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Question 1: In your book “Fusion Branding” on
the cover under your name is printed “Brand Futurist”. What
exactly is a “Brand Futurist”? How does it differ from other
writers writing about Branding and to put it bluntly why should our
reader as a senior person in a company be concerned about “Fusion
Branding”?
Answer: Senior managers often get told
they need “vision.” That’s usually defined as a clear, long-range
goal for their firm. That’s absolutely vital. But there is
another aspect of vision that is rarely discussed, but is, in many
ways,
much more important. Executives also must have a sense of what
the
world will look like in 1, 3, and 5 years. That enables them to
both
ensure that their long-range goal is in synch with expected
realities.
It also gives them a head start on planning for the business
requirements
of tomorrow. Much of what is written about branding is a rehash
of
everything we’ve heard for 30 years – “positioning,” “awareness,”
“brand
personality,” etc. Yet, in many cases, those concepts apply to a
world that no longer exists. Brands need a futurist to look ahead
to the emerging business and customer imperatives of tomorrow..
With
increased competition, demanding customers and rapid product cycles,
brands
must do more than adapt to changes. They must anticipate
them.
Question 2: In
your book you seem to focus a lot on the customer where
your predecessors seemed to be focusing more on the product and on PR
and
Advertising. Does this difference in focus define much of the
difference
in the form of branding that you are advocating?
Answer: Yes, absolutely. In the mass
economy, companies could define brands because they could control
information. There were relatively few media outlets, and
customer-to-customer communications was limited by proximity. But
a distinguishing characteristic of today’s customer economy is the fact
that customers – not companies –
define brands. That definition is based on value, performance,
service
and other attributes. And if those attributes do not meet
customer
requirements, then ubiquitous, technology-enabled customer-to-customer
communications will ensure that the brand suffers – no matter how it’s
“positioned.”
Question 3: Early
in you book you note that companies must incorporate “accountability,
customer equity and operational excellence into their branding
strategies”. Can you explain what these three components actually
are and why this focus is important to a company? Also can you
also explain how successful implementation of a branding strategy that
incorporates these components will differentiate a company from its
competitors?
Answer: Accountability requires internal
and external metrics – all relevant to the customer – in order to
manage
the delivery of customer value. Customer equity represents the
lifetime value of a customer. Its value comes not only from
increased profitability, but also from providing a metric that drives a
company to focus on customer retention. Everyday operational
excellence encompassing everything from R&D to product delivery and
support is necessary to ensure that whatever is promised gets
delivered. The value? Imagine that you are a customer
considering two companies. One focuses on “image,” “awareness,”
“positioning,” and cannot differentiate between a profitable, long-term
customer and one who just buys once. The other focuses
on accountability, everyday operational excellence that enables the
ability to do business on your terms, and customer equity, which
demonstrates
the value of your relationship. Which one are you going to do
business with? The differentiation consists of getting what you
value, and
in the company knowing your value to them.
Question 4: On page six
and seven of your book you list the 10 core principles
that represent the new face of branding. Can you explain how
these
interrelate, why they are important and also give examples of how
companies
have used these principles to improve their branding and sales?
Answer: Peter Drucker, the legendary
management consultant, has a quote that really defines the essence of
FusionBranding: “The purpose of business is not to make a sale,
but to make and keep a customer.” These ten principles all
revolve around what’s necessary to make and keep a customer in an age
when customers define brands. There are numerous examples, but
let me give you two. Everybody hates cable companies.
According to the American Customer Satisfaction Index (ACSI), three
cable companies – AT&T, Charter Communications and Comcast – earned
the lowest customer satisfaction scores ever recorded across all
companies and all
industries. The main reason is poor customer service, which led
to
expensive customer churn. But DirecTV upgraded and enhanced its
customer
service capabilities, primarily by changing to customer-focused metrics
(such as how often issues were handled in a single call) for its call
center.
The result: Per-user revenue went up, churn went down to a
historic
low and customer satisfaction increased 93% to a corporate
record.
Another example is GM. Once, GM had more than 70% of the U.S.
auto
market. Now, it is down to less than 30%, and is forced to run a
current,
unbelievable advertising campaign where it apologizes for its poor
quality
and service for the last 10 years. Compare that to the success of
Japanese auto companies, which have focused on such FusionBranding
principles
as economic value, supply chain expertise and customer commitment.
Question 5: In
your book you note that branding has changed over time. In fact
you note that there has been three major branding eras. Can you
explain what these eras of branding have been and how you see branding
further changing in
the future?
Answer: The first era was the mass economy,
which lasted from 1945-1995. This was the Golden Age of Branding,
when companies could leverage limited media, limited competition and
ever-increasing demand to create brands. Today, it’s the customer
economy, characterized by customer definition of brands,
democratization and privatization of
technology and organizational responsibility for branding. We’re
on the verge of the demand economy, which will be characterized by
immediacy,
personalization and reach. In the demand economy, branding
effectiveness
will be based on supply chain capabilities, multi-channel unification
and relationship capital.
Generals lose when they fight current battles with plans from past
wars. By the same token, by-the-book tactics and generous budgets
won’t establish a brand if they are based on outdated strategies.
If the branding effort is not linked to the realities of the current
era,
not only will the branding effort be like pushing a rock uphill, but it
will be the wrong hill as well.
Question 6: In
your book you also deal with the role of the internet although you
clearly point
out that your books focus on the role of e-mail and the internet is
only
as it relates to branding. You write in the book that the ”True
strengths of the internet is that it is much more than a marketing
medium, it is
the key to enabling a relationship enterprise that allows business to
be done on the customers terms.” Many people seem to have
discounted the role of the internet after the “dot com boom” but you
seem to take
a much broader view of the capability and role of the internet as a
tool
in branding. Can you discuss this further and explain why you
feel
as you do?
Answer: Companies focus on the internet
as a marketing tool, seeing it as a cost-effective way to distribute
information. That’s important, but it misses the true branding
potential of the internet. First, the internet easily enables
customer-to-customer communications. A brand no longer depends on
what a company says it is, but what other customers say it is. On
one hand, a single negative experience can ricochet
around the world in seconds, but on the other, the internet can enable
a brand to turn its customers into the world’s most powerful sales
force.
Additionally, a brand essentially depends on execution, not
promises.
Today, such execution requires a supply chain that works in
harmony.
For a child to get a desired toy at Christmas, the supply chain from
the
local store to the plant in China must work effectively. No
company
can brand effectively without internet capabilities that enable the
right
product to be delivered to the right person at the right time.
Question 7: You also
deal with how branding should work for B2B (Business to Business)
companies. Again you write “ B2B companies, more than other
enterprises, need to create branding capabilities that reflect customer
requirements, differentiate and communicate service and other
capabilities, and execute pricing strategic based on true cost-to-serve
and customer value.” Can you explain
this more fully and can you give examples of B2B companies that you
believe
are doing a really good job at their branding and explain why you feel
this way?
Answer: Unfortunately, many branding books
just focus on B2C firms. However, the tactics advocated for B2C
firms – TV advertising, “positioning,” etc. – are largely irrelevant to
B2B firms, especially in vertical markets. This causes B2B firms
to ignore branding, which is a mistake. Branding is just as
important
to B2B firms as it is to B2C firms. It’s important because a brand does
not depend on an ad, logo, campaign, collateral or telemarketing.
A brand depends on a profitable – and I want to underline profitable –
bond between a company and its customers. You cannot have
profitability
unless you know cost-to-serve and customer value, and you cannot have a
bond unless your operations reflect customer service and other
requirements.
A well-known example is GE. It gets the bulk of its revenue from
B2B
products, and is justifiably famous for understanding and meeting
customer
requirements. Another example is industrial products supplier
W.W.
Grainger, which has been willing to revamp its processes and even sales
compensation to better meet customer requirements.
Question 8: You have
just returned from a seminar in Kuala Lumpur, Malaysia and will soon be
returning there and then on I believe to the Philippines and later
possibly other locations in Asia. Based on your recent experience
and what you are seeing
going on in China and other locations do you feel Asians really
understand
Fusion Branding? Also can you give examples and discuss Asian
companies
that you believe really understand the customer connection and have
incorporated “accountability, customer equity and operational
excellence” into their
branding strategy?
Answer: Unfortunately, no. On one
hand, I believe Asia is on the cusp of an incredible branding
revolution,
especially in the area where consumer electronics, communications and
computerization are converging. Asian companies are taking the
manufacturing,
operational, call center/customer service and logistical skills they’ve
learned from outsourcing for Western firm and applying them toward
development
of their own brands. I predict that within a decade Southeast
Asian
and even Indian brands will be as well known in the US and Europe as
Japanese
brands are today. However, some will make the mistake of thinking
that they have to follow the Western, mass-economy model of
branding.
Large ad budgets. The right “position.” Some will even believe
one
“immutable” branding law that it is “better to be first than it is to
be
better” – which has led to the downfall of more than one US firm.
But applying such dated tactics to a new branding era will only cost
Asian
companies money. It is better for any branding effort by starting
from what’s important to customers – accountability and the ability to
do
business on customer terms – and not what may be important to agencies.
Question 9:
If you had to point out what you would believe to be the most common
mistake
of Asian companies in developing a truly effective branding strategy
what
would that be and why? Also, can you give examples of this that
might help bring the lesson home a little better?
Answer: For the first time, Malaysian
executives are devoting attention and money to their brands. It's
tempting to
look at the large, Western brands and think, "that's the model I should
follow." But it's not. All you have to do is look at the
financial
difficulties of a McDonald's or the Gap or United Airlines to
understand
that large marketing budgets don't always build successful brands
anymore.
Instead, Malaysian companies need to leverage the operational,
logistics,
quality and manufacturing skills they've learned outsourcing for
Western
firms to develop and promote their own brands. This is happening
more
and more everyday. For example, Baneng Holdings Bhd will be
coming
out with its own brand of children's wear and ladies apparel next year
to
cater to the international buyers. Another company that earned
its
spurs as an outsourcer, P.I.E. Industrial Bhd, will soon introduce a
DVD
player and a CD-RW/DVD combo drive under its own CyberHome brand name
in
South-East Asia, Australia and New Zealand soon.
Question 10: In
looking at Fusion Branding, you divide your book into six core
sections.
The last section before your final thoughts is on “Facing the
Future:
Challenges in the Demand Economy”. Here you note the issues of
“privacy,
dynamic pricing: bargaining in real time and Change management:
harnessing
the power of change.” These chapters I found in many ways the
most
thought provoking of your excellent book, can you give a short
explanation
of some of these points and how you see them challenging and changing
branding
in the future?
Answer: The chapter on privacy was written
before 9/11, which has forced me to rethink some of what I wrote.
I still think privacy will be a defining issue for brands. The
issues of identity theft and the US Patriot Act have raised the issue
of privacy in people’s minds, and I don’t believe that customers will
want to have
a relationship with a company that violates the trust that is at the
heart of every brand by invading privacy. Fashion manufacturer
Benetton, for example, was forced to backtrack from a plan to insert
RFID tags into its clothing because of fears that it could then track
people on streets and in homes. But the privacy issue will become
more nuanced, with 3 zones of privacy. One will be personal, with
the sexual, financial and other information people do not want
shared. Another will be
lifestyle, involving demographic and spending habits. People will
share this, but only if they receive something of value in
return.
Finally, there will be societal privacy zones. People won’t mind
being tracked with cameras, or having “see-through” X-ray machines in
airports,
if they believe such action stops threats to society.
Within 5 years, dynamic pricing means that the price per gallon/liter
will change in real time according to whomever else is pumping at that
very moment. We already see harbingers of dynamic pricing in
hotel/plane ticketing, eBay and commodity markets. Advances in
network, processing power and better analytical tools will easily
enable dynamic pricing for all companies in all industries. So
the issue becomes, how will dynamic pricing affect companies and their
brands? It has always been assumed that brands enable higher
pricing, but what happens when that premium disappears in a dynamic
marketplace? First, it’s going to force companies to
rely less on promotions, etc. to drive sales, which is good.
Lower
prices inevitably attracts the least-loyal buyers, plus existing
customers
are always the first to take advantage of lower prices. Second,
it’s
going to force companies to get a handle on both their operational
costs
and pricing strategies. Currently, companies are relatively
clueless
concerning both their true costs and the price sensitivity of their
customers.
Finally, it will lead to segmented branding strategies, which will be a
vast improvement over the one-size-fits-all branding strategies
followed
by most agencies and firms today.
Actually, the chapter on change management was a bit of a cheat, since
change management will always be a struggle. People do not like
change. Companies think that technology will drive change, but
people
who prefer the status quo will triumph over technology every
time.
But change management will be even a greater challenge in the future,
because
so much change is just over the horizon, and adaptability will be key
to
brand success. (In many ways, I feel like we are in the eye of
the
hurricane. We’ve passed through the Internet whirlwinds, and are
now in a relative calm while those gains are being digested, but the
whirlwind
from globalization, technology and economic forces beyond our control
are about to resume.)
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