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Study: Tech Brands Failed To Build Relationships

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Posted December 18, 2001 By Christopher Saunders     Feedback

A survey of marketing executives found technology companies spent too much time on brand awareness, and too little on CRM.

Clearly the economy hasn't been especially friendly to technology companies during the past year and a half, but a new study suggests that most of those brands didn't do themselves any favors, either -- shooting themselves in the foot by failing to build meaningful customer relationships.

According to a survey conducted by branding consultancy Liquid Agency and public relations firm Neale-May & Partners, many of the worst-suffering tech brands misspent their marketing dollars. Marketing and advertising executives polled said they believed financial losses and stock price depreciation were the chief causes of brand erosion -- a fact that Liquid Agency creative director Alfredo Muccino said was troubling.

"What we have learned from the survey is that tech companies have probably not done a good job with branding," Muccino said. "Over the last couple of years they placed a lot of emphasis on the idea of branding, but only really spending money on brand awareness. That's different than building trust and loyalty in the brand. Then, it's easier when you go through tough times."

"The basics of branding are ... about building relationships, and that enables you to survive tough times," he added. "In some ways, technology companies, due to their engineering heritage focus so much on technological innovation that they forget to build relationships with consumers, employees and so forth."

After financial losses and a crumbling stock price, respondents said "industry hype" was the third-worst contributor to tech brands' woes.

"As a consumer, investor or employee I have certain expectations of what this brand means to me," Muccino said. "If I'm over-promised that results in erosion of brand loyalty."

Based on those issues, the survey found that Hewlett-Packard, Compaq and Cisco Systems proved the worst at maintaining brand value in 2001, while Microsoft, Oracle, and Dell were voted as having best maintained brand value.

"Microsoft has done a better job of living up to the promises they've made to consumers than Cisco has, or at least that's how they are perceived," Muccino said.

The survey's respondents said that one of the best ways to redeem a brand, and to market and create demand in a tight economic climate, is through public relations, followed closely by customer relationship management and brand advertising.

That's a good sign, Muccino said.

"I was pleased to see there's so much emphasis on CRM because it's indicating that tech marketers are beginning to realize that it's all about the relationship," he said.

Additionally, the study found that technology executives play a significant role in their company's brand, either helping or harming its perception. Respondents to the survey ranked Microsoft chairman Bill Gates, Oracle chairman and chief executive Larry Ellison and Dell chairman and CEO Michael Dell as the top three tech executives that best personify their brands. Not surprisingly, those are the same three firms highlighted as best maintained brand value during the year.

Interestingly, respondents also tabbed Gates, Ellison and HP chief Carly Fiorina as the executives who most harmed their brands in 2001.

"Without a question, a strong leadership will reflect on the brand a great deal," Muccino said. "A CEO who is visible and exhibits strong leadership qualities will benefit the brand greatly."

"It's also a double-edged sword; at some point, whatever the CEO may do may impact negatively on the brand. It's a fine line to walk. Bill Gates and Larry Ellison showed [on both lists]. That's a very telling point of the close impact on a brand of a CEO's personality and behavior."

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