June 4, 2007
Brand Names vs Sales: The Eternal Dilemma
After 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).
The 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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