THE ROUSER MANIFESTO

A n e x p o s i t i o n o f t h e m o d e r n m a r k e t i n g c l i m a t e a n d a p r o p o s a l f o r h o w t o g e t

m a r k e t i n g b a c k t o t h e b o a r d r o o m .

2018

INTRODUCTION

ON THE TOPIC OF BRAND

As we detailed in the previous section on tactics,being able to balance short-term activation and long-term brand-building is key for marketing to be able toachieve maximum commercial effectiveness.Marketers must ensure that the tree is both wateredand the fruit is picked, as it were.

However, what is actually meant by brand differsgreatly. Many equate brand and branding with thevisual aspects of a product or a company, e.g. thelogo, fonts or colour scheme used. Others refer tobrand in a psychological context, as something thecustomer can relate to or even, they sometimesargue, fall in love with.

In this, the third section of the 2018 RouserManifesto, we will identify certain key aspects ofbrand that marketers must understand, highlightstrengths and weaknesses in the most importantmodels, and pinpoint potential issues with using a so-called brand purpose for marketing ends.

A SPECIAL THANK YOU

The authors would like to thank those whogenerously have taken time out of very busyschedules to provide invaluable feedback on thissection on brand.

AUTHORS

JP Hanson

CEO,Rouser

Gary Rivers

Associate Strategist,Rouser

BRAND ALWAYS

BRAND ALWAYS

D E F I N I N G B R A N D

Today, definitions and descriptions of exactly whatmakes up brand tend to range from the scientific tothe obscure and everything in-between. The problemwith most, however, is that they fail to encompassevery key trait of brands – they are far too narrow andcan therefore be close to irrelevant depending oncontext. For example, if one were to ask aneuromarketing expert, they might claim that brand isa complex mental construct that corresponds to anumber of regions of the brain that, when exposedwith relevant stimuli, can activate neurologicalactivity in a network of cortical areas. Scientificallyaccurate, but far from helpful for anyone looking foractionable advice on how to build one.

On the other end of the spectrum, one finds peoplesuch as Kevin Roberts, former CEO of Saatchi andSaatchi, who has suggested that brands are outdatedand that we might need a replacement for thetraditional concepts. In his book “Lovemarks”,Roberts proposes that “brands attract respect, evenlasting respect, but without love”. Lovemarks, heinstead argues, “command both respect and love”,which is “achieved through the trinity of mystery,sensuality and intimacy”. Slightly more helpful to ourprospective brand-builder, perhaps, but alassignificantly lacking in supporting evidence, scientificor otherwise.

Perhaps the best definition to date was made by thelate professor Al Achenbaum. Long before his time,he suggested that what distinguishes a brand fromits unbranded commodity counterpart and gives it itsequity is the sum total of consumers’ perceptionsand feelings about a product’s attributes, about howit performs, about the brand name and about thecompany associated with producing it. In otherwords, Achenbaum argued that brands: (1) are theopposites of commodities, (2) can have equity and,finally, (3) that what gives brands their equity is,basically, everything.

The brilliance of the description lies in its simplicityand openness, particularly given that brands are, asformer Chairman of J. Walter Thompson JeremyBullmore once put it, “fiendishly complicated, elusive,slippery, half-real, half-virtual things”. Still, it remainsfar from universally accepted.

S U G G E S T E D M O D E L S

What at least can be established with certainty is thatdefinitions of brands are plentiful and highly varied.The point, however, is not to debate what individualinterpretation of brand is closest to the truth (or,perhaps, furthest from nonsense), but rather tohighlight that brands tend to be defined in terms thatare of most practical use to the person defining themand, crucially, the context of the conversation inwhich the brand in question is being discussed. Toformulate it slightly differently: theoretical brandmodels often differ in value depending on theproblem the creator is trying to solve.

For example, Phil Barden, expert in the field ofconsumer science, argues in “Decoded” that the “painof price” activates the same regions of the brain thatare associated with physical pain (meaning that, yes,paying literally hurts). Purchases, then, would bedependent on the relationship between reward andpain and for a positive decision to be made, rewardsmust exceed a certain threshold. Or, to put it moresuccinctly in Barden’s terms: net value = reward –pain.

Apple, to take a popular example, has managed toexceed this pain threshold. Despite controlling but19.7 % volume market share (of the globalsmartphone market through its iPhone models), thecompany seized 87 % of the profits. Their products,and every touchpoint through which you encounterApple, are designed to increase what is sometimescalled premiumisation (value share) and the rewardside of the equation in order to null the pain of payingover $1000 for a smartphone that inevitably will beoutdated in 18 months’ time.

Theoretical brand models often differ in value depending on

the problem the creator is trying to

solve.

“”

The (net value = reward – pain) model proposed byBarden is essential to understanding how consumersinterpret price, which in turn can have a dramaticeffect on a brand’s positioning, packaging, retail,overall customer experience and so forth. In theory, itmeans that it could be possible to get a certain (andexceedingly affluent) segment of a householdhygiene market to pay $1.3 million for a single packof toilet roll – as long as the reward side of theequation was high enough.*

Of course, the brand also needs to be clearlydistinctive from its competitors. While Barden arguesthat there is meaning in distinctiveness (at least on asubconscious level), others argue that there doesn’thave to be. Professors Jenni Romaniuk and ByronSharp of the Ehrenberg-Bass institute, creators of theconcept of distinctive brand assets, claimmeaningless distinctiveness is a much wiserinvestment for brands to pursue, being that thefundamental function of branding is to ease theidentification of the product or service amongstcompetitors. Consumers, they argue, rarely stop tothink about whether the logo looks nice, trustworthy,or conveys any other connotation. Consequently, oneshould focus on qualities that distinguish the brand inthe form of “distinctive elements” that helpconsumers notice, recall and recognize it inadvertising and buying situations (i.e. mentalavailability, as mentioned in the Tactics section).

Either way, the implications of understanding themodel are profound. Removing or changingimportant brand-activating elements carries obviousrisks, as famous redesign failures illustrate. WhenTropicana orange juice “redesigned” its range, it lostits distinctive assets, something that cost thecompany an estimated $30 million in lost sales in justtwo months.

*In 2013, an Australian brand called The Toilet Paper Man launched, and reportedly sold, athree-ply roll made from gold woven into tissue that had taken four years to make and wasdelivered with a bottle of champagne.

Brands can demand a very high premium when bothexceeding the pain threshold and being distinctive. InSweden, iconic brand Solstickan excels at it. Thecompany has built enough brand equity over time toprovide such a high reward that it can command aprice for its two-pack of dishcloths that retails atalmost eight times the category average. Of course, ithas very distinctive assets in its logo and packagingas well.

The established reward and distinctive assets alsolead to a third function of brand, namely thatconsumers use them to make decisions underconditions of uncertainty.

In “Skin in the Game”, professor Nassim Talebdiscusses an insight from Rory Sutherland, in whichhe explains that “when there are a few choices,McDonald’s appears to be a safe bet. It is also a safebet in shady places with few regulars where the foodvariance from exceptional can be consequential.” –or, as Sutherland himself puts it, “McDonald’s is inpart successful because it is very good at not beingtotally shit”. In other words, consumers are awarethey will not get the best meal on the planet, but theycan rest assured they will not get a bad one, so theysatisfice. The point echoes the views of professorRumelt, who has previously stated that a brand’svalue comes from guaranteeing certaincharacteristics of a product. However, it presumes atrack record (reward/certainty) and distinctive assets(logo, colours etc.).

V I E W E D C O L L E C T I V E L Y

Ø On a psychological level, a brand is the sum totalof interactions customers have with a product andservice, defined in particular by the residue theseexperiences leave behind in our minds – both theemotional and rational imprints – which are, inpart, used to evaluate the proposed pain of pricefor a product or service.

Ø On a perceptual level, brands are a collection ofstimuli (distinctive assets – icons, colours, jinglesetc.) that are employed to make products easier tonotice, understand and buy.

Ø On an risk-reduction level, a brand assistsconsumers in making decisions under conditionsof uncertainty by ensuring certain characteristicsof a product.

McDonald’s is in part successful because it is very good at not being

totally shit.“”Rory Sutherland

T H E R E I S N O S I L V E R B U L L E T ,B U T P O T E N T I A L G O L D

The three ‘models’ illustrate our original point: a rigid,universal description of brand, that can be used withprecision in every condition, exists only in fantasy.Formulating an overly fixed view could also possiblyneglect some of the more nuanced points that can befound within the discourse. Having access to multipleschools of thought should liberate marketers, notcontain them. A potential compromise for the futuremay be to adopt a more fluid definition of brand thatincorporates elements of the three modelsmentioned above (and others), but allows forapplication in different measures depending on thequestion and situation at hand.

The financial argument for doing so is strong. Whilethe most useful definition of what a brand is largelydepends on the context (as do, it would seem, thebest drivers of brand equity), the potential businessvalue of brand is easier to measure. That’s not to sayit is easy to provide an exact total value, as isdemonstrated on an annual basis when companiesattempt to value brands and inevitably get it wrong.Because it is practically impossible to put a price on acustomer’s perceptions, the valuation rankings haveto rely on unsolicited calculations of financial brandvalues without access to the most relevant internalinformation. Consequently, the lists are significantlymore helpful to the valuation firms’ own marketingefforts than to anyone looking for relevant andactionable advice for how to handle their day-to-daystrategic decisions and brand management. Eitherway, how much the brand is worth on a hypotheticalbalance sheet is, in this context, less important thanits value in having an impact on day-to-day financialperformance.

The potential value of brand is, regardless, notable.For one, it can provide a competitive advantage. Ifone competes on price alone, the threshold to bereplaced is low - all it takes is one competitor to offeran identical product cheaper. Similarly, if onecompetes on product alone, the threshold to bereplaced is low – all it takes is for one competitor tocreate a better product or, again, and identicalproduct cheaper. Brand increases the thresholdsignificantly.

Furthermore, as BBH London’s Tom Roach wroterecently, having a strong brand betters one’s chancesof being chosen over competitors and attract morecustomers, at a lower cost per sale. Because of brandequity, these customers are also more willing to pay apremium.

This, of course, can have a large impact on business.Building brands will, as Binet and Field havedemonstrated, increase long-term profitability,margins, baseline sales and decrease pricesensitivity.

In other words, brand continuously delivers morerevenue, profit and growth more efficiently, whichgenerates shareholder value, and the effects are notlimited to B2C. Academic research has established,among other things, that even in B2B, branding hashad a positive effect on perceived product quality(Cretu & Brodie, 2007) and increases the likelihood ofa product to be added to a bid list and commandpremium price (Low & Blois, 2002; Michell et. al. 2001;Ohnemus, 2009; Wise & Zednickova, 2009) whiledecreasing likelihood of competitors’ offerings beingselected (Low & Blois, 2002; Ohnemus, 2009) andheightening the barrier to entry for competitors(Michell et. al. 2001). Brand equity also conveys anumber of intangible benefits to buyers, includingincreasing the buyer’s confidence in the product(Michell et. al. 2001), their satisfaction with thepurchase decision (Low & Blois, 2002) and reducingthe level of perceived risk and uncertainty (Bengtsson& Servais, 2005; Mudambi, 2002; Ohnemus, 2009).

Building brands will, as Binet and Field have

demonstrated, increase long-term profitability, margins, baseline sales

and decrease price sensitivity.

“”

Sal

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up

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Time

Brand building and sales activation work over different timescales

Sales activation/short term tactics Brand building/long term sales growth

Rather unsurprisingly, strong brands can capture, onaverage, three times the sales volume of weakbrands. It may indeed well be, to paraphrase DaveTrott, that brands can be considered (alongsidecreativity) the last legal unfair advantage.Recognizing these benefits, however, is one thing. Itis a completely different matter to realize them. As ithappens, this takes one back to strategy. The key isto understand how one’s brand strategy enhancesand enables the overall business strategy. Brandeffects are notoriously difficult to measure and aresmaller in the short-term. However, they also decayaway more slowly. In the long run, brand effects arethe main driver of growth. As such, they need to beput into a higher hierarchical level and time frame.

S O W H E R E D O E S B R A N DP U R P O S E F I T I N T OT H I S ?

Most modern marketers are well aware of thegrowing popularity of brand purpose and corporatesocial responsibility (CSR). The “golden circles” – anidea popularized by Simon Sinek – famouslysuggested that “people don’t buy what you do, theybuy why you do it.” It would be ignorant to suggestthat this type of buying (motivated primarily bypurpose) never happens. However, evidencesuggests quite conclusively that this is the exception,not the norm. Every now and then, a report arises thatstates something to the tone of “X percentage ofconsumers said they would buy a brand thatrepresents Y”, giving credence to the idea that brandsdo in fact need to stand for something greater thanthemselves. Unfortunately, what consumers say inresponse to surveys doesn’t necessarily reflect howthey typically behave. As David Ogilvy once said,consumers don’t think how they feel. They don’t saywhat they think and they don’t do what they say.

In April 2017, Richard Shotton published a top-lineoverview of a piece of research he had undertakenexamining the statistics that are regularlyregurgitated to support brand purpose  —  those fromJim Stengel’s “Grow”. The basic premise of the bookis that companies with an ideal at their heart seeshare price growth far in excess of those lackingsuch values. In summary, Shotton’s researchdemonstrated numerous fundamental flaws in themethodology of the original study, which in turncalled into question many of the proposed “findings”.To paraphrase, despite its popularity, there is noevidence that brand purpose delivers success.

Motivating brand purpose, which is inherentlyaltruistic, with ROI also creates an ethical Catch 22.The moment one does it, any and all altruism isundermined to the point where one cannot any longercall the purpose altruistic. It also insinuates thatbrands would do the opposite if it were simply betterfor business (brand “unpurpose”, as professor MarkRitson famously once called it). While this may soundfar-fetched, it is quite demonstrably what many of theso-called purpose-led companies do when it comesto paying tax or, rather, not paying tax.

This is all not to say that brand purpose cannot workfrom a strictly organizational sense, i.e. when used asa guiding philosophy for a business (upheld in itsbusiness strategy), as opposed to somethingnecessarily required to be communicated tocustomers in literal terms.

In “Obliquity”, professor John Kay provides numerousexamples of businesses that have managed toachieve a set goal obliquely ,  in contrast to the moreexplicit “maximize shareholder value” approach. Kayargues that by approaching problems indirectly,businesses can distil a High Level Objective (brandpurpose/mission/vision in the current context) into aseries of Intermittent Goals (which they can, to somedegree, influence) and Specific Tasks (that areachievable). In this respect, brand purpose may help abusiness focus on a common high level objective.However, it needs to take priority over businessoutcome, which of course is a lot easier said thandone in today’s market climate.

Either way, a purpose is clearly not enough by itself toguarantee success – despite how refined/ambitiousit might be. The means with which the purpose/visionis achieved takes far more work. At Rouser, we willcontinue to err on the side of caution is when brandpurpose is intended to be communicated (andunderstood) by consumers.

Consumers don’t think how they feel. They don’t say what they

think and they don’t do what they say.

“”David Ogilvy

A RECAP OF BRAND

BRANDS ARE NOT EASILY DEFINED…

…as they exist in the minds of consumers and therebyare inherently complex. Professor Al Achenbaum’sdefinition, arguably the best to date, illustrates theproblem as it defines brand as, in essence,everything.

BRANDS CAN BE DEFINED RELATIVE TOCONTEXT…

…and the problem which one is trying to solve. Moreoften than not, this should require balancing threeimportant aspects: memory/psychology, perceptionand risk reduction.

BRAND PROVIDES A COMPETITIVE ADVANTAGE…

…by increasing the threshold to be replaced. Price andproduct, the traditional and common aspects onwhich to compete, each have potentially significantdrawbacks.

THE FINANCIAL CASE FOR BRAND IS STRONG…

…as powerful brands can capture, on average, threetimes the sales volume of weak brands. Brands havealso proven to increase long-term profitability,margins, baseline sales and decrease pricesensitivity, both in B2C and B2B contexts.

BRAND PURPOSE IS OVERSOLD…

…and while a notable amount of consumers claim itmatters to them in theory, there is little evidence tosupport the claim that it matters to them, or thebrand’s success, in practice. However, brand purposemay work as an internal organizational tool withwhich to achieve goals obliquely.

RECOMMENDED READING

BOOKS

Decoded Phil Barden 2013

Competitive Strategy Porter, Michael 1998

Positioning: The Battle for Your Mind Ries, Al & Trout, Jack 2001

Building Distinctive Brand Assets Rumaniuk, Jenni 2018

Good Strategy Bad Strategy Rumelt, Richard 2011

How Brands Grow Sharp, Byron 2010

Theory. Evidence. Practice. Sharp, Byron 2018

The Choice Factory Shotton, Richard 2018

Skin in the Game Taleb, Nassim 2018

The Brandgym Taylor, David 2017

STUDIES

The Long and the Short of It Binet, Les & Field, Peter 2013

Profit Ability: The Business Case for Advertising ThinkBox 2017

ARTICLES

Unlocking the Power of Brand Properties Barden, Phil 2014

Brand Brewdog: How the Self-Styled Punk Brewery wentMainstream Clarke, Cameron 2017

KFC’s Marketers turned a Chicken Crisis into a BrandTriumph Ritson, Mark 2018

Pret Must Bite the Cost Bullet if It Wants to Keep Its “Natural” Brand Positioning Ritson, Mark 2018

Fwd to CEO: The Most Valuable Business Tool Ever Invented Roach, Tom 2018

ABOUT ROUSER

WE ARE ROUSER

Rouser is an international brand development consultancyfirm headquartered in Stockholm, Sweden, that specializesin brand growing aspects of business strategies, primarilypertaining to marketing.

At the very core of Rouser is an unwavering belief in criticalthinking and freedom from hype. The approach has led thefirm to not only perpetually analyse established truths andnew ideas alike, but, as a result thereof, to also form itsprocess. It is based on principles, not formulas. On techand media neutrality, not square pegs in round holes.

The process enables Rouser to define, align, develop,manage and track brands to create stability, relevancy,demand and growth. As such, it is another reason whyglobally active, award-winning companies with rapidgrowth rates and iconic, mature businesses alike trustRouser to help them make their brands better, not justbigger.

CONTACT

Web: www.rouser.se

Email: hello@rouser.se