Is Marketing Facing A Mid-Life Crisis?
Friday, October 11, 2002 5:38:00 PM
by Nick Wreden
|Interview with Nick Wreden, noted brand futurist and author of "FusionBranding: How to Forge Your Brand for the Future"
Q: WHY DID YOU WRITE FUSIONBRANDING: HOW TO FORGE YOUR BRAND FOR THE FUTURE?
A: I got the idea for the book when I compared a marketing book from the 1970s to one from the 1990s. Except for some minor updates concerning advances in technology and market research, they were virtually identical. While management, manufacturing and even distribution theories have made substantial advances in the past 30 years, marketing strategies are essentially stuck in a bell-bottom time warp. The more I researched the topic, the more it appeared that reliance on formulas from the past were behind so many branding failures.
Q. WHAT IS THE CENTRAL THEME OF YOUR BOOK?
A. Branding tactics that worked yesterday won't work in today's environment, and they are recipes for disaster for the changes that are coming in 2005 and beyond. Companies need to adapt to new branding realities and, more important, prepare for the branding imperatives of tomorrow.
Q. HOW DO YESTERDAY'S, TODAY'S AND TOMORROW'S BRANDING ENVIRONMENTS DIFFER?
A. The era from 1950-1995 can be characterized as the mass economy. It was the golden age of branding. Companies could define, or "position," brands because the mass media was so powerful in reaching and influencing mass markets. In about 1995, the world evolved into the customer economy, driven by changes in retail distribution, technology, demographics and, of course, the Internet. Customers define brands now, which means that branding must be done on their terms. In about 2005, we'll see the demand economy fully emerge. The demand economy will be characterized by reach, immediacy and personalization. Responding to these requirements will mean both operational and cultural changes within organizations.
Q. IF THE MASS ECONOMY IS OVER, WHY DO SO MANY COMPANIES STILL SEEK TO POSITION THEMSELVES AND DEPEND ON THE MASS MEDIA?
A. When TV first aired, commercials consisted of an announcer standing behind a microphone reading a script. Why? Because that was the way commercials had always been done on radio. It took time before marketing executives learned to leverage the visual and other strengths of television. In many ways, branding today resembles television's earliest days. Companies continue to rely on techniques that were only successful when the mass media yielded power over passive audiences willing to accept the products of a mass economy. Obviously, that's no longer true today. Relying on formulas that worked 30 years ago today only wastes resources and weakens customer relationships.
Q. SO MUCH BRANDING DISCUSSION TODAY FOCUSES ON VISUAL COMMUNICATIONS. IS THAT WRONG?
A. Branding today is much more than ads, logos and slogans. Branding in the customer economy requires customer equity, everyday operational excellence and accountability. Go to sites that promote their branding expertise and see how many times the word "customer" is mentioned. Unless the customer is at the center of branding efforts, focusing on visual communications is just a case of the tail wagging the dog. There's a role for visual communications, but it must follow a well-defined path determined by customer requirements and accountability.
Q. WHAT DO YOU MEAN BY CUSTOMER EQUITY, EVERYDAY OPERATIONAL EXCELLENCE AND ACCOUNTABILITY?
A. Customer equity roughly refers to the lifetime value of customers. Companies spend the bulk of their marketing dollars on customer acquisition, when it's widely known that existing customers are most profitable. Everyday operational excellence represents a brand's ability to honor commitments to customers. Accessible service, accurate billing and delivery, and quality and value are essential. Operational excellence also incorporates the supply chain, rarely discussed but absolutely critical for branding. Finally, it's about time that marketing becomes accountable for the dollars it spends. Executives still shouldn't be quoting the famous line from the turn-of-the-century department store magnate John Wanamaker: "Half my advertising is wasted. The only trouble is, I don't know which half." That might have been true around 1900, but it shouldn't be true today.
Q. IS FUSIONBRANDING JUST ANOTHER VERSION OF "ONE-TO-ONE" MARKETING?
A. Absolutely not! One-to-one marketing is about maximizing knowledge – often without permission – of a customer or prospect to sell them more. FusionBranding goes beyond establishing a sales relationship with a customer to creating a brand that customers want to have a relationship with. Customers will always tell you what they require. It's more important to have the consistent processes that incorporate that input and deliver value to the customer than to know, for example, where a customer went to school. Rather than one-to-one marketing, which is difficult and expensive to implement, FusionBranding is about doing business on customer terms, which any company can do.
Q. WHAT DO YOU MEAN BY "DOING BUSINESS ON CUSTOMER TERMS?
A. It's so essential to FusionBranding that I almost subtitled the book, "How To Do Business On Customer Terms" instead of "How To Forge Your Brand for the Future." Doing business on customer terms means strengthening the quality of customer interactions, with capabilities that allow customer to customize levels of ordering, support and service. It also means ensuring relevant communications. But doing business on customer terms does not mean giving away the company store. On the contrary, it means closer attention to true costs and profitability. Doing business on customer terms benefits companies by forcing them to understand which customers are profitable, and which are not.
Q. WHO ARE THE COMPANIES ANALYZED FOR FUSIONBRANDING SUCCESS?
A. Many of the 10 core principles of FusionBranding are drawn from studies of FedEx, Amazon.com, Staples, Harley-Davidson and other business-to-consumer (B2C) companies. But I also take a close look at an area ignored by a lot of branding studies – business-to-business (B2B) companies. That's important because the economy mainly consists of businesses who sell to other businesses, and branding is as important to them as it is to Nike and Coca-Cola, although they will never advertise on TV. As a result, the book looks closely at supply chain management (SCM), key technologies, organizational models and management of such constituencies as the media, employees and investors.
Q. YOU'RE A BRAND FUTURIST. WHAT ARE THE BRANDING CHALLENGES OF THE FUTURE?
A. In many ways, that depends on your offerings and industry. But in my book FusionBranding, I identify three forces that will affect every brand after 2005. The first is change management. Establishing a FusionBrand means doing business on customer terms, and that often requires changes in communications and processes throughout an organization and even supply chain. The second is privacy. Trust and loyalty are the foundations of every brand, and that can never be gained if customers think you are violating their privacy. The final challenge is dynamic pricing. eBay is the poster child for dynamic pricing, but we are rapidly moving toward the point when pricing for major items will vary based on real-time supply and demand. How can companies adapt and ensure appropriate revenue management when pricing is no longer fixed? Each chapter also looks at future trends and challenges in such areas as Customer Relationship Management (CRM), merchandising and pricing.