We have recently been through a branding exercise at Cambridge Judge Business School. That meant trying to understand how the rest of the world sees us and then designing a unified visual identity that reflects how we would like to be seen. Brand agencies and consultancies are keen to sell you the idea that you can, within limits, change your brand, chiefly by paying them a lot of money. They mean, I think, that your brand is the way that your customers or stakeholders see you. A “good” brand means that they see you in the way that you wish to be seen, whether that means good value for money, excellent service delivery or a high reputation for quality.
Economists think about brand a little differently. The challenge for any business in the grim world of industrial economics is to climb above the status of commodity. A commodity is an undifferentiated product (good or service) which will be priced in a competitive market at marginal cost. Only the least cost producers can survive and they will make only the minimum profit necessary to survive. This is the hellish world (for the producer, not the consumer) of perfect competition.
Anything a company can do to make its product distinctively valuable will allow it some pricing power and the ability to make a better than minimal profit. Brands are evidence of that distinctiveness, so that the value of a brand is captured by the ability to charge more for your product than for an otherwise similar commodity. So Coca-Cola can charge far more than Tesco cola or other equivalents. Mercedes can charge much more than Ford. The source of the brand value may be quality, reliability, fashionability, anything that the consumer values. Critically, the brand must reflect qualities which cannot easily be copied, in other words the brand is, and is based on, a barrier to entry.
Once a brand exists, it can be “stretched” but that is a dangerous thing to try. The brand is a signal to purchasers. If it turns out that the signal is false – I buy something branded Mercedes but it turns out to be of inferior quality – then the consumer may stop paying the premium even for Mercedes in its original domain. People can be fooled but only for a while. I once bought an Yves Saint-Laurent suit on the advice of a girlfriend, who associated YSL with fashion and fine quality. The suit was very poorly made, as confirmed by my mother who, having worked in Savile Row, the home of fine British tailoring, knew shoddy stitching when she saw it. It fell apart pretty rapidly, despite only moderate use. The suit and the girlfriend are now both history.
In the world of higher education, a brand has the same signalling effect. The quality of a degree depends on two things: the quality of the students that take the degree and the quality of the education they receive. The former is far more important. Assume that a particular university is known to attract the best (meaning most intelligent and hard working) students. That fact alone makes it desirable, because it acts as a selection mechanism for recruiters. If the university actually teaches them well too, then that is a definite bonus but less critical.
The brand value of Cambridge University is very high because it does attract some of the best students (and best researchers). I think it does a pretty good job of teaching them too, though it’s very hard to judge that objectively. Cambridge, Oxford, the BBC and the royal family are probably the most famous British brands (Benny Hill, Monty Python and Mr. Bean are pretty big too, at least in some parts of the world). They all have a long history of doing what they do very well (education and research, broadcasting and public soap opera respectively). Their brands are strong because of their behaviour, repeated over many years.
There is little Cambridge and Oxford can do to make their brands better, though there is plenty that they could do to harm it (e.g. sell degrees to rich dictators, discriminate among applicants on grounds other than academic merit). Attempts to rebrand that are not based on any change in behaviour will always fail eventually. Remember BP’s “beyond petroleum”? It was fake because very little of BP’s profits then or now came from energy other than hydrocarbons. People are rightly sceptical of big companies’ marketing, not because these companies are intrinsically evil. Mostly they are just trying to do a good job. But their senior executives are prone to believe what the branding people tell them, people who did liberal arts degrees, are very persuasive and play on the insecurities of CEOs who fear they lack creativity. CEOs who just do a good job and follow the basics of ensuring they know who their customers are and what need they are serving and that they keep executing well, will have as good a brand as they can get. All the rest is noise and superficiality.
Here is an example of branding foolishness. Judge Business School is the faculty of business of the University of Cambridge. It is not “attached to”, or “affiliated with” the University, it is a part of it, just like the faculties of mathematics and modern languages. Anything that casts doubt on this or suggests that the School is not necessarily a full part of the University would be, to say the least, unhelpful. Yet this is exactly what a group of external advisors urged the School to do several years ago. The School’s logo dropped the word “University”. It read CAMBRIDGE above with Judge Business School below. At the side was the University shield, a charming red and white symbol but not one that is instantly familiar to most people. All the people inexpert in branding – the students, staff and faculty – thought this was a terrible decision. We had endlessly to explain to people that yes, we are a part of Cambridge University. It took five years for this stupid decision to be reversed. The logo now, consistent with all other faculties at Cambridge, has UNIVERSITY OF CAMBRIDGE on the top. The crest is still there too, but now nobody need ask for clarification. Perhaps that episode explains my scepticism about brand experts.