Brand Royalty - an excerpt from Matt Haig's latest book
In this new book, published by Kogan Page, bestselling author Matt Haig looks at 100 winning brands and the ingredients that make them so. Brands covered include Burberry, David Beckham, Harry Potter, Nike and Calvin Klein.
Chapter 8: Mercedes-Benz: the prestige brand
In January 1886, Karl Benz, a 41-year-old German engineer, patented the world’s first automobile powered by an internal combustion engine.
A year before, his fellow German, Gottlieb Daimler, had built the first land vehicle ever to use an internal combustion engine – a motorcycle. In 1886, Daimler topped Benz’s achievement by building the first four-wheeled automobile (Benz’s vehicle had been a three-wheeler). Although the two men were only about 70 miles apart, they never met to work together on their inventions.
Forty years later, the companies both men set up – Daimler’s Daimler-Motoren-Gesellschaft and Benz’s Benz & Co – would merge. The resultant brand of cars, Mercedes-Benz, has become the most well-known prestige brand in the world. Although in recent years it has shifted slightly downmarket with vehicles such as the A-Class, a relatively affordable sub-compact hatchback, it has stayed true to its pioneering heritage.
For instance, in 2002 the new Mercedes-Benz E-Class became the market leader partly due to innovations such as an electro-hydraulic braking system, patented ‘sensotronic’ brake control and an ‘Electronic Stability Program’ that ensured better handling of emergency situations.
Even the cheaper A-Class represented a completely new type of car, which boasted lots of inside space despite its short design. Indeed, the car looked so different that Mercedes-Benz started running advertisements for it months in advance in Europe, to get people accustomed to the idea. It worked. The car has been a phenomenal success across Europe.
The trouble is, Mercedes-Benz has spent most of its history establishing itself as a prestige brand. Obviously, it has to be subtle about it. It couldn’t call itself ‘Mercedes-Benz, the prestige car’, because people don’t want to own up to their superiority complexes. They’d much rather pretend they were buying a car for another reason – engineering, say. Mercedes-Benz has therefore built a brand that focuses on engineering, even though the implicit intention has been to create a prestige brand. This is a clever strategy. It means Mercedes-Benz can appear consistent, even as it moves slightly downmarket. Cheaper cars such as the A-Class and M-Class are also legitimately sold on the basis of quality engineering.
However, while this strategy works in the short to mid-term, the longer view may be different. After all, prestige is ultimately about price, not engineering. The cheaper cars are popular because they are a way of buying into a prestige brand, but there is an obvious law of diminishing returns. The more cheaper cars that are sold, the less prestigious the brand becomes. Therefore product success could, paradoxically, equal brand failure.
Secrets of success
Chapter 26: Subway: the focus brand
When Fred DeLuca created the Subway brand, he knew exactly what he was doing. Set up in the 1980s, when other fast-food chains were expanding their menus beyond all recognition, Subway was based around just one product, the sandwich. And, just in case that was too broad, he narrowed the focus to one type of sandwich – the submarine sandwich. Only the fillings were variable.
It is this narrow focus that is fast turning the brand into one of the fast-food giants. In Britain, McDonald’s views Subway (which want to have 2,000 UK stores by 2008) as their number one threat.
The tight focus has helped the brand in several ways. It has certainly helped with the brand’s perception. If a brand stands for one product, the consumer’s perception of the brand is a lot clearer. People know exactly what is on offer when they enter Subway. The tight focus has also been helpful in naming the brand. Never underestimate the importance of a good brand name. Subway is a great name because it suggests the product, rather than spelling it out.
Another benefit of the tight focus is quality. McDonald’s workers have to cope with up to 80 items on their menus, everything from salads to cheeseburgers. At Subway, staff only have to concentrate on making one product. It therefore doesn’t take them as long to get good at making that one product.
Another advantage for Subway is that, unlike most other fast-food brands, it is not viewed as unhealthy, as its fillings are generally made of fresh ingredients. As the obesity crisis gains ever more urgency in the West, brands like McDonald’s, Burger King and Kentucky Fried Chicken are inevitably going to be affected.
The advantage for Subway is that it offers the service benefits of fast food – speed and convenience – without the unhealthy connotations. If it keeps focused, Subway could therefore become one of the major brands of the 21st century.
Secrets of success
Chapter 34: Hush Puppies: the casual brand
Like various other brands (see Vespa, for instance), Hush Puppies was started by post-World War II government intervention. In the 1950s, the US government asked Wolverine (a leather-tanning company, not the X-Men character) to find a way to tan and use pig-skin leather.
Wolverine’s chairman, Victor Krause, invented a process that created a new kind of material, suede. And shortly after, he created a new type of product for the US market – casual shoes.
Up until that time, US men didn’t really have casual shoes in the way we have them today. There were running shoes, but they were worn by athletes. If men wanted to wash their cars or do some gardening, they simply wore a worn-out pair of formal shoes they had originally bought for work. As for women, they tended to wear heels or canvas plimsolls.
However, the 1950s was bringing with it a different type of lifestyle. The post-war baby boom saw a migration away from the metropolis to suburbs and the country. All of a sudden, the average home included a lawn and a driveway. Leisure time was becoming something to be valued as people entered the golden age of consumerism.
Victor Krause had realized that this new type of consumer needed a new type of footwear, and his new leather was perfect for the job. However, he still didn’t have a name for the shoes he created. In fact, it was his sales manager, Jim Muir, who eventually came up with ‘Hush Puppies’. Jim was travelling in Tennessee as part of the first major attempt to sell the unnamed suede shoes. He stayed the night at a friend’s house, and was treated to fried catfish for his evening meal. On his plate, next to the catfish, were some fried cornmeal dough balls, which were a local Tennessee favourite. The dough balls were called ‘hush-puppies’, Jim’s host explained, because farmers used them ‘to quiet their barking dogs’. Jim Muir found this hilarious and nearly fell off his chair. In the United States in the 1950s, ‘barking dogs’ was also the phrase used for tired feet, as in ‘these barking dogs are killing me’. Once Jim had stopped laughing he realized he had discovered the perfect name for a brand of comfortable shoes.
The quirky name was then matched by an equally quirky logo of a basset hound. This laid-back breed of dog has proven a fitting ambassador for the ultimate comfort brand.
Secrets of success
Buy this book from the Kogan Page website.
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