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Presentation Contents
Introduction ......................................................................................................3
The value of branding ......................................................................................5
An engineers and accountants guide to branding.
The anatomy of a brand...................................................................................9
Forget about branding having the lowest price is all that matters.
Putting the margin back in to your bids with branding....................................18
From ATCO to AUSCO. Lessons I learnt from developing a
new brand name for what was once an industrial icon...................................21
Checking the health of your brand. ................................................................28
Some examples of some great industrial brands. ..........................................30
Brand building techniques..............................................................................35
A how-to-do-it branding checklist. ................................................................36
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Introduction
Good Morning, my name is Justin Wearne. I am the principal consultant of
JWPM Consulting.
JWPM is a management consultancy that advises industrial organisations on
how to grow the top line.
The number one problem that my clients approach us to help solve is - we
are not selling enough which, when translated, means we need a big
increase in gross profit or we are going to have to start surgery.
I am being dramatic. Normally, our clients problems comprise a range of
topics, for example
Strategic issues: positioning of products and services, the decision to be in
particular markets or not.
Business model issues: distribution, outsourcing, value chain analysis.
Product or service issues: how does our offering compare, is our service
delivery competitive?
Sales force issues: are we knocking on the right doors, are we efficient in our
approach, are we being systematic or haphazard?
Pricing issues, which often leads to branding issues, which is what are here
to discuss today.
I work with a wide range of organisations from SMEs up to multi-nationals.
I have been working in the Industrial marketing space for coming-up to 14
years, and in sales, advertising and marketing for nearly 25 years.
Its always a privilege to be invited to speak at a L21 Conference. Being here
is hard to fit into our work schedules, but I always find it very worthwhile.
Thankyou John, for your kind words of introduction.
Ladies and Gentleman, it was with some amusement that I received the news
from John Lee1 that he was planning a seminar on Industrial Branding.
Industrial branding? Thats almost an oxymoron.
Perhaps I am being unkind to a segment of the industrial community.
However, from working with many industrial companies, I would make the
observation that where as a significant number of companies know it and use
it well, the vast majority are unsophisticated in this regard. Most organisations
that one could consider industrial almost dont even have a logo and are
usually infected with brand vandals who endlessly and creatively misrepresent
the organisations corporate identity.
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Aircraft Manufacturers
Aasi Aircraft, Adam Aircraft, Aermacchi, Aero Vodochody, Aerocar, Aero Commander, Aeronca, Aerostar
Aircraft, Aerospatiale, Aerospatiale-Matra, Airbus Industrie, Airco, Airspeed, American Aviation, Antonov,
Arado, Armstrong-Whitworth, Agusta, Auster, AviaBellanca, Aviat Aircraft, Aviation Traders, Avro, Avro
Canada, Bachem, BAE Systems, Bayerische Flugzeugwerke, Beagle, Beechcraft, Bell, Bellanca, Beriev,
Bell Helicopter Textron, BFG Aerospace, Blackburn, Blriot, Blohm und Voss, Boeing, Blkow,
Bombardier Aerospace, BMW Rolls-Royce Aero Engines, Boulton Paul, Brantly, Breguet, Brewster, Bristol
Aeroplane Company, British Aerospace, British Aircraft Corporation, Britten-Norman, Bcker, Canadair,
CASA, Cessna, Chilton, Chrislea, Cirrus, Commander Aircraft, Comper, Consolidated, Convair, Culver,
Curtiss Aeroplane and Motor Company, Curtiss-Wright, Dassault Falcon Jet, Dassault Aviation, Davis
Aircraft Corp, de Havilland, DASA, Diamond Aircraft, Dornier, Douglas, EADS, Eclipse Aviation, Embraer,
Enstrom Helicopter, English Electric, Ercoupe, Eurocopter, Fairchild, Fairchild Dornier, Fairey, Falcon Jet,
Farman, Fieseler, Fleet, Focke-Wulf Flugzeugbau GmbH, Focke Achgelis, Fokker, Folland, Fuji, General
Dynamics, Gloster, Gothaer Waggonfabrik (GWF), Grahame-White, Grob Aerospace, Grumman,
Gulfstream, Hamburger Flugzeugbau GmbH (HFB), Handley-Page, Hanriot et Cie, Hawker Siddeley
Company, Heinkel, Helio, Hiller, Hindustan Aeronautics (HAL), Hughes, Hunting, Ikarus, Ilyushin, Junkers,
Kamov Design Bureau, Kaman Aero, Lake Aircraft, Lancair, LearJet, Lockheed Martin Corporation,
Luscombe Aircraft, Martin, Maule Aircraft, McDonnell-Douglas, Messerschmitt, Micco Aircraft, MiG, Mil,
Miles, Mitsubishi, Mooney, New Piper Aircraft, North American Aviation, Northrop, Northrop-Grumman,
Parnall, Percival, Piaggio, Pilatus Aircraft, Piper, Pitts, PZL, Raytheon Aircraft, Rearwin, Republic, Robin,
Robinson Helicopter, Rockwell, Rutan, Ryan, Saab, Scaled Composites, Saunders-Roe, Schweizer,
Scottish Aviation, SEPECAT, Shorts, Sikorsky Aircraft, Socata Aircraft, Slingsby, Stinson, Sopwith, SPAD,
Spartan, Supermarine, Tupolev, Utva, Vereinigte Flugtechnische Werke GmbH, Vickers, VickersArmstrong, Vultee, Waco, Weser Flugbau GmbH, Westland Helicopters, Wright Aeronautical, Wright
Company, Wright-Martin, Yakovlev, Zlin,
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You are the chair of the aircraft acquisitions committee at a major international
airline and your organisation is investigating the purchase or lease of 10 new
medium-haul, mid-sized passenger aircraft. A search of the internet will turnup a plethora of aircraft manufactures.
Something tells me that you will not be contacting all of them, but will probably
select a short list of the usual suspects.
On the list are names such as Boeing, Airbus Industrie, McDonnell-Douglas,
Northrop-Grumman, General Dynamics, Tupolev, Antonov, Focke-Wulf
Flugzeugbau GmbH , Messerschmitt, Gulfstream, and Wright Aeronautical.
Now, not all of these organisations manufacture medium-haul mid-sized
passenger aircraft (and some no longer exist), but look at the names. Do
some of these names activate in your mind some concepts, even thoughts
and feelings?
If they did then you are probably no different from anyone else. But we would
expect that the buying committee looking to purchase aircraft may not be
influenced by thoughts and feelings about a brand, that they would have some
kind of rigorous evaluation process that could see through any favouritism and
prejudice that might arise from merely the brand name.
I am here to suggest that even in the purchase of high value capital
equipment the brand name has a strong influence over the buyer.
The origins of brand marketing.
I hesitate to use examples from consumer goods marketing to mount an
argument for branding in industrial organisations. The reason is that some of
the counter arguments are so obvious
1. Hard core industrial executives are likely to say Selling soap powder off
supermarket shelves has nothing in common with selling high value capital
equipment in a competitive tender.
2. Industrial companies that have being selling on price for some time making
desperately thin margins will eschew the idea that further expenditure
should be put into pretty pictures and marketing puffery for so-called
brand building. Particularly when the pay-back will be over several years
and probably wont do anything to help win the next big contract.
However, brand marketing was developed in the highly competitive world of
consumer goods. This is where its power to build sales was discovered and
the practice refined. Because when two soap powders are demonstrably
indistinguishable and yet one consumer will swear by brand A and yet his or
her best friend will swear by brand B something more than product
performance is going on. Cigarette manufacturers have this down to a fine
art. If I told you that two people were about to walk in the door one smoked
Benson & Hedges special mild and the other smoked Winfield Red, you would
probably be able to guess which one was which. Even more frightening is
that the cigarette manufactures would be able to tell you what type of car they
are likely to drive, what age cohort they belong to, their level of education, the
post codes they are most likely to live in, what other brands of goods they
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prefer, and how they would answer the question when you arrive at a party
do you prefer to be early, on-time, or late?
<We all know of two companies whose products are virtually
indistinguishable. In fact, the two companies compete in a large market in
which there are dozens of competitors. However the two companies regularly
obtain a 30% premium on their competitors.
This is because Coca-Cola and Pepsi-Cola have persuaded us that the
phosphoric acid, the H2O, flavourings, colourings, sugar and what ever else
they throw into the dark sticky brew is better than that mixed by others and
indeed better than simple H2O itself.
So, if branding works for Coca-Cola, will it work for a manufacturer of
industrial hose or an organisation pressing metal pieces? Of course!
Branding is already working for industrial companies, but not with the
efficiency it could. Many industrial companies have customers that they have
supplied for years. These loyal customers buy trust, they have friendships and
are affected by any number of other intangibles that have a value as well as
the functional properties of the product. Very few industrial buyers will change
their supplier if an unknown somebody or other knocks on their door offering
the same goods for 10% less3.>
So to summarise, there are three areas where branding is important
ONE: Branding adds value to a product or service
The value of a brand for the selling of any product or service is that it
1. Differentiates a product or service in a way that is of value to the
customer.
2. Maintains awareness of the product or service so that customers seek out
your product or service in preference to your competitors.
3. Clearly indicates the product category or particular area of specialisation
that your product or service is known for.
4. Ensures that the product or service is clearly understood.
TWO: Branding is about developing a relationship with the customer.
One of the five things that you need for a healthy business
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The last requirement built and retained customer loyalty is where branding
fits in. If you have a significant number of people out there who know and
prefer your product or service over and above the competition then you have
a brand.
THREE: Branding allows you to charge more
Looking at it from a formula persons way of thinking
PRICE = Overhead + Product + Profit + Risk + Service + Brand
This is the formula that explains why a customer will pay more for a well
branded product or service.
This works for t-shirts. The same t-shirt made in Indonesia will sell for $18.00
as a generic or unknown brand, but you put Gucci on it and it will sell for up to
10 times the price. Better than that, even after you explain that to most
people they still want the Gucci T-Shirt.
This works for power tools. Makita power tools sell for considerably more
than brands of equal quality and function.
And it works in industrial marketing, for many years a certain model of Shure
Microphone was considered a deluxe premium high end product, the
preferred choice of the Australian sound recording industry selling for several
hundred dollars. The same model in America was a budget item more suited
to the amateur market or non critical sound applications like school public
address systems, and sold for around $50.
Clearly, image and reputation hold the key to how customers perceive value.
Lets have a look at why this works.
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Branding ladder
Master
Advanced
Novice
The majority of
industrials are at
this level.
Basic
Nave
Nave
At the bottom of the ladder is the Nave level. Organisations at this level have
got a name but not a whole lot more. Its either the person who founded the
business Frederick Smith Engineering or its based on where they started
the business Minnesota Manufacturing and Mining4. Or they used the train
wreck method of naming - jamming two words together Qualiserve. These
names are applied to a few obvious things that require a name: business
cards, letterheads, signs, the service vehicles. And that is about as
sophisticated as it gets. Basically they are unbranded.
Basic
One step better. The have developed a Logo. Some thought is given to the
corporate name. Its chosen to be compatible and sympathetic with the
product category, it communicates something about the offering. This is then
applied with some care to business cards etc. This has established the first
necessary ingredient for the development of a brand; a corporate identity.
They have achieved recognition but they dont have what could be described
as a brand. The majority of industrial organisations are at this level of
branding sophistication.
Novice
The next level sees the addition of some intellectual rigour. Some thoughts
such as market position start to creep into managements thinking what
4
Which went on to become the 3M Company now a very sophisticated industrial and
consumer manufacturing organisation.
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does our organisation stand for? What position do we wish to have in the
market place? This work is quite often documented in a strategic plan, but
what separates the Novice level from the next two levels is that the
organisation is talk but not a lot of action. The essential elements are starting
to be put in to place, but are not yet integrated into organisational behaviours.
Advanced
Here we see a more integrated approach. Management has implemented a
program to instil into the organisation comprehensive behaviours that back-up
the desired brand values. The Americans have a saying its called walking
the talk. What it means is that the branding strategy goes further than a logo,
corporate identity manual, and a description of the brand personality and
brand values. What happens is that all members of the organisation are
briefed on what the brand stands for and managers are required to up-hold
the brand values in their respective areas. An organisation like Virgin Blue is
a great example they employee smart good looking extroverted young people,
dress them in tight clothing, encourage them to have fun with the customers,
and all their written communications with customers have a friendly, fun style.
None of this occurs by chance; it has been planned, documented and now is
inculcated in to the operating procedures of the business. The business looks
fresh, alive and fun. As a result they have clearly differentiated themselves
from Qantas.
Master
Master organisations are into brand management. They are either managing
a number of different brands or are very aware of the power of their single
brand; the reputation of their organisation.
Brand management is not only about generating earnings by exploiting the
power of the brand but it is about preserving the integrity of the brand.
The brand managers understand that a brand is intangible. It not only doesnt
have a physical existence, but it also doesnt even exist in the corporate
memory. It actually exists in the collective memories of its target market. To
have a look at it you have to probe their minds. Organisations that are into
brand mastery regularly monitor the health of their brand through market
research as well as implementing the necessary actions required to develop,
build, and maintain the brand.
Having introduced the concept of organisations at various levels of brand
sophistication, I would now like to provide you with my model for the anatomy
of a brand.
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Brand theory
Product
Benefits
Performs
well.
Trusted.
Compatible.
Less
problems.
Large installed
base.
Well supported.
Product
Values
Satisfy need to
conform and
belong.
Reduce risk.
Credibility.
Easier path to
successful
project
completion.
High availability.
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A 19
The first and most important concept to establish is that a brand exists not in
the minds of the organisation that is selling the product or service but in the
minds of their customers and prospective customers.
People develop interesting ideas about products and services. Have you ever
seen somebody have a seemingly fixated attitude toward a particular product
or service? Even in some circumstances continuing to buy a product service
even when it has let them down in the past? People develop an emotional
attachment to products and services. This is linked to past experiences, fear
of change, business relationships etc.
People relate to products on 3 levels.
The first level is a purely functional level; product attribute and performance.
Most industrial marketing is done at this level. The next level is where the
buyer relates the product attributes to the benefit that they produce. This is
often referred to using the saying dont sell the sausage, sell the sizzle. Or
the often quoted example People dont want to buy a drill bit; want they really
want is a hole.
The final level is the highly personal level where the buyer either consciously
or more often subconsciously relates the purchase of the product or service to
their own wants, needs, or desires. This is what the buyer feels about the
product; do they feel that the product will help them to succeed in their job; will
the product deliver or fail? Past prejudices can be an influence here as can
the style of organisation5. Big companies for example tend to like to do
5
Actually the study of buyer behaviour (including industrial buyers) is a complex field well
studied by psychologists and other academics.
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business with other large companies. Brand marketing works most powerfully
by appealing to the personal values of the buyer. The concept of the brand is
linked to the concept of a market position.
Positioning
People think about brands in the same way as they think about people. The
human brain likes to categorise things. Thats how our memory system
works. The basis of most memorising schemes is to develop as many logical
connections to existing concepts. If you are having trouble remembering
something it helps to stimulate a neural connection by thinking about the
context. Where was I when I first heard about it? Where did I meet this
person? What does her face look like? Where was I living at the time?
So when we are introduced to a new brand for example lets call it Benex.
Our first thought is what product or service category does it belong to? We
first try to guess it from the name. If we cant work out what it is then the
chances of us recalling the name diminish substantially. We are quite unlikely
to spontaneously recall it even in the near future.
Well I put Benex into Google and got nothing much at all. So lets say it is the
name of a company that supplies rubber gaskets and o-rings.
Benex Rubber Gaskets and O-Rings
Positioning
How a product or service is perceived in the
minds of the target market - relative to the
competition.
In here
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We feel more comfortable now that we have a pigeon hole to put the name in.
Our next step is to decide if the name or concept is worth keeping. Will it be
useful in the future? We need to find out more information. What sort of
Rubber Gaskets and O-Rings do they supply automotive, plumbing, for oil
refineries, or maybe O-rings for space shuttle solid booster rockets?6
In fact, Benex supply rubber gaskets and o-rings for large industrial
applications and specialise in food processing equipment, oil pipelines and
refineries, and high pressure steam systems.
Benex Rubber Gaskets and O-Rings
Specialists in food processing, resource industry and high pressure steam.
Establishing a market position is about establishing a definite category in the
minds of a significant number of relevant current buyers and potential buyers.
Obviously Benex would focus their sales and marketing communications on
suppliers of food processing equipment, oil pipelines and refineries, and high
pressure steam systems as well as the end user maintenance departments.
What is a brand?
An abstract concept.
It exists in the minds of the target
market.
It has three components
Brand graphics.
Brand personality.
Brand values.
Detailed over
the next three
slides.
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If Benex were the first organisation to establish their name in that market
category and are able to dominate the Rubber Seals and O-Rings industry
then they will have a significant and long term advantage over the rival firms.
I am being slightly irreverent here. The Challenger Space Shuttle disaster was attributed to
the failure of an o-ring seal between one of the sections in one of the two solid booster
rockets. (Morton Thiokol was contracted by NASA to build the Solid Rocket Boosters).
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This is a central thesis of the landmark book Positioning by Al Reis and Jack
Trout. And the follow-up book The 22 Immutable Laws of Branding.7
The brand takes the establishment of a market position one step further.
Another interesting thing that the human brain does is the way it manages
concepts. A concept is an abstract idea. For example if I were to say to you
HOUSE that could lead to a highly complex list of items and further concepts
about house construction, real estate, homes, lifestyle, families, and even
sporting teams at your childs school.
Brand graphics
Logos, corporate colors etc. that uniquely identify
your products /services so that your customers
can understand them and seek them out.
Unique.
Memorable.
Good design values.
Easy to reproduce.
Sympathetic with the brand values.
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A 29
One single word can be the label leading to a large amount of information.
Information, incidentally, that has been carefully acquired, categorised and
stored over a long period of time. The first component of a brand is its
labelling function. This is achieved via the brand graphics which is the label
that leads to all the information that is stored about the brand including the
same information that a person has stored regarding how that product, service
or organisation is positioned in the market place. I like to think of the brand
graphics as the plastic tab attached to a drop file in a filing cabinet. When you
are shuffling through a filing cabinet looking for something, quite often another
item catches your eye and suddenly you are reminded of the contents of that
file. Peoples reactions to seeing a logo or some other element of an
organisations corporate identity are similarly reminded.
Brands are also said to have a personality. Again, just as we attribute a
personality to people, brands can also have a personality. Personality comes
from an observation of behaviour. How a brand acts or behaves contributes
to the development of the brand personality. Brands that behave badly,
7
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exhibit poor quality, provide poor service, and have poorly presented service
vehicles, predictably end up with a different image than those that behave
well.
Brand personality
A good starting point in developing a brand
personality is to ensure that it in some way
encompasses the USP - that which is unique and
has a value to your target market.
A 30
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Brand values
The brand values should be strongly aligned to
the values of the target market - this will then
allow the brand to appeal to their deepest
thoughts, emotions, and feelings.
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A 31
The final component of the brand is its values. Earlier, I spoke about the
power of appealing to the buyers values rather than just selling product
features and benefits. The brands values are designed to appeal to the
buyers values. Ideally these values should be a perfect match with the
buyers values on all levels. This is why organisations of similar ethnic groups
feel more comfortable doing business with like organisations. However, other
value systems can operate. In the IT world firms with a Geek outlook on life
will appeal to the Geek market.
Management teams have the option of sitting down and analysing the market
place, talking with their customers and working out how they can shape their
brand so that it appears unique in the market place in a way that has real
value to their customers and prospective customers8. Once you have a
definite and strong image and it is managed thoroughly not just through
careful adherence to a corporate identity program, but also through setting
behaviour standards throughout the organisation then you will be well on the
way to creating a valuable industrial brand.
But never forget this; you may be the architect of your brand but the building
site exists in the minds of your customers and prospects.
Frivolous differences have been used in brand marketing; OMOs Blue Beads of Bleach and
Lemon FAB for example. Personally I think that in B2B marketing highlighted differences
should have some basis in fact such as technical features.
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PAGE 18 OF 38
relationship with the customer. You need to have done the same. With a well
established brand you have a head start in this process.
TWO: Put some effort in to the appearance of the bid package
A large number of my consulting projects have arisen from companies that
have asked me to improve the appearance of their bid packages. A customer
of mine explained that they had the reputation for delivering the best
mechanical services but the construction company one of the majors gave
them the tip that their bids looked like something from the 1950s. Content
was not the issue. Price was not the issue. But the construction company
had a landmark government infrastructure project coming up and the tender
evaluation had a lot of emphasise on issues such as waste management,
occupational health and safety, collaboration, innovation, and ability to add
value through exceeding design specifications. The principal was looking for
quality companies to work on this project. And I was called in to spruce-up
their bid package and make it look the part.
When you look at the tender evaluation process often there is a scoring
system used. The weighting may well be 75% price, however scoring highly
in the other 25% is sometimes just enough to kick the bid over the line. And
this is where appearance and a strong brand can assist.
THREE: Get a 2nd bight at the cherry
By developing a strong industrial brand you will have a large number of
people out there who would prefer to do business with your firm. This can be
very useful when submitting a bid. I have yet to see a truly bullet proof tender
submission process where the customer stuck by all of the probity rules. The
only time I have seen that was when we or my client was not the preferred
tenderer. Developing a strong brand is one of the tools (and there are many
others) that will enable you to obtain an opportunity to negotiate with the
customer after the bids have been submitted. If your firm is the organisation
that they would prefer to do business with but price has become an issue they
may feel compelled to talk with you further.
FOUR: Dont bid if it isnt a good fit with your brand
Having a documented statement of your brand helps you to decide what
business you are in.
A Case Study.
A manufacturer of large switchboards was not winning enough bids. Their hit
rate was down around 3%. They were submitting a lot of bids. One of the key
issues was that they hadnt understood properly what their real market niche
was. Their product differed in that they were experts at building Type
approved high power switchboards high amperage combined with high
voltage and in addition their build quality was very high. Analysis of their bid
outcomes revealed that the product appealed to older engineers who were
specifying the product for plant expansion or retrofitting. Their buyers were
end users (they had to live with their product choice) and had been in the
electrical engineering business for many users. There was an obvious brand
value and brand personality that needed to be developed which appealed to a
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Value engineering.
Manufacturing.
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Project management.
Logistics.
Management systems.
Actually, these numbers are roughly correct; my memory has faded. However, for the
purposes of illustrating the order of magnitude and the trends that are discussed later in the
story they are accurate enough.
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Brand values.
The organisation had a published statement of corporate image (or brand
personality) and a culture statement. Published or not, there were several key
features that made up the organisations culture
1. An absolute commitment to performance both in delivering on promises
made to a customer and on meeting internal deadlines.
2. A high standard of business ethics.
3. Executives were expected to entertain customers. Even to the point of
being criticised if they were underspending on their entertainment
budgets, but arriving late at work because of a late night was
inexcusable and no alcohol was to be consumed or even stored on
company premises.
4. The organisation had an obsession with winning bids and had a
detailed bid evaluation, estimating, and proposal writing process. All
bids had to be hand delivered regardless of where in the world they
were to be sent and a sales executive would remain in-country until
the contract was awarded.
5. Every office had a sales bell which was rung for each module that was
sold. That occasionally meant ringing it 1,000 times if the organisation
won a contract to build a mining camp.
6. The organisation was tight fisted with its financial controls.
You can see the type of image that ATCO had. It was a dynamic, sales
driven, and performance driven company. However, the important point is
that this made ATCO an excellent fit with its main customers: project
managers; construction managers; mine managers; and drilling industry
people.
Committed to customer service and performance.
As a case study ATCO is interesting because, whereas many organisations
claim to have a commitment to performance and customer service, ATCO was
one of the few companies that I saw actually build it into their daily business
operations. The saying work through the night took on a whole new meaning
at ATCO. The organisation was obsessed with performance. If it promised a
customer that their workforce accommodation would be completed by a
certain date it absolutely was. It fiercely protected its reputation for delivery
on time and on budget because in the final analysis that was its point of
difference and it was no frivolous claim.
This would sometimes lead to the organisation losing a bid, because ATCO
would not make a promise that it could not keep11. The competitors would
11
As a notable example, in the early 90s AUSCO was asked by the United Nations to provide
workforce accommodation in Cambodia. This was an urgent requirement and the UN
specified a delivery date for the first contract of (say) 8 weeks. AUSCO responded with a
promise of 10 weeks. A competitor (an ex ATCO employee) agreed to the deadline, won the
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quite often commit to an impossible deadline just to win the job and if they
failed to deliver that would diminish the reputation of their own brand and
enhance ATCOs.
Almost a Household name
Many people thought that ATCO was a construction company. The reason
was that their product was so well branded that often on a construction site
the only signage that was clearly visible was the ATCO logos that were placed
on each corner of their temporary buildings.
Very few people I have met have not heard of the name, although during its
absence from Australia the name had started to fade12. Regardless, through
the 70s and 80s in Australia it was a dominant industrial brand.
The sale of ATCO Australia
In 1985 ATCO in Canada was going through huge changes diversifying into
Oil Drilling and Power Generation. After a particularly vigorous period of
acquisition they found themselves a bit short of cash and sold off ATCO in
Australia. A New Zealand company called Fortuna borrowed heavily and
purchased ATCO. Fortuna spent the next five years borrowing more and
went on to purchase some 8 other companies. Trading difficulties were
experienced leading to cash flow difficulties and, to cut a long story short, in
1989 its major creditor the Bank of New Zealand appointed a receiver and
manager.
Receivership
The Receivers assessed that ATCO by itself was still a viable business and
isolated it from the rest of the Fortuna group to restructure for a trade sale. A
new CEO was appointed, who in turn assembled a new management team
including myself. I joined the management team as the Group Manager
Marketing after the company had been in receivership for about 6 months.
Our brief was to restructure the company and to re-establish it in its traditional
markets and put back into place its management disciplines.
From ATCO to AUSCO
The most difficult task of all was that we needed to lose the ATCO name.
When the Canadians had sold ATCO 5 years previously, a condition of sale
was that ATCO could only trade using that name for 5 years, after that the
company was to rebrand itself.
This was a serious blow. The ATCO brand was an icon; almost a household
name. One of the most recognised industrial brands in the country, in-fact the
contract and failed by many weeks to meet the delivery. AUSCO won the lion share of the
remaining contracts totalling some $37 million.
12
ATCO Canada has re-entered the Australian market and now has offices in Brisbane,
Townsville, Mackay, Newcastle, Sydney, and Melbourne.
http://www.atcostructures.com/01Products_05Aus.htm
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10. We also flew around Australia over two weeks and undertook a name
change function officiated by a federal or state politician along with 100
major customers and suppliers.
11. On top of that we hired a a public relations firm to send out media kits
and press releases as well as inviting the media to the name change
function.
12. Managing employees was also an important consideration. Each office
held a name change function for employees where every employee
was given a name change handbook that explained what was
happening, why it was happening, and a section that described the use
of the new logo. In addition every employee received a t-shirt and
baseball cap.
And remember that this was happening while the company was still in
receivership all corporate stationery and literature had to include the words
receiver and manager appointed.
The name change advertisements went on for about 12 months. Every
receptionist was instructed to answer the phone Good morning AUSCO,
formerly ATCO Industries. That was maintained for 12 months.
Yellow pages advertisements still mentioned formerly ATCO and under the
listing for ATCO a note was inserted See AUSCO.
ATCO
AUSCO
The whole program cost roughly $750k which was a big call for an
organisation in receivership. But, the Receivers knew that the value of the
organisation was mostly in the brand name. Their entire turn-around strategy
rested on a successful trade sale.
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Success
ATCO (AUSCO) survived the name change. We traded under receivership
for a further 2 years, and despite going into a recession in the early 90s, and
battling the stigma of receivership we took the organisation from $65m
revenue making a loss of $6million EBIT to revenues of $135million making a
profit of $6m.
The success of AUSCO was not just due to the successful name change
program. However, it was a significant element.
Ultimately, James Hardie Industries bought AUSCO. I was out of a job and
started-up JWPM Consulting.
The lessons from ATCO
My 3 years at ATCO taught me the following things about branding
1. The importance of walking the talk: How significantly an organisations
behaviours can influence a brand.
ATCO had a reputation for
performance and it truly walked the talk.
2. The importance of being disciplined: ATCO had in place strong
management disciplines. In truth the average ATCO executive was a hard
working, hard playing, egomaniacal individual driven by ambition and
testosterone13. However, it was a seriously disciplined organisation that
counted every bean and forward planned with great care. This discipline
carried through to the way it managed its corporate identity.
3. The value of the brand: The mere fact that the Receiver and Manager of
the company could see the value of funding the name change program
(and was willing to recommend it to the secured creditor who was
underwriting the organisations restructure) is a strong indication that the
value of the ATCO brand was not underestimated.
4. The effect that a strong brand can make to sales performance: Making a
transportable building is easy. The barriers to entry to the business are
extremely low. Undoubtedly ATCO had a strong ability to perform and
deliver, but this was not a sustainable competitive advantage. The
existence of a strong brand built carefully over many years was clearly an
advantage and was worth an average of 15% additional margin.
13
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14
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An obvious observation is the incredible value attributed to the brands; CocaCola at the top of the list is valued at USD$67.39 Billion! Would anyone
actually pay that much for the brand alone? Apparently Coca-Cola sells
roughly 12,000 products every second across the globe.16 Do the maths work
out?
A number of industrial companies rank in the top-10. Microsoft, IBM, GE, and
Intel.
Incidentally, it has taken the accounting profession some time to recognise the
value of a brand in a companys balance sheet. Accountants have always
had great difficulty placing a value on goodwill or any form of intangible
assets (and for good reason). However, any of the above companies would
be seriously misrepresenting the value of their organisations if the value of
their brands was not brought to account.
Although not ranked in the top 10 global brands, I chose Kodak as my second
example of a great industrial brand because of a remark that my 11 year old
son made recently when I pulled a roll of film out: KODAK they have an
obsession with yellow! he exclaimed.
15
At least they were in 2000 according to Stephen Coomber in his book Branding.
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Kodaks origins
In 1888, George Eastman introduced his innovative KODAK Camera with the
slogan, "You push the button, we do the rest,"17 and began to develop a brand
that would dominate the global photographic market for over a hundred
years18.
Kodak Today
Today Kodak is a public company with worldwide sales of $13.5 billion and
employees over 120,000 people.
An important industrial brand
As well as being an important and powerful consumer brand, Kodak has a
very strong industrial base, marketing over the years Film Stock and
processing machines for professional photographers and processing labs,
medical imaging films, plates and processing equipment, motion picture films,
cellulose acetate yarn for textile manufacture, specialised aerial photography
equipment, high speed industrial photography, microfilming equipment for
archiving, the worlds first manufacture of commercial television recording
equipment, the production of alcohols and aldehydes for the chemical trade,
photolithographic printing plates, polyethylene plastic, and pharmaceuticals.
Long brand history
In the nearly 125 years since it was first coined, the KODAK trademark has
been used on billions of products and has generated hundreds of billions of
17
18
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community service projects. Each year, Kodak people in many U.S. and
international locations participate.
The lessons to be learned from the Kodak brand are
An original and unique name
What does the word Kodak mean?
The answer: absolutely nothing19. It was a name chosen by George Eastman
the founder of the company because it was unique, had strong consonant
sounds, 2 syllables to enhance memorability, easy to pronounce, had no
meaning in any language ideal for a global brand and it was available to
register as a trademark.
The translation of a proprietors ethics into corporate ethics
Where many organisations fail to grow is the inability of the proprietor to
replicate their own success traits into a business model. Its no use if its all
kept in their heads. Yes, they can lead by example but unless its
documented and inculcated into corporate policy and culture it will fail to drive
growth. What you see in Kodaks corporate culture is a highly values driven
business system that has survived many years after the retirement and death
of its founder20.
Adherence to great trademark practices
Kodak has followed its corporate identity standards to the point of being
almost boring; an obsession with yellow. But there are many ways to make
a product interesting in sales and marketing. You dont need to tamper with
the corporate graphics21. The consistency of its brand graphics, the heavy
handed use of yellow has worked extremely well for Kodak. But you try and
achieve that in your organisation and find out just how difficult it is. This is
where you need a brand champion. The endless tendency of people to fiddle
with the brand graphics will dilute their effectiveness if left unchecked.
Value driven behaviours
Kodak is a highly ethical company. As an industrial brand it stands for
thorough research, high quality standards, leading edge technology, and a
high standard of business ethics.
Do these ethics mean anything to its industrial clients? Let me see: medical
imaging for health markets; pharmaceuticals; television production; military
applications. Yes, I think their customers would hold Kodak in high regard
and that would result in sales as well as the ability to hold margins.
19
Well, not when it was first coined anyway. Today it means a lot thats what branding
does.
20
21
Lets not be overly simplistic. When you are on a good brand, dont muck around with it,
however, when a flagging brand needs reviving quite often a change of corporate identity is
essential.
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Step 3: Have a Meaningful Vision for your Business and your Brand.
A business Vision (or Mission) has a number or roles: most important of which
are to inspire and guide. Too many business Visions include words like
'leader', 'best', 'pre-eminent', 'most successful'. Words like this can mean
many different things to different people. Because of that they are of limited
help in inspiring or guiding the behaviour of the business team. Brand Visions
have just the same function. Make sure that you have a written Vision for your
brand that is strong enough to inspire and guide behaviour.
Ask yourself:
22
Do I have a brand Vision that everyone understands and has bought into?
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How can I build learning into this, so that I can find out what works and
what doesn't, and do it better next time?
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Conclusion
Let me conclude by reading a brief quote from the CEO, Hewlett Packard.
Carly Fiorina
Ultimately, strong branding is not just a promise to our customers, to our
business partners, to our shareholders and to our communities; it is also a
promise to ourselves
In that sense, it is about using a brand as a beacon, as a compass, for
determining the right actions, for staying the course, for evolving a culture, for
inspiring a company to reach its full potential.
Ladies and gentlemen, thank you for your patient listening.
If you require a copy of my presentation it will be available for download from
the JWPM website at www.jwpm.com.au.
Please allow me a few days to have it posted.
Further reading
1. 22 Immutable Laws of Branding, Al Ries and Laura Ries ISBN
0060007737
2. Branding, Stephen Coomber ISBN 1841124109
3. Brand Building on the Internet, Martin Lindstrom & Tim Frank
Andresen ISBN 1876719192
4. Brands and Branding, (author?) ISBN 186197664X
For further information visit www.jwpm.com.au
Justin Wearne can be contacted anywhere in the world by calling (from within Australia)
0414 744 481 or from outside of Australia +61 414 744 481.
justin.wearne@jwpm.com.au
Regarding the Copyright of this publication
I dont mind the use of this document or its copying provided that acknowledgement is given
to JWPM Consulting and our website is mentioned www.jwpm.com.au.
Thankyou!
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