The Origin of Brands

1. Divergence, not convergence, drives brand success

"Convergence would destroy brand building."

Divergence creates opportunities. As categories split and evolve, new niches emerge for brands to occupy. This process mirrors biological evolution, where species adapt to fill new ecological roles. In business, successful brands identify and dominate these emerging categories.

Convergence is a myth. Despite hype about technologies merging, history shows that products and services tend to specialize over time. For example, television didn't converge with computers; instead, we now have many types of TVs (smart, 4K, OLED) and computers (desktops, laptops, tablets).

Examples of divergence:

• Coffee shops branching into specialized chains (Starbucks, Dunkin', etc.)
• Automobiles evolving into distinct categories (sedans, SUVs, electric vehicles)
• Retail stores splitting into category-specific outlets (Home Depot, Best Buy, PetSmart)

2. Create new categories to dominate markets

"You don't build brands. You create categories."

Identify unmet needs. Successful brands often create entirely new product categories rather than competing in existing ones. This allows them to define the market on their own terms and establish themselves as the leader from the start.

Examples of category creation:

• Red Bull: Energy drinks
• Uber: Ride-sharing
• Netflix: Streaming video
• Amazon: Online bookstore (initially)

Focus on the category, not just the brand. When launching a new product, put equal effort into defining and promoting the category as you do the brand itself. This helps consumers understand why they need this new type of product in the first place.

3. Be first or be the opposite of the leader

"Fortune favors the first."

First-mover advantage. The first brand to occupy a new category in consumers' minds often becomes the de facto leader, even if competitors offer objectively better products later. This psychological "imprinting" is difficult to overcome.

If not first, be different. When entering an established category, position your brand as the opposite of the leader. This creates a clear alternative for consumers and avoids direct competition.

Examples of successful opposites:

• Pepsi (youth) vs. Coca-Cola (tradition)
• Avis (we try harder) vs. Hertz (market leader)
• Apple (creative) vs. Microsoft (business)

4. Prune and focus to strengthen brands

"Growth in all directions weakens a plant and it also weakens a corporation."

Avoid brand dilution. Companies often try to expand their brands into too many categories, weakening their core identity. Instead, focus on dominating a specific niche.

Benefits of pruning:

• Clearer brand identity
• Increased profitability
• Simplified operations
• Stronger market position

Examples of successful focus:

• In-N-Out Burger: Limited menu, strong brand
• Southwest Airlines: Low-cost, no-frills air travel
• Rolex: Luxury watches

5. Establish an enemy to define your brand

"Establishing an enemy is almost as important as creating a new category."

Create contrast. Defining your brand against an established competitor or concept helps consumers understand your unique value proposition. This "enemy" gives context to your offering and clarifies your position in the market.

Examples of brand enemies:

• Uber vs. traditional taxis
• Apple vs. IBM (in early personal computer ads)
• 7-Up vs. cola drinks ("The Uncola")

Benefits of having an enemy:

• Clarifies brand positioning
• Creates a narrative for marketing
• Motivates internal teams

6. Launch slowly with PR, not advertising

"This is the era of public relations. Today you build brands with publicity, not advertising."

Build credibility first. New brands and categories often lack credibility. Public relations and word-of-mouth create third-party endorsements that are more believable than paid advertising.

Slow growth is sustainable. Brands that grow slowly tend to have more staying power than those that explode quickly. This allows time for:

• Word-of-mouth to spread
• Early adopters to embrace the product
• Refinement based on initial feedback

PR-first strategy:

1. Generate media coverage and buzz
2. Build word-of-mouth among early adopters
3. Use advertising to amplify once credibility is established

7. Use simple, distinctive names for categories and brands

"The best brand names are short, unique, and distinctive."

Create clear mental associations. Simple, memorable names help consumers quickly understand and remember your brand and category. Avoid long, descriptive names that try to explain everything about the product.

Guidelines for effective naming:

• Short (ideally one or two syllables)
• Easy to pronounce and spell
• Distinctive within the category
• Avoid generic terms

Examples of great brand names:

• Uber
• Xerox
• Google
• Nike

8. Avoid line extensions; create new brands instead

"New brands almost always beat old brands."

Line extensions dilute brand identity. When companies stretch their existing brands into new categories, they often weaken the core brand and struggle in the new market.

Create separate brands for new categories. This allows each brand to have a clear, focused identity and dominate its specific niche.

Examples of successful separate branding:

• Toyota vs. Lexus
• Gap vs. Old Navy
• Marriott vs. Courtyard by Marriott

9. Survival of the "firstest" in brand leadership

"Survival of the firstest."

Being first creates a lasting advantage. The first brand to occupy a category in consumers' minds often maintains leadership for decades, even if later entrants offer objectively superior products.

Psychological factors favoring the first:

• Perception of originality and authenticity
• Familiarity and comfort
• Association with category definition

Examples of enduring "first" brands:

• Coca-Cola in cola
• Kleenex in facial tissues
• Google in search engines
• Band-Aid in adhesive bandages

Last updated: July 29, 2024