Brands and Their Emotional Appeal

What is it about Donald Trump that makes him a GOP frontrunner for US president (so far)? Here is what many people say. Trump cannot be controlled. Trump knows it is all a joke. He is our way of giving the middle finger to Washington and career politicians. He says what he thinks. He has no filter. That is refreshing. He succeeded in business. Maybe he could succeed in government too. He is not politically correct. He seems real. He embodies the rage of the white middle class.

Why is Richard Branson and his Virgin brand so popular? He smiles and laughs a lot. He has fun. He dreams big. He breaks the rules. He is not afraid to take risks and fail. He perseveres. He values people and respects his employees. In a way, he epitomizes a different more refreshing approach to business development and management.

Why is Andy Warhol so popular? He was one of the pioneers of Pop Art. He showed us that art can be about common everyday items, items that are a product of our high commercialized consumer society. Art can be accessible. It doesn’t have to be profound. And it can be transient like other aspects of our throwaway society. His work chronicled popular culture from the 60s through the 80s. And they sometimes made statements on popular culture. His art was original, different and modern. And Andy Warhol really knew how manipulate the media.

What do these three examples help us understand about branding? They demonstrate the power of personality. They establish the importance of being different from everyone else. They reveal that it is important to tap into deeply held attitudes, values and beliefs.  They indicate that timing can be a factor in popularity. And they show that emotional appeal is always very important.

Important Pricing Concepts

Pricing strategy is an element of brand positioning that is hardly ever talked about. So I thought I would summarize some of the more important pricing strategy concepts here. For a more in-depth coverage of this topic, Brand Aid covers this in much greater detail.

Here are some of the more important concepts:

• Cost plus pricing insures a profit on each item sold but is a very unsophisticated approach to pricing.
• People often compare a product's price to a reference price that they maintain in their minds. This reference price can be influenced by memory of past prices, prices of other products on the same shelf, the last price they paid for a similar item, the way the price is presented, the order in which people see a range of prices and several other cues that the marketer can influence.
• Price sensitivity and price elasticity are similar concepts. They focus on how sensitive people are to price changes. One way to think about this is how units will move up or down as a ratio to how much the price is increased or decreased. One would be advised that sensitivity can change, especially as certain price thresholds are crossed.
• Price as a signal to quality. In many categories, especially professional services and luxury goods, higher prices can be a signal to higher quality. If the price is low, the product or service is thought to be inferior. In these cases, a higher price actually increases demand.
• Price segmentation is a way to maximize profits by offering a variety of prices based on different customer need segments. Airlines segment prices, as do concert halls.
• Loss leader pricing uses a very low (sometimes unprofitable) price on a high visibility item (often heavily advertised) to lure customers in, who will presumably buy other items at full retail. Retailers often use this approach.
• Setting price based on customer value. With this approach, one determines what the product or service is worth to the customer and then sets the price accordingly. Hopefully, the customer value far exceeds the product's or service's cost. 
• Aligning prices with distribution channel perceptions. A brand might sell different versions of its products at very different prices in Walmart versus Lord & Taylor, for instance.
• Bundling or unbundling products and services will allow for different prices to be charged. 
• Altering the quantity to change the price point charged. This approach is often used by consumer packaged goods. 
• Penetration pricing refers to pricing the product very low to penetrate or quickly gain share in a  new market. 
• Price skimming refers to pricing the product very high initially, usually to recoup product development costs, and eventually lowering the price as more competition comes into the market. This approach is often taken by pharmaceutical companies. 
• Price discounting. This approach is often used to "juice sales" in the short run but usually has a negative long-term impact on brand value perceptions.
• Value pricing usually means offering the product at a low price point relative to the average price point in the category.
• Premium pricing usually means offering the product at a high price point relative to the average price point in the category. Premium pricing is related to the concept of price as a signal to quality.

I hope this has provided a useful overview of the different approaches one can take to pricing a brand and its products and services. 

Great Advertising

In today's over communicated world in which people are very busy and distracted, often multitasking, advertising needs to be highly entertaining to break through the clutter. After that, it needs to have a very simple message that it quickly and consistently communicates. Only when these two elements exist - (1) entertainment and (2) quick, simple and consistent message - does the brand break through the clutter and build memory triggers and associations.

GIECO does this exceedingly well. GEICO's very succinct and consistent messages:

• GEICO - Fifteen minutes could save you 15% or more on car insurance.
• If you want to save 15% or more on car insurance, you switch to GEICO. It's what you do.

To see how they have succeeded with this, click here to view some of their more recent highly entertaining ads.

Environmental Scanning

For most businesses, environmental scanning can also be very helpful in staying abreast of the latest customer, industry, and societal trends. “Environmental scanning” is a fancy term for the following process:

• Reading a broad cross-section of books and publications of relevance to your business
• Monitoring any other relevant media
• Keeping very close track of the emerging trends by counting the number of times certain ideas, needs, or concepts are referenced
• Seeking to better understand emerging ideas, needs, or concepts— those that are steadily increasing in frequency and intensity

When I worked in Hallmark's Product Discovery & Development division, we had one person who held the title of environmental scanning manager. Her job was to read upwards of 80 different periodicals and produce a report on a different emerging trend each month. Included in her report were implications for Hallmark including new product and service opportunities. She highlighted each trend in a different color and counted the number of times each trend appeared. The periodicals she read varied tremendously from The Economist, Foreign Affairs, Fortune, Forbes, Business Week, Investors Business Daily and The Wall Street Journal to People, Psychology Today, Scientific American, Time, Reader's Digest, Ladies' Home Journal and Cosmopolitan. 

Topics that she wrote about included simplifying one's life, seeking experiences rather than things and family/home cocooning. 

To see what trends might affect your business today, see Faith Popcorn's 17 Trends That Reveal the Future.

Hollow Claims

Increasingly, I have encountered brands that make the following types of claims:

• We are the quality leader in the X category.
• We are the innovation leader in the Y category.
• We are the service leader in the Z category.
• We are the leader in the XYZ category (which is the worst of all claims).

Is quality important? Yes. Is Innovation important? Absolutely. Is service important? Of course. Is it desirable to be the industry leader? Sure. However, in more and more categories, as I perform brand audits, I find that large numbers of companies in many categories make these claims—so much so that the claims have become hollow. “Leader” means top, number one, not one of many striving to be top and number one. Don’t claim an aspiration unless you can uniquely deliver on that aspiration.

Regarding quality, who is the leader in the hotel industry? Is it the Ritz Carlton with its “Ladies and gentlemen serving ladies and gentlemen” service, or is it the Four Seasons, or Mandarin Oriental, or Peninsula, or Amanresorts, or Shangri-La, or InterContinental? With this list of high-quality hotel chains, should Hyatt or Westin or Marriott or Sheraton or Hilton claim quality leadership? Who makes the highest-quality shoes? Who makes the highest-quality kitchen appliances? How about the highest-quality kitchen knives? Who makes the highest-quality shampoo? Why? Based on what? Is one independent ranking enough to make it so?

Are some companies real innovation leaders? Sure. Who would argue that Apple is not an innovation leader in its category with its introductions of the iPod, iPhone, and iPad? If your company is claiming innovation as its primary point of difference, is it as far ahead of its competition in reality and perception as Apple is in its category? Or is it in a pack of companies, each of which has introduced a comparable number of innovations? In the grocery store business, Wegmans has been widely recognized as the innovation leader time. Trader Joe’s is also innovative, but with a different formula. In the auto industry, which company should claim innovation leadership? Toyota because it was the first with a significant introduction of hybrid cars? GM because of its introduction of OnStar? BMW because of its constant innovations? How about Honda or Porsche?

Do some companies stand out as service leaders? I would contend that Ritz Carlton and Nordstrom would vie for this position in their respective industries. Who is the service leader in banking? In wealth management? How about in insurance? In restaurants? In hospitals? How does service leadership relate to quality leadership? And what does it mean to be the overall leader in a category? What is the metric for leadership? Market share? Distribution? Dollar sales? Unit sales? Customer loyalty? Leadership is a fairly vague term. Leadership, but in what? How important is quality to leadership? Service to leadership? Innovation?

I would contend that quality, service, and innovation are critical to most companies in most industries. Every organization should try to continuously improve its delivery of each of these performance areas. However, unless you are the undisputed leader in one of them, you should not claim it as your primary differentiating benefit. I would never try to claim industry leadership. It is a title that can only be conferred through general consensus by outside observers over time. And I would only claim quality, service, or innovation leadership if the following hurdles were cleared:

• Your brand is the undisputed leader in this area as evidenced by customer research, independent rankings, specific proof points, and truly measurable differences.
• You consistently deliver against this measure across all of your products and services at all of your locations/distribution points.
• You are, at least, perceived/recognized by your primary target audiences as a market leader.

Finally, if I made one of these claims, I would make sure that I had the resources in place to ensure consistent superiority in this area for a very long time. Don’t manage a brand that contributes to the hollow claims of quality, service, or innovation leadership. Rather, manage a brand that claims something truly unique, compelling, and believable to its target audiences. The organizations that can convincingly claim leadership in one of these three areas (quality, service, and innovation) are rare indeed.

© 2015 Brad VanAuken, Reprinted from Brand Aid, second edition, available here or here.

Brand Equity Measurement 101

“If you can’t measure it, you can’t manage it.” Peter Drucker

People are often confused about what brand equity actually is. Is it the asset value of the brand? Is it the price premium that the brand is able to command? Is it the reduced price sensitivity that it can create? Is it the emotional connection that the brand makes with people? Is it the loyalty that customers demonstrate toward the brand? Is it the brand’s personality? Is it the brand’s positive associations? Is it the unique identity that it brings to its products and services? Is it the degree to which the brand personifies those products and services? Is it the way the brand is able to share values with its customers and serve as a self-expression vehicle for them? Is it the goodwill that the brand generates? Is it the memory triggers that the brand creates in people’s minds? Is it the ability of the brand to create meaning that extends beyond one product category allowing for brand extension? Is it the brand’s promise? Is it the brand’s unique value proposition? Yes, it is all of these.

If a brand has equity it implies that the brand is an asset that has value. In fact, many studies over time have demonstrated that brand equity is a significant contributor to stock price, company valuation and shareholder value.

So what should the purpose of brand equity measurement be?

• To measure the brand’s health and vitality
• To understand how well the brand is positioned against its competitors
• To serve as a diagnostic tool
• To uncover any underlying weaknesses that require intervention
• To identify opportunities to further strengthen the brand
• To provide the information from which a brand scorecard can be built

That is, a brand equity measurement system’s output should be diagnostic and actionable.

Sometimes people equate brand tracking studies with brand equity measurement. Brand tracking studies tend to be fairly simplistic, often measuring just a couple of things and they are usually not very actionable. Sometimes people equate customer satisfaction scores with brand equity measurement.  And sometimes people equate attitudinal loyalty scores (such as a brand’s Net Promoter Score) with brand equity measurement. All of these are helpful to some extent but they are not very comprehensive or robust. One needs to look at the whole picture.

Here is what we include in our BrandInsistence brand equity measurement system:

• Unaided brand awareness (including first recall) associated with a particular product category. Related to this, unaided brand awareness associated with specific customer benefits.
• Brand relevance.
• Top-of-mind brand associations. Related to this, a map of brand memory triggers.
• The brand’s top-of-mind points of difference.
• The brand’s personality attributes.
• Importance of up to 24 customer benefits and values and the brand’s delivery against the same (allowing for the creation of brand positioning maps).
• Brand value.
• Brand accessibility.
• Emotional connection to the brand (four separate measures).
• Attitudinal brand loyalty (two separate measures).
• Brand vitality (two measures).

We measure all of these brand equity components by customer segment for the brand in question and up to three competitive brands. This provides a comprehensive picture of the brand’s strengths, weaknesses, opportunities and threats together with recommended actions to strengthen the brand.

In a related brand asset mapping study, we map out all of a brand’s associations (purchase, usage, customer segment, product, service, function, feature, lifestyle, occasion, etc.) to identify opportunities for brand extension.  In another related study, we map all of the emotions with which the brand is associated for each customer segment, helping the brand manager establish a stronger emotional connection between the brand and its customers.

I hope this has shed some light on the nuances of brand equity measurement. For more information on this, please refer to chapter 18 (Brand Equity Measurement) in Brand Aid,second edition.

The Quick Brand Health Assessment

You know your brand is winning in the marketplace when:

• The brand is mentioned to customers and potential customers, and they brim with enthusiasm in their response.
• Your brand’ s external messages “ring true” with all employees.
• Employees are enthusiastic and consistent in recounting what makes their brand special.
• The brand’s market share is increasing.
• Competitors always mention your brand as a point of reference.
• The press can’t seem to write enough about your brand.
• Your CEO has a strong vision for the organization and its brand and talks more about the vision than financial targets.
• Your organization’s leaders always seem to “talk the brand” and “walk the brand talk.”

Excerpted from Brand Aid, second edition, available here.

Repositioning Your Competitor's Brand

In the midst of the presidential nomination season, we will witness many examples of brands attempting to successfully reposition competitive brands - that is, the other presidential candidates. 

They will begin with research. Who are we talking with? Fiscal conservatives? Non-interventionalists? Progressives? Social conservatives? Democrats? Republicans? Foreign policy doves? Liberals? Tea Partiers? Social liberals? Evangelicals? Secularists? How do people label themselves and how large is each of these groups?

Once this is determined, that is, once the market segments have been established and sized, then different negative attributes are tested. The following are all possibilities:

• He believes in abortion, killing babies.
• He is crazy enough to get us into an expensive protracted war.
• He had an affair.
• She lies.
• He is a puppet of the 1%.
• He is controlled by big energy companies. 
• He is too idealistic. 
• We won't be safe under her leadership.
• He cheated on his taxes. He cannot be trusted.
• He is not tough enough on terrorists.
• She hates Israel.
• The economy will collapse under his leadership.
• She puts corporate interests in front of human interests.
• America will become a socialist state if he becomes president.
• He is a dinosaur.
• All of your tax dollars will go to lazy people that don't want to work if he becomes president.
• The minorities will take over our country if he becomes president.
• All of our jobs will be shipped overseas if she becomes president.
• Your child will never find work under his economy.
• There will be no opportunity for you to advance in society if he becomes president.
• She is a sociopath.
• He is an egomaniac.
• He is a socialist.
• He believes in creation science.
• He will start world war three.
• He doesn't believe in climate change.
• The environment will implode under his watch.
• You will be left behind in the America that he creates.
• Many animal species will become extinct if he becomes president.
• She is a dreamer.
• He is ruthless and power hungry.
• He is a scary evangelical.
• There will be no middle class left if he becomes president.

These ideas will be tested for how believable they are, how strongly they evoke a negative emotional reaction, whether they will drive a voting decision and how they will reflect on the person who makes these claims and the candidate against whom these claims are made. The results for each market segment will be analyzed to determine how much repositioning a competitor in this way can reduce his or her chances of being nominated or elected.

This is serious business and it is largely informed by marketing research and brand positioning concepts. Sit back and watch brand repositioning on steroids over the next year and a half.

Donald Trump's Brand Equity

Donald Trump contends that his net worth is in excess of $10 billion. Forbes estimates it to be $4 billion, while Wealth-X estimates it to be $4.5 billion. The Wall Street Journal indicates that he has assets of $1.5 billion. So what accounts for the difference between what Donald Trump says he is worth and other estimates of his worth?

His name. He loves his name and uses it on most everything. Many equate his name with quality. When asked, he has indicated that the brand value of his name alone is $3 billion. Previously, he had indicated that the brand value of his name was as high as $6 billion.

What value does brand equity provide? The ability to win business deals, charge a price premium and license the name for royalties among other advantages.

Forbes estimates the value of his licensing deals to be $60 million not counting his real estate licensing deals which could be as high as $120 million, putting his brand licensing income at something less than $200 million.

So, does running for president help or hurt his brand equity? If a key driver of brand equity is brand awareness (and it is), then his presidential bid is significantly improving his brand equity. Consider the fact that there are now dozens of articles highlighting the debate on his net worth, articles in Forbes, Fortune, Business Insider, The New Yorker and New York Times to name just a few periodicals.

But what if the publicity is bad publicity? There is an oft repeated saying that "There is no such thing as bad publicity." But after the first set of GOP debates, several business partners (Macy's, NBC and PGA) announced that they intend to severe ties with Donald Trump, potentially costing him millions of dollars.

According to our proven BrandInsistence(SM) brand equity measurement model, the five things that drive customers to insist on particular brand are awareness, relevant differentiation, value, accessibility and emotional connection. 

Let's take one at a time for the Donald Trump brand:

• Awareness - already high but still up significantly
• Relevant differentiation - differentiation for sure; relevant differentiation (for some, yes - he is still the #1 GOP presidential candidate per the most recent polls)
• Value - licensing value based on name recognition - yes; value to any particular person including women and Mexicans - questionable at best
• Accessibility - it may have increased
• Emotional connection - its seems to have decreased for many people while others applaud his independence and outspokenness

So, while awareness, a prime driver of brand equity, is up significantly, emotional connection is likely to be down for many but up for others. Value and relevant differentiation may also have mixed results.

What is his brand's equity? At least $180 million but likely much more than that. $3 to $6 billion? So says Donald Trump.