Overview
Every company has turning points. Some are anniversaries, such as the anniversary of the company’s founding, while others are due to sudden changes in the external environment, and still others are due to changes in the form of business. When a company reaches a turning point, it’s forced to reexamine the meaning of its existence. For whom does the company ultimately exist? What do they expect from the company, and how can it meet those expectations? Is it really something that only that company can do? In a sense, it may be like a grand self-discovery for the company.
Branding is the very process of deriving answers to these questions, communicating them to customers and all other stakeholders, and expanding them together. While creating a logo, obtaining a trademark, running an ad or campaign are some of the means of branding, they are by no means the end in themselves. Branding is a methodology for companies that have reached a turning point to transform themselves into a new entity without losing the core that they need to protect.
This report is designed to help readers deepen their understanding of what branding means by discussing four branding areas and presenting actual case studies. Since the areas of branding that need to be addressed vary with each company, readers are encouraged to read this report while considering which activities are most effective in addressing the management issues faced by their own companies.
*This report has been copied from the Hakuhodo Consulting column.
Original report 1: https://www.hakuhodo-consulting.co.jp/blog/branding/branding_20190820/
Original report 2: https://www.hakuhodo-consulting.co.jp/blog/branding/branding_20190913
Overall picture of each branding area
First, take a look at the overall picture of each branding area shown in the figure below.
At the core of every branding area is a brand offer proposition (the value that the brand provides in response to customer expectations) that must be defined when working in any branding area. Since the brand offer value is the guideline and core of all subsequent branding activities, it must always be specified first.
The four branding areas surround the core. The concepts of superordinate and subordinate do not exist in these branding areas and there is no set order in which they should be addressed.
- Brand communication: Communicating brand values internally and externally
- Brand marketing: Designing marketing activities based on the brand value provided.
- Brand activation: Designing user experiences and implementing measures based on the brand values provided.
- Brand management: Managing the company (business) brand based on the brand values provided.
Let’s take a look at each brand area in detail.
0. Brand value proposition: Determining the value the brand provides in response to customer expectations
When we see familiar brand names and logos, we subconsciously conjure a variety of images in our minds. For example, Nike’s swoosh logo may conjure active and energetic images, while Apple’s logo may conjure cutting-edge and stylish images. Based on these images, customers will be more willing to spend in anticipation of the benefits they will receive from those brands. In response, the brands will continue to deliver consistent value to meet those expectations. The customers’ trust and attachment to the brand is increased, leading them to make purchases on a continuous basis. Brand value proposition refers to visualizing and strategically designing the structure of customer expectations and the value offered by the brand.
To help you understand what brand offer proposition is, we’ll use Starbucks as an example. Howard Schultz, the founder and CEO of Starbucks, started the café business after visiting a bar in Italy and being impressed by the café culture that did not exist in the United States at the time. From a branding perspective, however, Starbucks’ success is due to its unique brand value. Rather than copying the Italian bar, Schultz added a completely new brand value to it, which was to provide a “third place,” to be aside from the home and office.
The brand value offered by Starbucks can be summarized using the following chart.*1
Source: Hakuhodo consulting
This framework is known as the brand fan and is used to define the value promised by the brand. The pink fan spreading upward represents the brand target, to whom the brand delivers value, and indicates the kind of people with values who most identify with the brand’s ideology and worldview. The blue fan spreading downward represents the value provided by the brand and shows the specific content of the value provided to customers. In other words, what is defined using this framework is who (pink) and what (blue) the brand offers.
– Brand target (who)
First, it’s worth noting the use of the term “target.”
In the context of branding, the word “target” doesn’t refer to the marketing target. A marketing target is the audience that will actually purchase the product or service offered by the brand. Going back to the Starbucks example mentioned earlier, the customers who visit Starbucks are of various ages and genders. For example, Starbucks has developed a beverage menu for kids. In Mexico, there is a Starbucks where all the staff are senior citizens. It’s natural for a business to want to attract more customers.
On the other hand, the brand target of Starbucks is people who are looking for an urban, high-quality living space. They are the people who most deeply identify with the brand value of the third place, and they are the people that the marketing targets who actually make the purchases aspire to become. In Hollywood movies you’ll often see scenes involving office workers rushing into cabs with a Starbucks cup in one hand while making a business call with the other. The brand target does not need to be real but is defined as an image of a person who embodies the brand to be shared internally and externally to guide future branding activities as a whole.
When defining brand targets, it’s important to portray the values behind the person as much as possible. Weave together words that describe the person’s values, such as their favorite music genres, how they spend their holidays, and their guiding principles in life.
Defining brand targets is not the same as finding out who will stick with a certain transient campaign or sale. It’s essential to find someone who will continue to embrace the values that the brand represents, regardless of the time, place, or product.
– Brand provided value (what)
There are two main types of value that customers derive from purchasing or using a brand’s products or services.
The first is functional value, which refers to the physical and functional utility provided by a product or service. For example, in the case of a car, fuel efficiency (fuel economy) is a functional value. In the case of an electric appliance, the durability (lifespan) is a functional value. Finally, in the case of a supermarket, the variety of products (number of product types) is a functional value. In the Starbucks example, the functional value is coffee that is delicious to you. While the taste of coffee, such as sweetness and bitterness, can be proven with a certain degree of objectivity, the phrase “to you” includes the brand’s philosophy that the taste of coffee is perceived differently by each individual. This philosophy is embodied in Starbucks’ functional value of being able to customize your own coffee (high customizability) and has led to Starbucks’ competitive advantage.
The second is emotional value, meaning the sensory and mood benefits provided by the product or service. The reason for purchasing a Starbucks coffee is not only the taste of the coffee. The comfortable and relaxing space provided by Starbucks is also a major factor that makes customers keep coming back. Similarly, there is no denying that the reason for purchasing a car is not only its functionality, but also the uplifting feeling one gets when driving it. Cosmetics also have a part of their value in the small paper bag that lifts one’s spirits, in the beautiful packaging, and in the special service one receives when purchasing them at a store. Emotional value is invisible and difficult to measure, but it has as much if not more influence on brand attachment than functional value.
Supporting these two types of values are the specific facts and characteristics of the product or service. All of the values provided need to be supported by some facts and characteristics. The facts and characteristics described here should be the unique strengths of the brand that cannot be imitated by competitors and should be directly related to the realization of functional and emotional value.
Brand personality refers to the atmosphere or worldview that a brand exudes and is expressed in phrases such as “Brand A has a XYZ vibe.” Brand personality is not something that is conveyed in direct words but is something that is naturally perceived by the customer during their experience with the brand. To achieve this, it’s important to create a sense of unity in the design elements at each customer contact point. For example, the impression one gets when seeing an advertisement for the brand and the impression one gets when actually visiting a store must be the same. A consistent brand personality plays a major role in subconsciously leaving an impression of the brand in the customer.
The last element, the brand essence, is a condensation of all of the value elements listed above and is, so to speak, the brand promise itself expressed in a single word. This is where the term “third place” in the Starbucks example comes in. The words defined here will govern all future branding activities and will be the key to achieving a consistent brand strategy.
Brand value definition is truly a self-discovery process for a brand. The process of searching for what the brand can do for whom is itself the energy to clarify the core of the brand and to take the first step toward a new form. We compiled a list of points to keep in mind as you proceed with the process of defining the values that your company’s brand offers.
1) Involve the entire company to build consensus
It’s crucial for the values provided by the brand to be something that all employees supporting the brand can stomach. Even if what is stipulated by only a few members is later communicated to employees, people will have doubts and have difficulty making it their own. In many of our projects, in addition to interviews with key people within the company, we conduct quantitative surveys and workshops for employees to define the values provided by the brand while involving them in the process. By proceeding in a consensus-building manner that comprehensively incorporates the voices of employees, the brand values are not merely theoretical, but can be established as the foundation on which all employees can base their decisions.
2) Don’t confuse facts and features with value
Facts and features are often confused with value when defining the value provided by a brand. Facts and features refer to the strengths and attributes of a product or service (from the company’s perspective), while value refers to the benefits that customers derive from using the product or service (from the customer’s perspective). Taking the example of a hair care and body care brand called Botanical Tales, the fact and feature is that the products use 100% plant-derived ingredients, but that alone is not a benefit to the customer. If these facts and characteristics are to be expressed as value, they have to be expressed in terms that are meaningful to customers, such as the safety when applied to the skin (functional value) and a sense of security for long-term use (emotional value). When considering value, be sure to ask yourself, “Is this beneficial for the customer?”
3) Consider both present and future perspectives
Another common pitfall when defining the value provided by a brand is defining it only from the present perspective. If the brand value being offered merely consists of current facts and characteristics and their sublimation into value for customers, it’s nothing more than a visualization of the current state of the brand (proceeding from the bottom of the framework to the top is called “laddering up” from the current perspective). On the other hand, in order to transform the image of the brand into a new one, the brand targets and what they expect from the brand must be clarified. From there, consider what kind of value should be provided to them. To do this, ask yourself, “What facts and characteristics will be necessary in the future (M&A, R&D, etc.)?” (This method of proceeding from the top of the framework to the bottom is called “laddering down” from the future perspective.) When defining the value provided by a brand, both the present perspective and the future perspective must be taken into account.
1. Communicating the brand internally and externally (brand communication)
For example, when you decide to buy a new smartphone, what brand comes to mind? Some brands come to mind immediately, while others may only come to mind after an Internet search. Or perhaps you may not be able to picture what kind of brand it is at all when you see the name. The same is true for daily necessities. When you go to the supermarket to buy more soy sauce or mayonnaise, do you always reach for the same brand of soy sauce or mayonnaise? The percentage that each brand occupies in the minds of customers within a particular product or service category is referred to as the mindshare of the brand.
The purpose of brand communication is to compete with competitors for this mindshare. When a customer wants to purchase a particular product or service, the company’s brand must firmly come to mind so that it becomes one of the options (increase in brand awareness = larger circle).
Even if the company manages to be mentioned as an option, if it’s not clear to customers what the advantages of the company’s brand are compared to other companies, it will eventually lose out to the competition and not be chosen by customers. Therefore, the superiority of the company’s brand over its competitors must also be associated with the brand (understanding of brand superiority = red arrow).
Let’s introduce some items and perspectives to consider when increasing the mindshare of a brand through brand communication.
– Consistent activities at all customer contact points
We can’t “memorize” a brand just by seeing or hearing about it a few times, much less understand the value it offers. You hear from friends who actually used a product that had left an impression on them after seeing it advertised, so you searched for it on the Internet and actually visited the store. After you go through this whole process, the brand finally leaves an impression in your brain. Thus, in reality, it’s rare for customers to make purchases after seeing an ad alone. In most cases, the purchase is made after going through multiple customer contact points (places where the customer encounters the brand). Therefore, when considering a brand communication strategy, it’s important to identify all possible customer contact points from the time a customer encounters a brand to the time of purchase, and to design an overall picture of what information and experiences will be provided by taking advantage of the characteristics of each.
In addition, the information and experiences provided at each customer contact point must have a coherent story. For example, in the case of L’Occitane, proposing a lifestyle in the warm and natural Provence in southern France is at the heart of the brand’s value proposition. The design is intended to evoke the natural materials of southern France included in each cosmetics series. In addition, some stores offer free beauty treatments using L’Occitane cosmetics to their best customers, creating a system that allows them to enjoy the L’Occitane worldview even after their purchase.*2
Continuous exposure to the brand’s value at multiple points of customer contact can gradually increase the brand’s mindshare in the customer’s brain, allowing a strong brand image to be established over the long term.
– Ensuring employees have a deep understanding of the brand
Companies often spend time and money to create beautiful logos or precise brand slogans, only to find that none of the employees fully understand its meaning and none of the salespeople are able to explain it to the clients. No matter how consistent brand communication is implemented throughout the customer contact points, it will always fall through somewhere. It’s the employees who bring the brand to life in their daily work, and it’s them who must have the deepest understanding of the value provided by the brand and the empathy for the future that the brand is aiming for. Therefore, brand communication must be carried out not only with customers, but also with employees with equal or even greater passion. A series of activities to spread the values of the brand within the company is called internal branding.
There are many methods of internal branding, and if it works well, it has the power to fundamentally change employee awareness and behavior, and in recent years, it’s often used as a tool to change the internal culture of the company. When employees deeply empathize with a brand, it means that they’re able to move, on their own initiative, toward the future that the brand aims to achieve. As globalization and mergers and acquisitions make organizations more complex and dilute the employees’ sense of belonging and ownership, the purpose of internal branding is to empower each individual to work in a unique way while maintaining common aspirations.
Let’s now discuss the relationship between external communication (outer) and internal penetration (inner)
When designing a brand communication strategy, we often see cases in which the promotion entities are different, with the public relations department in charge of external communication and the human resources department in charge of internal communication. However, this leads to a disjointed approach with each party not knowing what kind of activities the other is involved in. In reality, however, external communication (outer communication) and internal penetration (inner communication) are two sides of the same coin. The deeper the employees’ understanding of the brand, the more persuasive the brand message the customers receive become, and the higher the customers’ evaluation of the brand, the prouder the employees become of the brand. This phenomenon of mutual influence between employees’ and customers’ understanding of a brand is called the brand mirror effect. In order to maximize this mirror effect, brand communication strategies should be designed within the context of the overall picture, always keeping a bird’s eye view of both sides, rather than considering internal and external aspects in isolation.
– Brand communication measures
Now that we’ve explained the concept of brand communication, we’re going to touch on some specific measures that can be taken. The measures introduced here are only examples. In fact, there are infinite possibilities. Use the following examples as a reference and leave the rest to your creativity. These measures should not be implemented independently of each other but should be designed to work in tandem with each other under a consistent strategic story.
Outer measures (customers, business partners, shareholders, job seekers, etc.)
- Brand ads
Ads shouldn’t promote specific products or services, but rather deepen the understanding of a brand’s worldview and the value it provides. Corporate advertisements often fall into this category, and it’s desirable to roll them out extensively when the redefined brand is unveiled for the first time, followed by a certain amount of periodic advertising to maintain recognition and understanding. - Public relations/PR/IR activities
Strategically schedule and announce new investments, alliances, product launches, institutional reforms, and other news appropriate to the brand values you wish to communicate. In particular, when related news is announced in conjunction with brand ads, it increases the credibility of the brand message being communicated and makes it easier to penetrate the market. - Brand site
After attracting interest through brand advertising and PR activities, it’s best to launch a brand website that offers more detailed information. Compared to brand ads and PR activities, brand websites can express the value provided by the brand in a more direct and systematic manner. It also serves to strengthen the link between ads and PR activities. - Exhibitions/events
For B2B companies in particular, exhibitions and events provide an excellent opportunity to promote brand understanding among corporate clients. For B2C companies as well, events for customers provide opportunities to experience firsthand the brand’s worldview and the values it offers, thereby deepening their understanding of and attachment to the brand. - Flagship stores
Setting up a symbolic storefront that expresses the brand’s worldview and the values it offers provides a place where more people can become familiar with the brand through experiences. In addition to the usual product and service offerings, displays and mechanisms are often introduced in the stores to help people better understand the brand.
Internal communication measures (employees, group companies, etc.)
- Executive keynotes
Top management, including the president, should visit various locations to explain directly to employees the background and importance of branding and the meaning behind the values provided by the brand. The purpose of this activity is to make employees aware of the company’s seriousness about the new brand and the importance of their participation in the branding process. - Brand book
This book should include the significance of branding, an introduction and explanation of the values provided by the brand, a message from the president, and an introduction of representative internal examples that embody the brand. Like the executive keynote, the booklet is distributed at the same time as the launch of the new brand, and each employee is asked to keep it as a reference for daily business activities. - In-house posters
A well-designed poster clearly expresses the values provided by the brand visually. The posters can attract the interest of employees during the brand launch period, and at the same time, they can be displayed in places where they can be seen on a daily basis in the office to encourage memory and understanding of the content in a natural way. - Brand training
Holding company-wide brand training when a new brand is launched and incorporating relevant content into new employee training and mid-level employee training provide regular opportunities to think about the brand. It’s important to promote the personalization of the brand through dialogue with employees rather than a one-way provision of information during training. - Awards and contests
As a measure to further increase employees’ sense of participation, many companies hold contests to award employees who have realized business activities that embody the values provided by the brand and to solicit new ideas that embody the brand. Clarifying the actions required of employees through praise is expected to encourage specific actions.
Building a firm position for a company’s brand in the minds of customers and to ensuring that the brand continues to be the brand of choice among the many competing products through brand communication is a process that takes a long time. It’s a message from the brand that is conveyed not only through advertising and PR activities, but also through all customer contact points, and the entire company must work together to convey this message. What is obtained through these activities is the expectation of customers. If they choose this brand, there will be something good for them. With this expectation, they’re willing to pick up a product or try a service. However, brand-building activities don’t end here. Expectations must be met on a continuous basis. Here’s a question for you to think about: What is required to deliver the value promised to customers through brand communication and to continue meeting their expectations? See the next chapter for the answer.
The next chapter (In Japanese) : https://www.hakuhodo-consulting.co.jp/blog/branding/branding_20211125
*1: “Starbucks Success Story,” Howard Schultz et al, Nikkei BP (1998)
*2: Hakuhodo Consulting, the author of this report, has made its own forecasts and analysis based on publicly available information on the brand. (Reference source: L’Occitane official website, June 18, 2019)
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