In reviewing 641 U.S. and European studies of brand-building that cover packaged goods, durable goods, services and industrial products, the Coalition for Brand Equity found the most significant declines in brand loyalty were primarily due to the self-inflicted wounds of misguided, mistaken brand management. Powerful as brands are, they are being damaged by brand management policies based on defective and destructive marketing fables.
Fable No. 1: Marketing's job ends with the sale.
That's just plain wrong. The opportunity to begin an enduring brand relationship begins with the sale. To build that relationship, we must be concerned with what happens after the sale.
Studies make clear that advertising not only builds expectations but reinforces the relationship that begins when people buy the brand. Giep Franzen, a European professor, in a very extensive review of how advertising really works, observed that "the constant interaction between brand use and advertising helps to reinforce attitudes leading to universal loyalty."
When marketers communicate with customers after the sale, they reinforce the customer's decision to buy their brand. That's what American Airline's frequent flyer program does. So does Crest's anti-cavity guarantee. Philip Morris, American Express, Nintendo, Arby's and Waldenbooks are also staying in touch with their customers. They are keeping the brand relationship alive and well.
Retention studies show it can cost six times as much to win a new customer as it does to keep a loyal customer. Recent research also shows that loyal customers are less sensitive to price deals from competitors.
Fable No. 2: Quality relates only to the performance of the product or service.
There is more to a quality brand than product/service quality. Advertising affects the consumer's perception of quality. When advertising weight goes up, quality ratings go up. But advertising does not work in isolation. Every aspect of the brand's relationship with the consumer-from the advertising, publicity, promotion, direct marketing and event marketing through sales, service and after-sale marketing-must also project a clear and consistent quality image.
Fable No. 3: Major brands don't need a lot of advertising.
Major brands get that way with a lot of advertising, and they need a lot of advertising to stay that way. A study of 12 brands in 12 categories by the American Association of Advertising Agencies correlated market share with advertising budgets. Only two of the 12 brands increased spending to offset inflation. They were the only two brands to increase their share. Milking brands results in weaker brands.
Fable No. 4: If you spend enough on marketing, your brand will succeed.
The fact is you must spend your marketing dollars in the right way; the marketing mix matters.
Research shows that excessive promotion can reduce the perception of quality. It also may make consumers loyal to the deal rather than the brand. Still, you need both advertising and promotion to be a profitable market leader. Just as advertising builds a brand's market value, promotion helps build a brand's volume.
Fable No. 5: The only question is, does the marketing program generate sales?
No, the important question is, what kind of sales does the marketing program generate? Are they profitable customers, or do they have the potential to be profitable?
Brand loyalty is the basis for enduring, profitable growth. Today's methods of measuring customer satisfaction say little about marketing's effects on loyalty. Are we strengthening the brand relationship? Are we keeping our customers sold? Are we decreasing price sensitivity? Are we increasing brand loyalty?
As we measure loyalty, our goal is to convert a buyer to a loyalist. A loyalist to an ally. An ally into an advocate. We must measure the ability of advertising to move people up this loyalty ladder.
Brand loyalty-based marketing requires a basic and radical change in the way marketers make money. Brand loyalty is the basis for enduring, profitable growth. To build loyalty, marketers must reject the misleading fables of the past and adopt brand equity-building principles based on fact.M
Mr. Light is chairman of the Coalition For Brand Equity and president of Arcature Corp. marketing consultancy, Stamford, Conn. This article is based on a coalition brochure, "Building Brand Relationships: The Trustmarketer's Road To Enduring, Profitable Growth."