Pierre-X,
I remember there was a discussion on brand recognition by everyday customers a few months ago. Below is an interesting article I found on another SI thread that discusses the importance of brand recognition (ie INTEL Inside).
Hope you have to read the long article.
Kurt
pathfinder.com
Magazine Issue: June 22, 1998
Secrets of the New Brand Builders
AOL, Yahoo, Palm Computing--a few innovative infotech
stars have built powerhouse consumer brands in very little
time. You may be able to follow their lead.
Patricia Nakache
n the early '90s Intel faced a dilemma. Computer users showed little
willingness to upgrade to its latest chip, and Intel's older chips faced fierce
competition. The company's response: the multiyear, multibillion-dollar Intel
Inside brand marketing campaign. Some still question whether customers care
what brand of chip sits inside their computer, but they shouldn't: In 1996, 80% of
home computer buyers were aware of Intel as a microprocessor supplier, up from
only 20% in 1992, and a majority said they preferred Intel chips. Over the past ten
years Intel has delivered blowout financial performance, generating 36% average
annual returns to shareholders.
Despite Intel's stunningly lucrative strategy, most Silicon Valley whiz kids have
clung to the belief that breakthrough technology sells itself. No way. In fact, not only
does brand matter in infotech, but it probably matters more than in traditional
consumer-products businesses. With 50 to 60 software companies sprouting each
month, "the starting line is so crowded that startups need to claim victory on day
one," says Ann Winblad, founding partner of Hummer Winblad Venture Partners.
Branding helps companies survive long enough to secure a market foothold. Once
that happens, argues W. Brian Arthur, an economist at the Santa Fe Institute,
knowledge-based companies that gain market share are likely to continue doing so.
Why? Consider software: The larger the network of people and companies using a
particular kind, the more attractive it becomes to prospective users seeking broad
compatibility. In addition, users who have invested the time to learn to use a piece of
software are unlikely to switch to a competitor's product.
Maturing technology companies with product lines that are fast becoming
commodities, like Sun Microsystems, are realizing that branding helps them too.
Branding has already transformed a host of consumer commodities--chicken, fruit,
beef. Now that many types of computer hardware are becoming commodities,
manufacturers of products like Intel's microprocessors realize that a strong brand
helps retain a loyal following, even as they introduce new generations of products.
Just as important, a strong brand boosts a company's credibility when it announces
plans to launch a new technology or enter a new market, something Microsoft's
online service, MSN, benefited from, at least initially. And as technology becomes
more complex, trusted brands enable customers who aren't IT officers to short-circuit
an often baffling buying decision. Remember "No one ever got fired for buying
IBM"? That's the mindset many infotech outfits are striving to create, and a few--like
Microsoft and Hewlett-Packard--are achieving.
A handful of technology companies, such as Yahoo, AOL, and Palm Computing, are
brand-building trailblazers, becoming household names seemingly overnight. More
than half of U.S. households are familiar with AOL, and 42% know of Yahoo,
reports NFO Research. PalmPilot, the electronic personal organizer, took only 18
months to sell a million units, surpassing even the Sony Walkman.
How did these corporate kids achieve levels of brand recognition that would make
Procter & Gamble envious? Well, not the way P&G does it. These companies have
built strong, flexible brands quickly and cheaply by looking beyond advertising, the
mainstay of consumer-products companies, and pioneering less conventional
marketing approaches. It's not that technology companies don't advertise. Far from
it: Their spending on advertising has grown from $600 million to more than $2 billion
in the past five years, says Competitive Media Reporting. Even formerly invisible
tech players such as Seagate and Network Associates are trying to familiarize
consumers with their brand. But advertising is just one element in a bag of creative
brand-building tricks.
Brand-building trick No. 1: Give away the farm. Distributing free
samples--of everything from laundry detergent to magazines--is nothing new, but
technology companies have taken the tactic to previously unimagined levels, handing
out valuable services and intellectual property. The objective is to build a big affinity
group fast. Sound like a money-losing proposition? Quips Sun's vice president of
worldwide marketing, Anil Gadre: "You know what URL stands for, don't you?
Ubiquity first, Revenues Later."
America Online is the Godzilla of giveaways. For several years AOL has been
blanketing the country with diskettes and now CD-ROMs offering consumers a
one-month free trial. Why did AOL pursue this campaign with such zeal? Because it's
tough to describe the benefits of an on-line service to novices; AOL believes the best
approach is to let them try it.
AOL diskettes have found their way into consumers' hands through often surprising
channels. They've been stashed inside boxes of Rice Chex cereal, United Airlines
in-flight meals, and packages of Omaha Steaks. Most recently AOL has put its
free-trial software on hit-music CDs from artists such as Celine Dion and Sarah
McLachlan. Music fans can pop the CDs into their stereo and listen to their favorite
tunes or into their computer's CD-ROM drive and give AOL a whirl.
3Com's Palm Computing, manufacturers of the PalmPilot, applied the giveaway
principle with a twist: At Demo, a smallish conference attended by the who's who of
the technology world, it launched the devices after a ten-minute demonstration by
offering them at half price to the roughly 600 people at the show. Half went for it,
and so the buzz began. In the past 2 1/2 years, the company has handed out the
devices at 20 other such conferences. Most of the influential executives who attended
opted to buy them, says Ed Colligan, vice president of marketing.
But what good is a giveaway if nobody knows about it? Hence:
Brand-building trick No. 2: Conduct public relations like a war. The
best technology brand builders recognize that customers increasingly value
information from objective third-party sources. Among their public relations
innovations: guerrilla marketing stunts, lobbying around industry issues, and
celebrity marketing of company founders--such as Yahoo's youthful and now famous
duo, Jerry Yang and David Filo.
Sun has built the visibility of Java--its flagship software platform--within the
corporate community almost entirely through public relations. In addition to doing all
the usual PR stuff, such as sending the big guns out on speaking tours and making
high-profile announcements every time a licensing agreement is signed, the Java
marketing team launched an intense guerrilla marketing effort aimed largely at--who
else?--Microsoft, its nemesis. "Think of it as a military operation," says John
Loiacono, Sun's vice president of brand marketing.
Consider the marketing of Java Beans, a Sun technology that lets developers create
reusable pieces of code--miniapplications of sorts, like Lego building blocks. After
Microsoft developed a competing technology, Sun learned when and where Microsoft
planned to introduce it. The day before Microsoft's announcement, Sun mailed bags
of coffee beans to reporters with a note saying "Why is Microsoft so jittery?" and
inviting them to attend a Sun training seminar on Java Beans at a hotel adjacent to
where Microsoft was holding a developers conference and making its announcement.
Sun claims the tactic was a home run: It attracted over 250 people and planted seeds
of doubt in reporters' minds about the Microsoft technology while pumping up
Sun's, naturally.
Amazon.com is like Sun in that it's challenging the dominance of its industry's
behemoths. It is the leading online bookseller and the most visited shopping site on
the Internet. But most of Amazon.com's marketing success can be attributed to:
Brand-building trick No. 3: Work the Web. The Internet has spawned a host
of new ways to reach consumers, the foremost being online advertising, predicted by
Forrester Research to exceed $4 billion by 2000. But Amazon.com uses the Web to
far greater advantage: It has pioneered the cyberspace equivalent of franchising and is
becoming the master of one-to-one marketing. The company isn't earning any profits
yet, but that's largely because it's spending so much on brand-building--a shrewd
thing to do, if AOL is any guide.
To build brand identity, the bookseller strives to make every customer interaction
highly personal, the antithesis of the anonymous strip-mall experience. When a
customer logs on to the site, he is welcomed by name and is offered a list of
recommended books based on previous purchases. Through a service called
BookMatcher, Amazon.com asks customers to rate ten books. The ratings enable it to
further determine readers' preferences and to suggest additional titles they might like.
The site also alerts customers to new arrivals by their favorite authors. All of this
adds up to relationship marketing that land-based retailers can only dream about. The
payoff for Amazon.com: Customer accounts jumped 50% in the first quarter, and
repeat customers accounted for 60% of all orders.
Amazon.com happened on the concept of digital franchising a couple of years ago,
when an Amazon.com customer asked if she could link book recommendations on
her Website to Amazon.com. Sure, said the company, which began to offer the same
arrangement to other sites. Now Amazon.com will set up a link to any
Website--including your personal one--free, and will pay so-called Associates 5% to
15% of any revenue they generate. The Associates franchising program now
encompasses more than 40,000 sites, making Amazon.com virtually ubiquitous on
the Internet. Other cyber-retailers--such as CDNow and Cybermeals--are rapidly
replicating the Associates model.
Brand-building trick No. 4: Make it funny. In their marketing, technology
companies often try to capture the irreverence and freewheeling spirit of the Web and
of their own workers. For the 1996 Internet World trade show, for example, the Java
marketing staff published an entire comic book for software developers that featured
Duke, the Java mascot that looks part penguin, part tooth, battling to "keep the
Internet safe for everyone." Java marketing director George Paolini observes, "If
anything, Sun as a corporate culture errs on the side of humor." Sun believes that
gives it a public relations leg up over Microsoft. Referring to a recent incident in
Brussels when a prankster pegged Bill Gates in the face with a pie before Gates was
to deliver a speech, Paolini says, "That was a lost opportunity. He could have had so
much fun with that."
As fast as these innovative companies have built their brand recognition, they haven't
repealed an ancient law of marketing: Brands with staying power aren't built
overnight. Becoming a Coke or a Disney requires decades of sustained effort and
investment. That raises an important question: Will highflying infotech companies,
which can soar or crash in months, have the patience to stick with their
brand-building campaigns for the long haul? The smart ones will. In a business in
which every product and service becomes obsolete in no time, a strong brand is one
of the few things they'll have to hold on to. |
