What is Branding? A comprehensive look at the origin of "branding."
“Branding” has become the buzz word du jour. The term has been hijacked by business consultancies, marketing companies, advertising agencies, public relations firms and graphic/web design studios. The term has been adopted by every imaginable area of business. But, what does it really mean? To understand what branding is we must look to its origin and track its evolution. Let's begin with the etymology of the word “brand”. According to the Morris Dictionary of Word and Phrase Origins (Second Edition) (New York: Harper Collins, Publishers, Inc., 1988) 85-86: “brands/trademarks. The practice of branding animals for the purpose of identification is so old that its exact origins are unknown. We do know, however, that brands were first used on humans—criminals and slaves. According to the Oxford Dictionary, the practice of branding animals to indicate ownership was well established in England before Shakespeare’s time and the term trademark for the word or symbol chosen by a manufacturer to identify and distinguish his product was in use before 1838. Official registration of trademarks by the U.S. Patent Office did not begin, however, until 1870.”
Academics and marketers unanimously agree that the origin and evolution of branding moved from a commodity driven model to a value driven model. Rice, sugar, cotton and steel were all strictly commodities at one point. Consumers used the identification system, designed to show ownership, as a tool to navigate their way through vast offerings of these common goods. This allowed them not only to identify the best products available in their market, but empowered them to repeat a favorable purchase.
Economists credit an English artisan by the name of Josiah Wedgwood [1730-1795] for creating the first modern brand. Born into a family of potters, Wedgwood was a pioneer in industrialization who greatly improved the quality of the crude common crockery of his day. Christened “Queen’s Ware” after Queen Charlotte, his goods were of such superior quality, they stimulated demand and commanded a premium price—“Wedgwood” was synonymous with quality.
On May 13, 1931 the concept of branding was born. Neil McElroy wrote an internal memorandum at Procter & Gamble, proposing a new business strategy called “Brand Management,” and the age of differentiation was born. This concept focused attention on product specialization and differentiation instead of business function. By distinguishing the qualities of each brand from all other P&G brands, each would avoid competition with one another by targeting different consumer markets. McElroy’s concept of Brand Management, product specialization and differentiation were championed by P&G president/CEO, Richard R. Deupree, and became the foundation of the company’s business strategy.
P&G and the companies that copied their concept of brand management were extremely successful. In the early 1940s, Ted Bates & Company conducted an extensive research study on successful advertising campaigns. Their research identified a pattern. They found that the most successful campaigns, those that produced the highest ROI, used what they termed the Unique Selling Proposition, also known as the USP. In 1962 Ted Bates & Company’s Chairman, Rosser Reeves, wrote Reality in Advertising, where he shared the concept of the USP and outlined its three guiding principles:
The proposition must be clearly stated to the consumer:
“Buy this product, and you will get this specific benefit.”
The proposition itself must be unique. It must express a specific benefit that competitors do not, will not, or cannot offer.
The proposition must be strong enough to pull new customers
to the product.
In the late 60’s and early 70’s, the term “brand” began to take on new meaning, including the larger concept of image and values as interpreted by consumers. Al Ries and Jack Trout captured this evolution in a Harvard Business Review article and later authored a book by the same name: POSITIONING: The battle for your mind. Their concept stated that it was not product superiority that mattered, but rather consumer perception that drove a brand to dominance. This concept was dubbed “brand positioning” and is the foundation for most all brands today.
Brand drives consumer purchase decisions and affects nearly every functional area of a business. In the early 80’s “brand” started to appear on balance sheets and companies around the globe began searching for innovative ways to brand their products and services. Increasingly brand equity is eclipsing a company’s net worth. This has placed branding in a prominent position when developing a business plan.
In response to the prominent position that “brand” has taken, many marketers interchange the terms advertising, marketing, and branding. This has caused much confusion as to what branding is and how it works. To define “branding,” a common understanding of “brand” must first be established.
Legally, a brand can be defined as a name, term, sign, symbol, design, or a combination of, intended to identify the goods and services of one seller or group of sellers, and differentiate those goods and services from those of other sellers. However, today’s products and services, corporations and countries even politicians, and celebrities, can be considered brands. Simply put, the fancy names and labels don’t cut it anymore. In practice, a brand is a promise that manages consumers’ expectations. This promise is expressed both tangibly and intangibly, through signals. These signals promise a clearly stated benefit that differentiates an offering from those of competitors.
Branding preconditions consumers to consider and purchase a brand offering by managing the associations between that brand and its audience. This increases consumer confidence in the brand’s functional and emotional benefits. As brands reside within the hearts and minds of consumers, branding is not about getting your target market to choose your offering over the competition, it is about preconditioning consumers to see your offering as the only way to satisfy a specific need, want, or desire.
Branding allows an offering to take an obtainable, sustainable, and favorable market position. Brand strategy defines the brand’s promise and brand identity articulates that promise through a series of signals. These work to support the unique position that the brand has taken while managing consumer’s expectations of the brand. The role of branding has become an integral part of business strategy. It defines a realistic and manageable brand promise, detailing what the brand owner must deliver and consumers’ expectations of the brand.
Brand moves consumers’ frame of mind from making product decisions to making brand decisions. Product decisions are rational and take place within a given category. They begin with thoughts such as: “I could really use a cup of coffee.” Brand decisions are absolute—“Starbucks?”
The key difference is that product decisions aren’t decisions at all. They are sensible, logical deductions. Consumers consider all their options and deduct the lesser offerings. Brand decisions transcend the constructs of category to occupy a specific position within consumers’ minds—an expectation. This makes a given brand the one and only choice! Brand decisions are both logical and emotional. Consumers believe that the brand is the only choice, and belief leads to action. As these brands successfully deliver on their respective promises, they earn consumers’ trust and preference.
Brands are business assets requiring metrics to determine whether the value gained outweighs the investment made. However, brand value can be measured in very different ways depending on the brand owner’s objectives. Before a plan can be constructed, goals and objectives must be set; where a politician may assess brand value as votes, a product offering may measure brand value as margin or market share.
Globalization has ushered in a new area of competition, making new technologies and cheap labor available to everyone. Increasingly, companies are turning to their brands as their only source for competitive advantage. The health and well-being of any organization are tied to its brand strategy and identity, as these provide the tools necessary to create preference and manage consumers’ expectations.
