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The 22 Immutable Laws of Branding
Al Ries, Laura Ries
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eBook - ePub
The 22 Immutable Laws of Branding
Al Ries, Laura Ries
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About This Book
This marketing classic has been expanded to include new commentary, new illustrations, and a bonus book: The 11 Immutable Laws of Internet Branding.
Smart and accessible, The 22 Immutable Laws of Branding is the definitive text on branding, pairing anecdotes about some of the best brands in the world, like Rolex, Volvo, and Heineken, with the signature savvy of marketing gurus Al and Laura Ries. Combining The 22 Immutable Laws of Branding and The 11 Immutable Laws of Internet Branding, this book proclaims that the only way to stand out in today's marketplace is to build your product or service into a brandâand provides the step-by-step instructions you need to do so.
The 22 Immutable Laws of Branding also tackles one of the most challenging marketing problems today: branding on the Web. The Rieses divulge the controversial and counterintuitive strategies and secrets that both small and large companies have used to establish internet brands. The 22 Immutable Laws of Branding is the essential primer on building a category-dominating, world-class brand.
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1 THE LAW OF EITHER/OR
The Internet can be a business
or a medium, but not both.
Putting your brand name on a Website doesnât make it an Internet brand. There are brands and there are Internet brands, and the two are quite different.
If you want to build an Internet brand, you shouldnât treat the Internet as a medium, you should treat it as a business.
But the Internet is a medium, you might be thinking, just like newspapers, magazines, radio, and television. Maybe so, but if you want to build a powerful Internet brand, you will have to treat the Internet as an opportunity, not as a medium. You will have to treat the Internet as a totally new business where the slate is wiped clean and where endless opportunities await those who can be first to create new categories in the mind.
- It wasnât ABC, NBC, CNN, the New York Times, the Wall Street Journal, Time magazine, Business Week, or Newsweek that created the most successful information site on the Internet. It was Yahoo!
- It wasnât Barnes & Noble, Waldenbooks, or Borders that created the most successful bookseller on the Internet. It was Amazon.com.
- It wasnât Sothebyâs or Christieâs that created the most successful auction site on the Internet. It was eBay.
- It wasnât AT&T, Microsoft, or Cablevision that built the most successful provider of Internet service. It was America Online.
Everyone knows the Internet will change their business as well as everybody elseâs business. But how? And what can you do about it? Itâs easy to err in one of two different ways. You can make either too much of the Internet or too little.
You make too much of the Net when you assume that it will completely replace traditional ways of doing business. No new medium has ever done that. Television didnât replace radio. Radio didnât replace magazines. And magazines didnât replace newspapers.
You make too little of the Net when you assume it will not affect your business at all. Every new medium has had some effect on every business, as it has had on existing media. Radio, for example, was primarily an entertainment medium until the arrival of television. Today radio is primarily a music, news, and talk medium.
Great, you might be thinking. Weâll play the Internet right down the middle. Weâll treat it as another arrow in our marketing quiver. That would be your biggest mistake of all. You fracture your brand when you try to make it an Internet brand as well as a physical or real-world brand. No brand can be all things to all people. Yet that is what many Internet experts recommend.
To quote one Internet guru: âInternet commerce needs to be part of a broader electronic business strategy, a strategy that embraces all the ways that you let your customers do business with you electronically: by touch-tone phone, by fax, by e-mail, by kiosk, via handhelds, and via the Web.â
Many brand owners follow this strategy. They carry their existing brands over to the Internet and wait for miracles to happen. So we have sites like the following:
- Levi.com, Dockers.com, Barbie.com
- ABC.com, Forbes.com, Washingtonpost.com
- Ford.com, GM.com, Daimlerchrysler.com
Does brand familiarity in the âouternetâ foster interest in the Internet? A study by Forrester Research among sixteen- to twenty-two-year-olds says âno.â According to the Cambridge, Massachusettsâbased firm, âSome of the hottest brands in the off-line world have no online value.â
Thatâs not surprising. Did any nationally recognized newspaper or magazine make the transition to television? No, they were all failures on the tube, most notably USA Today and Good Housekeeping. (USA Today on TV lost an estimated $15 million the first year and was canceled during its second season.)
Business managers have much in common with military generals who fight their next war with the previous warâs weapons. Witness the wave of Websites that mimic the real world.
Slate magazine, introduced by Microsoft with a blaze of publicity, is a typical example. Edited by a semicelebrity (Michael Kinsley, made famous by CNNâs Crossfire), Slate struggled along as a Web version of a conventional magazine, including a conventional subscription price of $29.95 a year.
Only twenty-eight thousand people subscribed. So Slate switched to a more typical Web subscription price, zero dollars a year. Traffic to the Slate site zoomed to 2.4 million visitors a month. The question is, how will Microsoft make money by giving away the magazine?
The obvious answer is with advertising, which we donât think will work either. Salon, another magazine-type periodical, has been published on the Web ever since 1995. In spite of the fact that it has been attracting 2.5 million visitors a month, the publication is still unprofitable. Last year it posted revenues of just $3.5 million, mainly from advertising.
As a matter of fact, the magazine is not a good analogy for the Internet. Nor for that matter are radio, television, books, or newspapers. The Internet is the Internet, a unique new medium with its own unique new needs and requirements. Building a brand on the Internet cannot be done by using traditional brand-building strategies.
On the Internet, you should start the brand-building process by forgetting everything you have learned in the past and asking yourself these two questions:
- What works on the Internet?
- What doesnât work on the Internet?
Hopefully these laws will provide the answers you need to build a powerful Internet brand. The material is not based on strategies that have worked in other media. Rather, it is based on our experience with developing strategies for dozens of Internet start-ups. What worked and what didnât work.
Which leads to the first and most crucial decision you must make: For my product or service, is the Internet going to be a business or a medium?
If the Internet is going to be a business, then you must start from scratch. You must develop a totally new strategy, a totally new way of doing business, and (most important of all) a totally new name.
Who is going to win the Internet book war, Amazon.com, Barnesandnoble.com, or Borders.com? Is there any question in your mind that Amazon.com will be the big winner? There shouldnât be. If the Internet is a business, putting your name on both your physical store and your Website is a serious error.
Who is going to win the Internet bank war, Citibank.com, Chase.com, or BankofAmerica.com?
None of the above. The bank war will be won by one of the Internet-only banks. (Unless, of course, none of the Internet-only banks do a good job of branding.) Why? Banking is going to be a business on the Internet, not a medium.
If the Internet is going to be a medium, then you can use your existing brand name. The Internet becomes a complement to or replacement for existing media, be they radio, television, direct mail, newspapers, or magazines.
In truth, the Internet is a good information medium, an electronic library, if you will. Every company that has a sizable business needs a Website to keep its customers and prospects informed about the range of products and services it offers, as well as prices, delivery dates, warranties, colors, sizes, customer testimonials, and so on.
Instead of asking the customer to shuffle through out-of-date catalogs or spec sheets, a well-designed Website can present up-to-date information in a hierarchical and interactive way. (For the first time, a paperless office is within the realm of possibility.)
The Web should simplify many ordinary business transactions. If you want to subscribe to Newsweek, once you are connected to your service provider you should be able to type www.newsweek.com into your browser, go to the Newsweek site, and subscribe. Inputting your name, address, and credit card or bank account number should do it. No cards falling out of the magazine, no stamps, no trips to the post office, no phone calls.
In this example youâll notice that the product doesnât change. Newsweek is still a magazine delivered weekly by the U.S. Postal Service. The Internet is a medium that simplifies the selling of the product. It might also allow you to sample the product so you can decide whether or not you want to subscribe.
For some brands, of course, the Internet will replace existing distribution methods. (Any business that relies heavily on the telephone is a good candidate for moving to the Web. Flowers and pizza delivery are two obvious candidates.)
Three big brands that rely heavily on the phone (Dell, Cisco, and Charles Schwab) are moving to the Internet using their same names.
Dell Computer is in the process of shifting to selling on the Internet. It wonât happen overnight, of course, but you can visualize the day when most of Dellâs business will be done on the Net. (Currently the Internet accounts for about 50 percent of the companyâs revenues.)
For Dell the Internet has paid off in more ways than just increased revenues. It has helped the company cut sales and administrative costs from 15 percent of revenues five years ago to an estimated 9 percent currently.
Cisco Systems, the worldâs largest supplier of network equipment, has also moved to the Net. Today Cisco conducts more than 75 percent of its business over the Internet. The move to the Internet has reduced the lead time needed to fill orders from three weeks to three days. While total revenue has grown 500 percent, the number of employees required to service requests has grown by only 1 percent.
Charles Schwab is also shifting from the phone to the Net. It has become the leading online broker with more than three million Internet accounts (and thousands more added daily). Today Schwab handles about 236,000 trades a day, 80 percent of which are placed electronically.
Initially, Charles Schwab thought it needed a separate name for its Internet operation, so it came up with the âeSchwabâ name. Recently the company shortened the name to www.Schwab.com.
The Schwab situation illustrates two important principles. One, the same name can be used as long as your business will be moving to the Net. Two, on the Internet, the shorter the name the better. Charles Schwab is not a particularly long name, but the company decided to shorten it to âSchwabâ on the Web.
If you have a choice, donât take a chance on a long name. When prospects have to type a name on a keyboard, they are going to gravitate to the shorter names.
Merrill Lynch is also making a move to the Internet; presumably using both its existing name (www.MerrillLynch.com) and its initials (www.ml.com). That is a mistake. Unlike Charles Schwab, Merrill Lynch is not going all the way. Its Internet move is only a half step. The firm obviously has no intention of giving up the 14,800 well-paid stockbrokers who generate most of its business.
The Merrill Lynch Website could function as an information source for the customers who do business with its brokers. But not as a separate business. If Merrill Lynch wants to use the Internet as a business, the firm needs to come up with a separate name.
With 30 to 35 percent of all stock trades by individuals already on the Internet, Merrill Lynch is in a different position than Schwab. It only has four choices:
- Do nothing. Not a bad idea. There will always be people who want the personal attention of a financial consultant. Furthermore, by doing nothing Merrill Lynch can portray the negative side of Internet trading. Itâs hard to badmouth the Charles Schwab competition when you are offering the same services as they are.
- Make the same move that Charles Schwab did and shift the business to the Internet. Itâs probably too late in the game for this to work. Furthermore, what does the firm do with its fourteen thousand brokers and its reputation for service?
- Set up an Internet brokerage business with a separate name. This is what Merrill Lynch should have done . . . years ago.
- Use the Merrill Lynch name on both businesses, which is what they are doing. This is a âfoot-in-both-campsâ strategy that will never work. In the long run it will undermine the reputation of Merrill Lynch. It was not long ago that Merrillâs brokerage chief, John Steffens, publicly stated that âthe do-it-yourself model of investing, centered on Internet trading, should be regarded as a serious threat to Americansâ financial lives.â
Trust is an important ingredient in any retail business. If your customers donât trust you, they are unlikely to continue to do business with you. You undermine that trust by speaking out of both sides of your mouth. A company should take a stand and stick with it. Thatâs the way to build rapport with customers over a long period of time. Sometimes itâs more important to be consistent than to be âright.â
In any industry, thereâs room for multiple approaches, but there may not be room for multiple approaches in the same company under one brand. For many smaller companies, the best strategy might be to move lock, stock, and barrel to the Web.
Hooverâs, Inc. started out as a bookstore and then a publisher of business books. Its first book, Hooverâs Handbook 1991: Profiles of Over 500 Major Corporations, was an enormous success. The company went on to publish a number of other business and reference books.
Today, however, Hooverâs, Inc. is primarily an Internet company selling corporate profiles and other reference material to a wide range of companies and institutions. Eighty-four percent of the companyâs revenues now come from its Web services.
Provident American was a small Hartford insurance company that decided to jump on the Net. So it sold off its traditional underwriting business and severed its relationships with some twenty thousand agents. Then it changed its name to HealthAxis.com and became an Internet company selling health insurance from a variety of major carriers at prices 15 percent lower than it had been selling off-line. Recently HealthAxis metamorphosed into an ASP selling insurance technology software on-line.
Larry Latham was an auctioneer specializing in selling repossessed single-family homes from hotel ballrooms across the country. In spite of booming sales of $600 million a year, he decided to shut down his companyâs fourteen branch offices and move to the Internet. He hired a staff of twenty-two computer experts and renamed the company âHomebid.com.â In a test of the site he sold 136 out of 147 homes over the Web at prices that averaged 97 percent of list.
Larger companies are big enough to have the resources to support both an Internet business and an off-line business. In general, however, they need to differentiate between the two by giving their Internet business a different name.
Amway, the worldâs largest direct-sales company with $3 billion in annual sales, decided to take its unique distribution system to the Internet. But not with the Amway name. Its new Internet name is Quixtar.com.
Procter & Gamble is using the Web to sell beauty products, but not with Oil of Olay or any of its other brand names. Instead, P&G has created a new name (Reflect.com) and a new strategy. The site will allow consumers to âpersonalizeâ their selection of beauty products.
How can you tell whether the Internet is a business or a medium for your brand? You need to ask yourself the following questions:
1. Is the brand tangible or intangible? For tangible products the Internet tends to be an information medium. For intangible products, a business. Intangible products that are particularly appropriate for Internet branding include banking, insurance, stock brokerage, and the like.
We expect financial services of all types to move to the Net. The savings can be substantial. American Express estimates that it saves $1.00 every time a cardholder checks a balance on the Web rather than over the phone.
Travel is another category that is moving to the Web. In the year 2001, travelers spent $14 billion buying tickets on the Internet, amounting to 14 percent of their total airline spending.
2. Is the brand fashionable or not? For fashionable products the Internet tends to be a medium. For other products, a business. Clothing is generally fashionable, while computers are generally not. Where fashion is the primary factor, itâs difficult to imagine much business going to the Web.
We donât predict much success for Nordstromshoes.com, even though the site was launched with a $17 million advertising campaign. The commercials are amusing, but the prospect is unlikely to do much shoe buying on the Internet. There are three major questions a shoe site canât answer. Will they fit? Will they look good on my feet? Are they going to be comfortable?
3. Is the product available in thousands of variations? If so, the Internet tends to be a business. Books, for example. Itâs hard for an existing retail establishment to compete in a category with a bewildering array of choices. Thereâs no way, for example, that a bookstore could stock all the titles available at Amazon.com.
Another category that seems likely to move to the Web is office supplies. Again, the choices are so overwhelming that no one physical store can carry everything a company might want to buy.
Product variation is likely to become a major battleground in an Internet-dominated economy. Excluding food stores, roughly half the people who shop at any given store today walk out without buying anything. The major reason: The store didnât have in stock the product the customer was looking for.
Now that customers have the ability to find anything they want on the Web, manufacturers need to respond in one of two ways.
If physical stores are your major distribution channel, then you need to reduce the ...