At the risk of upsetting my friends at BrandFinance, I want to share what I heard at the keynote speech of yesterday’s Estates Gazette Property Marketing and PR Summit which was supported by the Profile Property Networking Group.
John Murphy established Interbrand back in 1974 – along the way creating a new marketing discipline (brand valuation) – and then sold the business in 1994. Subsequently, putting his theories into practice, he bought Plymouth Gin in 1996 from Allied Domeq for £600,000 and then sold it in 2000 for £28m. That’s some return! But his story offers some great lessons in building a professional services practice and some interesting ideas particularly for those in the intellectual property sector.
He started out with a small consultancy creating names for companies. This then required advice in trademark law so that the name could be registered, used and protected. Clients then asked (notice the fundamental principle of marketing – anticipate and meet client needs) for support in corporate identity, design and packaging to use the name – so the business expanded into design. Whilst the service offering, at the time, was unique there were fears that others would enter the market so offices were opened in New York, Paris, Frankfurt and Tokyo – a classic “new markets” strategy.
Returning to the service provided, a number of methodologies were developed to protect and promote the way Interbrand did things and maintain a market leadership position in the face of competition. A book was written “Branding – A Key Marketing Tool” – which was reviewed somewhat negatively by The Economist. The methodology – despite some challenges from the business management academics – became an industry standard. And most marketers will be aware of the story of when Rank Hovis McDougall first placed its brand value on its balance sheet. The financial/investment industry and media interest this generated prompted all the major accountancy practices to establish brand valuation consultancies.
John’s philosophy on pricing offers a salutary tale to those in the professions. He never used the hourly rates model but always quoted a fixed fee for the solution to the client’s problem. As an analogy he mentioned the Dynorod message of “satisfaction guaranteed or your blockage back”. This also relates to the principle of value pricing – how important is the service/solution to your client? He told the story of how Ford urgently needed a name for its new car model – which he did within just six weeks at a cost of £1m (a huge margin).
Things were going well in 1990 but then market indicators suggested that the bubble was about to burst. The tough economic environment forced Interbrand to make some tough choices, review all operations and expenditure and make massive cuts. “In recessions you have to do hard things…” Interbrand weathered the storm and the rest, as they say, is history.
John – like most true experts – can explain really complex ideas very simply. When asked to explain brands he responded “create a personality that stands out from the crowd – a personality that runs throughout the organisation and manifests itself in every aspect of your business”. He recounted how when he was asked to persuade leading business people about the value of brands he said “Put it this way, if you sell your business you can perhaps expect 2-3 times its future value, with a significant brand the multiple goes up to 7-9”. He then went on to do some very straight talking about the lack of differentiation in the education and legal sectors – and then the lack of profile of even the largest property services companies!
In the questions that followed his talk he also concurred that the starting point must be a good product (service) – as no brand will succeed without this. He also argued that you must “play to win” and concentrate on beating the competition rather than collaboration or collegiate approaches