Building a Better Brand

Giant companies know their brands are worth a fortune. The key to marketing your business is finding a timeless position and staying focused

by Steve McKee

Is Nike (NKE) a better shoe than Reebok (ADDDY)? Is Michelin (MHINF) a better tire than Goodyear (GT)? Who really knows?

Sure, each brand has their loyalists, and if you ask the executives at Nike and Michelin, I suspect they'd have reams of data to prove that their products are the best. But to the average shoe or tire buyer, are Nike and Michelin all that different from the competition? If you took all the brand indicators off both products, would you know which is made of longer-lasting material or offers better performance? In all likelihood, you wouldn't.

If that's the case, why are people like you and me willing to spend more for products from companies like Nike and Michelin? The answer, in a word, is branding. These marketers know that the huge investment of time and money they spend on their brands will make their products worth more in the marketplace. And they're right.

In BusinessWeek/Interbrand's 2007 ranking of the 100 Best Global Brands (BusinessWeek.com 08/06/07), the global value of the Coca-Cola (KO) brand was $65 billion. That's the brand alone—not the trucks, not the bottling plants, not even the secret formula. The same study says that the McDonald's (MCD) brand is worth $29 billion, and BMW (BYMOF) $21 billion.

Adding Value

Most brands are a long way from being worth $21 billion. But all of them are worth something, and the better the branding efforts the more value a brand can add to the products and services to which it's attached.

So how does a company go about building a strong brand? Well, let's start at the top and take Coca-Cola as an example. If you and I each wrote a rational description of the Coca-Cola brand, we'd probably use different words, but our statements would be fairly close in meaning. The Coca-Cola brand is so well established in our minds that we could work backwards from it and come to essentially the same place.

But in the real world, people don't diagram the meaning behind brands. Instead, the name or logo instantly brings to their minds a perception built by years of branding cues. These cues include everything from product design to pricing to packaging, as well as all of the tools in the marketing communications toolbox, from advertising to promotions to public relations.

The trick for any long-term branding effort is to focus first not on the cues themselves but on the benefits they communicate. For Coca-Cola, the primary rational benefit is refreshment. For Michelin, it's safety. Master marketers take great pains to understand the context of the consumer purchasing decision, and then build their core competencies and market positioning around it.

Take Your Positions

Much has been written about positioning since Jack Trout and Al Ries wrote a book on the topic more than two decades ago (Positioning: The Battle for Your Mind). In fact, if you read the Amazon (AMZN) description of their original work, you'll see it's cited by more than 100 other books. But positioning is not really a difficult concept: At root, it's simply the rational and emotional benefits people associate with a brand.

Gatorade (PEP) is the sports thirst-quencher. BlackBerry (RIMM) is a device that keeps you connected. QuickBooks (INTU) is the accounting software for non-accountants. The rational side of branding is not that complicated, at least in theory.