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There is nothing like a brand

PROFESSOR Robert Cialdini, in one of the two best books on the power of influence, (modesty forbids that I mention the second), made it clear that the well-understood psychological phenomenon of the "click whirr" response is essential to effective marketing.

In psychology the "click whirr response" is hard-wired into organisms as a result of their evolutionary antecedent's successful survival strategies.

In marketing terms the "click whirr" response leads us to see a brand name, associate quality and buy not so much the product or service as the immediately recognised brand that lies behind it.

It's a tough world

In last week's article I reiterated the need to build and sustain customer confidence. I suggested that as customers are increasingly aware of media reports, Internet information, blogs, and the actions of regulators your business is on public show twenty-four hours a day.

With so much customer-focused information the brand is, along with respected third party affirmation of the quality of product and service, essential. You need to be constantly reviewing the brand to identify what will deliver the "click whirr" response in an increasingly volatile and competitive global trading environment.

Nowhere is local any more

An aspect of globalisation is that if you have a successful business serving worthwhile customers at a profit, some day, somewhere, someone will be planning to take that business from you. Among other things "globalisation" means that competition may come from where you least expect it — and there is no such thing as a level playing field. A worker in manufacturing in China averages 60 cents an hour. In relatively nearby Singapore or Australia the lowest paid worker receives $6.70. Only by optimising the brand is it possible to compete. Perceived added value is a necessity.

Without a recognisable brand you are always vulnerable. A plethora of information places a burden of decision-making on the customer. The creation and sustaining of an effective brand relieves the customer of that burden. "Click" — I see the brand name. "Whirr" I buy with confidence. Without strong brand values price and availability could become the only factors in the buying decision and neither price nor availability may be in your favour.

The value of quality

Nowhere is the importance of the brand better exemplified that with "luxury goods". Readers may remember my past article on the "Tale of Two Shirts". I had bought an expensive, famous brand shirt and having done so, saw what appeared to be a remarkably similar garment in a supermarket at one tenth of the price.

Having bought the second shirt I compared the two and found no discernable difference other than the labels. Such is the power of the brand, however, that I find that I still choose the expensive article when I am dressing for an important occasion. Foolish, perhaps, but the "click-whirr" response remains strong.

Destroying the brand

The quality of Chinese food exports to the USA has recently been brought into question as a result of small minority of manufacturers and exporters delivering foods tainted with bacteria. The new wealthy in China will only buy food products from a small number of manufacturers that have successfully built strong brands.

In a key export market the national brand of Chinese goods has been damaged by a few rogue traders on both sides of the Pacific and the Chinese authorities immediately recognised the need to bolster the brand.

The Chinese government took swift and draconian action to re-build the national brand. The former head of China's Food and Drug Administration was sentenced to death for corruption having presumably accepted bribes to let the contaminated food leave the country. This week the unfortunate man's execution was announced.

Food exports to the USA from China are only around 1 per cent of the total, but concerns over the effect on the perception of "brand China" spreading to the other 99 per cent of exports was seen to justify dramatic action. More than 60 per cent of all US purchases of electronic goods are made from China. That alone would be enough to ensure that the "national brand" is of massive national economic importance.

At the same time the US authorities have been trying to redress the balance of trade between the USA and China. This is an activity that has not been helped by the export of tainted Californian orange products to the East. Heads will not roll in the same dramatic fashion in the USA, but the brand values of American products have taken a hard and unnecessary knock in China.

Building the brand

Some things are obvious. The following less evident steps are essential to building the brand;

— Put the customer at the centre of everything that you do. Recent research suggests that 70 per cent of business processes do nothing for the customer. Can you afford that much of your costly business activity delivers nothing that customers value?

— Use third parties, allies, partners and the media to promote your brand. Too much brand development is self-promotion. Potential customers read "promotional puffery" with the thought, "They would say that, wouldn't they."

— Protect your intellectual property. If you have a good idea you attract sharks who wish to steal that idea and enjoy the benefits that should be yours.

Not just competition

The success in global markets of China and India combined with political, economic and meteorological factors is leading to massive increases in the prices of raw materials. Without recognised brand values the cost of resources, fired by the battle to win them could price many goods out of the market.

Energy is essential for all goods and services. Oil prices continue to be high. Prices of alternative energy sources such as uranium are up 1200 per cent on what they were a few years ago. This is at a time when forecasts of uranium production this year are at approximately one half of what is needed to deliver the current nuclear power needs of China, the USA, UK and France alone. Meanwhile China is building 40 new reactors to add to the demand.

Prices of commodities from wheat to copper have increased and are unlikely to decline. An index of 23 basic raw materials is up 30 per cent this year.

The take away

The ease of technology transfer, differences in labour costs and access to essential raw materials make competitive advantage an increasingly complex and difficult goal. The one thing that we can rely on is the brand - and the "click whirr response" that we have all inherited.