People tend to use the words “business” and “brand” interchangeably, but they are actually two different things. Your “business” is your company—the organization that produces your products or offers your services. Your “brand” is the image or identity that your business projects—the way that consumers perceive your business.
For example, consider Proctor & Gamble. What do you think of when you hear that name? Most people haven’t heard of it; others might associate it with soap operas (or with Satan if they believe every silly urban legend that ends up in their inbox). While it’s a very lucrative business, the Proctor & Gamble name isn’t much of a brand. However, Proctor & Gamble does market a number of incredibly successful brands, including Charmin, Tide, and Duracell. These are brand names that are not only instantly identifiable, but that immediately elicit an association or emotional response in consumers (Charmin is soft, Tide is springtime fresh, and Duracell keeps going and going and going…).
Admittedly, the distinction isn’t always so… well, distinct. Coca-Cola is such an immensely popular beverage that its very name has become synonymous with the term “soft drink.” It’s delicious, refreshing, and evokes feelings of nostalgia (people drink Coke because they grew up drinking Coke). The Coca-Cola Company is a multinational beverage corporation that manufactures and markets hundreds of related brands, including Minute Maid Lemonade, Hi-C fruit juice, and Dasani bottled water. Coca-Cola is both a successful brand and a successful business, as are Apple, McDonald’s, and Nike.
Are You Building a Business or Building a Brand?
Building your business typically means expanding your scope and offering additional goods or services to your customers. However, building your brand typically means keeping your scope focused on a single idea that will come to embody your business. The two aren’t quite mutually exclusive; it is possible to have a profitable business with a strong, readily identifiable brand, but this doesn’t happen by accident. It takes a concerted effort to build your brand alongside your business, and you need to be willing to make sacrifices and concessions when necessary to balance the two out.
Unfortunately, it’s all too common for businesses to obsess over one while ignoring the other, which leads to either a loss in profitability or a dilution of the brand name. Case in point: Dell Computer Corp.
When Dell Computer first started, they had a niche. They were a business that sold personal computers directly to other businesses. In the first quarter of 2001, Dell was the world leader in personal computers (in both sales and profits), and their name was synonymous with “business personal computer specialists.”
Naturally, the next step was to build the business. However, the folks at Dell did so with total disregard for their brand. They branched out to offering personal computers to consumers (“Dude, you’re getting a Dell!”), which meant they were no longer “business” personal computer specialists. Then they widened their focus to consumer electronics, which meant they were no longer “personal computer” specialists. Finally, they moved into retail distribution, which meant they were no longer “direct.”
By 2003, they had even changed their name to reflect this new business model. They were no longer Dell Computer Corp., but Dell Inc.
There’s no denying these changes were profitable for the business. Sales increased steadily from $31.9 billion in 2000 to $61.1 billion in 2007. But as business went up, the value of the brand decreased. Their market share fell behind Hewlett-Packard’s in 2007, and they never caught back up.
So what should Dell have done? It’s all too easy to play Monday-morning-quarterback, but the obvious answer is they should have placed as much effort into maintaining their brand as they did into expanding their business.
“That’s the way it is in corporate America today,” Al Ries wrote back in 2009. “Everybody is looking for ways to build their businesses by expanding into other categories. Their real strategies should be to build their brands by dominating their categories. And often the best way to do that is by contracting their brands so they stand for something.”
Building your business will yield immediate results, but your success will be fleeting without a brand to hang it on. Building your brand may earn you the loyalty and adoration of your customers, but they’re going to be few and far between if you let your business suffer.
So the answer is to build your business in the short-term with an eye for your brand identity in the long-term. It’s easier said than done, but it’s not impossible. Just ask the folks at Apple, Samsung, Google, Microsoft, Walmart, IBM, General Electric, Amazon.com, Coca-Cola, Volkswagen, Shell, Disney, Target, Nestle…