How David Aaker has reshaped the universe of marketingBy Frank Viviano
In the globalized, consumption-fired 21st century, branding is the air we breathe, the oxygen of modern culture in realms that extend far beyond consumer products. Google and Apple are self-evidently brands, as are such venerable icons as Mercedes-Benz and Coca-Cola. So too are Obamacare, Generation X, and the Niners.
A few decades ago, a brand was often little more than a label, at worst an advertising gimmick used to pitch dubious medications and toxic hair gels. Today, it is the fulcrum of highly complex value systems—philosophical constellations in an edgy marketing cosmos.
The Plato and Newton of that volatile universe is Haas Professor Emeritus David Aaker.
The comparisons are not facetious. Like Plato, Aaker probes incessantly for the essential qualities of diverse phenomena, whether they involve manufacturing companies or Japanese beer. And like Isaac Newton, he has a mathematical turn of mind that instinctively hones in on critical connections.
“In the late ’90s, Dave’s critical thinking on marketing theory and brand equity was just beginning to take the business world by storm,” says Michael Dunn, MBA 90, chairman and CEO of Prophet, a marketing consultancy in which Aaker serves as vice-chairman. “It was pretty exciting to watch it take hold. … Out of the blue the office phone would ring and it would be the vice chairman of Toyota or CMO of MasterCard looking for Dave to ask a branding question.”
Prophet’s own corporate identity is deeply rooted in Aaker’s teachings. Two more Haas grads, Scott Galloway and Ian Chaplin, both MBA 92, co-founded Prophet on the basis of the brand principles developed by Aaker. In the short space of a dozen years, Prophet has become a key international player in branding, with seven branches around the world and a who’s who list of clients that includes giants like Sony, Volkswagen, Boeing, Visa, and UBS. Dunn calls the move to bring Aaker into the Prophet brain trust his “best corporate decision.”
The central thesis underlying what Aaker calls “the brand identity system”—more popularly known as “the Aaker Model”—asserts that a brand is a vital form of corporate equity, a measurable asset as important to a business as its capital infrastructure and staff. But there is nothing simple about Aaker’s elaboration on that thesis, which employs his mastery of statistical tools at Stanford and decades of academic research at Berkeley.
A successful brand does not represent empty dreams, but rather what the organization actually has the will and resources to deliver.
The model is informed by what Aaker describes as “educational” misadventures in entrepreneurship in the 1960s after earning a bachelor’s degree in management from MIT. After a series of stillborn initiatives in consumer exports, Aaker and a partner assumed managerial control of a small Houston sheet metal plant for $5,000; after working for no pay over the next 18 months, they sold their interests in the company for $1,000 and a $4,500 promissory note. The next year Aaker headed to Stanford to earn master’s and doctorate degrees in management, statistics, and business administration, followed by a move across the bay to work at Berkeley.
The sum result of these experiences, in academia and entrepreneurship, was Aaker’s seminal 1996 bestseller Building Strong Brands. One of its most insistent premises is that the quality assertions of a corporate image must play an active role in strategic planning, including product expansion and hiring. “A successful brand does not represent empty dreams,” he says, “but rather what the organization actually has the will and resources to deliver.”
Apple, Aaker observes, has built enormous brand equity through its constant emphasis on innovation, turning out a remarkable sequence of first-of-their-kind electronic devices that delivered on the brand’s promise. It also currently has the largest market cap among publicly traded firms. In Aaker’s scheme, these two achievements are inextricably related: The brand is as central to the firm’s operations as its research and development.
More than 20 years ago, that conviction led Aaker to question executives at 248 leading firms on what mattered most to their sustainable competitive advantage. The results were published by the California Management Review in 1989. To a degree that even surprised Aaker, brand-related considerations finished at the top of 32 categories, well ahead of management and engineering staff, production costs, financial resources, and technical superiority.
It was a watershed moment in corporate strategy, following a long and tense period of frenzied downsizing aimed almost entirely at cost reduction. Eventually, says Aaker, “CEOs began to recognize that you can only restructure and downsize so much—you need to grow. The key is branding. But at that point no one really knew what brand equity was.”
Building Strong Brands was Aaker’s response. “The book set out to explain how it could be done,” he says. It was translated into 11 languages, and he soon found himself lecturing around the globe. As Coca-Cola Chief Marketing Officer Joseph Tripodi put it, Aaker became “the brand name in brand management.”
Aaker has published a total of 16 books, including seven on brand strategy. His latest, Aaker on Branding, provides a compact summary of his writings in books, articles, and blogs. A section on digital brand building, for example, shows why the focus should be less on “selling” a firm, a brand, or an offering and more on what the customer is passionate about. So Pampers has a “go-to” website about baby care, a topic its customers are interested in and even obsessed with.
Indeed, the arrival of the Digital Age may present the biggest challenge yet to marketers. In a recent survey of 1,000 marketing executives, 76 percent agreed that their professional world has changed more in the past two years than over the previous half century.
“Why? The answer is social media,” says Aaker. “They don’t have a handle on it yet, and it complicates everything. Staggering sums of money are now directed at digital platforms.”
But digital marketing offers huge potential, he adds. “It is extraordinarily individualized and involving. It can reach people who don’t even watch television or read newspapers. If you can get all those people talking to each other, friends talking to friends, and motivate them, you hit a home run.”
A longer version of this article appeared in the spring 2014 issue of California magazine.