Marketing's Greatest Sin

Marketing’s Greatest Sin

Here is marketing’s greatest sin: there is no legal definition of a brand. Everyone speaks about protecting their brands. But, it is difficult to protect something when it is not a legal entity.

Imagine you are embroiled in a legal case.  Your brand is under attack. Imagine that you invite a branding guru as an expert witness.  At some point, the time will come when somebody’s lawyer asks, “Mr. Expert, Mr. Guru… What is a brand?”  If you have ten experts, you will have 20 definitions.  This is because every expert refuses to be an expert on the subject of what is a brand.  The experts will equivocate. The experts will provide vague answers. The experts will say, “Well, it all depends.  A brand is about image.  A brand is a logo. A brand is about positioning.  A brand is about value.”

A lawyer in England once said, “We cannot defend what you in marketing cannot define.”  And, you know, she was right.  Marketers, branders, the whole lot of gurus have been unwilling to come up with a definition that can be defensible. This is because everyone, every guru, every consultant, every advertising maven believes they must have their own definition.

It is the same outside of the courtroom. Ask twenty or thirty marketing executives the definition of a brand and you will receive twenty or thirty different answers. No wonder C-suite executives see the CMO’s efforts as costs rather than investments. 

It is unbelievable and irresponsible that we can have a widely accepted, legal definition of a trademark, and yet, we cannot have an equally, widely accepted, legal definition of a brand.

Go on the Internet and you will find this definition of a trademark:  

“The definition of a trademark is a name, term, design, symbol or any other feature that identifies one seller’s goods or services as distinct from those of other sellers.”

Whatever version or variation you may have in your country, the basic concept of a trademark is widely accepted.  The trademark identifies the source of the product or service. In a courtroom, you can swear that this is the definition of a trademark. 

The word brand does not even exist in law.  The time has come that with equal confidence we should be able to say, “I swear, so help me God, this is a brand.”

We just cannot do this today.  

What is worse is the fact that marketers use this definition of a trademark as the definition of a brand.

For example, go on the Internet site of the American Marketing Association and what you will find is this:  

“The definition of a brand is a name, term, design, symbol or any other feature that identifies one seller’s goods or services as distinct from those of other sellers.”

Go to Wikipedia and type in “brand.” Guess what? The definition of a brand is the definition of a trademark. Just imagine all of those university students writing papers for a marketing class using Wikipedia as fact: they are using the wrong definition.  Worse yet, their professors are accepting this.

The actual legal definition of a trademark is: 

“… any word, name, symbol, or design, or any combination thereof, used in commerce to identify and distinguish the goods of one manufacturer or seller from those of another and to indicate the source of the goods.”

The whole idea of the trademark is to protect the maker of the product or service. This is great. But, it is not a brand.

We have two words – trademark and brand – because these two words mean two different things.  But, right now, there is no useful distinction between a trademark and a brand at the American Marketing Association or anywhere else.  

Yet, in our language and in practice, we know there is a difference.  We know there is a difference.  We must make that difference legally defensible.

Not having a legal definition of a brand is marketing’s greatest failure and its greatest challenge.  


Because in marketing, we do not talk about trademark loyalty.  We talk about brand loyalty.  We do not talk about trademark loyalty management.  We talk about brand loyalty management.  We do not talk about trademark power.  We talk about brand power.  We do not talk about trademark equity.  We talk about brand equity.  

Let’s use this definition of a brand.

“A brand is any distinctive identity that identifies or distinguishes a specific promise associated with a specific product, differentiating that product from others in the marketplace.”

Promise is a very important concept.  Promise is fundamental.  Here are some of the implications.

You trademark products.  You brand promises.  You trademark products.  You brand the promise associated with the product.

Think of the trademark Crest. The trademark Crest identifies the source of fluoride toothpaste.  But, the brand Crest identifies not the source of fluoride toothpaste. The brand Crest is the source of the promise that you will die with your own natural, gorgeously white teeth attached to your head.  Its current tagline is “Extend the Life of Your Teeth.” Crest’s goal in marketing is to own the promise of a lifetime of healthy, gorgeously white teeth.  You may be dead, but you will have a beautiful smile.

This is a big promise.  And, this promise must be defensible in court, as well as defensible with the consumer. If a brand is not a legal entity, there is a risk that someone else can use that identity. Whether it is a mouthwash or a toothbrush, no imitator, no copycat should be allowed to steal Crest’s identity.

With the above definition of a brand, you might ask, “What is a brand promise?”  It is a simple sentence.  “Buy this brand, you will get this experience.”  That is the definition of a brand promise. It is future oriented. A brand promise indicates what the brand will do for you.

Think about Harley-Davidson. It is an amazing brand.  It is an extraordinary brand.  It is more than a promise of a motorcycle. It is a promise that if you buy a Harley, you will get this Harley experience.  Harley-Davidson does not just sell motorcycles.  Harley-Davidson sells the promise of a special, authoritative experience.  

If you want to know how to measure the strength of a brand, the answer is the number of people willing to tattoo your logo on their arm.  That is a long-term commitment to the brand.  

Remember, you brand promises, not products.  A promise creates an expectation.  The product is the evidence that you conform to that expectation.  Trademark products. Brand experiences.

One goal of marketing is to turn trademarks into brands.  The goal is to turn a trademark into standing for a relevant differentiated promise.  Associating a relevant and differentiated promise with a trademark turns the trademark into a brand.

A brand is an asset on a balance sheet. The accounting concept of Goodwill is all about the value of the brand-businesses. Enterprises must report Goodwill when the value of a purchased brand-business is more than the value of its assets. When brand-businesses are in trouble, you find the enterprise reporting an impairment.

Financially, brands are treated as assets. But, legally, not so much. The concept of brand is not in the law books. The legal cases in which brands play a role are all about trademark infringement and trademark dilution. The source id protected; the experience is not. For a marketing environment that is all about selling experiences, this lack of protection is a sin.

Now is the time for marketing to work together to create and institute a legal definition of a brand. For how much longer must this impossible situation continue? Marketing can do itself a great service by making sure legally that a brand is more than a trademark.

Disney+ streaming brands branding marketing

Streaming Brands Are Scavenger Brands

Streaming brands have become scavenger brands. Streaming brands are focused on scavenging for new subscribers with little focus on current customers. Scavenger brands survive by relentlessly seeking larger subscriber numbers to satisfy investors and analysts. Scavenger brands are the hunters and gatherers of the modern age. A streaming brand’s stock price and image are dependent on showing a larger and larger user base. Netflix suffered a serious decline in its stock price when it announced that it did not meet subscriber expectations and actually lost customers. The loss of around 200,000 customers erased about $80 million from the brand’s bottom line.

There are two critical brand issues that streaming brands push to the side. 

First, love your core customer.

No brand can survive on acquisitions alone. A brand needs both new customer and current customers. Current customers should be maintained and respected and loved. Current customers are valuable. If they really enjoy the brand’s experience, current customers will be willing to pay more. They will look for additional ways in which to experience the brand. 

Streaming brands are focused on growth. Disney’s CEO, Bob Chapek, indicated in a recent earnings call that Disney+ is focused on growth targets between 230 million and 260 million. Right now, Disney+ has 137.7 million. This reflects an increase of 7.9 million subscribers since the last quarter. Disney never mentioned retention of current customers in its earnings call. Disney also owns streaming brand Hulu. Hulu has 41.4 million viewers.

Warner Bros. Discovery’s HBO Max is focused on growth as well. The brand currently has grown to 76.8 million viewers. This is 13 million more than a year ago. Warner Bros. Discovery has indicated that HBO Max will be combined with its other streaming brand Discovery+ with 23.5 million users.

Paramount+ indicated that it had grown its subscriber base to 40 million. This is an increase of 6.8 million over the last quarter. In its earnings call the word “retention” was only used once. Paramount+ management believes that its library of content is what will “retain” its subscribers. Of course, Disney and HBO Max say the same thing.

Netflix did not have such good news as the brand lost customers and did not meet expectations on acquisitions. As Jason Aten points out in Inc. magazine this is probably because Netflix has no one left to sign up. “There comes a point when you are the largest streaming service, that it’s difficult to find people who are not already subscribers. You would think that would be considered a win, except that shareholders want to see growth, even when you are as big as you are reasonably going to get.” Netflix already has 214 million subscribers. Growing at the same rate as when you were smaller is extremely difficult. Disney+ and paramount, for example, have much smaller bases to build upon. When it comes to streaming, it is all about winning the acquisition war.

Growth is good, of course. But, all you seem to obtain as a subscriber is the ability to watch whatever you want for a fee. At some point, you may have watched what you signed up for and, with nothing else new to watch, you may cancel and move on to the next shiny new streaming service. Where is the additional value for the subscriber?

As a potential streaming customer, you are wooed with various tiers of viewing, some with advertising, some without advertising. So, you are able to choose a plan that works for you. But, once you become a user, you become a loser. Once you are a customer, your value to the brand is your monthly subscription fee. Sure, you are able to watch content, but you are just a number to please Wall Street. 

Scavenging for new customers at the expense of loving your current customers is a strategy for disaster. Brands need to reinforce customer attachment. Special deals will attract new customer. But these may not be the customers you want. They may sign up for some special movie and then leave. They may be loyal to the deal rather than the brand.

Netflix is learning this lesson. Recent survey data show that in the first quarter of 2022, Netflix lost 3.6 million subscribers. Of these, 60% had been Netflix viewers for under a year. Additionally, Netflix’s focus on acquisition of new customers led to a 13% loss of loyal customers, those who have been with Netflix for 3 years or more. 

Although not a streaming brand, The Wall Street Journal is a great example of a subscriber brand that offers a wide variety of experiences for current users. There is a weekly members-only newsletter of events, offers, insights and experiences package including trips, discussions, free audio books, educational courses, cooking classes, virtual tours and passes for galleries. The Wall Street Journal focuses not just on finding new readers to subscribe. The paper also focuses on ensuring that current readers have an expanded experience beyond news.

Second, Have a relevant differentiated Brand Promise

It is common marketing sense to focus on current customers as well as new customers. But, to do this successfully requires the brand to have a relevant, differentiated brand promise relative to competitors. What brands do not want is for customers or potential customers thinking that all the brands are the same. Although the streaming brands see themselves as relevantly differentiated from each other, tiered offers and content seem to be the selling points. The problem with this is that not only are tiered offers and content features, not benefits, but tiered offers and content are greens’ fees or table stakes. They define the category.

A brand promise goes beyond just describing the category: it is a multi-dimensional. It defines the parameters for all development, communications, innovation and renovation on behalf of the brand. A brand promise defines the special relationship between the brand and its users. The brand promise describes what the brand intends to stand for in the mind of a specific group or customers or prospects. The brand promise is future-focused: it tells us what the brand will do for the customer. 

The brand promise defines the brand’s essential relevant differentiation. It succinctly articulates the values of the core customer, the benefits these customers seek from the brand, the personality of the brand and its features. It is not enough to merely define the features.

If streaming brands want to scavenge for something important, they should be scavenging for their relevant differentiation. Disney+ alludes to the fact that their content is safe for people of all ages. But, again the default is the content. This is too bad. As a business, Disney had as its differentiator the creation and delivery of happiness. Disney was safe, magical, high quality, and affordable for anyone and everyone, regardless of age. Why is this not reinforced with customers, investors and analysts? Surely, this purpose relevantly differentiates Disney from Paramount+, Netflix, Warner Bros. Discovery? Disney+ will need a relevant differentiator. As one media analyst told The Wall Street Journal, “While it seems Disney+ is winning the subscription battle for now, let’s not forget it is late to the streaming party. It will see subs (subscriptions) losses at some point.”

In a recent article for Vanity Fair, Joy Press talks about the streaming marketplace and the ways in which streaming is changing. She notes that the streaming marketplace is “overcrowded” and that streaming brands are “uncertain about how to keep expanding (and retaining) their subscriber bases.” She discusses the internal agita of the brands as they are torn between creating segmented, niche, sometimes unconventional content and broadening the appeal of shows for the mass market. Ms. Press says that currently there is enormous pressure “… to be all things for all people.” 

Brands need focus. They need to have a handle on their prime prospects and like-minded others. Having a brand promise that relevantly differentiates the brand’s experience is what will keep current customers loving a brand when there are no new customers available anymore. 

Being a scavenger brand is bad for business. Having an acquisition-focused strategy at the expense of nurturing loyal customers will eventually take its toll. Loyal customers will leave the brand for better options. This is already coming true for Netflix. In a highly competitive category, with each rival offering quality entertainment, loyal customers have plenty of options.

Furthermore, even in entertainment, brands must have relevant differentiated promises. 

In describing the “up-fronts” – the event where the media showcase their offerings to entice advertisers to buy ad time – The New York Times reported that streaming media were “taking center stage”. Streaming media previewed trailers of movies and series hoping to capture percentages of advertisers ad budgets. All of the streaming services with ad-supported offerings gave the same kind of presentations: here are the shows we will be featuring. As told to The New York Times, there is a real shift in the media industry. The upfronts used be all about the TV networks, but now streaming media are upending that model. It makes sense in this competitive environment that streaming brands stand for something relevant and differentiated to stand out from the rest of the crowd. “My content is better than their content” will only work for a little while. Netflix is a great example that relevant differentiation is critical.

Brands survive and generate high quality revenue growth when they drive both quantity of growth and quality of growth while offering a relevant, differentiated trustworthy experience. 

Netflix Brand Changes

Netflix Finally Stops Believing What Worked Yesterday Will Work Today

There is a brand-business truism that states: Believing That What Worked Yesterday Will Work Today is Brand-Business Destructive. At some point, top executives and Boards of Directors need to face the music in a changing brand-business landscape. They need to stop doing what worked in the past. Problems arise when the strategic plan is to keep on keeping on with the same approach.

By now, readers of the business pages and business press will know that Netflix reported a significant loss of subscribers in their latest analyst call and, hence, experienced a significant drop in market value. Observers have been quick to comment on Netflix’ CEO Reed Hastings’ remarks regarding his thoughts on fixing Netflix. Financial Times called Mr. Hasting’s remarks a “humbling volte-face.” Reporters sounded almost gleeful when indicating that when facing this loss of subscriber growth, it took no time at all for the brand to “jettison long-cherished principles.”

Mr. Hastings was criticized for indicating that he was now planning to do things that he had previously said he would never do. These include ending password sharing, admitting there is excellent competition with which to deal, curbing massive content spending and allowing advertising. One analyst was unfortunately harsh saying that listening to Mr. Hastings was “… shocking.” The analyst followed by saying that the Netflix management team “… sounded like any other management team that just didn’t have the answers.”

This sort of criticism is brand defeating. It seems that every envious soul is kicking Netflix while the brand is down. In fact, according to The Hollywood Reporter, there is an entire town (Los Angeles) that is “rooting against” Netflix.

This unfortunate sniping shows an incredible lack of intelligence about brand-building. It is quite clear in brand-business management that continuing to do what worked in the past when the present is different is a tendency for trouble. Recognizing that things must change; recognizing that “cherished behaviors” may no longer be feasible is necessary for any brand. Mr. Hastings should be given some positive reinforcement for immediately telling us that it is time for the Netflix brand to respond and market differently. Better late than never.

Customers change; the world changes; brand reputations change; and competition changes. Doing what once worked when the current landscape is different makes no sense. Thinking that what worked yesterday will work today is inward looking. When focusing on past, successful strategies, a brand misses what is happening now and what can happen tomorrow. 

Mr. Hastings and his Netflix executives may be late to the recognition that things have to change, but at least they are planning for implementation now. Netflix is a pioneer; a category creator and definer. Netflix single-handedly disrupted the entertainment category affecting how, where and why people viewed content. The Netflix brand changed the game for television viewing, movie theaters and for Hollywood. Netflix was the leader. Netflix was the brand that all the other streaming brands emulated and, in some ways, copied. When the brand was growing, creating a new category of viewing content, Netflix followed certain strategies. The Netflix brand continued to implement these strategies even though, over the course of years, the viewing landscape was changing under its feet. As one ex-Netflix executive said, “There was never any fear that we’re in trouble. The feeling was we are leap years ahead.” 

According to online, Netflix lost customers because of two issues: available content and its catalog. On the one hand, Netflix suffered because other streaming services – following Netflix’ model – have been able to generate “buzzworthy” content at or above Netflix’s quality. Disney+ and Apple+ have seriously desirable content available. On the other hand, Netflix’s access to content was cut-off when the movie studios and TV networks started their own streaming services. Shows such as Friends or The Office returned to their original owners’ services, leaving Netflix with major gaps. Netflix underestimated the power of its follower brands and overestimated its power as a pioneer.

The Hollywood Reporter adds a third content-related problem: jettisoning the creative mind behind the expensive but extraordinary shows House of Cards, Stranger Things and Orange Is The New Black. Instead, Netflix focsued on “… less expensive, less curated, less compelling…” content that began “The Walmartization” of Netflix. Netflix, certain that quantity of original content was the answer, generated “a burgeoning number of shows” that lacked “quality control and curation.”

In other words, The Hollywood Reporter indicated that the Netflix approach of massive content generation became a “binge strategy” – make all these shows and they will come. And, as Jeff Sommer for The New York Times points out, Netflix cannot continue to just throw money at its problems.

But, all things, even bad ones, come to an end. As one rival executive said, “I don’t think Netflix is Blockbuster. I think it’s here to stay. But, the idea that they could spend their way to world domination is over.”

The renowned marketing guru, Peter Drucker, was a proponent of stopping what worked in the past. Mr. Drucker recognized the pitfalls into which so many great brands fall when it came to doing the same thing over and over. His lessons included these three key elements: 

  1. Environments change. Continuing strategies and actions that created past successes will eventually lead to failure. 
  2. Being defensive and unyielding will also lead to failure. Organizations must be willing to (quickly) abandon formerly successful approaches. 
  3. Believe that change will happen and that sometimes the change will be revolutionary. Enterprises should create the future by making changes even though it means “obsolescing the products or methods of its current and past success.” 

This is common sense. Standing still while changes rage around you is a formula for failure. Markets and customers change quickly. So, companies must be flexible, agile and quickly decisive. It is also important to have a leader who is willing to look outward rather than backward. 

Building a brand that is not afraid of letting go is critical. This means being ready to take or regain leadership in a fast-moving, changing world. Staying alive and growing hinges on how willing the brand’s top executives are to recognize when it is time to move on and jettison a strategy that is holding the brand back. Brands can live forever but only if properly managed. This means recognizing when it is time to innovate to breathe new life into a brand.

Netflix is telling us that some things will need to change. The brand is suggesting that many of its previous strategies are no longer helping the brand to grow.  The Netflix brand-business model will undergo alterations. Some of the more reasonable observers are questioning whether cutting funds for content and having advertising are actually the panaceas that Netflix needs. 

In the interim, it is refreshing, no matter how fraught and messy the situation is, to see a brand-business leader say that things will need to change if the brand is to survive.

Kraft-Heinz SEC

An SEC Ruling Favors Brands

You may have missed an important brand-elevating event this month. On September 3rd , the SEC settled a case of financial finagling with Kraft Heinz. Kraft Heinz, home to some of America’s favorite brands, agreed to pay a fine of US $62 million. This fine is a result of a financial scheme designed to inflate cost savings. The cost savings inflation made the enterprise look really good to analysts. This positively affected stock prices. Shareholders were happy.

Kraft Heinz, a 2015 merger of two iconic companies, engineered by the Brazilian private equity firm 3G Capital, promoted and utilized a severe financial approach called zero-based budgeting leading to massive cost-cutting. This approach denied funds to brands for renovation and innovation as well as for market research and all other strategies and tactics necessary for brand-value-building. 

The extreme cost-cutting, along with debt-accumulation and large numbers of employee firings siphoned money into the pockets of investors and executives rather than into brands. 3 G’s financial engineering seemed to have only one goal: satisfy shareholders at the expense of customer satisfaction and brands. 

The SEC was aggressively forthcoming in its ruling. Here is some of what the SEC had to say as quoted in The New York Times:

“Kraft and its former executives are charged with engaging in improper expense management practices that spanned many years and involved numerous misleading transactions and a pervasive breakdown in accounting controls. Kraft and its former executives are being held accountable for placing the pursuit of cost savings above compliance with the law.”

There is a marketing principle that says you cannot cost manage your way to high quality revenue growth. Financial engineering that extracts value from brands is a form of brand extortion. Innovation and renovation of products and services dwindle as monies are withheld.

As Kraft Heinz learned, financial engineering at the expense of customer focus and the brands they love is a financial formula for failure. 

Kraft Heinz was so focused on cost savings that the organization ignored this principle at its peril. By 2017, there was no more money to cut. Rather than give up on its financial engineering, Kraft Heinz skirted the law. Rather than honestly reporting its financial statements, Kraft Heinz booked a large amount of cost-savings in the year for the year when the cost savings were meant to be spread over three years. The SEC stated that Kraft Heinz actually changed the wording on a procurement agreement in order to create this false scenario for investors in order to make Kraft Heinz’ earnings report look fantastic. The false accounting was also designed to generate further excitement for zero-based budgeting. Kraft Heinz told analysts that the company had cut US $1.75 billion in yearly spending by the close of 2017.

Brands can live forever, but only if properly managed. Kraft Heinz neglected its brands. And, because of the pressured environment to cut costs, Kraft Heinz found itself unable to sustain the value of its brands. In 2019, Kraft Heinz was forced to write down the value of beloved brands like Oscar Mayer and Kraft mac and cheese by more than US $15 billion. 

Again, you cannot cost manage your way to enduring profitable growth. The Wall Street Journal reported that former Kraft Heinz employees said “…the company’s heavy cost-cutting after the Kraft Heinz merger diminished its ability to promote new or improved products.”

The goal of effective management is high quality revenue growth. The bottom line of any enterprise is to attract more customers who purchase more frequently who are more loyal generating more revenues and increasing profitability. Quality revenue growth of the top line is the road to enduring profitable growth of the bottom line. Organizations must focus on both customer value and stakeholder value at the same time. Focusing only on shareholder value at the expense of customer value is death-wish management.

Enriching loyal shareholders through financial finagling combined with short-term marketing tactics does not address declines in customer satisfaction and transactions. The financial engineers insist that their behaviors “unlock value.”  Not true. Financial engineering does not unlock value; it exploits value for short-term benefit. And, in the end, the brands (as well as, customers and employees) pay the price for these pecuniary shenanigans.

This is not to say that having a short-term focus is completely wrong. If there is no short term there will be no long term. However, managers must manage both the short term and the long term. The in-the-year for-the-year approach to management is a brand destroyer.

The SEC ruling with its accompanying fine and its charging of two of the executives involved may have been buried in the press after September 4th, but it is a boon for brands. 

Hopefully, this ruling will put some nails into the coffin of zero-based budgeting and financial engineering. Hopefully, this ruling will persuade companies to start engineering on behalf of customers, all stakeholders and brands. Hopefully, this ruling will usher in a new era of corporate virtue.

In the meantime, Kraft Heinz has acknowledged that brand building must be a priority.

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