"Remember: The race goes not to the strong, nor swift, nor more intelligent but to the less stupid"

Chapter 8

Brands for the Burning:
Intel and Motorola

The Book
The Sins of Branding

But even those who have learned that a brand is a symbol often fall into error by failing to understand that a brand can only arise from two sources. The first is as a result of product success. Most brand identities spring from this source. For example, Proctor & Gamble transformed Crest from just another contender to America’s leading toothpaste for decades after persuading the American Dental Association that Crest really did help prevent cavities. For a time, Crest was the only toothpaste able to make this claim, and the moms and dads of America flocked to buy a product that could objectively back up its claim to be “better.” Building upon this success, Proctor & Gamble was able to build a brand around Crest, introducing over time an entire family of related Crest-brand products including mouthwash, dental accessories, and variants of the toothpaste.

In high tech, most brand identities have also been built upon product success.Apple’s powerful brand image flows from its introduction of the Macintosh computer in 1984. From this point until the early 1990s, the Macintosh was clearly superior to other systems in ease of use and functionality, and many argue this superiority continues. And though it has became common practice for many to denigrate Microsoft technology, during the 1980s and early ’90s most of the company’s applications, particularly Excel, Word, and PowerPoint, usually received favorable press mentions and often beat their competition or at the least equaled them in head-to-head comparisons.

The second source of brand identity is a branding program. This type of program is a deliberate attempt to create brand identity and recognition via massive PR and marketing campaigns. Such efforts are expensive, and usually only large companies with established product lines can afford them. Remember, you can’t sell a brand, only a product or service. That means every dollar spent on their creation comes out of your marketing and sales budget. It can be difficult, though not impossible, for even large companies to calculate how many incremental dollars a branding program is generating. But if you have the resources and money to execute one, over time a corporate branding campaign can build tremendous market awareness for your products and company while also acting as a formidable barrier to market entry for your competition.

A second great error many marketers fall into is failing to understand the limitations and requirements of brand creation. For example, just because you have high name recognition doesn’t mean people will automatically buy your products. Once Windows-equipped PCs had caught up to the Mac (or had at least become good enough) in terms of ease of use and flexibility, Apple’s market share rapidly dwindled. In place of technical superiority, Apple has substituted “coolness” and innovative design. But this only carries you so far in high tech. Apple’s current worldwide 3 percent to 4 percent market share in sales of new hardware attests to this. Everyone knows about Apple; not everyone buys a Macintosh.

The PC market also taught IBM the limits of branding. The Silicon Beast the company unleashed in 1981 made many of IBM’s brand intangibles—reputation, safety, and market leadership—less important. Over time, the ability of former college student Michael Dell, who started his business assembling PCs in his dorm room, to manufacture desktop computers more cost-effectively than IBM has proven to be a more powerful market incentive than IBM’s lofty reputation. IBM had the point driven home by the collapse of its PS/2 effort.

Nor do brands allow you to simply raise prices at will. Many companies learned this lesson the hard way. Throughout the 1980s, Porsche and Mercedes raised the prices of their products seemingly in defiance of the laws of economics as consumers developed a thirst for German engineering. When they were done, by the early 1990’s a fun little two-seater such as the Porsche 944 you could have bought for $14,000.00 in 1982 cost almost $50,000.00 , and a small family sedan, the Mercedes Benz 190, that initially went for $15,000.00 now cost $45,000.00. Then Mazda introduced the Miata for about $15,000.00 and Porsche’s sales disappeared. Toyota and Nissan introduced full-sized luxury sedans for $30,000.00 and Mercedes gave up U.S. market share and profits by the bucketful. IBM also learned this lesson when it introduced OS/2 in 1987 with a price tag of $340.00, a sticker-shock contrast to the $60.00 price tag buyers had become accustomed to seeing for the current version of DOS.

The ability to extend brands can also be sharply limited. On the software side of high tech, companies such as Lotus, WordPerfect, Borland, and most notably Microsoft have built brand strategies focused on superior products, and then attempted to extend their success to other products and markets. This isn’t to say that the process is always successful. If your product isn’t judged by the market to be equal or superior to the competition, “brand identity” is no guarantor of success. For instance, do you think that because you’ve (Lotus) created the market’s best-selling spreadsheet (1-2-3), you can sell a new word processor (Manuscript)? Or because you’re selling word processors (WordPerfect) like there’s no tomorrow, you can also sell a database (DataPerfect)?...

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