We are working with established brands that are getting caught in a mean and dismal discount to the bottom threat loop.
I speak to new client prospects most days. Recently, a shower manufacturer who wanted a new campaign. The first thing they told me was ‘We have no brand problems, we are a leading brand.’ As I dug a little deeper there turned out to be massive overstocking in the DIY chains – their products were not selling and they were discounting to compete with imported non-branded alternatives, that looked identical and were half the price.
The same applied to a secure lock manufacturer, it could have been the same meeting. ‘We have no brand problems, we are a leading brand.’ the conversation continued ‘but we are having to compete with identical looking imports and new brands, so we have to drop our prices.’
Previously insurmountable brands are being brand value digested by the market. Even their own marketing and sales practices are compounding the problem. In essence, marketeers have to stop doing lazy marketing and fundamentally change their approach.
Brand Value. Branding (the genuine sort not, just a logo and new guidelines excuse) as a marketing strategy has become critical due to changes in the way we perceive and consume products and services. An epic increase in available competition, disruptive business models, innovation, quick copying fast to market practices, in just about every product category and service on the planet. Did you know that a company in China has been exposed as an artificial egg manufacturer?! Yes, you read that right… Synthetic chicken eggs. Nothing is sacred anymore!
In addition to this, majority consumers have the ability to quickly compare all competing value offerings with the click or a mouse or a swipe gesture on a mobile device. This drives the need to convincingly strengthen brand positions and continually seek new ways to deliver greater and convincing brand value that goes way beyond the superficial.
The smart Companies see the importance of creating strong brands that that have value and real customer benefits. They can avoid the horrid practice of continual price slashing and downward pressure that exists in commoditised and ‘wide choice’ markets. Organisations are discovering that it is desirable to compete on more than just price and volume, aiming to create brand value. (This is even happening in China, where the brand penny is dropping as they aspire and consume our status symbol goods). Successful, prosperous organisations with healthy profits, create and manage strong brands for their products and services. We see countries such as China, Korea and India (who wish to move out of OEM supply) beginning to create powerful brands with global impact.
Commodities are largely undifferentiated products that offer little or no perceived differences between offerings. These are lowly generic products or services with high levels of substitutability. With little-to-no perceived difference or brand value, consumers shop for commodities primarily on a low price, it looks the same, must be the same basis.
Producers of commodities are driven to compete with low price and high volume. The product life cycle is at the point where customer education is not required. Customers have widely adopted the product, the market is mature enough to have attracted multiple ‘me too’ competitors and the market expand while prices decline as consumers demand discounts.
You do have a choice. Accept that you’re f*****d and talk about the good old days, before the internet and social media. Or change with the landscape and times finding what new brand value you can achieve.
Brand value. How then do you go about branding a commodity product?
Identify and devise ways to create unique awesomeness, reinforce why your brand is unique in your category is also referred to as your unique selling proposition (but you know that).
Do a thorough (honest) current state audit on yourselves. Get to understand how your current clients perceive you and your product or service brand value (and don’t believe your own hype or management back patting keep the CEO in the dark nonsense). Start a ‘warts and all’ brand audit and research project to see why your customers choose your product over another. Marketers and sales team are often shocked to learn from customers that PRICE is not the most important factor, certainly not the only factor driving a purchase decision.
Study your competition (the enemy), they will have weaknesses (in their battle plan) and examine industry trends. How are your competitors positioned? What are their brands’ or products’ strengths and vulnerabilities? How does your position compare with competitive positions and how will those positions be affected by industry trends?
Conduct an internal audit in additional to your external audit. Find out what all stakeholders think and feel about your brand. What do they value? What guides their daily behavior on the job? What brand promises do they feel they must deliver on? Are their goals in line with the goals of your organisation and your stated mission?
Do a thorough communications audit to uncover the real messages you are sending to your internal and external stakeholders through your communications. Are your marketing communications saying the right things in the right ways consistently over time and across all media? Are your internal communications to employees and shareholders doing the same? If you discover some inconsistencies and liabilities during this phase, don’t panic and stop and start firing people and agencies. Suspend judgment on what you find. Remember, the most important goal to accomplish at this point is to emerge with an accurate picture of the current state of affairs, a revised truth, be it pleasant or unpleasant.
Once you have conducted your audit and surveyed the competitive landscape, then you can make a list of all the ways you are unique.
Provide brand value reasons other than rock-bottom prices as to why you are different and why people should buy your products or services.
Even in industries where clients say, “all of the products from us and our competitors are the same,” we can find branding opportunities.
Sometimes obvious differences will be defined in your product offering by this point. Other times not.
Be different! Find a way to offer something unique that cannot be found anywhere else. Your most important, unique, and least easy-to-copy point of differentiation should be the unique selling proposition for your brand and serve as the basis for your branding efforts.
Eliminate reasons for your customers not to purchase from you
This one sounds deceptively simple, but often companies unwittingly offer certain things or behave in certain ways that turn potential customers away. Be honest with yourself and seek to uncover and understand the reasons customers choose to not do business with you.
Create and build a powerful image for your brand. Once you make your product or service distinctive, build your new image through a combination of words, imagery, and other devices that appeal to human logic and emotion.
A brand must communicate what it distinctively stands for using as few words and/or images as possible, so keep the message simple but memorable. Build the image so it is distinctive and easily recognisable to your target market.
Image alone can help differentiate a commodity-whether based on real or perceived benefits – as long as the strategy is executed properly. Images can be built to inform consumers about hidden or small differences that they might otherwise be unaware of and thus turn these differences into something that, in their own minds, they simply cannot live without – “I’ve just got to have that”.
Branding is more than graphic design, development of a memorable name, an on trend logo, a catchy headline or new guidelines. All components of a brand must work together to create a differentiated personality for the brand that heightens awareness while building preference. Such strategic awareness will allow the brand to enjoy greater loyalty from your market while commanding a price premium with better margins.
Market the brand on brand. Brand communication is an essential part of building a strong brand for your commodity. Commodity products require unusually clear communication of the value offered in both economic and emotional terms.
Highly targeted and sharply focused communication must take place within the framework of an integrated marketing communications plan that includes one or more parts of the marketing communications mix: personal selling, promotion, direct marketing, advertising, and public relations.
Brand value must be communicated clearly and consistently over time and across all chosen communications channels.
Communicating your brand promise clearly, concisely, and consistently across all marketing communications channels will enable you to build strategic awareness. Strategic awareness occurs when not only do your customers recognise your brand, but they also understand the distinctive qualities that make it better than the competition.
Strategic awareness occurs when you have differentiated your brand in the mind of your market.
Only when strategic awareness is established can you hope to create brand preference within your market. Once brand preference is created, then it becomes a scientific exercise to quantify the price premium that can be commanded by your brand.
Going Forward – keep going and never stop!
Continually look for ways to innovate, create customer value, and stay ahead of the competition. Eventually all forms of differentiation can be copied, so continually stay ahead of the curve to ensure that your brand remains differentiated from the commodity pack mentality.
Do this through a comprehensive program of differentiation, image building, product development, consumer research, service, delivery and quality improvement. Routinely measure factors such as brand loyalty, name awareness, perceived quality, relevance, and preference. Focus on continually improving the four core customer values of convenience, availability, product or service functionality, and relationship to find ways to continually increase the value you offer to your customers.
We believe commodity selling is a challenge that presents unique opportunities for innovation and great creative marketing. When marketing and selling commodities, you must resist the urge to cut prices (it’s a critical indicator of brand value problems to us).
Instead, seek ways to protect your price by offering more value, finding unique ways to differentiate yourself, and creating powerful brands that create price inelasticity.
brand value. Think this does not apply to you? We live in a world of plenty in the western world everything has the potential to be a commodity, you can choose not to be.