Source: World Executive Report (ID: CEC_GLOBALSOURCES) Author: Mu Ye
Currently, Chinese enterprises are in a new stage of brand enhancement. Leading companies in various fields are accelerating brand globalization, and brand creation has become a conscious action for more and more SMEs. Around the topic of corporate brands, World Executive previously interviewed Cao Hu, global partner and China president of the globally renowned consulting firm Kotler Consulting Group, to crack the puzzle of brand building from multiple angles.
1. Chinese enterprises still have some common misunderstandings in branding. Can you summarize some?
Cao Hu: There are many misunderstandings about brands, and they cannot be summarized in one sentence. For example, many companies don't know what a brand is, yet they think they do. Many people say certain companies are brands, but in fact they are just well-known trademarks. For instance, LeEco TV is a well-known trademark but not a brand. A brand must be able to create value independently; a brand must sell at a higher price than non-brand products. What is brand value? The extra price per unit compared to competitors, multiplied by sales volume, is brand value. A company that relies on price cuts and the lowest prices every day has no brand, because there is no brand value, no profit created for the enterprise through the brand; it is just a well-known trademark. Many companies cannot distinguish between a brand and a well-known trademark.
2. Traditionally, building a brand has involved "three major sets"—media advertising, offline activities, and celebrity endorsements. In the digital era, what changes do enterprises need to make in brand building?
Cao Hu: Digitalization itself is a big concept. Let me try to sort out this term. Nowadays, digitalization has two meanings. One is that more and more customer interaction behaviors, product delivery behaviors, and brand building behaviors occur in virtual space, such as online network platforms like mobile and PC. In this process, the traditional "three major sets" are still important and cannot be discarded, but merely continuing to use them is not enough. To achieve twice the result with half the effort, you need to make good use of brand building in digital new media. This is an important supplement and amplification to the "old three sets." Content combines online and offline; one person can drive a thousand fans, and you can precisely build user relationships with immediate feedback. This is a very important process.
The second concept of digitalization is that production and delivery are digitalized. For example, online video courses are digital products; there is no physical entity, and delivery is also online. In this case, you need to master the design, iteration, and update methods of digital products, as well as new distribution channels for digital products. Through your own APP, PC, and large platforms, you need to embed them, which requires different brand building methods and must be distinguished.
In summary, the foundation of brand building lies in customer awareness and reputation; the fundamental value of a brand comes from its differentiation. The root of the trust relationship between brand and consumers comes from brand stories. These principles have not changed, but the digital era gives us more means and channels to connect with consumers, know who consumers are, interact at any time, and amplify corporate investment.
3. What changes have occurred in the relationship and communication methods between corporate brands and consumers?
Cao Hu: In terms of communication methods, in the past it was broadcast-style, i.e., media advertising, where both enterprises and consumers found it difficult to give feedback. Enterprise-led brand building was presented through advertising.
Then came social-style, where enterprises and consumers can communicate bidirectionally. Through social platforms, you can gather people interested in the brand, hear consumer feedback, and consumers' own materials become corporate communication materials. Enterprises can quickly understand consumers' true feelings about the brand. However, the advantages of social-style are also stage-specific. Its problem is that the various information on social platforms is messy, leading to low information dissemination efficiency. Often, user behavior information and data generated at the social level are disconnected from enterprise operations. You find that you communicate a lot on social platforms, but in the end, customer service methods change little, products do not change, and distribution channels do not change.
So, you need to move from social-style to integrated-style. Through community platforms built by enterprises and customers, you can bring customer preferences, needs, and usage scenario feedback into enterprise operations as early as possible, integrating this information into R&D, product design, marketing decisions, etc., as an important input of production materials for enterprise manufacturing. The relationship between customers and brands changes from external brand maintenance to production materials. This is integrated-style.
4. Previously, people liked to say "brand equals category." Now it seems popular to say "brand equals emotion," liking to talk about sentiment. Brands are becoming more IP-ized and personified. How do you view this trend?
Cao Hu: You are talking about several levels of brand cognition. Brand and category are the most basic two levels. First, a brand must clearly know the industry it targets, especially in the consumer goods field. People are not professionals and hope a strong brand is easy to recognize. So the first mission is to bring cognitive convenience—you know what it does at a glance. So the first brand brings cognitive convenience, i.e., the so-called category.
Second, when competition in all categories is fierce, category recognition alone is useless. It is basically impossible for any enterprise to monopolize a category. How do you compete within the category? You form brand preference. The second level is the rational level of the brand. Brand preference is the rational level, often determined by product value, convenience, price, function, etc. The third level is brand loyalty or reputation. At this level, you need to tell stories. When everyone's products are basically the same and hard to differentiate, you need to tell consumers who to choose. You tell brand stories, founder stories, the origin of the brand, the relationship between the brand and a certain thing, and even shape a social value. The brand can be associated with a certain beautiful social value. These all connect the brand with products and IP-ization. These are the three levels of a brand.
5. How should enterprises make good use of social media?
Cao Hu: Social media is a tool and a platform. Enterprises should use it at different stages or for different product types, viewing social media from different angles. First, view social media more as a customer service platform. Once you do this, the backend operation system must keep up, ensuring timely and accurate responses to customer complaints.
Second, view it as an advertising and communication platform. In the past, advertising was placed outdoors, on TV, etc. Now it is placed on big accounts and big V's. This requires that content production, placement, operation, and ROI evaluation be closely linked with enterprise operations, requiring particularly strong content marketing. Some social media can be turned into content e-commerce, a very good sales channel. This requires enterprises to have the ability to convert content and sink products for sales.
Third, view social media as a community. This is a group of customers to be converted and a group of fans who convert each other, bringing new performance and a continuous trading platform. New customer acquisition, activation and retention of old customers, customer consumption upgrades, cross-selling, and corporate information must all be completed on the community. You need strong community operation capabilities.
6. Now consumers not only focus on functional consumption of brands but also pay more attention to spiritual consumption, i.e., products can meet their emotional needs?
Cao Hu: That's right, this has always existed. This kind of product is about expressing oneself and dividing social classes. The product is not only for personal use but also for showing to others. Others' opinions of you constitute an important value of the product. There are many such products, such as your car, tie, clothes, where you go on vacation. These products often represent who you are and your status, with a strong sense of experience. The purchase process is full of fun. Such products have high involvement and high emotion. They need to build a brand, enrich experience, differentiation, and high premium.
7. Still emphasize premium?
Cao Hu: Yes, consumers are willing to pay extremely high premiums for what they like. At the same time, for daily purchases, products that are not fun to consume and have no emotional investment, such as toilet paper, would you compare in detail for toilet paper? No, you just want to buy it as fast and cheap as possible. This is called no-fun consumption. Such products are also subject to bargaining. Such products need to achieve scale. According to the importance of the product to consumers, consumption tends to be superior. The difference lies in the role the product plays in consumers' lives.
8. How to judge whether an enterprise's brand positioning is good?
Cao Hu: There is one principle: see how much premium the enterprise can sell. If the enterprise can sell more premium than competitors and the industry average, it shows the enterprise's brand is strong. This is the most intuitive. Of course, there are other indicators, such as growth rate and sales volume. Some enterprises have high premium but may have small sales volume, possibly being an important brand in a professional field. To see whether an enterprise has a clear positioning, a core reason is whether it can sell higher premiums.
9. Can it be understood that a good positioning can shape a good brand?
Cao Hu: It should be said that good positioning is a necessary condition for shaping a good brand, but not a sufficient condition. A good positioning does not equal a good brand, but without a good positioning, a clear positioning, and a positioning that can attract consumers, it is impossible to shape a good brand.
10. In recent years, many "internet celebrity brands" have appeared, such as Three Squirrels, and the previously very popular Heytea. Are they all internet celebrity brands?
Cao Hu: Heytea can be considered a brand. The biggest challenge for such chain stores is that when you first open one store, it is easy to find selling points, processes, tastes, product R&D, and it is easy to come up with new gimmicks. But the problem is that gimmicks are easily seen through. In the end, it must taste good. This is a test for all chain stores. Heytea is fine with one or two stores. After reaching ten or fifty stores, can it continue to maintain good taste? These brands are being observed. Heytea has made a very good start, making something distinctive that consumers like, but whether it can last long depends on brand operation. It can be called an emerging brand, because a true brand pursues a century-old store, is highly relevant to its core customers, and makes products highly relevant to customers in a value-oriented way. Brands are highly selective.
11. For enterprises, does the product revolve around the brand, or does the brand revolve around the product?
Cao Hu: It should be said that the product is an expression of the great brand dream. An enterprise cannot exist without products.
12. Is it to build products around the brand, or to build the brand around products?
Cao Hu: Both ways have been done. With a good product, once it is done very well, it becomes a brand. My definition of brand positioning is that the company is not clear at the beginning what kind of brand it wants to build, but it is relatively clear what product it wants to make, and relatively clear what kind of people will use such a product. In such a case, the company often has technology and products, does it first, and after slowly doing well, it has core users. Core users like it and recommend it to others. At this time, a brand is formed. The brand belongs to consumers from the first day. For you, the Nike brand has your definition; for me, the Nike brand has my definition. So the Nike brand is different in each consumer's mind. Therefore, the product is always the realization and tribute to a great brand concept.
13. Has brand management also been upgraded?
Cao Hu: Of course. Now the relationship between brands and consumers is changing. Consumers increasingly see whether the brand can cultivate my interests and help me explore myself. It has become more of a companion, friend, mentor, buddy relationship, or even a spiritual leader relationship. Consumers have more and more expectations of brands, often exceeding the product itself.
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