Everything you do in business builds your brand for good or ill, as your actions generate feelings, associations, and ideas in the minds of your consumers. The challenge is to make sure those actions create a meaningfully different experience that people want to repeat. This is because people are predisposed to choose things that stand out from the crowd. A brand’s difference gives consumers an easy rationale for choosing it, and a ready justification for paying a price premium. Research by Millward Brown finds that brands with a meaningful difference command a price premium 13 percent higher than weaker category alternatives.
For example, look at Lululemon. Founded in 1998, Lululemon produces sports apparel for women that is fashionable, environmentally friendly, and as technically advanced as sports apparel for men. The company spends virtually nothing on advertising. Instead, it concentrates on building an ardent consumer base by creating a unique customer experience. Instructors wear the clothing at in-store events like self-defense and goal-setting workshops, simultaneously building product awareness and forging ties with local communities. Through the community portal on its website, Lululemon invites customers to share their experiences via Instagram and Twitter. They are encouraged to apply to become Lululemon ambassadors, “unique individuals … who embody the Lululemon lifestyle and live our culture.” The company now has over 200 stores, and sales soared from US $40 million to US $1.37 billion in eight years. In the US alone, sales grew 40 percent in 2012.
People have always been attracted to brands with meaning, whether their experience of that meaning is tangible and functional or more of an emotional nature. Meaning drives volume; brands that stand for something meaningful and different in customers’ minds can generate five times more purchases than less meaningful brands.
What is marketing’s role in realizing such results? For one thing, we know that getting the word out about a brand makes it salient – marketing’s term for being included in the set of options a customer is considering. The faster a brand comes to mind in relation to a specific need, the more likely it is to be chosen. Meaningfully different brands are the most likely to benefit from a marketer’s efforts to improve salience. (In fact, a better way to think about how salient a brand is would be to ask: How quickly does a sense of what the brand stands for form in the mind of the consumer?)
But marketing plays a broader role in shaping a brand. It does not just manage to get a brand into a customer’s consideration set; it powerfully influences which aspects of that brand the customer notices and experiences. Good marketing helps ensure that brands are meaningful, different, and salient.
Chobani provides an example of how a product that delivers a noticeably different experience can overtake the competition. The company came along in 2005, after years of focus on low-fat products had left the US yogurt market vulnerable. Chobani’s brand strategy focused on the taste, texture, affordability, and authenticity of its “real” yogurt. Consumers responded enthusiastically and the brand attained mass distribution in just two years. In five years, the company held over half of the U.S. Greek yogurt market, and nearly 20 percent of the total yogurt market. By 2011, Chobani was the number-one yogurt brand in America.
Or consider the Mini Cooper, a car that reentered the US market in 2002 after an absence of 30 years. Younger, more non-traditional car buyers were attracted to the unique brand appeal of the Mini’s compact size, fuel efficiency, and fun, sporty performance. The company relies on clever stunts (challenging a Porsche to a race), event marketing (annual road trips for owners), and offbeat outdoor advertising to stand out in a crowded marketplace and appeal to the non-traditional consumer base. As a result, Mini has grown from one to seven available models at 119 dealers in 38 US states. Sales in the US have eclipsed those in the UK, and the company posted a 26 percent increase in 2011 and 15 percent increase in 2012. Mini’s well-defined and targeted purpose clearly made a clear impact on the bottom line.
By working in ways like these to make a brand more meaningful, different, and salient, Marketing drives the positive consumer behaviors that yield financial value growth. Our analysis of the annual reports for 49 corporate brands found that the strongest brands returned an average of 31 percent more operating profit as a proportion of revenues than those that lacked meaningful differentiation. Additional analysis looked at changes in value market share over time and found that meaningful, different, and salient brands are also four times more likely to grow.
This finding should come as no surprise. Strong, profitable brands are meaningful to their consumers, perceived as different from the competition, and are more salient than the alternatives. These three qualities determine how likely people are to choose the brand, pay a premium for it, and stick with it in future. If a brand is more meaningful, different, and salient than its competition, then it will likely command the highest value market share among its target audience. And this value is what will drive sales and profits, not just for now but for a while down the road.