ee-for-service operations that used to rely on word-of-mouth advertising are finding it no longer suffices in the fast-moving federal market for administrative services. That market is characterized by conditions under which branding can be used to best effect: Customers often haven't heard of the organizations selling their services; standards for evaluating offerors are evolving and differ from client to client; and clients often are pressed for funds and need services quickly so they aren't willing or able to indulge in painstaking comparison shopping.
"Investing in a brand pays off when you build brand equity and become known for what you deliver," says Mark Vogel, executive vice president for brand management at St. Louis advertising agency Osborn & Barr, whose motto is "We build belief." If you doubt the power of branding, consider that companies spend hundreds of millions of dollars to create and maintain the symbols customers know them by. If you close your eyes and think of some of the best known firms you'll see why. What happens when you think Nike, Coke, Kodak or Pepsi? If certain colors, trademarks or phrases come to mind, you've been branded.
Branding has become vital now that the markets for most goods and services have become crowded and cacophonous and transactions move faster than ever. Brands have taken the place of personal interactions with salespeople. Buyers make purchasing decisions based on brands and what they represent about the quality of a company's products. Companies use their brands much as ranchers do, to differentiate their products from the rest of the offerings in the range. Products and services with recognizable brands also can command higher prices.
While branding often helps propel products to the top of their markets, it doesn't guarantee success. Brands produce the "highest returns when customers lack specific information for evaluating a purchase, don't have clear standards for evaluating the information they do have, either can't or won't seek out more information, or just don't have time to do so," writes Robert G. Docters, senior vice president with Ernst & Young Consulting Services Inc. in "Branding: Shotgun or Rifle?" in the July/August issue of Journal of Business Strategy. Docters suggests that the nature and success of brands depend largely on the price and the types of products and buyers involved. Organizations should target their brands to specific buyer decisions, he recommends, and spend selectively on devising and supporting brands where they will do the most good.
Brands belong more to customers than to companies, Vogel argues. "[Building a brand] forces us to look to the marketplace at the expectations of [buyers]," he says. "Lots of times you work with a client who is driven by short-term goals and disappoints the marketplace by being untrue to the brand. For example, Crystal Pepsi did not meet buyers' expectations. The new Coke did the same. If Volvo introduces a product that isn't [very] safe it won't sell; the same if Chevrolet introduces a product that's not red, white and blue."