Prof G Micro Class: Brand Strategy - YouTube

This week, a summary of the first few classes in my brand strategy course.

So, loosely speaking, think of a brand as all the touch points that create emotional

and tangibles surrounding a product. There are three basic categories or

three basic ways to build a brand: there's pre-purchase, purchase, and post

purchase. Pre-purchase - advertising, public relations - the things we typically

consider brand building. Purchase - where you actually buy the product -

distribution, the store. And then post purchase - loyalty programs, customer

service, warranties. What do we see happening? Pre-purchase, which has been

massively over invested, is in structural decline. Why? Because advertising sucks

and the advertising industrial complex is collapsing. Young, wealthy people, i.e.

anybody a brand wants to reach have decided to opt out of advertising, which

has become the tax that the poor and the technologically illiterate pay. What does

this mean for you? It means if you're a brand you need to reallocate capital out

of pre-purchase into purchase or post purchase. So we take that capital out of

pre-purchase which is the rookie move in brand strategy and we allocate it

towards the medium whose death has been greatly exaggerated and that is stores.

The gangster move of the last 20 years that has created more shareholder value

than any decision in the history of business with Steve Jobs' crazy

irrational decision to zag while everyone was zigging and take money out of

advertising and allocate it into a medium that was dying - specifically store -

"This is our store and the first quarter of the store has our Home section and

our Pro section with all our great Pro products and every product we make is in

this first 25% of the store and you can see the whole product line." Stores are

the consummation of a relationship - you hear about somebody - a good family, nice,

fun to be around and pre-purchased through advertising, but the physical

interaction: the first kiss, sex with the product who we personify and have a

relationship with, is at the store. You have sex with Tom Brady or Giselle, you

go into an Apple store, you go into a Samsung store or Samsung distribution which

is an AT&T or Verizon store - that's having sex with a guy named Roy with a

name tag in bad lighting. "You know what this is?" "Yes, that is a ten

times larger than life replica of your penis." "Oh, that's hilarious."

Point of distribution: stores are more and more strategic and while

square footage and stores will decrease, the amount of money spent on each square

foot relatively will increase. The other gangster move? Post purchase, warranties -

some sort of guarantee, some way of getting data. It's really post purchase

intelligence where we take data from the purchase and use it as a means of

whipping the consumer back around to that purchase funnel again. Think of the

clock as being an axis unfurled across X Y or an x axis - pre purchase, purchase and

post-purchase - we want you to have a bias, we want to lean the axis this way -

take money and allocation in your own human capital out of pre purchase and

either put it into purchase - the stores are under invested, you can still make

money in retail in stores as long as there's an omni-channel and we do click

and Collect - but really try and get to post purchase. Who are the best brand

builders in the world? Hands down, Tobacco. Take a product whose primary benefits

are death, disease and disability and turn them into the most aspirational

brands that make us feel tough and cool and you have the best branders in the

world. Why are they the best brands in the world? Because we turned them into the

best brand builders in the world. When they were advertising on television, our

mothers, our sisters and our daughters kept dying and so we said "That's it,

we're pissed off, you can no longer advertise!" So what do they do? They took

all of this capital and they allocated it to purchase and they put cute

pictures of camels and bodegas at distribution. Just about the time, this

was losing its effectiveness - good for them - but here's what happened. Our

sisters, our daughters and our mothers kept dying so we said "That's it, no more

cute camel points of purchase!" just as this was starting to lose some

momentum and they built the largest databases in the world and when they

sensed you were stopping smoking, they started sending you Marlboro points or

coupons to get you back into the franchise. The original CRM database

marketers? Tobacco companies. There are exceptions to every rule. Pre-purchase ad

supported media is not going away it's just going to be a shit place to work or invest.

As a matter of fact, I'll be watching ad supported media tonight. I'll give you

one hint. We'll see you next week.