February 19th, 2015
By Mark Di Somma
Branding Strategy Insider helps marketing oriented leaders and professionals like you build strong brands. BSI readers know, we regularly answer questions from marketers everywhere. Today we hear from Karen, a VP of Marketing in Washington, D.C. who writes…
“We serve various government sectors and completed a complex rebrand last year for our B2B company. We needed to build some distance from a government contract name that evolved into serving as a name for a division of our company, giving us two identities. All key stakeholders were in full alignment on the decisions that were made during the rebrand. Now we have a major customer questioning these decisions, influencing some stakeholders to rethink the path we have chosen after a great deal of work. What suggestions do you have for staying the course and facing resistance from customers and employees who prefer our identity the way it was?”
Thanks for your question Karen. It’s always hard when, having taken decisions and set a path, someone wants to revisit the decisions. From what you’ve said here, it looks like you’ve put in the hard yards to get the organization back to the point where it has a single name and with that, one assumes, a new identity that reflects that sense of who you want to be. You don’t identify who’s leading the charge for a reversion at the major customer, or whether they were involved all along in the rebranding consultation, but let’s assume they had some involvement and that they were consulted. The key point is that your brand is your brand – not theirs. Their views are important because they are a major customer, which is why they would have been consulted, but equally it’s not their role to tell you what your brand is.
Failing retail brands often have a second theme that unites them: discounting.
While the popular press might trumpet sales promotions as being good for the consumer, it’s also worth remembering that price discounting is very bad for brands that over-use it.
Let’s start with the most obvious drawback: it’s literally money off the bottom line. Too many marketers focus on traffic and revenues at the expense of margin. And that could be a crucial error when there is a vital trade-off between attracting more consumers into the store with discounts versus cutting deep into gross margin with 30% or 50% off list prices.
The second downside of discounting is commodification. The reason consumers are hopefully prepared to pay more for your brand is because it represents more to them than the alternatives. The brand associations add value to the offer and that lowers price sensitivity, increases demand and further enforces brand loyalty and repeat purchase – the classic outputs of brand equity.
But just as you build brands by focusing on their associations, you break them when you reinforce the commodity at the expense of those associations. And that’s what discounting does. It draws attention to the price and the product and says to the consumer ‘forget about what we stand for, buy us because we are cheap. Buy us because we are a commodity’.
When I see brands on sale for less than the recommended retail price it makes me question the brand. Suddenly it is not expertly made, high-quality fare – it is just cheap at a bargain price. Once the spell of the brand is broken, very few branded manufacturers can support their high cost operating model in the cut-throat environment of commodity competition.
Short answer – yes it is, but not in the way it was.
I haven’t met a brand manager yet who didn’t tell me that they had a differentiated product. I’m not surprised. It’s part of the job description of any brand owner to be marketing something that is disruptive, market-changing, blue-ocean, category-killing…15 years on from when I first suggested “parity is the real pariah”, every brand’s still talking up difference – but consumers are increasingly hard pressed to see any.
In some ways, marketers only have themselves to blame. Enthused by the need to be so very different from everyone else, marketers seem to have searched, then compromised and finally settled for nit-picking their way to a self-appointed category-of-one. Is it time to call time? Perhaps if more brands admitted that the chances of them redefining the universe at a product or service level were nil, they could focus more on the things that do matter.
We’ve been drawn into the innovation myth – the belief that brands can invent their way to market dominance. Most brands will never do that. At best, “innovation” (which would better be described across the majority of the market as improvement) will keep them on a par with those around them. At worst, it will lure them into risking massive resources for a difference they will never make.
So let’s talk about a shift of focus: from big picture, broad brush disruptive market plays to a new era of personalized, specific, individualized small plays. In the new world of the quantified self and the emerging Internet Of Everything, brand differentiation today is really about what a brand does for “me” not how it revolutionizes whole swathes of a sector.
Your word is your brand. Or rather, if the words aren’t right and your consumers depend on them for vital information, your brand will quickly find itself in the crosshairs of regulators, activist groups and annoyed consumers. The recent case concerning the contents of herbal supplements is more than an argument over percentages; at its core lies a simple question that underpins consumer trust.
Does it do/have what it says on the box?
You can see this as a labeling issue – particularly where food is concerned. Even that soon evolves into an argument about detail, consumer knowledge and mandatory disclosure. It doesn’t change the fact though that consumers expect to get what they pay for and there are brands that continue, wittingly or unwittingly, to short-change them. The halo effect of these actions carries through to everyone else in the sector.
As Walker Smith observed last year in this piece on Branding Strategy Insider, “Trust is a third rail for every kind of business or brand. It is an intangible requisite for staying in business of which companies dare not speak. As soon as you ask for it, you lose it. If trust cannot be taken for granted in the everyday course of business, if trust is not beyond question, then customers immediately jump to the conclusion that something is out of sorts.”
I suspect that, for some, the reason “something is out of sorts” is because two very simple words are being confused: earn; and earnings. In the bid to tell the market what they are making revenue-wise, brands sometimes overlook what they should be building reputation-wise. To earn takes time, effort, integrity and the willingness to forge. Earnings are now, today, what it says on the press release. Central to this is the ongoing tension, identified by Steve Denning in this article, between the “real market” (the world of real transactions) and the expectations market (the world in which investors form and articulate expectations of how companies should perform).
Which leads to a dilemma that to my mind remains unresolved. Whose trust should brands value most – the trust of the consumer; or the trust of the market?