The Myth of Branding
Archives: Daily Issues
Issue #2153
- WEALTHY: You don’t need to be clairvoyant to pick money-making stocks (Andrew Gordon)
- HEALTHY: Old age and supplements – a deadly combination? (Dr. Ray Sahelian)
- WISE: Stuart Henderson on advertising
ALSO IN THIS ISSUE:
- Unless you’re Coke or Nike, don’t waste money on this (Michael Masterson)
- What not to do with your business card design (Suzanne Richardson)
- It’s Good to Know… about the cost of living around the world
- Add "chicanery" to your vocabulary
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The Three-Legged Stool of Profitable Investing
What’s your guess? The market will finish the year with decent gains? Its growth days are behind it? We’re in for a crash?
It’s a big guessing game. Professional investors, hedge fund managers, and market observers can’t be sure. Your guess is as good as theirs. I have my own ideas, but sorry. I’m keeping them to myself. I’m no oracle. But I am in the business of making great investment choices, not predicting the market. And how can I do one without the other? By investing in fundamentally sound companies in growth sectors at advantageous prices.
It comes down to three things: Fundamentals, value, and growth. It’s as simple as that. Free search screens on financial websites will help you find inexpensive but fundamentally sound companies. As far as growth sectors go, my favorites are alternative/clean energy and mining. With a little reading, you can come up with some favorites of your own.
Spending your time finding companies that can outperform the market makes more sense than trying to outguess the market.
[Ed. Note: ETR's Investment Director Andrew Gordon is the author of about a dozen books on energy markets, global countertrade practices, and the hot growth sectors of China and Russia. He is the editor of INCOME, a monthly financial advisory service that uncovers income-generating stocks that promise safety (first and foremost), along with much-higher-than-average profit potential.]
"Doing business without advertising is like winking at a girl in the dark. You know what you are doing, but nobody else does."
Stuart Henderson
The Myth of Branding: Why Entrepreneurs Should Focus on the USP
I recently got an interesting e-mail from Brian Ochsner, an ETR reader from Denver. He said, "As a direct-response copywriter, I’m skeptical about the number of marketing people who are enamored with the need for ‘branding’ or to ‘build their brand’ to effectively market their business.
"I know that brands such as Kraft and Coca-Cola have power and influence with Americans, but I’m not sure ‘branding’ has much of a place with most small- to medium-sized business marketing."
He posed three questions:
- What, exactly, is "branding" marketing?
- Can it be an effective type of business marketing?
- Can it work effectively together with direct-response marketing?
Brian’s hunch is exactly right. Branding is perhaps the most commonly touted and least understood aspect of marketing. If you believed all the hype, you’d think that you should spend 80 percent of your time and money "building" a brand.
As Bob Bly and I have said in past ETR articles, nothing could be further from the truth.
Branding makes sense for Kraft, Coca-Cola, Nike, and Sony. Huge consumer companies have to spend money on general advertising to keep their names out in the commercial world. The idea is that when people make buying decisions, they will favor products whose names they know.
Brand-name consumer products almost always outsell generic products. In 2002, Dennis Dangerfield (the vice president of grocery-store cooperative Topco Associates, LLC) pointed out that private-label products accounted for only 20 percent of grocery sales in the U.S. And the reason brand-name products come out on top is not quality, since many generic products are just as good. The reason is consumer trust.
Trust comes from familiarity, and familiarity increases sales. But it is very, very expensive to create a household name. We are talking about tens of millions or even hundreds of millions of dollars here – which puts branding entirely out of the reach of any fiscally intelligent entrepreneur, even if he is working with a big budget.
Prior to the Internet boom, small-business owners understood that they couldn’t afford to spend money on branding. To break into new markets, they relied on traditional techniques: big discounts and bigger headlines. But when billions of dollars started pouring into start-up Internet ventures, the idiot-savant CEOs running those operations had to put the money somewhere – so they put it into advertising their brands.
To justify this enormous waste of money, they invented theories to substantiate their foolishness. Most of those theories were versions of the same, stupid strategy: Spend whatever it takes to garner the most eyeballs to your website. And after you’ve established first position in the "look-who’s-looking-at-me" contest, figure out some way to profit from it. Profiting from something so nebulous needed its own magical name too; they called it "monetizing."
Create traffic first by selling the brand… and then monetize the traffic… and then go public. That was the program. And dozens of Internet entrepreneurs did just that. Most of that brand building went to naught, of course. Sports stadiums were renamed for unpronounceable URLs, and then they were changed back to something else again as the Internet businesses behind them went bust.
It was during that period of chicanery that the modern myth about branding was formed – the myth that the first course of action for any small business should be to build a nationally (or internationally) recognized brand. This myth persists today in books and at conferences and seminars about Internet marketing. But smart would-be entrepreneurs like you have the sense to smell rats when they are rotting behind the floorboards.
The fact is, most of the profitable business in the world is done without the benefit of brand recognition – and 99 percent of new businesses develop without any money or time spent on general advertising.
I can think of only one exception. The George Foreman Grill began as a small business and morphed quickly into a world-class brand. But you are unlikely to replicate that success if you hook up with Mike Tyson – or any other celebrity, for that matter – even if you could afford the price tag. The George Foreman Grill story was one of perfect timing: the right product with an out-of-fashion celebrity who made a miraculous comeback to the mainstream. It won’t happen again for another 20 years.
The branding myth persists today, even among experts who witnessed the debacle of the Internet advertising implosion. According to a 2005 PointRoll Inc. survey, 70 percent of online advertising professionals cited "branding" as the most important or second most important goal of online advertising. Interaction rate was viewed as the most important measurement of an online ad’s performance, with 53 percent of those responding indicating that the best way to judge an ad’s effectiveness is to measure the percentage of users who interact with it.
What’s missing from that picture?
Profits, of course. As a future entrepreneur, you want to create sales immediately. But they have to be profitable sales – or at least near-profitable sales – or you’ll go broke before you reach your second year of business. There are as many ways to create profitable sales as there are businesses. When you get into your own business, you will have to figure out which way works for you. (I explain how to do this in my soon-to-be-released book Ready, Fire, Aim.)
Direct-response marketing of a hot product is probably the most effective way to create profitable sales. Promoting your brand through general advertising is probably the least effective way.
So now, to Brian’s three questions:
- What is branding marketing? It’s selling the name of a company or product through general advertising so that later on, when the customer is faced with buying your product versus another one, he chooses the brand he is familiar with.
- Can it be effective? Not for small businesses.
- Can it be combined with direct marketing? Not really. Branding is meant to make selling (either direct selling or retail selling) easier. It is not meant to be used simultaneously.
Those questions answered, let me say a few words about where and how branding can work for entrepreneurial enterprises.
First, understand that establishing a unique selling proposition (USP) is not the same thing as branding.
Many, if not most, products and product lines will benefit from marketing that stresses the USP. If, for example, you are launching a business that sells organic pet food, your USP should emphasize the fact that all your products are green. Your company’s name might express that benefit, as should the product names, the packaging you choose, and the layout and design of your marketing and product materials. And your USP should be a major component in the design of and sales copy on your website, as well as your Internet ads and landing pages.
All that promotion of your USP will have the effect of creating an idea in a potential customer’s mind that will have the same effect that branding has for large businesses. And that effect – which is a higher-than-average initial response rate to your marketing due to consumer familiarity – will also work with your existing customers on the back end.
Thus branding in this limited sense (consistently promoting your USP) works in conjunction with direct marketing as a back-end mechanism – to sell more products to people who have already bought from you. And that’s how people with small- and medium-sized businesses should think of it.
I have plenty more thoughts on this subject, but these are the most important for someone in the early stages of starting and growing a business. Get a copy of my book Ready, Fire, Aim when it comes out in January and you’ll learn more.
[Ed. Note: Michael Masterson and his team of business-building and marketing experts will be revealing their strategies for getting a brand-new business of the ground... and making an existing business grow like crazy. Reserve your spot at this fall's Info Marketing Bootcamp- Making a Fast Fortune on the "Other Side" of the Internet - today.]
The One Deal That Can Change Your Life Forever
The most difficult deal a beginning real estate investor has to make is the first one. It’s such a psychological hurdle that 90% of all would-be investors give up before that single deal ever happens. But there’s no need for you to be one of them.
Plus, once you have that first deal under your belt, your second, third, and subsequent deals typically come with less time and effort.
Click here to learn how you can land that first deal much faster… and then go on to make more money than even most seasoned pros…
A Mini Space Ad for Your Wallet
As Michael Masterson has pointed out many times, business cards are not a necessity for most businesspeople. But if you feel that you do need them – or if you just like the idea of having them to hand out at networking events – make sure they represent you in the best possible way.
"Think of your card as a way to sell yourself," says Michael, "and design it like a tiny space ad."
He forwarded me an example of what NOT to do on a business card:
- The name of the business – a graphic design studio – is printed in an artsy type that’s hard to read. The name of the designer is similarly artsy and illegible.
- There’s a question of credibility. The card lists all of the following services: graphic design, direct marketing, logo/layout design, airbrush work, Web design, illustration, fine art, and photography. Can one person really provide expert service in all these areas?
- The copy – an explosion of different shapes, figures, and text going in three different directions – gives no indication of what to read first.
"This card," says Michael, "is a perfect illustration of why less is more."
For a more successful card:
- Choose sales copy that emphasizes one and only one benefit or skill that you want to sell.
- Always keep the graphics simple. The purpose of color and design is to emphasize the copy, not to show how creative you are.
The Age Limit for Supplements
As a strong believer in natural remedies, I am constantly recommending that people turn to supplements to help them fight disease, stay healthy, and keep their brains and bodies strong. Recently, a 65-year-old reader of my newsletter wrote to ask: "Is there an age limit on taking the herbs, hormone supplements, or amino acids?"
The simple answer is that there is no age limit – you can take supplements into your 80s and 90s and beyond. However, you should reduce the dosage of those supplements as you grow older. That is because many herbs (including ginseng and many sexual-enhancing herbs) can stimulate the heart to beat rapidly, which can cause problems for those with weak hearts.
In general, supplements such as fish oils, garlic, and most vitamins and minerals are fine no matter how old you are. Hormones, on the other hand, can be dangerous unless used in tiny doses of less than 5 mg. Individual amino acids, such as tyrosine and phenylalanine, can also cause heart rhythm problems in high doses, and so can SAM-e, a nutrient used for depression.
As a rule, as you get older you should take a portion of the suggested dosage, perhaps half the amount recommended on the label of the supplement bottle- at least initially – to find out if there is any untoward effect. You should also be cautious about using supplements while you are taking prescribed pharmaceutical drugs, because we don’t fully understand their interactions.
[Ed. Note: Ray Sahelian, M.D., the author of Mind Boosters, is internationally recognized as a moderate voice in the evaluation of natural supplements. Visit Dr. Sahelian's website at www.RaySahelian.com, and read more of his articles about the supplements you should and shouldn't be taking at ETR's FREE natural health e-letter.]
It’s Good to Know: The Cost of Living Around the World
Considering a move to Moscow or London? You might think twice when you find out that a two-bedroom apartment will set you back $4,000 a month in the Russian capital and a burger and fries will cost you $8 in the U.K. These and other high prices for food, housing, transportation, and household goods make Moscow and London the most expensive cities in the world to live in, according to Mercer’s annual Cost of Living Survey, which governments and corporations use to figure how much to pay overseas employees. Rounding out the list of the top 15 are Seoul, Tokyo, Hong Kong, Copenhagen, Geneva, Osaka, Zurich, Oslo, Milan, St. Petersburg, Paris, Singapore, and New York City.
(Source: SixWise)
How a “Dumb Blonde Moment” Led to a Secret Golden Backdoor That Earned Me $3,012 in Only 48 Hours… I Tripped Over This by Mistake!
I thought I was following the DVD down to a tee. But I guess I was having another “blonde” moment.
I did the exact opposite… Hey, what did I know? Oops!
Then it happened: $3,012.00 in 48 hours doing the opposite of what everyone else is doing.
Read on to learn how you can have your own “blonde” moment.
Word to the Wise: Chicanery
"Chicanery" (shih-KAY-nuh-ree) – from the French for "trickery" – is a subterfuge used to trick, deceive, or evade.
Example (as I used it today): "It was during that period of chicanery that the modern myth about branding was formed – the myth that the first course of action for any small business should be to build a nationally (or internationally) recognized brand."
[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD LibraryW700H156.]
Michael Masterson
Copyright ETR, LLC, 2007
Similar Articles:
- The Myth of Branding: Why Entrepreneurs Should Focus on the USP
- The Myth of Branding: Why Entrepreneurs Should Focus on the USP
- How to Establish “Brand Presence” – Even If You’re Not a Brand Marketer
- Words to the Wise: Direct-Response Marketing (DRM)
- Worth Quoting: Tim Ferriss on Personal Branding
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