  clearly perceived as ‘for younger looking skin’. In 1985, Procter & Gamble therefore acquired the brand, and invested significantly in R&D, to create a raft of brand extensions to better deliver the said promise. As a result, brand extensions now include Complete, Total Effects, ProX, Regenerist, Regenerist Luminous, Classics, Fresh Effects, Body (North America) and White Radiance (Asia).  They also include lots of ingredients to deliver the younger looking promise: including a broad spectrum sunscreen, retinyl propionate (a vitamin A derivative), glycerin, niacinamide (vitamin B3), and amino peptides.

Lessons learned from other brand innovations

Gucci brand extensions

Gucci started out making saddles for wealthy horsemen in Tuscany in 1921 (5). Impressed by some of the luggage he saw guests with at luxury hotels, he then employed fine leather craftsmen, and the latest machinery, to make luggage. He also set up stores to reach elite customers. Clothing then followed in 1964, as did the iconic double GG logo on belt buckles. Then through the 1970s, as the company established a reputation for classic Italian style and luxury, it prospered. While ups and downs followed, eventually in 1990, the hiring of a strong creative, Tom Ford, to design a ready-to-wear collection, took the company to new heights. Most recently the brand extended into homeware and decoration (Figure 6) and social sharing via digital media has inspired even more growth.

Gucci Home Decoration

Caterpillar Inc. (sometimes shortened to Cat) is the world’s biggest manufacturer of construction equipment. The name results from the merger of two companies in 1925; one of whom Holt, whose tractors hauled guns in World War 1. During World War 2 their trucks also found fame with the US Navy who used them to build military bases. Then through the 1950s, the company made a series of acquisitions, bringing new products to market under the Caterpillar name.

Caterpillar brand extensions

By the late 20th century, Caterpillar was synonymous with reliability, durability and technology, and a distinctive yellow livery.  In 1994, therefore, via a carefully controlled licensing programme, Caterpillar extended the brand to a other merchandise. Firstly, and most famously, boots. The footwear sector has since boomed, and it remains the most successful consumer product licensing segment to date. In the late 90s Caterpillar then issued its first watch license, to Catwatches.com (Cat calls them rugged timepieces), and in 2016, to mobile phones. According to Kenny Beaupre, Caterpillar Brand Licensing Manager, “This builds positive brand awareness which helps in many ways. It also connects new and existing audiences to Caterpillar’s products and services. We’re fortunate people like being associated with our brand, and Cat licensed products are a great way to show this connection.

Caterpillar brand extensions

The Walt Disney Company  brand extension

Walt Disney, a shy yet visionary man, famously created his first sound cartoon, Steamboat Willie in 1928 (4). It featured what was to become the world’s best known mouse.  Later in 1935, he went on to create the first full length, animation, Snow White and the Seven Dwarfs. Then in 1955, he opened the world’s first amusement park, Disneyland (in Anaheim, Los Angeles). To fund this he also diversified into TV programmes, including the Mickey Mouse Club, and live action movies. As a result, by the mid 1960s, when Walt Disney died, he’d set high standards, instilled strong beliefs in, and established a clear vision for the company, “to make the world happy”.

This vision has since guided Disney’s “imagineering”. 

Marketing Inspiration

1. Brands grow through evolution (from a brand promise), or revolution through innovation to realise a brand vision. So build clear brand values. And also answer the question – “what does the brand stand for”? (Figure 8)

Brand extension through evolution or revolution

2. Great brands, and thus brand extensions, tend to have high awareness (at least in their niche). And also distinctive rational and emotional benefits. So pay particular attention to boosting the latter, as people pay more.

3. Successful brand development springs from clear insight, a strong creative leader, visionaries, a great R&D department, or a strong brand belief system.

4. Don’t think narrowly i.e. within a market segment, to extend a brand. However, do understand customers, and their views on your brand. Also think creatively: to uncover an insight or thread to connect the brand parts, and inspire a clear direction. Further even if a finding is untrue, it could still inspire growth.

5. You are more likely to reveal extraordinary brand extension ideas, through a culture of innovation. So hire folk who are bold and not blinkered.

6. Don’t cannibalise your own sales unless you are making more money i.e. higher margins.

7. Slapping your brand name on any product risks eroding rather than enhancing your brand. So avoid stretching too far, and only use a new brand when dissonance, and upside potential is great.

Need some help? Our brand strategy services are always tailored to your needs.

References

1. The Rowntree Society

2. Sébastien Jaulent, Katia Luxin, and Yna Sacko, Dissertation on ‘Advantages and Disadvantages of Brand Extension Strategy for Companies’

3. No7 Beauty

4. Olay – Our History

5. Gucci

6. Caterpillar and their shop

7. Capodagli Bill, Jackson Lynn, The Disney Way – Harnessing the Management Secrets of Disney in Your Company  (1988)

We’re marketing folk, rather than politicians, so think in a particular way. We also have roots across the country, and don’t live in the London bubble. So reflecting on marketing politics over the last 5 weeks, and Government, since the EU Referendum, this is to share our thoughts on where we are today and why? And from which all marketers (and even politicians) should learn.

It is Friday 13th December and all of the results from the first winter-time general election since 1923 are in. Of 650 seats, the Conservative Party have 365, a clear majority of 80. That’s an increase of 47 more seats, while Labour Party lost 59 seats. The reflects a 44% and 32% share of the vote respectively. The SNP also gained seats with a 45% share of the Scottish vote. The Lib Dems lost one seat overall, most notably that of leader, Jo Swinson. Their vote share was just 11%.

The Conservative seat gains are largely in the North, Midlands and Wales. These are also amongst the highest Brexit supporting areas. And also areas of traditional working class labour support. Though Labour also lost share of vote in strong remain areas (1).

Six lessons learned

1. The winner best matched the electorate’s wishes

According to numerous polls in the run up to the election, the key issue facing the country was firstly, though not universally, Brexit. Second, health (i.e. the NHS). And third of approximatly equal importance, crime, immigration and the economy (2).

Of course, the Brexit issue masks different needs, either to leave or remain in the EU. Nevertheless, the 2016 Referendum result stands, and ‘leave’ was endorsed in the 2019 local European elections. Further, Parliament’s inability to get the job done has compounded public frustration.

2. Simplicity of offering and message

The Conservative message focused primarily on ‘Get Brexit Done’ and also ‘Unleash Britain’s Potential’. Secondarily that enabled investment in the NHS (20 new hospitals, 30-50k new nurses etc.) and 20k more police. Thus cleverly linking the voter’s #2 and #3 concerns to the first. Whereas Labour focused primarily on the NHS (the concern most relevant to their supporters) yet offered a protracted and no obvious solution on Brexit.

Yet interestingly, despite the Conservative’s focus on Brexit messaging, a recent survey suggested that still only some 57% associate the party with this cause. Thus while many of us may be bored with the message, it failed to reach 43%.

3. Messages must be believable

At the same time as promoting ‘Get Brexit Done’ the Conservatives also ‘dissed’ the ambiguity and incredibility of Labour’s position in calling for another referendum, and being unclear what they would support.

Conversely the Labour Party attempted to stoke fear that the NHS would be sold by the Conservatives to Donald Trump). This message was strongly challenged, unsupported by documents provided. Procuring drugs from US companies at the right price appears an entirely different and less relevant point.

4. Targeting by demographics alone is not enough

While historically voting allegiances split along age, wealth and geographic lines, the Brexit issue has complicated this pattern (3). There now appear to be more different types of people with differing underlying concerns. In London, folk are younger, more white collar, work for big, multi-national business and are remain concerned. Whereas in the Midlands, North, and Wales, as well as parts of the South, there are also larger numbers of blue collar, small business, and leave concerned. As the Conservatives have won them over, reading between the lines, it appears that Labour has failed to understand and meet their hopes.

Social media which allows targeting by multiple demographic and psychographic variables seems to have played a significant role.

Of course, it remains to be seen whether Labour voters’ switch of allegiance is temporary or evidence of a fundamental shift in attitudes.

5. Personality counts

The Conservatives elected Boris Johnson leader partly on the premise that he would give them a bounce in the polls. He has also consistently led Jeremy Corbyn on leadership ratings (strong, decisive) (4). While there are many personality issues on both sides, it appears there is considerable anecdotal evidence on doorsteps that JC was a liability. The Conservatives knew this and it was central to their communication strategy – ‘we’re not Jeremy Corbyn’ (rated dislikeable, weak, untrustworthy) (4).

6. Know where you are on the brand lifecycle

Sensing decline under Mrs. May in the Summer, the Conservatives, quickly replaced her with a fresh face. While much has been made of his personal life little appears to have harmed. Again this is interesting, and by comparison, we should remember that a ‘colourful’ personal life appears essential to get top jobs in countries such as France and Italy. Looking to the future, it remains to see what type of Prime Minister Boris Johnson will be. He has the opportunity to choose and learn from others – perhaps Winston Churchill or Ronald Reagan.

Today’s announcement that JC will not stand at the next election in order to oversee a change of leadership and not go quickly seems to prolong Labour’s difficulty. Though perhaps in time, the Labour Party will thank the Conservatives for hastening his end.

Politics and Marketing Inspiration

  1. Successfully marketing politics, political parties, and policies, as well as any product or service, relies on a clear understanding of audiences, their needs and attitudes.
  2. Understanding, segmenting and targeting audiences by needs and attitudes is easier, more discriminating and effective than demographics alone.
  3. Don’t under-estimate the importance of a clear singled-minded message, and benefit, backed by a credible supporting argument. Equally, fuzzy messages are both difficult to understand and identify with. They also question the credibility of the message sender.
  4. Personality is also differentiating. It is fine to have a few warts and use colourful language or display strength of character such as drive and determination, in order to get your message across and engage. Though it is important that your overall beliefs and behaviours are consistent, and grounded in what’s generally regarded as truthful.
  5. Monitor where you are on the brand lifecyle. If sales or support wanes, it is time to rethink your brand communication. Start with #1.

References

  1. Based on EU Referendum estimates by the BBC and Professor Chris Hanratty
  2. Sir John Curtice, Strathclyde University writing for the BBC.
  3. Sir John Curtice’s research on political leadership as published by the BBC
  4. You Gov Political tracker

Marketing myths

There are many myths about the role of marketing. Some perceive marketers as customer champions, growth drivers and highly creative. Yet others see them as ‘fluffy’ and lacking in commercial nous. A glance at the back pages of many newspapers or online marketing posts also reveals a variety of different titles for the job of marketing director. Including customer, experience, digital, direct, brand, communications, commercial and so on. Thus it is no wonder there are differing and sometimes contradictory perceptions. All underlines that a successful marketing director requires a combination of skills and expertise.

Seven essentials for the role

So based on research and experience writing The Marketing Director’s Handbook, there are seven essentials to being a successful marketing director (Figure 2.1). Firstly:

The marketing director’s Superior Performance Model’

1. Explain, influence, manage and lead your colleagues

It never surprises how few really understand marketing. Thus to win trust and influence your colleagues, don’t underestimate the need to explain what marketing is. In particular, how it works, and adds value.

At the same time, steer your colleagues, and business, to a more successful place. Success will follow not just from what you do, but also how you do it. So set the tempo for the business. In particular, articulate a bright and motivating future and work collaboratively with your colleagues to win friends and influence. Also manage the day-to-day, get what needs to be done, while looking to the future.

As Jack Welch once wrote in a letter to shareholders:

“In the old culture, managers got their power from secret knowledge: profit margins, market share, and all that… In the new culture, the role of the leader is to express a vision, get buy-in, and implement it. That calls for open, caring relations with every employee, and face-to-face communication. People who can’t convincingly articulate a vision won’t be successful. But those who can will become even more open – because success breeds self-confidence.”

Jack Welch

2. Be a disciple of customer understanding

No matter how sophisticated organisations might seem on the outside, it’s amazing how many hire and expect marketers to make decisions based on their own ‘gut-feel’.  However, history suggests that the most successful are those that best understand their customers. As a result this is not something just to pay lip-service to.

You’ll also make better decisions based on facts – who customers are, their needs, attitudes and behaviour.  This is particularly true in our increasingly digital world. A world with more and more data, yet that is sadly lacking in insight.

Thus accurate and comprehensive understanding on customers and their needs is vital to optimise products or services, and communications. Specifically this means understanding the ‘why’s’ behind that ‘what’s’?

This also means investing in processes and people to do this. In addition, you should do this yourself, and encourage colleagues to do likewise.

3. Establish early warning systems

The nature of customers, markets, and technology, also means that new opportunities and threats are emerging all of the time. Yet history is littered with organisations that failed to adapt or change to new threats. Thus they died an untimely death.

It is also easy to become ‘blinkered’ by corporate cultures, and trapped by a ‘flimsy’ job specification. Someone in the organisation therefore needs to look outwards, and challenge and reinvent the ‘wheel’ before threats appear.

Marketers can and should play a key role in being the eyes, ears and ‘early warning radar’ of the organisation. This fits perfectly with helping the organisation understand and focus on customers. However, don’t do this on your own, nor view this as a power grab. Moreover, an exercise to sensitise and empower your organisation’s eyes and ears to feedback to the organisation’s brain.

By knowing most, and what’s going on first, gives a competitive advantage. Some also call this foresight.

4. Measure and manage the numbers

Attracting customers and making money are common business goals. This is where marketing makes its most important contribution. However, only marketing directly fuels growth. Other functions fuel efficiency. So combining both leads to more profit, and better stakeholder returns.

Effective management is only possible by measuring ‘key performance indicators (KPIs). So as you have growth objectives, and responsibility for marketing initiatives, it is natural that you measure and manage the numbers. Simply so that any deviation can be understood and addressed.

In managing the numbers, also understand the relationship between customer and financial outcomes. Thus the ability to justify where to invest in, or fine-tune, your marketing activities.  

So get your CFO onside and to help. The more heads on the case, the better the ‘measurement’ solution.

A quick win is to work with your CFO to establish a marketing and financial dash-board. This will also boost your Boardroom credibility.

5. Develop and deliver your brand or brands

If your colleagues do not understand marketing, you can be sure they do not understand brands.  So this challenge also starts by helping them understand. And in particular, to establish ‘why bother with your brand?

There are lots of reasons to bother with brands

First, to simplify and drive customer choice and purchase. Second, to enhance value (brands command premiums) and shareholder value. Also, to align hearts and minds and deliver consistently over time.

While the management function to boost brand stand-out and appeal is marketing, you’ll also need help from other functions to deliver your brand.

In particular in service companies, where the good work of an advert in raising expectations is sometimes undermined by a surly customer service agent, or poor system. It therefore requires effective management of the customer touch-points or underlying processes to deliver a great brand experience.

Influencing brand delivery also requires you to influence in parts of the organisation beyond your responsibility. So work with your colleagues to identify issues, and deliver a more distinctive and appealing offer to your customers.

6. Deliver marketing technical excellence

In highly competitive markets, both strategy and execution make a big difference to the results. Misplaced or poorly articulated words in a strategy also risk confusion or mistakes in product development or marketing communication. Sub-optimal products, positioning or communication also risk missing the ‘target’ or ‘need’. All risks wasted marketing investment.

The devil is therefore in the marketing implementation detail. Even a tiny improvement in response could add millions to revenue or your bottom line.

So set up processes, tools and techniques to make sure that both strategic and executional decisions are of the highest order. And then test and test again from low to higher investment.

7. Use your creative skills to solve problems

Through your great advertising and promotion work thus far you’ll build a reputation for being creative. So use this strength to help colleagues and the businesses as a whole. Further, if the CEO’s role is to manage the big picture and the financial director’s is to manage the numbers, then the task of creating ideas lies with you.

Also take the lead in solving problems that your business faces.  Even if the problem lies outside of your functional area, the health of the business remains your prime responsibility.

So bring colleagues together to this end. With the right skills, resources and creative tools no problem is unsurmountable. And if bravery does not come naturally, remember that it is a just state of mind. So go for it! If needed, also bring in some external help. An even more objective approach could also better unite colleagues and focus your business.

Marketing Inspiration

1. Whatever the job title, communicating AND also managing the effective delivery of the business plan and marketing strategy through the business is key to being a successful marketing director.

2. Success is also down to your own personal skills and relationships as well as technical excellence.

3. Put yourself in the customer’s shoes (and thus understand him or her) when making decisions.

4. If in doubt, sleep on it.

5. If still in doubt, then ask round and about.

6. While it is more lonely at the top, remember you are not alone. You also don’t have to do everything yourself. Call for help.

About The Marketing Director’s Handbook

The Marketing Director’s Handbook is the definitive guide to being a successful marketing director. It is also unique in covering both the marketing and also management aspects of the role. Written by Tim and Guy, it is therefore a ‘must-read’ book for all directors and a ‘must-keep by your side’ for all marketers. So if you wish to be a successful marketing director, read the FREE introductory chapter, reviews, and then order your copy on this website. We’ll also send you FREE and up-to-date copy of Chapter 31 – Managing Digital Marketing.

Also available at Amazon, Foyles, Waterstones, The Book Depository and other good bookshops.

The Marketing Director's Handbook - the definitive guide to superior and successful marketing
The Marketing Director’s Handbook

Productivity is an economic concept (Figure 1). It represents the ratio of economic output: input. Practically, productivity assesses the competitiveness of an economy, and the health or otherwise of constituent businesses. It also indicates a country’s ability to improve raise wages over costs as this depends largely on raising output per worker. Thus understanding UK productivity is key to determining how to improve the UK economy and businesses.

UK Productivity = Outputs/Inputs
UK Productivity = Outputs/Inputs

Since 2008, UK productivity failed to follow the previous 10 years plus trend line (Figure 2). Overall output fell by 6% yet employment by just 2%. As a result, productivity fell by 4%. Exactly why UK productivity failed to grow is hotly debated by economists (1). The decline is similar to other major OECD countries (with exceptions such as the USA and Ireland (2)).

UK Productivity Conundrum | Figure 2 : UK productivity 1994-2018 ONS

We, therefore, thought it helpful to have a view. So in this article, we investigate why? We also pin-point lessons for UK plc and businesses. In particular, we cover:

  • How to measure productivity?
  • The employed population
  • The role of the service sector
  • The role of the Internet
  • The rise of challenger brands
  • Management influences
  • Conclusions

How to measure productivity?

In general, labour productivity is the ratio between a measure of output volume (gross domestic product or gross value added) and a measure of input used (the total number of hours worked or total employment).

For our analysis, we use the following UK Office for National Statistics (ONS) definition (3).

Productivity = output per worker i.e. Gross Value Added  / Total Number of Hours Worked (by those employed).

Gross value added (GVA) is the same as gross domestic product (GDP) minus taxes on products plus subsidies on products. We use the ‘Chained’ definition to eliminate the effect of inflation.

We also use time series data with 2007 indexed as 100 to match Figure 2.

Thus, for productivity to improve, this means that output must rise ahead of hours worked. Or more must be produced in the same or fewer hours. Let’s investigate further.

Reasons behind UK productivity decline

Figure 3 shows first, that total hours worked failed to keep pace with the trend line between 2008-2014. The decline between 2008-2014 reflects the fall-out from the banking crisis. Between 2007 and 2009 some half a million lost their jobs when many firms down-sized, went out of business (and/or were taken over). Some notables in financial services include Northern Rock, Bradford and Bingley and Lehman Brothers.  However, total hours worked is now back on the long-term trend line mirroring population growth. Nevertheless, the number of hours worked has failed to ‘grow output’ or it has held up despite the fact there is less to do. Both options suggest some time is ‘wasted’ or ‘inefficient’.

Fig 3 : UK productivity (output/hour) 2000-2018. Depressed by low output and increasing hours worked. ONS

Second, total output (Chained GVA) grew strongly between 2000-2007. It also fell sharply at the height of the banking crisis, yet continues to under-perform the trend line. Thus this also appears a compelling reason for the productivity decline. Let’s investigate both of these factors further.  Starting with the supply-side.

The growth of single owner businesses and part-time employees depress output

Since 2008 the number of single owner businesses and part-time employees grew above the trend line (Figure 4).

UK Productivity Conundrum | Figure 4 : Growth of part-time employed and single owner businesses 2000-2018. ONS and Dept for Business, Industry and Skills

However, according to the Annual Business Survey, the ONS’s annual tracker, small firms produce less than large firms (Figure 5). Overall, therefore, it seems that a shift in the mix to less productive firms has depressed overall UK productivity. Further, as Figure 5 also shows, even the productivity of the largest firms fell during the heights of the financial crisis. This  suggests that even switching some workers to part-time contracts, failed to maintain productivity. Of course, both part-time and full-time workers still require the same training.

UK Productivity Conundrum | Figure 5 : GVA per worker 2006-2015. Larger firms produce more per worker than smaller firms. ONS, Annual Business Survey

Further, looking at the ‘W’ shape of Figure 5 suggests that firms of all sizes have ‘bounced-back’ from the worst of the recession. With output at between £43-52,000 per worker, figures match those a decade earlier. It therefore appears that both employers and workers appear to have swallowed a new pill to keep businesses fully functional, flexible and to benefit quickly from an economic recovery.

The service sector is a key growth driver (Figure 6)

The UK service sector currently accounts for 80% of output and hours worked (2018). This is an increase of 7% points in output and hours worked since 2000 (from 73%). Further, in the 7 years to 2007 the increase was 4% points, yet in the last 11 years, just +3% points. While the service sector continues to grow ahead of the rest of the economy, growth remains below the pre-2007 trend line. As Government has focused on ‘belt-tightening’ since 2008, and Brexit since 2015, it is unsurprising, that spending remains depressed. But what’s going on in the different sectors?

UK Productivity Conundrum | Fig 6 : Service sector output 2000-2018. ONS

Under-performing and over-performing service sectors

Closer inspection of the performance of individual service sectors reveals six laggards: wholesale/retail, finance/insurance, recreation/culture, hotels/catering, transport/storage, and the public sector (Figure 7).  All six continue to perform below the historic trend line.  Performance changes may be due to lower levels of expenditure and/or trading down to lower value, margin, or non-essential services. This seems reasonable given several sectors appear more ‘discretionary’. A decline in transport could also be explained by an increase in ‘stay-at-home’ entertainment.

UK Productivity Conundrum | Figure 7 : Under-performing service sectors 2000-2018. ONS

Two sectors are yet to show a marked change of trajectory post the financial collapse. First, the finance sector which grew very rapidly to 2007 (with historical evidence pointing to uneconomic over-lending as the reason). ). Yet the sector still trails the pack. This seems due to a combination of low interest rates, low consumer confidence, and the rise of challenger banks (offering better value, and perhaps an opportunity for revenge). Second, the public sector; while resilient post ‘crash’, public sector GVA declined from 26 to 22% of the service economy from 2000-2017. However, hours worked remained c. 28% throughout the period. Thus output per hour has fallen and remains subdued.

Over-performing service sectors

Conversely, some service sectors have over-performed: services businesses (including rental, building and employment services), real estate, IT (including media and telephony), and other services (includes scientific, technical, law, accounting, advertising and consulting professions)  (Figure 8). However, growth for all but two remains below the historic trend line. Growing most strongly, are IT (reflecting many new markets and growing customer penetration), and service businesses.  Some services businesses, such as employment, advertising, consulting, and media firms, were highly responsive to changes in the economic environment. They quickly laid off staff or reduced hours or salaries, and vice versa, to maintain competitiveness and profitability. Many are also highly reliant on people, particularly well-educated people, to deliver services. Also on personal relationships to drive demand, rather than mass marketing, and the Internet.

UK Productivity Conundrum | Figure 8 : Over-performing service sectors 2000-2018. ONS

The growth of online is the elephant in the room

Since 2007 the UK has experienced major sociological shifts, ‘belt-tightening’ societal pressure, and the rise of online channels. The financial crisis of 2008 also seems to coincide with a tipping point in the rise of the Internet. In 2000, just 27% of the UK population had Internet access, and fast speeds were non-existent. In 2007, 75% of the population had Internet access, and 50% received broadband at an average speed of 4.6 Mb/second. The first iPhone also launched in 2007. Yet today UK Internet penetration is over 90%, and average download speeds are 45-47 Mb/second (4). The first iPhone also launched in 2007 yet today 80% own a smartphone.

Aided also by the growing number of comparison sites, there is an increasing and high propensity for customers to compare and hunt lower prices (up to 30% less) online.

Thus online purchasing has grown significantly from just 3.4% of retail sales in 2007 to nearly 18% in mid 2018. Further looking at trends (Figure 9), overall retail sales since 2007 remain below the overall output trend line. And retail sales excluding online sales, even further below the trend line. The pattern of decline is almost a mirror image of the growth in Internet users. 

Figure 9 : Growth of internet users and online sales 2000-2018. ONS

The arrival of Black Friday

The convenience and financial benefits of shopping online enabled by increasing broadband and mobile penetration continue to drive online sales growth at the expense of ‘bricks and mortar’ retailers. Black Friday appeared in the UK in 2009 championed by etailers such as Amazon, eBay, and others. It was also spurred by Asda in 2013. However in 2015 Asda de-clined to participate, announcing that their customers preferred year-round deals rather than a single day of discounting. Reading between the lines, this suggests the event had little effect on Asda’s bottom line. Perhaps merely serving to bring forward demand. Conversely, etailers have experienced significant sales and growth.

The rise of online challenger brands

The UK branch of Amazon EU alone amassed £21 billion sales in 2017, +80% over 3 years (and equivalent to £7.5m per employee). However, as this Amazon business is based in Luxembourg these sums are largely removed from the UK’s accounts.

While the wholesale/retail sector only accounts for a 10-11% of total output, other sectors such as real estate, hotels/catering, recreation, transport, and finance /insurance markets, also have burgeoning online sectors. And the last decade or so has seen online challenger brands enter and grow share in other markets too. Examples include Rightmove in real estate, Booking.com in travel/hotels, a myriad of flight search engines, Confused.com and ComparetheMarket.com in finance and insurance, and uswitch.com in energy.

The growth of online therefore appears to coincide with the removal of a significant chunk of income from the UK economy.

Significant growth in online advertising

Figures were first recorded for digital advertising expenditure in 2005. In 2005 spending was just under £600m (some 5% total advertising expenditure). In 2007 digital advertising spend was 9% of the total, and by 2017, 28% of the total (£5.7bn). This is a growth index of 474 vs. 2007 (Figure 10).

Figure 10: Growth of online advertising and online sales 2000-2018 ONS, Advertising Association and Internet Live

While online advertising potentially influences all purchases, growth better correlates with online sales rather than total output (Figure 10). While online advertising potentially drives income, it is also a cost, and only adds to profits if extra income generated exceeds extra costs. It remains to be seen whether this level of online advertising is sustainable (6-8% income) and grows margins.

What we do know however, is that a very great proportion of online advertising income is also due to US owned Google and Facebook – both based in Ireland. Google Ireland’s turnover is £27.5bn (£9.2m/employee) and Facebook Ireland’s turnover is £16bn (£4m/employee). Again this suggests a significant chunk of UK advertising output has shifted offshore.

Structured management practices enhance productivity

Now let’s return to the role of internal business influences on productivity (Figure 11). In 2016, the ONS surveyed management practices among 25,000 firms. The so-called ‘management practice’ score is an aggregate of several measures including practices relating to continuous improvement and employment management – such as those relating to promotions, performance reviews, training and managing under-performance. In the questions, a score of 1 is assigned to the most structured management practice and 0 the least.  The mean score across all organisations was 0.49. Their analysis found a statistically significant correlation between management practices and labour productivity, with an increase in management score of 0.1 associated with a 9.6% increase in productivity.

Figure 11 - Management practice score by size of organisation. ONS

The analysis also shows a statistically significant relationship between management practices, the size of a firm, and productivity.  Further analysis also reveals that family firms have lower management practice scores and productivity than non-family or foreign-owned firms. Management scores are also higher for the real estate, service business, and other services (scientific and technical) businesses. A higher incidence of degree-level staff is also associated with a higher management practice score and greater productivity.

Does time spent online at work affect productivity? 

Finally, we explore the effect of hours spent online at work to see if this has any bearing on productivity (Figure 12). Since 2007 the number of hours spent online at work (or in education) doubled from 3.3 hours (10% total in 2007) to 6.6 hours (20% total in 2017) (6).

Figure 12: Hours spent online at work or place of education

While we cannot precisely quantify productivity in those hours, some research raises questions. Asked whether ‘I feel more productive without the Internet’, 10% of adults 16+, and 15% of those aged 18-34 answered ‘yes’ (6). Recent announcements that Wetherspoons, and Lush Cosmetics, are closing their social media accounts, also confirms (at least for them) that the marketing time-costs fail to outweigh the benefits. And if marketers are failing to realise benefits, it raises the question are you?

Marketing Inspiration

  1. It appears that there are many supply and demand side-factors that depress UK productivity. Including competition from other nations.
  2. While the financial crisis spurred many new businesses, the smallest are least productive, and have most to learn. They should seek help from the UK’s world-leading academic, creative, and marketing consulting community.
  3. The financial crisis of 2008 also depressed customer confidence and purchasing. However, marketing deals with changing attitudes and perceptions. And basic marketing communication principles suggest that businesses and customers will buy and invest to secure benefits, rather than to avoid disbenefits. To drive demand, all should therefore promote positive messages. The national campaign starts here.
  4. Further technological and societal change is inevitable. And with online sales accounting for c.20% total, expect further growth. Marketing’s answer to the UK productivity crisis is to invest more in understanding the social and behavioural causes and effects, and inspiring products and services that deliver benefits.
  5. Off-line players face threats from low price online players and disintermediation. So choose to join and beat them. Or lose out. Winning requires improved customer value propositions or world-efficient supply and production capabilities.
  6. Digital promotion is here to stay. Though online advertisers should carefully measure returns. And remember that the marketing mix also includes off-line media with very high reach and impact.
  7. Declining public sector productivity is a threat to the whole economy, as income comes from private sources. The challenge is to deliver more for less, build world-class organisations and reduce income loss from UK shores.
  8. The openness of the UK economy, high Internet and smartphone penetration, and fast broadband, fuels customer and business agility, and innovation. However, the Internet also brings distractions that appear to dilute UK productivity. Addressing this starts with awareness of the issue.

What do you think?

References

(1) Patterson, Peter, Deputy Chief Economist, Office for National Statistics, The Productivity Conundrum, Explanations and Preliminary Analysis, 2012

(2) Organisation for Economic Development (OECD)

(3) Camus, Dawn, Editor, The ONS Productivity Handbook – A Statistical Overview and Guide, 2007

(4) UK Fixed Line Broadband Performance (Residential), OFCOM, November 2017

(5) Management and Expectations Survey, Office of National Statistics and Economic Statistics Centre of Excellence (ESCoE), 2016

(6) Communications Market Report, OFCOM, August 2018

Thanks to the UK productivity team at the Office of National Statistics for answering our questions and helping with our analysis. Also to fellow marketing consultants at The Marketing Directors, Chris West, and Tim Arnold. To anyone wishing to build on this analysis, please do. We’re also happy to share our datasets and insights to help you.

B2B vs. B2C marketing is a very different proposition. Or is it? The growth of digital media means that there is an increasing number of channels and methods from which to chose. So how should marketers approach the task of engaging and winning customers? It’s a bit like learning a dance.

Comparing B2B vs. B2C marketing

B2B vs. B2C marketing

Businesses that Sell to Consumers

The B2C marketing challenge is to build product awareness and convert browsers into buyers.  As it’s usually a ‘low involvement’ purchase, say to buy a confectionery bar, thus marketing campaigns must capture the consumer’s interest immediately. Typically mass promotion activities like tv and press advertising are employed.  In addition, special offers such as discounts or vouchers ‘activate’ the purchase. The challenge is therefore to establish an effective one-step routine.

In the online world, an email or search marketing campaign encourages consumers to click and buy. The email or advertisement encourages consumers to a website landing page designed to sell the product. The purchasing process must be simple and easy, for example, by integrating the shopping basket and checkout page. Requiring more than a couple of clicks risks the customer shopping elsewhere.

Businesses that Sell to Businesses

The goal of B2B marketing is also to convert prospects into customers but the purchase is usually more considered.  More decision makers are usually involved and the challenge is also to engage and educate the target audience and build relationships. To succeed a B2B company must generate and nurture leads over a longer time period. A careless or quick step could mean a lost partner (or customer). The challenge is to therefore also to establish an effective multi-step relationship building routine.

In the online world, an email campaign or online advertising campaign again typically drives prospects to a website. However it is less likely to achieve an immediate sale.  A more realistic goal is to secure a meeting with a sales representative in order to discuss the customer’s business requirements in more detail and also influence him, her or them to buy (i.e. complete a sale). By providing information about the products and services, benefits, features, possibly pricing, and also contact information, reassures customers and wins trust. Conceiving marketing activity as one of several steps in a longer, integrated, multi-step campaign is more likely to persuade. Consider awareness and relationship building via direct mail, newsletters, video promotion, webinars, virtual exhibitions, conferences or live events and also social media such as Twitter or Linked In .

Marketing Inspiration

While there are differences in B2B vs. B2C marketing, the principles about engaging and building customer relationships remain the same. At the outset use market research to understand the customer journey from the customer’s point of view.  In particular, the sources of information and the selection criteria that the customer uses, and the triggers and barriers to build awareness, relationships,and drive sales. At each step along the journey, consider how the experience that your brand delivers is different to or better than your competitors. And if it is no different,then work out what improvements to make.

This information will then help you build a better marketing communication strategy. Specificaly the key messages, media and timing to attract and engage customers at each step on the journey. If you are a B2B marketer, learn how to dance the marketing 2 or 3 step. And while B2C marketers may be 1 step routine masters, learning a 2 or 3 step routine may help you to build stronger customer relationships. In so doing you will better invest your resources to really make a difference.

Additional reading

1. How B2B customers search for tech solutions, Tenfold.com

Even Apple, one of the world’s most successful companies, visionary, secretive, allegedly antipathetic to research, fails occasionally. Witness poor iphone battery performance, speedily reversed software changes and easy-break charging cables.  While following the ‘gut’ sometimes leads to new product development success, success is far from guaranteed.

Equally, following ‘sacred’ product development ‘gate’ processes sometimes fails to guarantee success. This is because gate processes are just that – processes. And processes are ‘a series of actions or steps’ to help management manage risks. Also to prioritise opportunities and avoid wheel reinvention. Thus processes tend to be rigid, inflexible, and less suited to some circumstances, such as rapidly changing markets.

In the 1990s Reader’s Digest was a multi-billion dollar business. Its’ mailings were legendary. Their magazines and books sold in the millions, and if the sales data were published, most products would appear in the best-seller lists. The products and promotions were based on extensive testing, and response rates commonly in double digits. Then in the UK, along came the National Lottery. Almost at a stroke response rates fell, as the attraction of Tom Champagne’s £50,000 Free Prize Draw declined in comparison with the opportunity to win millions on Lotto.

The fact that a substantial proportion of products and services fail rather than succeed suggests there is more to do (1). While failures are set-backs, there is also lots to learn from failure. It helps improve the odds of innovation success.

Instituting feedback loops beats cognitive dissonance

How to anticipate and overcome failure? It is easier to observe and comment with the benefit of hindsight.

While there is much good in health-care, there are also many stories of unfortunate casualties and accidents. In the UK alone, there are nearly 1m reported patient incidents (fatal and non-fatal).  In the US, preventable medical error in hospitals is the 3rd biggest killer. Problems occur mostly when clinicians work diligently and with good intentions. Problems include complexity (WHO lists 12.4k diseases and disorders each requiring different medical protocols), stretched resources and decision making pressures. There are also other reasons, for example, cultural, where communication, assessment and reporting is less than open and honest.  Errors occur where practitioners are so focused on a task at hand that true perspective is lost. Thus compounding issues. Early remedy is sometimes frustrated through fear to speak-out or failure to accept reality – evidenced in a blame or a cover-up mentality (2). So called cognitive dissonance.

Conversely, where the mindset to is to ‘fess up’, document and investigate the reasons for failure, heath-care outcomes rise.

The air industry has the lowest fatality rates of all forms of transport. How is this? Through systematic recording of the reasons for failure and then learning from them. As a result, installation of black-box flight recorders in aircraft is a globally agreed practice. This allows full investigation of the reasons behind any air accident. In turn, black box flight recorders, have inspired protocols covering landing, takeoff, cockpit safety and more.

Product Development

‘Biological’ evolution beats analysis paralysis

A conventional approach to product development is to identify a pain point, or unfulfilled customer need, and then design a better product or service or fill a gap.  When faced with nozzles that ‘clogged’ and halted the washing powder manufacturing process, Unilever put their top mathematicians and fluid experts on the case. After a long study period they came up with a new design. However, the powder produced still blocked the nozzles. Almost in desperation, a team of biologists, with no knowledge of fluid dynamics, were then tasked with solving the problem. They took a very different approach. First to manufacture and then test ten different variants of the nozzle. The winning nozzle was then copied and revised ten times and each retested. Through 45 generations and nearly 450 failures, an outstanding nozzle emerged. In other words, through rapid evolution, scientists learned how to make a better nozzle (2).

Synchronous product development and testing

What about the online world? Take the ubiquitous and multibillion behemoth, Google. Google tests and releases hundreds of millions of lines of code daily. Billions of builds prompt millions of automated tests to run across hundreds of thousands of browser instances daily. Testing is Google’s ‘secret sauce’ and it takes pride in both its development speed and failing on a daily basis.

Google product development

Google’s approach may have shortcomings, but they are willing to publish it and open it to the scrutiny of the international testing community so that it continues to evolve. Everyone who writes code at Google is a tester and responsible for quality. The mantra is “you built it and you break it” i.e. code a little and then test the build.  Then code more and test more. However, while product development and testing go hand in hand, different responsibilities lie with different groups. Beyond development or coding, Google has created roles for engineers (Engineering Productivity) to make other engineers more productive and more quality-minded. Their mission is to avoid re-work and redundant code due to sloppy development.

A development aim is to build a core product and release it once deemed useful to as large a crowd as feasible. And then seek feedback and iterate, rather than ship a large number of features at once. Gmail is a good example; remaining in beta mode for four years to signal that the product was still under-development.

Instead of distinguishing between code, integration, and system testing, Google runs small, medium, and large tests emphasising scope over form.  If a problem doesn’t require human cleverness and intuition, and suits automated testing, then it is. Again during early Google Mail development, 40 user groups of 2.5% experienced different colour shades. Tracking determined the best shade to optimise engagement.

Marketing Inspiration

  1. Adopt a ‘growth’ mindset rather than an ‘ostrich’ (head in the ground) mindset. Engage with, understand and challenge reasons for failure because feedback is the food of champions.
  2. Learn from biologists. Because markets are evolutionary systems, products and services evolve, with the fittest and strongest taking increasing market-share.
  3. Seek marginal gains. Accumulated over time they provide a competitive edge. Whether in product development and delivery or another element of the marketing mix such as promotion.
  4. Avoid unnecessary complexity c.f. ‘wood hidden by trees’.
  5. Encourage and make the most of differences of opinion. No-one has a monopoly on good ideas, and differences in opinion help improve product quality.
  6. Use the right investigative tools and strike the right balance between more qualitative human understanding vs. weight of data.

Do you have a product development challenge? If so check out our marketing consulting services.

References

(1) According to the Product Development and Management Association (www.pdma.org), 2004, 42% of new products failed between 1990 and 2004.

(2) Syed. Matthew, Black Box Thinking – Marginal Gains and the Secrets of High Performance, 2015

(3) Whittaker. James. A, Arbon. Jason, Carolla. Jeff, How Google Tests Software, 2012

Storytelling predates writing; the earliest forms were spoken, combined with gestures and expressions. They also include fairy tales, myths, legends and many of religious origin. There is much to learn from stories. Thus with brand storytelling it is possible to transform a brand from a frog to a prince, prolong brand life and even slay a competitor or two in the process.

Great stories endure

Saint George (AD 280 to 23 April 303), for example, is immortalised in the myth of Saint George and the Dragon. Initially, a soldier in the Roman army, he became venerated as a Christian martyr. Also adopted as patron saint of many countries, cities and organisations. 

The story about George and the Dragon returned from the Crusades in the 11th Century. In what is now a legend, the dragon lives at a water hole and requires a gift of a sheep or maiden to allow the locals to reach the water. When it is a maiden, they draw lots. However, one day a princess is chosen. She begs for her life but to no avail. Then George comes along, slays the dragon and saves the day.

Great stories are retold

Great stories touch and move us. Particularly when seen in a cinema, or through mini movies – as some television advertising has become. Not only do great stories engage, but they merit retelling and sharing. Only the best stories grab attention, are ‘liked’ and shared. In this rich digital media world (1), we are therefore all writers, photographers, producer/directors and editors.

It is the same for brands. Only the best impress journalists, trade buyers and of course, consumers. Some brands became great through brand storytelling. Some stories are born of reality, many of accident or serendipity and some invention.

Great stories offer inspiration for brands

Figure 1 shows a typical cinematic story structure. This is useful for brand storytelling. Act 1 involves setting the scene, introducing the characters, conflict and setting. It then concludes with a climax or set-back (turning point 1 (TP1)). Act 2 develops the story, with rising action and tension, and concluding with another climax or set-back (turning point 2 (TP2)). Finally, in the last act, the dénouement, the story reaches a climax, and resolves.

Brand storytelling - Fig1 - 2 act story structure

Great stories tend to recognise deep truths, important life lessons

For example, that good always triumphs over evil. That every cloud has a silver lining – i.e. that you can derive some benefit from every bad thing that happens to you. Or that fortune favours the brave – that drive and determination is essential to success. Christopher Booker’s Jungian-influenced analysis of stories and their psychological meaning, espoused seven basic plots (2). Margaret Mark and Carol S. Pearson subsequently highlighted eighteen: eight guides or gifts and ten warnings (3). Figure 2 shows eight familiar stories mapped to Mark and Pearson’s need-states.

Brand storytelling - Fig 2 : Common storylines

‘Transformations’ deal with significant change in attitude, behaviour or personal growth. ‘Overcoming the Monster’ stories are crime and adventure staples. They feature archetypal heroes (and villains) such as George and the Dragon. Also James Bond vs. Scaramanga (The Man with the Golden Gun). And Harry Potter, growing from boy to man, while battling Voldemort.

The typical story-line is baddie does bad thing (set-up), goodie fights baddie and loses (story development, set-back). Then goodie digs deeper, fights back and wins the day (dénouement). In Bram Stoker’s Dracula, he kills a young maiden and then goes after Harker, the hero’s fiancée. Harker and friends then hunt and eventually kill Dracula. Thus saving Harker’s fiancée (and allowing them to live happily ever after).

Great brand stories follow from brand archetypes

Brand archetypes can play different roles in narratives, and inspire brand storytelling. In a typical ‘overcoming the monster’ story-line, archetypal heroes, such as James Bond and Harry Potter are protagonists (leading players). Equally the brand could still be the hero, but not the protagonist. Alternatively a bit player – perhaps the protagonist’s assistant or ‘weapon’.

Consider a utilitarian hero archetype, cleaning brand Mr. Muscle.  In a typical 3 act story, we see the housewife battling the dirt, getting tired and frustrated at her inability to clean the house etc. until along comes the hero, to clean away the dirt and save the day. The protagonist is the brand user or housewife, and the adversary, simply dirt.

Nike is a more inspiring, hero(ine) archetype (4).  The protagonists in Nike advertisements are usually athletes or ordinary people, and the adversaries are fellow competitors. In a typical 3 act story, the athletes compete against each other. One wearing Nike clothing or using Nike equipment, suffering set-backs yet finally winning, and winning applause.

The Nike advert (below) features a tennis playing protagonist vilified for being a pretty face. However, the antagonist is not just a fellow competitor but public dismissal, or disdain. All questions confidence in the athlete’s skills. Will she, won’t she succumb to the pressure? Watch the advert to see the dénouement. Also feel how the rising tension strengthens the brand story.

Brand Storytelling Marketing Inspiration

Now work through these simple brand storytelling steps to finesse and execute your brand strategy.

1. Understand your brand truth, archetype and positioning

Great brands like great stories are based on great truths. Great truths include customer and brand truths. So look inside and outside your business to find them.

  • Consider what do customers’ really think, believe or need? Is there anything meaningful and true but unknown or disbelieved about your brand?
  • What is your brand founder’s tale?
  • What’s special about where or how it was invented? Perhaps a ‘secret’ production or delivery process or ‘magical’ ingredient?
  • Also what’s special about the brand look, livery or the people who make or deliver the brand.

2. Create and tell stories to engage and dramatise the brand benefits

Consider characters, the role of the brand, and how your brand could transform customers’ lives. How can you create rising tension, and a dénouement that fits the brand? Also involve disparate people in the creative process and allow time to nurture the ideas.  Figure 3 shows a start-point brand storytelling concept.

Brand storytelling - Fig 3 Brand story concept

3. Express the story through multiple media

While great stories and great brands touch people in different ways, they are based on a clear brand strategy and also express a consistent message. So for creative brand storytelling involve diverse experts in early brand development. Also consider how the story unfolds or presents through different media and choose media that enhance the message and enable sharing.

References

1. According to https://www.internetlivestats.com there are now over 1.1 billion websites including a burgeoning range of social media including Facebook, You Tube, Twitter, Instagram, Pinterest, LinkedIn, Snapchat and many more.

2. Booker, Christopher The Seven Basic Plots: Why We Tell Stories.

3. Mark, Margaret and Pearson, Carol S. The Hero & the Outlaw. Building Extraordinary Brands through the Power of Archetypes.

4. Named after Nike, the Greek goddess of victory.

On June 23rd 2016 the UK decided to leave the EU. So what does this mean for UK businesses and marketers? And do you have an oven-baked Brexit plan. The consensus expect a period of uncertainty as everyone digests the facts, and devise strategies to manage the risks and plan a way forward.

Rather than think doom, gloom and despondency, think positive, and as global citizens, embrace the world

The trade barriers erected around the EU protect EU businesses from global competitive pressures. As a result they cause ‘flabby’ rather than ‘fit’ competitors. The UK has a proud history as a free trading nation and being ‘open for business’. Thus UK business should be materially ‘fit’ to compete in unfettered markets. Also to attract inward investment.

The world is a big market

According to the IMF (1) the world economy was worth $73.2 billion with the EU accounting for $16.2bn (22%) (Figure 1) in 2015. Thus the rest of the world accounts for the larger proportion (78%), with the USA, China and Japan, being the largest markets.

Global economy 2015
The world economy by country (2015)

Many global opportunities

Moreover, emerging markets are forecast to grow faster than the developed markets, and China and India will both reach the top 3 by 2030 (Figure 2). There are many opportunities to grasp.

Top 20 economies 2015 - 2050 ranked by GDP in dollars
The top 20 largest economies in the world 2014-2050

As marketers we know that the most successful businesses are those that understand and meet the needs of their customers. Thus investing in research and marketing to better understand and meet future customers’ needs, and build relationships and value makes sense.

Marketing Inspiration

1. To best manage the risks, and realise opportunities don’t leave Brexit planning until the 11th hour. Develop a clear business plan now. Also make clear that you are open for business as usual, and that you value your relationships. Take steps to strengthen relationships with overseas suppliers and customers too. There is reassurance and value in relationships.
2. Keep searching for win-win opportunities to sell, invest and buy. Also acquire knowledge to build competitive advantage. Use research to uncover insights and and realise short and long term opportunities.
3. Have no fear. The fittest or most able will be the most successful. So stay true to good business and marketing principles; understand customer needs, and demonstrate and deliver value in meeting needs.
4. For any business that considers themselves unfit, start Brexit planning to get fit wisely. In particular, to maximise the value of your offer.

References

  1. International Monetary Fund
  2. PricewaterhouseCoopers

Standing out from the crowd is tough! It is therefore common to find products, services and brands making the same claims. In other words, occupying the same brand positioning spaces. For example, almost every business service claims to improve business efficiency. Further, in consumer goods, almost every washing powder washes clean. Most food also tastes good, and nearly every feature film entertains. These are examples of ‘basic’ or ‘generic’ category benefits; they match the most basic or prevalent consumer needs.

This is where the idea of brand personality has a role to play. Brand personality can transform your brand into a super brand. Through how the brand communicates not just via what is said.

So what is brand personality?

Brand personality confers human characteristics on a brand; physical characteristics, beliefs and behaviours – these guide how the brand looks, speaks, what it thinks, believes and also how it behaves.

While there are usually few benefits to express, there are almost limitless ways to express the benefits. For example, with candour, authority or through humour.

A brand personality helps engage

A great deal of psychological literature suggests that people have a tendency to perceive those they like as more similar than those they dislike. People also have a tendency to perceive themselves in a positive light and seek congruence (1).

Thus a brand personality helps attract and engage. So consider the criteria involved in selecting a mate. Other than physical attributes it mostly comes down to personality and the consequential benefits of a personality.  Beyond the obvious, “And Mrs. Ecclestone, what attracted you to the multi-millionaire Bernie?” other potential benefits include reinforcing self-knowledge, self-consistency and also self-esteem (2).

Brand personality also enriches differences and helps attract and cement relationships. There are three main strategic applications or benefits of a brand personality (Figure 1) (3). To:

Influence of brand personality
  • express or enhance either functional or emotional benefits (these are essential criteria for strong brands). Mr Muscle adds strength to a cleaning brand, Fairy suggests a delicate touch or care, while Nike suggests those who wear their sports-wear are winners (4).
  • reflect consumer types/enable self-expression. BMW creates stylish automobiles (this is aspirational to non-owners and confers ‘cool’ on owners), Fosters imbues macho and comedy to beer drinking (and thus confers self-esteem and sociableness on the drinker), while Apple suggests high style, easy communication (and confers cool and feel-good in belonging to an ‘elite’ group).
  • strengthen consumer-brand relationships; Starbucks attracts as a ‘cool’ place to chill while John Lewis is trusted as a place to shop (because of their clear and consistent trading and returns policies). The passion and success of Manchester United not only generates extraordinary physical and emotional support but the club shirts are also labels (and convey self-image benefits).

Archetypes add meaning to brands

Applying archetypes to brands helps further distil and define a brand’s personality. An archetype is a collectively inherited unconscious idea, a pattern of thought, behaviour, image. They are also universally present in myths, legends, literature and art. Archetypes came to popular consciousness through the work of Swiss psychiatrist and psychotherapist, Carl Jung – the founder of modern psychology.  However, archetypes are neither good nor bad, they simply exist. Further, while the number of archetypes is limitless, there are a few notable, recurring archetypes, “the chief among them being” (according to Jung) “the shadow, the wise old man, the child, the mother … and her counterpart, the maiden. Also, lastly the anima in men (the feminine side in a man’s psyche) and the animus in women (the masculine side in a woman’s psyche)” (5).

Humans automatically inherit archetypes and enrich them based on our own experiences. Archetypes also reflect basic human needs and motivations. Mark and Pearson (6) summarised these needs along two axes: belonging/enjoyment versus independence/fulfilment and stability/control versus risk/mastery (Figure 2).

The strongest brands are clear and familiar archetypes

Figure 2 shows the twelve main archetypes mapped on two axes, together with examples of well-known brands that fit each archetype. Some are easy to understand while others may trigger subliminal thoughts.  For example, Virgin is a familiar Outlaw brand cf. Robin Hood. A challenger to authority, taking from the rich and ‘evil’ (as they have variously portrayed established national airlines, banks and railway companies) and giving to the ‘poor’.  Think also Zorro and Rebel without a Cause. This is archetypes is particularly useful to position pioneering brands or those taking on the establishment.

Creating brand personality using archetypes: Twelve Master Archetypes

Archetypes also add meaning and convey messages that verbal and written information cannot.  Thus they help bring brands alive. They are also powerful in stimulating new ideas to help brands challenge category conventions, stand-out and reconnect with consumers. Thus understanding the archetypal nature and power of a brand is the first step to realising the strategic benefits outlined in Figure 1.  Once you determine your archetype and understand how it works, the more easily you can express it, use it and also avoid career-limiting mistakes! Brand marketing activity that correlates most strongly with archetypes tends to be more successful and value enhancing (and vice versa) (6).  

The right brand positioning, personality and archetype depends on the market in which you compete, your customer segments and also their needs. In addition, the brand positioning spaces occupied by competitors, as well as your own strengths and weaknesses.

Marketing Inspiration

  1. As search engine marketing relegates brands to a few keywords, avoid dumbing down your brand. Strengthen your brand strategy by investing in a colourful brand personality to be seen and heard.  
  2. Understanding and optimising brands transforms the ability to compete.  If you are #2 or #3 in a category, this could give you an edge to overtake a competitor. So search for and express the distinctive and engaging combination of personality traits to build consumer-brand relationships. If products are people, then brands are friends or loved ones.
  3. Investing a distinctive brand archetype will also strengthen your brand positioning. In turn making it easier to understand and manage.
  4. For service or digital brands, that customers meet through people, such as in call or service centres, a brand personality or archetype ‘blueprint’ will also guide staff to converse and behave consistently. Further if you have a service glitch, customers will be more forgiving.
  5. A good place to start is with a competitor brand positioning assessment that encompasses personality and archetypes.

References

  1. Sirgy, M. J. Self-congruity: Toward a Theory of Personality and Cybernetics, United States. Greenwood Publishing Group, p. 14, (1986).
  2. Sirgy, M. J. “Self-concept in consumer behaviour: A critical review,” Journal of Consumer Research, vol. 9, no. 3, pp. 287-300, (1982).
  3. Ahmand, Anees and Thyagaraj, K.S. Understanding the Influence of Brand Personality on Consumer Behaviour (2015).
  4. Nike is the Greek goddess of victory. The figure of Nike also appears on the bonnet of Rolls Royce cars, ‘the best cars in the world’.
  5. Jung, Carl. The Archetypes and the Collective Unconscious, Second Edition (1996).
  6. Mark, Margaret, Pearson, Carol S. The Hero and the Outlaw – Building Extraordinary Brands through the Power of Archetypes (2001).

Photo credit: Warner Bros. Batman vs. Superman 2016.

Digitalisation and 24/7 global connectivity increases customer power and supply-side reach. Search and algorithms also reduce brands to keywords. As a result, markets become increasingly competitive over time and not less. These therefore create pressure for change. And dealing with change requires foresight and innovative business strategy skills and processes.

We often get asked to help businesses get closer to customers and to develop new marketing or brand strategies. Yet businesses plan, organise and manage in different ways. Further, marketing has not always been viewed as a management discipline. It only emerged formally as such in the 1950s (1). Marketing functions evolved from sales, and brand functions, from communications.  Digital functions also evolved from the need to master new information and communication technologies. Yet customers and brands are the only constant in a fast-moving digital world.

Yet business strategy, marketing strategy and brand strategy are different

At the outset also recognise that marketing and branding are often misunderstood concepts. Further customer marketing and consumer marketing are different to brand marketing. Some businesses also have dedicated ‘marketing’ and ‘branding’ teams and some do not.  Even when dedicated teams are in place, the functions and skill-sets tend to be very different. Marketers are also seldom empowered to lead business strategy. While some businesses employ rigorous strategic planning processes others also encourage entrepreneurship. What’s done now, tends to follow from the past, with the pace of change, depending on the knowledge and views of senior managers. So while, there is no ‘one-size’ solution for all there is a useful strategic planning process to work out the right solution (2) (Figure 1 – Infographic).

Business and brand strategy planning process

Clarify where the business or brand is now and in the future

By understanding where a business or brand is now and where a business wants to be in the future allows route-map development.

So first understand current business, marketing and brand strengths and weaknesses, business drivers. Then create clear, challenging, and inspiring goals.

The marketing discipline uniquely looks through the lens of customers and customer segments to assess issues, size market opportunities and influence demand.

By clarifying where you are now and want to be, the size of the gap, potential route-maps or strategies to bridge gaps will become clear. Potential roadblocks or issues should also become clear. So opportunities and solutions can then be developed to address key issues. If this is not possible, then new goals need setting.

Use human imagination and analysis to generate and build ideas

Work with colleagues and allow human imagination to generate and build ideas (2).  While some organisations prefer an analytical approach to business strategy development, others prefer a more creative approach. However, there is merit in dual ‘left brain’ and ‘right brain’ thinking. Left brain thinking involves assessing the pros and cons of each opportunity. Right brain thinking requires stepping away from the detail, and taking inspiration from the world around, to imagine new opportunities and strategies. In our experience no-one has a monopoly on good ideas, and employing different brains speeds the progress.

Planning from the customer, market and brand point of view also inspires. In particular, versus technology, creative or financially-led methods.

Engage colleagues to win a mandate for change

Engaging colleagues is important to fact-find, ensure understanding and reassure. Thus revealing hopes and fears and adding colour to issues and opportunities. Also clarifying what’s understood and agreed, or not. All thus helps focus attention on what’s required.

By agreeing goals and collaborating, the best ideas should naturally surface to the top. Though the best solution is seldom the one that is 100% technically correct if only 20% of stakeholders agree with it. A better solution is one that is 90% technically correct where most stakeholders agree with it. Only then will there be a mandate for change.

Remember that change is difficult and takes time

The journey to create truly customer-focused businesses and powerful brands is a long one. So be pragmatic about what benefits are achievable, at what cost, and by when. Also understand the barriers to change to devise more effective strategies and plans. Figure 2 shows a product-brand continuum with benefits delivered at each stage (3).

Brand strategy continuum
For product, service or sales-led organisations, there are benefits in simply understanding and meeting the needs of customers. This needs structures, skills and processes to put the customer and his or her needs first and centre.

For organisations in markets where brands are emerging as a differentiator, there are benefits in understanding customer awareness and perceptions. Also in using these insights to better set your offer apart.  This requires structures, skills, planning and management processes to design, promote and manage brand(s).

For digital and service organisations delivering through people, and for larger product brands, there are benefits in understanding and influencing perceptions through all brand encounters. This needs structures, skills and processes to create distinctive communications, align people activities and behaviour to deliver consistent experiences.

The very largest organisations and those contemplating expansion into multiple geographic markets and categories, require more developed relationship building strategies. In addition, brand personality, structures, skills and processes to expand across countries and assuage multiple cultures.

Marketing Inspiration

  1. Customer and brand marketing are both strategic business development disciplines. Yet also different ways of thinking about business strategy. So help senior management understand this point, and start by working collaboratively to define relevant business goals.
  2. Successful customer or brand-led business development requires strategies, structures, skills and processes to work across entire organisations. Rarely will success follow if expectations rely on one person or activity. So with clear goals in mind work out clear ways to realise them as a collective.
  3. Understanding a business and brand’s current position is vital to define the ‘gap’ to bridge to reach your goals. So research customers to understand current brand relevance. And also avoid giving undue importance to unexplained digital information such impressions and clicks.
  4. As business and brand drivers continually wax and wane, stay abreast of changing dynamics. Also what works and doesn’t. As a result you’ll be better able to deploy your businesses’ finite resources and influence customer choice.
  5. Use creativity to strengthen customer relationships though key touch-points.
  6. Finally, for those new to marketing, investing in a brand may be a step too far. However, for an objective view on the way forward our marketing consulting services are always bespoke.

References

  1. Webster Frederick E. “A Perspective on the Evolution of Marketing Management” Journal of Public Policy and Marketing Vol. 24 (1) (Spring 2005)
  2. Harari Yuval Noah. Sapiens – A Brief History of Humankind (2014)
  3. Arnold Tim, Tomlinson Guy. The Marketing Director’s Handbook (2008)