BRANDING OVER THE CRACKS
JAMES
HEARTFIELD
INTRODUCTION[st1]
‘One cannot
step twice into the same river, for the water into which you first stepped has
flowed on’. Heraclitus, fragment 21
Market
economies proclaim the advantage of flexibility over command economies, but in
exchange for that advantage, they must surrender their claim upon the security
of certain outcomes. Marketing gurus like Charles Handy and Tom Peters upbraid
their audiences with homilies drawn from the philosopher of flux, Heraclitus: ‘Nothing
certain, but change’ and ‘expect the unexpected’.
The social
division of labour, though, has definite proportions at any one moment. In
London, 145 000 people working in computer and business services stand waiting
to serve the 460 000 strong financial service sector centred on the City of
London.[1] But while
investment and production goes ahead on the assumption that the goods and
services will be paid for, that outcome is not in any way guaranteed – a fact
underlined by the recent disturbances in the financial markets. The point of
sale is episodic. The subdivision of tasks amongst different sections assumes a
successful outcome that only comes at the end of the process, if at all.
Like
Heraclitus’ river, the torrent of fruit-flavoured, sugared water flows on. Each
purchase is discrete, and never literally repeated. But the brand Coca Cola defies the episodic character
of the sale, to endure beyond each purchase, connecting them as if in one
continuous chain. The Brand[st2] is the attempt to
fix the flux of the market society with the appearance of permanence. Once
branded, it seems that you can step
into the same river twice. (The recent collapse in Coca-Cola’s sales in
This
article looks at the contemporary vogue for branding in business theory as
symptomatic, less of success than of failure, of the attempts by businesses to
avoid market failure. It sees the quest for brand added-value as an attempt to
avoid diminishing returns, and looks at the ways in which branding raises the
threshold to market entry at the cost of rivals. It also investigates the
connection between re-branding, and attempts to overcome the barriers to
accumulation at the international level by disciplining labour. The
preoccupation with the value of brands – as opposed to the development of new
production – is a telling insight into contemporary capitalist self-perception.
BRAND FETISHISM
Thomas Gad,
who ‘connected people’ for Nokia, deploys the metaphor of genetic inheritance
to ward off the fear of contingency: ‘The brand code equals business DNA’.[5] The appeal
to an organic metaphor is telling. The purchasers of Gad’s book 4D Branding are worried about how to
replicate the initial sales. Genetic replication stands for the spontaneous
replication of market success. Natural inheritance is a common metaphor for
property relations, one that invests them with the comforting fixity [st4]that they lack in
fact. Many years ago, the conservative Edmund Burke asserted hopefully ‘The
laws of commerce are the laws of Nature, and therefore the laws of God.’ [6] DNA is a
more secular image, but it still holds out the promise of the natural
reproduction of market relations, and the replication of the original sale.
Branding
transforms[st5] the episodic
processes of sale and purchase into a singular object. Branding turns a social
relation into a thing that can be taken hold of, and even bought and sold on
the market itself.[7] The
ubiquitous B[st6]rands seem to us to
be the epitomé of market relations. But the appeal of the brand for the
individual businessman is that it promises to suspend the uncertainty inherent
in the exchange process. Branding is an attempt to overcome the spontaneous and
unplanned character of market exchange – albeit one that remains firmly within
the confines of private property.
The
advertisers--or now brand consultants--are parasitic upon the anxiety of
businesses, promising to sell them the one thing that they cannot produce
…sales. Similarly, broadcasters and publishers ‘sell’ audiences,[8] and
polling organizations sell ratings to advertisers.[9]
Branding
is, in its essence, a defensive denial of the contingency of market relations,
on the part of companies whose precarious existence is a torment to them, which
must be warded off by the Juju of the brand.[10]
Peter York at SRU Ltd hopes that ‘a brand should ensure a long-term and forgiving relationship with its
audiences’.[11] On the other hand, David Bernstein warns that
‘a logo is
not a magic totem or a philosopher’s stone’, but such caveats belong to a
bygone age[st7].[12]
‘The word
“branding” is like a magical incantation’, says Thomas Gad.[13]
Belief in the magical properties of the brand is today commonplace. In the
first place, brands are mysterious. ‘What are brands made of?’ asks Arthur
Einstein, the New York-based advertising consultant. ‘They’re existential’[st8]. Pettis points out
that Einstein does not mean that brands are a response to the existential angst
of salesmen. He means that “while a product can be touched and felt the brand
itself is not a tangible thing. It is an abstraction”.[14] [st9]Chuck Pettis of the
American Management Association is similarly vague when posing the question
‘What is a brand?’. The answer is: “The sensory, emotive and cultural proprietary
image surrounding a company or product… a significant source of competitive
advantage … an enhancement of perceived value and satisfaction” and “arguably
the company’s most important asset”.[15]
That should cover all bases, and nobody could accuse [st10]brand
consultants of pedantic or mundane thinking – on the contrary, the imagination
takes flight in discussions of branding.
Russell L
Hamlin, CEO of the Sunkist Growers is also impressed by the intangible: “an orange … is an orange … is an orange. Unless
of course that orange happens to be a Sunkist, a name eighty per cent of
consumers knows and trust.”[16] The
relation of trust between the producers and consumers here has been re-directed
on to the object itself. ‘Trust’ is an intention accorded to other people,
ordinarily, but here it is the Sunkist that deserves trust. ‘Men’, observed the
philosopher Ludwig Feuerbach, “transpose their own being into things”.[17]
French
explorer Charles de Brosses first characterized the objects worshipped by
native peoples as ‘fetishes’.[18] These
man-made objects were worshipped as if they were rather the creators of men.
So, too are Brands made into fetishes that, though made by us, come to rule
over us. According to United Biscuits’ Sir Hector Laing: “Buildings age and become
dilapidated. Machines wear out. People die. But what live on are brands.”[19] Brands
promise everlasting life to Sir Hector, but to others the brand exemplifies
everything that is wrong with our society.
Selling indulgences: For the Pope’s visit to
Brand and anti-brand
In 1989 the
Vancouver-based Media Foundation started the magazine Adbusters, whose editor
Kalle Lasn perfected the art of subverting the corporate message, or
‘culture-jamming’. Culture-jamming caught the moment: the ubiquity of the big
brands, the Nike ‘swooshtika[st11]’
McDonald’s Golden Arches and Microsoft presented a seamless continuum of
consumerism that was crying out to be ripped apart. After the
anti-globalisation protests attained critical mass in
No Logo’s international success indicated all the
strengths of the newly emerging culture-jamming activism, but also perhaps some
of its weaknesses as well. Unwittingly, the anti-brand activist is paying
homage to the same God, albeit negatively.[23]
Both the brand enthusiast and the anti-brand activist share the same belief in
the superhuman power of brands. As Mark Ritson, professor of Marketing at the
According
to Klein: ‘“Advertising is about hawking a product. Branding, in its truest and
most advanced incarnations, is about corporate transcendence.”[25] If Klein
were describing the capitalists’ tendency to attempt to transcend the business
of social production, it would be convincing, but she goes further in seeing a
literal transcendence of production:
‘even the
classic Marxist division between workers and owners doesn’t quite work in the
[Special Economic] zone, since the brand-name multinationals have divested the
‘means of production,’ to use Marx’s phrase, unwilling to encumber themselves
with the responsibilities of actually owning and managing the factories, and
employing a labour force.’[26]
Further,
Klein emphasises ‘this is not a job-flight story. It is a flight-from-jobs
story.’[27]
But it is
difficult to square that claim with the long climb in the numbers in work.
Between 1950 and 1995 the world workforce increased from 1183m to 2742m.[28]
Influenced by the New International Division of Labour theory[29] and the
anti-NAFTA campaign, Klein emphasises the migration of jobs to the
Furthermore
it is a mistake to take the statistical growth of service sector employment in
the West as evidence of a ‘post-material’ economy. Much of the change is
nominal, as activities undertaken in-house by industrial firms, such as
cleaning or servicing machines, are reclassified from productive jobs to service
jobs if they are out-sourced.[32] It would
be a mistake to reduce productive labour to a physiological category directly
related to material transformation.[33]
The
prejudice that the realm of production has been transcended, or relocated
elsewhere serves to justify the restriction of the politics of protest and
contestation to the realm of exchange. In this way the culture-jammers only
hold up a mirror to brand theory, rejecting its conclusions while sharing its
underlying belief in the priority of consumption over production. The tendency
is for culture-jamming to reduce to an arch commentary on consumer goods, part
of the language of taste by which the educated mark themselves off as more
discerning consumers than the hoi polloi.
It is hard to tell whether the Biotic Baking Brigade’s Subcomandante Tofutti
and his Global Pastry Uprising is parodying capitalism or parodying opposition
to capitalism.[34]
Not only
does culture-jamming tend to end up paying homage to brands as much as it
critiques them, it also grants undue authority to the power of the brand. Where
Klein’s account portrays the brand as the culmination of the power of the
market, the contemporary explosion of branding is not evidence of health, but
decline. Hypnotised by the power of brands, the anti-brand activists fail to
recognise that these are indications of capitalism’s running up against its
inner limits. In particular, branding indicates the attempt – ultimately futile
– on the part of businesses, to suspend the judgement of the market. As Marx
indicates, once capital “begins to sense itself and become conscious of itself
as a barrier to development, its seeks refuge in forms, which by restricting
free competition seem to make the rule of capital more perfect, but are at the
same time heralds of its dissolution…”[35]
It might seem strange that branding could be seen as a restriction of free
competition, but as we shall see, that is precisely the motivation: locking
consumers in and competitors out. The ubiquity of the brand demonstrates not
‘the astronomical growth in the wealth and cultural influence of multinational
corporations’,[36] but a
desperate attempt to avoid capital’s own inner limitations.
AHISTORICAL BRANDS
As fetish
objects b[st12]rands
appear to have no history. So according to one b[st13]rand
theorist “Branding goes back to the beginning of history … from Ancient
Egyptian bricks to trade guilds in Medieval Europe” craftsmen have always
marked their wares.[37] Actually,
branding came into its own around the 1890s, just as merger-mania was transforming
the family firm into the modern corporation.[38]
Leading brands of the 1890s:
American Express Travellers’ Cheques; Avon
Cosmetics; Cadbury’s Chocolate; Coca-Cola; Colgate; FT; Gillette; Heineken;
Ivory Soap; Kodak; Lipton Tea; McVities Biscuits; Pears Soap; Phillips
Electronics; Quakers’ Oats; Steinway Pianos; Van Houton’s Cocoa; Wedgwood
Pottery.[39]
The next
wave of branding activity was 1926 – again as straitened circumstances forced
the pace of mergers, creating corporations like the BBC, M&S, and ICI. The
post-war boom fostered the growth of the consumer market, but it was the
downturn of the 1970s that facilitated the creation of [st14]Microsoft,
Virgin, and the Body Shop. In the 1980s the British government flooded the
market with newly privatized companies: BT, British Gas and BA. Today the big
brands of the eighties marketing boom are mostly in trouble: British Telecom’s
funds were depleted by speculative investment in East Asian markets, leading to
pressure on Chairman Iain Vallance, the Thatcherite Golden Boy; Marks and
Spencers’ consistent losses during the past decade [st15]and
reputation for the drab have led to a retreat from the global market, as
indicated by the closing down of their French operation. The privatized rail
companies, like Virgin and Connex, have become a by-word for disaster.
‘Brands’ –
stylistic marks that subsume discrete commodities under one brand name,
associated with a company – are integral to mass production. They substitute
for the personal relations of trust associated with craft production. But branding theory is a contemporary
phenomenon, as are its correlate goods [st16]whose
value appears to inhere principally from the brand, rather than the material
qualities of the good. The valuation of brands on company balance sheets is a
relatively recent occurrence[st17],
signalling Capital’s inner tendency to attempt to overreach simple market
exchange. If brands are rediscovered throughout history, we can lose sight of
what is new in the attempt by business to avoid the capricious nature of
exchange.
Brand Chronology
1893 Sears
and Roebuck Co founded in Chicago, Coca-Cola registered as a trademark
1926
Marks & Spencer Limited becomes a public
company.
December 7, Imperial Chemical Industries
founded in a merger
December 31 The British Broadcasting
Corporation
1945, ‘Coke’ registered as
a trademark
‘Let's be frank about it; most of our people
have never had it so good,’ Prime Minister Harold Macmillan told Britons,
1965 McDonald's went
public
November 1965 ‘
March 1976 Anita Roddick founds the Body Shop in
November 1984 two million people buy shares in the newly floated British Telecom (£4 billion),
followed by British Gas in December 1986 (£5.4 billion) and British Airways in
February 1987 (£900 million).
DEFENSIVE BRANDING
While
branding consultants talk up the creative aspect of branding, it is rarely
noticed that branding strategies are often a defensive reaction to market
conditions. In the 1970s Levi Strauss ‘made the mistake of expanding beyond the
core product lines’, reports Robert Holloway, VP Global Marketing, an
‘expansion’ which ‘diluted the
Nick
Hodges, Chief Executive of the London International Group, owners of the Durex
brand (‘Durability, Reliability, Excellence’, registered in 1929), explains that the declining sales
of condoms in the seventies tempted the company into chinaware and photo
processing – ‘diversification was an eighties vogue’ – but profits were
stretched and debts mounted up to 1993.[41]
But for the health crisis of Aids, the Durex brand would in all probability
have disappeared, rather than becoming what it is today, a world-beating brand.
British
Airways’ chief executive Bob Ayling explains that the effect of the company’s
first re-launch, post-privatisation, was beginning to pall (‘our research
confirmed that we needed to change again’[42]).
The issue of branding arises where, in Ayling’s words, there is ‘the need to
re-launch’. In each instance the response of these companies was to dire
straits was to ‘re-brand’. Branding strategy is a counter-crisis measure for
companies that perceive their markets to be slipping away from them.
Iain
Ellwood makes a case for ‘the added value of advertising’ that is positively
downbeat. It can “revitalize a brand that may be losing market share; protect a
brand against a competitors advertising effort; … reinforce a brand’s appeal in
the market.”[43] The
unavoidable conclusion is that rebranding [st18]is a
defensive strategy, designed to shore up a product that is proving to be
uncompetitive. The question remains whether the real point of intervention
ought to be the brand image or the product itself.
ANTI-COMPETITIVE BRANDING
In keeping
with the defensive character of branding, it is pointed that the brand
consultants seek to play upon the anxieties of companies about the competition.
David A Aaker warns that “as industries turn increasingly hostile, it is clear
that strong brand-building skills are needed to survive and prosper.”[44]
Intriguingly, the appeal of a branding strategy is that it will give the
additional push that gets your product ahead. Patrick McGovern, chairman of the
board of the International Data Group says that ‘Branding has become much more
important recently because of the proliferation of choice that’s available to
customers’.[45] The
unspoken assumption is that apart from the brand, there is not much to choose
between the different products.
In
Neo-classical
economic theory teaches that the market rewards labour-saving and innovative
products. Competition differentiates between products on two scales, cost and
quality. This was an economic theory that corresponded to a period of
innovation in which products were actually differentiated. The role of
competition is simply to realize the already existing advantages of the
superior commodity. But with branding theory the priority is reversed. The
superiority of the product is subordinate to the reception and durability of
the brand. Branding theory corresponds to a moment in which the rate of
innovation is relatively low, and the differentiation of products, therefore,
must take place through marketing and advertising.
The
original ad-buster Vance Packard first noticed the way that advertising
increased in importance in inverse proportion to product differentiation, when
he listened in on ‘an annual conference of advertising agency men’ who ‘heard
an appeal for more ‘gifted artists’ in persuasion to cope with this problem of
the “rapidly diminishing product differences”’.[49]
Packard highlighted the challenge made by Chicago Tribune research director
Pierre Martineau to advertisers: ‘What is the advertising direction going to be
when the differences [between rival products] become trivial or non-existent’.
The answer, according to one agency president David Ogilvy, was that ‘the
greater the similarity between products, the less part reason really plays in
brand selection.’
A RESPONSE TO FALLING PROFIT MARGINS
According
to Brian Sharples, president of Intelliquest, ‘developing a price advantage is
the single biggest lever that a company can employ to boost margins and
profits’.[50] The
promise of branding is that it can sustain price advantage – even where the
normal course of cost-reduction seems to lead inexorably to reductions in
price. Branding theory bucks the trend described in neo-classical theory for
the advantages of labour-saving technique to be passed on to the consumer.
Iain
Ellwood explains that ‘some [companies] often price their products too low and
the resulting effect is to devalue the brand … trying to reduce the prices too
much, leading to an unnecessary cut in profit margins’.[51]
Unfortunately, falling prices is a normal effect of competitive reduction of
costs. Michael Cox and Richard Alm illustrate the trend.[52]
They show how long one must work in each decade since the 1920s to purchase
some typical commodities. (* latest in
1999)
|
Year |
1920 |
30 |
40 |
50 |
60 |
70 |
80 |
99 |
Latest* |
|
Half
gallon of Milk |
37mins |
31 |
21 |
16 |
13 |
10 |
8.7 |
8 |
7 |
|
Three-pound
chicken |
2hrs 27mins |
|
|
|
33 |
22 |
18 |
14 |
14 |
|
100
kilowatt hrs electricity |
13hrs 36mins |
|
|
2hrs |
|
39mins |
45 |
43 |
38 |
|
3min
coast-to-coast call |
30hrs
3mins |
|
|
|
1hr |
24mins |
11 |
4 |
2 |
For
consumers, the effect of competition has pushed down the cost of milk and
chickens to a fraction of its cost to our grandparents. But to keep in the game
farmers and retailers are chasing minute profit margins on a gallon of milk or
a chicken. Avoiding these falling profit margins increasingly engages the
creativity of the firm.
A brand
solution to falling profit margins is illustrated by the clothing
manufacturers, Levi Strauss. Levi’s Robert Holloway describes how the initial
failure of diversification only reproduced the trend of falling prices over a
wider – and less admired – range of
commodities[st19]. As he
experienced it, the challenge that Levi faced was ‘putting Levi Strauss back
into the Jeans market’.[53] But this
is not quite the back-to-basics story that it appears. The ‘jeans market’ was
no longer simply about selling stitched cotton. As Holloway notes, in 1996
Forbes announced that ‘Levi Jeans are not so much a product as an Icon’.
Holloway describes how ‘the decision was taken to focus on image not volume.
The high image flagship product of
What in
fact Levi Strauss did was to supplement the depleted value of the cotton
trousers by realizing the price of the icon. They were no longer selling
clothes, but kitsch, thanks to the unrewarded efforts of Marlon Brando, James
Dean, John Travolta and Mickey Rourke amongst many who had invested the
clothing with its new premium. The ‘brand-added value’ of nostalgia for the 1950s
shows up on Cox and Alm’s chart as a reversal of the trend for commodities to
fall in value relative to wages:
|
Year |
1920 |
30 |
40 |
50 |
60 |
70 |
80 |
90 |
latest |
|
Pair of |
10 hrs 36
mins |
|
|
|
|
|
|
|
|
Iain
Ellwood explains that with price cutting ‘the damage to the brand in the long
term is difficult to repair, especially as shrinking profits reduce investment
and quality’[55] Clearly
this was a lesson that Levi learned the hard way in the 1970s. For Levi Strauss
& Co. the value of the brand was something worth defending in the courts.
The British supermarket chain Tesco’s bought 501s at cost, and, instead of
charging the premium price of between £32-£49 gave some of that back to
customers by selling them at £30, and then £25. According to reports, Levi
Strauss ‘fears that its reputation will be damaged if its jeans are sold in
supermarkets’.[56] On
In the
European Court of Justice case, Tesco’s were at pains to distinguish their
strategy of buying up 501s in East Europe at cost to sell in West Europe at a
reduced price, from the growing market in imitation designer-wear. But the
market in fake labels is a response to the same market distortion that Tesco’s
exploited – the difference between the intangible value added by branding, and
the costs of production of the goods themselves. In prosecuting designer
rip-offs, top label companies insist that they are protecting quality, but by
their own admission, the quality no longer inheres in the material object, but
in the associations of the label.
The dispute
between Tesco’s and Levi’s over the mark-up on 501s has little to do with
creating new value. Rather it is a dispute over the distribution of additional
value already created. By exacting a premium price, are attracting more of the surplus
value created elsewhere in the economy – like any monopoly. Western consumer
goods markets, buoyed by the expansion in personal credit, set shop prices
adrift from factory costs of production. By importing goods, Tesco’s took
advantage of price differences that arose from the dampened spending power of
East European consumers, but also, presumably, from the reduced costs of
production there. Neither company’s strategy represents a substantial
transformation of production relations for capital as a whole, only a struggle
over dwindling profit margin.
The Limits of the ‘Brand –Added-Value’ theory
Between mid-1988 and the end of 1991, IT firm
Compaq was falling out of its target customers’ consideration and boosted its
advertising, but sales failed to respond.
Market Research firm Techtel were drafted in to explain the problem:
‘opinion of the brand was falling because of the price’, said Techtel’s
president Michael Kelly. Compaq’s high-value products were losing out against
newer and cheaper rivals. They fired the president, the advertising agency and
laid off 1400 employees. To reposition the brand as more competitive Compaq had
to spend another $16M in advertising to demonstrate that they had recognized
the problem and dealt with it. They had ‘broadened from a technology-driven
image to a customer-driven’ one, according to Kelly. (Pettis, Technobrands,
p98) The theory of ‘brand added-value’ did not prevent Compaq from having to
restore profitability by the more traditional means of cheapening the goods by
reducing labour costs to get a wider share of the market – but the branding
specialists demanded their slice anyway. Instead of adding something new,
Techtel only put a gloss on the ordinary dynamics of class struggle.
LO-TECH LOGO
Brand strategies
generally emphasise novelty and innovation. Branding plunders the image-bank of
the new technologies, from laboratoire Garnier to ‘liquid engineering’ and the
‘appliance of science’. The dominant brand strategy is ‘brand-new!’ – the
promise of cutting edge technologies (carefully moderated with new age values,
of course). But all too often branding and technological innovation are pulling
in opposite directions. Amongst themselves the brand strategists take a dim
view of technology. Patrick J McGovern of the International Data Group
patronises the pointy-headed techno-geeks: ‘Technologists tend to think
technology alone will sell their products – that superior technology is the
only thing that differentiates them from their competitors’.[58] How very
silly of them, to think that building a better mousetrap was the path to
success.
According
to Chris Pettis:
‘High
technology customers face a Hegelian dialectic in that their high-tech
marketing and product managers, who understand well the technicalities of their
products, are not equipped with the overall brand expertise and experience that
their companies need but find it hard to define.’[59]
What Pettis
is describing is not an Hegelian but a Marxist dialectic in which the dynamic
forces of production, represented here by the technologists, are constrained by
the conservative relations of capital accumulation. The philistine marketing
men personify the priority of circulation over production, which are
increasingly at odds.[60]
In fact, as
technological innovation slows down, the importance of branding increases.
Brian Sharples, President of Intelliquest, Inc., says “technology executives in
mature markets have fully embraced the concept of branding, although companies
in new and emerging markets tend to focus more on technology-based competition”[61] – get
with the programme, guys! Innovation is so yesterday. Chuck Pettis explains
cryptically, that ‘as markets mature, creative technology solutions give way to
standards as the market begins to define and demand a compatible and
standardized approach’[62] But what
can Pettis mean by these ‘standards’ which creative technology solutions must
give way to. On closer inspection Pettis simply means the image of high
standards, as a promise that substitutes for the state of the art (now a
hopelessly passé formula).
The
Director of Corporate Communications for Hewlett-Packard Co guiltily admits
that ‘we have not as a company,
historically, been conscious of the importance of managing the overall HP
brand.’[63] But then
when Hewlett-Packard looked after the printers, the reputation of the brand
looked after itself. New technology companies that survived on innovation in
the eighties became increasingly image-conscious in the nineties. The terms
‘new technology’, ‘IT’, and ‘dot.com’ no longer referred to specific
technologies, but themselves became a brand, and one directed primarily at
investors at that. By the bursting of the Internet bubble, an echo resounded in
the hollow space where the new technology should be. Most so-called Internet
firms proved to be either marketing ventures or potty enthusiasms. Branding got
the better of the Nasdaq, and investors were duped.
Anti-competitive
branding is an attempt to secure the continuation of profit margins at the
level of relations between companies. At its most extreme it represents the
divergence between capital’s existence as a source of new value, and as
technological progress. In the IT bubble, speculation substituted real
investment; investment in brands diverted resources from investment in new
means of production.
At another
level, branding is associated with more than redistributed [st20]profits
between companies. The role of the brand in the reorganisation of global
markets and labour discipline indicates attempts to restructure production in
capital’s favour.
Intel Inside
In May 1991 a court ruled that ‘386’, the
trademark previously exclusive property of Intel was from then on common
nomenclature for a microprocessor of those specifications. ‘Out of this
“crisis”’ writes Chuck Pettis, came the decision to trademark the Intel Inside
logo’ (Technobrands, p70). The Intel Inside campaign was launched at a cost of
$250M in the second half of 1991 and 1992, ‘the most expensive ad campaign ever
launched by a semi-conductor company’ (Ibid.). Intel’s original appeal was due
to its having cornered the market for microprocessors at the top of the range.
With more competitors muscling in, the company tried to hang onto the term
‘386’, through legal means. But as William James said, the word ‘Dog’ does not
bite, and Intel failed to lay claim to a number. Instead they diverted vast
resources into a branding exercise that targeted not just their Original
Equipment Manufacturer customers, but also end-users.
GLOBALISATION: AVOIDING PROBLEMS AT HOME
Globalisation was the buzzword for the nineties, and a core
theme of branding strategies. Just as George Bush Senior was promising a New
World Order, McDonalds was opening up in
According
to David Bernstein, “deliberately setting out to become international by
assuming an international origin is wrong-headed … Brands are born somewhere.
Companies are born somewhere.”[64] For all
the talk of globalisation, brands remain stubbornly national in their character.
‘International brands are creations of their homelands. MacDonalds, Coke,
Levi’s … are as American as apple pie’, says Bernstein.[65]
In brands, we can see both capitalism’s inner striving to conquer a world
market, but also its inability to let go of national particularity.
It was the
challenge of falling returns and saturated home markets that persuaded many
large companies to resolve their problems on the world market. Nick Hodges at
Durex explains that ‘during 1993 we put together a plan to globalise the Durex
brand, cutting costs by closing smaller factories, moving production to the
East and automating production in the West.’[66]
For Durex, then, globalisation was more of a desperate counter-crisis strategy
than a positive expansion.
Globalisation
put new emphasis upon the brand, as competition in foreign markets heightened
the challenge of product definition. Bob Ayling expresses the ambiguity of
British Airways’ new identity, which is ‘aimed at presenting British Airways as
an airline of the world, born and based in
At L’Oréal,
Alain Everard explains that the company read the emerging Asian markets as a
new outlet: ‘The markets of developing countries tend to follow a certain
pattern. First a thin layer of buyers of luxury goods such as Lancôme’… then
‘as income starts to move[st21] over
$2000’ western middle class aspirations [st22]are
‘reflected in purchasing’. ‘Between 1989 and 1993 the market for health and
beauty products grew by 94 per cent in Indonesia, 93 per cent in Malaysia, 60
per cent in Taiwan and 90 per cent in Thailand’.[70]
L’Oréal’s expansion was based on the role of
Global
re-branding can lead to anxiety about the identity of the product. Bob Ayling
explains the real background to the much-debated re-design of BA’s livery.
Dispensing with the Union Jack tailfins in favour of abstract ethnic designs
provoked BA’s original sponsor Mrs Thatcher to cover up the model on a BA
display at the Conservative Party conference. ‘One of the most difficult
branding issues is what happens to the brand as strategic alliances are formed
with other airlines’.[72] In this
case it was a deal with Qantas, in which BA took a 25 per cent stake. For a
while the company thought about the brand Global
Airlines as the natural successor to British Airlines, but rejected it. Global Airlines represents the notional
liberation of BA from its national boundaries, but in fact BA remained tied to
the fortunes of British capitalism. The consolidation [st23]of the
European markets was
driven in part by
GLOBALISATION AND THE MERGERS &
ACQUISITIONS MARKET[st25]
Company
growth through Mergers and Acquisitions (M&A) is accelerating on the
European continent in anticipation of the single currency and across the world.
For a company, securing a rival brand enhances monopoly domination of the
market. With each merger, brands are consolidated.
Bob Ayling
at BA explains how Jacques Delors’ Single European Act of 1988 led to the
greater consolidation of the European airbus industry:
The laws in
The
question raised is whether BA are positively interested in the rival brands’
own performance, or negatively in taking out a competitor.
Nick Hodges
at Durex explains how the process of re-branding bought up local rivals works[st26]:
When
re-branding local brands – such as Hatu
in
Ultimately,
of course, the rival brand is not important for what it brings to the company,
but for its absence as a competitor.
BRANDING OFF THE COMPETITION
Generally
seen as evidence of the triumph of the free market, branding strategies are in
fact about avoiding the downside of competitive pressures. Fiona Gilmore
differentiates the strategy of branding from the cost-cutting measures in vogue
in the 1980s: ‘This simple economic value comes from the price premium
justified by effective branding, maintaining and growing markets, and from
building brand loyalty to deter new
entrants and substitutes, thereby making future earnings more secure.’[77] Bob
Ayling emphasizes the point that branding must secure markets against new
entrants: ‘One of the big branding challenges that British Airways has faced
over the last few years it that as a “mature” brand it has to keep the brand
fresh in the face of “new” brands … new entrants’ to the market’.[78] You do
not have to subscribe to the victim mentality adopted by Richard Branson and
Freddie Laker to understand that BA plays hardball when it comes to protecting
their over-mature “brand” against rivals.
The
economic advantage of excluding competitors from the market can be seen from
the premium Nestlé paid for the Rowntree Group, more than five times the book
value of the company, at £2.5 billion. Of that sum two billion represented the
economic advantage of excluding a rival from the market. According to Iain
Ellwood, ‘Once a company has large market share in one product, it will be
easier to gain share in an associated market than further increase the original.’[79]
Here it is clear that the prospect of growing the company by buying up rival
brands has substituted for developing new products and creating new markets.
Ellwood writes that ‘as global consolidation takes place, there are huge
financial incentives to buy up strong brands in fields where the company is
weak, rather than developing new brands from scratch.’[80]
ECONOMIES OF SCALE
While
buying up rival brands is one response to global markets, another is to
globalise the brand. Amongst twenty ‘ways that branding online can offer added
value’ Iain Ellwood proposes ‘go global – even small companies can now reach a
large global audience for a low cost.’[81]
It is an insight that has long been understood that global marketing reduces
marketing costs. ‘International campaigns are tidy; save advertisers time and
production costs’, says David Bernstein. [82]
What Bernstein and Ellwood are describing are the positive effects of economies of scale. With the expansion
of companies, the reproduction efforts can be cut out. This is as true of marketing
as it is of product development or purchasing.
For
L’Oréal’s Alain Everard, the savings represented by international marketing
were vital. Reproduction on an expanded scale meant that the company could save
on design and packaging – ‘we project the same brand names and images in all
markets’. But marketing beauty products on an international scale presents
certain definitional problems:
‘We use the
local language and adapt the international advertising unless there are
exceptional reasons for not doing so … for example in
‘Companies
… could enforce rigid uniformity as McDonalds does, where every staff member in
every country should greet and treat customers in the same prescribed manner…
The advantage for McDonalds is that one system can be continuously refined and
spread across the world, as internal communication is standardized.’[84]
BRAND EXTENSION
One way to
economise on marketing is to extend the brand, by including new products under
a well-established trademark or logo. ‘Extending the power of a brand into new
products and services is one of the strongest reasons for brand-building’
suggests Thomas Gad.[85] As an
economy of scale, brand extension can be advantageous. According to Ellwood the
‘advantages of brand extension’ include ‘lower introduction costs for new
products or lines … lower risk on investment in new products.’[86] That way
the new product can piggyback the success of the old. In effect the company’s
prior achievements become guarantor to the customer that the new line will be
of the same standard. ‘Virgin has become a true lifestyle brand, with people
adopting its values as a convenient way of reflecting their own aspirations,’
writes Ellwood.[87] It is
perhaps a poor example. Following the failure of Virgin Trains, Branson’s VOP
Holdings, owners of the Our Price and Megastore chains lost more than £126
million in the year to January 2000. A tongue-tied Branson described the loss
as ‘a significant erosion of the company’s profitability’.[88]
But brand
extension carries pitfalls. ‘The Pierre Cardin brand … has been stretched too
far and has now been devalued,’ warns Ellwood, sagely.[89]
The view that brands become over-extended
describes real problems, but through the prism of branding fetishism. In truth
it is not the brand that is overextended, but the company. The reputation of
the brand is just where the problem comes to light.
OWE MY SOUL TO THE COMPANY STORE[90]
Perhaps the
most successful example of brand extension is the expansion of retail outlets
like Wal-Mart and Sainsbury’s in the 1980s. Iain Ellwood explains well what the
basis of the supermarkets’ success is:
Supermarket
multiples are an excellent example of how retail power has increased in the
business chain. Their grip of the general grocery market has tightened with a
few key brands such as Sainsbury’s, Tesco and Waitrose dominating the
The
aggregate buying power of the large chains has created real economies in
distribution as well as holding down wholesale prices – even leading to
complaints from the British Prime Minister that supermarkets had a stranglehold
on farmers. Though some suppliers get hurt, Ellwood is right when he points out
that some of ‘the top branded
supermarket multiples’ own-label products are now better quality than many
manufacturers’ brands.’[92] In fact
this is what one should expect as concentration of production brings economies
of scale. The supermarkets’ buying monopoly has given them the leverage to
force the restructure the food production and distribution chain. The outcome
is either a coalition between farming and supermarkets, as in the case of the
Co-op, or the consolidation of smaller farms into large agri-business. Tough as
it is for small farmers, supermarkets will not pay them more because they are
more labour intensive than agri-business.[93]
A more
fanciful outcome of supermarket consolidation, though, is the hope invested in
loyalty cards. ‘The shopping data gathered from these cards is enormous …
Stores can use this information to predict and redirect stock, for promotion
and seasonal trends.’[94] Still
caught in the full flush of this innovation Ellwood gets carried away with the
potential:
It cannot
be long before they develop a more sophisticated programme of bronze, silver
and gold card holders to segment their shoppers further. Potential fast-track
checkouts for gold card holders and a seductive concept for those with little
time available.[95]
What
Ellwood is describing is the supermarkets’ ambition to tame the
unpredictability of the consumer goods market. Seeing their aggregate
purchasing power enhanced, these large retail outlets imagine that the
businessman’s Nirvana of a perfectly planned market is within their reach.
Surely, they reason, now that we have consolidated all of the high street
outlets into one, the anarchy of competing over a fickle customers’ unexpected
choices is at an end. In the days of primitive markets, such ambitions were
realised with the emergence of the ‘company store’, where employees bought
goods from an outlet run by their employers. With typical market rationality,
Company Stores were known for overcharging captive markets, often setting
prices above
the wages [st27]the same
company paid them.
Of course,
the ambition to recreate the Company Store tells us more about the anxieties of
the store managers more than they do about markets. All the evidence is that
customers carry many different ‘loyalty’ cards, although
RE-BRANDING AS DISCIPLINING THE WORKING CLASS
BA’s Bob
Ayling understands that the company’s re-brand was directed as much at
the staff as it was at the customers[st28]. ‘The new
livery, the efficiency programme and the change in staff skills are all
designed to show employees and customers the airline is changing, as we need to
do’.[98]
Similarly, at L’Oréal Alain Everard understands the coercive power of the brand
over the employees. “When it comes to hiring people in South East Asia, for
instance, we have to make them understand that they are joining not only a
company manufacturing skin care which they may use … but which is the number
one cosmetics company in the world”.[99]
Now it is the workers who [st29]have to
pay homage to the brand, like worshippers of a wooden fetish, as if they owed
their existence to the brand, not the other way around. Pettis has employees
recite the corporate catechism, to remind them of their higher purpose:
Employees
should have the positioning statement and the associations posted at a visible
spot near their telephones so that they can refer to them when communicating
with any of the companies publics, including prospects, customers and
suppliers.[100]
At Asda,
store debts of £1 billion, falling share prices and lost sales in 1991 led to a
re-branding exercise, that saw the ‘crisis ridden company’ return to its niche
as the ‘low value family shop in poorer areas’, and abandon its plans to
challenge more ‘up-market’ stores like Sainsbury and Tesco.[101]
The brunt of the re-branding was directed at the staff, as Chairman Archie
Norman insists ‘central to the Asda proposition is straight talking’.[102] For Asda
employees that meant ‘living the legend’ (!).[103] It also meant that Asda reversed its
financial condition by 1996 through the simple expedient of raising capital from
its staff: ‘we … have the biggest share ownership plan in
The
ideological claim of mission statements upon staff indicates that, finally,
branding strategies are dependent on the production process, however much it
appears that success can be won simply at the level of marketing.
Unfortunately, re-branding is generally a substitute for real change in the
production process; so re-branding strategies are mostly exhortations as far as
the workforce is concerned. Anita Roddick’s Body Shop provides an interesting
example of a branding strategy that seeks to disguise its own character through
marketing. David Aaker explains ‘The Body Shop charter reminds employees as
well as customers that “goals and values
are as important as our products and profits” and that “the Body Shop has soul
– don’t lose it”.’[105] Body
Shop founder Anita Roddick believes that “employees like customers are ‘hyped
out’” and need a sense of purpose that is more ennobling and involving that
mere [st30]profits.”[106]
Roddick’s mission statement is a piece of employee-oriented branding, whose
result is to get the best out of the workers. Curiously, the very denial of the
goal of profit creation has proved to be a very successful piece of
profit-creation – drawing upon the best intentions of the employees to earn
profits of GBP6.8m and a book value of GBP300m at their height.
Thomas Gad
states a branding cliché when he says: ‘People are one of the greatest assets
in a modern business and the single most important asset in building a brand’.[107] Iain
Ellwood makes the same point: ‘People are the greatest asset for any company:
if they can be encouraged to express the brand at all levels, the business will
benefit enormously.’[108] But this
is a cliché that needs to be unpacked. On the face of things it acknowledges
the special contribution of the workforce. But their contribution is to act as
‘expressions’ of the brand. In true brand-fetish mode, Ellwood makes the brand
the originator and the workers the loyal creations. According to Thomas Gad, a
good brand:
will enable
you to have your pick of the best people from the universities or the job
market, and they will work for you for lower salaries, fewer fringe benefits,
while making fewer demands for personal development.[109]
At this
point one has to feel that Gad is carried away with the magical properties of
the brand, imagining that logos and narratives can do the work of pay and
prospects in getting the best out of the workforce. In the real world workers’
acquiescence or combativeness determines the extent of their adoption of the
company brand, not the other way around.
DE-PERSONIFICATION OF CAPITAL
The
emergence of the brand is made possible by the overcoming of the family firm.
Many brands take the form of a personalisation of the product: Colonel Sanders,
Ronald MacDonald, Mr Gillette are all essentially fictitious proprietors[st31], or where
they are real people, have long since ceased to be the principle share-holders.
Just as common is the association of the brand with a personality, like
L’Oréal’s use of Andie MacDowell as brand, herself replacing Natassia Kinski.[110]
The
corporation supplants the individual as owner of the firm. Sir Edward Coke in
the 17th Century concluded: “a corporation was but an impersonal
creation of the law – not a being, just a product of written rules and
government fiat”[111][st32]
Nonetheless, the fictitious person of the corporation must be recognised in law
as having rights and responsibilities just as if it were indeed a person. For
the brand, too, as individual proprietors are left behind, ersatz persons,
brand-characters who make the product intelligible to the consumer, must
replace them. For individual customers, there is a need to put a face to the
corporation, even if it is a fictitious face. The brand assumes a human
character that people can relate to, and place within a human narrative – even
when that is markedly fictional. “Today”, writes Thomas Gad, ‘“your brand has
to have the qualities of a dear friend, someone you really trust (and I mean really).”[112]
It is helpful that Gad, the advertiser who coined ‘connecting people’ for
Nokia, insists that his comment is not figurative. It tells us that he really
does think that the brand is a person. The victory of the fictitious corporate
person over mere mortals is complete.
In an age [st33]when
people were less willing to suspend their disbelief, David Bernstein proposed
that ‘A corporate personality is far easier to convey when there is a single
entrepreneur, extrovert and identifiable at the helm’. [113] But if
that is the case, who are these nobodies that Bernstein uses to illustrate his
argument?
‘Tesco, Jack Cohen; Lotus, Colin Chapman;
Thorn, Sir Jules; IBM, Thomas Walton; Texas Instruments, Pat Heggarty; Mars,
Forrest Mars; Hanson Trust, James Hanson; Argyll Foods, James Gulliver; AIB,
Bernard Audley’?[114]
Sir Hector
Laing’s (United Biscuits’) earlier point, that people come and go but brands go
on forever begins to make sense, when we consider the way that the corporation
has liberated itself from human mortality to become a transcendent persona.
BRAND ADDED VALUE—THE CONTEMPORARY CONCEPT OF
CAPITAL
Interbrand
estimates the additional value that brands bring to some big name products:
|
Brand |
Brand
value $M |
|
Coca Cola |
83,845 |
|
Microsoft |
56,654 |
|
IBM |
43,781 |
|
General
Electric |
33,502 |
Source:
Interbrand/Citibank 1999
They also
estimate the extent to which brands multiply the value of some key supermarket
products:
|
Brand |
Multiple |
|
Coca Cola |
4.95 |
|
Gillette |
3.83 |
|
Louis
Vitton |
2.35 |
Source:
Interbrand/Citibank 1999
In 1988,
British foods company Rank Hovis MacDougall ‘made history by becoming the first
firm to include a brand valuation on its balance sheet’.[115]
The ‘added
value’ of the brand represents a return to an archaic conception of profit –
that of ‘profit upon alienation’ associated with early economic theorists the
mercantilists. The mercantilists adopted the standpoint of the merchants who
made money on the mark-up between purchase and sale. East India company
merchant Thomas Mun (1571-1641) persuaded the treasury that added value comes
from selling ‘more to strangers yearly than wee consume of theirs in value’ The
theory of ‘profit upon alienation’ fell into abeyance as manufacturers saw the
importance of creating new value through increased productivity, relegating the
‘profit upon alienation’ to the end point, or realization of the prior gains.
In the
1980s, a renewed emphasis upon marketing resurrected the theory of ‘profit upon
alienation’. Prime Minister Margaret Thatcher credited her ‘father’s background
as a grocer … for my economic philosophy. . .ensuring the incomings showed a
small surplus over outgoings at the end of the week’.[116]
In another
respect, though, the brand-added value concept departs from the eighties dogma
of cost-cutting competition--in [st34]the
equilibrium model of economics popular in the eighties growth was out of the
picture. Instead, markets were seen as a zero-sum game, in which Peter is paid
by robbing Paul. That view corresponded to a time when market raiders like the
late Sir James Goldsmith could make more money buying up companies, breaking
them up and selling their assets than by engaging production.
With the
return of growth in the nineties, shadow chancellor Gordon Brown showed off his
knowledge of the latest economics in a speech about ‘neo-classical endogenous
growth theory’. Deputy Prime Minister Michael Hesletine ridiculed ‘Labour's
brand new shining modernists' economic dream’ by punning on the speechwriter’s
name ‘But it’s not Brown’s, it’s [Ed] Ball’s’. Brown’s re-focusing on growth,
though, won the day, and since 1998 the Office of National Statistics have
recorded Gross Value Added in the economy. Value Added is calculated by
comparing the difference between the value of input compared with output. Since
all inputs – wages, raw materials, and machinery – are paid at cost, the Value
Added remains the mysterious product it always was, except that the alchemy
invoked to explain it today is not the philosopher’s stone, but the bewitching
powers of brands. ‘Brand equity can be defined as the value provided to a
product or company by its brand identity’, writes Pettis.[117]
Why brands get the credit tells us more about the preoccupations of our own
time than it does about the mechanisms of wealth creation. In other ages, the
qualities that were deemed to garner special reward were thrift, risk-taking
intellect, or breeding. In our image-conscious age, graphic design and logos
are invested with the magical property of making something out of nothing.
The concept
of Brand is the contemporary version of the concept of capital, the value that
begets more value. “Branding survives because it enhances the present value of
future cash flows”, writes Fiona Gilmore.[118]
“Products are made in the factory” says Walter Landor, president of the Landor
branding agency, “but brands are made in the mind”.[119]
As ever, the capitalists want to separate off the magical property of creating
additional value from the dreary business of making things. The divorce between
the value of brands and the apparent cost of production reinforces the belief
that brands create value out of mental power alone.
A logo
“won’t cure all the ills of a badly run company” warns David Bernstein, “but
companies are tempted to think so – and this contributes to the cost”.
Bernstein argues that “if the benefits of a house style are so wondrous then no
self-respecting company can pay peanuts for the treatment”.[120] What Bernstein means is that the high cost of
re-branding arises from the company’s own anxieties about its competitiveness.
The more anxious they are then the greater the cost of the re-branding will be.
“The reputable designer”, writes Bernstein, “regards himself as a problem
solver” “The Company therefore has a problem”, Bernstein continues. “Otherwise
why call him in?” The cost of the service is in proportion to the anxiety of
the company. The advertiser preys upon the company’s uncertainty about itself.
The good designer “will ‘ask the question behind the question’”. In other
words, he will discover yet more problems that the company did not even know it
had. Bernstein’s caveats belong to another age.
Estimating
the added value of the brand raises certain difficulties. Thomas Gad has
outlined the different methods. Cost-based value: ‘accumulates [st35]costs for
building the brand’; Revenue-based value: ‘current value of the expected future
earnings’; Transaction-based value: ‘market prices of a similar brand acquired
recently’.[121]
The flaw in
all the valuations of brand-added value is the assumption of additional value
to be had. As explanations from the standpoint of the individual firm it makes
sense to argue that the profit margin [st36]is the sum
that you have withheld from your rivals. But as an account of the economy as a
whole it cannot succeed without a prior explanation of the existence of surplus
in the economy. At one level this is not difficult. All societies at a higher
level than Colin Turnbull’s benighted [st37]Ik[122]produce
a surplus over and above what they consume. The economic form that the surplus
product takes is the defining characterisation of that society, as slave
society gave up its surplus as Tribute, Feudal society its service and
industrial capitalism its profit. It is characteristic of our image-conscious
and culture-driven age that what added value is to be had, is attributed to the
magical power of the brand.
Jerry
Gibbons, President of the Doyle Bane Bernbach advertising agency met client
Bill Gates of Microsoft in 1982. ‘Our feeling is that you’re not spending at a
level that’s appropriate for your company right now’ Gibbons told Gates, whose
advertising budget was $250 000. Gibbons took a bar napkin, drew a circle –
‘this is your industry today’ – marked out a pie section, saying ‘this is your
current share, and as you know, the industry is going to be growing’. Gibbons
drew a larger circle to represent the difference between $1.5 billion and $5
billion. ‘This is how it’s going to be growing in the next few years, and good
strategy for your company would be to capture as much share of the market as
you can now while share points are cheap. Share points are cheap because the
market size is small. As the market grows the cost of acquiring share points is
going to increase greatly. If you can increase your share, then when it becomes
more competitive, all you’ll have to do is protect your share.’
‘He grasped
that concept pretty quickly’. Gates went back to
Source:
Chuck Pettis Technobrands, p145