On The Margins

Monday March 21, 2005

[ Business ] On the Importance of Building the Brand

1908: Walter Davidson with Endurance race winner

Brand is not an attractive lable on a product. The brand of a product is the guarantor that the product meets a certain category of expectations. In fact, investment in building and protecting (not just legally protecting, I should emphasize) a brand represents a part of the transaction costs of carrying on with the business behind that brand. The cost of building a brand is a non-redeployable cost. Once you have built a solid brand, you cannot unravel it and build another solid brand from it.

When I say a brand is a kind of non-redeployable asset, I mean to distinguish it from redeployable assets.

In simpler terms, a brand is not like a truck that can be used to carry computers one day and cucumbers the next.

Building a brand goes hand-in-hand with providing a solid assurance, to the buyers of the product, the consistency of certain characteristics, which only the brand can signal. And, only when a brand is capable of such signalling, can the brand take a life of its own through social and organizational self-regeneration.

Let me give a quick example.

William Harley, Arthur Davidson and his two brothers incorporated their bike builder in 1907, a year before GM was founded.

Last week, Harley-Davidson passed GM in market value (17.68 bn vs. 16.17), Financial Times reports (March 21, 2005, p. 14).

This is a far cry from the 1970s when H-D was owned by American Machine and Foundry, a ten-pin bowling specialist.

Now, with this story in the mind, it should not be too hard for anyone who has lived in the U.S. long enough to know something about the image Harley-Davidson has built for itself through its history and in the last few decades.

H-D has strived ceaselessly to focus its business over the past twenty five years. Through focus, it has demonstrated and signalled its dedicated commitment to the market that matters to it and for which it matters. It has strengthened and built its brand, the most significant expression of its intention into the future, and the most valuable non-redeployable asset it possesses.

Harley-Davidson, Brand, Marketing, Business, Transaction Cost Economics, History, GM.

2005-03-21 23:37:45.0 -- Comments [0] ; Permalink ; Trackback.