Brand Secrets: Basic Principles of Advertising Planning

Chapter 1: Knowledge Economy and the Era of Branding

The Knowledge Economy Era: As we entered the 21st century, the bell of the knowledge economy had already rung. Humanity has experienced the eras of agricultural and industrial economies and is now stepping into the knowledge economy. The agricultural economy was based on land and labor, while the industrial economy relied on raw materials and energy. For thousands of years, people lived off the land until about 200 years ago, when an apprentice in Britain invented the steam engine, significantly freeing productivity and bringing humanity into the industrial age. Today, in a world where amazing things happen every day when you wake up, knowledge-intensive industries are rapidly rising, and knowledge has become the most dynamic factor in production.

A key feature of the knowledge economy is its “future orientation.” With advancements in virtual reality and the networked nature of the economy, growth no longer relies solely on labor, capital, and resources but is driven by continuously emerging new demands.

Development of Marketing: Marketing, like the economy, has also evolved through three distinct eras:

1. Product-Oriented Era: In the industrial age, the focus was on the product. Advanced technologies and new products dominated the market, and customers followed.
2. Sales-Oriented Era: Post-industrial society saw the rise of large retail chains like Walmart and Sears, driven by surplus goods. Western marketers often said, “Great designs are created in the lab, and great products are born in marketing,” reflecting the peak of this era.
3. Consumer-Oriented Era: Today, with the rise of the service sector and rapid global internet development, society has transformed. Consumers are now at the center. Markets have become flatter, personalized, and globalized, with businesses operating more virtually, and interactions becoming more interactive.

In the knowledge economy, you can lack land, energy, or even capital, but you can still create unparalleled wealth. “Knowledge is power” has become a living metaphor in this era. Bill Gates, who dropped out of Harvard, created one of the greatest myths of the knowledge economy by becoming the world’s richest man in less than 20 years. His company, Microsoft, employs nearly 20,000 people and has assets worth over $200 billion.

In the knowledge economy, both the total amount of knowledge and humanity’s ability to acquire and apply it have significantly improved. For example, while China’s four great inventions took centuries to spread to the West, in today’s internet age, the world has few secrets. Even top-secret military information from the Pentagon can be accessed online. When the FBI painstakingly deployed agents to capture a super-spy, they found out the spy was a teenage hacker.

In this ever-changing globalized world, relying on an ancient family recipe to sustain a hundred-year-old store is no longer viable. Any new product on the market will quickly be copied, imitated, or even surpassed by competitors. We now live in an age of product homogenization.

The only weapon a company can rely on is its brand. Product designs can be imitated, and core technologies can be reverse-engineered, but competitors cannot build a brand overnight. In an age of material abundance, the brand has become the main marker distinguishing similar products. We have truly entered an era of brand consumption.

The Meaning of a Brand: A brand is the image and personality of a product established through marketing and advertising in the minds of consumers. It reflects the product’s intrinsic quality and external characteristics.

The Power of a Brand:

The value of a brand manifests in the following seven key aspects:

1. Marketing Status: Refers to the brand’s position in terms of market share, sales volume, pricing power, and overall influence in the market.
2. Stability: Indicates the brand’s performance amidst market fluctuations, including the brand’s recognition, consumer loyalty, and changes in sales and market share.
3. Potentiality: Refers to the brand’s ability to expand its market reach, its modernization, and adaptability.
4. Affinity: The appeal of the brand to consumers and the trust it inspires. Affinity is crucial in building brand loyalty.
5. Marketing Support: The company’s ability to manage the brand and allocate resources, including advertising, promotion, distribution, and development.
6. International Degree: The brand’s global reach, market share, and recognition on an international scale.
7. Brand Maintenance: The legal protection and management systems in place to protect and sustain the brand.

Famous Brand Value: A famous brand, by definition, is a well-known brand with high added value. Famous brand products sell better and at higher prices. They possess core value, meeting consumer needs and desires, leading to repeat purchases and long-term profitability. Consumers pursue famous brands because of their belief that “famous brands are always good.”

In a globalized, peaceful world, the strength of a nation is no longer defined by its military power but by how many global brands it possesses.

Oligopoly Brands: In today’s “winner-takes-all” society, oligopoly brands have emerged. In many industries, the top four companies account for more than 75% of the production volume, reflecting brand concentration. Economists refer to this as the “four-firm concentration ratio.”

Oligopoly brands first use advertising to establish brand awareness. Through the “Matthew effect,” they occupy consumer mind space and establish brand preference. In an age of information overload, consumer memory is limited. Oligopoly brands push out competitors by dominating consumer mind share.

They also diversify their products to create depth and breadth, attracting a broader consumer base and creating barriers to entry for potential competitors. Additionally, oligopoly brands use chain operations and geographic expansion to ensure their products are available wherever consumers are, achieving omnipresence and monopolizing the market to maximize profits and extend the life of their brand.

Chapter Two: Advertising Creates Brands

Where Do Brands Come From?

Brands don’t just fall from the sky; they are artificially created by businesses, particularly through advertising. In an era of product homogenization, the idea that “good wine needs no bush” is outdated; excellent quality alone does not guarantee a product’s success in the market. Only a brand image established through advertising can deeply resonate with consumers and endure over time. Advertising serves as a bridge for communication between businesses and consumers.

The Allure of Advertising:

To put it bluntly, in today’s world, if you don’t advertise, you won’t sell diamonds; however, with effective advertising, you could sell a brick wrapped in newspaper at a good price. Consider the ubiquitous ads for wedding rings by De Beers. A widely circulated story illustrates this: when the Berlin Wall fell, it left behind a massive amount of debris. A German entrepreneur had the idea to buy all the rubble, turn pieces of the wall into keepsakes—like paperweights and keychains—packaged in transparent organic glass, and advertise with the slogan, “Bring the Berlin Wall home.” This clever marketing made his business thrive and he earned a fortune.

In 1996, while seeking re-election, President Bill Clinton faced significant challenges due to a scandal. His campaign team hired a consulting firm, leading to a memorable incident: during a live broadcast of his campaign speech, a chandelier fell from the ceiling. Instead of fleeing, Clinton instinctively embraced his wife, Hillary. This gesture, caught on camera, moved many Americans, particularly female voters, contributing to his electoral victory. It’s no wonder some describe America as a brand meticulously crafted through advertising, highlighting its pervasive influence.

Advertising Creates Added Value:

Philip Kotler believes that marketing involves discovering, creating, exchanging, and satisfying value. Coca-Cola famously states, “We sell water; customers buy advertising.” Beyond tangible benefits, advertising excels at creating added value, giving products additional perceived worth through psychological suggestion, especially for unique items.

Alberta, a southwestern Canadian tourist destination, has ads that blend vivid imagery with abstract hints: “We sell scenery and ruggedness.”

Advertising Origins:

What is advertising? Art is a compensation for life’s debts, with various artistic forms returning what life lacks—beautiful dances, enchanting songs, and poignant love stories. Advertising, like art, derives from life but elevates it.

Marx said that the leap from product to commodity is perilous because it realizes the product’s value, while the jump from commodity to brand is even more treacherous because it captures the added value—something all entrepreneurs yearn for. A well-known brand sells better, lasts longer, and is priced higher than others. The disparity in prices for similar quality products stems from this added value, which advertising creates.

Consumers desire honesty in advertising, yet straightforward ads rarely engage. For example, a cosmetic ad featured ordinary people like teachers and factory workers, claiming, “For our jobs, we face the elements, but this product truly honors our faces.” While this approach appeals to many, it begs the question: Would these consumers genuinely prefer such products marketed as cheap and basic? After achieving financial stability, many would abandon budget-friendly brands for premium ones, seeking products like Olay or Estée Lauder instead.

A savvy Shanghai businessman advertised a brand of shampoo, showing a coin bouncing to convey that washing hair with it costs only a few cents. Yet, university students preferred to flaunt high-end brands like Head & Shoulders or Pantene, distancing themselves from any image of frugality. Products can be affordable yet still carry a premium image in advertising. Even ads for lower-end products can be crafted to reflect quality and aspiration.

The Dream Factory of Advertising:

Advertising aims to craft dreams and must keep consumers enchanted to foster brand loyalty. It originates from the product yet transcends it. The American Marketing Association defines advertising as a paid, non-personal promotion of products, services, or ideas by specific advertisers through various media channels.

Paul N. Nystrom describes advertising as a non-direct sales activity that piques potential consumers’ interest, encouraging them to favor the advertiser. Advertising emerged from two preconditions: the flourishing of a commodity economy and the advent of mass media, which facilitated societal integration and the dissemination of commercial messages.

Advertising is about delivering the right message, in the right way, at the right time, with the right budget, through the right media, targeting the right audience. In summary, successful advertising is about finding the right people, delivering the right message, and doing so effectively. This requires meticulous and scientific advertising planning.

Advertising Planning as a Productive Force:

We define advertising planning as the scientific coordination and implementation of advertising production, publication, and campaigns based on market research to achieve optimal marketing results.

We encounter numerous advertisements daily, but most fail to captivate or even irritate us. A typical American is bombarded with over 1,500 ads each day—through radio, television, mail, billboards, and online. Similarly, in rapidly urbanizing China, urban dwellers confront hundreds of ads daily. Yet, many go unnoticed, fading away like a fleeting dream.

In this era of information overload, uninspired and irrelevant ads leave no lasting impression. A classic advertiser’s lament is, “I know half my advertising budget is wasted; I just don’t know which half.” This highlights the critical need for scientific planning in advertising. Only well-planned ads can achieve market objectives.

Seven Key Considerations for Advertising Planning:

1. What Is the Advertising Goal? (WHY TO SAY)
   The first step is to define the advertising goal, which should reflect the marketing strategy and be closely tied to sales objectives. Clear objectives are essential for successful advertising strategies, whether it’s to boost sales quickly, change brand perceptions, or expand market share.
2. What Is the Advertising Budget? (HOW MUCH TO SAY)
   Establishing an advertising budget is both a science and an art, often involving a combination of experience and insight. An effective budget should ensure that marketing goals are met while allowing for continuous advertising efforts. Some risk-takers pour all their resources into a single ad campaign and succeed spectacularly, but that can be risky.
3. Who Is the Target Audience? (WHOM TO SAY)
   Don’t expect one ad to resonate with everyone. Identifying the target audience is crucial for effective communication, allowing for tailored messaging and strategies that enhance engagement.
4. What Message Should the Ad Convey? (WHAT TO SAY)
   An ad should showcase the product’s best features, but given limited airtime—like 30 seconds for a TV ad—it’s essential to prioritize what information is shared. The message must be compelling to capture attention.
5. What Type of Presentation Should Be Used? (HOW TO SAY)
   After determining the message, selecting the most effective presentation and appeal is critical. This requires careful evaluation of various factors, including brand image, market positioning, message strength, and audience psychology.
6. When Should the Ad Be Released? (WHEN TO SAY)
   Timing is vital in marketing strategies. Decisions about when to launch product ads should be specific to market conditions, such as timing around a product’s release or leveraging competitors’ missteps to boost market share.
7. What Media Should Be Used for Advertising? (WHERE TO SAY)
   In this age of global information and increasing individualization, choosing the right media is paramount. With a vast array of media options—television, newspapers, magazines, and radio—finding the right mix to effectively reach the target audience can be complex yet critical.

By considering these seven aspects, advertisers can craft messages that resonate with consumers, ensuring their campaigns are effective and memorable.