Brand as a Function of Strategy
There have been numerous articles written on the concept of "brand". I’ve read seemingly all of them in my time, and I’ve thought about the idea of brand sometimes to distraction. Obviously a brand is an important thing, crucially important. So important in fact no one seems to define it the same way.
"A brand is a promise." was a definition I saw. I've seen several others and, as stated, many articles on the subject going on about the complexities of a brand and the difficulties of finding the right people to represent it, etc. While many points of view have validity, none I’ve seen focus the issue of brand where I think it ought to be focused; that is on brand as a function of a company’s strategy and business model.
I’ll explain. Take for example Wal-mart. Some would argue Wal-mart’s brand is Americana, the most basic--some would say lowest--common denominator that is average or small town America. You have a 70s happy face as an emblem, a star in the logo, a simple name and an image in commercials of low priced items served up to you by your helpful and energetic neighbors (and their elderly parents). It's a comfortable and accommodating picture, and speaks to basic, sun-lit values of a mythological America.
So then, what is Wal-mart's strategy? Easy: Sell sell sell! Of the three basic choices any company has in competing, price, product/process innovation and market focus, Wal-mart has chosen price with an unprecedented vigor. How does Wal-mart keep its prices so low? The secret is an inventory management system called “cross-docking” by which packages go from supplier to a Wal-mart truck in around 45 minutes. Compare this to several days for its competition. Starting with this single core metric, everything else in Wal-mart’s business plan is defined. Wal-mart reports sales daily and trains its local managers to gauge demand at their stores so the right products will come at the right time and not sit on the shelves. Wal-mart’s business model thus functions like a high-test muscle car against its family sedan competition.
Wal-mart is a high performance engine of product supply and resupply. It moves product faster and so can sell for less, with its vast superiority in volume making up for its lower prices. It also pays its suppliers faster lessening their own need to borrow money to finance their operations. Wal-mart thus can demand lower prices from these suppliers. Eventually of course, as its business becomes more important to them, Wal-mart can squeeze suppliers even more.
So how does this show brand to be a function of the strategy? Like this: Wal-mart’s strategy is to sell as much as it can to as many people as possible. It's all about price. Wal-mart then marries the strategy of price to basic American values in its branding. Wal-mart has this implied message: Americans want lower prices because Americans are practical and want to pay less for everything. IN OTHER WORDS, AMERICAN’S WANT LOW PRICES BECAUSE THEY ARE AMERICANS. The accessories of Wal-mart’s brand: friendliness, safety and friendly old people all reinforce the value of typical Americans and lower prices.
The model generally succeeds. It hasn't in some cases, most notably in Europe where Wal-mart's logistic partners UPS and FedEx were replaced by DHL with whom Wal-mart did not "grow up" and so with whom it could not so easily coexist with its extremely time-sensitive delivery model. One might also wonder though if the identity of the typical European was anathema to Wal-mart’s brand.
Perhaps China will provide an answer. Though starting slowly Wal-mart is beginning to establish a beachhead in this country, a country that, like the U.S., is filled with very practical people who like lower prices because wanting lower prices defines them. Perhaps indeed Wal-mart’s newest customers will ultimately be as American as good Chinese food.