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How has the "branding industry" grown in recent years and what will the future hold?
There has been continual evolution in the thinking of many companies on this issue. Years ago, “marketing” replaced “selling” as the major activity of corporations. The marketing function encompassed all the activities that companies use to distribute their products including selling, advertising, public relations, merchandising, pricing, etc.
Recently, however, the emphasis has shifted again. What is the objective of a marketing program? Obviously, the objective of such a program is to build the brand in the prospect’s mind. Companies that built brands like Budweiser, McDonald’s, Rolex, BMW, Volvo and many others are very successful while companies that failed to build powerful brands often went bankrupt. Hence the emphasis on “branding” which has become a much more discussed topic in the business community today than “marketing.”
In the future, we see marketing dividing into two functions: One is “branding” which would encompass all those activities that have to do with influencing consumers such as advertising and public relations. The other function is “selling” which will need a new name to encompass not only selling, but also promotions, merchandising, posters, point-of-sale activities.
How can companies launch brands that allow them to serve existing clients at the same time as capturing new ones?
Instead of thinking of ways to serve and maintain clients or customers, enterprises that launch new brands should think of trying to create new categories. The best, most powerful global brands are almost always based on new categories. The Body Shop was the first cosmetics shop selling "natural" cosmetics. Volvo was the first automobile to focus on "safety" as its primary benefit. Red Bull was the first "energy drink."
Who is the owner of a brand? Consumers or companies?
Companies own trademarks which are registered in various countries around the world, but they don't own their brands. Their brands are owned by consumers because a brand is only something that exists inside the mind of the consumer.
Most of your examples are consumer products, what about industrial products?
We use mostly consumer examples because people don't know the history and background of most industrial products. Even industrial people don't know the background of other industrial products. If you are in the pump business you probably don't know too much about the mainframe computer business. So most industrial people know only their rather narrow industrial businesses. We focus on the principles of marketing, not case histories. The point is that the same principles apply no matter what your size or what you are selling, consumer or industrial, large business or small business. Why is that? Because marketing takes place inside the mind of the customer or prospect. The products might be different but the minds are similar.
What was marketing like before your Immutable Laws of Marketing book? What led you to write this book?
Marketers tended to ignore competition in the development of their strategies. Our book is very competitive-oriented in the sense that you can’t develop an effective strategy without considering the strengths and positions of your competitors.
Why twenty two laws?
It’s an arbitrary number. We picked the 22 most important principles from our point of view.
Have you seen any changes, that the laws have improved?
The 22 Immutable Laws of Marketing is a book about strategy. Good strategy never changes, therefore the laws, in principle, should never change. The only changes you find today are in tactics. For example, the use of the Internet is a very important tactic today, yet it did not exist several decades ago.
Why do you think it is so difficult to differentiate a brand?
We live in an overcommunicated society. There are just too many products, too many brands, too much advertising. With literally hundreds of categories and thousands of brands, the average person cannot remember the small differences that one brand has from another. Companies need to forget about trying to establish "differences." What they need to do is to establish new categories. When you introduce a new category, like Red Bull did with "energy drink," people remember the new category and the brand. Starbucks with "expensive coffee" and Zara with "fast fashion" are two other examples of building brands by establishing new categories.
Can you name some ideal or close-to-ideal brands? What is so perfect about them? Here are four brands that have been positioned extremely well in the American market.
BMW. In 1974, BMW sold 15,007 automobiles in the American market, which made the brand the eleventh largest-selling European vehicle. The following year, BMW introduced its long-running theme, "The ultimate driving machine." In 2005, BMW was the largest-selling European brand in the American market with sales of 266,200 units. The BMW theme, the ultimate driving machine, positions the brand as the one car that's fun to drive. No other automobile brand has been able to capture the attribute of fun.
Barilla. The brand was introduced into the U.S. market in 1996 with the theme "Italy's No. 1 pasta." Three years later, the brand became the No. 1 pasta in America. Interestingly enough, only the brand comes from Italy. The pasta is made in a plant in America.
Dyson. A United Kingdom product, Dyson was introduced into the U.S. market with the theme, "The first vacuum cleaner that doesn't lose suction." Even though its vacuum cleaners sell for $400 and up, Dyson in just two years became the No. 2 brand in the U.S. market, second only to long-time leader Hoover.
Grey Goose. Introduced in 1997 with the theme, "Rated the No. 1 tasting vodka in the world," Grey Goose was bought by Bacardi Ltd. in 2004 for more than $2 billion, the largest sale in history for a single liquor brand. Why was Grey Goose so successful? Because it pre-empted the ultra-luxury vodka category in the same way that Smirnoff dominates the regular vodka category and Absolut dominates the premium vodka category.
What do you think will influence strongly brands and their differentiation in the future?
There is one strong trend that still has a long way to go. That's the trend toward global brands. Even if you live in a small country, you should think of taking your brand or brands global. If you don't, a global company is going to come into your country and take your business away from you.
In the future there is only going to be room for big global brands and small, narrowly-focused local brands. There's no room in what we are calling "the mushy middle."
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