It's a myth that having lots of brands and plenty of branding is good for business. After a certain point, both brands and branding cease to be useful–and, in fact, can be positively toxic.
To understand why, though, it's first necessary to differentiate between "brand" and "branding." You'll see why in a minute.
A brand is the set of emotions that people associate with a corporate name or a product name. Brand is almost entirely the result of the customers' experience with a product or series of products.
If a company's products are mostly excellent, the brand becomes a major asset. For example, people are willing to forgive Apple for the occasional turkey because the company has a history of high-quality products.
However, if a company's products are mostly lousy, the brand rapidly becomes a liability. For example, the Packard Bell PC brand self-destructed because the products gained a deserved reputation for low quality.
Most often a company's products are more or less average–and in this case, the brand is pretty meaningless. Chances are the company is competing on price and the brand simply isn't much of a factor in buying decision.
Branding, by contrast, consists of marketing products and activities that attempt to create, reinforce, or change those emotions. These include new product names, logo designs, tag lines, brand-oriented advertising (as opposed to product ads), brand placement (like naming a stadium), and so forth.
If your products suck, however, any money spent on branding is only going to remind people how much your products suck.
Once again, Packard Bell is an example of this. Right before they went out of business, they spend a huge amount of money touting the "high quality" of their products. It didn't work because buyers knew differently–from their own experiences and from the all-powerful word of mouth.
If your products are average, money spent on branding won't make things worse, but it probably won't make things better either. If people simply don't feel an emotion, there's really very little you can do to create one.
If you're willing to spend a huge amount of money–and we're talking many millions of dollars here–you might be able to create some buzz around a mediocre product. But it's a big gamble and most of the time such efforts fail.
So spending money on branding only makes sense if your company falls into the first category–that is, if you've got excellent products and you want to reinforce those positive emotions.
Apple, for example, expends plenty of effort creating a coherent brand image and on product advertising, because these activities make it easier to spread the positive buzz. However, those activities would either fall flat or be detrimental if Apple's products weren't capable of creating those positive emotions in the first place.
What happens in many companies is that people start focusing on branding (the activities) rather than the brand. When demand drops or competitive products grow market share, many executives jump to the incorrect conclusion that the problem can be solved with more vigorous branding.
Before the bailout, General Motors used to be a perfect example. By the 1980s, GM's products had become substandard, especially compared with the Japanese brands. Rather than fixing that fundamental and all-important problem, though, GM spawned more brands.
Eventually GM had more than a dozen different global brands, all of which were either mediocre or worse: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling.
While this scheme no doubt kept thousands of brand marketers employed, it continually kept the company focused away from its only real business issues, which were building great products and selling them at a reasonable price.
In other words, GM's focus on branding kept the company from focusing on the brand itself–the emotions that people feel about the products.
Another problem with spending lots of money on branding is that it encourages more complexity. Here's another example: Research In Motion, the guys who make the Blackberry.
Here's a partial list of RIM's product brands: Electron, Pearl, Pearl Flip, 88xx, Curve, Bold Storm, Tour, Style, Torch, and Bold Touch. Say what?
To make matters worse, most of these product brands have (or had) multiple numbered product versions. The "Bold" for example, comes in the 9000, 9650, 9700 and the 9790 varieties.
Compare that with Apple's iPhone — one product name, with a version number that's pretty easy to understand. While Apple's other product lines are a bit more complex, they're absurdly simple compared with RIM's Byzantine nomenclature.
Returning to GM, it's no coincidence that the company returned to profitability after it shed most of its brands and began to focus on the quality and originality of its products rather than on its baroque branding schemes. Today, after a significant restructuring, GM has only seven global brands, and only four in the U.S.: Buick, Cadillac, Chevrolet, and GMC.
In my experience, the greatest danger inside most companies, when it comes to sales and marketing, is spending too much on branding. In almost every case, it's smarter to focus instead on the brand itself: specifically, on the product and the customer's experience buying and using it.
If your products aren't up to snuff, you should flat-line your branding budget until the product problems are fixed. And even when your products are top-notch, you should spend money sparingly.
Less truly is more.
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