long term brand building

In it for the long term: business, brand and marketing strategy

Businesses need to invest in the long term or risk being stuck in an endless cycle of cash flow challenges. First published in First 5000.

Short-term financial priorities rule the mind-set of many mid-sized business

Having worked with mid-sized businesses, and evident in research by KPMG1 BDO2, Grant Thornton3 and the Australian Government Department of Industry, Innovation and Science (DOI) 4, the key problems are lower profit margins, cash flow and access to capital.

For the short term, this is earmarked for paying employees, overheads and running costs. For the long term, this is about investing now in technology, scarce talent and innovation that sets the company up for growth in the future.

In this context, justifying marketing investment on long-term brand building for which the company cannot see immediate results is a hard battle. But doing the opposite keeps companies in a vicious circle of short-term reactiveness and chasing cash flow.

In fact, a paper presented by the DOI at the GAP Summit 2017 reported research findings that “Mid-sized firms are ten times more likely to shrink away than grow into large businesses. If those which go out of business entirely are counted, then the ratio swells to twenty to one.”

They go on to say that, “Only a third of mid-sized businesses have a written strategic plan for their future…”5 demonstrating the short-term mind-set of many.

As a result of organisations pigeon holing marketing as communications, and the rise of digital with its seemingly lower costs and ability to measure performance and demonstrate results almost immediately, marketing has, too, become short term, tactical, communications and often digital-only focused.

Look beyond short-term communications tactics to strategic marketing

Having trained as an FMCG marketer, we were given P&L responsibility for our line of business. The Marketing Mix was the 4Ps – Product, Place, Price, Promotion. We worked with: Research and agencies to understand our customers, define our brand position and strategic objectives; Sales, Trade Marketing, R&D, Production, Logistics, Finance and agency teams to develop and execute the brand and marketing strategy and tactics across the mix; and monitored performance across the business, linking brand to business strategy and the bottom line. How well does your marketing team understand the cross-functional, commercial and long-term aspects of your business?

An advocate for the 4Ps of Marketing, Mark Ritson roughly quantifies the effort to be invested on tactics as 1/3rd with diagnosis and strategy each demanding 1/3rd effort prior to delving into tactics. Then, of the effort invested in tactics ¼ should be invested on each of the 4Ps meaning that 8% should be invested in tactical communications – a far cry from the current 80%. 6 I note that these proportions are overall effort and not specific to budget investment, although in looking at where the money is currently being spent, 80% isn’t far off.

With Service organisations, marketing needs to consider the 7Ps: 4Ps plus People, Process and Physical Evidence (e.g the aircraft of an airline, bank branch environment, website quality, staff uniforms, logistics transport). Whilst responsibility and budget allocation is often with other departments, the effort invested by the marketing team in these areas further reduces the overall proportion of effort on tactical communications.

The other way to think about Marketing is “consistently delivering against the promise” – what is the brand promise we are making to our customers and then what do we need to do across the business to consistently deliver against it? If Marketing is purely communications and disconnected from the rest of the business, then how will they know whether what they’re communicating can be delivered? If the business can’t deliver against the brand promise, then changes need to be made to either the promise and/or the experience until it is viable and credible. That requires a Marketing team with a broad remit, and the resource, to impact both communications and the experience.

Invest in long-term brand building as well as short-term sales activation

Following significant research into how marketing works, Les Binet and Peter Field recommend that the “best practice” ratio for long-term brand building to short-term activation 60% to 40% for B2C brands.7

From their recent research on B2B brands, the need to invest in long-term brand building holds true, with a slightly lower proportion at 48% to 52% for sales activation. This is based on the understanding that the selling process is usually longer, and often led by relationship building which is inherently about building trust in the person and the brand over the longer term.7

These findings reinforce prior research on “How brands grow” by Byron Sharp and the team at Ehrenberg-Bass Institute, summarised in the table below. 8 9

WhatLong-term Brand-buildingShort-term Sales activation
ObjectiveIncreases mental availability – the customer’s likelihood to think of your brand in buying situations 8 9Increases physical availability – how easy your brand is to find and buy 8 9
StrategyBroad reach

Emotions and associations 8

Tight targeting

Relevant messages 8

TacticsSingle minded, compelling, emotive idea across broad mediaUnder the umbrella of the single-minded, compelling, emotive idea:

· Target different segments with relevant offers in relevant media e.g. sales course to sales leaders

· Target audiences with different types of messages depending on where they are in the decision-making journey e.g. during info-gathering stage

· Target specific occasions or life moments e.g. getting married

B2C 760%40%
B2B 748%52%

Invest in brand identity that reflects your brand position

With the importance of Brand Identity in developing mental availability for the brand, and making it easier for customers by essentially bypassing difficult decision-making processes with the brain in autopilot, I also dedicate effort and investment to this area of long-term brand building.

Reflect your brand position in the identity – name, visual, verbal, sonic, scent and touch, people behaviour – and then consistently represent it across all touch-points. This is key to being noticed and remembered when the customer is looking for a brand to fulfil their functional and psychological goals, in the cluttered landscape 9 10.

For all brands, having a strong, distinctive, coherent and consistent identity that reflects your brand positioning maximises the effectiveness of your marketing investment across all 4-7 Ps. For businesses that don’t have the same “big brand” marketing investment, brand identity is your opportunity to stand out, unify touch-points and see a bigger bang for your buck.

State of the nation

In the current situation, where sales activation is 80% of communications – without a brand positioning and identity to increase mental availability, standout in the cluttered environment, unify the brand, connect with and build meaning for customers; and without a strategic marketing perspective to ensure a coherent brand across product, place, price, promotion, people, process and physical evidence and consistent delivery against the promise – money spent neither maximises the effectiveness in the short term, nor builds the brand for the long term.

Where to from here: Marketing for the long-term success of brand and business

  1. Develop your strategic business plan with sales and marketing inputs and responsibility for outcomes
  2. Whilst you may have communications specialists within the marketing team, the team needs to be connected across the business and have the resource to engage employees in all areas to consistently deliver against the brand promise to customers
  3. Invest equal effort on diagnosis, strategy and tactics in marketing
  4. Define your target market for the brand and identify sub-groups (audiences/segments/cohorts) for value propositions for tighter targeting under the brand umbrella
  5. Build a brand position that is unique, relevant, meaningful and compelling to your target market
  6. Reflect your brand position in your identity – and consistently represent your identity across all touch-points
  7. Develop the sub-group value propositions to sit coherently under the brand (as required)
  8. Establish strategic objectives for your target market, linking brand to business strategy and the bottom line, against which measure performance
  9. The marketing plan, team effort and investment needs to consider 4Ps or 7Ps: Product, Price, Place, Promotion, People, Process, Physical Evidence
  10. Invest in long-term brand building as well as short term sales activations to build mental and physical availability of your brand

References

  1. KPMG Enterprise and Fairfax Media, Growth 2.0 Report, 5 priority issues for mid-market businesses, 2018
  2. BDO, Growth Index, A report on the fastest mid-sized businesses driving the Australian economy, 2018
  3. Grant Thornton, The overlooked opportunity in Australia’s mid-sized businesses, May 2019
  4. Mark Cully, Chief Economist, Australian Government Department of Industry, Innovation & Science, “Stuck in the middle? Mid-sized enterprises in the Australian economy”, September 2017
  5. A Vision for Australia_2017_Summit_Report, Global Access Partners
  6. Mark Ritson, “What ails marketing? Mortification, Tactification, Communication and Digitisation”, Eat Your Greens, Wiemer Sniiders, 2018
  7. https://www.thedrum.com/opinion/2019/05/23/exclusive-look-binet-and-field-s-new-b2b-marketing-research
  8. https://www.cmo.com.au/article/646133/binet-digital-has-skewed-marketers-too-far-into-sales-driven-advertising/
  9. Byron Sharp, How Brands Grow, Part 1, 2010 and Part 2, 2016
  10. Phil Barden, Decoded: The Science behind why we buy, 2013