Brand-Centered Businesses

Brand-centered businesses significantly outperform their competitors, with almost double their profit margins yet start-ups often lack a brand focus, thinking that 'brand' is an add-on for later. In fact it should be the starting point of business model thinking.

Product-market fit is the holy grail of lean start-up thinking. Who could disagree with Mark Andreesson’s much-quoted “the only thing that matters is getting to product/market fit”?

Yet it only takes a moment’s thought to know that we don’t buy products, we buy brands: just think about the $29.99 own-brand T-shirt above compared to a functionally identical designer version priced at $150.

Owners of successful brands have known this for a long time but the same rules apply to start-ups and small businesses: your customers buy your brand - not your product.

And that means a different way of thinking about business models. It’s about brand-market fit not product-market fit.

Brand-market fit vs. product-market fit

In March 2013, googling for “product-market fit” gave me over 900,000 hits and “brand-market fit” a few hundred hits. It’s obvious that the conversations is currently about the product rather than the brand. It’s time to redress the balance!

The fact is that marketing science, psychology and now neuroscience tells us that we make choices not based on rational, functional, carefully-considered product features but on fast, emotional gut feelings and instincts linked to brand associations and brand meaning.

Andre Reynolds of Vibrant Media describes a perfect example of this, telling how he chose a pair of fashionable boots rather than another functionally superior pair – even after carefully assessing the functional job-to-be-done:

“I’m buying into something for reasons that are less purpose and more look and feel… what I walk out with is based on which product does a better job of conveying what I want to imply about myself.”

Andre describes this as brands ‘incorporating his lifestyle’ and pleads “Are you there brands? It’s me, Andre.”  In other words, the job-to-be-done idea and pains/gains thinking needs to take into account powerful emotional factors that beat the rational considerations every day.

The challenge for anyone creating a business (and brand) is that these emotional factors mostly operate at a non-conscious level and customers are often unable (or even unwilling) to express them.  Not everyone is as perceptive as Andre.

Fortunately, there are tried and tested psychological models to help us with the challenge of understanding how products can convey  “what I want to imply about myself” and help us tap into the power of non-conscious emotions.

Archetypes and Brands

The most developed and tested of these models is based on brand archetypes, described, for example. in Mark & Pearson’s excellent The Hero and The Outlaw.

The origins of archetype theory lie in the notion that we all collectively share innate understanding of certain types of ideas and meanings, including the meaning of recognizable ‘characters’. These characters are found, for example, in folk tales where we can recognize the hero, the baddie, the lover, the wise sage etc.

In Andre Reynolds' example above of buying boots, he describes a critical trigger of an in-store poster showing "a man wearing a rather long taupe trench coat blowing ever so slightly in the wind. He was walking through the city, carrying a cup of coffee in sleek brown leather gloves" - and wearing the desired boots of course. We might discover that the brand was tapping into an archetype of "sophisticated urbanite in touch with nature" that coincided well with Andre's desired identity.

It is this connection between the brand's associations and the customer's psychology that underpins brand-market fit and the archetypes model gives us a clear structure to use in finding that fit.

Products matter – a lot!

You might think from the example of Andre's boots above that products don't matter and the power and meaning of a brand come from 'marketing' - such as an in-store poster. In fact, the same research in psychology and neuroscience tells us that product (and service) experiences are vital to building all those associations: there is a 'right' type of boot for a sophisticated urbanite and it probably differs from the right type of boot for an adventurous sportswoman.

Products need to perform and do the job effectively. If Andre's boots fall apart after a few urban walks the most brilliant advertising poster isn't going to persuade him again. Reliable performance is another way to build positive brand associations.

What does it mean to be brand-centered?

Booz Allen Hamilton published research showing that brand-guided companies “have profitability margins nearly twice the industry standard” across a range of different industries.

They describe how brand-centered companies have clearly-defined brand values, a brand-led approach to key activities such as product development and customer service and employees who are genuinely “living the brand”.

To achieve this, the first thing a company has to do is “to define the market position it aspires to” and develop its brand proposition.

In other words, a competitive brand positioning is at the heart of the business for these more profitable companies.

That is why, at opento, we put brand at the center of our thinking on business models. Brand-centered business models ensure that the business assets and capabilities deliver the correct brand competences to meet the key customer needs.

Putting it into practice

We all know that start-ups and lean businesses can rarely afford to spend hundreds of thousands of dollars on developing a brand positioning before working on their business model. And even large, profitable companies are challenging traditional costly and time-consuming approaches.

At opento, we've been using these ideas in our business model frameworks with many different types of brands and in many markets.

We've now put together a system of products to help you design, test and optimize your business model cost-effectively Find out more and explore our products by visiting the opento store.

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Rachel Martin
Rachel Martin says:
May 14, 2013 12:26 PM
Great post Sandra and thanks for bringing brand-centered business model thinking to life so clearly. I have a business idea that's still at the incubation stage just now and I'm an avid follower of the Lean Start-up movement, so this insight on the importance of putting brand at the heart of my business model design is a great idea. It seems obvious now once you’ve explained its significance, but you're right, people do buy your brand, not your product.
Sandra says:
May 15, 2013 10:00 AM
Thanks, Rachel,
It would be great to see the Lean Start-up world embrace brands.
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