UK: Inside Management - The seven building blocks of brands.

UK: Inside Management - The seven building blocks of brands. - Leslie de Chernatony reveals the factors which, in the right combination grab the attention and contribute to the making of a household name.

Last Updated: 31 Aug 2010

Leslie de Chernatony reveals the factors which, in the right combination grab the attention and contribute to the making of a household name.

What makes a powerful brand? Put it another way: what are the characteristics of a brand - any brand - which go to ensure that it is really successful? Research shows that, while some brands are obviously more dominant than others, there is no such thing as a single brand. In every product field there is a spectrum along which differently configured brands compete for customers' attention. Take credit cards. American Express and Barclaycard are equally effective as means of paying for goods. Yet some people prefer American Express, because of the personality statement it makes, while others opt for Barclaycard because it is accepted by a greater number of outlets.

The same research identifies seven different types of brand building block which are available to businesses. What differentiates one brand from another in the same field is the way in which its managers stress particular blocks rather than others in their marketing programmes. In general, the more blocks that can be called into play the better. Weak brands are characterised by over-reliance on one or two blocks. While the powerful brands, such as Marlboro, Coca-Cola and Nescafe, take advantage of many, if not all the blocks.

Furthermore, thriving brands derive strength from the way in which management integrates all their features, making sure they are linked together. Faced with a complex, well-fitting jigsaw puzzle, competitors find imitation difficult. They have to identify not only the number of pieces but also the configuration. Managing, say, Nestle Cappuccino is not based simply on the excellence of a coffee formulation, it involves surrounding the taste with the suggestion of a lifestyle, merging relaxation with enjoyment and glamour with convenience.

The foundation block, which is essential to any successful brand, is functional capability. All new brands are bought on trust. If they are to develop and sustain a relationship with buyers, they must meet performance expectations. The PIMS database at the Strategic Planning Institute shows a positive correlation between brand profitability and being first to market. But there is an even stronger correlation between profitability and quality. Powerful brands offer consumers the assurance of consistently high quality. Kellogg's commitment to quality has now been recognised by several generations of customers. The company's standards have been maintained in an era when consumers have become increasingly bombarded with retailers' own brands. As a consequence, Kellogg's has kept its customer goodwill. Mars and Cadbury have also been scrupulous about protecting their taste heritage. Moreover, by carrying over their products tastes, they have been able to extend the brands into the ice cream bar and liqueur markets.

Some managers still think about quality in terms of the systems needed to prevent defects. They focus on internal factors, and listen carefully to what their technologists have to say about quality standards. Other managers see quality as a competitive weapon. They concentrate on customer satisfaction, and on helping colleagues to maximise this within their own operations. Toyota's management exemplifies this type of strategy. The Japanese company learned long ago how consumers use clues to assess the quality of cars. It then focused on these points, such as tuning the slam of the car door so that the noise makes the right quality statement.

Some businesses have succeeded in redefining the rules of competitive engagement based on quality. Caterpillar, through its dealer network, offers to service its own earthmoving equipment anywhere in the world within 36 hours. Komatsu found it difficult to compete on these terms. Instead, it designed its products so that little servicing was required.

New brands invariably have to face up to the challenge of competition. It is very often a tempting short-term strategy to enhance functionality and to stress this aspect in promotional campaigns. But once a brand is established it becomes dangerous to rely too heavily on functionality. As IBM discovered with its original PC, clones can rapidly present a threat by stressing functionality themselves - and at lower cost.

The second block that managers of powerful brands draw on is symbolism. The emotional element associated with a product can make a significant contribution to the health of any brand. Choice is influenced not only by what the brand does for the consumer, but also by what it says about the consumer. Oxo's success has been helped by the way that Katie's personality and lifestyle (in the advertisement) have evolved with the times, reflecting shifting attitudes in society. Pepsi Cola's advertising focused on favourable results obtained from blind testing, while Coca-Cola - the brand leader - showed global communities united in friendship, all happily drinking its product.

Some managers with conspicuously consumed brands have been able to capitalise on their brands' ability to make the right statement for their consumers. American Express is a well-known case.

There are any number of brands that have had symbolic roles deliberately written in. Through careful advertising and packaging Rowntree was able to differentiate its brands in this way. Thus Black Magic is about a sophisticated relationship between two people, while After Eight is identified with gracious living. Alert managers are always on the lookout for situations that will allow them to associate their brands with some ritual celebration. Moet and Chandon and Interflora are two examples.

The importance of the symbolic component is best illustrated by comparing the Porsche Carrera and Toyota Supra Turbo. Both cars are designed with closely comparable performance characteristics. Both accelerated from zero to 60mph in 6.1 seconds, and have similar top speeds of around 150mph. But the Porsche image meant it was able to charge a premium of around £15,000.

The third building block is the name of the brand. At the turn-of-the-century this was the key to the success of a brand, as the name and logo were at that time used to make better quality offerings stand out from the rest. However, a good name is no longer enough. These days two competing car hire firms might well charge comparable rates, and they might both replace their vehicles every six months. The winner will be the one which delivers the car on the night before the customer's journey.

Finding a good name is no easy task. The name must not only seek to convey the brand's current strengths, it must allow for the possibility of extension into new areas. In a sense, Frigidaire boxed its successive owners (General Motors, then White Consolidated) into a corner. Caterpillar Tractor, on the other hand, proved a more adaptable name. The company was able to drop the "Tractor" when embarking on a brand extension programme.

Market entry of a new brand is greatly simplified if its managers are able to count on the fourth building block: sign of ownership. Where an organisation has a high public profile there are obvious advantages in linking the brand closely with the name of the parent company. Canon, Philips and Cadbury are just three of the thousands of businesses which stamp their names on their brands. But care is called for here. In the wake of the Rowntree acquisition (see A Bittersweet Tale, p66), Nestle adopted a policy of mild endorsement (eg, KitKat from Nestle) which weakens its title. There is a danger, too, that the parent's heritage could be debased by brand extension - as Levi-Strauss found when it moved from jeans to suits.

By definition, retailers' own-brands lean heavily on sign of ownership. Taking advantage of their closeness to consumers, several major multiple retailers have fine-tuned their brands to match consumers' needs. Their proposition is that quality is at least as good as the leading manufacturer's brand, but at a lower price. It has been suggested that the term USP - when applied to a strong manufacturer-owned brand in the fast-moving consumer goods field - no longer just means "unique selling proposition" but "universal supermarket patronage".

Giant multinationals, such as Unilever and ColgatePalmolive, refuse to bow to the retailers. Instead they adopt strategies designed to demonstrate value to both consumers and the trade. With strong consumer propositions supported by continual investment, such manufacturers command the retailers' respect. The parties make up a partnership with a mutual interest in maintaining brand value. Heinz's chief executive has been quoted as saying that he looks at brand loyalty in terms of the percentage of consumers who switch stores when the Heinz brand is out of stock, rather than switch brands.

The fifth building block is called shorthand notation. In an era of increasing choice, consumers are bombarded with vast amounts of information about competing brands. Supermarkets usually stock around 20,000 different lines, all of which strive, via their advertising and packaging, to attract consumer interest. Research has shown that consumers process information rapidly and protect their memories from being inundated with unwanted information by erecting perceptual barriers. One study has revealed that, on a typical day, approximately 550 advertisements are directed at consumers, yet they pay attention to less than 1% of these.

When consumers are presented with a full array of information about competing brands, the piece of information they are most attentive to - regarded as the best indicator of performance - is the brand name. Consumers use brand names to interrogate their long-term memory about brand characteristics. If the message that comes back is favourable, a purchase is likely to be made. Thus businesses like Mars win by associating their brand names with a few key attributes - and they simplify choice by using uncluttered package design on which the brand name stands out.

The sixth building block is legal protection. It has been estimated that, in 1992, sales of counterfeit brands across Europe amounted to around £52 billion. When Yves St Laurent discovered a warehouse containing £11 million-worth of fake perfume, the company also found production machinery valued at £33 million. Happily, the legal environment is making life more difficult for counterfeiters. The European Customs Code allows officials to impound brands suspected of infringing registered trademarks, and in Britain search-and-seize orders can be obtained within hours of suspect goods entering the country. The damage can be greatly reduced by trademark registration, by employing firms to track down counterfeiters and by more sophisticated packaging technology and batch-numbering processes.

Some companies have attempted to be more proactive by turning a threat into a marketing opportunity. Volvo recently ran a publicity campaign showing a mother and child on the rear seat of a car pictured against a background of clouds, with the caption: "If your Volvo could fly, would you use anything but genuine Volvo parts?" Caterpillar employed a similar technique with the line: "Deciding to buy a non-genuine part for your Caterpillar is like rolling dice." The purpose of the advertising was to remind buyers why they should stay loyal to the brand.

The seventh building block is strategic direction, meaning the holding of all the other blocks in place, like a keystone. Brands are most likely to succeed when everyone in the business understands their particular features, and is eager to strengthen them further. Federal Express in the US proclaims that its company is the right choice when a parcel "absolutely, positively has to be there overnight". This corporate vision is communicated to all employees, who are trained to deliver a superior service. Logistics planning and information technology provide a high level of support, and a clear sense of direction infuses all departments.

Strategic direction gives a brand the ability to out-perform competitors. In broad terms, customers perceive value in brands (a) when they cost less than competing brands offering similar benefits, ie they are "cost-driven"; or (b) when they possess unique benefits, ie they are "value-added" brands. The Mazda 626GLX Executive is a good example of a cost-driven brand. All aspects of the value chain have been scrutinised to cut unnecessary cost without sacrificing quality. The result is a car offering a standard of fittings normally seen on a BMW 735iL or Mercedes 560SEC, yet at a considerably lower price.

In the retail sector, Kwik Save's success derives from eliminating frills and offering a service level appropriate to its particular segment. Costs are driven down: by not price-marking individual items, by not accepting credit cards, by opting for small stores (costing typically £1 million) which can be opened in much less time than those of competitors. Prices are trimmed accordingly.

At the other end of the scale, because they offer superior benefits compared to the competition, value-added brands command premium prices. Cray Research supercomputers, for example, are priced at over $15 million. Each has huge data processing capabilities, interfaces with any other computer equipment and runs software written in any language. New software is continually being developed for each user. Several months before delivery a Cray team will visit the site and work with the customer to ensure that all connecting services are in place. Later, upon delivery, a full-time team will take up residence with the customer, to support the machine and try to ensure a problem-free operating environment.

Like other powerful brands, Cray achieved its leading position by combining several of the building blocks described above in a coherent manner. Successful brands, be they products or services, are always presented in such a way that buyers perceive special values in them which match their needs. The challenge will be to sustain these values in the face of ever intensifying competition.

- Leslie de Chernatony is reader in marketing at City University Business School, London.

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