For over a decade now, UPS delivery trucks in the USA have avoided making left turns. Analysis of tracking system data found that eliminating left turns – which often left the vehicle idling at an intersection for significant periods of time – would save time and gasoline. This is exactly the sort of insight that allows a company to change things for the better, but it can be really tough to find no matter how much data is available to you.
I honestly can’t remember how I came to see this video. It features Katy Woodrow-Hill, the head of planning at Dare, describing her top four tips on becoming a ‘doing’ brand. But I thought the ideas were well worth repeating here.
In a recent post on iMedia Connection, Millward Brown Optimor’s Pandora Lycouri and Dmitri Seredenko conclude that Samsung can’t buy love. In “Can Samsung Buy Love?” they contend that simply outspending Apple is not going to overturn the strong emotional connection with users that Apple has earned through consistent innovation and iconic style. Maybe not, but it might help Samsung charge a price premium over other brands.
I have recently spent some time exploring how some brands manage to charge a price premium. Premium is the ability to command a price premium in any product category; it is not the same as luxury. Luxury brands practice an extreme form of premium marketing and additionally leverage the power of scarcity. Limited supply helps convey a perception of exclusivity.
In the course of my exploration, I have spent some time exploring the mobile phone category in the USA using BrandZ data and Euromonitor. Given the fast-paced nature of the market it is the marketing equivalent of studying how fruit flies evolve. Brands enter the market with something new, they evolve to fend off competition and then, like as not, die. Anyone remember Palm?
The fascinating thing about the entry of the Apple iPhone to the category was the way the brand immediately supported a price premium over the available brands because it was clearly seen to be different from them. Functionally and from a design viewpoint, it was unlike anything else and so it commanded a price point unlike anything else. This was apparent in our data from 2008 onwards even though the brand took a while to establish widespread salience.
My friend and colleague Erik du Plessis once observed to me that “survival of the fittest” was really a misnomer and that it should be “death of the least fit.” As he noted, the lion gets up every morning knowing that it just needs to be faster than the slowest buck, and the buck wakes up knowing it just needs to be faster than the slowest in its herd.
His comments are entirely relevant to the analysis presented by Chemi in Bloomberg Businessweek. Companies and brands do not need to be the best in their industry to survive, they simply need not to be the worst. However, another factor not considered by Chemi’s analysis was price. If a brand wants to command a price premium it needs to offer a better than average experience and be seen as different in a good way.
If all the companies in a product or service category are viewed badly by consumers, then it may not matter if they are dissatisfied with their current choice since they have no obvious alternative. Lacking alternatives they simple have to tough it out, getting more disgruntled and resentful the longer the poor experience continues. Particularly where service contracts or annual fees are involved, people will have limited opportunities to switch and prior experience of changing provider may prove painful and futile. Of course, from the company viewpoint it is a great business model to have customers who feel trapped and feel they have nowhere to go. You can squeeze as much profit out of them as possible… until, that is, someone comes up with a better offer.