The economy, consumer demand and branding

There is something curious happening in the economy today.  Something that we have not seen in 70 years.  Demand is falling.  Consumer desire to purchase things is falling.  Business desire to purchase things is falling.  Everywhere you look people would rather put their money away than spend it.

If nobody is buying, then the economy will continue to contract.

The economist and New York Times columnist Paul Krugman recently wrote, “Once again, the question of how to create enough demand to make use of the economy’s capacity has become crucial.”

So what does this have to do with branding?  Usually we think of branding as driving preference for one brand vs. another.  Underlying this are some assumptions, unspoken, that consumer desires are limited only by their income.  That is why brand positioning is fundamentally about comparing one brand to another.  This concept is labeled “differentiation” in the language of brand positioning.

In other words, we have taken it for granted that consumers want to buy things.    Even in the last couple of recessions consumer demand has held up — people wanted to buy things.  

Today consumers are sitting on their wallets.  Businesses are sitting on their wallets.  Demand is dropping.

In this economy, branding needs to work harder, to serve a different purpose than simply “differentiation”.  Branding needs to create demand.  

Narrative Branding is a method that is concerned with the role of the brand in the life of the consumer.  A compelling narrative does more than change minds, it changes behavior.  It is more effective at generating demand than the standard brand positioning method.  

This is particularly important for companies in today’s economy.  Marketing dollars that create demand for your offerings are better spent than marketing dollars that “differentiate” you from competitors.  In other words, a company will be better served by using branding to create demand rather than to simply shift preference from one brand to another.

Of course no single company can solve the falling demand problems of the economy.  But if more companies adopt Narrative Branding or other narrative methods for creating and managing brands, there can be a substantial impact on consumer demand.  At a minimum it will create demand for each company’s offerings.  

What are your thoughts on how branding can create consumer demand?

Visual memory and branding

At dinner the other week a writer friend recommended a book to me.  She said, “Have you ever read Linda Seger’s Making Good Scripts Great?”

I said that I hadn’t.  

Later that night, when I was back home, I looked up the title on Amazon.  I immediately recognized the book’s cover.  In fact, I realized that not only did I recognize the book but that I already have it, read it and had a very positive opinion about it.  

I have a very strong visual memory of the book but a poor verbal memory of the author and title.

That got me to wondering about the methods we use to assess the strengths of brands.  One of the most common measures is Awareness.  In other words, can you remember the name of the brand?  In standard marketing research the Awareness questions are verbal.  It is asked first as an unaided awareness — “Tell me all of the brands of books on screen writing that come to mind.”  Then aided awareness, “Here is a list of brands of books on screen writing.  Please check all that you recognize.”

In that kind of research I probably would not have recalled Linda Seger’s fine book either unaided or aided.  Yet, if you had shown me the cover I would have instantly recognized it.  So is that a flaw of my memory, that I can remember what I have seen in a different way than I remember what I’ve heard?  Am I just a poor candidate for market research?

Which brings me to the title of this post.  

Many of the standard approaches to market research were developed in the 1960s and 1970s.  The technology of the time allowed for conducting research either in person or on the phone.  In person surveys were very labor intensive, time consuming and expensive.  Phone research had the great advantages of speed and lower costs.  These influenced the types of questions asked.  Jump ahead a few decades and we find ourselves in the internet age where the surveys are now conducted online.   This allows for the same phone questions to be asked online.  

The typical brand tracking study now asks the standard unaided and aided awareness questions online.

This gives rise to an interesting phenomena.  The standard research questions were developed around the  limitations of an old technology.  The new technology should allow for a rethinking of how the questions are asked.  It is now possible to visually  show the brand in context in the awareness questions.  And, in fact, some companies are moving in that direction.

In general, market research is using new technology to do old things.  Instead it should allow for creating more robust techniques for uncovering what is in our minds.  

As we learn more about the way memory works and have new technologies for market research, it provides a wonderful opportunity to develop better methods for assessing brands.  

As the late Peter Kim was fond of saying, “Question everything.  Assume nothing.”

What are CMO priorities for 2009?

We wanted to know how CMOs would arrange their priorities for 2009.  So we analyzed some new proprietary data from a new survey we conducted among CMOs and other senior marketers about their priorities for 2009.  The study was done in partnership with Jupiter Research (which is Forrester as of January 1st).

Two themes came through clearly — the need for greater accountability and the challenges of managing brands across all of the new forms of media.  

Here are the top 5 priorities of marketing decision makers for 2008

#1  Achieving measurable ROI on my marketing efforts

#2 Developing marketing programs that integrate online and traditional media

#3 Translating the brand experience across different touchpoints

#4 Cutting marketing budgets without cutting performance

#5 Optimizing our portfolio of brands

The Jupiter Research data is available here.  jupiter-cmo-priorities-for-2009

You can read more about the study by downloading it from our website, http://www.versegroup.com

Consumer new year’s resolutions

A new Marist poll reports that 12% of consumers who are making resolutions say that “spending less money” their New Year’s resolution.  That is not good news for the economy since consumer spending makes up about 70% of GDP.  

If consumer demand is falling, that will make the recovery more difficult.  Generating consumer demand therefore will play an important role in the economic recovery.  And one of the critical factors is brand marketing, since that helps to create demand.  

There is no national brand marketing department charged with increasing demand for consumer products.  That job falls to individual corporations. 

So we can see how important brand marketing is for both individual companies and for the economy as a whole.  

At the same time we are seeing that corporations are cutting their spending on marketing.  Some of the cuts are in media spending.  And some of the cuts are in the marketing departments themselves.

That creates an interesting conundrum.   Demand is falling.  At the same time, marketing, which stimulates demand, is being cut.  

One solution to this conundrum is to find more effective and efficient methods of brand marketing.   If we continue to do brand marketing as usual, with the standard techniques, we can expect the same kind of results that got us into this economic mess.

A breakthrough method for creating and managing brands

Welcome to the first blog on Narrative Branding (R).  

The purpose of this blog is to encourage a dialog in the marketing community about approaches for making marketing itself more effective, more efficient and more accountable.  Branding is a central element of marketing.  Therefore improving marketing requires developing better ways of defining, creating and managing brands.

What is Narrative Branding?  It  is a breakthrough method for creating and managing brands.  It is also a trademark of Verse Group.