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Why Physics: The dynamics of marketing and branding show up in a variety of ways - from promotion to projections. Using the laws of physics as a guide to assess the efforts needed to meet goals is the purpose of this article. You don’t have to look for your slide rule or fancy calculator. We will be taking some liberties with the laws of physics – a practice in which we have all had experience! Forgive us, Sir Ike. But first, let me offer some working definitions for brands, branding and marketing. |
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In the end, branding is a product in itself |
Branding - What it is / Why it's a money makerA brand is the name and associated or implicit reputation of a company and/or product. Effective branding contributes to market share, margins, and the balance sheet. One report values Coca Cola's brand as 51% of its value or $71 billion (according BrandWarfare - McGrawHill 2001). This is an accumulated effect of its P&L performance in market share gains. IBM's PC division, as another example, uses their brand equity to realize price premiums in the commoditized PC business. In the end, branding is a product in itself. It requires research (thinking), development/distillation, and testing (making sure the messages are understandable to all target levels and "wears well" in the market). Any marketing effort that doesn’t have building brand equity at its core isn’t worth its weight. |
First Law of BrandingSir Isaac Newton’s first law of motion is often called the
law of inertia and is the most important element in branding. Let me
paraphrase it in market speak, "A company at rest tends to stay at rest while
a company in motion tends to stay in motion. This happens at the same speed and
in the same direction unless acted upon by a new market force." |
Our Job is to to Get on the Right Side of the Right Track |
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Blue Chip Status |
Brand defines a "blue chip" company. Inertia explains why “blue chip” brands who may not offer as competitive a value proposition as new brands can still command dominant market share and/or price premiums. |
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"Coattails" or the "snowball effect"
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Whether it's national election winners pulling in local winners or 2 good products pulling 3 non-competitive products, the coattail phenomenon is real and an inertial function. Coattails also extend to brand "rub-off" where down market products that may not be value competitive can still enjoy success with the right name brand. |
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Mergers and Acquisitions |
We need only to look at the track record of conglomerates and holding companies that acquired good brands, mismanaged them and still sold them for a profit only because of their brand status. While there are exceptions to this phenomenon, it remains a business axiom that good brands are devilishly hard to kill. |
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Established Brands do not have a Free Ticket |
Former "category killer" like companies like Gateway, AOL, Sun, Silicon Graphics and brands like Compaq, Buick, Lucent, Pontiac, and Oldsmobile are struggling with a variety of problems from core technology to undefined positions. An established brand asset still isn't a free ticket. |
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New Technologies and Startups |
The law of inertia also explains why so-many startups and
technologies, with excellent value propositions have such a
difficult time getting established. For all the EBay’s of the 90s and Compaq’s of
the 80s, there are large harbors of start-up corporate wreckage.
The same can be said of technology. Ethernet was invented in the 80s (some reports say the 70s) but didn't propagate until the 90s. In this new millennium, Ethernet is "in the air" and in coffee houses - 20 years down the road! Paper and "sneaker net" had more inertia than we thought. |
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Forecasts and Decision Making |
The laws of inertia also help explain why most sales and
income projections for successful initiatives or start-ups are too bullish in the
first 2 years and too conservative in year 5, especially in the area
of "taking out" older competitors.. At the same
time, without the bullish first 2 years of projections, good luck on
your funding! The consumer electronics business established greater than 50% penetration of digital technology in the home during the 80s with the CD player. The recording side of the business (those who captured the sound for the CDs) didn't reach that level of penetration until more than 5 years later! It is at least as likely for decisions to be made that adopt new
technology too quickly than too slowly. If your end users do
not depend directly on the technology rather than the application,
moving too quickly can buck inertia and cost a lot of money. |
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Promotion and Advertising |
The lesson here for brand promotion is familiar to all of us. It takes repeated exposure for a campaign to build inertia with end-users, your channel, and the intelligentsia. It also explains why, after you are tired of your own campaign “inside the building”, your campaign is usually just getting up “a head of steam” in the marketplace. |
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Forces derive Position Forces are applied from different directions. Based on strengths, weaknesses, and outside influences on your brand, a net force or vector is derived which represents the market position of that product or service.
When forces are equal in mass and directly opposed in direction, such as the gravity of a car and the friction of a tire, it produces a force resulting in movement. We see this in the market place when the projection of an idea (the up arrow in the accompanying graphic), countered by the natural rest position of the reader, gains traction and forward movement in the marketplace. |
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Until recently, Volvo has maintained its position based on brand, not on product. In fact, for the last 10 years or so, most driving aficionados complained that Volvo's cars handled more like trucks with very little excitement from a value or technology point of view. Their previous implementation of 4-wheel drive had several significant drawbacks compared to Audi, Suburu, and others, while their safety record was matched by many others. Yet, they were able to maintain their pre-eminent market position of "safety" alongside the market positions of Mercedes (value/engineering) and BMW (value/handling). Their ability to withstand a down product cycle was because they established their natural position years ago and inertia carried them through. Now that they have created an interesting new flagship product (under new truly synergistic new ownership), they are poised for capturing back market share without overcoming market inertia. |
During a down product cycle, Volvo was able to maintain their pre-eminent market position of "safety" alongside the market positions of Mercedes (value/engineering) and BMW (value/handling)
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The building of a new brand hates time but once it is built, it is an unassailable asset. The overall lesson is that no budget is large enough to counter factors beyond your control. By comparing your plans and initiatives against physical principles, you will get a better approximation of what is required for success. © 2003
BrandInc Associates. All rights reserved. |
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Volvo
provides a case example and a good summary for our discussion on the Physics of
Branding.