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6 Mistakes to avoid when building a brand

The Branding Lab
branding

1. Being customer orientated and not competitor orientated

You can assume that most of your competitors are going to be customer oriented. So what happens in the marketplace? Everyone winds up with a similar product.

Back in 2009, we began working for Great Wall Motor in China. The research we received from the client told us that Chinese buyers preferred sedans rather than SUVs because sedans were more prestigious and SUVs were practical vehicles with no social status. So we recommend that Great Wall focus on SUVs because the other 28 Chinese auto companies were likely to focus on sedans. As a result, Great Wall became the largest, most-profitable Chinese automobile company.

Entrepreneurs should do the same. Start by analysing your competitors and try to find a way to be different. You can’t win by being better; you can only win by being different.

2. Not defining your focus

Every successful brand has a focus. If your brand is the market leader like Pizza Hut, your focus is “leadership.” Domino’s narrowed its focus to “home delivery” and became the second-largest pizza chain. Papa John’s narrowed its focus to “better ingredients, better pizza.” Little Caesars narrowed its focus to “two pizzas for the price of one.” There are hundreds of pizza chains, but these four chains dominate the category.

For entrepreneurs, you need to make sure your company has a strong angle and all your actions and goals are in line with it. Ask yourself, What category am I competing in? And how do I verbalize my difference in two or three words.

3. Thinking names don’t matter

Hansen Natural Company had a great idea. Launch a 16-oz. energy drink to compete with 8.3-oz. Red Bull and the other energy-drink brands. The brand name: “Hansen’s Natural Energy Pro.” The brand went nowhere. Then Hansen launched Monster energy drink, also in a 16-oz. can. Today, Monster is a strong No.2 brand to Red Bull.

Names come last. Entrepreneurs should first develop a marketing strategy. And then name their products or services to reflect that strategy.

4. Not using a strong visual

Many powerful brands have been built by using a visual that communicates something about the brand. Coca-Cola’s contour bottle. Marlboro’s cowboy. Corona’s lime. Stella Artois’ chalice. Blue Moon’s orange slice. Geico’s gecko. Aflac’s duck.

Before launching a product or service, entrepreneurs should try to find a visual that reinforces the marketing strategy. Quite often, that requires either a change in strategy or a different brand name, or both.

5. Assuming your new brand will take off rapidly

That leads to many bad decisions, such as spending heavily on advertising to launch the brand.
Today, the best way to launch a new brand is with PR. You should only use advertising after your brand has become established. PR first, advertising second is our mantra.

Keep in mind, Entrepreneurs should be prepared to spend a substantial amount of time doing PR. Hiring a PR firm is an option only for those companies that have already built a substantial business, otherwise it is a waste of time and money.

6. Expanding your brand

Once your brand starts to take off, you need to resist the urge to expand. Look at McDonald’s. In spite of adding dozens and dozens of items to its menus, the chain today is in trouble. On the other hand, look at In-N-Out Burger, a West Coast chain that still has just four things to eat on its menus: hamburger, cheeseburger, double-double (a double hamburger) and French fries. Per-unit sales last year. McDonald’s: $2,476,000. In-N-Out Burger: $2,546,000. (If In-N-Out Burger were a national chain, its sales would probably be much greater.)

Look at Yahoo, a company that once dominated the “search” market on the Internet and was worth $140 billion on the stock market. But Yahoo rapidly diversified into a portal and also made many acquisitions and turned them into Yahoo Mail, Yahoo Games, Yahoo Groups, Yahoo Pager, etc. Today, Yahoo is worth just $30 billion on the stock market and perhaps $25 billion of that is due to its holdings in Alibaba.

Meanwhile Google remained a pure search engine and is now worth $498 billion on the stock market. But even Google is falling into the trap of expanding its brand. That’s the mantra of corporate American, keep expanding the brand until it falls off the cliff.

Except for geographic expansion, entrepreneurs should almost never expand their brands. Quite often, however, they should do the opposite: narrow the focus.

The Branding Lab
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