Marketing, Branding, and Sales: The Hierarchy
There is a hierarchy in business that has three tiers. All three tiers are equally important, and each is intrinsically connected to the others. The most important thing for a marketer to understand is exactly how the three are interconnected. The hierarchy goes like this:
(1) Branding –> (2) Marketing, –> (3) Sales.
What does this mean? This hierarchy represents the way a business acquires new customers, keeps them, and turns them into loyal clients.
Tier 1: Branding
Let’s start with branding. A company’s brand is almost like a physical asset. Take a minute to think of any large cap company that has a well known brand (such as Nike, IBM, Citibank, etc.), and ask yourself how much it would cost to buy their company name brand for use in your own business. Do you think you could afford to buy their name? Can you imagine how how much money that name brand is worth?
What if a company like Coca-Cola sold its name brand to some other company, and started building a new brand for itself? Even though their physical assets such as people, warehouses, factories, trucks, etc. would remain the same, if they had to start over with a totally new company name the cost of doing so would be astronomical. Moreover, the worth of the company would drop by many billions of dollars!
Why?… because an avid Coke fan entering a small gas station on a hot day to buy his favorite drink will most likely walk out of the store if he doesn’t find a bottle of coke. It doesn’t matter if the gas station has some other drink that is very similar to Coke. He wants to buy Coke, and that’s that. Unless this avid Coke fan is getting very dehydrated, he won’t reach for another brand, no matter how similar it is.
That’s the power of a great name brand — over time it garners a tremendous amount of loyalty and momentum, and as far as our Coke example goes, it doesn’t matter if another drink is physically exactly the same… if it goes by a different name brand, then most Coke fans simply won’t buy it — they’re happy with what they’ve got, and they don’t want to take a chance on something different. That’s Newton’s first law — the law of inertia… “A body in motion tends to stay in motion unless acted on by an outside force.” Generally, it takes a very strong force to cause people to change their deep-rooted existing habits.
Over the years, Coca-Cola has invested so much money and resources to increase their market share and win over the hearts and minds of loyal customers all over the world, that a large amount of their momentum as a company is due to the power of their name brand. Without the name brand, it doesn’t matter that Coke has factories and employees and trucks. All of those physical assets are infused with an extra value by Coke’s name brand. Take away the name brand, and those physical assets would instantly lose their worth, because infrastructure means nothing if you can’t sell your products. A new name requires an enormous investment of marketing dollars and the passage of time to build a large and dedicated following.
So, branding creates loyalty over the long term, and a strong name brand is just as attractive to its target market as it is repulsive to people outside its target market. You must not be afraid of being repulsive to people or companies that aren’t part of your target market, because the more successful a brand gets, the more it attracts its loyal followers and repulses people outside its target market. You have to be prepared that the more successful you get, the more simultaneously repulsive and attractive you get. Your fans will adore you that much more, and your critics will dislike you more intensely as well. For example, many Pepsi fans hate Coke, and vice versa. It’s almost like fans of a sports team. People choose sides, and get really intense about their position.
Another clear example of this behavior can be seen in the entertainment business. Take any mega star in music, acting, sports, etc, and ask yourself whether this star is controversial. Consider the names Donald Trump, Michael Jackson, Madonna, Jay-Z, and Kobe Bryant. Do you like them? Do you dislike them?… Now ask yourself the most important question from a business point of view… Do you think they have a strong fan base? Are they doing well financially?
Chances are you know some or all these celebrities, and chances are you know that they make a lot of money, too. Are these celebrities controversial? Yup. Some people hate these celebrities, and others love them. Do you think these celebrities care how many people dislike them? Do you think perhaps some of these celebrities cultivate their controversial sides in order to increase their wealth?
The answer is very definitely, “yes!” They know their target market, and they know what their target market wants. Everybody else doesn’t matter, because they don’t pay their bills. Clearly, it doesn’t matter how many people don’t like you. When your brand is powerful, some people love you and others hate you. When it comes down to it, the main question you should be asking yourself is “does my brand get me paid?”
Tier 2: Marketing
So now that we’ve discussed the basics of a great brand — which is a long-term goal and takes a lot of time and effort — let’s turn our attention to what you can do to generate immediate profit. The way to do that is marketing. We’re not going to cover marketing in depth, because we already published plenty of other articles that effectively cover this subject; however, the main idea that we’d like to impart is that the role of marketing is to somehow draw peoples’ attention to you, so that you can interest them in your products and services. Great marketing does four main things to increase a company’s profits:
- It increases a company’s number of new customersIt turns new customers into return clients
- It turns new customers into return clients
- It increases transaction frequency (the number of times a client buys something)
- It increases the volume of each transaction (the amount of money charged per sale)
So, let’s break this down a bit. Good marketers are able to get new customers by creating a well-thought out marketing plan which includes elements such as an ideal client profile, and a clear understanding of their industry. One of the main things a good marketer must do is to get to know their costumer as closely as possible. They must understand the customer’s likes, dislikes, needs, wants, fears, etc.
This allows them to bring the right type of customers to salespeople — customers who are predisposed to buy the product/service, and have the means to make the purchase — which makes salespeople’s lives a lot easier. Imagine trying to sell a product/service to someone who is not interested, and more importantly, can’t afford the product/service. That would be a waste of time and resources. That’s why marketers prequalify prospective customers, so that salespeople can do their job with ease.
That’s why marketers must ensure to narrow down their target market to only their ideal client type. When businesses try to do business with “everybody” they end up dealing with too many types of clients, most of which are inevitably bad for the company’s long-term health. When a business deals with customers who don’t fit its ideal client profile, these customers tend to waste the company’s time, money, and energy, making it harder for the business to stay profitable. Instead of growing and finding more ideal clients who spend money and happily recommend the company to their friends and family, the business starts faltering when it focuses all of its resources on appeasing problematic clients, and handling their complaints. The wrong type of client is like the wrong type of fuel for your car… If you try to run a Ferrari on regular fuel (instead of high-octane fuel), you will soon begin to experience engine problems.
We’ve all had experiences with incompatible clients who exhibited such behaviors as non-stop complaints, resistance to the company’s prices, or unrealistic expectations for products and services. When a company allows incompatible customers to become its clients, these customers tend to dominate the company’s attention and they divert the company’s focus away from its prime clients who make up the bulk of the company’s income. The results can be disastrous, because as a business begins to increasingly struggle with its incompatible customers and neglects its best clients, these great clients begin to leave, and the company loses more and more money as it continues to spiral downward in a never-ending cycle of dwindling resources and over-complicated day-to-day operations.
As the severity of this situation increases, and all the prime clients leave to find new providers, the company is left with the most annoying, low-paying incompatible clients who were the source of its trouble in the first place. Once all the highest paying and easiest jobs are gone, all that is left are the incompatible demanding clients who don’t want to pay fair prices. Worst of all, these clients now control the company’s future, and the business is totally dependent on them for its existence.
This is why it’s so important to clearly define the company’s ideal client type before starting any marketing campaign. Once the ideal client profile has been determined, a business can begin finding and “collecting” ideal clients on which it can base its future. Oftentimes, having a handful of great clients is better than having large numbers of terrible clients, and it’s important to go through your client list once in a while and see where you can trim incompatible clients, so you can find better clients to replace them.
When a business begins acquiring new ideal customers, it has to convert them into regular clients. By doing so, and by increasing the number and size of their transactions, the business begins to grow exponentially.
Tier 3: Sales
Although sales is a topic of paramount importance, it will receive almost no attention in this article. It’s only mentioned here in order to illustrate the interdependence between branding, marketing, and sales. Ideally, a marketing strategy is so effective, and the company brand is so powerful, that the final step in the hierarchy (sales) becomes virtually effortless. If a company’s marketing is able to educate its customers, prequalify them (i.e. ability to pay, timeframe, level of interest, etc), then it stands to reason that the sales team will have a much easier time closing sales, because all of their customers are able and willing to pay for the services being sold.