How Brands Were Born: A Brief History of Modern Marketing

The "Mad Men" era of the 1960s was a Cambrian explosion of brands -- from cigarettes to soap -- that have come to define modern marketing. Understanding how those marketing campaigns began helps to explain why branded products are so ubiquitous today.

There was a time, going back at least 70 years, when all it took to be successful in business was to make a product of good quality. If you offered good coffee, whiskey or beer, people would come to your shop and buy it. And as long as you made sure that your product quality was superior to the competition, you were pretty much set. Well into the 1970s, a savvy consumer could distinguish between high-quality and shabby products quite easily.

And yet, as much as we like to complain about what we buy, it remains a fact that we live in a golden age for quality products. Today, it is much more rare to find cars that consistently break down or kiddie pools that leak. I challenge you to walk into any supermarket and find a product that is not of almost equal quality to the category leader in terms of functional performance. Nevertheless, the companies that were category leader in the early days often still are today. Some represent the "foundational brands," the companies that in the 1950s and 1960s epitomized the kind of smart marketing that is now ubiquitous. A handful of these marketing leaders are listed in the gallery below. And the reason they have survived the test of time comes down to the discipline of marketing and branding.

THE BIRTH OF MODERN BRANDS

The shift from simple products to brands has not been sudden or inevitable. You could argue that it grew out of the standardization of quality products for consumers in the middle of the 20th century, which required companies to find a new way to differentiate themselves from their competitors.

In the 1950s, consumer packaged goods companies like Procter and Gamble, General Foods and Unilever developed the discipline of brand management, or marketing as we know it today, when they noticed the quality levels of products being offered by competitors around them improve. A brand manager would be responsible for giving a product an identity that distinguished it from nearly indistinguishable competitors.

This required an understanding of the target consumer and what we call a "branded proposition" that offered not only functional but also emotional value. Over time, the emotional value would create a buffer against functional parity. As long as the brand was perceived to offer superior value to its competitors, the company offering the brand could charge a little more for its products. If this brand "bonus" was bigger than the cost of building a brand (the additional staff and often advertising costs), the company came out ahead.

In the 1950s and 1960s, brands like Tide, Kraft and Lipton excelled in marketing activities (see above gallery), setting the benchmarks for all brands today. This marked the start of almost 50 years of marketing where "winning" was determined by understanding the consumer better than your competitors and the getting the total "brand mix" right. The brand mix is more than the logo, or the price of a product. It's also the packaging, the promotions, and the advertising, all of which is guided by precisely worded positioning statements.

BUILDING AN 'ARTICULATE BRAND'

As my friend Simon Clift, former Chief Marketing Officer of Unilever likes to say, a brand is the contract between a company and consumers. A bundle of contracts, in fact. And the consumer is the judge and the jury. If he or she believes a company is in breach of that contract either by underperforming or misbehaving, the consumer will simply choose to enter a contract with another brand.

I say "misbehaving" because in fact the strongest brands have always exuded a clear sense of their core value. Dan Wieden, legendary ad-man and founder of advertising agency Wieden & Kennedy, puts it another way: Brands are verbs. Nike exhorts. IBM solves. Sony dreams.

But few brands are so articulate. Even the inventors of brand management continue to find it a challenge. Jim Stengel, formerly of Procter & Gamble, candidly acknowledged to me in an interview that "while many of P&G's products were very highly regarded for their functional qualities, some of our competitors had a stronger emotional bond with consumers' hearts. There was a lot of trust in our products, but there wasn't a lot of love."

For decades, it was the case that big companies marketed brands, while everyone else sold products. When I graduated from university in the late 1980s, someone with the ambition to learn marketing knew to start at companies like Colgate, Procter, Unilever, Coke, Pepsi, and General Mills to learn the ropes. Companies like Sara Lee, Mars, Cadburys, and Danone, also very much dependent on successful branding, tended to hire "graduates" from these companies after they had been trained for five years in the basics. From there marketers fanned out across industry. A quick LinkedIn search today among chief marketing officers and senior vice presidents of marketing confirms that how important these companies have been in shaping the face of marketing today.

THE STATE OF MARKETING

Just 20 years ago, most retailers did not even have a proper marketing department. If they did the department was responsible for little more than coordinating store-opening launch parties.

But in the early 1990s, things started to change. The previous commoditization of product quality was followed by an almost equal push for build real brands. One by one the big retailers started to realize that they had an opportunity to also play the branding game and that by selling more, higher quality, but particularly better-branded products, they could not only dramatically improve their margin mix, but that they could raise the profile and reputation of their own brand as a whole.

Without a doubt, the UK has led the pack worldwide. The retail landscape there is now really different to elsewhere as a result. Retailers like Tesco, Waitrose and Sainsbury started hiring marketers from their suppliers like Unilever and P&G just over a decade ago. Of course it took some time, but today these companies and their portfolio of brands enjoy equal and sometime better brand loyalty than any of the manufacturer brands they carry. And the results have followed. Private or "own" label as its sometimes called market share in the UK is over 50% in some key core food and household product categories. And profit has followed; The profit margins of these UK supermarkets chains is over double that of the rest of the world's supermarkets.

Continental Europe has followed closely, with private label shares in many supermarket categories averaging between 20 and 30 across the store. The US still lags significantly, but Wal-Mart's recent complete rebranding and introduction of many private label product lines is undoubtedly a sign of what's to come.

And this development has not been limited to retailer brands or the fast moving consumer goods markets. The rapid rise of a mobile phone brand like HTC from a private (OEM) label supplier just three years ago to a major player today, as well as the very strong ascension of brands like Haier in household products and LG in the TV market show that a little bit of marketing knowledge can go a long way to building strong brands.

Now, a decade into the 21st century, the market looks very different to just 20 years ago. The explosion of branded offerings is overwhelming and confusing consumers and causing an ever-increasing headache for the leaders of 'traditional' brands. The average western consumer is exposed to some 3,000 brand messages a day. How can consumers cut through the clutter? How should traditional market leaders regain leadership? The new marketing kings of the 21st century will be the subject of my next column.

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