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UK: Build your reputation with those who matter most to you. - Marketing: overbranding can be as bad as underbranding.

Last Updated: 31 Aug 2010

Marketing: overbranding can be as bad as underbranding.

Why can't my brand do a Nike? If a boring old running shoe can become a hugely expensive - and profitable - 'to die for' icon, why can't my brand achieve something similar? According to a recent article by McKinsey consultants, more and more companies are trying to emulate brands such as Nike and Coca-Cola to become 'power' brands - brands whose personality and presence make them stand out from the crowd and enable them to extend 'across multiple concepts and into multiple channels'.

Let them try. A tiny few may make it. But for the rest, the decision to invest in what McKinsey calls 'major marketing muscle' will be their biggest mistake ever. The widespread belief that being a Nike or Coca-Cola is what branding is all about is the source of two fundamental marketing mistakes that constantly feed and reinforce each other: overbranding and underbranding. Overbranding happens when a company wastes vast sums of money on things like advertising, PR, sponsorship, packaging and design in a vain attempt to dress its brand up to be something that it is not.

Underbranding happens when, in reaction to this disastrous profligacy, others decide 'branding is not for me'.

For SMEs, underbranding is perhaps the biggest source of lost opportunities.

To see why, think of brands as people. First, there is not one society that does not name individuals. Names are a superb form of communications shorthand. It's easier to say 'Andy' than to say 'you know, that chap with the big nose, slight squint and red hair'. Likewise, distinctive names help people remember products, services and companies.

Second, all people have an identity - the way we cut our hair, the clothes we wear, how we walk and talk - which send messages about us to the people around us. Likewise all products and services need to be designed, packaged, explained and sold in some way. How this is done inevitably influences how attractive they are to their target audience. Third, like people, products and services have reputations. They are known for certain qualities and behaviours and this affects how other people deal with them.

When name, identity and reputation mesh, it can work wonders. Take an extreme example, a gangster with a reputation for mindless cruelty. The more his reputation 'goes before him', the easier his life becomes. His actual investment in deeds of mindless cruelty generate a good return for him. To use modern jargon, he has high brand equity. Likewise, a brand with a clear, distinctive reputation tends to have ready and willing customers and distributors pre-disposed to do business with it. It generates more bangs for its bucks than underbranded grey blurs, which miss opportunities because the first reaction among target audiences tends to be: 'who?'.

Avoiding overbranding is perhaps harder: how do I know when a further investment in brand building is unnecessary? Thinking about people is helpful here, too. People who manage their reputations well have clear answers to three simple questions. Who matters to me? What matters to me? And how best do I communicate my contribution to 'what matters to them'?

For some people and brands, such as pop stars or Coca-Cola, ubiquity and fame are essential. But for others, that sort of fame and presence is unnecessary. For most brands, especially business-to-business, identifying exactly who matters most (in terms of potential customers, distributors and opinion formers) quickly suggests the bare bones of a 'media strategy': how best to reach them. Like most people, they only need fame within a relatively small circle. For example Tetramin, the tropical fish food, is a huge brand with 80% global market share. But its owners, Tetra Werke, know that the only people who matter are the buyers and distributors of tropical fish food and they focus all their reputation-building efforts on them.

Tetramin is successful without being a Nike. Trying to be a Nike would destroy its profitability. It knows the secret of successful brand management, which is finding the right level and working it to the full. It's not always easy. After all, how many of us manage our own identities and reputations at home and at work as assiduously and effectively as we could?

Alan Mitchell was editor of Marketing and now works as a freelance journalist.

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