Investment in your brand

Luckily, you are just seconds away from some very smart brand marketing solutions. Click here!

Key points

One of the most common questions brand managers ask is "How much do I need to invest to build my brand?".

There are many different market situations, and therefore many different answers, but the task is largely the same:

1. To capture the attention of your target customers
2. To get them to include your brand in their consideration set
3. To get them to trial your brand
4. To get them to buy your brand
5. To get them to become brand loyalists

The three key determinants of the amount you will have to invest are:

• The effectiveness of the communications
• The "stickiness" of your brand/products/services
• The size and geographical spread of the target market

Effectiveness of communications

Proctor & Gamble reputedly believe that it costs $1 billion to develop a global consumer brand. The expenditure of the more successful "dot coms", such as Amazon, Yahoo!, eBay, and so on support this claim. However, the prize is worth it. In the mass consumer market there is a 3-2-1 rule: the brand leader has 3 times the market share of the second brand, which has twice the market share of the third brand.

It is estimated that the average consumer experiences up to 3,000 brand messages a day, so most brands in most situations will have to spend significant sums of money on promoting themselves through the brand communications mix in order to be heard.

However, there is also another way of reaching your customers. This is to identify influential people who evangelise your brand/products/services to others.

At one level, this is the network selling approach of Amway, Avon, Tupperware, Body Shop, and countless others, who promote themselves through individual agents, who in turn hold parties or events to promote their wares. The role of distribution as a communications medium should never be underestimated.

A rather more striking example, is the use of celebrity endorsement. In the UK, there is a TV chef called Delia Smith who is so authoritative that anything she recommends is in danger of selling out the next day. She once praised a particular brand of omelette pan that immediately received several years' worth of orders. The major supermarket chains in the UK have advance schedules of what dishes she will be demonstrating so that they can stock up on all the ingredients.

This communications approach is hard to manage, but it can be spectacularly successful on a very small budget.

The rules of trying to build a major brand on a budget are:

1. Find people who know lots of people, and are viewed as leaders
2. Give them shared ownership of the brand, and make them feel part of your team
3. Give them good reason to want to tell others about your brand

"Stickiness" of brands/products/services

Selling to everyone as a one-off, where they never buy your products/services again, is not a long term strategy. The more your products/services meet their emotional, as well as rational, needs, the less hard you will have to work at your communications.

Some products/services simply sell themselves, in which case you should ensure that you develop an extensive sampling program.

Size and geographical spread of the market

It will inevitably cost a great deal more to become brand leader in the mass consumer market, than in a business-to-business environment where there are only a few key players in the market.

When Research International validated their Microtest(r) new product research model, they found that their predictions for the consumer acceptance of a product they had tested were significantly more accurate than the marketer's prediction of the size of budget s/he would be given. Given that two products are equally desirable, the one who can afford to generate the most attention for his/her product will win.

So what is the answer?

The answer is:

In the mass consumer market

1. Do you have "sticky" brand/product/service?
2. If yes, how much will it cost you to get 20% of the market to first become aware of it, and then to try it? On the assumption that 75% of people who trial it like it, and that they each tell 4 people, you will then have generated 80% awareness. Retailers will then react to the growing demand by giving it more "facings" which will, in turn, generate more attention and demand
3. If no, then you will have to generate the same 80% awareness primarily through the brand communications mix, which is why it might cost you $1 billion to develop a global brand

In a business-to-business market

1. Do you have "sticky" brand/product/service?
2. If yes, how much will it cost you to reach 20% of the end customer market either directly, or in partnership with distributors. If distributors find it easy to sell at a good margin, they will make a point of telling the rest of the market. If you are selling it directly, then as each new customer takes it on, s/he becomes a reference site for the next customer
3. If no, then you will have to generate the same level of awareness primarily through the brand communications mix, which will cost you a great deal more

Luckily, you are just seconds away from some very smart brand marketing solutions. Click here!

For further information, please contact enquiries@mudvalley.co.uk

© 2004, Mud Valley ™ brand marketing community.

Related answers