A new world and an old’s take on branding

One of the more surprising facts about the discipline of brand management is its relative immaturity. We may have had brands for thousands of years but the explicit approach to their management is only a few decades old.

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Neil McElroy at Procter & Gamble officially invented brand management in 1931 when he sent round his famous memo that laid out a brand-based approach to selling soap powder. But brand management really only took off in the late 1980s with the work of Professor David Aaker at the University of California.

However you trace the origins of brand management, you end up back in the same place – the US. Modern brand management is about as American as apple pie or fireworks on the 4 July. The rest of the world might now practise its tenets, but the original theory and approach was born and bred in the USA.

Pick up any textbook on branding and the chances are that it was written by Americans and, equally likely, the early chapters will only briefly discuss the key concept of brand heritage. America owes much of its success to the powerful ideology of the ‘American dream’ – the precept that anyone can achieve anything in America irrespective of their origins. This wonderful aspiration has been the engine of much of America’s economic and cultural success but it is also one of few deficits that brand management has inherited from its American origins.

In the American school of branding, origin is often overlooked in favour of consumers and target markets. Contrast the dominant American approach with that of Europe and the differences could not be more extreme.

Having spent ten years working in America and another decade working mostly in France, I have grown to respect both approaches. But where the American approach to branding begins with consumer research and target segments, the European approach starts with historical analysis, a founder and an obsessive pre-occupation with provenance.

Take European wine, for example. It is not just bloody-mindedness that prevents French or Italian winemakers from putting the grape varietals on the labels of their wine like the Americans or Aussies. French winemakers believe that the same combination of grapes produced in one region is fundamentally different from the very same combination produced elsewhere – even if the vines in the two regions are actually clones of each other.

America overlooks origin in favour of consumers and target markets. Europe takes a different approach

It’s no coincidence that the French and Italians prefer to refer to their wines by provenance – Bordeaux or Chianti for example, while Anglo-Saxon winemakers use the grapes that go into the product to describe their versions of these wines. Think of Cabernet Merlot or Sangiovese.

You can therefore imagine the tension that has descended on Switzerland in recent weeks. For more than two centuries, the Swiss have dominated the world of premium watchmaking, but the key question is not how to say ‘Swiss Made’ but rather how a specific watch justifies that premium branding.

A watch currently qualifies as being Swiss made if at least 50% of the components in its movement are actually made in Switzerland and if it is assembled and undergoes a final inspection in the country. However, it’s that 50% figure which is currently causing so much angst in the Alpines.

Several foreign watch manufacturers are currently able to claim a Swiss pedigree despite being non-Swiss owned and, for the most part, non-Swiss made. The New York Times this week presented the example of the Swiss Mountaineer watch brand which, despite its name, prominent use of the Swiss flag on its packaging and the words Swiss Made on its timepieces, is actually owned by a Hong Kong company and predominantly manufactured from non-Swiss parts in China.

If this was a British car or a US toy brand, the partial manufacture in China would probably pass un-noticed. The UK is, after all, a country that continues to take pride in the success of ‘British’ brands like Mini and Rolls-Royce despite the fact that they are almost exclusively run by (very smart) Germans.

But this is Switzerland we are talking about. “Watches produced almost entirely in China are sold legally under the Swiss made label,” read a recent statement by the Federation of the Swiss Watch Industry. “A strong and credible Swiss trademark creates jobs for watch manufacturers and subcontractors throughout the value creation chain.”

Almost all of the 500 Swiss watch brands that form the federation support its call for a clearer and more stringent definition of what “Swiss Made” actually means. If the federation has its way, the proportion of Swiss-made components in a Swiss watch will rise to 80% of that timepiece’s total value.

When it comes to European brand management, provenance dictates everything.

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