The Greatest Moments in Branding History

1. The moment Neil McElroy invented modern brand management.

If you look up Neil McElroy on Google, you will most likely discover him as a former United States Secretary of Defense under President Eisenhower. And even if this was the highest position he occupied during his career (kind of hard to outrank the White House), this was not the area where he has had the most impact.

In 1925, a young Harvard graduate enters P&G to work on the advertising of the different soap products that the company sells. Quickly, the young man starts having a pretty clear idea on how P&G should improve its way of doing things: in a memo that now became the birth certificate of modern brand management, McElroy argues that a new approach is possible for marketing the current line of soap products.

Instead of exclusively focusing on products, one person would be in charge of each brand (P&G had two at the time Camay& Ivory) and a team of “Brand Men” would be devoted to work on all the different aspects of marketing the two brands.

This memo was an inflection point in the history of branding because it defied the current way of marketing products, putting emphasis on brands for their power to differentiate products that will allow P&G to target different segments of customers with the same product (soap).

McElroy changed the way companies look at brands forever: he became CEO of Proctor & Gamble after Deupree retired in 1948, and from then, all of P&G CEO’s was required to have brand management experience. Today, countless companies (including big multinationals) still organize their teams according to McElroy’s standards, and the branding business has never been as flourishing: so yes, he has been a White House executive, but Neil McElroy will forever be the father of brand management.

Fun Fact: McElroy was not a conformist, but his new vision of what branding should be was not the first change he brought to P&G: the memo he sent to explain his vision was three pages long, completely transgressing the company’s “one-page long” memo policy established by the top management. Nevertheless, Deupree (P&G CEO at the time) happily endorsed his memo, spotting the innovative vision of his new prodigy.

2. When a psychologist won the Nobel prize of economics

Remember the time when we used to think that consumers are “rational” and that they make decisions by maximizing utility and minimizing risks?

Well, it is safe to say that this is not the case anymore; and this matters for your branding.

In 2002, the American psychologist Daniel Kahneman got the Nobel prize for proving just that: together with an American cognitive and mathematical psychologist Amos Tversky they challenged the definition of human rationality that was commonly accepted until then. At the time, this seemed like a risky path to take due to the fact that the “rationality” of human beings was the basis of the modern economic theory: it was accepted that “individuals use rational calculations to make rational choices and achieve outcomes that are aligned with their own personal objectives. These results are also associated with an individual’s best, self-interests”.

By relying on surveys and experiments, both authors brought to light the fact that when future consequences were uncertain, people are unable to analyze a complex situation and take a clearly guided decision: instead, people tend to make judgment that might be referred to as “irrational” because they allocate a greater importance to emotions which are hardly predictable or controllable.

So how do we link that to branding and find leverage to grow your business?

Well, what Kahneman and Tversky are telling us is that trying to predict what people will do based on what they need and what resources they have to solve their problem is not the right thing to do. Instead, one should try to understand how the clients feel, and what are the real needs underlying the ones they verbalize.

Let’s clarify this concept using an example:

Clara wants to buy a car. After doing some research, she picks up three viable options that tick all her boxes:

  1. Volkswagen Golf: 17.000€
  2. Audi A3: 22.000€
  3. Seat Leon: 16.000€

 

After thinking about it, asking advice from friends and family and checking out the three cars in dealerships, she goes for the Audi A3 and explains her choice as follow:

Buying a car is an important investment for me, I wanted to pick the best possible option, and because the difference in pricing is not huge, I’d rather be safe by taking a German car, and I have never heard someone complaining about having problems with an Audi, so I think this is the smartest investment

You probably already heard this kind of argument “it’s an important investment, I will take the best option”. The truth is that in this specific case, the argument does not hold because those three cars are virtually the same: they come out of the same assembly line, have the same engines, same chassis, similar performances, etc.

So, what’s different?

The brands.

This might seem silly, but in fact, this is all that differentiate those three cars.

Want it or not, you can explain the similarities all you want, but pulling off to your in-laws Christmas dinner in an Audi or in a Seat won’t make the same impact.

In this specific decision process, status played a more important role than the need for a vehicle

This example illustrates well the theory of Daniel Kahneman because the very fact that different people purchase very similar products but with significantly different price tags shows that people are not as “rational” as modern economic theories wanted to believe.

To conclude, we saw that McElroy changed the game by focusing the efforts made by P&G to market its products on branding, and Daniel Kahneman won the Nobel prize by stating that people are more driven by emotions than “rationality” when making purchase decisions.

So maybe, just maybe, trying to understand how your customers feel and taking care of your brand can improve your business.

The key takeaway of all this: take good care of your brand because it matters much more than the problem you are trying to solve for your customers.

February 25th, 2020 | Branding

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