Monday, 21 February 2011

Authentic Brands - Quality, Heritage and Sincerity deliver higher margins

Professor Mike Beverland
School of Management
University of Bath
 "If an employee comes to you with an idea for a new product with no obvious market; it's new to the firm, new to the world and may not be even be possible to make, what would your reaction be?" asked Professor Mike Beverland at the Birmingham Institute of Art & Design at Birmingham City University recently, speaking at the first of the 2011 series of Design Built-In Visiting Lectures.

Many, if not most businesses wouldn't touch these ideas with a barge pole. For marketers, working to the credo, 'the customer is always right', innovations tend to become incremental; radical innovation is risky and rare.

Nonetheless, risky ideas can re-shape how we see and experience the world. As the author of "Building Brand Authenticity : 7 Habits of Iconic Brands" Prof Beverland, who has recently moved to Bath University from Australia, showed how his research indicated that successful brands are 'ignited' through innovation with brand authenticity derived from it.

Brands that continue to innovate become part of history with higher margins and are loved by users. But innovators need support by their very nature - for going against tradition and breaking the rules.
Authenticity, he argued, is central to modern marketing practice.

Brand authenticity leads to - increased consumer perceptions of uniqueness (critical differentiation); increased purchase intentions and word-of-mouth support; attraction and retention of a greater proportion of higher value customers with these brands becoming embedded in wider cultural environment.

This can happen to such a great extent that people's loyalty and identification with these brands becomes embedded into their lifestyles to form part of their identities as individuals.

Companies can build brand authenticity through three key steps - by building product quality, reputation based on heritage or a historical narrative and sincerity - or developing the brand as part of a moral crusade.
In terms of product quality key features of these businesses include a love of production; design-led Innovation and a focus on developing meaningful connections between their products and their customers.

Heritage as a feature had often been overlooked in recent years, but was about building a reputation for innovation and leadership, coupled with becoming part of an identified culture or historical narrative.

Research by Stephen Brown, University of Ulster, showed that brand revivals had become a feature within consumer markets in recent years. These demonstrated familiar themes including the ability to evoke vivid memories of a collective experience, be relevant and in particular capable of being updated and generate collective longing for 'better times'.

Sincerity tends to be linked to making innovation a moral crusade. If companies made a sincere claim and didn't back it up they would quickly become compromised.

Professor Beverland highlighted James Dyson's quest to re-invigorate Britain's industrial past by making innovation a personal moral crusade. New Zealand cleaning products business, BEE - Beauty Engineered for Ever - was making cleaning 'fun' by using natural products and by doing this had become one of fastest growing companies out of New Zealand in past 5 years.

Many of these businesses have a real passion for making their products combined with a genuine service orientation which can be summed up in the phrase, "Build it and they will come". When Australian naturalist, Steve Irwin built his Croc Park, or the Steve Irwin National Park - he felt that if Aussies came face to face with wildlife in their country they would love it.

These were leaders who got their hands dirty. "How many CEOs know the central functions of their businesses today?" asked Professor Beverland. Or as Vivienne Westwood put it, "I have to get to the bottom of things. I have to try to understand something...the world we live in suffers terribly from a sort of trademark-ism where everybody thinks they can find these simple keys to things and then fit everything in. The truth is in the detail."

By getting stuck into the detail and really understanding the business and their markets these businesses were able to leap ahead of customer demand, bypassing some of the short-comings of taking a marketer-led approach.

As Prof Beverland put it, quoting from Stephen Brown, "Most mainstream marketers, maintain that the customer is always right, that the sales figures speak for themselves, that the public gets what the public wants. This may be so, but it's also true to say that the customer is always right wing - conservative, reactionary, stuck-in-the-mud - that sales figures don't always speak the truth and that the public shouldn't always get what the public wants."

Or as James Dyson has put it, "Sure we do some market research, but we don't listen to it slavishly. There are times when you have to bravely step forward. A true innovator takes risks."

For Professor Beverland companies could learn from 'market immersion', as opposed to market research. This could be developed by adopting stances such as employing customers within your business; living with the market; trusting your gut instinct, allowing employees to dabble or take time out to innovate, experimenting with new products and seeding your fan base early to take your customers on a journey.

As Chief Executive of Click Clack, John Heng put it,"to design a product for the US you have to be part of the US which is why I'm out of the office seven months of the year. I'm a US resident. I'm into it every day, I watch CBS News, CNN, ABC, just to become part of what happens."

Closer to home in the Midlands, Morgan Motor Company employs sports car enthusiasts taking on board their views when developing new products such as the Morgan Aeromax, which has been followed by the Morgan Eva.

Playmobil's founder, Hans Beck, was credited with "inspired Instinct" in developing their range. Much of it was based on his observations of children and how they play. Beck spent over 3 years sitting and playing with children. He noticed that they drew people with exaggerated facial features and whilst they had many toys they did not have small models of people to use with their toys.

Companies that take the market immersion route can end up actually spending less of R&D than their peer competitors, for example, Apple spends 5.9% of turnover on R&D compared with a 7.6% spend for the industry average.

"Marketing is, when you think about it, all too often based on a form of 'Hearsay Evidence', which would not be admitted in a Court of law- for good reason," said Prof Beverland. "Too often marketing teams outsource market research and you get something back from people who are not passionate about it. Anthropologists have lived with people for years to understand them, for good reason."

Ultimately brand authenticity was built through careful selection of your teams and by taking care of them; telling their stories to affirm your brands values; encouraging creativity by supporting risk-taking ideas and leading by example, - getting involved in innovation.

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