It's not what most company CMOs and brand champions want to hear. But I have to say it anyway: Consumers care more about categories than they do about brands.
What? You might be thinking. You’re a branding expert. Isn’t it hypocritical of you to say that brands aren’t that important?
Not really. Consumers love categories, but they refer to these categories by brand names. Inside the consumer’s mind, the brand is just a shorthand device for the category. A consumer thinks, I’ll impress my friends by ordering an ultra-expensive vodka. But that’s not what he or she says to the bartender. “I’ll have Grey Goose on the rocks.”
Brands succeed not because of love but because of location.
Brands are simply an efficient means to an end. And powerful brands are those that stand for and represents a distinct category or concept in consumers’ minds.
In an over-complicated world, we search for simplicity wherever we can find it. And great brands provide that in spades.
You want “cheap chic,” just say Target.
You want an “energy drink,” just say Red Bull.
You want “performance athletic wear,” just say Under Armour.
You want a “professional all-day laptop computer,” just say Lenovo. (Wait a minute, they didn’t use the strategy I suggested in my last post yet. But imagine if they did, how terrific a brand it would be?)
Too many company managers are too much in love with and too focused on their brands. And management thinks, we consumers are in love with their brands, too.
But we’re not. We are only in love with the ideas, concepts and categories that brands represent in our minds.
Therefore the key to building and maintaining a brand is to be sure the category and idea your brand represents is vibrant, relevant and frequently thought about.
Look at Dell, a company in trouble. Dell is in trouble because it stands for a category in trouble. In the mind, Dell means desktop computers sold direct.
When businesses were buying customized desktop computers by the truck load, Dell was the number-one computer company in the world. Everyone assumed Dell was a platinum brand and whatever products the company offered, consumers would think they were great.
So Dell began to market computers to consumers with advertising like “Dude, you’re getting a Dell!” They compounded their troubles by also trying to sell a wide range of products including television sets and MP3 music players.
As you probably know, “Dude, you’re getting a Dell” fell flat along with other sales initiatives at Dell. Today Dell’s sales are down, Dell’s stock is down, and Hewlett-Packard is now king of computer hill. Michael Dell even fired his CEO and is now back in charge at Dell.
Dell, a brand in trouble? No. Dell is a category in trouble. If we all wanted desktop computers for our companies, Dell would still be on top.
Unfortunately, today most business people as well as consumers want laptop computers. Business is going mobile and global. So instead of laptops, many companies give employees laptop computers. Today’s laptops last longer, have more memory, more power, cost less and allow you to work from home, the airport or on vacation.
Sure Dell has launched laptop computers to meet this demand. But here is where the problem lies. In the mind, the Dell brand doesn’t mean laptop. It means customization and buying direct which happen to be two things inconsistent with buying a laptop computer. Most laptops are too small to allow for much change and most people want to feel and touch a laptop before purchasing the product.
No matter what Dell does, the brand is in trouble because the category is in trouble.
No brand owns the laptop idea today because no brand has focused on it. Compaq had a great opportunity. (They had the name and the cute nickname “the luggable computer.”) But they gave up on that focus and started to sell all types of personal computers until they finally threw in the towel and merged with Hewlett-Packard.
Toshiba had a great opportunity. At one point, Toshiba was the largest seller of laptop computers (and may well be so today.) But like Compaq, they also got into the desktop market. Furthermore, the Toshiba name is tarnished because the company sells a broad range of products under that name.
That’s why Lenovo has such an outstanding opportunity. If they focused on their ThinkPad brand name, they would have the perfect product, the perfect name and the perfect opportunity to dominate the laptop category. That’s how you use a category to build a brand. But the only way to lay claim to a category is by having a focus. If you make a full line of products for all types of consumers, you haven’t laid claim to anything and you will never own any real-estate in the mind.
So what is a once high-flying company like Dell to do if it sees its category sliding?
Launch a second brand to ride the new opportunity and let the old category drift with your existing brand.
That’s what Dell should have done. That’s what Kodak should have done. That’s what Toyota did.
Toyota, the reliable, affordable but slightly boring Japanese car company, made itself both luxurious and cool. But not with the Toyota brand. The company did it by launching the Lexus brand at the high end for the luxury market and the Scion brand at the low end for the youth market. (And today they dominate both markets.)
Much has been written about the success and brilliance of the Apple stores. How they demonstrate the power and consumer love of the Apple brand.
It’s just the opposite. Apple stores are strong evidence of the power of the iPod category. High-capacity MP3 players are a hugely vibrant and relevant category today. (Apple has sold more than 100 million iPods.)
Certainly Apple stores do an excellent job of promoting Apple products, giving great service and excellent technical support. But without the success of the iPod category, Apple stores would be just like Sony stores, empty. No matter how cool the décor.
Some branding experts say Sony needs to get consumers to love its brand again, just like consumers love the Apple brand. But the only way Sony can do that is by dominating a category people are in love with or willing to fall in love with. Instead, Sony sells a full line of products to all types of consumers and is getting no love.
As Apple iPods become more mundane and as Apple iTV and iPhone devices fail to generate much excitement, we will see how successful Apple stores continue to be. If I were Apple, I would make my stores iPod stores, focusing on music and players.
With Tower Records gone, kids have no place to hang out. And nothing works better than music in drawing a crowd. I would promote music in order to get people to buy more, listen to more and keep my music category vibrant. Because we all need a little love in our lives. And the way to brand “love” is by building and maintaining lust for a category.
We marketers are often too smart for our own good. We get caught up in how we ourselves think and would make decisions, and often lose sight of what our target customers would do (which is often very different).
Putting categories before brands is natural consumer thinking. When I want a Snickers bar, I never start by saying I want a Snickers. I start with telling myself I want something sweet, I want a candy bar! And what's the best candy bar in the world? Snickers!
We always start by self-creating a need or desire for a category, even for a split-second, before we decide on which brand within that category is to our preference.
Great job, Laura.
Posted by: Matt | June 2007 at 08:54 AM
"Apple re-invented the MP3 player market...there is not an iPod market! The iPod is an Apple creation. And to say there is not loyalty to the Apple brand is just plain daft....."
- David Taylor
read this...
"Consumers love categories, but they refer to these categories by brand names."
"Much has been written about the success and brilliance of the Apple stores. How they demonstrate the power and consumer love of the Apple brand."
- Laura Ries (above)
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I think Laura made some excellent points about categories and brands yet I'm of the opinion that consumers love either categories, brands or both.
I don't believe the fate of a company selling products can soley be determined by its focus on a particular category. However, I do think that it is a good idea for startups to focus on one idea/product/service while paying close attention to the market trends.
Re-branding like what Toyota has done is an excellent strategy for staying "focused". It seems as if this is something that MANY car manufacturers do and it works.
However, I don't know if this would work for a software/hardware company like Microsoft or Apple because people seem to have more brand loyalty in this market.
Posted by: Dennis Matthew Dewey | June 2007 at 10:40 PM
I was in the process of responding to this article last week but this ridiculously hot girl walked in my office and started talking to me and I got completely distracted and just deleted my post. So now, I find myself on vacation taking the time to respond to your post.
For starters I completely disagree with your comment that basically you would make all of your stores Apple iPod stores and focus on music. What a mistake that would be.
To me, the Apple brand says more than just music. I love their Mac vs. PC commercials...it seems like you would be all over these. What a great positioning strategy. The commercial is basically about "squares" vs. "creatives." I love it. It totally embodies what the Apple brand is.
For me the Apple brand shouts innovative. It is more than just music players and computers. It is a technology company that launches innovative and creative products. I think they are on the right track.
My belief is that the iphone will be a success. Initially, it doesnt appeal to me because of the camera size and lack of music memory. But I believe that this product will appeal to a massive audience. I have been watching the commercials and it looks pretty cool.
I just purchased a Pocket PC and have to admit the thing is pretty addictive. Same with those Blackberrys (Crackberrys). OF course both of these are convergence products. I really think this phone has legs and it will run.
On a side note, I think you need to state that you will do something completely irrational if this product is a success....i.e. shave your head.
Anyhow, I have enjoyed reading your blog....keep up with the great work.
Posted by: The Hotz(e) | June 2007 at 10:23 PM
Dell is now offering 2 desktop computers for sale at a retail outlet. The first time ever for Dell. That outlet is Wal-Mart. It seems Dell is trying anything to boost sales.
Posted by: Robert Wicks | June 2007 at 02:08 AM
Wow. This really is an jaw-droppingly flawed bit of thinking.
Whilst I agree that in some cases the whole "brand love" thing is over-done, going as far as saying its all about categories not brands is bonkers. And you have your cause and effect mixed up.
Apple re-invented the MP3 player market...there is not an iPod market! The iPod is an Apple creation. And to say there is not loyalty to the Apple brand is just plain daft. Yesterday 2 people came up to me in Starbucks to look at my MacBook pro...did they do that because the laptop market was booming? Of course not.
Do the 40% of who say NO when asked if they would buy own label instead of Heinz ketchup at any price do so because of the ketchup category? Of course not.
Great brands create markets. Not the other way round
Posted by: David Taylor (from Where'sTheSausage) | June 2007 at 01:57 PM
its so annoying when ads say stuff like "dude youre getting a dell!" or "gimme another shot of turkey!" i think theyre just trying in a really really misguided way to follow your dads advice from 30 years ago and make their brand name the generic. but its so god awfully fake. advanced civilizations are going to look at ads like that and think "oh my god, these people must have been retarded." you know how ads from the 50's just look cheesy and stupid to us now? i don't think its gotten any better.
Posted by: Tom22 | June 2007 at 12:17 AM
Two points...
In my mind, Dell always has and still is THE laptop computer. I build my own (of course with their help) and I receive it within a couple of days. I'm not a computer expert - so maybe I'm in the minority - but the next time I need a computer I call Dell.
The reason kids don't hang at "record" stores is they do, just at a different location - the Internet. And if they find something they like, it goes to their iPod and then WOM to friends. Same as when I was a kid, except we really did buy records and play them on our turntables.
Posted by: greg gillispie | June 2007 at 05:32 AM