Fusion Branding

Interview with Author Nick Wreden

On his book

Fusion Branding:  How to Forge Your Brand for the Future

Nick Wreden
Question 1
:    In your book “Fusion Branding” on the cover under your name is printed “Brand Futurist”.  What exactly is a “Brand Futurist”?  How does it differ from other writers writing about Branding and to put it bluntly why should our reader as a senior person in a company be concerned about “Fusion Branding”?

Answer:  Senior managers often get told they need “vision.”  That’s usually defined as a clear, long-range goal for their firm.  That’s absolutely vital.  But there is another aspect of vision that is rarely discussed, but is, in many ways, much more important.  Executives also must have a sense of what the world will look like in 1, 3, and 5 years.  That enables them to both ensure that their long-range goal is in synch with expected realities.  It also gives them a head start on planning for the business requirements of tomorrow.  Much of what is written about branding is a rehash of everything we’ve heard for 30 years – “positioning,” “awareness,” “brand personality,” etc.  Yet, in many cases, those concepts apply to a world that no longer exists.  Brands need a futurist to look ahead to the emerging business and customer imperatives of tomorrow..  With increased competition, demanding customers and rapid product cycles, brands must do more than adapt to changes.  They must anticipate them. 

Question 2:    In your book you seem to focus a lot on the customer where your predecessors seemed to be focusing more on the product and on PR and Advertising.  Does this difference in focus define much of the difference in the form of branding that you are advocating?

Answer: Yes, absolutely.  In the mass economy, companies could define brands because they could control information.  There were relatively few media outlets, and customer-to-customer communications was limited by proximity.  But a distinguishing characteristic of today’s customer economy is the fact that customers – not companies – define brands.  That definition is based on value, performance, service and other attributes.  And if those attributes do not meet customer requirements, then ubiquitous, technology-enabled customer-to-customer communications will ensure that the brand suffers – no matter how it’s “positioned.”

Question 3:  Early in you book you note that companies must incorporate “accountability, customer equity and operational excellence into their branding strategies”.  Can you explain what these three components actually are and why this focus is important to a company?  Also can you also explain how successful implementation of a branding strategy that incorporates these components will differentiate a company from its competitors?

Answer:  Accountability requires internal and external metrics – all relevant to the customer – in order to manage the delivery of customer value.  Customer equity represents the lifetime value of a customer.  Its value comes not only from increased profitability, but also from providing a metric that drives a company to focus on customer retention.  Everyday operational excellence encompassing everything from R&D to product delivery and support is necessary to ensure that whatever is promised gets delivered.  The value?  Imagine that you are a customer considering two companies.  One focuses on “image,” “awareness,” “positioning,” and cannot differentiate between a profitable, long-term customer and one who just buys once.  The other focuses on accountability, everyday operational excellence that enables the ability to do business on your terms, and customer equity, which demonstrates the value of your relationship.  Which one are you going to do business with?  The differentiation consists of getting what you value, and in the company knowing your value to them.

Question 4: On page six and seven of your book you list the 10 core principles that represent the new face of branding.  Can you explain how these interrelate, why they are important and also give examples of how companies have used these principles to improve their branding and sales?

Answer:  Peter Drucker, the legendary management consultant, has a quote that really defines the essence of FusionBranding:  “The purpose of business is not to make a sale, but to make and keep a customer.”  These ten principles all revolve around what’s necessary to make and keep a customer in an age when customers define brands.  There are numerous examples, but let me give you two.  Everybody hates cable companies.  According to the American Customer Satisfaction Index (ACSI), three cable companies – AT&T, Charter Communications and Comcast – earned the lowest customer satisfaction scores ever recorded across all companies and all industries.  The main reason is poor customer service, which led to expensive customer churn.  But DirecTV upgraded and enhanced its customer service capabilities, primarily by changing to customer-focused metrics (such as how often issues were handled in a single call) for its call center.  The result:  Per-user revenue went up, churn went down to a historic low and customer satisfaction increased 93% to a corporate record.  Another example is GM.  Once, GM had more than 70% of the U.S. auto market.  Now, it is down to less than 30%, and is forced to run a current, unbelievable advertising campaign where it apologizes for its poor quality and service for the last 10 years.  Compare that to the success of Japanese auto companies, which have focused on such FusionBranding principles as economic value, supply chain expertise and customer commitment.

Question 5:  In your book you note that branding has changed over time.  In fact you note that there has been three major branding eras.  Can you explain what these eras of branding have been and how you see branding further changing in the future?

Answer:  The first era was the mass economy, which lasted from 1945-1995.  This was the Golden Age of Branding, when companies could leverage limited media, limited competition and ever-increasing demand to create brands.  Today, it’s the customer economy, characterized by customer definition of brands, democratization and privatization of technology and organizational responsibility for branding.  We’re on the verge of the demand economy, which will be characterized by immediacy, personalization and reach.  In the demand economy, branding effectiveness will be based on supply chain capabilities, multi-channel unification and relationship capital.

Generals lose when they fight current battles with plans from past wars.  By the same token, by-the-book tactics and generous budgets won’t establish a brand if they are based on outdated strategies.  If the branding effort is not linked to the realities of the current era, not only will the branding effort be like pushing a rock uphill, but it will be the wrong hill as well. 

Question 6:  In your book you also deal with the role of the internet although you clearly point out that your books focus on the role of e-mail and the internet is only as it relates to branding.  You write in the book that the ”True strengths of the internet is that it is much more than a marketing medium, it is the key to enabling a relationship enterprise that allows business to be done on the customers terms.”  Many people seem to have discounted the role of the internet after the “dot com boom” but you seem to take a much broader view of the capability and role of the internet as a tool in branding.  Can you discuss this further and explain why you feel as you do?

Answer:  Companies focus on the internet as a marketing tool, seeing it as a cost-effective way to distribute information.  That’s important, but it misses the true branding potential of the internet.  First, the internet easily enables customer-to-customer communications.  A brand no longer depends on what a company says it is, but what other customers say it is.  On one hand, a single negative experience can ricochet around the world in seconds, but on the other, the internet can enable a brand to turn its customers into the world’s most powerful sales force.  Additionally, a brand essentially depends on execution, not promises.  Today, such execution requires a supply chain that works in harmony.  For a child to get a desired toy at Christmas, the supply chain from the local store to the plant in China must work effectively.  No company can brand effectively without internet capabilities that enable the right product to be delivered to the right person at the right time.

Question 7: You also deal with how branding should work for B2B (Business to Business) companies.  Again you write “  B2B companies, more than other enterprises, need to create branding capabilities that reflect customer requirements, differentiate and communicate service and other capabilities, and execute pricing strategic based on true cost-to-serve and customer value.”  Can you explain this more fully and can you give examples of B2B companies that you believe are doing a really good job at their branding and explain why you feel this way?

Answer:  Unfortunately, many branding books just focus on B2C firms.  However, the tactics advocated for B2C firms – TV advertising, “positioning,” etc. – are largely irrelevant to B2B firms, especially in vertical markets.  This causes B2B firms to ignore branding, which is a mistake.  Branding is just as important to B2B firms as it is to B2C firms. It’s important because a brand does not depend on an ad, logo, campaign, collateral or telemarketing.  A brand depends on a profitable – and I want to underline profitable – bond between a company and its customers.  You cannot have profitability unless you know cost-to-serve and customer value, and you cannot have a bond unless your operations reflect customer service and other requirements.  A well-known example is GE.  It gets the bulk of its revenue from B2B products, and is justifiably famous for understanding and meeting customer requirements.  Another example is industrial products supplier W.W. Grainger, which has been willing to revamp its processes and even sales compensation to better meet customer requirements.

Question 8: You have just returned from a seminar in Kuala Lumpur, Malaysia and will soon be returning there and then on I believe to the Philippines and later possibly other locations in Asia.  Based on your recent experience and what you are seeing going on in China and other locations do you feel Asians really understand Fusion Branding?  Also can you give examples and discuss Asian companies that you believe really understand the customer connection and have incorporated “accountability, customer equity and operational excellence” into their branding strategy?

Answer:  Unfortunately, no.  On one hand, I believe Asia is on the cusp of an incredible branding revolution, especially in the area where consumer electronics, communications and computerization are converging.  Asian companies are taking the manufacturing, operational, call center/customer service and logistical skills they’ve learned from outsourcing for Western firm and applying them toward development of their own brands.  I predict that within a decade Southeast Asian and even Indian brands will be as well known in the US and Europe as Japanese brands are today.  However, some will make the mistake of thinking that they have to follow the Western, mass-economy model of branding.  Large ad budgets.  The right “position.” Some will even believe one “immutable” branding law that it is “better to be first than it is to be better” – which has led to the downfall of more than one US firm.  But applying such dated tactics to a new branding era will only cost Asian companies money.  It is better for any branding effort by starting from what’s important to customers – accountability and the ability to do business on customer terms – and not what may be important to agencies.

Question 9:   If you had to point out what you would believe to be the most common mistake of Asian companies in developing a truly effective branding strategy what would that be and why?  Also, can you give examples of this that might help bring the lesson home a little better?

Answer:  For the first time, Malaysian executives are devoting attention and money to their brands.  It's tempting to look at the large, Western brands and think, "that's the model I should follow."  But it's not.  All you have to do is look at the financial difficulties of a McDonald's or the Gap or United Airlines to understand that large marketing budgets don't always build successful brands anymore.  Instead, Malaysian companies need to leverage the operational, logistics, quality and manufacturing skills they've learned outsourcing for Western firms to develop and promote their own brands.  This is happening more and more everyday.  For example, Baneng Holdings Bhd will be coming out with its own brand of children's wear and ladies apparel next year to cater to the international buyers.  Another company that earned its spurs as an outsourcer, P.I.E. Industrial Bhd, will soon introduce a DVD player and a CD-RW/DVD combo drive under its own CyberHome brand name in South-East Asia, Australia and New Zealand soon.

Question 10:  In looking at Fusion Branding, you divide your book into six core sections.  The last section before your final thoughts is on “Facing the Future:  Challenges in the Demand Economy”.  Here you note the issues of “privacy, dynamic pricing: bargaining in real time and Change management:  harnessing the power of change.”  These chapters I found in many ways the most thought provoking of your excellent book, can you give a short explanation of some of these points and how you see them challenging and changing branding in the future? 

Answer:  The chapter on privacy was written before 9/11, which has forced me to rethink some of what I wrote.  I still think privacy will be a defining issue for brands.  The issues of identity theft and the US Patriot Act have raised the issue of privacy in people’s minds, and I don’t believe that customers will want to have a relationship with a company that violates the trust that is at the heart of every brand by invading privacy.  Fashion manufacturer Benetton, for example, was forced to backtrack from a plan to insert RFID tags into its clothing because of fears that it could then track people on streets and in homes.  But the privacy issue will become more nuanced, with 3 zones of privacy.  One will be personal, with the sexual, financial and other information people do not want shared.  Another will be lifestyle, involving demographic and spending habits.  People will share this, but only if they receive something of value in return.  Finally, there will be societal privacy zones.  People won’t mind being tracked with cameras, or having “see-through” X-ray machines in airports, if they believe such action stops threats to society.

Within 5 years, dynamic pricing means that the price per gallon/liter will change in real time according to whomever else is pumping at that very moment.  We already see harbingers of dynamic pricing in hotel/plane ticketing, eBay and commodity markets.  Advances in network, processing power and better analytical tools will easily enable dynamic pricing for all companies in all industries.  So the issue becomes, how will dynamic pricing affect companies and their brands?  It has always been assumed that brands enable higher pricing, but what happens when that premium disappears in a dynamic marketplace?  First, it’s going to force companies to rely less on promotions, etc. to drive sales, which is good.  Lower prices inevitably attracts the least-loyal buyers, plus existing customers are always the first to take advantage of lower prices.  Second, it’s going to force companies to get a handle on both their operational costs and pricing strategies.  Currently, companies are relatively clueless concerning both their true costs and the price sensitivity of their customers.  Finally, it will lead to segmented branding strategies, which will be a vast improvement over the one-size-fits-all branding strategies followed by most agencies and firms today.

Actually, the chapter on change management was a bit of a cheat, since change management will always be a struggle.  People do not like change.  Companies think that technology will drive change, but people who prefer the status quo will triumph over technology every time.  But change management will be even a greater challenge in the future, because so much change is just over the horizon, and adaptability will be key to brand success.  (In many ways, I feel like we are in the eye of the hurricane.  We’ve passed through the Internet whirlwinds, and are now in a relative calm while those gains are being digested, but the whirlwind from globalization, technology and economic forces beyond our control are about to resume.) 

About the Interviewer:   Christopher W. Runckel, a former senior US diplomat who served in many counties in Asia, is a graduate of the University of Oregon and Lewis and Clark Law School.  He served as Deputy General Counsel of President Gerald Ford’s Presidential Clemency Board.

Until April of 1999, Mr. Runckel was Minister-Counselor of the US Embassy in Beijing, China.  Mr. Runckel lived and worked in Thailand for over six years.  He was the first permanently assigned U.S. diplomat to return to Vietnam after the Vietnam War.  In 1997, he was awarded the U.S. Department of States highest award for service, the Distinguished Honor Award, for his contribution to improving U.S.-Vietnam relations.  Mr. Runckel is one of only two non-Ambassadors to receive this award in the 200-year history of the U.S. diplomatic service.

Copyright, 2007 © Runckel & Associates
Terms of use

Runckel & Associates logo

About Us | Contact Us