The New View of Marketing
Our view of marketing is expanding. We’re moving from narrowly defined brand management focused almost exclusively on the relationship between the brand with the goal of benefiting our shareholders, to a broadly defined stakeholder management designed to increase brand value by adding value beyond the brand and customer relationship to the stakeholders and thereby further increasing customer value. While customer value has always been at the center of any successful business, we need to understand the broader implications of brand positioning. The simplest explanation I’ve heard of brand positioning is that brand strategy is really about a promise to customers – a promise that your brand will deliver the value you claim when you offer to sell it to the customer at a stated price. A strong brand promise is meaningful, deliverable, and defendable. Being able to say yes to all three is a good definition of a sound strategy.
Let’s assume you have determined a positioning for your brand to be meaningful to your customers. Because you understand there are many alternatives out there for your customers to choose from, you understand that it is important to differentiate your brand offering to ensure you can defend your brand positioning and be rewarded with loyal customers over time. That leaves deliverability as the wild card in brand strategy execution. The truth is that you have much more control over what is meaningful and defendable because you understand your customer well and you know your brand stacks up effectively against all viable alternatives. But what you can’t control is the deliverable piece. Delivering the value you promise to customers is composed of a lot of moving parts.
Delivering the Brand Promise
It’s 2010. Imagine you’re Apple. You’re talking about how your brand encourages people to think different with individuality and creativity as the core brand promise. How is that brand proposition perceived when you have young workers at the plant that makes iPhones in China jumping out of the factory windows to commit suicide because of terrible working and living conditions at the plant run by your local Foxconn manufacturing supplier? Foxconn crams up to six workers into a small dorm far from home, offers minimal time off, and no social activities leaving too many of them feeling hopelessly depressed. Eighteen workers commit suicide that year. Apple’s customers notice. The backlash is severe.
Apple advertising is talking about individuals being change agents which is why you see the most creative and individualistic of your friends and peers proudly displaying their open MacBook Pro with its glowing Apple logo. It represents their aspirations.
Perhaps you also want to demonstrate your creativity and individualistic spirit, so you buy an Apple, helping to make it one of the most valuable companies in the world.
Now factor in the news of those workers at the Foxconn-run Apple plant in China being treated so badly, depressed enough to jump out a window. Doesn’t quite seem so cool to open your Apple at Starbucks with this story playing loudly in the background, does it? You might even look self-absorbed and insensitive.
Back in 2010, Steve Jobs was very sick; he died a year later. Perhaps this is one of the reasons Apple was slow to react. Foxconn’s initial response was to put up nets on the building to deal with the problem.
However new Apple CEO Tim Cook finally realized the dichotomy of promising one thing to customers while providing an opposite set of values and beliefs to the workers at their Foxconn-run plant. Cook fixed the problem by pressuring Foxconn to offer its employees more time off, less overtime, and trips home every six weeks. They also offered bigger dorms with fewer roommates while introducing a wide range of social activities. Apple didn’t own Foxconn, but Apple certainly owned the public relations problem.
Tim Cook realized that what was happening with Foxconn in China was negatively impacting the delivery of the Apple brand promise of individuality across the globe. I have an iPhone, and maybe you do too. Because I can put the music I prefer on my iPhone from iTunes and customize my applications in many more ways than Samsung, Apple delivers on the individuality promise I bought into, even though we’re talking about one of the biggest brands on the planet.
Remember the Nike story? The iconic shoes being produced in sweatshops in Bangladesh while the brand promise of Nike was all about personal best? How could Nike as a company live up to the challenge they had thrown down to consumers to get out there and just do it to achieve the best they could be while as a company they were falling far short in how they treated the workers who made these great shoes? It wasn’t good. It took six years for Nike to get it.
Founder and then CEO Phil Knight said: “The Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse. I truly believe the American consumer doesn’t want to buy products made under abusive conditions.” He went on to form a Fair Labor Association and now conducts several hundred audits per year on suppliers making their shoes to ensure child labor isn’t being used and fair labor practices are in place.
The customer doesn’t differentiate your activities from the activities of your supplier. The customer sees how IKEA treats employees in an IKEA store. IKEA doesn’t call them employees; they elevate the relationship by calling them, associates. It isn’t just a word; it’s an approach to how they recruit and manage over 120,000 workers worldwide. I have friends at IKEA who have worked there for over 20 years. They work together to personally model a better way to work and share ideas.
The IKEA brand promise is about a better way to furnish and decorate your living and office space. They hire associates who are interested in helping customers find solutions and work together from the warehouse workers, to the showroom assistants, to the front-line cashiers, and even the post-sale loading and delivery people. Everyone works together to help deliver on the promise of not only helping you find a better way to utilize your living space but inspiring you with ever-evolving room settings in-store that show you what could be.
IKEA involves other stakeholders proactively by sourcing products from suppliers that help them find a better way to use your personal living space with a bed, or kitchen-counter combination, or even a play area for the kids. IKEA extends the broader perspective on the better way brand promise to how they work with local communities in high-corruption-risk markets to develop a better way to choose sites that are owned free and clear of corruptive practices.
They work transparently with local government officials to develop very detailed build-out plans in a jointly prepared IKEA and local government memorandum that is made public and clearly identifies all the necessary permits that may be required in advance. In this way, they are not held up along the way by local officials stalling the process in an attempt to get a bribe and they remove the risk of an IKEA associate trying to speed up the lawful permit process with an unsolicited bribe. The corruption door swings both ways.
IKEA deals with the risk of corruption both internally and externally with a better way to work with local communities to reduce the chances of corrupt practices entering the process. Even during the build-out, they install windows so the public passing by can look in and see the work being done.
All bids for constructions materials are made transparent with the support of local business leaders and the media. All stakeholders have to be managed if IKEA is to deliver universally on their better way brand promise. After a disastrous public relations problem in Russia in the early 2000s, IKEA recognized that the best defense for corruption allegations – real or perceived – is a level of transparency that completely fits their brand promise of inspiring a better way.
IKEA learned a hard lesson in Russia, just as Nike learned a hard lesson in Bangladesh, and Apple did in China.
Delivering Emotional Values
Brands are your most important assets in business. Managed successfully, they define your products and differentiate them from all available alternatives. Your brand must have emotional attributes and a personality as well as a functional role to ensure the maximum appeal to both potential and existing customers. Emotional benefits not only help your brand connect on a higher level with customers, but they are also more difficult for the competition to match than functional attributes. But it is delivering on these emotional benefits that indicate values and beliefs that can make it hard to ensure you deliver your brand promise through all your stakeholders. Hard, but not impossible.
How you position your brand becomes the single most important strategy you will employ in growing your business because it defines the customer value contained within your product. Your product includes materials that may be sourced from many places, provided by employees who believe not only in the brand promise, but hopefully in their crucial role in building, distributing, and communicating that brand promise to customers.
A customer can, of course, buy a product that is not a brand, but in that case, they are assuming that one product is no different than any other in that particular category – it’s a commodity rather than a brand. In some markets around the world, basic items such as sugar, flour, milk, meat, and eggs are sold in markets without any branding, just as they have been for hundreds of years. The customer simply views the product as a commodity and will buy the cheapest eggs, milk, or sugar at the market. If there is any difference, it will be based on price. In other words, there is zero brand value. However, in most markets around the world, these commodity products are differentiated, priced, and sold based on brand value.
Danone sources milk for their products in India but recognizing local farmers often have only one or two cows, they developed a milk delivery logistical apparatus that allows local small farmers to thrive as they offer the freshest dairy products wherever they compete – including in India. The key is in the word ‘value.’ An effective brand offers a distinctive and recognized value. That’s the brand promise. We know that if we increase our customer value, we will likely increase our sales: the value equation.
So, doesn’t it stand to reason that if you could get the stakeholder to enthusiastically contribute consistently to creating, delivering, and communicating customer value that you wouldn’t just increase sales, you would constantly add value to deliver exponential customer value resulting in exponential sales growth sustained over time.
And finally, once you have established a meaningful, deliverable, and defendable position for your brand, remember the Everything Communicates rule, a rule I learned a long time ago from my mentor at Coca-Cola, Sergio Zyman. Everything you do or say about your brand communicates something. And this is the critical point – everything your stakeholders do and say communicates something about your brand either directly or indirectly. Everything Communicates. So, manage it accordingly. Manage the whole thing, including the behavior of your stakeholders.
Make sure what you communicate and what you motivate them to communicate is always in line with what you and all the other stakeholders do. Every minute of every day. All the time. It’s all interconnected. And if you have stakeholders that do not or will not align their behavior with your brand promise that you need to change who your stakeholders are. Just as quickly you would cancel advertising that made false promises about your brand or fire a salesperson who made false claims. The customer will reward you when you manage it well, and pummel if you get it wrong. That’s the world we live in today – everything is interconnected.
Apple’s Brand Promise
Apple products are elegant and sophisticated to be sure, but the brand promise – what Apple fundamentally stands for – is to think different. Steve Jobs wasn’t the only point of burning passion at Apple; he just started a fire that still burns in the Cupertino headquarters and in over 500 retail stores spread across 25 countries. That the company continues to deliver exponential sales growth so many years after Steve Jobs’s death tells me that there are thousands of fires burning constantly throughout Apple striving to continue to make a dent in the universe as Jobs so famously said. And even when they do make a mistake, as they did most definitely did with Foxconn in China, they fix it. The Apple value equation is based on the brand promises delivered through a deep appreciation for the awesome power of individual creativity.
Are We Selling or Marketing
The key to executing this consistency across all stakeholders gets to what we as marketers do best. We don’t just sell what we happen to have, we market it. We start with what our customers want and then fulfill those needs. And we use the same process in creating and delivering stakeholder value.
Where do you start as you move from a sole focus on delivering customer value through your brand promises to delivering stakeholder value? You need to understand both the emotional and the functional needs of each stakeholder. How can you possibly deliver on your stakeholder needs and engage them in your brand promise if you don’t dig in and start doing your homework? Just as you talk, listen, and watch customers to determine their needs and tension points, you need to apply equal rigor in understanding the needs of all your stakeholders.
We can adapt and deploy customer segmentation tools for B2C (Business to Consumer) and B2B (Business to Business) to find out what matters to each stakeholder. B2C segmentation is very effective in understanding the needs of local communities. B2B segmentation can reveal insights and lead to a better understanding of what you need to do to create value with suppliers, local political leaders, distributors, retailers, and so on. In future articles, I’ll illustrate how this can be done so that as marketers we use our skills and capabilities to lead in stakeholder value creation, delivery, and communication, just like we have been doing with customer value since the early days of commerce.
The Importance of Understanding All Stakeholders
When we dig in and really understand the needs of our stakeholders and value them just as we do our customers and shareholders, we are on the first step to engaging them in our brand promise as enthusiastic and dedicated advocates. To paraphrase the words of the Confucian philosopher Xunzi: Tell them and they will forget, show them and they will remember, involve them and they will understand.
This has been my credo for marketing my entire career. As brand managers and marketers, when you lead stakeholder management to drive exponential value and growth for your brand promise, these ancient words still ring true. Do what marketers do best – understand the target audience (in this case multiple stakeholders); create meaningful, deliverable, and defendable value; and involve everyone in the business system, including all the stakeholders who contribute to your brand’s sustainable success to ensure they are aligned and motivated.