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The Origin of Brands: A Book Review

March 9th, 2007
Books

The second book in the MarketingProfs.com book club is “The Origin of Brands: How product evolution creates endless possibilities for new brands” by Al & Laura Ries. The first thing I noticed about this book is just like “Citizen Marketers” it is authored by a man and a woman. This is a non-trivial fact as in marketing you need to understand and appeal to as wide an audience as possible. Niches and segments are all well and fine, but unless you are selling feminine hygiene products or beard trimmers it is probably in your best interest to investigate the appeal/resonance your product or service or brand has with the opposite sex.

The second thing I noticed is this book has a red cover and has been made to look like a Coca-cola can, the world’s number one brand. Red covered books are all the rage, “Citizen Marketers” and “The Intelligent Investor” both had bold red covers, I blame this on Chairman Mao.

So besides commenting on the cover and the authors, what about the contents? The key idea advanced by the authors is that brands develop, grow, prosper, and fail organically, similar to ideas advanced in Darwin’s “The Origin of Species”. If you are in denial about the theory of evolution, you probably won’t be a proponent of the ideas advanced in this book. Other important tenants of the authors include divergence being a more powerful and successful strategy than convergence, the necessity of identifying new markets and introducing new brands, and the power of public relations in launching a brand.

What is the size of the market?” is the wrong question to ask when creating a new brand according to Al & Laura. They believe the best branding opportunities lie in developing a new market. This jives very much with my MBA specialization (Entrepreneurship and New Venture Creation) and the VC Valuation Method. A venture capitalist isn’t interested in the current market size or your current market share, both could be zero, they are interested in the estimated market size and your venture’s market share in three to five years.

I’m a big fan of quotations and this book had a number of them that I thought were particularly prescient or insightful, the first of which is:

Marketing is not about markets; marketing is about minds.

Convergence versus Divergence

The authors are anti-convergence, they skewer ideas such as interactive TV, they are even against smart phones such as the recently previewed and hyped iPhone. Independent estimates by equity analysts seem to disagree with the authors here, forecasting large sales both in the US and world wide. Guy Kawasaki also has some questions concerning the iPhone and its initial sales potential.

Opportunities don’t reside in the mainstream. They always reside on the edges where the competition is weak or non-existent.

Although the book is aimed at marketers particularly those in brand management, market research, and advertising/PR it actually has a lot of good advice for potential entrepreneurs who in many cases are trying to introduce a new brand and possibly develop a new market.

Though other industries are discussed, the book pays particularly attention to convergence/divergence in IT/telecommunications. This is both an industry I’m personally very familiar with having completed a degree in Computer Science and worked in IT for a number of years, but I believe those industries were chosen due to the rapid change that has occurred during our lifetime.

The authors advocate launching a new brand for new products/markets/segments/niches. This puts them very much in the house of brands not the branded house school.

Oddly enough, it’s often easier to establish a brand at the high end than at the low end. A high-end brand just naturally attracts publicity. Rolls-Royce, for example is a well-known brand although they spend little on promotion and sell very few cars.

On the other hand, you can often make more money at the low end. Wal-Mart is the best example.

A final insightful quotation dealing with convergence/divergence from “The Origin of Brands”:

Addition (convergence) is the glamorous side of marketing, but subtraction (divergence) is the moneymaking side.

Reading about creating new brands reminded me of a Nietzsche quotation which found its way into the computer game Alpha Centauri:

Companions the creator seeks, not corpses, not herds and believers. Fellow creators the creator seeks–those who write new values on new tablets. Companions the creator seeks, and fellow harvesters; for everything about him is ripe for the harvest.

Danna, one of my MBA classmates was always quoting Chinese philosophy and poetry to me, but when I quoted again from this same video game, she was not familiar with the verse at least in the translation used in the game. Verifying and linking to the Nietzsche quotation reminded me of our trip to Jasper and something Li Po wrote:

We sit together,
the mountain and I,
until only the mountain remains.

First Mover Advantage

The authors are big believers in first mover advantage, devoting an entire chapter to “Survival of the Firstest”, but they also advocate copying and modifying an existing idea. From a branding point of view, being first will always resonate in people’s minds even if a brand can not sustain its dominance, the brand may always have a certain cachet attached to it. The authors state it is the “perception of product quality that guides consumer’s decision”. Extrapolating the first brand/product/service will always have more experience, a longer history than any other brand introduced. The book has a chapter entitled “Survival of the Secondest”, a number two brand must “do it different” than the number one brand to be successful.

Al & Laura have a great deal of faith in the strength of brands and inevitability of divergence, so even though the first brand may always be number one in the market it is still possible to be extremely successful as the number two brand as long as subsequent brands can differentiate themselves. They go so far as to imply that it doesn’t matter what strategy is taken by the number one brand is, the number two brand has to do the opposite, they devote an entire chapter to “Establishing an Enemy”. They caution against line extensions and note the difficulty in moving a brand to a new market. Although brands die out, the authors believe it is the category that dies out and it takes the brands with it as the brands are unable to associate themselves with a new product or service successfully.

The book advocates being the first on the market with a new brand, but as many of my professors and any VC worth is salt would note, first mover advantage is not a sustainable competitive advantage. IBM is frequently touted by the book as being first into the personal computer market, but they were overtaken by new brands and eventually got out of that market entirely as they made more money in consulting services. The Dot.com era provides many examples where companies and their venture capitalists backers in their rush to be first, never stopped to determine if there was ever going to be a market to sustain their venture, and perhaps the best Dot.com example of company or brand that wasn’t the first, or even the second but still went on to dominate and become world renown is Google. Sometimes quality and execution does matter more than being first to establish a brand in a new market.

The Power of PR

Although this shouldn’t come as a surprise to anyone who bothers to read the cover of the book or the author’s bios and noted that Al & Laura Ries are also authors of the National Bestsellers “The Fall of Advertising & the Rise of PR”, they are big believers in building a brand with PR and that you maintain a brand with advertising. They noted that PR especially deliberate leaks onto the internet can be a large benefit when building a brand. This jives with the previous MarketingProfs.com book club selection on the power of Customer Evangelists/Citizen Marketers.

Who gets mocked?

The book slags a lot of brands, companies, and strategies. They take pot shots at GM though they seem to revere Alfred Sloan, they note how GM has devalued its own brands and confused customers by introducing expensive Chevrolets and cheap Cadillacs among other offences. Though I just saw on the local news GM made a profit this quarter. They also think Daimler-Benz made a mistake in buying Chrysler.

They also don’t think NetFlix is long of this earth as movie downloads over the internet will make their entire category redundant. NetFlix was cited as being ‘on the ball‘ in Jared Spool’s keynote speech at Web Directions North. I’m not a customer, but seeing as how NetFlix became successful almost exclusively on word of mouth as well as focused on a new market/niche, introduced a new brand rather than Blockbuster’s attempt to extend their brand into the new market, NetFlix seems to have done a lot of the things the book advocates. I don’t see why NetFlix can’t be a competitor in downloadable movies, their brand name still works, and the cable companies or Apple’s iTunes Music Store is much more of a line extension than NetFlix would have to do. I also think their customers, movie fans who use the internet, would be the same people who would use a movie download service. Wal-Mart and Amazon.com are also in this space, their brands don’t seem as well positioned as NetFlix’s. This has become a very desirable new market with many companies trying to extend their brands or launch a new one in anticipation of rapid growth and big profits.

Wrapping Things Up

This a good book, worth reading for entrepreneurs along with the folks in marketing at more established firms. I finished reading it long before the discussions will commence on MarketingProfs.com this may be the last marketing book or book that isn’t about finance or accounting that I will read for a while. I’m now officially pursuing the CFA designation, though I won’t be noting that on my resume until I pass the first test. I do mention it in cover letters as I’m still seeking a full time job. I was going to complain about Al & Laura lacking a blog, seeing as how blogs are suppose to be good for PR and cultivating Citizen Marketers, but a quick Google reveals the existence of The Origin of Brands Blog. I’ll add a link to it obviously, but if anything I’m looking to prune the list of blogs I even occasionally read, rather than add to it. I was a reader of Jackie and Ben’s blog for at least a year prior to the release of their latest book.

I need a better conclusion, hopefully I’ll write one when I inevitably get tasked with re-writing my review over at MarketingProfs.com. The last paragraph had too many links among other problems. In order to at least end on topic I repositioned the final quotation I noted down which comes directly after where the book discusses Ken Lay and Enron. This is another example of both the failure of convergence, the vitality of new markets, and the profitability of the lower end of the market when the author’s ask:

Do you want to fly where the egos soar or dive down where the dough is?


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  • Just reread this and fixed a grammar mistake or two. Maybe I should become a professional book reviewer or perhaps I should skip the middleman and just write a book. Once again it appears I was right in writing about a brand/firm whereas the experts appear to have gotten it wrong. Of course time will tell if iTunes defeats all comers in the downloadable media market as they control the hardware, software, and content whereas cable companies and Neflix only control the distribution.

    I’ve also enjoyed watching Blockbuster die having been personally boycotting the company since 1998 or so.

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