The Role of Brand Marketing in New Business Success by Brad VanAuken, BrandForward, Inc. June 2006 Recommend this article

As I work with more and more smaller businesses, including start-ups, it has become obvious to me that some businesses attempt to address underlying business problems through branding. I find that I am not only consulting on branding but also general business strategy and especially the intersection between the two. Given this clear need, this article is about the intersection of branding and business strategy in creating a successful new business.

A very common problem I encounter is businesses that have a product and a manufacturing process but little understanding of the underlying customer need that the product addresses. Businesses should always start with a solid understanding of the customer needs that its products and services can fulfill – functional, emotional and otherwise. This assumes that the business has already identified its primary and secondary target market segments and knows a fair amount about those segments’ needs, desires, hopes, fears, values, aspirations, problems, concerns, shopping behaviors, etc. All of this can be discovered through formal or informal market research. Research techniques are myriad, but often include one-on-one interviews, focus groups, online surveys and discussions with current customers. Another technique is to ‘shadow’ your customers and ‘live the brand’ with them to discover how they experience it.

Another common problem is developing a product or service that does not deliver a superior value proposition to what is already available, either because it is not differentiated in relevant ways from what is already available or because its cost structure demands too high a price for the perceived value.

Sometimes, while the business may understand the customer’s need and have created a superior solution at a reasonable price, it may not be able to easily identify or communicate with the target audience (or be made aware of the event or situation that triggers the need) making the marketer’s/media planner’s job very difficult and sometimes even impossible.

I have said this many times before: a brand promises relevant differentiated benefits to specifically targeted customers and then makes good on that promise in all that it does. Ideally, it promises a benefit (or benefits) that: (a) are extremely important to the target customer, (b) the company is particularly well suited to delivering and (c) that the competition is not addressing. The most powerful benefits to own are often emotional, experiential or self-expressive.

Another common new business problem is being under capitalized, leading to cash flow problems. What may otherwise have been a very successful, profitable business, dies for lack of cash. This can be solved by accurately forecasting cash flow needs and raising enough funds to cover inaccurate cost or revenue estimates or other faulty assumptions or unforeseen circumstances. A related problem is the ability and will to live with low or no income for a few years until the business has a chance to more fully develop.

Choosing the right business model is also important.

What is the long-term profit potential in the product/service category? Is the business scalable? What is the ratio of fixed to variable costs? What is the sensitivity of demand to price? What, if anything, will make your execution of the business more profitable than everyone else’s?

Adaptability is critical. Most successful businesses have reinvented themselves many times until they have landed on a formula that is successful.

Hard work and attention to detail is also extremely important.

And again, I will stress that businesses often start with a product or an idea, but no real understanding of the underlying customer need or purchase/usage behavior. Marketers, when asked to develop marketing for start-ups and other small businesses, must be able to deliver much more than a logo, tagline, brochure, trade show booth or ad campaign. They must be able to help the business understand its markets and its business model and define and deliver upon its unique value proposition.

One final comment: business owners in my experience -- especially doctors, engineers, and other very smart, analytical types -- often underestimate the importance of marketing and the unique skill sets of experienced marketers. This sometime leads to cutting corners where they shouldn’t be cut or second guessing messages or campaigns based upon anything other than the communication of product functions and features.

I have seen businesses that have created superior product functionality but ignored the look and feel of the product (its aesthetic design). What otherwise would have been very successful products are spurned by the target customers for this reason alone. Don’t forget product aesthetic design (and packaging, if appropriate).

Two other areas in which marketers can be very helpful to small business owners: in crafting the optimal pricing and distribution strategies (which can only be adequately addressed in separate dedicated articles).

Last, but certainly not least, newer quickly growing businesses are almost always constrained in what they can spend on marketing and brand building. The brand marketer will best serve these businesses by focusing on:

1. the basics (defining the unique value proposition, crafting pricing and distribution strategy, etc.)
2. low or no cost marketing techniques (such as publicity, customer referrals, building ‘buzz’ and highly targeted marketing) and
3. the quickest and easiest incremental revenue wins – identifying and pursuing the ‘lowest hanging fruit.’

Here are the criteria that I use to estimate the potential for a new business or brand:

• Size of market (customer need, total revenue potential) – bigger is better
• Rate of market growth (or contraction) – high long-term growth rate is best
• Market fragmentation – this may be good or bad – requires additional analysis regarding the factors that underlay this fragmentation
• Your unique value proposition within the market – extremely important – be honest with yourself
• Your current or projected share of the market – bigger is better
• Market profitability – higher is better
• Market entry and exit barriers – high entry barriers and low exit barriers are best

2005’s Top 10 Fastest Growing Online Brands in the UK
Neilsen/Net Ratings recently reported the following:

This list would seem to indicate, as European Internet Analyst Alex Burmaster says, that “The future [of the Internet]… is user-generated content centered around community sites that ride the rise of the Internet as a tool to communicate, exchange ideas and pictures.”

Brand Trivia

• Coca-Cola was originally green.
• Iceland consumes more Coca-Cola per capita than any other nation.
• A can of Diet Coke will float in water while a can of regular Coke sinks.
• 7% of Americans eat McDonalds each day.
• Colgate faced a significant obstacle marketing toothpaste in Spanish speaking countries. Colgate translates into the command "go hang yourself."
• All hospitals in Singapore use Pampers diapers.
• Levi Strauss first intended to sell his denim material to the miners who were searching for gold in 1850, in order to make tents and covers for their wagons.
• The wristwatch was invented in 1904 by Louis Cartier.
• Ben and Jerry's send the waste from making ice cream to local pig farmers to use as feed. Pigs love the stuff, except for one flavor: Mint Oreo.
• The Ramses brand condom is named after the great pharaoh Ramses II who fathered over 160 children.
• American Airlines saved $40,000 in 1987 by eliminating one olive from each salad served in first-class.
• When KFC first translated its advertising slogan "finger lickin' good" into Chinese, it came out as "eat your fingers off."
• In 1921 advertising manager Sam Gale of General Mills created fictional spokeswoman Betty Crocker so that correspondence to housewives could be sent with her signature.
• Pepsi spent a lot of money on an advertising campaign in China with the slogan “Pepsi gives you life” – unfortunately, it was translated as “Pepsi brings your ancestors back from the grave.”
• Over 275 different PEZ heads have been designed, with some 48 models on the market at any one time. The most popular dispensers of all-time are the Mickey Mouse and Santa Claus models.
• Inventor Joshua L. Cowen, created the first battery, which spawned American Eveready. He also created Lionel trains.

Brad VanAuken is president and founder of BrandForward, Inc., a full-service brand management consultancy with clients throughout the world. Previously, Brad was the vice president of marketing for Element K, a leading e-learning company and director of brand management and marketing for Hallmark Cards, Inc. During his tenure as Hallmark’s chief brand advocate, Hallmark received the Brand Management of the Year award. Recognized as one of the world’s leading experts on brand management and marketing, Brad is a much sought after speaker and writer. He wrote the books The Brand Management Checklist and Brand Aid. His free online brand management and marketing newsletter is read by thousands of marketers throughout the world. Brad has a BS degree from Rensselaer Polytechnic Institute and an MBA from Harvard Business School.

Email: vanauken@brandforward.com
Company Profile: BrandForward, Inc.
Company URL: http://www.brandforward.com

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