Interview: Professor Malcolm McDonald
Creating Powerful Brands
Steve Macaulay
Hello, I am Steve Macaulay and I am interviewing
Professor Malcolm McDonald about a book that he cowrote with Leslie de Chernatony. It’s called Creating
Powerful Brands.
Malcolm, brands have got two things: one a tremendous
mystique about them; yet, at the other end people saying
well brands are disappearing – the internet, price
comparison websites, that means brands don’t exist
anymore to the same extent that they did. What is your
view?
Malcolm
McDonald
Well people have been saying this for the past fifty years
about brands. It never has been true and it never will be
true. I am Chairman inter alia of a company called
Brand Finance that tracks the top brands in the world,
and if you look at the list you will find that apart from
newcomers to do with the internet and mobile telephony,
apart from the obvious ones like that, the long term
brands remain up there and they make much more
money than their pimply little me-too competitors.
Now an example I would give you, I say to my
audiences, you haven’t got Heinz and Mars and
Kellogg’s in your pantry, I say, have you? You have got
all the bog standard own labels, haven’t you? And they
all look at me and smile, and I say, now you are just as
stupid as I am, you have got the brand leaders there and
you pay more for them. And then I go on and say, and
don’t think it is just to do with fast moving consumer
goods, because I used to be a marketing director of a
fast moving consumer goods company myself – Canada
Dry. And I say, if you look for example at Alpha Laval,
nobody can taste the different, but you put Alpha Laval
on it, it gives them 65% market share. If you look at
SKF bearings, you can’t taste difference if you are an
engineer, you put SKF on, 45% world market share.
You look at Castrol GTX, you can’t taste the difference,
put Castrol on it and it gives them 65% world market
share. Intel Inside, for a more modern one, you can’t
taste the difference, put Intel on it and it gives them a
massive market share.
So I think the facts, Steve, belie what you have just said,
and contradict it – always has done, and always will do.
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Professor Malcolm McDonald
Steve Macaulay
So what is it about brands that give it that power, then?
Malcolm
McDonald
It a very, very difficult question to answer that and I think
that anybody who could answer it precisely would
probably be a multi media millionaire. But, let’s get one
or two things clear. Everything in the world is a brand; a
brand is a name on a product, a person, a place – so
Cranfield is a brand, that is a place; the Queen is a
brand; Bournemouth is a brand; Milton Keynes a brand.
But so are, shall we say, the banks – they are brands,
they have got names. And yet in spite of the billions of
pounds and euros that they have spent on advertising I
defy anybody, certainly in the United Kingdom, to say
there is anything different or distinctive about any of
them. And the answer is no there isn’t. So they are not
successful brands.
So that brings into play the notion of what a successful
brand is, and a successful brand is a name, or a person,
a place, a product, a service, which creates sustainable
competitive advantage or super profits. In other words,
it bestows benefits to the person or people who are
buying them that they are prepared to pay a premium for.
And if you look at the profit impact of market strategies
which has been going now for many, many years,
looking at what the factors for success are in industry
you will find that the top brands always, always have
about 20 to 25% more profits than other names on
products or services.
So again the facts point to what a successful brand is.
And of course, if you think about what a successful
global brand is, it’s exactly the same as a successful
brand, the only difference is that a global brand does it
consistently around the globe.
Steve Macaulay
Now, I know one of the things that you have said in the
book is a brand is much more than just a logo; what
actually would you call a brand? Because one of the
things you have said is there is no clear one definition of
what it is.
Malcolm
McDonald
The first thing that the brand leaders do in any domain,
whether it’s service or whether it’s business to business
or whether it’s consumer, they work tirelessly and
ceaselessly. The Procter and Gambles of the world, the
Unilevers of the world – they work tirelessly, they put
loads and loads of money in research and development;
they are constantly researching the consumer – their
needs, their attitudes, their hopes, their likes, their
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Professor Malcolm McDonald
dislikes, their desires. And they push the frontiers
forward all the time with the physical formulation of the
product.
So there is no question that the physical formulation of
these products is superb. So they get the basics right.
But what they then do, they endow them with a kind of a
personality. It’s difficult to say what that means, other
than that if I were to say to you – or as I frequently do to
an audience – a Parker pen is going to walk in at the
moment, as opposed to three or four other kinds of
brands. Or a certain car was going to walk in, as
opposed to other brands of cars. You would instantly
think it’s young, its old, it’s male, it’s female, it’s macho,
it’s soft, it’s hard. And endow them with these
personalities that almost make them like people and you
get to love them, you get to trust them.
And of course this is quite apart from the kind of
shorthand that you have with brands, where in most
purchase situations we are in a rush, and rather than
taking a risk of buying something else, you reduce that
risk by buying a well known brand that you have trusted
and liked all your life and no matter what anybody says,
the generics and the own labels in supermarkets have
not been able to displace the top brands and they never
will do, as long as those companies concentrate on
consumer or customer needs and continue to push the
frontiers forward.
Steve Macaulay
One of the things that you describe in the book is the life
cycle of a brand and brand planning. What does that
entail?
Malcolm
McDonald
The concept of the life cycle is well researched and well
established – not just in marketing but in business
generally. I mean for example, if you look at this
country, well in fact if you look at Western Europe, just
about everybody today has got cars, televisions,
dishwaters, washing machines, so if you want to grow
your sales, instead of the good old days of just taking
sales because there was growth in the market today, if
for example you are a Ford and you want to grow your
sales, you are going to have to take sales from
somebody like Toyota. That means you are going to
have to work really, really hard on the physical
characteristics of the product and of course on your
brand.
So we must accept that all markets get mature sooner or
later, but the problem is that there are many examples –
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Professor Malcolm McDonald
I have written about them in the past – of self inflicted life
cycle analysis where you assume that the market is
mature. So you take promotional effort, shall we say,
and product development effort away from it. And the
very fact of doing that helps the decline of the brand.
Now if you look at some famous brands like Baileys, for
example, and others in the Diageo portfolio – Guinness
is a prime example where it was dying because it was
considered to be an old person’s drink and they
rejuvenated it, they relaunched it and got it on a new life
cycle by repositioning it. And the world is full of that.
Lucozade was another classic example of that, where it
was a dying product, it was associated with illness now
it’s a sports drink and it’s leaping away.
So if you do find yourself in a position where you really
are in a mature market, the clever companies are the
ones who actually look again at the market and seriously
think about repositioning that in another segment of the
market. So it’s there, but you can, as it were, shoot
yourself in the foot by just accepting it and not doing
anything about it.
Steve Macaulay
One of the things in the book that you say is mess with
the core values at your peril, and yet the examples you
quoted seem to suggest quite a big shift.
Malcolm
McDonald
Yes. Those are, I think, extreme examples. The
Lucozade one and the Guinness one – but Guinness has
always been part of not just our heritage, but the world’s
heritage; perhaps one of the most famous brands of all
time. And unfortunately the people who brought it along
– when I was a young lad for example, we all get old,
and the new generation begin to associate it with the
kind of people who drink it.
So it kept its core values, and again if you read the
Guinness case history, they had this motto, which was
more than a motto it was actually a deeply embedded
policy of the perfect pint wherever you sell it, everywhere
in the world. It was getting a bit tired. So the first thing
is they made the product absolutely superb, but they also
– and there was nothing wrong with it – they didn’t ditch
the old people, or the older people, all they did was they
persuaded younger people of the benefits of drinking it,
and by doing so they changed the profile of the
consumer base and that gave it a new life. So they
didn’t abandon the core concept.
Lucozade was slightly different because Lucozade was
always a successful product, but they did actually
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Professor Malcolm McDonald
reposition totally as a sports drink and it was the best
thing they ever did.
Steve Macaulay
One of the things that I would like to do is to get bang up
to date and say we live in an internet age, viral
marketing, brands like Google which are a means to an
end if you like – do you think brands are still relevant in
this busy internet age? How have they changed? One
of the things you say in your book is a brand is a brand,
it’s really only the execution that matters. Now I am
beginning to think that isn’t so in this internet age?
Malcolm
McDonald
Again, the clever organisations – the Procter and
Gambles, the 3Ms, the Xeroxs of the word, the Unilevers
of the world, the Diageos of the world – all the
companies who are deeply, deeply experienced in
branding, they have never, ever ignored the media. And
those companies have a deep understanding, in fact
better than most organisations, of the impact on
reputation and branding of new media. And what they
do, they don’t put their hands in front of their faces and
deny them, they actually embrace them. And so the
clever companies understand word of mouth, they
understand all of these wonderful, wonderful new media
like face book etc, etc, etc. There is a new one, a brand
new one, which most people haven’t heard of yet – it’s
on the iPhone, it’s the iApplication.
Now I am a brand, Malcolm McDonald, and I hope that I
will be the very first professor in the world, hopefully if
not that the first professor of marketing to put my
products and my concepts on the iApplications or the
Apps store.
No we don’t ignore them, we embrace them. We don’t
abandon the old media, we embrace them and we run
with them and we use them and you are totally au fait
with what is happening in the world. So, as I say, I as a
brand, I could just sit here and say well I have written my
books, I have done all these things – and I am 71 years
old now. No, I am embracing the new media; I promise
you. Just like all the brand leaders do.
Steve Macaulay
One of the things that clever companies do is evaluate
their brand and the success and where it is going and so
on. What sort of things are they doing?
Malcolm
McDonald
If you look at the process whereby any product or service
gets to market, there is and I won’t rehearse it here, but
there is a sort of creating awareness process and there
is making people think about the domain. There is then
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Professor Malcolm McDonald
trying to create preference for your particular product or
service; and eventually it’s turning that service into actual
sale. Now there are different words used by different
academics, but it is universal, it’s always been the same.
Now, again, the clever companies, are the ones who
understand the preferences of the consumer. So if you
have done your segmentation correctly and you
understand that there are in all markets probably at least
eight to ten segments, the preferences that the people
occupying those segments have for accessing that kind
of information and trialling and choosing differ by
segment. But if you haven’t got your segmentation right
you are just casting a net out, or you are doing the
shotgun approach, as opposed to the rifle approach.
The clever companies understand the preferences of the
people in the segments and they don’t just communicate
to them, they actually use those people’s preferences for
getting their points across.
Steve Macaulay
Malcolm, thank you very much.
Malcolm
McDonald
My pleasure.
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