Notes from Brand Strategy Micro Lesson by Scott Galloway

This week a summary of the first few classes in my brand strategy course. So loosely speaking think of a brand as all the touch points that create emotional and tangible surrounding a product. There are three basic ways to build a brand.

There is Pre-Purchase, Purchase, and Post-Purchase.

  • Pre-Purchase is advertising.
  • Purchase where you actually buy the product, distribution, the store and then…
  • Post purchases loyalty, customer service and warranties.

What do we see happening?

Pre-purchase which has been overly invested is in structural decline. Why? Because advertising sucks and is collapsing. Young wealthy people have decided to opt out of advertising.

What does this mean for you?

This means if you are a brand you need to get capital out of pre-purchase into purchase or post-purchase — Which is the risky move brand strategy and allocate it towards the medium, the stores. 

The gangster move of the last 20 years that has created shareholder value than any decision in history of business. Was Steve Jobs crazy for zagging while everyone was zigging while everyone was taking money out of advertising and allocating into a medium that was store?

Stores are the consummation of a relationship. You hear about somebody, a family, nice fun to be around through pre-purchase but the physical interaction, the first kiss, sex with the product and have a relationship is at the store. If you have sex with Tom Brady you go into an Apple store, a Samsung store which is an AT&T or a Verizon store that is having sex with a guy named Roy with bad lighting.

Point of distribution, stores are more and more strategic. While square footage in stores will decrease, the amount of money spent on each foot will increase. The other gangster move, post purchases, warranties. Some sort of guarantees getting data. That is where we take data from the purchase and whipping that customer back around in the funnel again.

Think of the clock as being as an axis. You want to lean the axis, take your capital out of pre-purchase and put it into purchase or post-purchase. The stores are underinvested. Really try to get to post-purchase.

Who were the best brand builders in the world hands down? Tobacco. Take a product that’s primary benefits are death, disease and disability. Turn them into the most aspirational brands, they make us feel tough and cool. Why are they the best?

We turned them into the best branders of the world. When we were watching them on television our mothers, sisters, and daughters kept dying and we said “that’s it we’re pissed off, you can no longer advertise.”

So what did they do? They took their capital allocated it to purchase and put cute pictures of camels at distribution. Just about the time it was losing its effectiveness.

That was great but our mothers and sisters kept dying so we said that’s it no more cute camels at points of purchase. Just as this was starting to lost momentum and they built the largest databases in the universe. When they sensed you were stopping smoking they started sending you Marlboro points or coupons to get you back into the franchise.

There are exceptions to every rule. Pre-purchase to add supported media isn’t going away, it is just going to be a shit place to invest. A matter of fact I’ll be watching ad-supported media tonight. We will see you next week.