In a recent piece for Ad Age, marketing guru Al Ries made the statement: "Fundamentally there are two ways to increase sales: (1) Expand the brand [i.e., a brand-centric approach to marketing], or (2) expand the brand's market share [i.e., a customer-centric approach to marketing]." "While it's more difficult to expand a brand's market share, this is the better way to go. The larger the market share," Ries writes, "the more powerful a brand becomes. Unfortunately, he laments, "Overwhelmingly, marketing managers believe in the expand-the-brand philosophy."

We share venerable Al's frustration: when it comes to taking actions to grow the bottom-line in the short- and long-term, the discussion becomes not what are we going to do to grow our customer relationships, but what are we going to do with the brand. In their breakthrough Harvard Business Review article, "Customer-Centered Brand Management," Roland Rust, Valarie Zeithaml, and Katherine Lemon agree that, for all the talk about the importance of the company, "Brand management still trumps customer management in most large companies."

Take the recent marketing efforts by Eastman Kodak, a company with a comforting, reliable, warm, and happy brand image that's beloved the world round. "Most corporate marketers would be overjoyed if consumers considered their brand to be a loyal, reliable, trustworthy old friend," reported The New York Times not too long ago. With its film business in decline, Kodak began building its digital business where it could channel its vast knowledge, capabilities, and customer relationships, developing new service offerings (digital radiography, internet archiving, commercial digital print runs) and products (the EasyShare). Sounds like the customer-centered approach that Rust, Zeithaml, Lemon, and a mountain of case studies of businesses in similar circumstances would recommend, no? But wait, there's more.

"I told Carl [Gustin, Kodak's CMO], 'Keep the trust and the warmth, but make the brand innovative and cool and digital'," Antonio Perez, Kodak's CEO, told The New York Times. "The only thing we're keeping constant is the red and yellow colors, and the Kodak name," added Mr. Gustin. The company pointed to research conducted by its ad agency that consumers around the world think that Kodak is not only NOT cool, but also that when it comes to digital, "they perceive the brand as lacking momentum, credentials, or innovation stripes," according to Kodak's agency account chief. Now Kodak's digital business is growing at an impressive 35+ percent annual rate and the Kodak EasyShare camera occupies the top spot on the world's best-seller list, so one might ask the question how critical "coolness" and "innovation stripes" are to the purchase decisions of consumers who seem to gravitate and buy the brand even though by all accounts it's pretty dull and basic. One might ask how important "coolness" is to B2B buyers that Kodak targets through its commercial divisions. And finally, one might also ask the question what kind of new products and innovations is the company coming up with to substantively address this apparent hole in its image—according to the Times article, there have been design changes and product "updates," but it doesn't sound like truly innovative, leading edge new products. Instead, there's a whole lotta branding stuff—a new ad campaign, (potentially) a new logo, and a PR effort with consumer electronics folks.

Contrast Kodak with American Express, "the 155-year-old financial-services firm long known for catering to gray-haired executives with expense accounts," courtesy of The Wall Street Journal, in "a high-stakes hunt for young customers." Rather than try to convince anyone that American Express isn't for corporate suits, it introduced a new series of no-fee credit cards, "for urbanites who are single, age 25 to 35, dine out often, like to drink and aspire to be hip," the first of which it dubbed "In:NYC," with "In:Chicago," and "In:LA" cards planned for later this year. Like other Amex cards, it plays up the benefits of membership (holders can earn points toward a private booth an ultra-hip bar and discounts at trendy restaurants), the common denominator among all of its card marketing efforts, and it's clear it's an Amex card. Yet marketing efforts focus on building membership for In:NYC—ads tout the "über-glam lifestyle you'll easily become accustom to." Amex reports 90% of the people who have signed up for the card have never had any type of American Express card before and more than half are under age 35.

As Rust et. al. have written, the focus on building the brand instead of the customer-base has become, "increasingly incompatible with growth." Companies will continue to struggle with expanding into new business areas, attracting a new segment of customer, and even just sustaining current market positions if they don't start taking a customer-centered approach.

There are over 100 emerging markets—defined by the International Finance Corporation as a stock market that is increasing in size, activity, or level of sophistication—in the world today and Brazil is one of the hottest. With a vibrant population of over 175 million, the country's recent jump in inflation was attributed to a one time increase in gasoline prices as the main cause (in August, inflation had in fact hit a 15-month low), its central bank is expected to continue cutting interest rates, and its GDP growth in the second quarter exceeded expectations. A recent scandal involving the President Luiz Inácio Lula da Silva's political party has shaken some confidence that the orthodox economic policy instituted when he came into office in 2002 will continue, but according to The Economist, "investors have remained calm, reassured by Brazil's relatively strong economic fundamentals."

On the marketing-side, Brazil has some of the hottest brands in the world including Embraer, the #4 aircraft manufacturer in the world receiving much attention after a big sale of new planes to JetBlue; Skol, the #4 beer brand in the world; Brahma, a top-seller in Brazil and InBev's latest global brand entry; and Banco Itaú, one of the largest banks in Brazil with growing international operations in North America and Europe. Still, as in the rest of the world, many firms appear bound and determined to commoditize their brands, focusing on offering rock-bottom prices and little else as a reason to buy. To get his take on the state of marketing in Brazil, we spoke with Alberto Cerqueira-Lima, the president and CEO of Copernicus Brazil and former marketing chief at what was once Brahma and is now part of InBev. Here's what he had to say:

Copernicus Mzine: Studies conducted in several countries indicate that in most categories, buyers indicate that price influences their purchase decision more than any other attribute, including brand name. What's the situation in Brazil?

Cerqueira-Lima: Having a low price seems to be the only attribute valued by consumers when buying products and services, but this is a big assumption. There's no doubt that price—regardless of the current economic situation—was, is, and will always be an important factor in any and every purchase, but is it the most important to every single buyer in the market? Most companies aren't asking. This corporate price obsession reflects the stubbornness among marketers in Brazil who continue to manage their brands today the same way they were managed a decade ago—they make assumptions about what customers need, want, and care about and develop a strategy based on what are just best guesses.

Copernicus Mzine: Do you see this mindset—to make decisions based on untested assumptions—changing at all?

Cerqueira-Lima: Yes, absolutely! Many companies are realizing that offering price as the only reason to buy is as damaging in an emerging market—if not more so—as it is in an established one. Becoming successful isn't a matter of just making a sale; it's about making a profit. In order to make a profit, they have to offer something of value that people are willing to pay for or, better yet, pay more for. At the same time, these leading companies are less willing to leave anything to chance—with competition and the cost of doing business on the rise, they can't afford to make big decisions about their brands based on their own opinions any more. They need to talk to customers. It all starts with the customer.

Copernicus Mzine: How is the traditional vs. non-traditional media debate taking shape in Brazil?

Cerqueira-Lima: Just as in the U.S., most seem focused on whether one tactic is better than the other. But this is really missing the point. Communicating what value the brand offers is so frequently mismanaged—this is the real issue, not whether the Web or mobile is better than TV or radio.

Day by day, it is getting harder to get the customer's attention and communicate the attributes and benefits or, in other words, the value your brand offers that will spark purchase interest. Again, it comes back to talking to customers and studying what value your brand offers or could offer that will encourage customer interest and purchase. Also, ask customers about their media habits—what tactic or combination of tactics will be most effective is a function of who you are trying to reach. This is how marketing communications should be managed.

Copernicus Mzine: Can you give some examples of global companies who have adapted well to the Brazilian market? Why have they been successful?

Cerqueira-Lima: Elma chips, ExxonMobil, Pepsi, Coke, LaFarge, Microsoft, Mastercard, to name just a few. They know their customers; they listen to their customers; and they base their marketing decision on their customers.

Copernicus Mzine: If you had the ear of every CEO in Brazil for five minutes, what would you tell them they need to do about their marketing programs?

Cerqueira-Lima: It is not enough any more to have a good product/service at a good price. Nowadays, it is essential that companies start planning their strategies based on their customers' real needs, wants, motivations and perceptions. A company's assets are not their products/services, infrastructure, plants, etc. Customers are the asset. At the end of the day, it is the customer who is holding the money that pays the company's bills and goes into stockholder pockets.

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For a few years now, we've heard rumblings that psychoanalysis was making a triumphant comeback into marketing, but these days the rumblings have turned into cosmic tremors. Almost on a weekly basis an otherwise rational, experienced, and intelligent executive will turn to us in a meeting and wax poetic about the "incredible insights" and "invaluable information" buyer research grounded in psychoanalytic practice has revealed to them about the unconscious motivations of their customers and prospects. "Even as Freudianism is increasingly viewed as suspect in society at large," reporter Ruth Shalit wrote on Salon.com in 1999, "it has been worshipfully embraced by no-nonsense, jut-jawed captains of industry." Five years later, the number of companies applying research methods grounded in the teachings of Freud, Jung, and others is growing, as are corporate converts to psychoanalysis.

As a brief bit of background, psychoanalysis is, according to the Borderline Personality Disorder Resource Center, "the method of psychological therapy originated by Sigmund Freud in which free association, dream interpretation, and analysis of transference are used to explore repressed or unconscious impulses, anxieties, and internal conflicts, in order to free psychic energy for mature love and work." Once a dominant force in psychiatry, psychoanalysis as it applies to treating mental disorders has been largely sidelined. The American Psychoanalytic Association has admitted psychoanalysis was previously too broadly applied to severe mental illness. Because of its many forms—there's Freudian, Jungian, Lacanian, Alderian, and more—psychoanalysts have been able to avoid relegation to utter obscurity in part by arguing that the many criticisms hurled against it are aimed at a different branch of the practice and don't apply to it. Also aiding the cause, most of its critics expend equal time and energy undermining the arguments of other critics of psychoanalysis.

Psychoanalysis was introduced to marketing research in 1939 by an enterprising young psychoanalyst named Ernest Dichter who wrote to six American corporate giants, saying he was "a young psychologist from Vienna" with "some interesting new ideas which can help you be more successful, effective, sell more and communicate better with your potential clients." He believed the assumption that all buyers made purchase decisions based purely on rational reasoning, the questionnaire-based approach to collecting data about consumer preferences, and statistical number crunching which drove marketing efforts in the 1930s were fundamentally flawed. As he explained in the Journal of Marketing Research:

What struck me...was that people were being asked through questionnaires why they were buying milk.... It was almost comparable to asking people why they thought they were neurotic or to a physician asking a patient whatever disease he thought he had....The last thing I should do is let the person who behaves in one for or another interpret his or her behavior....because you cannot get reliable answers that way. You get rationalized answers.

Instead, Dichter recommended the "Depth Interview" where a hundred or so interviewees could individually talk in a "free associative way" about their preferences and proclivities and he would analyze the conversation to understand unconscious motivations. He also encouraged the use of the "psychodrama" to "penetrate just a few pegs deeper than the depth interview" where he asked interviewees to essentially act out a product: You are a car. How old are you? What color? Are you manly? Are you womanly?" Eventually, Dichter dubbed his approach Motivational Research and founded the Institute for Motivational Research to promote his work to corporate clients.

As you might expect from a disciple of Freud, Dichter's interpretations of underlying consumer motivations typically involved death or sex. For instance, Copernicus'-own Kevin Clancy invited Dr. Dichter to BBDO to help kick off a study for agency client Pepsi. The good doctor sat with the creative folks at the agency to review a reel of Pepsi commercials, but he grew troubled after the third commercial. "Stop everything!" he said. "You are showing Pepsi in all these commercials with ice...served with ice...cans encased in ice! You must not do this. Ice is a symbol of death! You are associating your client with death!" [At which point the creative director turned to Clancy and asked, "Is this guy for real?"] As another example, Dichter also explained that "sex was responsible for a half-billion dollar blunder," with the Ford Edsel: "Some designer who knew little about human motivations castrated the car. It has a gaping hole at the front end." Titillating to some, completely nutty to others, Dichter's conclusions grabbed more than their fair share of attention and by the late 1950s American business had embraced psychoanalysis, just as the psychiatric community had.

Over the course of the next few decades, psychoanalysis fell out of favor seemingly everywhere but in corporate America as its scientific merits came under increasing fire. Many critics don't even consider psychoanalysis a science. As Harvard psychologist Dr. Susan Ketelhohn has noted, "Freud was a philosopher, not a scientist." First, there's the lack of empirical data to support psychoanalytic theory. Freud's writings, critics point out, cited only one clinical case in full, and offered oblique, incomplete references to others. Grünbaum also argued that the reasoning on which Freud based his entire psychoanalytic theory was "fundamentally flawed, even if the validity of his clinical evidence were not in question" because "the clinical data are themselves suspect; more often than not, they may be the patient's responses to the suggestions and expectations of the analyst."

Other critics questioned the scientific credentials of psychoanalysis because it lacked any codified rules or regulations of interpretation. Colby wrote that "there are no clear, intersubjectively shared lines of reasoning between theories and observations." One analyst might draw one conclusion, while a second analyst would come up with something completely different based on the same information. As an aside, if these criticisms sound familiar to anyone, they're similar to the complaints you hear about focus groups which are quickly falling out of favor even at companies that have traditionally relied on them to make any and every key marketing decision.

So our question is, why, if it has been discounted by the psychiatric community as, at best, an easily falsifiable, ersatz science offering no valid insights into what is driving the behavior of individuals does the business community continue to embrace it? As interesting as Freud as a personality may be and as much as the language of psychoanalysis (Oedipal complex, oral fixation) has become part of our culture, there is nothing that is scientifically validated, replicable or projectable about it psychoanalysis. Making large marketing decisions based on psychoanalysis of buyers is the same as flipping a coin—it's completely random.

For more insightful marketing discoveries, visit http://www.copernicusmarketing.com/discover/index.htm

Have a hot discovery for our next release? Contact us at ami.bowen@copernicusmarketing.com

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We've heard Joseph Jaffe interviewed on the subject of the future of advertising several times recently, so were happy to finally get a hold of a copy of Life After the 30-Second Spot, which many a marketing communications guru has said they wished they'd written. Since most future-of-advertising prognosticators seem to focus solely on new forms of media replacing old forms, Jaffe's continuous emphasis on effective communications as a function, not just of media selection, but also relevance of the message—in his words, whether it's "on brand" and "on strategy"—has been like a breath of fresh air in the traditional vs. non-traditional debate.

His book offers plenty of sure-to-be controversial opinions on why advertising is what it is today (he shares our frustration with agencies and their "ego-driven selves," for instance); covers "New Marketing", or emerging forms of media such as long-format content, gaming, and viral marketing; and offers "Seven Attributes of New Branding." Though Jaffe would probably call us old fuddy-duddies for saying so, we don't think the 30-second spot should be a priori ruled out as a potentially effective means of communication. Still, his book certainly presents compelling evidence for how companies can and do use new media forms to reach buyers.

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Many a brand management professional has already put Brand ManageCamp 2005 on their calendar. This exciting conference will take place November 1-3, 2005, at the Hyatt Regency at Penn's Landing in Philadelphia, PA, and features an incredible line-up of recognized and respected authorities in their areas of expertise.

Speakers including the father of positioning Jack Trout; retail and consumer trend expert Phil Lempert (who you may also recognize as the NBC Today Show's food trends editor); President and CEO of BBDO Worldwide Andrew Robertson; the mother of cause branding Carol Cone; and Copernicus' own Kevin Clancy will "deliver to you the relevant information and actionable insights you crave to become a stronger, more successful brand manager while helping you unlock the full potential of your brands."

Available spots at the conference are going quickly! Visit www.managecamp.com/register.php to register today. Also visit the Brand ManageCamp Blog for au courant musings from the speakers: www.managecamp.typepad.com.

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