[MUSIC] Hello and welcome to this MOOC on brand management, aligning business, brand and behavior. I am Nader Tavassoli, I am a Professor at London Business School and I know all of you´re wondering, what is it with this coat hanger that is part of this course. I will tell you, but you'll have to wait until the second week. So, what I will tell you today is about brands. We'll start out by discussing what are brands, then we'll talk about how is the environment for brands and for their success changing. And then we'll think about new ways of building brands and what that means for you, and your organization. So the first thing I'd like you to do is to think of a brand as quickly as possible when I put up a very, very simple word in the English language. Now, I've done this across the world and most people get it. So I know most of you will at least think of this brand, as one of the first two or three brands that you can think of. Here's the word. Now, did you get it? Many of you will have thought of the brand name Volvo. Some of you would have thought of a brand like Safeway, because safe is part of the word Safeway. Some would have thought of Chubb, because they make safes. But few of you will have thought of brands like Renault even though Renault, some years ago has won many of the major safety tests for cars. They even went out with a big advertising campaign saying, we are safe. Drive us, but most people did not rewire their brains. Volvo simply owned the term safety in people's minds. So, how do we think about that? Well, Volvo itself is the identity of the brand. It's the brand name. It's a registered trademark. Attached to that registered trademark are a set of associations. Some good, some not so good. So if we think of the brand image, it really is net net what do these associations mean to you or more importantly, to their target customers? If I'd said, Volvo and tell me what you think, some of you would've probably said, a bit boring even though they design some of the most exciting cars today. That image has stuck with them over decades. So Volvo's challenge to build the brand is to protect safety for those consumers who care about safety, as their key purchasing criterion. It's an image they've built overtime with various advertisements, various images. And of course, they've invested in safety over the last 70 to 80 years. They've been consistently at the forefront of either inventing safety features or like the ABS brakes, which they did not invent, they made part of the standard car earlier than others did and it was still an optional feature for other cars. So if you think of a brand, it is the identity, which is Volvo, its logo. The visual identity in many ways and its image this set of associations attached to the brand. And marketers think of their job being to enhance the brand image by negating negative associations and elevating positive ones. And of course, to protect the visual identity of their brand as well. So, next question is if this is what a brand is how has the competitive environment for brands and branding changed? What's the landscape brands are now competing in? So to discuss that, let me take you back in time, 1984. I'm an undergraduate student in economics and I'm introduced at this point to a concept called perfect competition. Now, some of you have not heard this concept before, so let me explain it to you. A perfectly competitive environment is where competition is so fierce that the players in the industry are forced in terms of their pricing down to basically their cost base. They don't make profit anymore. All the value that's created goes to the consumer. Now, what are the conditions under which you have perfectly competitive markets? One is you have a large number of sellers with low barriers to entry. The other is you have perfect information and the third is you have homogenous or commidity-like products. Now back in 1984, that seemed kind of ludicrous. And as you might imagine, as a teenager, I was not paying much attention, but dial forward just a few decades. Do we have a large number of sellers? Well, have a look at Google and think of a product like the iPhone. Lots of retailers are selling the same product. So if you think about the retailer profits, they're basically under huge pressure, because everybody's selling the same products. What about the concept of perfect information, especially in a global environment? Today, you look at the internet. You look at Google. You look at Metasearch engines like Kayak, which is a search engine on top of search engines. You look at in the UK, we have moneysupermarket.com. You can even go to a store and use your mobile phone, and scan in the barcode, and find a better price elsewhere. And there are even some websites, like ratemyprofessor.com where you can get information on the people that teach you. So, there's a lot more information consumers have. Not only do they have more information today than they had yesterday, but they often have more information than your very own salespeople at least about the products they are interested in. So if I go and buy, let's say, a television. I might have done my search online beforehand. I'll have selected two, three different models and I research them in depth. And when I go to the store, I want the sales person to help me make my decision. Now of course, they have dozens of TVs to deal with. They have lot of other electronics in their mind. So for them, it's actually quite difficult to know more than I know, so that whole relationship in terms of information has shifted. The customer often knows more than the company. And finally, let's think about this idea of commodity like products. Homogeneous markets. Just this year at the Oscars in 2015, we had Taylor Swift appear in a white jumpsuit as part of the Oscars. And the brand called Nasty Gal, which sells this jumpsuit for $78, thought it was theirs and so did most of the consumers and it sold out online within just a few hours or days maybe. Turns out, this was actually a jumpsuit by Balmain, which sold for almost $2,000. They look so similar not even the brand and Nasty Gal knew it was not one of their own. Now, look at other products in a space. Go to any supermarket, look at hair care products. A lot of low-cost competitors, basically, copy the trade dress of leading brands in order to look alike. Think of trying to get a mortgage product or any kind of insurance product, I'd say. Most of them are very, very much alike between competitors. And even think about the iconic Apple brand in terms of the pad, in terms of the iPad. The lawyer when they were suing Samsung went to the judge and showed the tablet from Samsung versus the pad from Apple and said, look, they are so similar. They've copied everything we do. So competitive benchmarking and competition has really commoditized industries, and I don't have to tell those of you in business to business products how difficult it is to actually differentiate your products from each other. Not only that, but your customers are driving this commoditization. So in business to business, we've got strategic functions now, which are procurement and they really are making products seem very similar. Why? Because they want to ask you to compete on price. They're basically telling you as competitors, hey, you're the same as all these other prequalified suppliers. Give me their best price. So, the question is what role does a brand play in this environment? Does it really matter if the same product comes from one brand versus the other? If the jumpsuit comes from Nasty Gal or it comes from Balmain. If the oil comes from Shell or it comes from BP, does it really matter. So what this MOOC is about is yes, it does matter. Let me just give you one more example to stress this point. I asked you to name a brand when I said, safe and many of you will have said, Volvo. I'm going to give you another brand now or not another brand, you're going to give me another brand and the word is the following. Try and guess the brand. Now most of you, if not all of you will have thought of Disney. Why? Well, in part, because magical is part of their slogan for the brand. The Magic Kingdom, but now think about what makes Disney so magical. So for those of you who've been lucky to visit a theme park, think of all the different experiences. The brand is not really a product or even a service, it's an experience that happens over a prolonged period of time. There are many, many touch points and these touch points cut across all your different business silos. It can be the parking lot attended. It can be the ticketing person. It can be an operator of a little choo, choo train where you can listen to. It's a small world and you're in your own little magic bubble while you're there. And you can think of even vendors who are constantly fixing and upgrading the theme park, they have to disappear into the background. It's very, very difficult to create a magical experience. It's not the same as commodity products. This is really the behavior of dozens, if not hundreds of people that occur across this experience that you have. So, what this this MOOC really is about is about this gap between the brand promise. Which traditionally, marketing communications was about creating that promise. It's creating those expectations and about the delivery of that promise. So the brand is not just the icing on the cake, it's the cake itself. It's not an outcome, as in the brand image. It's really part of the process itself. It's its inside the organization. It fuels innovation. It drives your people's behavior who then deliver the costumer experience. Now, this is a real step change from the way we think about branding before. Before, it was very controlled. It was the visual identity. I could have advertisements, place them media, again, which were very controlled. Now it's about internal to the organization, engaging with different business functions that marketing traditionally has not engaged with with. Operations, human resources, IT. And it's about those functions, delivering the brand at many various touch points across the customer experience. Our luck changes, the ways of work change for the company. The ways to measure brand health changes. The way you measure success changes and that's really what this MOOC is about. [MUSIC]
