THE

MARKET ENGINEER
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Business Performance Through Innovation and Branding done Strategically

Special Essay Edition

October, 2003

Brand, Branding, and Wealth Creation

Value Promises, Vision / Innovation, Hierarchy, Wealth Creation,
Ownership, Strategy, Communication, and the Future
Gary Lundquist " The Accelerator
Any study of brand, branding, or brand strategy
uncovers a very distinct dichotomy. Two camps exist
one relating to symbols and the other to value as
defined by customers.
Symbol View: The official definition of the American
Marketing Association says that a brand is a name,
term, design, symbol, or any other feature that
identifies one seller's good or service as distinct from
those of other sellers (Bennet, Dictionary of
Marketing Terms, 1988)
Marketing guru Philip Kotler states this definition:
...a name, term, sign, symbol, or design, or
combination of them, which is intended to identify the
goods and services of one seller or group of sellers
and to differentiate them from those of competitors
(Marketing Management: Analysis, Planning and
The A c c e le r a t o r
Gary Lundquist
accelerates innovation
and branding by
engineering businesses,
products, strategies,
and launches. With a
suite of collaborative
pre-planning processes
called Rich Visioning,
he helps management
and project teams
create durable wealth
through consistent increase in the win-win
value of relationships with customers,
investors, and allies.

th

Control, 8 ed., 1991)

With this reinforcement, many practitioners equate
brand with name, logo mark, and slogan. These
practitioners also believe that companies own
brands; that products should be developed first, then
branded; that and brands are built through
advertising that connects brand names to products or
company.
Value View: Todays best marketers see brands and
branding differently. The company may own the
name, logo and slogan, but markets of customers
own the brand. Brands live in the minds of people,
whether consumers or decision makers in businessto-business customers.
In this view, brands are built by establishing
relationships, not just names. Such brands grow
around promises made and kept the core of trust
essential to any relationship. Specifically, brand
promises state the value to be received in very
compact statements called value promises. Brands
are built by communicating value promises and
connecting those promises to the brand name,
slogan, jingle, and logo. Brands are built by making
clear and highly visible promises, then visibly and
credibly honoring those promises over time. This
view suggests that value promises should be
developed first, then used to guide product design
and development.
This article is one of a pair. For a more complete
picture, please see the companion article,
Innovation and Wealth Creation. That article
presents a larger picture. This one gets into
processes necessary for innovation as well as
branding.

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The symbol standard grew some amazing brands in

less complicated times. Congratulations to them.
This paper deals with todays value view of branding.

Brands and Value Promises

products just the revenues gained from sales of

products or shares of stock.
On the other hand, companies do own the value of
their internal innovations. New manufacturing
methods, for instance, create value for the company
as important as revenue from products. A valuable
perspective sees internal innovation as done by
businesses with markets that are entirely within a
larger organization.

Value-based branding requires understanding

customers and their relationship to value. We can
find this concept in the writings of Adam Smith
(Wealth of Nations, 1776), yet Miller and Heiman
(Conceptual Selling, 1986) state it more clearly.
In both internal and external markets, brand
development paves the way to customer and
"No one buys a product per se. What is bought is
investor buy-in.
what the customer thinks the product
A company's
will do for him or her."
brand is the sum of Ted Levitt laid the groundwork with his
seminal article, Marketing Myopia
all the experiences
Not drill bits, but round holes. Not pencils,
(Harvard Business Review, 1960). An
the intended cusbut ideas captured on paper. Not
industry is a customer-satisfying process,
tomers have with
loudspeakers, but sound. Not a massive
not a goods-producing process. The
that
company.
corporate-wide enterprise resource
organization must learn to think of itself not
The
Evolution
of
planning system, but productivity that
Brand Strategy as producing goods and services, but as
increases profitability.
Vic Zauderer and buying customers.
Likewise, no one invests in a company.
Marc Escobosa These truths summarize very simply as:
They invest in what they think the company
2000
Customers define value.
will do for them.
""""""""""""Value defines brands.
A brand is a wellCustomers buy value, not the product itself.
Brand visions define innovations.
differentiated
Value: The sum of benefits
Innovations define companies.
concept for providBenefit: Result of satisfying a need
ing consumers with
Companies define industries.
a benefit that will
Need: Something desired that is not
(In that order!)
arouse motivating,
yet present
Businesses dont create value. They
exclusive and
Product: Something that meets a need
innovate products that enable value when
incomparable
Business: An organization that meets
used by customers to satisfy needs.
anticipations.
needs
Precision Tools for Industries dont create markets; markets of
Company: An organization with one or
Emotional customers with needs enable industries.
more businesses
Branding, Think about that. Let the paradigm shift
Innovation: (process) Development of
Dan Herman, 2004 settle in.
ideas into products in use, for the first
""""""""""""
Of course, customers cant always
time anywhere, that create compelling
Brand as an idea, articulate their needs. Hamel and Prahalad
value for customers.
is a cluster of
(Competing for the Future, 1994) note that
(For product, also read at least:
consumer percepcustomers are notoriously shortsighted.
Idea, technology, research result,
tions attaching to a
Companies own responsibilities to identify
service, process, tool, strategy, facility,
product sold under
future needs, then innovate products that
business model, and business. For
a specific name.
customers will want just as soon as they
product in use, also read at least:
Trust is a Five know such things are possible. The
Service in use, process in
Letter Word process begins with need identification, not
application, strategy in action,
Erwin Ephron with R&D or ideation.
business in service, etc. For
Customers buy value, not products. Products, then,
customer, also read: Stakeholders of every type,
are value-delivery systems, not assemblies of
within the business and out in the marketplace.)
features and functions. Winning companies are
Take a moment to re-read the breadth of innovation.
designed, led, and managed to develop and deliver
Though we will speak primarily about branding of
valuable products better than any alternative.
products, most of what follows directly applies to
And brands share the same focus. Powerful brands
branding of businesses and companies of any type.
today are value promises, not just names and logo
From that perspective, then, customers own the
marks. To ensure value, todays best companies
value of products. Only customers can own the
define value promises first, then develop products to
benefits of meeting their needs with the products.
match up to the promises.
Businesses cant ever own the value of their
Thus our definition of brand is this.
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Brand: A value promise accepted by target

markets and mentally attached to a product or
company name, logo, jingle, and/or slogan.

Figure 1
Elements of a Brand Rich Vision

Brand, Vision, and Innovation

Value promise precedes product. That compact
statement implies huge shifts in paradigms and
operations for most businesses. It suggests
requirements to define value promises and to use
those promises to guide innovation of businesses,
products, and other ways to serve customers.
Ideally, value promises will be stated with dramatic
simplicity. BMW: The Ultimate Driving Machine.
Some companies take ownership of words or
concepts: Federal Express: Guaranteed overnight
delivery. More commonly, the promise takes a
phrase or compact sentence.

Name

Focus

Mission

Customers

Market
Image
Position,
Brand

Needs

Getting to the power of simplicity takes development

UniqueBenefits
of a strong, positive, detailed, multi-faceted,
ness
marketable vision. It is both intriguing and highly
logical that the vision required for brand definition is
the same as that needed to accelerate innovation of
Differentiation " the specific, unique features and
new businesses and products.
value this business or product will offer.
Innovation: (result) A valuable product In the B2B arena,
Position: Highly desired perceptions.
the corporate
not previously available that meets
Market position " what the market
brand
is
the
key
needs not previously met
currently believes. Desired position "
branding element
Innovation / brand visioning looks at an
what we want the market to believe.
of the firm and the
innovation (future product or business)
Slogan " the core essence of the
true integrator of
from nine distinct directions.
desired position stated in a few words.
the entire
organization.
Name: The first point of connection to
Value Promise: A clear, concise
The Core of
the minds of customers. Usually
statement of value to be promised to
Integration Is the
defined late in visioning, when much is
specific customers based on
Brand,
known about the topic. This is the
understanding of needs, desired
Don E. Schultz
brand name.
benefits, required uniqueness, and how
Marketing
the company wants itself and its product
Focus: Technical or market arenas in
Management,
to be perceived.
which this business/product competes.
Spring, 2001
Features, functions, future additions.
Mission: Purpose. A commitment to
Statement of functionality.
deliver specific value through specific benefits
enabled by specific technologies and features. In
Customers: Choice of whom to serve targeting
effect, a commitment to the brand.
of markets and market segments (distinct pieces
of markets). In business-to-business markets,
This brand/innovation visioning works for products,
descriptions of companies and decision makers
services, tangibles, intangibles, hardware, software,
as customers. In consumer markets,
facilities, teams, and investment opportunities.
characterization of individuals representative of
Brand visioning is one element of corporate visioning
the segment.
done for established companies, start-ups,
Needs: Urgent requirements that drive sales or
businesses, functional departments, and major
investment. Distinct lists for each target market
projects. (The last two are seen as internal
segment.
businesses)
Benefits: Results of meeting needs. Value is the
Brand visioning begins with facilitated decision
sum of benefits. Quantified value is the sum of
making by a cross-functional team. In performance
quantified benefits. Distinct lists for each
of this due diligence, the team may well recognize
segment.
that it does not have sufficient information in one or
several areas. If so, the process has defined needs
Uniqueness: Competitors " those seeking the
for market research.
same customers with similar products.
Competitive factors from customer perspectives.
Brand visioning establishes features and functions of
Estimates of how well each competitor performs.
innovations required to meet the value promise.
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Every distinct view in the analysis sets context and

requirements for development. Indeed, because of
its breadth, brand visioning invariably finds new ways
to increase value to customers. For that matter,
brainstorming on value stimulates creativity and is a
powerful tool for generating new product ideas.

preferable and competitive products. Designing for

value delivery sets a comprehensive project scope,
reduces rework, and shortens time to market.
That is important, yet not enough. Another definition
is required.
Brand equity: The durable economic worth of a
brand to a company over time.

Brand definition takes a significant effort much

more so than choosing a brand name. The unique
Brand equity reflects that extra commitment to a
value promise becomes a core focus for all of
particular product that ensures customer
innovation (product development, launch,
If
your
company
loyalty and allows premium pricing.
and tactical marketing) and customer
has sales of $100
service. A name simply doesnt carry the
Brand equity delivers easier sales, repeat
million, you can
same weight.
purchases, upsell and cross-sell success,
increase revenues
barriers to competition, easier market
Brand definition done early in innovation
by $30 million with
expansion, and a competitive platforms for
becomes strategic. It focuses
commensurate
higher market impact with both new
development of the product or business on
profits over five
product introductions and ongoing product
delivery of unique, preferable value. This
years if you let
marketing.
strategic approach dramatically improves
brand help drive
productivity, reduces cost and risk, speeds
In financial terms, brand equity is
your growth.
time to market, and ensures competitive
Brand Asset measured in greater cash flow, more
impact.
Management reliable cash flow, faster cash flow, faster
Scott M. Davis time to payout, lower cost of sales, lower
A reminder: The company can state and
Jossey-Bass, 2000 cost of capital, and higher share value.
own its brand definition, yet markets of
""""""""""""
customers will own the brand. Getting
For R&D labs and other internal innovators,
Market
to your
from definition to market ownership takes
brand equity is a source of greater funding,
employees as
commitment and strategy.
faster funding, more reliable funding, lower
much as your
cost of funding campaigns, lower cost of
Brand Hierarchy
customers. If your
capital, and ability to hire top talent.
employees
dont
As mentioned, brand visioning develops
Powerful lab brands are sources of
get it, neither will
both corporate and product brands.
stronger and more profitable collaborations,
your customers.
Especially for B-B companies, the
greater visibility outside the parent
Kristine Shattuck, organization, more effective outreach,
corporate brand provides an umbrella
Southwest Airlines, shorter time to technology transfer, more
under which one or more business,
quoted in a 1998 consistent and rapid application of research
product, and/or service brands fit. The
Conference Board results, lower cost of licensing, stronger
corporate promise applies to all products,
study on Managing partner loyalty, and competitive platforms
and thus is more general. For example,
the Corporate Brand for market impact.
General Motors brands both the Cadillac
and Chevrolet businesses, and each of
Project teams gain easier funding, repeat funding,
those businesses brands each distinct vehicle
new opportunities, barriers to competition, easier
offered.
expansion into desired project areas, and a platform
To see the importance of the corporate brand,
for higher corporate impact.
consider what happens when something goes wrong.
Looked at another way, branding is a business
The fallout of Tylenol tampering fell on Johnson and
strategy for achieving these benefits. Branding thus
Johnson, not on the Tylenol brand. The Alaska oil
sits at a par with innovation (new product
spill Exxon, not the boat pilot. Rollovers of Ford
development and marketing) in terms of direct
Explorers Ford and Firestone, not the vehicle or
delivery of revenues to the corporate bottom line.
tire brands.
Well developed brand equity is a businesss single
The corporate value promise covers product lines
greatest asset and only truly durable source of
and products. The best corporations make that
wealth. People and products come and go.
value promise a part of the behavior of everyone and
Facilities degrade and fall out of date. Only the
every process in the company.
brand has the potential to survive change over time.

Brands and Wealth Creation

Brands form logical foundations for innovation, yet
the costs of defining and developing a brand need to
be justified in terms of return on investment. Prior to
launch, brands focus innovation, leading to more

The value promise of branding itself is simply this

Wealth Creation.
To achieve its value promise, of course, the brand
must be backed up by performance in every part of
the company. Indeed, product equity is the durable

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economic worth of existing products abilities to meet

brand value promises. Innovation equity is the
durable economic worth of corporate abilities to
create and deliver new ways to meet value promises.
Of these, the value promise and brand survive, while
other ways to deliver value continuously evolve.
Equity is wealth. Brands deliver that most essential
form of equity durable commitments of customers.

Brand Ownership
Brands live in the minds of markets of customers. To
achieve that result, the company must take
ownership of responsibility to honor the brands value
promise. For our purposes here, ownership means
acceptance by the company of its brand obligations.
Ownership implies a powerful commitment, not just
legal rights. Ownership implies that everyone from
top management to staff makes the same
commitment, as appropriate for each persons job
function. Ownership means living the brand
literally becoming part of the value promise.
Thus the first job of branding is to gain internal buyin and consistent support company wide. Two tasks
must be done: Convince corporate management
that branding itself is worth while; and convince
everyone in the company that the particular brand
vision is the right one. The arguments for branding
are those in the section on brand equity above. If
management doesnt yet believe in branding, internal
marketing of the value of branding can be integrated
into marketing of specific brands.
Developing in-house buy-in to a brand means
marketing the vision. Not just the name and value
promise, but the choice of customers to serve, needs
to meet, uniqueness to provide, competitors to
outperform, perceptions to create, and features to
provide that will enable meeting all those conditions.
For the corporate brand, the marketing team is
senior management. Choice of company brand is
very strategic, and made by senior management
even when another team develops options. Senior
management demonstrates its ownership, in part,
through its consistent, visible, and audible support of
the brand and all of its implications.
For a product brand, the brand-management team
(marketers) need to market both up to senior
management and out to staff. In almost every case,
gaining senior management support first simplifies
gaining buy-in from staff.
The tools of internal marketing are not that much
different from the methods of branding discussed
below. Begin with strategy, then implement with
consistent messages customized for each type of
stakeholder. And of course, follow through by living
the brand.

Branding and Strategy

The brand is a corporate strategy. Perhaps better
said, commitment to the value promise is a very
high-level strategy. Lesser strategies will be used to
create market awareness and grow acceptance of
the brand.
In effect, branding is a business within the company.
It delivers a product (the brand), gains market buy-in,
and returns wealth to the company (brand equity).
As a business, branding needs to define itself and
establish its operations.
Branding: The very strategic process of
persuading market acceptance of and
commitment to specific business and/or product
brands (value promises).
To define branding operations, we need another
business visioning process. The one described here
has been applied to operations in companies,
functional departments, and projects, and to both
established organizations and start-up businesses.
Goals: Desirable long term results toward which
we want to work. Goal setting, then
characterization of success in reaching goals.
Goals are durable and may last for the lifetime of
an organization. Changing goals changes context
for strategies.
Objectives: Clearly defined, achievable, timeable, and measurable near term results toward
which we want to work, often during a plan period.
Objectives adapt over time to changes in
marketplaces, technologies, competition,
government regulation, and more. Objectives
connect goals to the real world. Objectives nest.
That is, objectives for brand development fit under
corporate objectives for wealth creation.
Strategies: Methods for reaching goals by
achieving objectives. Strategies nest. Innovation
and branding are corporate strategies.
Advertising is a branding strategy. Placement is
an advertising strategy. A tactic is a tool or
process managed by a strategy to achieve
objectives. A strategy at, say, department level,
is a tactic at company level.
Integrated Strategy: The combination of several
strategies to achieve a suite of objectives.
Integrated branding strategies often include, for
instance, public relations, advertising, and
websites.
Plans: Summaries of how strategies will be used
to achieve objectives. Plans determine resource
requirements. Often, planning may be bypassed
in favor of direct project management.
Goals and objectives are results, not processes.
Strategies are processes. Plans describe all three,
adding delegation and resource management. This
very general decision process works for operations

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of all kinds, yet must be customized to accomplish

branding.

Branding and Communications

requests for product demonstrations within three

weeks of the third ad in the ad campaign. Or more
specifically, 75 requests for product demonstrations
from Chief Information Officers.

Branding deals with perceptions. Branding uses

communication to close gaps between what markets
believe now and what we want markets to believe.
Thus branding has specific requirements beyond
other types of operations.

Effectiveness in creating brand awareness and brand

loyalty, however, must typically be measured with
market research. Short term sales may not measure
brand recognition or acceptance of the value
promise.

As an example of the complexity, consider the

process of getting a message into the minds of
customers across paradigm gaps of belief, habit,
knowledge, and experience.

Third, branding strategies are means of persuasion.

That is, they attempt to reach targets at a
psychological level in order to influence behavior.
Branding seeks to initiate and sustain positive, winwin relationships.

Perceptions
Encoding
Transmission
Decoding
Perceptions

What we believe
Output filtered through our
paradigms
Across paradigm gaps
Input filtered by their paradigms
What they believe

To address the realities of persuasion,

communication must become a strategic process. In
particular, goals come in two distinct forms.
Targets: Those to whom a program of
communications will speak
Tasks: Results this communication program will
achieve in terms of actions we want targets to
take
Target definition extends customer descriptions from
brand visioning. Strategies to achieve
communication tasks depend directly on knowing a
starting place of current perceptions plus typical
responses to various types of messaging and
persuasion.
Since targets come in large numbers within market
segments, target expectations, behaviors, and
responses are broadly representative of the class. In
business-to-business marketing, classes can be
clearly distinguished. Management, technical
evaluators, and users in a customer company
typically need different messages. Small companies
need to be treated differently from large companies
or businesses in large companies.
Note first that branding tasks differ by type of target.
Thus tasks are best stated as mental responses by
the specific type of person to a specific
communication.
User: This is much better than Brand X.
Technical evaluator: Cool! Ive got to tell
management about this!
Decision maker: This confirms what my staff
has reported. We will buy this product.
Second, objectives now measure responses to
communications. Responses to standard marketing
communications are easily measurable: 200

Effective branding strategies center on

communication targets, not on the product or
company. That is, a product brochure is not about
the product, but about customers first, then about
how products can meet customer needs.
To ensure a customer center, branding
communications can be structured around four
themes.
Needs: Business problems faced and the
negative consequences of not solving those
problems. Connect to pain; create urgency.
Opportunities available and the negative
consequences of not acting. Connect to gain;
create urgency.
Vision: A picture of life and benefits after needs
are met in practical, real-world scenarios.
Connect to hope.
Solution: The product or service that enables the
visions, meets the needs, and delivers the
benefits. Connect to intellect.
Preference: Reasons to chose our product over
alternatives. Reasons to engage in a long term
relationship with our company. Connect to their
due diligence.
Themes might be stated explicitly with clear labels,
or implicitly and woven into the text or presentation.
Typically, the first three are presented in order, while
preference is sought throughout.
Centering isnt an option for any branding campaign,
and it applies to the whole company.
Centering communications
means centering strategies
means centering companies
means centering everything
the company does and says.
The power of branding depends on the power of the
value promise to both focus the company and focus
its communications.

The Future of Branding

Branding has evolved dramatically away from a
focus on symbols to a focus on value-driven

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relationships. In so doing, branding has become an

intimate partner of innovation in making and keeping
satisfied customers, over time, at a profit, in a
competitive environment.
To perceive the future, consider a simple, yet
powerful system built of innovation and branding.
Opportunities: Chances to meet customer
needs. Though some opportunities come from
serendipity, opportunities are developed through
marketing. Branding sustains opportunity flow.
Performance: Company and product in action
meeting needs and delivering value. Evolution of
company/product to meet changing needs and
perceptions of value.
Trust: Developed by consistent company and
product performance at or above expectations.
That is, built by clearly and visibly making value
promises, then visibly and credibly honoring those
promises. The foundation of relationships.
Relationships: Durable connections between
individuals and/or organizations, built on two-way
communications, that deliver ongoing value to
both sides. The only durable source of wealth.
This system describes the way business works.
Opportunities enable performance which (hopefully)
builds trust that grows into relationships.

Relationships enable new opportunities to perform

that, when successful, reinforce relationships. Trust
in value promises made and kept over time ensures
ongoing relationships which deliver preference for
specific sources of performance.
Innovators recognize opportunities and state them as
value promises. They develop products which
deliver value through excellent performance. Brand
practitioners use the same value promise to initiate
relationships and build trust through performance.
Value promises made (branding) and kept
(innovation) over time enable win-win (product for
payment) relationships that embody the equity of the
brand. Needs change and products change, yet
relationships last as long as performance delivers the
best value.
Those who excel in implementing this branding /
innovation system will win the greatest share of
brand preference and sales. Advantage is built
through the joint system, not through innovation or
branding done individually.
Though innovation will produce results we cannot
foresee today, wealth creation will always depend on
sustaining durable win-win relationships. The
leading edge will always be held in balance with
fundamental human decision processes.

Published by

The Market Engineering Press

12006 N. Antelope Trail, Suite 10
Parker, Colorado 80138
303-840-9929
www.Market-Engineering.com
GaryL@Market-Engineering.com

Copyright Market Engineering International, Inc.,

2003-06. All rights reserved. Permission to reprint
quotes and excerpts is given, and use is
encouraged. Please include the following credit
line: From Branding and Wealth Creation by Gary
Lundquist, 303-841-9929.

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