Prof G Micro Class: Brand Strategy

This week, a summary of the first few
classes in my brand strategy course. So, loosely speaking, think of a brand as all the touch points that create emotional and tangibles surrounding a product.
There are three basic categories or three basic ways to build a brand:
there’s pre-purchase, purchase, and post purchase. Pre-purchase – advertising, public relations – the things we typically consider brand building. Purchase – where
you actually buy the product – distribution, the store. And then post
purchase – loyalty programs, customer service, warranties. What do we see
happening? Pre-purchase, which has been massively over invested, is in structural
decline. Why? Because advertising sucks and the advertising industrial complex
is collapsing. Young, wealthy people, i.e. anybody a brand wants to reach have
decided to opt out of advertising, which has become the tax that the poor and the
technologically illiterate pay. What does this mean for you? It means if you’re a
brand you need to reallocate capital out of pre-purchase into purchase or post
purchase. So we take that capital out of pre-purchase which is the rookie move in
brand strategy and we allocate it towards the medium whose death has been
greatly exaggerated and that is stores. The gangster move of the last 20 years
that has created more shareholder value than any decision in the history of
business with Steve Jobs’ crazy irrational decision to zag while everyone
was zigging and take money out of advertising and allocate it into a
medium that was dying – specifically store – “This is our store and the first quarter
of the store has our Home section and our Pro section with all our great Pro
products and every product we make is in this first 25% of the store and you can
see the whole product line.” Stores are the consummation of a relationship – you
hear about somebody – a good family, nice, fun to be around and pre-purchased
through advertising, but the physical interaction: the first kiss, sex with the
product who we personify and have a relationship with, is at the store. You
have sex with Tom Brady or Giselle, you go into an Apple store, you go into a
Samsung store or Samsung distribution which is an AT&T or Verizon store – that’s
having sex with a guy named Roy with a name tag in bad lighting.
“You know what this is?” “Yes, that is a ten times larger than life replica of your
penis.” “Oh, that’s hilarious.” Point of distribution: stores are more and more strategic and while square footage and stores will decrease,
the amount of money spent on each square foot relatively will increase. The other
gangster move? Post purchase, warranties – some sort of guarantee, some way of
getting data. It’s really post purchase intelligence where we take data from the
purchase and use it as a means of whipping the consumer back around to
that purchase funnel again. Think of the clock as being an axis unfurled across X
Y or an x axis – pre purchase, purchase and post-purchase – we want you to have a bias,
we want to lean the axis this way – take money and allocation in your own
human capital out of pre purchase and either put it into purchase – the stores
are under invested, you can still make money in retail in stores as long as
there’s an omni-channel and we do click and Collect – but really try and get to
post purchase. Who are the best brand builders in the world? Hands down, Tobacco.
Take a product whose primary benefits are death, disease and disability and
turn them into the most aspirational brands that make us feel tough and cool
and you have the best branders in the world. Why are they the best brands in
the world? Because we turned them into the best brand builders in the world. When
they were advertising on television, our mothers, our sisters and our daughters
kept dying and so we said “That’s it, we’re pissed off, you can no longer
advertise!” So what do they do? They took all of this capital and they allocated
it to purchase and they put cute pictures of camels and bodegas at
distribution. Just about the time, this was losing its effectiveness – good for
them – but here’s what happened. Our sisters, our daughters and our mothers
kept dying so we said “That’s it, no more cute camel points of purchase!” just
as this was starting to lose some momentum and they built the largest
databases in the world and when they sensed you were stopping smoking, they
started sending you Marlboro points or coupons to get you back into the
franchise. The original CRM database marketers? Tobacco companies. There are
exceptions to every rule. Pre-purchase ad supported media is not going away it’s
just going to be a shit place to work or invest. As a matter of fact, I’ll be watching ad
supported media tonight. I’ll give you one hint. We’ll see you next week.

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