March 4, 2014 § Leave a comment
March 3, 2014 § Leave a comment
Products with low brand equity require different strategies than products with high brand equity.
A recent study showed that encouraging customers with positive experiences to post online reviews can be a powerful strategy for driving customer acquisition. However, such a strategy may not be equally effective for all products. For products with low brand equity, such as new or emerging brands, there is a significant correlation between cumulative online customer reviews (positive or negative) and sales impact. But for products with high brand equity, such as category leaders and well-established brands, cumulative online customer reviews (positive and negative) do not have a significant effect on sales. The study concluded that different strategies are needed for each group.[i]
Low Brand Equity Products
A proactive strategy should be adopted that focuses on generating positive online reviews for product models with low brand equity. This is because they can benefit sales of that particular model directly as well as strengthen equity for the brand overall. This can enable weaker brands to compete more successfully against stronger brands by “flipping the funnel” (Spending less on traditional advertising and more effort on increasing satisfaction and loyalty to drive word of mouth and customer acquisition).
An essential requirement for this strategy to succeed, of course, is a truly superior product offering. One that is relevant, differentiating and, ideally, has the potential to become a category changer. Tactics that can be used to encourage positive online customer reviews include:
- Make detailed information about products available and easily accessible online.
- Establish brand communities and early adopter clubs. Members of these clubs can buy products with incentives before launch to spark the feedback process. Management can also use positive feedback as seeds and negative feedback to modify and improve their products before launch.
- Provide samples to expert review websites. (Anecdotal evidence suggests that customers often refer to expert reviews in their own reviews.)
- Send reminders and incentives to customers to encourage posting reviews.
High Brand Equity Products
Product models with high brand equity, however, have little to gain by pursuing a concentrated strategy designed to garner and leverage positive online customer reviews. That said, “These products models still receive a significant sales boost from being part of a strong brand; therefore, their resistance to positive reviews does not disadvantage them and they are protected to a degree from negative review.”[ii] And, although models of a strong brand are not affected directly by their own online customer reviews, they can be adversely affected by positive customer reviews for models of weak brands, allowing these competitors to draw consumers away from them. Furthermore, while controlling negative online customer reviews may not be as important for strong brands, brand managers are well advised to monitor them and take corrective actions. This is because the cumulative body of negative reviews overtime can become increasingly important if these brands lose category relevance and strength.[iii]
So, to avoid risk of losing category relevance, strong brands have more to gain by being vigilant in their efforts to create barriers to competition instead of on generating online customer reviews. Two leading strategies to consider include:
- Invest to create superior product models that leapfrog the competition by improving performance around common features, adding new features or eliminating major limitations. Such a leapfrog strategy can dramatically reduce incidences of positive online customer reviews on product models of weaker brands and essentially make these competitors irrelevant.
- Create energy through branded sponsorships (e.g., Valvoline motor oil and its NASCAR sponsorship) or branded social programs (e.g., Avon Walk for Cancer). Brand energizers, such as these, can dramatically strengthen brand loyalty and negate the impact of positive reviews on product models of weaker brands.
Brand equity plays a significant role in moderating the relationship between online customer reviews and sales. Products with low brand equity have much to gain by directly pursuing strategies to capture and leverage positive online customer reviews. While products with high brand equity have more to gain by being on the offensive and continually raising the bar through innovation or creating brand energy to strengthen customer loyalty and reduce the impact of positive reviews on competitors’ products.
[i] “The Effects of Positive and Negative Online Customer Reviews: Do Brand Strength and Category Maturity Matter?” by Nga N. Ho-Dac, Stephen J. Carson and William L. Moore, Journal of Marketing, Volume 77: pages 37-53, 2013
[ii] Ditto i
[iii] Ditto i
February 13, 2014 § Leave a comment
Tell your story from the heart. Find those interesting threads that connect your brand purpose and values. This is the art of brand story telling.
February 11, 2014 § Leave a comment
February 11, 2014 § Leave a comment
These days, disruption happens at lightning speed. Companies must continually reinvent themselves or risk brand irrelevancy – the biggest problem facing most businesses today.
The simple truth is that most organizations are either unaware of the looming signs that their business models are under siege or, unfortunately, underestimate the magnitude. Digital disruption can drive dramatic changes in market dynamics, such as the emergence of new categories/subcategories that raise the bar on consumer preferences, as well as the onslaught of new and non-traditional competitors. It has been estimated that companies are now forced to redefine their business models about every six years on average or face brand irrelevancy.
The problem is exacerbated by the fact that many organizations do not see it coming until it’s too late. Or, they are unable to confront these formidable realties with forward-looking, game-changing strategies. Brand irrelevancy occurs when consumers choose a target category or subcategory to buy and a particular brand (even if it was once the category leader) has slipped from the consideration set, resulting in shrinking margins and market share.
Antiquated organization structures, silo thinking, traditional mindsets and fierce P&L pressure to defend existing turf are among the chief barriers that prevent business model reinvention. Many corporate leaders choose to take the easy path by making incremental enhancements to their core competencies instead of driving category-changing transformation. They argue that it is better to “stick to our knitting,” “keep our focus,” “avoid diluting our energies. However, traditional thinking such as this can be riskier today!
So how do organizations create/renew brand relevance in today’s volatile business climate?
One strategy, according to David Akker in his book titled Brand Relevance, is to create transformational offerings that form new categories/subcategories and make the competition irrelevant. He argues that creating a new category/subcategory can result in a first-mover advantage and the potential of earning significant ROI because, with little or no competition, margins can be very attractive. Tenure of this marketing position depends on the barriers the firm creates, including customer loyalty, an image of authenticity, scale economies, preemptive strategies and competitor inhibitions to name a few.
Akker’s book, which I highly recommend reading, provides a powerful framework for finding new concepts, picking the winners, defining and managing new categories/subcategories, and creating barriers to ensure sustainable differentiation. It also offers an array of in-depth case studies on companies, such as Best Buy, Toyota, Zipcar and Apple. These companies have won the brand relevance battle by boldly creating breakthrough offerings that form new categories/subcategories, and effectively managing them to become the undisputed exemplars.
A second strategy for creating or maintaining brand relevance is to look beyond the offering and focus on specific brand equity attributes that make your brand unique from all others and drive consumer choice. Frankly, for companies in many types of service industries or in highly commoditized business segments where it is easy for competitors to copy the features of your offering, this is the only sensible strategy that can be pursued to drive sustainable competitive advantage. This can make competitors irrelevant because they lack these “essential” elements.
Brand equity attributes that build trust and/or deliver powerful self-expressive benefits include:
- Shared interests that are as meaningful to customers as the offering itself (e.g., Pampers, which has positioned its brand’s category to be associated with baby care as well as being a disposable diaper brand)
- A distinctive and enduring brand personality (e.g., Asahi Super Dry, which has a western, young and modern personality that contrasts sharply to its archrival, Kirin, which is the classic “your father’s brand”
- Organization values and culture, such as innovation (3M), customer-driven (Nordstrom’s), quality-driven (Cadillac) and concern for the environment (Toyota Prius)
- Passion (e.g., Apple because of its passion for design and commitment to delivering innovation and an over-the-top user experience)
- Social programs (e.g., The Body Shop through its visible endorsement of third-world ecology and workforces and Lay’s SunChips through its visible use of solar power and compostable packaging)