Cautionary tales for a board of directors
The role of a Board of Directors in branding
The responsibilities of a board member swing wide, ranging from the minute details to big-picture directions and approvals. However, many boards of directors rarely tackle the greatest impact they can have on a company’s business: Creating a new brand.
Brand represents the most effective way to steal market share and, for the board of directors willing to assume the duty, it leaves the most lasting and important legacy because they will have transformed their company and the category it competes in.
They will also fulfill their most important responsibility to shareholders: Finding the opportunities in change so the future is ensured and market share is stolen.
The alternative will be worse, especially if a competitor does grab an emotional connection to the customer as its position, and the rest are left scrambling to survive.
The Scary Alternative when Creating a Brand
Think about how Gateway once dominated the laptop market only to be crushed by the greatest brand of them of all, Apple. In recent years, Gateway has filed for bankruptcy, dropped out of the Fortune 500 list and was purchased by Acer for a lousy $1.90 per share. (Its stock was once in the 80s.)
That is a cautionary tale for all of those who fail to look ahead, especially as our world has changed so much recently. Anymore, the differences between products, services and even companies are relatively small from the perspective of target audiences. To them, most products and offerings basically produce the same result, so most become commodities and battle on price.
For example, when you buy a car, you understand that they all have tires, a steering wheel and an engine, and can get you from point A to point B. The decision-making process may include a sort of segmentation, whether you want a sedan or convertible, for example.
However, when making the decision to buy, do we really understand the inner workings of the engine and transmission, especially compared to all the other product benefits from all the manufacturers? Of course not. We don’t have time to do those tests. So we filter.
We consider the ones with the greatest self-reflection of ourselves. This is the definition of brand. It has become the only differentiator in today’s market, which is why a board of directors needs to closely examine the equity and health of its current brand – and whether it’s truly stealing share from the competition.
If it’s not, then the danger is more than the bottom line stagnating. You can become irrelevant, especially if a competitor embraces change and owns the highest emotional connection to the target audiences.
Get Brand Right
For many, creating a brand is thought to be just marketing, and that’s why so many get it wrong – and why a board of directors rarely generates a brand process. It is thought to be unimportant. They see brand as simply as a logo, a color palette and a description of what the company is about. The Board’s role in rebranding is to see problems and find ways to fix them
But those symbols only represent the brand. The brand is about reflecting your own customers, the customers of your competition and even your employees. Brand is about the culture of your company so that brand promises can be fulfilled and consistency is ensured.
Brand is always attractive to shareholders. They are looking, of course, to increase their investment, which means they are not interested in the status quo. As a representative of that audience, your responsibility is to explore opportunities that will do just that.
What happens with most companies, and even their boards, is that they look for ways to cut costs, which may have short-term benefits but rarely have long-term ones. Certainly, you want to assist in reducing redundancies and increasing synergies, but you must make sure the end results are not detrimental to the customer.
The more forward-thinking plan is to ensure the company’s success for the future by both attracting customers to your brand and transforming the marketplace itself so that you become the leader and the preferred choice for investors. (Read about the branding process here)
Who Will Win
This is especially true if you are in a market that only promotes product benefits, and the brands themselves are unemotional and often mirror the competition. In that case, the first one to grab the opportunity will eventually own the category.
Take the example of athletic shoes. For decades, the category simply marketed product benefits – action wedges, built to last, great support, etc. – and the market stagnated with Converse owning 49% of the market in 1975.
Once a company entered marketplace with an emotional brand, rarely mentioning product benefits, the entire category changed. Nike, with it’s no nonsense and win brand of “Just Do It,” arrived, Converse became a minor player and Nike now stands with more than 60% of the market share.
We’ve all seen how market leaders have begun to fail because they were unable or unwilling to change and were left behind once a competitor developed a brand based on an emotional connection to the customer: Blockbuster and Kodak, for example.
Brand gives a board of directors the marketing tools it needs to lead a company in the direction that has the greatest impact of them all: Stealing market share. Clearly, that IS Board’s role in rebranding.