APRIL 19, 2005

By Christopher Kenton

Pruning the Tree of Marketing Theory

Cluttered verbiage obscures the real meaning and usefulness of terms. That's why I'm arguing for a simple, basic definition of "brand"

For the past few weeks, I've been arguing for a reduction of the definition of "brand" to it's foundation. Brand, I believe, should be understood as a tangible symbol that distinguishes one company's products from those of the competition. All other notions, infused with theories about the complex relationship between company and customer, should be understood as derivative concepts -- separate from the core meaning.

I didn't originate this idea -- it is, after all, the American Marketing Assn.'s official definition of brand -- and I'm also not original in championing adherence to this definition. Nevertheless, I've taken a lot of heat from a group of marketers and other readers, outraged at my oversimplification of marketing complexity. I've been accused of everything from ignorance to some kind of puritanical marketing fundamentalism. The more progressive complaints have proposed that my argument should be accepted in the same spirit as cultural diversity -- that conflicting definitions of brand could peacefully coexist if we all just have a little tolerance.

But the crux of my argument is that conflicting definitions for core marketing concepts can no longer be tolerated. After many years of creative innovation and chaotic change, a time comes when we need to buckle down and prune the vast overgrown tree of marketing theory back to the strongest and straightest branches. In the current environment, with a shaky economy, with businesses pressed to the wall to define the mechanisms that generate bottom-line value, with investors and regulators demanding accountability, that time has come.

HEART OF THE PROBLEM.  Marketers pride themselves on their ability to understand a company's customers. Today, they need to listen more carefully to their most direct customers -- the businesses to whom they provide services in return for a budget and a paycheck. What businesses need from marketers today is a sober assessment of value and a back-to-basics approach to defining marketing's contribution to cash flow. But where to start?

I've been arguing so forcefully for the tangible definition of brand because the issue cuts to the heart of marketing's current disarray, both practically and symbolically. There's no better place to focus attention in bringing clarity back to the practice of marketing, because the brand represents not only the balance of tangible assets and the intangible processes that invest those assets with value but the balance of corporate and customer interests as well. In many respects, the brand is the cornerstone of marketing theory and practice.

Insisting on the definition of brand as a tangible symbol that distinguishes the products and services of one company from all others is the first step in clarifying the array of derivative concepts that describe how the brand is created, improved, leveraged, and valued.

VALUE BOOSTERS.  From the corporate standpoint, the most important derivative brand concept is brand equity -- a measurement of the cash value added to the corporate ledger. There's no debate about whether or not brands represent real value, and there are many ways in which it's measured, including the price premium a branded product commands over competitors, the replacement value of the brand, the royalty value it would command if licensed, and the market value of the branded product or business over and above the value on the books.

Brands add value to the bottom line by reducing market risk and maximizing product value. Strong brands enjoy customer preference and loyalty, which stabilizes revenue streams, reduces defection to competitors, eases introduction of new products, and facilitates premium pricing. Strong brands provide leverage in developing partnerships and distribution channels, and help companies attract quality employees. In fact, enumerating the number of ways a brand adds measurable value to the business would be a column in itself.

Given all the ways in which brands enhance value, it's not surprising that marketing includes just as many ways to build and enhance the brand itself. It will likely spark another debate for me to suggest that brand-building activities be gathered under the banner of "branding," especially as that term has come, in many circles, to be synonymous only with advertising.

DRILLING DOWN.  But brand building encompasses far more than the expertise of advertising, more even than the entire scope of the marketing function itself. Building a strong brand encompasses all of the activities that connect the company with its customers, investors, partners, employees, and even competitors.

Over the next couple of weeks, I'm going to drill down into many of the specific, detailed, examples of brand-building activities and derivative brand concepts. How does a brand connect the company with its customers? How are businesses building and managing effective brands? How has technology changed the way we understand the meaning of brands? How are businesses grappling with the need to quantify the marketing activities that build and leverage brands to add bottom-line value?

Understanding these activities and how they're being shaped by changes in the business environment is important. But it's impossible if we don't insist on stabilizing the language we use to describe them -- and the first step is embracing clarity in our understanding and communication of marketing and branding ideas.

This doesn't mean marketers should stop imagining new concepts for the way brands connect businesses with their customers. On the contrary, businesses need this creative ability more than ever. But we need to accept that the context for this work is what connects marketers with their clients and co-workers: the necessity of quantifying the business processes that add value to the bottom line.