How To Make Functional Brand Equity Ethical
1. Real vs. Perceived Functional Benefit
In a recent presentation before the Federal Communicators Network, Carin Van Vuuren, executive director in the New York office of the brand consultancy Landor talked about the importance for brands of delivering an emotional benefit to the customer. Curiously to me, she did not talk about the functional benefit. I found this odd because other formulations appear to include a functional aspect:
- The WPP Group’s “BrandZ” method begins with the proposition that customers have both a rational and an emotional attachment to the brand and that the value of the brand derives from both of those factors.
- Young & Rubicam’s Brand Asset Valuator (BAV), talks about brands deriving equity from four sources. (Forgive me, but I am going to use an acronym here that means something nasty in Yiddish.) The attributes are “DREK,” for differentiation, relevance, esteem, and knowledge. I read “Esteem” as the functional one – a measure of the customer’s perception that the brand has quality.
2. It’s All Emotional
When I thought about it again, I realized that Landor’s worldview is consistent with the above. For both BrandZ and BAV treat the functional benefit as essentially a matter of perception, not reality.
- From the BrandZ perspective, for instance, it is not the functional benefit itself that creates brand equity, but rather the customer’s rational “attachment” that creates it.
- Again, in BAV, it is not the functional benefit that we are concerned with, but rather the customer’s esteem for the brand—the perception or belief that the brand is logically worthwhile.
3. If A Real Benefit Is Unnecessary, Why Does The Perception Build Equity?
I am willing to bet that few brand-driven buyers really do their homework in terms of finding out the truth about which product is best. Rather, it is enough for the customer to have the sense or belief that the quality of their preferred brand is actually better than its competitors.
Why isn’t the reality important when it comes to building brand equity?
The answer is fairly simple. Branding is based on image – perception – not a commodity advantage. Anybody can copy that. Plus, just because you have a functional advantage doesn’t mean that the customer knows it – a mistake I think a lot of otherwise good potential brands make.
Nobody is going to tell me that there is a serious difference between funny looking exercise sneakers that cost more than $100 at Skechers and less than half that price at Payless. Yet I will not set foot (so to speak) in a Payless store. Why?
Well – let’s answer this question with more questions.
- Do Sunkist oranges taste better than non-Sunkist ones? (doubt it)
- How about Chiquita bananas? (again, probably not)
- Or, dare I ask, how about any brand of water? (you can tell yourself otherwise, but I also don’t think so)
So why do I pay more for any of these?
Forget the non-functional benefit for now. Forget whether Chiquitas make me feel happy or Aquafina brings on the aura of clean.
On a strictly functional level, I fear the consequences of choosing a generic over the brand.
4. Fear: The Secret Ingredient to Functional Branding
Ever been to the dollar store? Where they sell everything from soaps, to foil pans, to coloring books? You know how you’ll only buy things that you aren’t afraid will break?
That’s why brands matter.
I saw an article this week about Wal-Mart, and how customers revolted when they decided to pull Glad bags from the shelves. (“When Brands Disappear, Shoppers Do Too,” March 17, www.thestreet.com). I can understand the logic on Wal-Mart’s part: They probably think that if people are going to their stores, they are not brand-driven but rather are looking for the lowest price.
But the response of customers proves that at every price point, people will pay more for things they perceive to be of higher quality. After all, think about trash. If you put it in a lousy bag, and it breaks, you’re going to have smelly garbage all over the place. So it pays to have a strong bag you won’t have to worry about.
Are Hefty trash bags actually better? Again, just like with the other products mentioned above, I don’t know, though I suspect that they’re not. (It’s like Papa John’s pizza, where they say it’s got “Better Ingredients.” Better than what? They won a lawsuit in the Supreme Court where the ruling was, the ingredients don’t have to be better at all, because the customer is going to know, or should know, that it’s just a tagline.)
Think about water. Why is it so hard to brand one water over another? It’s because the brand equity is all functional. In my mind, I’ll take any bottled water over the tap because I have bad images of drinking something from the sewer. The choice of Dasani or Aquafina doesn’t really matter because I’m trying to escape a fear of filth.
5. “Emotional Emotion” vs. “Function-Driven Emotion”
This, then, is the distinction between functional and emotional brand equity. Functional brand equity is the emotion associated with the perceived quality of the brand. Emotional is the emotion (yes, that’s redundant) that has nothing to do with quality at all. Sometimes they mesh (e.g. “Mercedes makes me feel pampered because I feel safer”), but not necessarily, or all the time. Either way, as soon as a product or service attribute generates a feeling in the customer over and above its actual value, brand equity has developed.
6. The Ethics Question
All of this leads to a difficult question about ethics.
By and large, I think most people know that they have a choice about whether to buy into the “emotional emotion” side of branding. That’s advertising fantasy, and they know it.
But I don’t think most customers know about the potential difference between actual functional benefit and the perception of same. I think that most people conflate the two, and are willing to pay more for certain brands because they have been tricked into believing (or trick themselves into believing) that the $60 T-shirt in the highly branded store at the mall is really worth more than the $5 street version.
Obviously this leaves the creators of brand with a real opportunity to be evil. For if brand equity derives from perception, not reality – whether functional or emotional – then theoretically, the smartest way to make money from a brand is to keep the cost of creating it as low as possible, and the perception of quality as high as possible. That way, you can sell it for a price premium, hopefully in high volume and for a long time before somebody else catches up.
If you’re living in a brand-based economy (which we are), and you need to make things cheaper than your competitors (which you do), then the pressure is on to cut corners, even to the point of breaking the law or at a minimum behaving unethically. Like using victims of human trafficking as slave labor. Like using inferior or counterfeit ingredients or components. It gets dirty pretty fast.
7. Help for Good Marketers
Despite all of this, it is not necessary to be evil in order to be a successful marketer.
In fact, it’s not even smart.
First all, evil is not a sustainable strategy, because we now live in a social media world. So whatever you are doing to create your brand, someone is going to find out about it. A good example is labor driven by human trafficking. There is growing momentum around the world to find and stop the perpetrators of this horrible crime, and those who practice it won’t be in business forever.
Second of all, evil is not a necessary strategy. It might be a little more difficult in the short term, but there are ways to ethically establish, and profit from, functional benefit in a way that creates brand equity. The logic here is that you offer real qualitative advantage to the customer in order to gain their trust that you will continue to do so in the future – a reserve of equity against which you can borrow time to innovate so as to keep ahead of the curve.
8. Five Specific Suggestions
1. Actually make your products better.
2. Add a disclosure to your price tag that explains why the markup is X percent to cover it – that shows the customer transparently what advantage they are paying for.
3. Make a public commitment to truth in advertising and put some teeth behind the commitment (a guarantee that you stand behind.)
4. Keep innovating so that your window of functional advantage remains solid.
5. Perhaps most importantly, set appropriate expectations upfront. Remember, your product doesn’t have to be the best out of all possible products to command a price premium. It only needs to be better than all the competitors in its class.
In a world where the perception of a functional benefit matters, there is a way to benefit from that perception without hurting people. You may have to try a little harder, but the long-term brand equity that accrues – both functional and emotional, because you are building the kind of trust that supports the customer’s willingness to buy into the positive brand fantasy – is, in my view, going to be worth it.
NextGov.com reports this morning on a study by National Journal Group (owned by the same parent company as NextGov.com) showing that while social media tools are gaining acceptance by federal government agencies, government employees themselves don’t get what all the fuss is about. To them (us? since I’m one of them), social media is blather, noise, babble—a distraction. Quote:
“The study, which looked at Washington insiders' media consumption habits, found that more than half of Capitol Hill staffers, federal executives and employees of corporations, lobbying firms, nonprofits and other private sector organizations view Twitter as "pointless babble." Nearly a third called the service a ‘passing fad.’’
This raises a few interesting questions.
- Which is the authentic government brand? Is it the view of the employees, or the official view of the agencies? Or is it perhaps neither, since brand is commonly understood to be the image of the product, service, or organization in the minds of its stakeholders? Moreover, can we say that there is such a thing as a brand for the whole government, when it is really divided into many diverse agencies with unique functions and a myriad of stakeholders?
- Assuming that the brand of the government is authentically anti-social media (which I do not believe to be the case), should the government or any brand change itself to meet the needs of its customers, or is the brand “entitled” to exist in its own right, and the customers must simply adjust? (This might seem like a stupid question for the private sector since brands require customers to survive, but the relevance has to do with long-term success and how an organization can perhaps stay solvent by setting expectations appropriately and then finding stakeholders who appreciate what the brand does have to offer.)
- With respect to the government as a brand (assuming that it is one, which I do), who is the customer, really? Is it the taxpaying public, since they (we) pay the taxes that ultimately fund the agencies? Or is it really Congress, which determines the level of appropriations given to particular agencies? Or perhaps it is key stakeholder groups outside the agency, who influence the public and congress to think a certain way about what the agency is doing?
OK, there is no way I am ever going to answer all of these heavy questions in a single blog post. But maybe we can just touch on a few broad concepts to get a philosophical base going for future discussion.
- I do agree with the view that the brand is determined by the image that exists in the mind of the customer (or stakeholder, in a government context). That image, in turn, is determined both by the official pronouncements of the agency and the informal communication from staff. The fact that government is experiencing a disconnect in terms of its attitude toward and use of social media means that its image is fractured before the public as well.
- And yes, “the government” is actually a brand in and of itself. This doesn’t mean that individual agencies can’t have their own brands, but the reality is that most of us associate the word “government” with a particular constellation of symbols, images and meanings. That makes it a brand.
- I would even go a step further and say, a brand can exist even when no one intends it to. Because whatever the public or a subset of the public is thinking about as a brand, becomes one by virtue of their collective image of it. In my view this is a critically important insight that too many organizations overlook, because they are so obsessed with wanting to define and control their own public identities. They can’t even begin to entertain the idea that they don’t really have any control over this at all, but rather can only try to influence it by engaging the customer. (First heard this from social media guru Shel Holtz, and he’s right.)
- What about the question of brand authenticity vs. customer satisfaction, which was supposed to be the subject of this post? In the end, I think, it’s really a Darwinian process—evolve or die, and most can’t evolve because their cultures are too entrenched. The notion that you can change a brand’s authenticity in order to keep it afloat with its customers is farfetched. You might be able to tinker with it around the edges or move it forward incrementally, but a major change – such as convincing a huge federal workforce that social media is really hip, cool and now and should replace the standard-issue PDF memos and formal press releases they are used to – is very, very unlikely and would probably cause more harm than good.
- Finally…who is the customer? And whose needs are more important, theirs to get what they need from the government or the government’s to be its authentic “self?” Again, this may sound like a dumb question, but is it really? Because if you look at the way government works, does it not seem to revolve very much around the authenticity of the brand, and not so much around the needs of the taxpayer? Not that this is intentional, if the image exists—rather, there is a lag between the culture as it exists and the development of the culture outside, and its own communication needs.
So assuming that there is a disconnect between government as a brand and American cultural demands, what can be done to smooth it over? My suggestion would be to avoid forcing the issue of social media in its more extreme forms. (Remember that I speak only for myself here and do not represent any agency or institution.) Rather, we might be better off focusing on language and tools that are more “serious” and formal – such as those associated with the President’s Open Government Initiative, and the release of high-value data sets—to accomplish the same goals, but in a way that more closely aligns with the government’s authentic brand. This could help move the government toward meeting the needs of its customers more effectively, but in a way that doesn’t feel like such an uncomfortable stretch.