Brand

Building strong brands isn't getting any easier. An explosion in the number of brands--as well as a proliferation of ways to communicate them, from hundreds of cable channels to the Internet, product placement in movies, and even mobile-phone display screens--has made it tougher to get messages through. In addition, converging product-performance and service levels in many industries have made it more difficult to sustain existing brands.1 Meanwhile, the economic downturn has hamstrung marketers by cutting their budgets (Exhibit 1).

Rising above the clutter without breaking the bank will require companies to get smarter about branding. During the 1990s, marketers spent unprecedented sums, but many discovered later that more wasn't better. The promotional efforts of some companies were indiscriminate, focusing on aspects of the brand that didn't drive customer buying patterns. Others failed to note shifting customer preferences and evolving market segments; Volvo, for example, lost out on years of potential sales by waiting until 2003 to introduce a sport utility vehicle. In short, marketers relied too heavily on intuition and not enough on a fact-based understanding of the marketplace.

A few companies are starting to build their brands more scientifically--and in doing so have pushed marketing to new frontiers. The key is combining a forward-looking market segmentation with a more precise understanding of the needs of customers and a brand's identity. The wealth of information about customers and buying patterns (obtained by studying everything from loyalty programs to cheap Internet-based surveys) and the availability of more sophisticated and accessible statistical tools make it possible to undertake these tasks with more precision and accuracy than ever. In short, reaching the next level requires a more rigorous, data-based edge to branding.

Certainly, even the most advanced quantitative techniques can't save

Related Thinking from The McKinsey Quarterly ...

Marketing in 3-D - David Court, Thomas D. French, Tim I. McGuire, and Michael Partington

Revving up auto branding - Anjan Chatterjee, Matthew E. Jauchius, Hans-Werner Kaas, and Aurobind Satpathy

brands whose value propositions lag behind those of competitors. And adopting new methodologies has its challenges. The solid analytics at the heart of the new approach may not only require new skills in the marketing department but also highlight steps that other parts of the organization--from product development to operations to customer service--must take to help deliver the brand. Moreover, some marketers may worry that adopting more quantitative techniques will compromise their creativity. In our experience, though, getting analytical about customer needs and the brand identity helps channel the imagination into areas in which it makes a difference. And the ability to avoid costly trial and error and to build a better brand more efficiently is too compelling to pass up, particularly in challenging economic times.

Tomorrow's segments today

The first order of business is to take a hard look at the long-term profit potential of each customer segment; otherwise, marketers can waste a huge amount of effort defining and delivering brands for segments that don't warrant the investment. While no good brand manager ignores shifts that are clearly under way, marketers have traditionally based their segmentation schemes on current conditions, such as