I was talking to a group of small agency principals recently. I asked how many knew their largest client’s business strategy. Fewer than five of the 50 or so in attendance raised their hands. That didn’t surprise me.
Remember, a brand is a promise and the corporate strategy should be to fulfill that promise. Too often, ad agencies focus primarily on the creative element in order to promote sales. Possibly, their clients may not view them as valued partners in aligning brand strategy and business strategy.
In any business situation, the brand strategy needs to reflect both the short term and long term goals of the business. Aligning the brand strategy with business strategy makes the brand more impactful and emotionally meaningful. It’s the best way to create a road map that is tailored to that brand’s growth and ensure that goals become reality.
The Connective Elements of Corporate Strategies
Brand strategy, business strategy, business model strategy and competitive strategy should be a finely woven tapestry. But to begin to envision this, we must understand the key components of each of these and how they interrelate.
The big picture elements of how these strategies come together include:
- Mission, vision and values are closely related to brand essence and promise.
- Organization culture generally should have alignment with brand archetype and personality.
- Competitive frame of reference, market structure, market segments and target customers are fundamentally important to most brand strategies.
- Product/service portfolio is the way the brand delivers on its promise.
- The value proposition and sources of differentiation are closely related to brand positioning.
- Both business and brand strategies should consider accessibility and distribution.
- Business model strategy, competitive strategy and brand strategy must consider pricing strategy.
- Brand extension sometimes requires strategic partnerships.
Additionally, there are a myriad of other factors that intertwine among business model, competitive and brand strategies. Business model strategy considers how many of the factors in the business strategy come together to create a profitable business model. Also key to this are target customers/customer base, revenue sources, distribution channels, pricing strategy, cost structure, sources of financing, cash flow and reinvestment strategies.
Competitive strategy focuses on achieving competitive advantage in the long run, via cost leadership, competitive differentiation or customer segment focus.
Brand strategy should include target customer definition (including prioritization of need segments), competitive frame of reference, differentiating benefits, pricing strategy and distribution strategy. Then there are factors such as how to achieve awareness, relevant differentiation, customer value and emotional connection to the brand. Brand strategy can also include the brand archetype and personality, which correlates with the organization’s culture.
We can see how often these planning elements overlap in the business, competitive and brand approaches. For a company to be successful, all of these strategies should be in alignment. When one element changes, the other strategies should adjust to be consistent.
BMW’s Ultimate Driving Approach
Here’s an example of a terrific business strategy that perfectly aligns with a brilliant brand strategy:
In the early 70’s, BMW held a miniscule share of the European luxury car market in the U.S. It occupied an even smaller share in the mind of its target market, despite the fact that BMW built itself on core values of technology, quality, performance and exclusivity. At the time, Mercedes Benz was outselling BMW three to one. In the U.S. market, Mercedes had established a foothold by promoting its superior “European Engineering.”
However, if you were to talk to a BMW designer, he would tell you that its cars had far superior engineering than the Mercedes Benz cars. He believed that BMW designed and built cars that were much more responsive to a driver’s actions. By providing a significantly enhanced sense of the road, drivers had the feeling that they were in complete control of their automobile. BMW realized that this was territory no other manufacturer claimed or provided. It was a distinction that sports car aficionados and auto enthusiasts greatly appreciated.
Thus, a business strategy was born. “At Bayerische Motoren Werke, we will build highly engineered automobiles and market them to performance-minded enthusiasts.” The company communicated this new strategy to all of its employees, strategic partners, suppliers, distributors, customers, sales teams and marketing teams. BMW wisely involved its agency, Ammirati & Puris, in every step of the strategy development. They teamed to carefully craft a brand strategy that aligned with the overall corporate message: “BMW, the ultimate driving machine.”
For over four decades now, BMW’s business strategy and brand strategy alignment has driven the company to the top of its category. The BMW brand continues to emphasize the company’s emotional, interactive and experience-driven relationship with its customers.
Today, BMW and Mercedes Benz are in a continual battle for the top luxury car spot in global sales.
Zappos Establishes New Business in Shoe Business
It’s important to understand the synergistic relationship between business and brand strategies. When a company or organization makes a change in one area, it needs to be in conjunction with the other.
An example of the how business and brand strategies adjust in tandem is Zappos. The company emerged in 1999 with its initial mission to be the first website to sell a wide variety of shoes online. However, marketing to that strategy was expensive. When a number of shoe manufacturers were hesitant to market their product with Zappos in opposition to their own websites, Zappos co-CEO’s Nick Swinmurn and Tony Hsieh (pronounced Shay) changed focus. They adjusted the company’s mission from offering a broad selection of shoes online to one of providing the best customer service in the industry. That re-direction of a business strategy established Zappos’ area of distinction from which to align a branding strategy.
David A. Aaker, vice chairman at Prophet, a branding agency in San Francisco, and Professor Emeritus of Marketing Strategy at UC Berkeley, details the Zappos story in his book, Brand Relevance.
“The mission was to have the best service in the industry. The signature policies were free shipping…a 365-day return policy with free shipping, and a call center that was staffed 24/7…with involved, informed customer-oriented representatives. Unlike other e-commerce firms, Zappos actually encourages customers to call in, with a visible 800 number believing that the resulting personal contact with its sales reps will foster the relationship with the brand.”
Zappos Representatives are Just a Phone Call Away
Zappos encourages customers to contact the phone center. If you go to its website, the 800 number is prominently listed at the top of the page. I cannot tell you the number of company websites where I’ve had to search and search for a direct phone number to reach customer service.
But “over-the-top” service is what Zappos is all about. The company now emphasizes customer service as its marketing tool. It believes that approach cements customer loyalty and helps ensure positive word of mouth marketing. The commitment to customer service is paramount in screening prospective employees and ingrained into their training. The phrase “Powered by Service” is actually a part of the Zappos company logo.
Author Micah Solomon wrote about the company in Forbes Magazine in June 2017. “Hsieh reasoned that the marketing budget was better spent on free shipping and a 24/7 call center, which would generate word-of-mouth advertising. Further search engine marketing was extremely effective and inexpensive. Zappos simply bought the brand names of shoe manufacturers so that when a customer searched for a shoe brand on Google, a Zappos ad would appear.”
The adjustment in the marketing approach based on the business strategy paid off as Zappos turned a profit in 2006 with sales of $600 million. Two years later, Zappos exceeded $1 billion in sales. Amazon bought the company in 2009 for an estimated $1.2 billion.
Remember, the business strategy IS the brand strategy. Brand development is born of corporate strategy. It is not a marketing initiative. It’s a corporate initiative and it must start at the top with C-level executives as its standard bearers. It is essential that they work to ensure that every employee, channel partner and strategic partner understands how he or she delivers on the brand promise every day.
About the Author
As founder and CEO of BrandSavants, Russ provides uncommonly strategic business and brand development capabilities. He is also a managing partner of The Brand Establishment, an association of agencies whose owners are Certified Brand Strategists.
At BrandSavants, we transform organizations by elevating the brand conversation. That catapults our clients' thinking which grows brand value and increases worth.