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Building brand castles for printers

Friday, 10 October 2003
By Print21

Legendary US investor, Warren Buffet once said that successful global brands gave their owners an enormous competitive advantage by “setting up a protective moat around their economic castles. The average company, in contrast, does battle daily without any such means of protection”.
In the local graphic arts market, how are we doing in setting up protective moats around our economic castles? How relevant are Warren Buffet’s comments to the Australian printing and graphic arts industry?
I’d argue that the critical element of any competitive strategy is your brand. A strong brand communicates, differentiates and delivers value.
In graphic arts the major global brands might be those of advertising agencies, such as Saatchi and Saatchi, Leo Burnett and Clemenger. High profile industry suppliers such as Xerox, Hewlett-Packard, Heidelberg, Creo and Kodak stand out whilst print franchises, Kwik Kopy, Snap, Minuteman and Kinko’s spring to mind.
Each evokes a response; each communicates, differentiates and adds value. Is it any real surprise that each of the above brands is able to charge premium prices? Research states that there is a high correlation between brand awareness and price premium, so much so that strong brands can command a premium of 30 percent or more. Put simply, they can charge more for their products and services because of their strong brands.

Castles of the mind

Stronger brands mean we widen the moat and make it more difficult for our competitors to get a foothold into our ‘economic castles’ (our clients). Usually the only way for them to gain such a foothold is to drop their prices and buy the business. Loyalty and customer retention are far more likely with a stronger brand.
A brand name also adds value. It gives us an image, personality and quality that are important to our customers. It’s not about reality; it’s about building perception in our customers’ minds. Renowned positioning theorists, Al Ries and Jack Trout state that, “Marketing is a battle that takes place inside the mind. If you own a strong position in the mind, you can milk that position forever.” When customers think of your company brand, what do they think of? Just another printer, or one that has a brand that communicates, adds value and is differentiated?
A strong brand is one of the most powerful and valuable, assets a company can possess.
Franchising is an excellent example of the power of the brand. Snap, Kwik Kopy and more recently World Wide On-Line are good cases in point. In the past 15 years they have built jointly over 250 stores. They have created powerful brands, each with a strong identity that communicates, differentiates and adds value.
So why would you abandon a brand? Perhaps because of lack of brand equity (the value of the brand to your business) or perhaps a replacement brand is better and more applicable to the target market.

Show me the brand

Recently one of our longest standing industry brands, Show-Ads has been replaced by PMP Digital. This umbrella branding strategy adopted by PMP with PMP Print, PMP Digital and PMP Distribution, is clearly different to its major competitor, IPMG which has chosen to retain the individual identities of its companies such as Inprint, Offset Alpine, Hannanprint and prepress house Sinnot Bros.
Both branding strategies have their unique advantages. PMP’s umbrella branding can stimulate demand in other PMP businesses. For example, PMP Digital’s customers may buy from PMP Print or PMP Distribution or vice versa. It also allows for easier branding of new business, so if the company decided to launch PMP Logistics as a brand, it could do so quite easily as there is an existing degree of brand identity.
Umbrella branding also reduces marketing and brand development costs, i.e. if the PMP brand is promoted, it effectively promotes all other brands under the same umbrella.
Another argument for the change is that the new PMP Digital business offers many different services to those offered by Show-Ads, and that PMP in its own right is a powerful brand.
Conversely, IPMG has chosen to use individual brands. This strategy can also reveal many advantages. The first is the retained identity, despite new ownership. Would it have really worked in Queensland to lose a brand like Inprint? Would it have worked to have just IPMG in Sydney and not Offset Alpine and Hannanprint, competing in similar markets? Would IPMG Print draw from a larger pool of clients, each of which associate different things with Offset Alpine and Hannanprint?
By adopting this approach, has IPMG managed to allow each brand to be positioned to different target groups at different pricing levels?
Others that have adopted individual brands despite merging are Southern Colour (VIC) and Impact Printing in Melbourne, and Colorpak which has retained the Hale FoldPak name in NSW.
The question of which branding strategy – individual or umbrella – will be most successful is a matter for conjecture. We will only know which method has been successful over time.

Milk the brand or drain the moat?

On balance I think the IPMG branding strategy is a safer bet. I think the problem is that the position Show-Ads held in the market is different to that of PMP Print. Will the PMP brand and the new PMP Digital brand be able to replace the brand equity that Show-Ads had built up over 70 years? How many of Show-Ads customers know, or can positively relate to the PMP brand? How will the ex Show-Ads customers respond to the change? What will be the effect on the culture of the company? Will PMP, to quote Al Ries and Jack Trout, be able to ‘milk’ the PMP Digital brand at some time in the future to the same extent as Show-Ads?
Another brand strategy both could have adopted is joint branding. Penfold-Buscombe for example has adopted this strategy. This may appear to be an each way bet, but often it can be the best choice leveraging off both brands whilst retaining some of the former brand’s identity.
The question of which branding strategy to adopt should be carefully considered and researched. Research, I fear, is often the most neglected step in finding out exactly where your present brand is positioned in the customer’s mind, how a change in brand will effect that position and whether the new brand can lead to your ability to ‘milk’ the brand, charge more for your products and services, and clearly differentiate.
Branding should be one of the key competitive strategies for all companies, big and small. I’d suggest in today’s price driven market we do everything possible to build the moat and protect our economic castles.

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