Brands Create Customers

The Economist has a insightful report on how a billion-dollar industry can collectively fumble its brand, and watch a competitor walk away with its customers. The industry in question is the recorded music industry, which is now caught in a disastrous tailspin. The article isn’t about brands per se, but it shows how an archaic and dysfunctional business context can produce an archaic and dysfunctional brand—that sends customers elsewhere.

What is the context of your business?

Every company (or industry) must ask itself: What is the context of our business? Their answer to this question will define their effective brand. This may not be the brand they publicize in symbols and slogans, but it’s the real brand that customers deal with (or work with) on an everyday basis.

To develop this context, a business (or industry) must start by answering these questions:

1. What unique forms of value do we deliver?
2. How can we innovate to deliver more?
3. How does this value enable customers to create more value for themselves?
4. Where are we leading our customers?
5. How can advancing our customers build our competitive advantage?

If the context of your business is money . . .

The music industry never asked itself these questions, ignoring the fact that in the 1990’s hundreds of technology companies were making answers to these questions the core of their business. The music labels believed that the context of their business was money, not customer value. Specifically, the context was to rake in as much cash as possible by controlling artists and customers through a well-oiled, and well-protected, profit machine.

A cramped and coercive brand

Unfortunately, the industry didn’t realize that its profit context was effectively becoming its brand. Sadly, it was a horribly cramped and coercive brand, one that alienated artists and customers alike. It was often perceived as a brand of avarice. It was so strong that it also blocked the industry’s ability to transform itself, and to innovate. Not surprisingly, customers left in droves. Eventually, artists began to look elsewhere, too.

From the Economist:

IN 2006 EMI, the world’s fourth-biggest recorded-music company, invited some teenagers into its headquarters in London to talk to its top managers about their listening habits. At the end of the session the EMI bosses thanked them for their comments and told them to help themselves to a big pile of CDs sitting on a table. But none of the teens took any of the CDs, even though they were free. “That was the moment we realized the game was completely up,” says a person who was there.

Toward a context of value

From a brand perspective, the context of a business (or industry) can never be money alone. Money, or profit, is a customer result. The context of a business is the form(s) of value that the business delivers to customers, and how that value engagement can help customers advance themselves, and the business.

This context of value lays a solid brand foundation. It makes brand building easier, and more effective, with customers, employees and partners.

Where the recorded music brand now thrives

What happened to the recorded music brand that the traditional music labels let slip away? It now thrives at Apple, reinvented, re-cast and rejuvenated. Apple had the brand vision to see where new technology could take recorded music, and customers, in new value engagements. Thanks to the iPod and iTunes, recorded music has never been more popular, nor a music brand more prevalent.

Photo: Mulad — Flicker

This entry was posted on Thursday, January 17th, 2008 at 5:34 pm and is filed under Brand Innovation, Brand Leadership, Brand Building. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.