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Excerpt: The Origin of Brands

A father-and-daughter team of marketing experts argue that great brands, like successful species, simply evolve from existing ones. Here, the rules of nature are applied to launching those brands.

By Al & Laura Ries - May 21, 2004

PARVIS E GLANDIBUS QUERCUS. Tall oaks from little acorns grow.

The biggest, most powerful world-class brands start from little ideas. If you try to force-feed your new brand or your new company with massive resources including a massive advertising budget, you are unlikely to be successful.

Time and Patience Are Your Allies

You can kill a plant with too much water and too much fertilizer. You can kill a brand the same way.

The strongest and longest-lasting brands are created by divergence of an existing category. But this divergence is a slow process. Television was invented in 1927, but was not commercialized until after World War II. A company formed to launch a television brand in the 1930s would have gone bankrupt.

Perhaps no revolutionary product grew as fast as the personal computer. The first personal computer was introduced in 1975, the same year Bill Gates dropped out of Harvard to go to Albuquerque, New Mexico, to write a basic software program for the Altair computer.

Microsoft, the company Gates founded, is today the second most valuable company in the world, worth $304 billion on the stock market.

Things weren't always so rosy. On February 3, 1976, Bill Gates wrote an open letter to Altair users complaining about software piracy. Published in the Homebrew Computer Club newsletter, Gates's letter stated, "The amount of royalties we have received from sales to hobbyists makes the time spent on Altair BASIC worth less than $2 an hour."

Most people who found themselves working for less than $2 an hour would have looked for some other line of work. Not Bill Gates. His faith in the future of software paid off in a big way.

Branching takes time. It even takes a while for a new category to be recognized as a new category. One of Bill Gates's early problems was the perception that software wasn't worth anything. So owners just copied the software needed to operate their computers from friends. (Less than 10 percent of Altair owners bought Microsoft's software.)

How do you launch a brand anyway? There are two theories.

Theory A vs. Theory B

Theory A (for "airplane") is the airplane launch. Your brand rolls slowly down the runway for thousands of feet, and then after a massive effort your brand slowly lifts off the tarmac. After the brand is airborne for a while, it starts to accelerate into its cruising altitude.

Theory B (for "big bang") is the rocket-ship launch. Your brand takes off like a rocket and then coasts into orbit.

Advertising favors the rocket-ship launch because ad programs are traditionally launched with a big bang. That's the only way to create enough attention to get above the noise level.

PR has no choice. It has to use an airplane launch. PR programs are invariably rolled out over an extended period. That's the only way that PR can deal with the needs of the media, which are focused on scoops and exclusives.

What about the Real World?

Does a new brand take off like a rocket ship? Or does it take off like an airplane?

Take a typical new brand in the beverage industry. This brand took four years to break $10 million in annual sales and another five years to reach $100 million.

The brand is Red Bull, a brand built primarily by PR and a brand that took off like an airplane, not like a rocket ship.

Take a software brand that took even longer to get off the runway than Red Bull. This brand took ten years to reach $100 million in annual sales.

The brand, or course, is Microsoft, a brand that took off like an airplane, not like a rocket ship.

Take another example, a retail brand. This brand took fourteen years to break $100 million in annual sales. Today the brand does $198 billion in annual sales and has become the world's largest retailer.

The brand, of course, is Wal-Mart, a brand that took off like an airplane, not like a rocket ship.

The turning point for new products comes when slow initial sales suddenly accelerate toward the mass market. According to a recent research report, this averages six years after launch in America.

The largest, most powerful brands, the brands that have stood the test of time, are the brands that have taken off slowly, like an airplane. The brands that take off rapidly like a rocket ship usually turn out to be fads. Here today, gone tomorrow. The hula hoop, Bartles & Jaymes wine cooler, Crystal Pepsi, and many others.

Initially, consumers loved Crystal Pepsi. They voted it "Best New Grocery Product of 1992" according to AcuPOLL, an independent nationwide survey of sixteen thousand new grocery products.

Crystal Pepsi also won critical acclaim as one of the best new products of 1992 by Time magazine. And The Washington Post ranked it among what's "in" for 1993.

Three months after its national introduction, Crystal Pepsi had a market share of 2.4 percent.

A year later the product was gone.

What about Nature?

Nature offers many examples of the superiority of slow growth.

Small dogs outlive large dogs. Slow-growing hardwood trees outlive fast-growing softwood trees.

The oldest living tree is not some giant sequoia, it's a bristlecone pine that stands just 55 feet tall. Its estimated age is 4,767 years, which means that this particular bristlecone has been growing at the rate of fourteen-hundredths of an inch a year. (Fingernails grow a lot faster than that, around one and a half inches a year.)

Concrete is stronger if it cures slowly rather than rapidly. In hot weather contractors will spray water on freshly laid sidewalks to cool the concrete and slow down the curing time.

Rapid growth weakens rather than strengthens. That's true for a brand as well as for a plant or an animal.

The tallest person who ever lived was Robert Wadlow, who was eight feet 11 inches. Unfortunately he didn't live very long. Wadlow died at the age of 22.

Experts now believe that autism in children is caused by rapid brain growth. A recent study of 48 autistic preschoolers found that the kids' heads had been smaller than average at birth but had grown explosively during infancy. On average, they went from the 25th percentile to the 84th percentile in about a year's time.

And what is cancer? Rapid and abnormal cell growth.

This is not to say that you don't want your new brand to grow as rapidly as possible. As in nature, the odds favor the brand that can stick its head above its neighbors' and get more than its share of nutrients. You want your new brand to dominate its category, and to do so you need to push its growth.

Be patient, though. Divergence takes time. People are suspicious of the new and different. A typical reaction: "I'll wait and see if this new concept turns out to be worthwhile." You need to sell the category as well as the brand.

Satellite radio has taken off slowly. After more than two years of heavy promotion, XM Satellite Radio, the market leader, has only 1.4 million subscribers. That sounds like a lot, but it's less than one percent of the 200 million cars on the road in America.

Furthermore, to sign up those 1.4 million subscribers, XM Satellite spent $100 million on advertising the first year and $60 million the second.

They should have saved their money and waited for the turning point. Let the brand build slowly using primarily PR techniques. Then when the turning point arrives, jump in with a massive advertising program.

Two Problems: Credibility and Convention

The launch of a new brand that defines a new category has two problems.

Credibility is the first. A new concept is just not believable, especially when presented in an advertisement. If Viagra had been launched with an advertising campaign ("The pill that can cure impotence"), it would probably have gone nowhere.

Advertising is like spam. (In fact, spam is advertising, although not all advertising is spam.) Advertising has little credibility. To be effective, advertising needs the credibility that only third parties can provide. Third parties being friends, neighbors, relatives, and especially the media.

That's why the most effective marketing program for launching a new brand starts with a PR campaign, which drives word of mouth, which creates credibility for the brand. Only after a brand has achieved a measure of credibility can a company afford to spend its resources on an advertising program.

After credibility, the second problem is "convention." People want to buy what is "conventional." In other words, people want to buy what other people are buying. In general, they don't want to be seen as unconventional.

Of course, if this conclusion were totally true, it would be almost impossible to get a new concept off the ground, whether it's light beer or living together before marriage. Fortunately, a small cadre of consumers consider themselves unconventional and are not only willing but sometimes eager to try something new.

So the trick to launching a new brand is to make a connection with unconventional people, or the people whom marketers have called innovators or early adopters. That's why the process takes time.

It takes a while for a new concept to work its way up the convention ladder. From totally unconventional at the bottom to totally conventional at the top.

Other Complicating Factors

Everybody is conventional and everybody is unconventional. That is, people might dress conventionally, but are willing to try any new restaurant that opens in their neighborhood. On the other hand, you have the computer nerd who might buy any new gadget the high-tech industry offers, but lives on pizza, hamburgers, and Mountain Dew Code Red.

The younger generation also plays a role in this process. It's natural for each generation to create its own identity by rebelling against the previous generation. This rebellion often takes the form of changes in music, clothing, hairstyles, food, beverages, etc.

Many brands have been built by creating the perception that they represent the younger generation. Examples include BMW, Mini Cooper, Pepsi-Cola, Mountain Dew, Red Bull, Tommy Hilfiger, The Gap, and Abercrombie & Fitch.

Nor can the role of mutation be overlooked. Parents who expect their sons or daughters to be carbon copies of themselves are always surprised. It's mutation and natural selection that assures that the next generation is not only rebellious, but also different.

Launching a new brand involves solving several problems. How do you move rapidly in a process that's inherently slow? How do you create credibility for a new brand (and a new category) that has no credibility?

Both problems are interconnected. The best way to deal with both issues is a public relations strategy called the leak. You release information about the new brand before it's ready to be launched. The more radical the concept, the longer the gestation period.

Brand building, especially of the new-category variety, is not easy. You may have the best product in the world, you may have the best marketing strategy in the world, you may have the best names (for the new category and the new brand), and you may have all the resources you need.

But you'll never be successful unless you get into the prospect's mind first.

So How Do You Get into a Mind?

For most marketing people, the conventional answer is advertising. We hire an advertising agency, we set an advertising budget, we prepare advertising plans (preferably with a big broadcast television allotment), we shoot the commercials, and we launch the program.

Then we sit back and wait for the results. In most cases, the results are a big disappointment. In truth, advertising is not a good way to launch a brand. Advertising has a role and function, but it's in brand maintenance, not in brand building.

This is the era of public relations. Today you build brands with PR, not advertising. Today advertising must take a secondary role.

In fact, brands like Starbucks, Wal-Mart, Palm, Viagra, and Red Bull were built with virtually no advertising at all.

Advertising lacks credibility, the crucial ingredient in brand building. Only PR can supply the credibility that allows your brand to get into consumers' minds.

Furthermore, the big bang approach advocated by advertising people doesn't work either. You need a slow buildup by PR. Advertising should be used only to maintain brands once they have been established... by publicity.

When your brand can make news, it has a chance to generate publicity. And the best way to make news is simple. Announce a new category and not just a new product. The news media wants to talk about what's new, what's first, and what's hot. They definitely don't want to talk about what's better. That makes them look like a shill for an individual brand.

Furthermore, what others say about your brand is much more powerful than what you say about it yourself. That's why publicity in general is more powerful than advertising.

And why over the past two decades, public relations has eclipsed advertising as the most powerful force in branding.

Al & Laura Ries are two of the world's best-known marketing consultants and then authors of the recent bestseller The Fall of Advertising & The Rise of PR This is excerpted from The Origin of Brands, by Al & Laura Ries. Copyright 2004 by Al Ries and Laura Ries and published by HarperBusiness, an imprint of HarperCollins Publishers Inc. Reprinted with the permission of the publisher. You can buy The Origin of Brands at Amazon.com.



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