Branding Strategy Insider

Of Success, Strategy And Positioning

Success is not about having the right people, the right tools, the right attitude, the right role models, or the right organization, although all these things help. Having the right strategy is what puts an organization over the top. Strategy sets the competitive direction, dictates product planning, tells you how to communicate internally and externally, and tells you on what to focus.

A great business strategy without proper marketing will often fail in a highly competitive world.

Killer Competition
Strategy is what makes you unique and it is the best way to put that difference into the minds of your customers and prospects. In a world of ‘killer competition’, using good strategy is the best way to survive what I call the ‘tyranny of choice’. Whether the consumer is choosing between 260 choices of car models, 38 choices of tire makers, or even 50 brands of bottled water, there are so many good alternatives for customers that companies pay dearly for their mistakes. Competitors get your business and you don't get it back very easily. Companies that do not understand this will not survive.

Strategy, as defined in Webster's New World Dictionary, is all about "maneuvering into the most advantageous position prior to actual engagement with the enemy." To do this, an organization must first study, understand and maneuver around the battleground - a battleground that is in the minds of consumers and prospects.

Positioning is how you differentiate yourself in the mind of your prospect.

The Positioning Process
A business strategy's success or failure depends on how well a company understands these five elements of the positioning process:

   1. Minds Are Limited. The mind rejects new information that does not compute. It accepts only new information that matches its current state of mind. The mind has no room for what is new and different unless it is related to the old. One way to overcome the mind's limitations is to present a message as important news.

David Ogilvy: The Creativity Mandate

"I am supposed to be the No. 1 creative genius in the whole world, and I don't even know what the hell the word 'creativity' means. But I'm not afraid to tell creative phonies that their commercials are utter nonsense. When I write an ad, I don't want you to tell me that you find it 'creative.' I want you to find it so persuasive that you buy the product -- or buy it more often.

If you spend your advertising budget entertaining the consumer, you're a bloody fool, housewives don't buy a new detergent because the manufacturer told a joke on television last night. They buy the new detergent because it promises a benefit."

- Then, eighty year old David Ogilvy in his closing remarks at the 82nd annual meeting of the Association of National Advertisers, October 1991.

Sponsored By: Brand Aid

Great Moments in Advertising: The First Agency

N.W. Ayer & Son was the first advertising agency in the United States, founded in Philadelphia, Pennsylvania in 1869. N.W. Ayer was responsible for some of the most enduring slogans in advertising history, including:

"When it rains it pours", advertising salt for Morton Salt, coined in 1912 "I'd walk a mile for a Camel", advertising Camel cigarettes for R.J. Reynolds Tobacco, coined in 1921. Sometimes this slogan was formed into a jingle,"I'd walk a mile for a mild, mild Camel." "A diamond is forever", advertising diamonds for De Beers, coined in 1948 "Reach out and touch someone", advertising long-distance telephone service for AT&T, coined in 1979 "Be all you can be", advertising military service for the United States Army, coined in 1981.

In 1973, the company relocated to New York, New York. Following a general trend in the advertising industry, N.W. Ayer was subject to a number of mergers and acquisitions and was eventually acquired by the Publicis Groupe (based in Paris, France), which closed down the N.W. Ayer offices in 2002.

Sponsored By: Brand Aid

Cola Rivals Fight Losing Battle

The Cola Wars have been raging for more than a century. But the ongoing fight between Coke and Pepsi has always been as much about the period in which each phase ensued as the two warring factions themselves.

At the start of the 20th century, for example, both brands waged war over their medicinal properties. In the 40s it was all about patriotism. In the 70s it was about youth. In the 80s it was celebrities and being cool.

This decade has proved no different. Both Pepsi and Coke have attempted to align their brands to the trends of the era. But this decade is more challenging than most, as Western markets become more interested in healthy products and more natural offerings.

Coca-Cola's latest response is a campaign designed to challenge preconceptions of Coke as an unnatural beverage. The activity, which centres on a 30-second TV ad called 'Pemberton', emphasises that Coke continues to be made to a 122-year-old recipe and is, therefore, free from modern preservatives or flavourings. According to Cathryn Sleight, Coca-Cola GB's marketing director, the campaign originated from a discovery that Coke consumers 'didn't know that it has no added preservatives or artificial flavours. We felt it was important to reassure them'.

From Commodity to Brand and Back Again

When I teach a class on brand management I always begin with a continuum.

It's a continuum that starts with the most generic of generic forms - the commodity - and ends with that most unique and specific of things - a brand.

It's a great way to generate a strategic understanding of brand management for two reasons. First, it underlines the fact that brands are not born as brands, they are born as commodities. For example, more than a century ago, John Pemberton set out to create a tonic, not a global brand named Coca-Cola. And in 1962, when Bill Bowerman and Phil Knight each chipped in $550 to set up Nike, their goal was to make running shoes for athletes, not create a global leisure brand empire.

Historians and publicists try to rewrite brand history to show that a founder had a brand vision and foolproof marketing foresight. The reality is usually much less strategic or visionary. Over extended periods of time, a new commodity becomes associated with certain positive thoughts.

These associations are often unintended but they come to define the product and move it gradually toward branded status.

Associations can come from the product's performance, its originator, famous consumers, a single moment in history, or a century's worth of varied cultural associations. Anthropologist Grant McCracken called branding a 'diecasting mechanism', where a product was painted with the colours of particular cultural associations.

The Essence of Branding Strategy

A branding program is all about differentiating your product or company from the others in your category. And, if you don't have a point of difference, you'd better have a very low price. An example was BMW, which many, many years ago established the powerful position of being the "Ultimate Driving Machine." It has driven that differentiating idea to become one of the world's most successful premium automobiles.

Many companies just don't understand this. All they promote are meaningless slogans. Michael Porter said it very well: "Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value. The essence of strategy is in the activities--choosing to perform activities differently or to perform different activities than rivals. Otherwise, a strategy is nothing more than a marketing slogan that will not withstand competition.”

Sponsored By: Brand Aid 

Italy's Master of Marketing Strategy

What's red, Italian and goes from 0mph to 60mph in three-and-a-half seconds?

The answer is the Ferrari Enzo. It's the highest specification Ferrari ever manufactured for the road and features a mid-mounted six-litre V12 engine, which makes 660 horsepower at 7800rpm and 485 pound-feet of torque at 5500rpm. While I don't actually know what anything in that previous sentence means, it certainly sounds impressive.

In contrast, when it comes to the marketing of the Enzo I am able to appreciate the efforts of these Italian maestros, because aside from technical expertise, Ferrari also understands how to go to market.

Ferrari's targeting strategy offers an excellent example of its expertise.

Not just anyone can buy an Enzo. In fact, unless you are invited by Ferrari, you will not be able to get your hands on one. Ferrari knows one of the biggest secrets of marketing: nobody ever made money trying to sell to everyone.

The secret of profitability is not to sell a lot, but rather to sell a specific offering to a specific group and, crucially, not to waste time or resources on customers who fall outside the target group.

Private Label Brands: Too Powerful?

The typical format for managerial learning at a business school usually involves students working on case studies during their classes.

This approach often guarantees a much richer learning experience than the lecture format.

The classic criticism of the case study method, however, is that it encourages managers to believe that any problem can be solved. In fact, many strategic problems are intractable. Sometimes the biggest managerial skill of all is to learn which battles to avoid fighting in the first place, rather than to contemplate how every battle may be won.

I was reminded of this issue last week. I was wrapping up my brand management course with a session on private labels. Private labels, own-brands or store brands, have always been with us. From their origins as 'recession brands' in the 50s, through to their evolution into premium-priced luxury alternatives, consumers have always had a private label option.

Private label now counts for half the transactions in most leading supermarkets in the UK. In many categories its relative share of the market continues to grow.

The intriguing question from the manufacturer's point of view is what to do about this growth. There are a number of options, but none of them appear to be able to stem the tide. The classic approach, adopted by Coca-Cola, was to fight the threat of store colas by focusing even more heavily on brand. The 'Always Coca-Cola' campaign was a direct response to the threat of own brand.

Co-opetition Strategy

This competitive strategy recognizes the value of viewing the marketplace not as a “zero sum game” in which your gain is always someone else’s loss but rather as a place in which value can be created by discovering mutually beneficial relationships with other organizations that would traditionally have been considered competitors. This approach recognizes that organizations become stronger the more value-generating relationships that they forge. We believed in and extensively practiced this approach during my tenure at e-Learning provider Element K.

•    We provided our content/courses to Learning Management System vendors. 
•    We offered our Learning Management System to organizations that want to host other companies’ content. 
•    We actually private labeled our entire e-Learning solution to organizations that wanted to compete with Element K in the e-Learning space. 
•    We provided referrals to online degree granting schools in return to their referrals to us for continuing education.

And the list could go on and on. Suffice it to say that most of our competitors were also our business partners in one-way or another. This approach offers numerous advantages for the company that pursues it:
•    Value-added exchange of information (latest product/service features, competitive information, industry trends, etc.)
•    A cooperative relationship with your competitors
•    More business referrals
•    The ability to provide products and services and gain business that would have been difficult to accomplish alone
•    More exposure to more deal flows
•    A greater exposure of your brand in the marketplace (leading to greater brand awareness)
•    The ability to focus on building your organization’s unique core competencies

Attitude, Behavior and Brand Loyalty

Allan L. Baldinger and Joel Robinson of The NPD Group conducted a major study to better understand the link between attitude and behavior in brand loyalty.  They found the following:

•    The larger the brand, the larger the group of consumers whose attitudes towards the brand are stronger than their behavior (“prospects”) and the larger the group of consumers whose attitudes toward the brand are weaker than their behavior (“vulnerables”).

•    Brands that have more “prospects” than “vulnerables” tend to increase market share; brands that have more “vulnerables” than “prospects” tend to lose market share.  A key characteristic of a healthy brand is that it has more “prospects” than “vulnerables.”

•    Healthy brands would do well to focus on trial-generating strategies because the attitudinal commitment of its buyers, both current and new, will be strong.

•    Unhealthy brands would do well to fix image problems and strive for improvements in key attribute ratings among their current loyal consumers.  This would lead to an emphasis on retention strategies through communications and product offerings.

Baldinger and Robinson also discovered a surprisingly low year-to-year retention rate (approximately 50%) among consumers who were highly loyal (behaviorally) to brands.

Source: Baldinger, Allan L. and Joel Rubinson, “Brand Loyalty: The Link Between Attitude and Behavior”

Sponsored By: Brand Aid