It’s all brand
If I blindfolded 100 people off the street and asked them to take a sip of soda and identify whether it’s Pepsi or Coke, most people would be guessing. I know lunatics that drink cases of Coke a week, but unless you’re a soda fanatic, I think it’s relatively non-controversial to say they taste, at least, pretty similar. Soda devotees, stay out of my DMs.
Unfortunately for Pepsi, that similarity is decidedly not reflected in revenue. “As of 2021, Coke dominates the market share worldwide with a share of around 48%, while Pepsi has a share of approximately 20.5%.” In the same year, “Coca-Cola also brought in more revenue: $38.7 billion compared to PepsiCo's $25.3 billion.” Coke is McDonald’s, not Burger King (despite the Whopper Whopper song that gets stuck in my head all the time). Coke is Nike, not Reebok.
Are McDonald’s burgers really that much different than BK?
Are Nike’s shoes really more well-made than Reebok?
Does Coke taste really that different from Pepsi?
For most people, the answer is probably not. The difference is the brand.
We perceive McDonald’s, Coke, and Nike as market leaders not because of what they do or what they make, but because of how their brand makes us feel and what we associate with their name versus that of their competitors.
Brand perception directly translates to revenue. To wit:
McDonalds did $37 billion in sales; BK did $10B.
Look at this chart (h/t RetailDive) for Nike vs Adidas vs Reebok sales — Reebok is getting cooked.
You can have the best product. A bad brand can sink a good product every single time.
The importance of brand
I’m a communications flack, so I’m in the bag for advocating for communications people and marketers of all stripes. Nonetheless, the truth is in the money — brand matters.
A lot of tech layoffs hit marketing and communications departments early. It’s a tremendous error on behalf of these companies because how a company shows up in the market (brand, marketing, etc and so on) is directly tied to revenue.
A startup can have the best product. If no one knows about it, what it does, or how it works you won’t sell.
A startup can have an inferior product. If you market it well, you can win.
A startup whose core business strategy including managing its brand perception in the market will, on balance, fair better than those that do not.
I spoke with someone who mentioned their company was based in South San Francisco. That’s an intentional, brand-related choice. It’s not Silicon Valley; it’s not San Francisco; it’s South San Francisco. It is intended to convey something about their organization. It’s such a small detail, but that level of granular attention to brand earnestly makes me excited. To consider your address as part of your brand is king shit, plain and simple.
Most startups aren’t at the level of maturation to think about how they message their address, but it’s instructive in that everything a startup does “says” something — from the colors on your website to your company boilerplate to your booth set up at events to how your CEO dresses when he goes on TV, and everything in between.
That’s not to say that marketing and brand perception can always overcome any challenge — it can’t. But brand and marketing are absolutely integral to winning mindshare, marketshare, and creating revenue.
Costco is a great example of the power of brand. The company is incredibly successful but it doesn’t do much advertising. They have a lot of stuff that you can buy in bulk on the cheap. The CEO will murder people if they raise the price of a hot dog. We all know what we’re getting, and we all think the same thing when we think of Costco because their brand perception is strong, and that results in revenue — “Gen Z and young millennials are more likely to shop for groceries at Costco.”
In today’s day and age, companies and executives are more scrutinized than ever before. Brand perception matters more than it ever has, and managing it should be P0 for executive teams at startups across all industries.
Those that don’t might end up like Reebok.