Forss & Castlin: On Brands

Given that the discussion about what brands are (and are not) has recently been making the rounds again, Gary Rivers (now Forss) and I thought it might be timely to repost what we wrote four or so years ago in the original Manifesto.

So, well, here we go.

"One of the reasons why differentiation fails to exist to the degree proponents claim is that the premise presumes conscious thought, while the human brain much prefers mental shortcuts. And that, to be blunt, is what brands are.

Some brand differences do subsist, mind. If they did not, there would not be such a thing as brand salience, all goods would be commodities, price premiums would be unobtainable and so forth. To illustrate, Phil Barden argues in Decoded that the “pain of price” activates the same regions of the brain that are associated with physical pain (meaning that, yes, paying literally?hurts). Purchases would consequently be dependent on the relationship between pain and reward. For a positive decision to be made, rewards must exceed a certain threshold (net value = reward – pain). Apple, to take a clichéd example, has clearly managed to exceed this pain threshold. Their products, and every touchpoint through which the customer encounters the company, are designed to increase premiumization (value share) and the reward side of Barden’s equation in order to null the pain of paying over $1000 for a smartphone that inevitably will be outdated in 18 months’ time. But it is important to realize that price premiums are inherently relative to a supposed generic equivalent, and to ask oneself what that might be. It is also crucial to acknowledge that a lot goes into the equation, not least whether the brand is available there and then; the net value and reward of a public restroom goes up exponentially the more one is desperate for a visit.

Of course, brands also need to be clearly distinctive from their competitors. Jenni Romaniuk and Byron Sharp, creators of the concept of distinctive brand assets, contend that the fundamental function of branding is to ease the identification of the product or service amongst competitors. As noted previously, consumers rarely stop to think about whether the logo looks nice, trustworthy or conveys any other connotation. Consequently, marketers should focus on qualities that distinguish the brand in the form of distinctive elements that help consumers notice, recall and recognize it in advertising and buying situations (defined as mental availability). The implications of understanding this model are profound. Removing or changing important brand-activating elements carries obvious risks, as famous redesign failures illustrate. When Tropicana orange juice “redesigned” its packaging, it lost its distinctive assets, saw a 20% sales decrease in two months and suffered a $30 million loss as a result. To make matters worse, people hardly stopped buying juice, meaning they effectively boosted the sales figures for their competitors to boot. Similar displays of ignorance of the importance of consistency are particularly common among newly recruited senior marketers who want to “put their stamp on things” - it serves their ego far more than the brand.?

But we digress.

Established rewards and distinctive assets further lead to a third function of brand, namely that consumers use them to make decisions under conditions of uncertainty. Rory Sutherland has explained this phenomenon by observing that McDonald’s is largely successful because it is very good at not being very bad. If there are few options available, or the food variance from exceptional can be consequential, the golden arches provide a safe bet. Consumers are aware they will not get the best meal on the planet, but they can rest assured that they will not get food poisoning either, so they satisfice. Sutherland’s views mirror those of Richard Rumelt, who has stated that a brand’s value comes from guaranteeing certain characteristics of a product (though he recognizes that such characteristics are difficult to define). However, the argument presumes a track record (reward/certainty) and recognized distinctive assets (logo, colors etc.). It also, one should note, applies to almost any famous fast-food chain, not least McDonald’s main competitors such as Burger King, Pizza Hut and KFC.?

We should emphasize that Sutherland makes no claims about differentiation (his point is that brands act as heuristics), nor do any aspects of the above have anything to do with it. On a psychological level, a brand is the sum total of interactions customers have with a product and service, defined in particular by the accretion of residue these experiences leave behind in their minds. These are in turn used to evaluate the proposed pain of price for a product or service. On a perceptual level, brands are a collection of stimuli (distinctive assets such as icons, colors, jingles etc.) that are employed to make products easier to notice, understand and buy. On a risk-reduction level, a brand assists buyers in making decisions under conditions of uncertainty by ensuring certain characteristics of a product."