How should companies approach developing a brand?
A company is like an iceberg - 90 per cent of it is underwater. The bit jutting above is the brand, the visual surface of the company. To be successful, you have to have all the stuff below - to start with, a good product that works. Often I'm consulting with companies not doing the basics right.
I see the brand as the icing on the cake.
You should remember that different industries have different branding needs. There is not a universal requirement for it. For instance, if you sell business-to-business (B2B), selling is a lot more important than branding. Invite the international buyer to New Zealand, take them to a rugby game, take them out on the harbour and out for dinner and your business will benefit a lot more.
Can you expect a premium for your brand if you do it right?
You can get a huge premium if you have the whole package and experience. Look at Apple - you're buying the whole experience: the phone, the packaging, the software, the in-store, the advertising, the ghost of Steve Jobs hovering over you. It's not just the Apple product.
Are there successful companies that have developed brands as an afterthought?
There are firms that have developed their brand from the start and there are ones that did it as an afterthought. I'd probably argue that most brands were developed as an afterthought. If you build the first brewery in Auckland - it's 1840 - you are going to do really well.
If you go through the Fortune 500 or the Interbrand 500 and look at the history of these companies, most of them developed the company, then the brand: Kraft, Nestle, Unilever, GE, IBM - all of the big old companies. Kraft was originally National Dairy Products, a company set up by Goldman Sachs and Lehman Brothers to consolidate the US dairy industry. So many top brands did not start out with great brands. Once they were making good profits, they were able to invest in brand-building and advertising, repetition and reputation. Google has a strong brand, but underneath it has a good search engine, that's why it is successful.
It starts with the product. You can't brand an undifferentiated product. Lots of farmers have tried, but you can't really brand plain old carrots.
You don't have to have a brand. In New Zealand there are companies that are incredibly successful and fly under the radar. There is a company operating from a shed in the Hawkes Bay turning over $100 million, 99 per cent exported. It doesn't have a brand; it just has a good product targeted at a B2B market.
What would your advice be to startups on developing a brand?
My advice would be less is more. Simplify, simplify, simplify. Like the restaurant industry, if there are too many items on your menu, it reduces your focus. Concentrate on 80/20, have a good product and not too many products. Remember, cash is king. Focus on your supply chain. So many times companies underestimate good old-fashioned selling. Once you have done the basics put a brand on top of it. Branding is not some kind of silver bullet. It should come after you have everything else right.
Tim Morris is managing director of Coriolis Research.