Branding Strategy Insider

The Power of the Specialist Brand

When you study the marketing wars, the well-differentiated specialist tends to be the winner.

Here are some thoughts on why the specialist brand appears to make an impression on the mind. First, the specialist can focus on one product, one benefit, and one message. This focus enables the marketer to put a sharp point on the message that quickly drives it into the mind. Domino’s can focus on home delivery. Pizza Hut has to talk about its different pizzas, home delivery, and sit-down service.

Another weapon of the specialist is the ability to be perceived as the expert or the best. If that’s all they do, they must do it very well. Finally, the specialist can become the generic for the category.

Xerox became the generic word for copying. (‘‘Please Xerox that for me.’’) Federal Express became the generic word for overnight delivery. (‘‘I’ll FedEx it to you.’’) Even though the lawyers hate it, making the brand name a generic is the ultimate weapon in the marketing wars. But it’s something only a specialist can do. The generalist can’t become a generic.

Sponsored By: +2 Marketing Consultants

Simplicity: A Powerful Brand Strategy

The basic concept of some products predicts failure. Not because they don’t work, but because they don’t make sense. Consider Mennen’s vitamin E deodorant. That’s right, you sprayed a vitamin under your arm. It doesn’t make sense unless you want the healthiest, best-fed armpits in the nation. It quickly failed.

Consider the Apple Newton. It was a fax, beeper, calendar keeper, and pen-based computer. Too complex. It’s gone and the much simpler Palm Pilot is an enormous success. The best way to really enter minds that hate complexity and confusion is to oversimplify your message.  Some of the most powerful programs are those that focus on a single word. (Wells Fargo: fast. Volvo: safety. Listerine: kills germs.)

The lesson here is not to try to tell your entire story. Just focus on one powerful differentiating idea and drive it into the mind. That sudden hunch, that creative leap of the mind that ‘‘sees’’ in a flash how to solve a problem in a simple way, is something quite different from general intelligence.

If there’s any trick to finding that simple set of words, it’s one of being ruthless about how you edit the story you want to tell. Anything that others could claim just as well as you can, eliminate. Anything that requires a complex analysis to prove, forget. Anything that doesn’t fit with your customers’ perceptions, avoid.

Sponsored By: +2 Marketing Consultants

5 Reasons Gillette Is The Best A Brand Can Get

Times are tough for marketers right now. So let me take you away to an oasis of consumer loyalty where huge margins and a ridiculously dominant market share are the norm. Where private label is non-existent and your biggest competitor is your second string product. No, it’s not a fantasy. It’s the alternative marketing universe occupied by Gillette.

Thanks to years of product innovation and heavy investment in marketing and advertising, Gillette occupies perhaps the most dominant position of any of the major global consumer goods brands with an estimated 70% share of the global razor blade category. Common sense might suggest that if you found yourself in this envious position you would sit back and count the billions of dollars in annual revenues that this market share delivers. But Gillette is owned by P&G, and while even the best marketing company in the world can’t improve much beyond that level of market share – there are plenty of other levers to pull to generate shareholder value. And those levers provide brand managers with a vital, best practice lesson in growing a brand's contribution even when market share remains constant.

First, drive profitability. Market share might have reached its zenith, but that does not mean your margins can't be squeezed. And squeezed tight. One industry insider in the UK recently revealed that despite a retail price of £9.72 for a pack of four Fusion razor blades, the actual manufacturing and packaging costs for this product is less than 30p. That’s a whopping mark-up of almost 3000%. How about that for a margin?

Second, practice positive cannibalization. Gillette launched its five bladed Fusion line in 2006 with a 40% price premium over Mach3, its previous three bladed offering. Despite the fact that both lines generate significant profits, with such a huge share of the shaving market it makes more sense for Gillette to focus its marketing resources on switching its own customers from Mach 3 to the more profitable Fusion line than trying to win any more share from competitors. That’s why Gillette is now spending millions to compete against itself with ads and online comparisons that attempt to convince its Mach 3 consumers that their current razor is simply not good enough and to trade up to Fusion. A year ago Fusion started a TV campaign called "Nudging Disciples" in which ads argued that "five is better than three," referring to the different blade counts of Fusion and Mach3. The spot shows Tiger Woods, Derek Jeter and Roger Federer literally knocking Mach3 razors out of men's hands with a golf ball, baseball and tennis ball, respectively. "Sometimes you need a little push to let go of your Mach3 razor," the narrator says. While it may seem crazy to spend millions to compete against yourself, the margin differences mean that this will deliver a better ROI than targeting the small number of remaining non-Gillette consumers over to the brand. Targeting existing customers is usually easier and the conversion rates are better.

Small is Beautiful for Brands

It's a big deal when a new chief executive takes the helm. All eyes, therefore, were on Fabrizio Freda at Reuters Global Luxury Summit in New York last week. Freda is about to become the head of Estée Lauder, and he took the stage to outline the future direction of the huge cosmetics group, which includes brands such as Clinique, M.A.C. and Crème de la Mer.

His big message? Smallness. Estée Lauder's market data suggests that consumers are opting in ever greater numbers for smaller SKUs - even when bigger formats offer significantly better value for money. Freda says he is planning smaller formats of fragrances and cosmetics, with lower entry price points and, hopefully, better sales.

Freda wasn't the only soon-to-be chief executive preaching the gospel of minimisation last week. Bob McDonald, who steps up to the helm of Procter & Gamble on 1 July, says his focus will be on global expansion and the ability of P&G to adjust its range to meet the needs of consumers in emerging markets.

McDonald cited Pantene, one of the brands he oversaw in India while head of haircare, as a prime illustration of the future direction for P&G. Pantene is sold in mini-sachets in India, as many consumers cannot afford bigger formats and prefer smaller, single purchases. Smallness triumphs because it fits the needs of emerging markets better.

At the other end of the pricing spectrum, smallness is proving key for several of the world's luxury brands. Bain & Company's 2012 Luxury Market Update suggests that leather goods brands such as Louis Vuitton, Gucci and Hermès will return to prosperity faster than ‘pure' fashion brands such as Christian Lacroix or Valentino.

The Importance of Brand Heritage

I'm calling out British marketers today. They have a lot to learn about the importance of provenance, heritage and history.

May was undoubtedly marketing's month for nostalgia. M&S ran triumphant three-day penny bazaars to honour its 125-year anniversary; meanwhile, Sainsbury's out-heritaged its rival, with its 140-year celebrations capped by a beautiful ad from Abbott Mead Vickers BBDO.

In addition, Nestlé relaunched the Milky Bar Kid with a montage of half a century of uneasy blond, bespectacled children reading lines to camera. Persil and Virgin Atlantic also climbed onto the retro brand wagon with their own heritage campaigns. Meanwhile, Hovis announced this month that its 'Go on lad' campaign had grabbed a 3.5% increase in market share and added £60m to the top-line of the business.

This trend is surprising, given that one of British marketing's biggest weaknesses is its Anglo-Saxon disregard for history and provenance.

It's a deficit I have become familiar with as a consultant. I was trained in the US business-school model, which rejects focus on heritage in favour of consumer orientation. However, all that changed seven years ago when I started consulting for some of the great luxury brands. Personal discretion and an iron-clad non-disclosure agreement prevent me from identifying them, but trust me, they are great.

It took my new French masters more than a year to beat the historical reticence out of me and show me the power of using history to inform brand strategy. It might sound like merde de vache, but in the following years I have come to appreciate how right they are.

The Birth of Brand Management

Happy birthday reader! Yes, I know you weren’t born on this date. I am referring to a professional anniversary not a personal one. May 13th is a very auspicious date for all of you who manage brands because it’s the day that our profession, brand management, was born.

To understand the importance of today’s date we must travel back in time. Past the first Interbrand valuation in 1988, beyond the early branding research of Professor David Aaker in 1970, beyond Al Ries and Jack Trout’s  introduction of the ‘Positioning’ concept in 1969 and back to 1931 and a beautiful Spring morning in Cincinnati, Ohio. Specifically, we need to head over to the corner of Sixth and Main Street and into the office of a tall, twenty seven year old promotions manager by the name of Neil McElroy.

As we watch him at his desk, typing furiously, he looks like any other young manager. But McElroy is a rising star at P&G. It’s only been six years since he joined the company as a summer intern. In that time he has risen from a job in the mail room to become a key member of P&G’s advertising team. His boss, R. R. Deupree the President of P&G, is already keen on the idea of developing separate branding teams within the P&G portfolio. But he has asked McElroy, who is seen as one of the best marketing minds in the company, to flesh out the idea and formalise it. It is this task that now occupies McElroy and his trusty typewriter. The memo now emerging before our eyes is about to initiate a completely new organisational role and signal a revolution in marketing management. Neil McElroy is about to invent brand managers.

His memo actually proposes “brand men”. But the seven point description of the proposed duties for this new role that follows is unmistakably that of a brand manager. McElroy suggest that the new role includes full responsibility for packaging and advertising decisions. Equally important, “brand men” should also meet with regional sales teams and work with them to ensure the marketing plan for a brand is executed correctly in the field. Brand managers should also analyse sales and develop marketing plans and then monitor their progress using appropriate research methods. And they should not do all this alone – but with the support of a team of market researchers and assistants also dedicated to a specific brand.

Perhaps most radical of all, the memo also recommends that each brand team should have the independence to openly compete with other P&G brands in the same category.

The Seven Markers of Passion Brands

The topic of passion brands is particularly important to consider in difficult economic times. When pressures mount on companies' bottom lines, they typically look first to the expense side of products, both in their development and marketing. The opportunity that a brand passion creates is the opportunity to conscript willing and enthusiastic consumers to spend their financial and social currency on those brands, exhorting friends and family to follow suit.

In my book Passion Brands, the leading passion brands identified in our research for their "life force engagement" include:

Apple, Sony, American Express, Starbucks, Folger's, Target, Nordstrom, Craig's List, Whole Foods, Toys "R" Us, Camel, Absolut, Kraft, Cadillac, BMW, Acura, Infiniti, Jeep, and Arizona Iced Tea.

There are seven accelerators of Passion Brands, which represent a consumer syntax, a step by step process that marketer's must honor and follow with the goal of forging a passion brand. The following steps describe how each element must be sequenced to develop an evolving and deepening consumer relationship.

Work the Worldview, not Age, Race, or Gender

The passion brands I studied rarely seem to target consumers in a traditional way, as in women eighteen to thirty-four. More often, they identify shared values about the world and how it works and then illustrate how the brand also shares in that vision.

The Danger of Category Short-Sightedness

Readers of Branding Strategy Insider might wonder why it takes so long for some marketers to respond to obvious threats to their market share. At times the answer can be traced back to a classic quandary: categories. Categories were invented to enable marketers to calculate relative market shares. They involve drawing lines across a market and establishing a product category within which all rival brands will compete for share. The premium lager category, the tinned pet food category, the economy hatchback category: these and thousands of other groupings have represented the battle ground for brands for many decades.

In the short term, categories provide a handy method for summarising the competitive set.

However, it is not what a company sells but what the customers buy, so it's a fundamentally flawed exercise for marketers to start dictating where a market begins and ends. The archetypal example of the strategic vulnerability of categories has always been the early American train companies.

At the start of the last century, a small number of train companies had emerged as market leaders and each held a large and established share in their category: trains. The companies had oligopolistic relationships with each other and settled back for a period of guaranteed revenues.

Within a few years, however, railways were superseded by cars. The rail companies were unable to compete against or collude with this new threat because their category short-sightedness had blinded them to the true business they were in: transportation.

Strength for Online Brands

What do United Airlines and Starbucks coffee have in common? Take one of United's U.S. flights, and you'll find out.

On every domestic flight you're served Starbucks coffee. In fact, the deal between the two companies requires flight attendants to say "Starbucks Coffee" when offering in-flight beverages.

What we're seeing is the trend toward brand alliances. Brands that are mutually complementary team up with each other and with their partners' brand missions. A quick look at several major U.S. supermarkets reveals they offer Starbucks coffee. Starbucks cafés are situated in the stores. Starbucks analysed its traffic flow and concluded people are in the mood for a cup of something while waiting around. Successfully selling coffee to such customers optimises revenue flow for both the coffee chain and host establishments. Thus, brand alliances are born that benefit both the consumer and the bottom line.

What's this got to do with online branding? Brand alliances, as we know them, are in the midst of an interesting change. Some years ago, most brand builders would have been aghast at the thought of their brands being seen alongside other brands. Brands should be perceived in exclusivity, they believed. That theory is no longer applicable. It's impossible to be the best in each and every way. That's why complementary companies need each other. Brand builders must identify the best companies within fields/disciplines/product categories that are complementary to their own and team up with them.

The potential for creative thinking in this type of cooperative brand building is massive. Key to its success is to ensure the values and brand propositions of potential brand alliance partners bear clear, relevant relationships with each other.

Alternative Brand Alliances

Recently I was in a Copenhagen taxi, heading for the city's airport. My co-passenger was a lady who carried a fancy bag. A very nice bag, I'm sure, but what interested me was the combination of brands it represented. Samsonite produced the bag. No surprise there, as Samsonite is the world's largest luggage manufacturer. This Samsonite bag also represented Philippe Starck, a designer known for his work with furniture who, in this case, had designed the bag for Samsonite.

Brand combinations are indeed often surprising. These days, I often notice alliances I'd never have predicted.

Nestlé and L'Oréal recently announced a relationship. What do these two brands have in common? Anything?

Yes indeed. Nestlé's aim is to produce food that's healthy, not only for the insides of our bodies, but for our skin as well. Who's the global market leader in skin care? You got it: L'Oréal.

This new, laterally inspired approach to brand alliances will change the way we build brands. In the good old days, the most obviously related brands teamed with each other. Market leaders joined with other market leaders. These days, there's every indication an alliance between a low-- and a high-equity brand can be just as valuable for both parties as a marriage between equals.

Why is this development so relevant? Most likely you control an online business. If there's one business arena that can benefit from a brand alliance strategy via links, co-branding and general brand alliances, it's the interactive sector.

So try liberating your strategy from traditional alliances and think outside the box. Identify the values your brand stands for and ways the community perceives your brand, then identify other brands that share your brand's ethos, rationale, commitments or aims. Then, start brainstorming. If you really want to heat up the creative debate, consider your nearest competitor. Determine which brands they'd have to team up with to give you a run for your money and to ignite corporate envy. Then, get in first. Approach potential partners before your competitors make their own proposals.