Customers value some of the most powerful brands in the world primarily for their "cultural value": They provide imaginative resources that people use to build their identities.
These are what Harvard Business School professor Douglas Holt terms identity brands—and their market power cannot be attributed to the usual suspects of success: superior business models or cutting edge technology.
Holt is interested in what makes identity brands resonate. In his research, he focuses on the best-performing identity brands—the top 5 percent that have been extraordinarily successful with customers over long periods of time.
What's the secret of long-running megabrands such as Mountain Dew, Nike, and Budweiser? The magical sweet spot when a brand delivers imaginative stories that are perfectly attuned to society's desires.
His new research, which he discussed with HBS faculty at a marketing seminar on May 8, is part of a forthcoming book that focuses on identity brands that deliver extraordinary customer value over time.
The most powerful brands are those that are able to transverse disruptive cultural shifts.
— Douglas Holt
"I'm interested in a question that I don't think we ever really ask or address well, which is, 'How does customer value work over time?' How is cultural value created; how is it maintained; how is it destroyed?'"
With the strategic importance of brands climbing, understanding how certain brands achieve so much power in the marketplace is at the center of much discussion. The advice most often provided to managers is to weave the brand into the most potent popular culture trends. Recently, consultants and ad agencies began emphasizing the reverse: recommending that managers seek out the essential "DNA" of the brand. Many brands pursue these two models and do fine, says Holt.
But the brands that interest him most, consumer brands that maintain the most powerful grip on the market for years running, don't fit these models.
"The most successful brands do something different," he says.
What the most successful brands do differently, he believes, is to target powerful ideological contradictions produced by society. Through popular culture, society paints a picture of its ideals: What is a successful person? What is the good life? People strive for these ideals and experience tensions when how they understand themselves differs from the standards society has set. These contradictions produce potent demands for what Holt terms utopian desires—the desire for imaginative constructions that will resolve the felt tensions.
Brands that successfully respond to these desires are what Holt calls brandtopias. Brandtopias champion resolutions to contradictions through the stories they tell, primarily through advertising. Consumers use these stories as allegories—through ads, for instance, consumers learn different ways of understanding their place in society. When they drink a soft drink or beer, or drive their auto, much of what they're consuming is the allegory.
The demand that brandtopias sate is based upon the nation's ideology as expressed in popular culture. So shifts in ideology produce ruptures in the marketplace for utopias. Holt's model reveals that there comes a point when the best ad in the world won't make a dent if its message and the cultural moment are not aligned.
One of Holt's inspirations was to juxtapose how brands maintain cultural value in the face of cultural disruptions with research that examines how companies continue to deliver product value in the face of technological disruptions. Scholars such as HBS professors Clayton M. Christensen, well known for his research on disruptive technological change and author of The Innovator's Dilemma, and Dorothy Leonard, whose idea of "core rigidity" has become a strategic touchstone, set up the case for keeping an eye on technological change.
But Holt argues that's not the whole story.
Brands That Bridge Cultural Ruptures
"There's disruptive cultural change, too," Holt says. "The most powerful brands are those that are able to traverse disruptive cultural shifts. Many brands falter when disruptions hit. The most impressive brands are those that are able to use disruptions as a platform to enhance the delivery of cultural value."
To analyze the pattern of cultural demand and the strategies that brands use for negotiating cultural ruptures, Holt devised a research method he calls a brand genealogy. He overlays the trajectory of the brand's allegories over history—through analysis of ads supported by archival documents and interviews with managers—with American cultural history, focusing particularly on popular culture.
With this method, he is able to see the place of the brand's allegories in the society, as well as how they gain and lose value. Holt finds that the allegories play well in periods of ideological consensus, which may span anywhere from five to fifteen years. But then restructuring of the economy and society requires new ideology. The new ideology pulls the plug on old utopian desires and creates new ones in their place.
The greatest challenge for a brandtopia comes when there is a major disruption in popular culture. The best brands, Holt suggested, read the new ideology forming in popular culture, and then transform the brand by inventing a new story that both draws upon the brand's historic cultural authority and at the same time addresses a new utopian desire.
One brand that has consistently created cultural value, hopping across several cultural disruptions, is the soft drink Mountain Dew, according to Holt. Launched by a small start-up either in North Carolina or eastern Tennessee (the drink has two origin myths, he said with a smile), the high-sugar, high-caffeine, low-carbonation beverage battled very competitively against Coke and Pepsi before its acquisition by PepsiCo in 1964.
The brand's initial success was premised on an allegory about hillbillies, which working class people outside America's cities found valuable at a time when American ideology was all about engineering life and technological progress. Holt describes the geographical spread of Mountain Dew's success, which reveals who the allegories play to. In large cities and urban and ethnic areas, Mountain Dew barely shows up on the radar. However, in the mostly working-class, non-urban metro areas in the Eastern half of the country, Mountain Dew "blew through the roof," said Holt in his seminar for faculty. This pattern of customer loyalty has remained stubbornly consistent for forty years.
Holt showed how the value of the hillbilly allegory was destroyed by the hippie counterculture in the late Sixties. Mountain Dew responded with a new "redneck allegory" in the late Seventies that worked well with a new American ideology that had emerged. Once again, Holt traces this brandtopia from beginning to end and finds that it too melts down, this time in the early '90s as widescale economic restructuring led to new ideals of success broadcast widely in television, film, and news. PepsiCo responded by finding a place for the brand in the emerging counterculture, developing a "slacker allegory."
Holt also described the transformation of American ideology in the early '90s. The country idolized extraordinary athletes like Michael Jordan and the new entrepreneurial "warriors" imaged by people like network giant Ted Turner and Bruce Willis in his film roles. Executives were now portrayed as similar warrior-athletes who ventured into out-of-bounds challenges like technical rock climbing. These were the masculine ideals that society held up as heroic. Meanwhile, Holt asked us to consider the life of a guy who was twenty years old and living in Green Bay, Wisconsin. Such a young man was facing a very different reality. Factory jobs had mostly disappeared and now he was looking at a life stocking shelves in franchise stores for $9 an hour, fulfilling hourly quotas under the close supervision of a stressed-out boss.
Holt attributes Mountain Dew's stunning success in the 1990s to PepsiCo's nimble transformation of the brand to fit these new ideological circumstances. A new advertising campaign, "Do the Dew," creatively combined high-octane extreme sports with the point-of-view of the slacker counterculture. The ads featured daredevil stunts juxtaposed with the ironic, unimpressed commentary of a group of teenage boys: "Done that." "Did that." "Doin' it tomorrow."
"The tensions that are produced between the nation's ideals and the life one can actually experience produces a utopian desire," Holt explained, "the desire for an affirmative identity that responds to what society demands." For the disaffected young man in Green Bay, Mountain Dew's "Do the Dew" campaign was a perfect fit: It resolved his anxieties about masculine identity by providing an affirmative, if sassy, alternative.
These ads increased sales by 40 million cases. From 1993 onward, said Holt, Mountain Dew has led the carbonated soft drinks category in share growth, and now has passed many rivals to rank third in retail sales behind Coke and Pepsi. Mountain Dew is now a $4.7 billion business, and this success can be largely attributed to using advertising to create the right allegories at the right time.
Brand Equity Through Cultural Authority
Mountain Dew ads have consistently championed an alternative idea of manhood versus American ideology, Holt said. Even though the allegory has changed over time, the brand's consistency in supporting a certain kind of identity has earned it cultural authority.
For identity brands, brand strategy, as we conceive of it today, is often inconsequential.
— Douglas Holt
People trust the brand to do "utopian work" for them, Holt explained. Successful brands "own a particular kind of metaphor that they apply to do identity work to heal a particular ideological contradiction." In the case of Mountain Dew, its ads touched on a particular kind of masculinity allegory, he offered: "As opposed to the constraints of adult work life, the allegory celebrates a rebellious kind of manhood in which masculinity is earned by letting their libidos and their creativity have full and free expression. This is ideological territory that Mountain Dew owns, and their advertising continues to rework this territory as society changes."
"To build brandtopias, managers need to ask different questions and create different answers than one finds in conventional branding," Holt continued at the seminar. "How do we note the rise and fall of an ideology, identify it in popular culture, and figure out how the ideology impacts the brand's customers?"
What marketers usually think of as unpredictable trends often have a structure that is deeply tied to what is happening in the economy and the society, he said. Understanding this structure and its transformation is crucial for the long-term success of brands that rely upon cultural value.
"For identity brands, brand strategy, as we conceive of it today, is often inconsequential," Holt concluded. He calls for a new type of strategy, grounded in history that takes into account ideological contradictions that create utopian desires.