by Temel Aksoy
Exposure effect If a person frequently sees another person or object, they begin to like that person or object over time. The human mind has a special fondness for the familiar. This is why brands invest in advertising. They want to be frequently seen and heard. (See Robert Zajonc.)
Halo effect During WWI, American psychologist Edward Thorndike asked commanders to evaluate the soldiers under their command. He was surprised to find that all of the “superior soldiers” characterized by the commanders as good marksmen, disciplined, determined, intelligent and sacrificial, were also tall, strong and handsome. Thorndike coined the term “Halo Effect” to describe how the commanders were influenced by the soldiers’ outward appearance and attributed to them many positive traits that they didn’t actually possess.
People generally take this sort of “wholesale” approach to making evaluations. Because the human mind doesn’t like to entertain contradictory ideas at the same time, it generates its own consistent ideas. This effect explains why people attribute all positive attributes to a successful person or company and overlook the negatives. When people like one characteristic of a brand, they’ll generally make a positive generalization about the brand’s other characteristics as well. Therefore, brands should focus on a single characteristic in their advertisements, because people will automatically attribute all of the positive characteristics to a brand they buy for a single reason.
As people make decisions and assign meaning to other people, events and objects in a world full of ambiguity, they use shortcuts to simplify their lives. By doing so, they conclude that they’re in command of their lives and have everything under control. It gives them a feeling of security. (See Fritz Heider.)
These practical and useful shortcuts may be very beneficial when making choices, but they’re also very dangerous. They’re beneficial because they allow people to make decisions quickly without wasting time, but they’re also dangerous because they can result in poor decisions and mistakes.
PRODUCT, BRAND and BUYING
Companies exist to provide value to consumers. For them to do so, marketers need to make their products and brands desirable. If we succeed, our brand has value we can measure . . . or so we’ve been taught. In this next part, we’ll look at the role brands actually play in people’s lives, and whether the concept of brand valuation is a myth or a reality.
15.
Every Product and Service Serves a Purpose in People’s Lives
Marketing is essentially about understanding people’s needs and offering them products or services that will satisfy those needs. But this definition is overly broad. Take, for instance, an egg as a food. It meets the need of hunger. But describing an egg as an edible product is not enough for a marketer. An egg can be a breakfast food if eaten in the morning, a snack in the evening, an ingredient in a pastry and so on. In other words, the product we know as an egg does different jobs in different situations.
Clayton Christensen and his coauthors discuss this concept in a well-known Harvard Business Review article. They say that focusing on “the job to get done” instead of “need” allows the marketer to manage existing products and services and to develop new products and services more efficiently.
As the egg example shows, a single product category can address very diverse human needs. The restaurant that people go to for a good meal isn’t the same as the one they go to for cheap food. The restaurant where they discover new delicacies and the restaurant they frequent to “see and be seen” are meeting different needs. They are all restaurants, but they do different jobs. Therefore, to do the marketing for a restaurant, first we need to identify the job of the restaurant, and then all of the related product and service elements—from meals and waiters to decor and music—must be designed accordingly.
Knowing a product’s category isn’t enough to know its job. A company that manufactures cosmetic products, such as beauty cream and perfume, is classified by the national statistical authority as a “chemical” manufacturer, but no woman describes her cosmetics as a “chemical substance.” As Charles Revlon, the founder of Revlon, said, “In the factory we make cosmetics; in the drugstore we sell hope.”
To succeed, every marketer must know the job that the product or service does in people’s lives. In other words, she must know what she sells.
16.
What Is More Important: The Product or the Brand?
A product can be a physical object like detergent, a service like car rental, a location like the Bahamas, an idea like vegetarianism, an event like a film festival or a movement like wearing your seatbelt. In the eyes of marketers, political parties and artists are also “products.”
Brand, on the other hand, is a concept that includes the product but is much broader. A brand consists of a product or service as well as the accompanying awareness and perceptions. As famed advertising executive and management consultant Al Achenbaum described so well, “What distinguishes a brand from its unbranded commodity counterparts is the consumer’s perceptions and feelings about the product’s attributes and how they perform. Ultimately, a brand resides in the minds of the consumer.” According to Achenbaum, for this reason, the difference between a commodity and a brand is derived from the “meaning” that people attribute to the brand.
Having a powerful brand is very valuable for a company, and all entrepreneurs are well aware that owning a powerful brand is more valuable than owning a factory. Brand provides an important advantage in a crowded marketplace. Since the late twentieth century, production capacity has exceeded demand in almost every product category. With all of this surplus production, every entrepreneur can manufacture a product in the country of choice and market it anywhere. This is why the topic of brands has been so popular in recent years and why marketing has seen a rise in the number of brand professionals and brand consultants.
Given this reality, it’s easy to understand why most people say that a brand is more important than a product. But we must remember that a brand is impossible without a product. If the performance of a product or service purchased by a consumer (customer) doesn’t meet their expectations, even a powerful brand perception can’t make up for the product’s defect.
As a marketing consultant, I am obviously well aware of the importance of branding, but I believe that the value that people derive from a brand is built around the properties of the product itself. Many managers seem oblivious to how critical this issue is. Many marketing directors assume that product quality can be compromised with small adjustments to reduce costs and that no one will notice if this is repeated at regular intervals. But things don’t generally go as planned. No matter how well recognized a brand is or how powerful its perception is, if it doesn’t deliver what it promises, it won’t survive.
Delivering what is proposed is a must for marketing to be effective. The efforts of marketing directors, advertising professionals and brand consultants on behalf of a product will only pay off if there is a product (service) that lives up to the brand promise. If the product miserably fails to meet people’s expectations, there is no marketing director or consultant in the world who can save this brand. The exaggerated statements that have been in vogue in recent years, such as “Perception is everything, the product is nothing,” are really dangerous to brands.
17.
Every Brand Has a Value Proposition
Brands must deliver what they promise. They should also be priced accordingly.
Everyone wants to get the greatest value at the best price. Of course, we as humans don’t have the ability to compute the benefit of what we get from a brand and the money we pay for it, but we all can guess the cost–benefit when we’re parting with our very precious money.
If consumers (customers) believe the product’s benefit is worth the cost, the brand proposition will be attractive, resulting in purchases. Whether conscious of it or not, every shopper has a measure of value in their mind (V
alue = Benefit / Price). The benefit of a brand is made up of product or service properties, brand recognition and the intangible properties that people attribute to the product. For a brand to be purchase-worthy, benefit must be directly proportional to price.
In a product category, shoppers rank the brands according to their prices. In this ranking, the benefits provided by each brand match its price; the products that offer the most benefit are the most expensive. Consumers will buy one of these brands based on their budget and their desires. Although some brands make their value proposition by focusing on benefit (product and perception) and others by focusing on price, the goal of both approaches is to highlight the value provided to the consumer.
But what is value, really? Value is a concept that’s perceived differently depending on the person, the conditions and the time. A product may be valuable for one person but not for another. What is valuable today may not be tomorrow. The value of a brand also varies depending on location, time and the person making the purchase.
Because of these variables, the value of a brand can’t be measured solely by production costs. For instance, design adds value to products. Think about art or interior decorating. The value of works of art or antiques is not proportional to their manufacturing costs. The iconic lemon squeezer that Philippe Starck designed for the Alessi brand is very valuable for people who think design is important. These people will pay significant money for a kitchen utensil that others would never pay, simply because they value aesthetics.
Clearly, the brands that people purchase have not only functional value but also emotional and social value. Branding expert David Aaker often says that when people make a purchase decision, they take into account both the functional benefit of the product or service and the emotional and social benefits provided by the brand. A jacket sold by a fashion brand protects women from the cold (functional benefit), but this jacket also makes the woman feel good about herself (emotional benefit) and might make her look more fashionable and stylish than her friends (social benefit).
Another factor is convenience. When measuring brand value, people consider not only the benefits they get and the money they pay, but also the difficulties they face when buying the brand. The effort required to purchase a brand and the time they spend doing so are also costs that people pay. A brand can create value by reducing the amount of time and effort people are forced to expend. Providing shoppers with an easier and more comfortable purchasing experience increases the value of products and services.
Many marketers believe that a brand’s positioning is what confers its value. This is a marketing myth. A brand’s value proposition is not synonymous with positioning. Rather, the value proposition is the price that a brand demands for the benefits that it provides. Positioning, on the other hand, is something external that marketers want to instill in a brand (details in chapter 38).
Value creation is complex, and it’s always changing. As the product supply is abundant and competition increases, elements that create value in almost every sector are evolving to become more abstract and experience-focused. The aesthetic, symbolic, emotional and cultural dimensions of value are becoming more noticeable. In their article “Welcome to the Experience Economy,” B. Joseph Pine and James H. Gilmore provide an example of this from the popular 1980s television show Taxi: a character served food and provided tour guide expertise to enhance his services. These upgrades led to bigger tips and longer rides.
These added experiences may evolve, but what hasn’t changed is the essential nature of value: product benefit that’s worth the price. A brand’s value proposition is a matter of understanding people, identifying elements that create value in their lives and managing each element as effectively as possible. Understanding people and creating value for them is a never-ending journey.
18.
Products Are Created in Factories, Brands in Minds
To understand people and create value for them, companies and marketers must appreciate that brand is partly perceptions and feelings—therefore, in the mind. The fMRI tests conducted by psychologist Samuel McClure in a 2004 study aptly described what a brand is. Participants in the experiment were unable to distinguish between brands when they did a blind taste test of two colas served in a glass. Every participant had similar cerebral activity in the taste and smell areas of the brain.
But, when the participants did the taste test and were allowed to see the brands, the results were radically different. When they knew they were drinking Coca-Cola, there was activity in the regions of the brain associated with thought, emotion and memories, not just the areas associated with the sense of taste and smell. Coca-Cola activated not only the senses of taste and smell but also other emotions and thoughts. Coca-Cola occupies a larger and more vibrant place in the human mind than other colas.
How did this happen? Coca-Cola has become a household name, not only because of its extensive distribution network, but also because it advertises regularly and often—so all of the people in the study had a wealth of experience with the Coca-Cola brand. Therefore, through these repeated exposures Coca-Cola had created memory structure with a larger number of more powerful impressions in the minds of the subjects (details in chapters 57 and 72).
When I am asked, “What is a brand?” I say, “A brand is the space that a product and associations related to this product occupy in the human mind.” And a brand is only as powerful as the number of people who have allowed it to occupy space in their minds. (As Byron Sharp put very succinctly, there are two “market based brand assets.” The first is mental availability, and the second is physical availability.) (See chapters 57 and 69 for more details.)
The impression left in people’s minds by what they’ve seen and heard about the brand, and by what they’ve experienced while using the brand, creates a “brand memory” in the human brain (details in chapter 69). Brand memory stores not only the tangible benefit people obtain from the product or service in question (e.g., thirst relief and refreshment), but also the emotions and experiences people have when consuming the brand. Thus, advertising, with its reliance on emotions, feeling and images, is undoubtedly a very important determining factor in the creation of brand memory. As the father of advertising David Ogilvy says, “Products are manufactured in factories and brands in the mind.”
19.
How Do Shoppers Behave?
Advertising and marketing are complicated by the fact that the people who are demanding, recommending, purchasing and using a product or service aren’t always the same people. If a person gets a craving for chocolate, buys it and eats it, then the person demanding, buying and consuming the chocolate are all the same person. But if a mother buys chocolate from a shop for her child, the demand, the consumption and the purchase aren’t originating from the same person. The consumer is the person who uses a product, while shoppers are the people who purchase it.
Back when production was low and there was limited competition, manufacturing companies were very powerful. Making a good product was often enough. But with the more recent proliferation of production and competition, companies that control sales channels occupy the position of strength. Today, even brands that have an excellent product and advertise it effectively can’t close the sale if they’re unable to establish a presence that draws the attention of shoppers at points of sale. Today, persuading shoppers to purchase something is largely about location, display and timing.
As psychologist and market researcher Paco Underhill says in his book Why We Buy, “The economy would collapse if we only went to stores for things we need and only bought the things we planned to buy!” Since people don’t buy only what they need, nor do they buy only what they plan to, human behavior at sales points has become one of the subjects that companies focus on the most—thus the concept of shopper marketing arose.
The questions that interest shopper marketing professionals are those like: Which departments do people go to at po
ints of sale? How do they find what they’re looking for? What do they see and what do they miss? How do they respond to stimuli that they encounter? How do they examine the products on display?
Marketers have discovered that it’s possible to make certain generalizations about shopper behavior and to change the shopping experience in response. For example:
Most people are right-handed, and they write from left to right, so when they enter a store, they head to the right. Therefore, product displays are arranged in stores with this habit in mind, and the checkout is usually on the left side of the store.
People tend not to look down. No product is randomly placed in a store. It’s no coincidence that the more expensive products in supermarkets are at eye level, whereas the cheaper products are placed on the lower shelves.
In most supermarkets, the staple food items are placed at the back of the store. This strategy forces shoppers to pass by all of the products on display so that they’ll purchase more products. (However, recent studies of the Ehrenberg-Bass Institute have shown that this common practice isn’t a good approach. People are more likely to choose a store for future shopping if they were previously able to find the products they needed and get out of the store quickly.)