To Understand Good Brand Strategy, Look To The Stock Market

By Tom Callard, Chief Strategy Officer, BBH NY

Investing in stocks, I recently found out, is hard. The silver lining to my failed day trading career is that I realized there are some striking overlaps between investing and brand strategy.

Determining altitude

With both stocks and brands, there is a question of altitude. You’re attempting to discern at what point you should exit.

For brands, this comes into play when you’re deciding how high to elevate your purpose. You’re striking a balance between landing at a point that is too low to be inspiring, and a point that is so high-minded that it is spoofed by SNL. We’ve all reached that point where we’ve convinced ourselves that fast food is actually about authentic connection in a time of disconnection.

It’s a strategy truism that if you ladder the benefits up high enough from any product, you end up with enlightenment. Shampoo becomes head happiness, which becomes confidence, which ends up at enlightenment. With cars you go from machinery to travel to freedom to, you guessed it, enlightenment.

Brands, like stocks, are liable to become disconnected from their fundamentals when they rise too high. We should all ask ourselves whether the product at the heart of the campaign is able to sustain such an elevated position. Your BS detector is often your best defense.

Challenge your POV

There is also the appeal and fallacy of the crowd. In the stock market, there is value in following the crowd, but that strategy can also lead you astray. Breakout success comes when you know something about the masses that most people don’t. The same is true in brand strategy.

Many brand strategies seem to follow a previous success as if it will be equally as transformational for them. Take Dove. Dove was the first major brand to make body positivity part of its strategy, to huge success. But in subsequent years, plenty of brands have attempted to own the same space. While that is a hugely positive shift for the industry, body positivity is no longer enough to differentiate those brands in terms of strategy. It is now table stakes, and they need to develop their own POV on the world.

The same goes for spirits doing their version of Johnny Walker’s ‘progress,’ or sports brands attempting to copy Nike’s inspiration. The truth in both brands and stocks is that past performance is a poor predictor of future success.

Conclusion

In both brands and stocks, you’re attempting to intuit the correct altitude before it becomes disconnected from fundamentals and to identify a mass truth that is not widely known. Chasing the crowds can work, and can feel less risky, but in reality, the risk of not developing your own distinct point of view can turn out to be greater. So resist chasing trends, question the wisdom of the crowd and find a POV on the world that you’re willing to stand behind — no matter what others may say.

This is not investment advice.

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