Big city marketing on a suburban budget: effective brand building for small businesses

Part 1 of 3: Brand Equity vs. Brand Capital

If I asked someone to list a few of their favorite brands (no particular category), they would likely toss out some very big names. Mine include Apple, Target, Coca-Cola and Guinness.

I like them because, to me, they stand for the best things about their respective categories and because I have responded to the way that they have communicated with me over the years. Apple is not just a computer, it’s MY computer and it performs the way I think a computer should. Guinness is not just a beer, it’s a premium beer with a great heritage and I prefer the taste of Guinness to other beers.

These companies and others like them have taken years and billions of dollars (spent with the biggest, most expensive agencies in the world) to affect my perceptions of their brands and my behavior when it comes time for me to make a purchase decision. They have built tremendous equity in their brands, earning the trust of the market and commanding fierce, almost cult-like loyalty from very vocal segments of the people who buy their products.

As we know, not everyone can afford a big city agency or the multi-million dollar ad campaign. But that doesn’t mean that we can’t build great brands anyway. Small businesses have the potential to build fantastic brands (and become medium-sized businesses in the process)… They just have to take a different approach.

Everyone is familiar with the term “brand equity,” literally, the value of a brand. Some brand names are worth millions or even billions. But if you’re a small business owner, chances are that your brand is worth squat. Yet, whenever you talk with a marketing firm, ad agency, etc., the guy/gal on the other end of the table will tell you that you need it and that their company will put together the ad campaign that will help you earn it.

Unless that person happens to be a marketing superhero or you’re sitting on the next huge cultural phenomenon like, say the next eBay, the reality is that you’re a long way away from any meaningful brand equity.

But you can grow your business now and focus on what’s important by looking past the lofty, ivory tower of brand equity and instead set your sights on building “Brand Capital”.

I define Brand Capital as the result of an efficient, well-planned marketing initiative. Then, like any other kind of capital, you take it and reinvest it in the brand, leveraging it to earn more capital and in the process, boosting (in small doses at first) sales, brand awareness, customer loyalty and word of mouth around your brand. It works like a snowball effect; the more Brand Capital you earn, the faster you’ll roll down the hill and the more Brand Capital you will earn, etc.

Say you have a short-term goal of announcing a new restaurant to a local market. If you take out an ad in your local newspaper for two weeks telling people to come eat at your new restaurant, they may do just that. But what happens next? Some of the people that came may become regulars. The people that saw the ad but did not come during the two weeks will likely forget about you and your restaurant. When it comes to furthering your long-term goal of running a profitable restaurant, you haven’t done much, You didn’t earn any capital to further your efforts.

Instead, what if you start with your ad in the newspaper but this time add a special offer, like “visit our web site for coupons and a chance to win ______!” And additionally, you can also tell all the people that come to the restaurant that you’re doing a special promotion and let them fill out a card with their name and email address so that they can enter. This e-mail list definitely counts as Brand Capital: it came out of your original initiative (the newspaper ad) and it can be easily and cheaply leveraged towards building your brand and starting long-term relationships with these customers in your next initiative.

The next post, Part 2 will go into some ways to build and use Brand Capital and Part 3 will outline how to incorporate your Brand Capital goals into an integrated marketing communications campaign.