Branding Strategy Insider

Brand Building and Emotional Benefits

 
People buy benefits rather than features.

For example:

Time-release (feature) products are purchased because they are long acting (benefit).

Clear bottles let us see the purity in color and consistency of waters.

Dissolving tablets allow us to take medicine on the go.

Roller ball pens write faster.

Rubberized handles on scissors provide a sure grip.

And many marketers would agree that we buy products and services that enhance our positive sense of self-esteem, in some way. They believe that all brands, products and their features are associated with a rewarding emotional payoff. Moreover, all features and benefits are linked to emotional end benefits.

Think of iPod, BlackBerry, Fiji Water, Poland Spring, Mercedes, Ford, Starbucks, Dunkin' Donuts, Hershey, Godiva, Tiffany, Kay, Disneyland, Maui. We seek out these brands with their USPs, features and functional benefits because we like the way they make us feel and what they allow us to communicate about ourselves.

Building Brand Momentum

 
Owned for many years by H&R Block, CompuServe was the first major commercial online service in the United States. It was founded in 1979, dominated the field in the 1980s and was still a major player through the mid-1990s. Prodigy, the second major online service provider, was founded in 1984 as a joint venture between CBS, IBM and Sears. It offered its subscribers access to a broad range of networked services, including news, weather, shopping, bulletin boards, games, polls, expert columns, banking, stocks, travel, and a variety of other features. In 1990, CompuServe had 600,000 subscribers and Prodigy had 465,000 subscribers. But then AOL entered the scene and quickly dwarfed both companies. Begun as Control Video Corporation and focusing on games using specific computer platforms in the early to mid-1980s, the company altered its strategy over time and changed its name to AOL in late 1989. Positioned as an online service for people unfamiliar with computers, at its peak, AOL had more than 30 million subscribers worldwide. How did it do this? 

Differentiating The Ultimate Commodity

 
For the past ten years, when conducting brand education workshops, I have often included a “branding water” case study. The point of the case study is to illustrate that anything can be branded successfully, even commodities. Hundreds of teams from dozens of countries have presented their recommendations on this topic. Most of the recommendations had at least nuggets of good ideas for creating unique brands of water. And many were strong enough that they could easily be turned into thriving businesses. I wish I had saved all of the teams’ flip chart pages from this case study over the years as their content could easily have been the basis of my next book, Branding Water: Differentiating Commodities for Fun & Profit.

Water is the quintessential commodity. Approximately 326 million trillion gallons of water can be found on earth. (Admittedly, only 3% of this is in the form of freshwater. About 70 percent of our planet is covered in ocean with an average depth of several thousand feet.) And approximately 60% of human bodies are water. Water is largely tasteless, odorless and colorless. Recognizing that water is scarcer in some places, still in much of the world, water is delivered directly to people’s homes at a relatively low cost and is easily available in great quantity. In fact, many people and businesses use massive quantities of water on a regular basis for irrigation, manufacturing and to maintain landscapes.

So how then can one differentiate and command a price premium for water? It has already been done many times before. Consider Voss, Pellegrino, Ty Nant, and many other brands of bottled water.

The Principles Of Marketing

 
A number of people have asked us to summarize our marketing principles in a simple, easy-to-remember way.

Good thought. Having written (or co-written) 11 books on the subject, I can see how our basic principles can get buried in a blizzard of examples and case histories.

What’s the No.1 principle of marketing, at least as far as we’re concerned? 

It’s the principle of focus. You narrow the focus in order to own a word in the mind of the consumer.

Without a focus, it’s very difficult to build a strong brand. And without a strong brand, any company’s future is in doubt.

While “focus” should be the key ingredient in any marketing campaign, it’s not the whole story. So we developed an acronym called “FOCVS” which does sum up our key thoughts. 

FOCVS, a word using the original alphabet of the Roman Empire, consists of five key elements.

F is for “First.”

Nothing works better in marketing than being the first brand in a new category in the mind. 

• Starbucks in high-end coffee.

• Red Bull in energy drinks.

• BlackBerry in wireless email.

There are two issues, however, than many people miss. The first issue is what we mean by being “first.”

Brand Focus Leads to Power and Profits

Building a brand and building a profitable brand are two different things. 

Take Sony, for example. If you did a survey, you would probably find that Sony is the world’s most admired electronics brand. Way ahead of whoever might be in second place.

Terrific for owners of Sony products. But how about the owners of Sony stock? Does the company make any money? The sad fact is no. Net profits after taxes of Sony Corporation are small. Very small. 

In the last ten years, Sony Corporation had revenues of $519.2 billion. But net profits after taxes were only $4.0 billion. That’s 8/10th of one percent of sales. It’s hard paying off your bank loans, not to mention paying dividends to investors, with that kind of return. 

Of course, this is Japan, so who pays off its bank loans anyway? In 1999, the Bank of Japan cut its benchmark short-term rate effectively to zero. 

Like most Japanese companies, Sony is heavily line extended. Sony puts its brand name on television sets, videocassette recorders, digital cameras, personal computers, cellphones, semiconductors, camcorders, DVD players, MP3 players, stereos, broadcast video equipment, batteries and a host of other products. 

Yet Sony’s most profitable product is the PlayStation video game, a brand which makes only marginal use of the Sony name. (As powerful as the Sony brand might be, PlayStation is even a better brand name because it stands for something in the prospect’s mind.) 

How To Attack The Leading Brand

You know the kid’s game. Rock (fist) breaks scissors. Scissors (two fingers) cuts paper. Paper (flat hand) covers rock.

So what’s the best strategy in a game of rock/scissors/paper? The answer is obvious. It all depends on what strategy the other kid uses.

So, too, in marketing. Your best strategy often depends on what strategy your competition is using. This is especially true if you are trying to compete with a No. 1 brand, perhaps the most difficult job in marketing.

Take Pepsi-Cola. How does the brand compete with No. 1 Coca-Cola?

Be the opposite. Coca-Cola is widely perceived to the real thing, the authentic brand, the long-time market leader. So how does Pepsi-Cola become the opposite of the real thing?

‘The imitation cola’ is not going to cut it. Pepsi had to look a little deeper into the situation. Coca-Cola is also perceived to be a brand that has been around for a long time. (Actually 123 years). It’s the cola your parents drank.

So Pepsi-Cola became the cola for the younger crowd. ‘The Pepsi Generation.’

Over the years, The Pepsi Generation is the only advertising strategy that has substantially moved the needle. And aside from a technological breakthrough, the only strategy that is ever likely to move the needle.

Be the opposite is a marketing strategy that can work for any brand in any product category. How did Loew’s, for example, manage to make substantial progress against market leader Home Depot?

Fighter Brand Strategy Considerations

Fighter brands are one of the oldest strategies in branding. In a classic response to low priced rivals an organization launches a cheaper brand to attack the threat head on and protect their premium priced offerings. Unlike flanker brands or traditional brands that are designed with a set of target consumers in mind, fighter brands are specifically created to combat a competitor that is threatening to steal market share away from a company’s main brand. Fighter brands are usually a classic recession strategy. As value competitors gain share and private labels grow stronger - an increasing number of marketers turn to a fighter brand to rescue disappearing sales while maintaining their premium brand's equity.

When a fighter brand strategy works it not only defeats a low priced competitor but also opens up a new market. Intel Celeron is a notable case study of successful fighter brand application. Despite the success of its Pentium chips, Intel faced a major threat during the late Nineties from competitors like AMD’s K6 chips that were cheaper and better placed to serve the emerging low-cost PC market. Intel wanted to protect the brand equity and price premium of its Pentium chips but also wanted to avoid AMD gaining a foothold into the lower end of the market. So it created Celeron as a cheaper, less powerful version of its Pentium chips to serve this market and keep AMD out. Intel’s subsequent 80% share of the global PC market is testament to the potential of a successful fighter brand to help restrict competitors and open up additional segments of the market.

Anchor Your Brand With Credentials

Three years after Barilla was introduced into the U.S. market in 1996, the brand became the No. 1 pasta in America.

Not bad, considering the competition: Ronzoni, Mueller’s, Creamette, San Giorgia and American Beauty, among others. The previous market leader (Ronzoni) was owned by Hershey Foods, a formidable marketing machine. Furthermore, Barilla sells for 5 to 10 percent more than the competition.

Traditional wisdom would credit Barilla’s success to its barrage of 30-second television commercials. An American woman makes eye contact with a mysterious Italian stranger who serves her Barilla pasta, all set to vocals by tenor Andrea Bocelli.

Today, Barilla has 17 percent of the dry pasta market, more than twice the market share of the No. 2 brand Ronzoni which has 7 percent.

Most commercials focus on creating a rapport with consumers in order to build loyalty to the product. There’s a certain ‘warm and fuzzy’ feeling in your typical TV spot. The objective is to make the consumer fall in love with the brand. The soft-sell is in; the hard-sell is out.

There’s nothing wrong with this approach, provided you add one additional ingredient: credentials. What are Barilla’s credentials? They’re in the commercials and on the package. ‘Italy’s No. 1 pasta.’

Subtract the credentials from the commercials and you have nothing but mush. Beautiful, enchanting, romantic mush.

Saturn’s Marketing Lesson Is One To Remember

Fundamentally, there are two ways to increase sales: (1) Expand the brand, or (2) Expand the brand’s market share.

Most companies focus on the first way, expanding the brand. While this might seem to work in the short term, expanding the brand will eventually weaken the brand and leave it in worse shape than before the process began.

While it’s more difficult to expand a brand’s market share, this is the better way to go. The larger the market share, the more powerful a brand becomes. When a brand reaches 50 percent or more market share, it becomes so dominant that it is almost impossible for a competitor to overtake.

Consider Microsoft Windows, with a worldwide share of the personal computer operating system market of 94 percent. How is the No. 2 brand, Apple’s Macintosh, going to compete with Windows?

By building a better operating system? Macintosh already has the better operating system. Here’s what the country’s foremost technology expert (Walter S. Mossberg of The Wall Street Journal) has to say: ‘Macs have better hardware, a better operating system and better bundled software than Windows PCs.’

Even with better hardware, a better operating system and better-bundled software, Mac has only 3.4 percent of the market.

Creating The Brand Halo Effect

Marketing and psychology are closely related. If psychology is the systematic study of human behavior, then marketing is the systematic study of human behavior in the marketplace.

Good-looking people, for example, tend to be perceived as more intelligent, more successful and more popular.

That’s the halo effect in psychology.

The halo effect also works in marketing. What key product is behind the phenomenal success of Apple Computer? In a word, the iPod.

In fiscal year 2005, Apple Computer sales were up 68 percent over the previous year. Profits were up 384 percent. And the stock was up 177 percent. And Apple’s net profit margin increased from 3.3 percent to 9.6 percent, an astonishing jump.

The good news from Apple Computer wasn’t just the success of the iPod. As a matter of fact in 2005, the iPod and iTunes together accounted for only 39 percent of Apple’s sales. The other 61 percent of Apple (computers, software and services) also did well.

Apple’s computer and related businesses were up 27 percent in 2005 over the previous year. And, according to industry reports, Apple increased its share of the personal computer market from 3 to 4 percent. That’s the halo effect in marketing.