212. Graceann Bennett: Brands Are Value-Generating Assets, Marketing Is Just Tactics

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Peter Drucker famously identified the only two value-generating functions of the firm as innovation and marketing. We propose to differentiate brand building (or branding) from marketing, especially in this digital age. Brands are the vehicle for framing, establishing, nurturing and enhancing relationships with customers. In the digital age, marketing has become mechanized and mathematicised; it’s about numbers more than about human values and emotional bonding. Graceann Bennett is a branding expert who has devoted her career and her research agenda to furthering the science of brand building.

Knowledge Capsule

Brands are assets that drive customer value and business revenue, and they’re more valuable than ever in the digital age.

Our Economics For Business entrepreneurial method emphasizes the facilitation of value for customers — it is customers who create value through their experiences, and the role of entrepreneurship is to facilitate those valuable experiences. Brands are platforms for value facilitation and conduits for value delivery. In the economic system where assets are value drivers, brands are high-capacity intangible assets. They can be developed and nurtured through various types of economic investment, with a high return on that investment because of the closeness to the customer that they can embody. The investment can be creative and intellectual and is not necessarily limited by budgets and financial resources.

Brands hold emotional and relational value, often communicated through symbols and codes.

Brands have meaning for customers, and the meaning is differentiated — customers prefer one brand over another. Brands fit into their lives and connect to them emotionally – they can trust brands, rely on brands, and even love brands. Brands express the essential humanism of economics – the entrepreneurial ethic of improving others’ lives. They represent an understanding of human yearnings. They help people who are striving to be the best version of themselves. They’re a great tool for entrepreneurs.

Brands often communicate via symbols and codes: advertising, logos, package design, social media, and sales presentations. These are important, but they’re not the essence of branding. That role is reserved for the emotional connections that brands make with customers, engendering trusted relationships.

In the digital age, marketing has lost the art of branding.

Brand building is an art, an engagement with customers on a psychological and philosophical plane, enhanced by creativity, design, expressive language and visualization. In the digital age, marketing is headed in a different direction. Marketing has become mathematicised. Digital marketing is all about the numbers: audience reach and likes and engagement metrics defined as clicks and views. It’s the mechanics of the engagement funnel, of clicks leading to conversions. Graceann Bennett called this approach “the attention economy rather than the emotional economy”.

Even worse, marketers are antagonizing customers with an interrupt-and-annoy approach of increasingly invasive pop-ups and intrusions and uninvited invitations in e-mail and text. Annoyingly intrusive marketing can further decay into creepiness as consumers receive offers for goods and services algorithmically triggered by their search history and e-mail conversations or voice requests to Siri or Alexa that they might not have realized were quite as available to marketers as they are.

Branding creates customer relationships through emotion and psychology.

The mathematical, mechanical approach is exactly the opposite of the human approach of brand building. Branding aspires to a relationship with customers, a creative relationship of innovation and renewal that continuously improve customers’ expectations of what’s possible and their anticipation of satisfactions to come from brand usage and branded services. Entrepreneurial brand owners seek to understand the needs and wants of customers, and what they find disappointing in current experiences, with a view to making their experiences and their lives better. A lot of this initiative takes place in the realm of psychology, getting inside customers’ minds to understand their preferences and why they hold them, and their choices and why they make them.

Brandowning firms examine themselves critically to ensure that they are authentic in serving customers’ emotional and psychic needs.

Graceann Bennett employs Jungian archetype analysis to clarify and channel brand approaches to customer relationships, emphasizing what’s authentic in the brand’s character and orientation that aligns best with customer psychology. While the first stage of the entrepreneurial method is a deep understanding of the customer and their needs so as to define and scale a potential market, it’s also appropriate in the solutions design stage for the brand owner to look inward to define the persona for the brand. To establish trust and build a relationship, a brand must inspire confidence on the customer’s part, and to do so must establish authenticity: when claiming to deliver a benefit and facilitate a valuable experience, the brand claims must be consistent with the brand character, the brand heritage and the brand history. A brand can’t claim to be something it’s never been before, or claim a meaning and a purpose that it has never before exhibited. It can add features and polish and update its attributes, but it can’t depart entirely from its historical, observed orientation. Brand relaunches and repositionings risk losing connection with the customer if they are not credible.

Brands should search not for novelty in presenting themselves, but depth, clarity and simplicity in establishing brand character.

Ethnography is the best research technique to develop empathic engagement between brands and customers.

Ethnography is mingling with customers, talking to them, listening intently, and observing their actions and behaviors. This kind of interactive contact with customers should be primary – the analysis of digital clicks and views and followers and even purchase behavior can’t deliver the same rich emotional and psychic consumer understanding and insight. In the digital age, we’ve abandoned the art of mingling, and that’s a difference between branding and marketing.

Additional Resources

GraceannBennett.com

Playbook Studio: Playbook.Studio

Graceann Bennett on LinkedIn: Mises.org/E4B_212_LinkedIn

211. Jeff Grogg: Building The New Production Structure Of Entrepreneurial Capitalism

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t’s time to re-imagine how entrepreneurs bring their innovative value propositions to market at the appropriate scale to meet the important needs of millions of people. The new way of thinking is for entrepreneurs to focus all their energy on designing, refining and strengthening the value proposition, and then plugging in to a network of resources assembled by others so that customers enjoy the full realization of the value experience the entrepreneurial has designed. Jeff Grogg of JPG Resources joined Economics For Business to describe how this works in the CPG food and beverage industry.

Knowledge Capsule

Starting From A New Value Proposition.

The entrepreneurial journey — whether starting a new company or launching or improving a brand or launching and managing a new corporate innovation initiative or even a new division or internal venture — starts with a value innovation goal. An entrepreneurial team or an entrepreneurial organization conceives of a new experience for customers that they’ll value highly enough to warrant the firm’s investment in new capabilities. The team tests the market appeal and commercial power of the value proposition to greatest extent they can. They get ready to go to market at scale — to produce, package, ship, distribute, sell and take payments, and then to respond to marketplace results with more volume, or broader distribution, or maybe some tweaks to some aspects of the execution of the value proposition.

Traditionally, once the launch decision is made, the firm maps out the value chain and assembles the enabling resources — manufacturing capacity for products, service backrooms and infrastructure for services, supply chain components, business partnerships and their associated contracts, marketing and sales capabilities, distribution, warehousing and retail access.

What if this part — the resource assembly part — were already done? The risks and constraints of making a new business out of a new value proposition would be greatly reduced.

Jeff Grogg and his platform firm have built new business infrastructure so that entrepreneurs don’t need to.

Jeff describes his company, JPG Resources, as a business builder. His focus is on food and beverage businesses in the CPG category. The company build businesses so that entrepreneurs don’t have to. To be clear, the entrepreneurial teams focus on the customer and customer empathy and understanding, identifying a unique value that meets meaningful needs for a large number of people. That’s the critical step in the generation of new economic value.

The next step is typically building the supply chain from formulation and recipe development for scale, to manufacturing and packaging, shipping and distribution, and designing the management processes and hiring the people and drawing up the contracts for smooth continuous scale operations. That’s extremely hard work, and fraught with risk. The phrase “starting a business” can sound intimidating for that reason.

JPG Resources can absorb and take on and solve all those challenges and potential problems, and free the entrepreneurs to concentrate on customer value design and the last mile of marketing and sales.

The new entrepreneurial production structure can apply at all scales.

JPG Resources has helped pre-market start-ups with initial product development and culinary research, has provided infrastructure for growth for maturing companies, has helped mid-size companies expand beyond their current scope, and has helped big companies enter new areas beyond their existing comfort zones. The new “plug-in” production structure operates at all stages and all scales and all along the value chain.

JPG Resources can provide manufacturing or train manufacturers from start up through expansion. The can help with food science, create new processes, manage contracting, identify and mitigate risk factors and arrange insurance. They can organize supply chain redundancy (efficient redundancy through back-ups, not wasteful redundancy through duplicates) and build resilience for clients. A virtual supply chain is superior to — and more flexible than – the self-assembled version.

The new entrepreneurial production structure is a network without boundaries.

The very term “supply chain” reflects linear thinking — links joined together in sequence. Systems thinking is non-linear. The JPG Resources infrastructure is an ecosystem using connective logic, connecting the necessary components, people, knowledge and flows for the desired outcome, and reconnecting as needed when the environment or the market changes. The network is not bounded — there are always external or partner services that are currently outside the network that can be brought in through new connections. All are conceptually aligned, and all the relationships and contracts are win-win. The experience of JPG Resources in designing, assembling and integrating supply chains and production networks means that they’ve seen both sides of contractual relationships and service partnerships under all conceivable circumstances and can make sure all the agreements work – and expand the value space – for all parties.

The new entrepreneurial production structure is an acceleration and strengthening of knowledge-building proficiency.

In episode #199, we identified knowledge-building proficiency as the key to value creation capacity. By partnering with infrastructure building firms like JPG Resources (and Gembah from episode #210), entrepreneurs can benefit from sharing the knowledge that these forms have already accumulated over multiple projects and product and business launches and growth initiatives. Jeff’s company is only too happy to share this knowledge, and doing so can help entrepreneurs avoid what he calls “self-harm” — making mistakes that could be avoided with the relevant prior knowledge.

Experience is harder to share. Jeff’s staff have hundreds of thousands of hours of experience, and, while entrepreneurs can’t live what they’ve lived, they can certainly benefit from experiential learning.

The error avoidance inherent in knowledge and experience sharing can be invaluable to entrepreneurs.

Individual freedom and choice still apply, in a more flexible capital structure.

Entrepreneurs can choose as much or as little of the available pre-built infrastructure as they choose. They can focus on their own strengths and supplement where they know they need to. They can make their own connections in the ecosystem and their own adjustments as circumstances dictate.

The new entrepreneurial infrastructure does not imply a reduction in entrepreneurial initiative, but a boost, an acceleration, an expansion of value creation potential. It enables the entrepreneur to concentrate on value facilitation rather than on building a supply chain.

The capital structure for value creation in the economy as a whole becomes more flexible, flows more freely and can throw off the shackles of bureaucracy and regulatory compliance. The entrepreneur can pass on the burdens of HR and finance and legal and many more functions that are peripheral to — and sometimes impediments to – value creation and concentrate on the value task alone.

This suite of organizational and capital innovation points to a structure of more firms, better firms, and faster and more significant value creation, with fewer economic resources devoted to value-extracting bureaucracy.

Additional Resources

JPGResources.com

Jeff Grogg on LinkedIn: Mises.org/E4B_211_LinkedIn