April 24, 1997

Branding may be more than you think

Michael C Markowitz, Editor in Chief

Because almost everyone seems to have jumped on the branding bandwagon, I wonder if the wagon isn't in danger of having a wheel fall off.

What is your company doing to establish its "brand"? As is true of ranchers developing brands to clearly mark their livestock, electronics manufacturers are looking for ways to stamp an indelible claim on their products. Manufacturers today are finding it increasingly difficult to differentiate offerings on price, quality, and function, so they hope these stamps will set their products apart from the rest. And, judging from the March issue of Electronic Business Today and the parade of companies talking about "their brands," your company is currently either building its brand, creating a strategy to build its brand, or considering liquidation. A word of caution may be in order, though: Because almost everyone seems to have jumped on the branding bandwagon, I wonder if the wagon isn't in danger of having a wheel fall off.

Intel, with its wildly successful "Intel Inside" program, built the branding bandwagon among technology companies in 1991. Intel's success is frequently cited as justification for other technology companies' efforts to develop brands. As such, it is worthwhile to look critically at Intel's program. In his 1996 book, Building Strong Brands, David Aaker, a professor of marketing at the University of California--Berkeley and consultant to Intel, claims that Intel generated more than 90,000 pages of ads during the first 18 months of the campaign. In fact, the campaign helped boost Intel's 1992 revenue by 63% and, according to Electronic Business Today, analysts suggest that it boosted 1996 revenue by 29% (over 1995 revenue).

But there are a couple of things to point out. First, consider the competitive environment. Last year, while Intel was growing 29%, where were its competitors? Recovering from multiple serious injuries, I'm afraid--all incurred between 1992 and 1996 and all self-inflicted by gunshots to the feet. Today, as Cyrix begins shipping its MediaGX processor--with the world's largest PC maker, Compaq, as its showcase, credibility-creating customer--and as AMD prepares to ship its K6, Intel's branding efforts are showing some signs of stress.

Many of the current and planned branding campaigns may disappoint their creators. Why? Because too often we settle for the quick-fix answers and don't critically probe far enough below the surface of the obvious. Suffering from "Pentium envy," some companies try to emulate Intel's efforts and expect the same results.

Here's where I may shoot myself in the foot. Most of the branding efforts appear to focus on advertising. I like that, because it helps pay our bills. Unfortunately, current efforts are defining advertising as the primary vehicle for building the brand. That's far too narrow and leads to silly decisions, such as having component manufacturers use television and daily newspapers to market their brand and image to their customers' customers at the expense of their true customers. Compaq's decision to put Intel outside by using a Cyrix µP in its new Presario 2100 line demonstrates that Intel's approach may not work in a truly competitive market.

Instead, I prefer the definition of branding that Jeff Patterson, former publisher of EDN, uses: "Branding is anything that touches the customer." That means that branding includes the advertising the customers see, the product they purchase and use, the service they receive, the packaging they discard, and the support they hope to minimize. So, when your company jumps on the branding bandwagon, don't focus on the easy and obvious parts of branding at the expense of the equally important, but less clear, parts.

Michael C Markowitz, Editor in Chief Let me know what you think. Send me your comments via fax at 1-617-558-4470 or over the Internet at ednmarkowitz@mcimail.com or m.markowitz@cahners.com.

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