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June 4, 2007

Brand Names vs Sales: The Eternal Dilemma

Macy's logoAfter I wrote my Saturday post on Federated’s name change to Macy’s, I followed up on an article I had read about CMO Anne MacDonald leaving the company just before the name change became official.

An interesting Ad Age article suggests her departure had to do with the eternal tug of war between brand building and sales today.

Sales driven merchants are giving us less and less time to show results, it seems. And a good many CEOs just do not have the patience to build a meaningful brand name. On top off that, some analysts believe that Internet search engines are doing serious damage to branding as well.

But make no mistake: a good brand name can drive sales and help you dominate a category. Without a decent brand name, you’re just a reseller. Laura Ries says that the goal is to move from being a "brand name" to a "category" (you don’t buy an MP3 player, you buy an iPod, you don’t shop at the local big box, you go to Target, etc).

Federated logoThe idea is to move away from focusing solely on getting the next sale and building brand name recognition, thus building an asset for your company that, according to Jacob Jans, "you can use to make money again and again."

A great example is JC Penney, who is focusing on branding (a la Target) to build sales which were up 13% in the first quarter after taking the time and money to build their brands, sub brands and store brands.

Tim Kenney has a great post up entitled "Ten Reasons Why Branding has a Strategic Effect on Your Bottom Line," which should satisfy marketers and bean counters alike.

And as Drew McLellan says, "Every business has a simple choice. You can create/identify a brand to differentiate yourself or you can just be the cheapest option." At this naming company, we choose the former.

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Posted by William Lozito at June 4, 2007 5:10 PM
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Thanks, William, for the reference to our article on the strategic effect of branding on the bottom line. We learned this over years of experience. Funny. All the the ten items are unintended, but positive consequences of the branding process.

Interesting thoughts about brands. I wonder how much of what we attribute to 'branding' has anything to do with names, images, and the other creative conceits of marketers. JCPenney's success has nothing to do with its brand, for instance, and everything to do with product development, merchandising, and pricing. It's ads and other branding artefacts are inert. Ditto for Field's: while we certainly can ponder the name and recollect memories, isn't what we think far more dependent on our EXPERIENCES and the reality of the business than anything it has 'branded?'

Further, The Macy's management has confused us by talking about 'brand' when they're busy monkeying around with the 'business.' This is why the name change has come with failures in store experience, employee relations, etc. They're not dumb, though, so I can only guess that they have a strategy other than that of making Field's a success: if they 'follow the book' on branding nonsense, perhaps they can make the case to a potential buyer of the business that they've done what they were 'supposed to do.' The July 19 buyout bid from KKR substantiates this theory.

I've written a bit more about the sad state of affairs on my blog, Dim Bulb, if you'd like to check it out:

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