We've already discussed marketing topics, but is there anything more to say? Actually, there is still a lot.
Two major developments have brought permanent changes to marketing. One is the internet, and the other is the global brand trend. Since the new century, both have greatly driven revolutionary changes in the marketing world.
- PR is more important than advertising
In the past, almost every new brand was launched through a large advertising campaign. In today's media environment, this approach is no longer effective.
Advertising is expensive and lacks credibility, especially when a new brand invests in ads. That's why many of the most successful new brands have launched through PR.
Examples: Google, Facebook, Snapchat, Uber, and Twitter.
Think about the recent U.S. presidential election. Hillary Clinton's campaign spent nearly twice as much on advertising as Trump: Clinton spent $1.184 billion on ads, while Trump spent $616 million. Yet Trump won the majority of electoral votes: Trump got 306, Clinton got 232.
If you compare the two candidates in terms of public attention, the situation is the opposite. In most metrics, Trump received nearly three times as much PR as Clinton.
Why? Because Trump was "controversial," while Clinton was not. Controversy creates news, and news builds brands.
This is a big difference between PR and advertising. PR campaigns need controversy, but this doesn't work in advertising. Consumers get tired of ads that attack competitors.
But when the media reports on similar events, consumers don't blame the brand.
- Category is more important than brand
Marketing is often called "brand building." The emphasis is on creating a more famous, more authoritative brand.
However, what role does the brand play in the marketing process? Consumers don't buy brands; they buy products associated with the brand name.
Compare marketing to war. Nations send armies to conquer territory. Companies launch marketing to occupy categories.
Soldiers, tanks, and fighter jets are tools of military warfare. They are not the goal.
Products, packaging, channels, and brands are tools of marketing warfare. They are also not the goal. The goal is to occupy a category.
Worse, from a brand perspective, a brand almost loses its value if it is separated from the category it represents.
Think of Nokia, once a company that dominated the mobile phone market with the Nokia brand. When the market shifted from traditional phones to smartphones, what did Nokia do?
It did what most companies would do. Nokia tried to transfer its traditional phone brand to its smartphone products—and it was a disaster.
Apple did not do that. When the computer market shifted from home to business use, it didn't use the name "Apple." It named its business computer product "Macintosh."
When Apple decided to enter the smartphone business, it still didn't use the name "Apple." It named its smartphone product "iPhone."
(I should say this was Steve Jobs' approach, not Apple's, because when Apple entered the smartwatch business, it quickly adopted the line extension strategy that almost every other company practices.)
After the success of the iPhone, you might think some of its competitors would also use new brand names. But they didn't.
Every major smartphone maker worldwide stuck with existing brand names: BlackBerry, HTC, Huawei, Lenovo, LG, Motorola, Nokia, Samsung, Sony, and Xiaomi.
Most marketers are brand-oriented. They think about what other categories their brand can occupy. This is especially evident in global companies like Sony in Japan, Samsung in South Korea, Tata Group in India, and General Electric in the U.S.
- Name is more important than strategy
RadioShack went bankrupt "again," which may not be surprising.
What is surprising is that the company's executives thought using the name "RadioShack" would succeed. Do you remember when you last walked out to buy radio equipment?
(Translator's note: RadioShack once defined itself as a ubiquitous electronics company because its retail stores were so numerous they were almost everywhere in the U.S. It started by selling radio equipment, and over time expanded to include wireless communications, electronic components, batteries, accessories, and other digital technology products and services.)
Take Orville Redenbacher, the leading popcorn brand for decades. Now, as consumers become more concerned about food health, especially high-calorie, low-nutrition foods like popcorn, this brand has lost its leading position to Smartfood.
No brand can live forever. Times change, and companies need to adapt. One way is to launch new brands to respond to changes in the market.
But even when companies launch new brand names, they often overlook the importance of the name they choose.
Common practice is to create a new brand name before developing a marketing strategy for it. This is a serious mistake.
The best practice is to have a strategy first, then a brand name. The chosen name should convey the brand's marketing strategy. For example, Duracell batteries (Translator's note: The word "Duracell" combines "durable" and "cell"), a name that conveys the fact that alkaline batteries last twice as long as carbon-zinc batteries.
Of course, Duracell quickly overtook its competitor, Eveready alkaline batteries, which is another example of a disastrous line extension.
Consumers don't interpret your marketing plan. They just pick up similar products on the market, compare them, and choose between brands. The best way to communicate your marketing strategy is to choose a brand name that reflects it.
- Visual is more important than words
For 65 consecutive years, Heineken was the best-selling imported beer brand in the U.S. market. Then Corona entered the U.S. market with a lime on its bottle.
Today, Corona outsells Heineken in the U.S. by 120%. That's the power of visuals.
But not any visual has such power. After all, advertising and other forms of marketing are full of visual images. What a brand needs is a visual that reinforces its verbal positioning concept.
"Positioning" is a verbal concept, a verbal nail. The tool to drive this nail into the consumer's mind is the visual hammer.
The goal of marketing is to implant a word or a verbal concept into the consumer's mind, but using words and vocabulary is not the best approach. Combined with visuals, it creates emotional appeal.
- Multi-brand is more important than single-brand
The era of single-brand companies is over. In the future, like Apple, Procter & Gamble, Coca-Cola, Unilever, Nestlé, and many others, global companies will have multiple brands.
Look at two famous single-brand companies of the past: General Electric and IBM.
From 2006 to 2015, GE's revenue declined by 28%, and IBM's revenue declined by 19%.
Actual revenue decline is even more severe. Over the past decade, inflation has reduced the real purchasing power of the dollar by 16%.
Take the internet industry as an example. Almost every major company worldwide built websites with existing brand names. Which of these websites achieved great success?
None.
To build a successful website, you need a new brand name. Take Walmart, for example. It launched Walmart.com in 2000. Today, 16 years later, Walmart.com contributes less than 3% to Walmart's total sales.
Review the five revolutionary changes:
PR is more important than advertising
Category is more important than brand
Name is more important than strategy
Visual is more important than words
Multi-brand is more important than single-brand
Ignoring them is at your own risk.
Source: Ries Category Strategy -END-