Geography As Branding: An Encore Presentation
This week's Must-Listen Moment:
How brands use geography to market their products at premium prices.
One day, 33 men in Washington, D.C., got together to form a society based on their common interest.
That interest… was in geography.
They named their group the National Geographic Society. The year was 1888.
Gardiner G. Hubbard was the founding President, and he oversaw the publication of the Society's scholarly journal – which they called National Geographic.
The magazine would publish scintillating articles like, "The Telegraphic Determinations of Longitude" and "Geographic Methods of Geologic Investigation."
It didn't have a lot of subscribers.
When President Hubbard died in 1897, his son-in-law assumed the National Geographic presidency.
You may of heard of him.
His name… was Alexander Graham Bell.
Yup, that Alexander Graham Bell. The inventor of the telephone was also the second president of the National Geographic Society.
And by the way, speaking of geography, where was Alexander Graham Bell born?
The United States?
Answer: Scotland. He did, however, live in Ontario and die in Nova Scotia.
Back to our story. Bell appointed his son-in-law as the editor of National Geographic. And together, they made a momentous decision. Both were big fans of photography, and they began to add vivid photos to the magazine, not just as editorial art direction, but as the basis for articles themselves.
So instead of a text-based technical journal aimed at scientists, National Geographic became a picture-centric magazine read by the public, and by 1908, photos accounted for more than half of the publication.
Bell's mission was to prove that geography was anything but a dull subject.
The Society would fund explorations, and show people - who rarely left the cities, states or provinces they lived in at the time – that there was an entirely fascinating world of places and people to be discovered.
One very famous photograph appeared in the November, 1896, issue. Entitled "Zulu Bride and Bridegroom," it was the first photo to show a bare-breasted black woman. As time went on, a legend began that National Geographic slyly included bare breasts often as a way to increase subscriptions.
But in actuality, those photos were exceedingly rare. As New Yorker writer Adam Gopnik put it, any young boy who waited by the mailbox for the next glimpse would have to be a very patient mailbox watcher. Yet the myth persisted.
Needless to say, Alexander Graham Bell's National Geographic magazine flourished, and today, it reaches more than 6.8 million worldwide readers per month in 40 different languages.
The issue of geography is also a subject the marketing world subscribes to.
Many companies, even entire industries, attach their brands to geographical points of origin as a way to differentiate themselves and assert superiority.
From German engineering to Russian vodka to Swiss watches, "Geography as branding" is a powerful marketing strategy that often comes with a premium price tag.
And whether that premium price is justified is a fascinating question…
One of the biggest goals of modern marketing is to create desire.
Then convert that desire into purchase.
The concept of desirability is also employed to attract potential customers.
The "desirability" of a product or service is built using both tangible and intangible elements.
Often, those factors create not only a desire, but a willingness to pay a premium price.
That's why the use of geography in branding is so powerful.
Geography conjures up very evocative associations in our minds. Imagine…
When a product ties itself to its geography, it wants to link itself with the positive associations of that location.
It wants to remind you of the history of the product.
It wants to trade on the implied superiority of that culture.
And it wants to create a unique image that competitors would find hard to duplicate.
Think of Kentucky bourbons, Cuban cigars or Belgian chocolate.
But it also raises an interesting question: How much of the geography of branding is inherent and earned, and how much is just pure image management?
In other words, if we're paying more for a product because of geography, are we getting our money's worth?
When you look at the back of an iPhone, it says, "Designed by Apple in California."
Apple has one of the most desirable and clearly defined images in all of marketing, but isn't it interesting the company felt compelled to put "Designed in California" on their products.
California conjures up distinct imagery – of Hollywood and celebrities and a cool lifestyle of endless summers.
Steve Jobs understood that. It was yet another layer that added to the allure of Apple.
"Canadian Bacon" is another interesting use of geographical branding.
It's a popular item in the United States, and it may just be one of the few foods Americans associate with Canada.
Yet no one in Canada ever refers to bacon as "Canadian bacon."
The "Canadian bacon" Americans relish is round, processed, pre-sliced and smoked.
However, true Canadian bacon is called peameal bacon. It has a layer of fat on one side, is cured in a briny solution – and is not smoked.
It seems that back in the 19th century, there was a pork shortage in England. So the British started importing Canadian side bacon. When it arrived, they smoked it. Americans living in England enjoyed this bacon, and when they went back home, they began smoking their bacon - and calling it "Canadian bacon."
Therefore, what Americans call "Canadian Bacon" isn't really Canadian at all.
The geography makes it desirable, even if the truth is a bit… salty.
When you think of ice cream brands, a spoonful of Häagen Dazs is one of the first to come to mind.
The name, Häagen Dazs, implies a European/Danish heritage.
But it was actually created… in the Bronx.
Founders Reuben and Rose Mattus were Jewish immigrants working in New York.
When they decided to create a gourmet ice cream in 1961, Rueben came up with two completely fictitious words: Häagen & Dazs. He wanted the name to sound Danish, for two reasons. First, the Danish were well-known for their sweets, and secondly, he felt Denmark was the only country that saved the Jews in World War 2.
Rueben also knew a Danish-sounding name with an umlaut would attract attention.
Note to Rueben: Umlauts are not used in the Danish language.
Be that as it may, Häagen Dazs is still considered a premium ice cream, due to its quality ingredients, and a heaping helping of borrowed geographically-implied branding.
Think about the phrase, "Swiss Time."
The Swiss are famous for their timepieces, and the world pays a hefty premium to purchase watches made in Switzerland.
But why is that?
To answer that question, you have to go back in time to the year 1541…
It's the 14th century. Martin Luther has drawn up his 95 theses in opposition to the Roman Catholic Church, which results in the Protestant Reformation.
In Switzerland, John Calvin is the leader of this reform movement.
He was a strong believer in austerity and sacrifice, and imposed laws that put limits on the private consumption of luxuries, which he saw as sinful.
One of the things he banned outright was the wearing of jewellery.
That put jewellers in a difficult position, as they could no longer display or sell their wares.
But sometimes laws have unintended consequences.
Craftsmen from Italy and France came to Geneva for religious refuge, and taught the jewellers there how to add jewels to watches. And since Calvin considered watches a practical item - and not a luxury - timepieces with jewels quietly quenched the Swiss public's desire for luxury.
That forced specialization of watch-making spawned a highly-skilled industry, and in the early 1600s, the Watch Makers Guild of Geneva was formed.
The meticulously-made watches became incredibly popular, and soon Switzerland boasted hundreds of watch-making and watch component companies.
For over 400 years, watch-making has been Switzerland's most identifiable industry. Due to the country's geography, and its famous neutral politics, the industry has been able to survive wars, revolutions and depressions.
After the end of the Second World War, demand for Swiss pocket watches and wristwatches soared. By the late 1960s, close to 80 million Swiss timepieces were being exported.
Today, close to 500 Swiss companies manufacture watch movements and parts.
It's interesting to note that while Switzerland only produces 2.5% of worldwide watch production, the opposite is true when it comes to value - as the country produces 95% of all watches sold at prices over $1,000. And brands like Rolex, Omega and Breitling are desired the world over.
That premium placed on Swiss timepieces has brought much wealth to Switzerland – the ironic result of Calvinist austerity.
According to the Economist Magazine, the most consumed spirit in the world… is vodka.
While there are conflicting accounts of where vodka was first created, there is agreement that it was in the 14th century. And it appears that Russia predates Poland slightly in the vodka history books.
The cold climate of Russia made it hard to grow grapes, so Russians began experimenting with the alcohol potential of fermented grains.
Then, according to historical reports, an early version of vodka was created in a monastery in Moscow.
As a drink, vodka is unusual as it is perceived to be neutral and lacking a defined taste.
And because vodka is without a distinct flavour, its place of origin becomes the main way to differentiate brands.
For decades, Russian vodka was seen as the premium, authentic vodka. Russia, as a country, consumes the most vodka worldwide, and the best-selling vodka there is called Russian Standard Vodka
Yet when you look at the world's best-selling vodkas, most are not made in Russia.
Absolut is made in Sweden. Stolichnaya, or Stoli for short, is made in Latvia.
Grey Goose Vodka is made in France.
Smirnoff is the best-selling vodka in the world. It's an interesting brand, because while Smirnoff was created in Russia, it hasn't been made there for years.
In the U.S., vodka imports have reportedly dropped 70% since 2013, due to the tensions between U.S. and Russia. And none of the top 10 vodkas sold in America are Russian.
So - if Russian vodkas don't rule the vodka category anymore, are they worth the premium?
The fact the best-selling Smirnoff vodka trades on a Russian history, but is no longer made there, raises an interesting question.
Should you pay a geographical premium for a product that is no longer produced in the country of origin?
Burberry, long known as one of the most famous manufacturers of trench coats, and a brand that positions itself as utterly British, reportedly manufacturers many of its products in China.
The Guardian newspaper in London recently ran a story questioning what it called the hypocrisy of trading on a "Made in Britain" appeal when many of Burberry's British factories have been closed, and manufacturing has been shipped to Asia.
Last year, Kronenbourg's 1664 brand of beer was censured for making claims about its "Frenchness" – as the beer is not only brewed in the UK, but the majority of the hops used in the recipe are grown outside France.
Now, most companies would argue that the original craftsmanship of a product continues even when that product is now manufactured in a completely different country and culture.
But, the fact remains that nobody ever outsources for quality.
It's a question of authenticity, and it needs to be raised.
The use of geography as branding, and the premium price asked by that branding, is also open to a certain amount of interpretation.
Take the phrase, "German engineering."
It is a highly desirable aspect in the world of luxury automobiles, and it implies a sophisticated degree of precision and technical superiority.
Germany, of course, has a special history with the automobile. Karl Benz patented the first internal combustion engine there in 1879, and his first automobile in 1886. It is also the country that boasts the Autobahn – a highway that allows cars almost unlimited speeds.
Now, think of the brands that associate themselves with "German engineering."
Combined, those four German brands command 60% of the worldwide luxury car market.
Clearly, auto buyers gladly pay a hefty premium for German engineering.
But if "German engineering" implies precision, high standards and technical superiority, it would be reasonable to assume it also includes dependability.
Yet when you look at the annual J.D. Power 2014 Vehicle Dependability Study, it's kind of surprising.
It surveys the number of problems owners have experienced over the last 12 months with cars they've owned for three years.
And specifically, the survey counts the average number of problems per 100 vehicles.
The number one brand, far and away, is Lexus. The Japanese luxury car had only 68 problems per 100 cars.
In distant second place, was Mercedes, with 104 problems per 100 cars.
How many other German luxury brands made the top 10?
One. Porsche - sneaking in at number nine with 125 problems per 100 cars. No other German luxury cars made the top 10.
But in another J.D. Power survey that looks at how gratifying a new vehicle is to own and drive, Porsche came out on top for the 10th year in a row. Audi, BMW and Mercedes are all in the top 10.
Therefore, the surveys imply a new German luxury car is gratifying to drive, but is not high on the dependability list as time goes on.
So - does "German engineering" warrant a premium price?
It's all how you look at it.
There are two ways to classify a wine.
The first is by terroir.
"Terroir" is a French term that means the geographical location a wine hails from, which includes the region, the soil and the climate.
The second way is cépage. "Cépage" is the grape variety.
While France is known for many things – its wines are prized the world over, and many are priced at a premium.
Most French wines are classified by terroir, a categorization that emerged over the centuries as villages developed unique approaches to winemaking. So if you walk into a wine store looking for a nice pinot noir from France, chances are you won't see the words "pinot noir" on the label. Because pinot noir is a grape, not a region.
Instead, you should be looking for a label that says Burgundy, which is a region in France where pinot grapes are grown.
There are nearly 500 officially recognized regional wines in France.
But France is having a wine crisis right now.
Lately, the percentage of non-wine consumers has doubled to 38% of the French population.
While the domestic wine market in France is in decline, it's booming in other countries.
What French winemakers discovered was that only 3% of French wine consumers know what terroir is, versus 30% who understand the notion of cépage. It is an interesting conundrum for French winemakers.
The geographical origin of their wines has always been their differentiating factor. But the vast majority of North American wine buyers – not wine connoisseurs – but the rest of us – don't choose our wine by the region – we usually choose it by the grape.
I think I'm typical. I'm a Cabernet Sauvignon fan. Therefore, the grape is the main factor for me – the region is secondary. If it happens to be a California Cab, well, that's an added bonus. But my first question to the waiter always is – do you have a nice, beefy Cabernet Sauvignon on the menu?
I have never asked what wines they have from the Bordeaux region of France.
Problem is, educating the average consumer to the nuances of winemaking would take too long and be too expensive.
So the French wine industry has had to reluctantly demote the geographical origin in their marketing – and focus instead on grape varietal.
In a world where an established point of origin is one of the holy grails in marketing, France is having the exact opposite problem.
After centuries of success by marketing geography, geography is now getting in the way of sales.
Nobody buys a Swiss watch to find out what time it is. The precise engineering and beautiful design creates a desire that goes beyond time.
But the premium price tag was created by geography.
So many products are defined in our minds by their place of origin. It's a link usually forged by time.
French wine has been poured since the 6th century. The Swiss watch industry has been ticking for almost 400 years. German engineering has almost 130 years on its odometer.
The mind is an impressive filing system, and marketers count on that fact. We tend to hold onto geographical marketing as a signpost – and forever conjure up that imagery whenever we think of that product.
And we'll even continue to pay premium prices in spite of the fact many products are no longer made in those countries, or crafted by the original cultures. And in some cases, we even pay more even though the birthplace is pure fiction.
But as Alexander Graham Bell taught us, geography is powerful.
It's put a lot of brands on the map…
…when you're under the influence.