Two definitions for the price of one this week, as both relate to money and brands’ ability to generate it:

• “Brands are (perhaps) the biggest business phenomena of the last century”
• “Brands are value creators”

Whilst many of the definitions of brands, as previously discussed, focus on their relationship with their customers, the other side of the coin is equally important. Why are businesses so interested in brands?

The answer is simple, they help create value. As the various brand valuation surveys show, successful brands help deliver higher prices and better loyalty and so allow the companies that own them to deliver better margins. These brand valuation surveys are based on creating a comparison with a brand’s profit versus what the equivalent profit might have been if the product was unbranded for any year and then multiplying this up to allow for a brand’s ability to deliver this over time.

For example the Interbrand methodology measure what it calls the “conceptual role of the brand”, namely “the portion of demand for a branded product or service that exceeds what the demand would be for the same product or service if it were unbranded”. The estimated annual difference is then increased by a multiplier based on the brand relative size and competitive strength. Interbrand uses what it calls the Brand Strength Multiplier which it bases on 10 factors and reflects “the ability of the brand to secure the delivery of expected future earnings”.

The results give the current No. 1, Coca-Cola, a brand value of over $74billion suggesting that the annual increment in profits for the owners of the largest brands equates to billions of dollars.

So it’s not surprising that John Stuart, one time chairman of Quaker said: “If this business were to be split up, I would be glad to take the brands, trademarks and goodwill and you could have all the bricks and mortar – and I would fare better than you.” Brands may be an intangible, lacking the solidity of bricks and mortar but as numerous analyses have shown, the value of an organisation is increasingly based on intangibles and primary amongst those intangibles are the brands.

Whilst the debate continues about if and how you can measure the value of a brand and whether or not that value should be included in the balance sheet, it is undoubtedly true that businesses pay premiums to acquire brands.

Consider the $57bn P&G paid for Gillette and the $3.7bn that Unilever have just paid to acquire the brands owned by Alberto Culver. Commenting on the purchase, Paul Polman, chief executive of Unilever, said: “We are delighted to be acquiring Alberto Culver. Their people have done an excellent job of building an impressive range of brands such as Tresemmé, VO5, Nexxus, St Ives and Simple. These will complement Unilever’s existing portfolio of iconic brands like Dove, Clear and Sunsilk in hair care and Pond’s and Vaseline in skin care, and will help build on our strong global positions in hair care and skin care categories.”

So whilst brands build relationships with their customers they also build big businesses.

One of the most widely used traditional definitions of a brand is the “product plus” definition. It is based on a simple analysis of how many brands were actually developed – think Coca-Cola, think Kellogg’s Corn Flakes or indeed Sunlight Soap. It reflects a belief that a “brand” is something that is created around, and on top of, a product or service.

Put simply a brand is the sum of the product (or service) and the  name values, functional and emotional attributes and the personality that are added to it via the packaging, advertising and brand experience.

A modern and deliberately provocative  alternative stands this definition on its head and suggests rather than starting with a product or service a brand can be  defined by a set of values, attributes and personality which can then be applied to almost any product or service category.

Think Virgin, think Easy… and maybe even Apple as potential archetypes of this new approach.

As I said this is a deliberately provocative definition because the “brand” only becomes a brand when it is actually applied to its first product or service.

Perhaps a more realistic interpretation of this definition which reflects how increasingly brands are no longer tied to a single product or services but are extended over a variety of categories and markets, is the combine the traditional approach and the alternative approach, as below….

This reflects the reality of many modern brands which started life as a single product, service or even maybe as a range in one category, but once they have established a clear brand equity (of values, attributes and personality) the brand and its equity is leveraged to extend into new markets. 

Think Lego which started life as a humble range of plastic bricks but “built” up its brand as something that stood for “creative constructive /educational play” and has since stretched that brand into electronic games and theme parks amongst other things. Or Marlboro which built its brand on cigarettes imbued with a masculine pioneering spirit and has stretched the brand into rugged clothing and adventure holidays.

All of which starts to suggest either that a brand can be defined separate of any product or service – or at least its ‘equity’ can be.

“Chain.. keep us together” sang Fleetwood Mac, which I suppose should be the theme tune for this week’s brand definition: “A brand is the vital link between an organisation and its customers”.

The definition is a simple metaphor. One part of a chain is the organisation and the links in that part can be seen as the supply chain or value creation chain from sourcing through to distribution. Then there is another part of the chain which represents the customer.

The brand can therefore be seen as the missing link.

It is not only what will connect  (link) the organisation to its customers, but if it is a strong link it will bind them to it – reflecting brand loyalty!

Finally another reason why this is such a powerful metaphor is that a link is circular and this reflects modern thinking about brands and marketing.

Brands are not just the means by which organisations talk at and try and engage with consumers. They also need to be the means by which customers can engage with the organisations. Relationships and dialogues are what brands need to be built on. And a link that isn’t complete, that isn’t a loop, is a weak link and no brand owner wants theirs to be the weakest link!

People make emotional connections to brands, so it’s not surprising that some of the most popular definitions of brands are ‘emotional’ too. One such example is, “a brand is a promise”.

As a definition it’s beautifully short, ‘sweet’ and so very memorable.

However, analysing it a bit more thoroughly, its strength is that it combines the notion of the brand proposition – that the role of a brand is to make an  offer to its customers -  with one of the original definitions of a brand as a guarantee of quality. In other words, what this definition is saying is that a brand is not just an offer but something more – a promise.

And it is this thought taken a bit further that has led to the variation of the definition which I personally prefer, namely, “a brand is not just a promise, it’s a responsibility”.

This definition therefore reflects the fact that brands aren’t just externally focused  on ‘selling’ to customers but on building and maintaining these relationships. The point of purchase is not the end of a sale but the beginning of a relationship and it is the ‘responsibility’ of the brand to deliver on its promises. Otherwise how can it expect to retain its customers?

As one of my colleagues Tim Kaner puts it, “a brand is the promise you make, the customer experience is the promise you must keep”.

It is also a definition that should help remind marketers about the difference between over-promising and under-delivering, and, under-promising and over-delivering.

If you asked a cowboy what a brand was, he would talk about the permanent marks made on his cow hides by a hot iron shaped in a particular way to denote  his ownership of those cows.

In short, for him a brand would be a mark of ownership.

Indeed this definition goes back to the earliest known incidence of branding I am aware of. It comes from over 2,000 years ago, when one oil lamp maker in Rome started stamping the word ‘Fortis’ onto his lamps. It showed that he had made them and they were his lamps, well at least until he sold them in the market.

Which raises some interesting questions about this definition in relation to marketing. Is a brand a mark of ownership or a mark of manufacturing or creation? And who does own a brand?
 
On the ownership of brands my personal opinion is that an abdication has taken place. “The company brand owner is dead, and the consumer is the new king.” Over the last few years, many marketing people have handed over ‘ownership’ of their brand to their consumers. It is now increasingly accepted that  as consumers have their own ‘perceptions’ of the brand and can shape its future, they are the ‘owners’.

Without trying to dispute either the importance of consumers, the notion that an individual’s perception of brand is personal, or indeed the inability of companies to control every aspect of what will shape brand perceptions, I would like to state the case for the old kings – the brand owners – to reclaim ownership of their brands

Firstly, I am no lawyer, but the notion that a (marketing) director of a company which legally ‘owns’ a brand – and that is in turn valued highly on the company’s balance sheet – can publicly proclaim that they do not really ‘own’ that brand, seems patently dangerous to me.

If companies do not ‘own’ their brands, how can they expect to defend their rights over them? Giving up ownership could have unwanted consequences. Is it giving a green light to counterfeiters to reproduce, replicate and trade-off brands? If challenged, the counterfeiters can simply refute any claims of damages. You don’t own the brand, they do.

Secondarily, it is undoubtedly true that we all have individual perceptions and experiences of the brands we know, and we can even feel like we ‘own’ at least a part of those brands. But do we really own the object, the brand in question?

As consumers, they may be able to influence the brand, and even control it to some extent. They are perhaps the most powerful influencing force or pressure group. But they are not, and never will be, the owners. We can stop buying a brand, we can ignore it, we can suggest and influence alterations, but we do not enact change or final control.

I would draw a parallel with the Mona Lisa, which enjoys ‘awareness’ or fame in the way a brand does, and which engenders a wide range of different perceptions. In other words, everyone has a perception of the painting in our mind, but it would seem foolish for me to suggest that any or all of us actually own the Mona Lisa.

Thirdly I believe it is vital that marketers continue to recognise the importance of their role as brand owners. Individual perceptions are crucial, but branding is all about the creation and management of meaning en masse. Branding is a social phenomenon. Brands – particularly the ‘big’ national and global brands – are fundamentally ‘mass’ tools. Brands aren’t about single transactions: they work in multiplicity, with many people, and on many occasions. Brands are a means by which their owners do their best to manage multiple relationships simultaneously.

It is the role of the brand owner, through their brand and all its points of interface, to try to create and then manage the best perceptions of that brand.

Finally I would suggest we should be deeply concerned if  consumers were completely in charge. Sometimes consumers don’t know what they want, or at last don’t know until they are offered it. Brand ownership and creation is often about innovation, changing what already exists and creating new things. If the consumers owned the brand and their word was final, then many, many brand innovations would be killed before they started. As Henry Ford said, “If I had asked the consumer what they wanted, they would have told me they wanted a faster horse”.
 
A brand owner should have ‘that vision thing’. That is, the belief that what you are doing is right, and that it should be done even if those around you don’t always agree. Walt Disney, W.K. Kellogg, Richard Branson, Phil Knight (the founder of Nike) and Anita Roddick (the founder of The Body Shop) believed in what they were doing. They believed in creating something that existed in their minds long before it existed in the minds of what were often, at first, very dubious consumers.

So I believe that there has been a significant shift of power in the relationship between brand owners and consumers and that we have now reached a position where branding is an organic and ‘negotiated’ unit of social and economic currency. However I would still argue that companies own their brands and so brands can and should still be defined as a mark of ownership.