The Single Word That Should Define Your Branding Strategy

Simple Brands-Netflix

There is plenty of advice on how build a brand. And yet, brand building is more complicated than ever, in part due to the competitive environment, but also the strategic decisions brand owners make.

A look back at some of the most successful brands shows a commonality that can be summarized in a single word: simplicity. Successful brands are simple brands.

Simple brands have most chances of being noticed, remembered and preferred.

Netflix allows you to access thousands of titles with a click of the mouse. Google uncluttered the screen of all the unnecessary information and presented us with a single obvious option: to search for the information we need.

Keeping it simple works.

Simple Brands Demystified

It’s not uncommon for Brand Managers to demand simplicity when developing a brand’s identity: clean and simple logo, modern and uncluttered website. Many brands stand out through visual simplicity.

Unfortunately, that’s as far as most companies are willing to go in building a simple brand. And it’s not enough.

A simple brand makes it easy for its customers to understand its purpose and interact with it.

A simple brand minimizes the decision making process.

A simple brand offers a great customer service experience.

A simple brand is honest.

How to Build a Simple Brand

Building a simple brand requires vision and strategic trade-offs. It requires saying “no” when saying “yes” means better short term sales and profits.

Here is what simple brands do:

  • simple brands communicate clearly in a language that its customers understand. Often times we refer to an offer as being “too good to be true”. Upon reading the fine print, we discover that indeed it is. That complicate our relationship with the brand, and we rank it low on our simplicity scale.
  • simple brands present information that is complete and easy to find. In case of eCommerce, the buying process has to be fast, simple and without unexpected surprises. Amazon built is otherwise complex business on a simple idea: allowing users to shop online fast, with a few clicks of the mouse (one-click ordering).
  • simple brands offer a product assortment that minimizes consumer choices, and makes products that are easy to use. Apple excels at both. Their huge success in the phone market was achieved with a single product: the iPhone. Steve Jobs was also keen on designing an interface that is so intuitive that even small kids can use.
  • simple brands welcome and makes communication with its customers easy. We all hate calling big telecom companies because we know how bad the experience is: waiting on hold, than being transferred from agent to agent until you find the right person who is competent enough to assist you.
  • simple brands offer a great experience. I used to think great customer service has become a point of parity, and not a differentiation strategy. However my real-life experiences tell me that in most categories there is still room to differentiate on making it easy for customers to deal with your brand.

All these elements on which a simple brand is built are interconnected. A narrow product line allows staff to be more knowledgeable, and answer questions quickly. A seamless online shopping experience generates more orders and less cart abandonment.

Staying Simple is Complicated

Unfortunately most brands start simple, but in time tend to complicate things. Growth and complexity seem to go hand in hand.

Brand and line extensions are the two most commonly used strategies to grow sales. Any new addition to the existing assortment is a step away from simplicity.

Even Apple, a brand that was revived by a return to simplicity, fell into the line extension trap after Steve Job’s disappearance.

A smaller and a bigger iPad, a bigger and a cheaper iPhone, an Apple TV that can be used to play games-all options that complicate the Apple brand, and don’t necessarily make it more successful (for the first time in a decade Apple predicted a decline in sales in the second quarter of 2016).

Stealing competitors’ positioning is another strategy that leads to confusion.

The Volvo brand has always been associated with safety. That’s the reason my wife and I decided to buy a Volvo-so our kids will be safe.

However, in recent years, Volvo’s communication strategy has shifted to promoting engine performance, including direct comparisons against BMW and Audi. At the same time, the German brands are highlighting the safety features of their vehicles. Confusing, isn’t it?

Simplicity Gets Noticed

The biggest advantage of a simple brand is its ability to compete against category giants.

Dollar Shave Club has managed to build a successful business competing against category giants such as Gillette by delivering simple (and funny) brand experience. The brand has been named the biggest disruptor in the US market by Siegel+Gale’s 2015 Global Brand Simplicity Index.

We all love simple brands that make our lives less complicated. Therefore, no matter what strategy you go for, your goal as a brand owner should always be to build a simple brand.

Cheers to simplicity!

A Guide to Understanding Your Brand’s Target Audiences

Brand's Target AudiencesImage credit: Joe the Goat Farmer on Flickr

Most Brand Managers understand the importance of having an accurate image of the brand’s target audiences. What’s often missed is how our marketing actions impact the quality of that audience.

We often judge the strength of a brand by the number of Facebook fans, Twitter followers and email subscribers. What we don’t know is if these fans are actually buying its products, and referring it to their friends, or are there to for freebees or discount coupons.

There are various ways to define audiences. One way is to segment potential customers based on hard data such as demographics, media usage, and purchase frequency. This is important, but we need to take the audience segmentation one step further.

Strategically, brand managers have to think of how consumers relate to brands and the categories they belong to. We all have brands we love, brands we hate, and brands that leave us indifferent.

We use our relationship with brands as a selection tool that help us decide among the multitude of competitive offerings.

Category First, Brand Second

Whenever a new brand enters our radar, we automatically link it to a category. That’s how we structure things in our minds, and cope with the multitude of choices available. For the Brand Manager, this is important for two reasons.

First, linking a brand to a less-crowded category (if the option exists) when establishing its  frame of reference gives the brand a chance to stand out.

Second, in the case of a new brand, it is important to create the category-brand link as early and clearly as possible to eliminate confusion and avoid building the wrong brand perceptions.

Once the category-brand relationship has been established, a brand’s audience consists of these four types of consumers:

Category Connoisseurs

These are people passionate about the category in general, with no loyalty to a particular brand. They enjoy trying, comparing and talking about products and are familiar with the vast majority of brands in the category.

Take wine connoisseurs for example: they are able to list distinct differences between Merlot and Cabernet Sauvignon and lecture you for hours on why a bottle of wine is worth $1000, while another only $10.

These consumers are a great go-to resource for any brand in the category. A discussion with category connoisseurs will allow you to understand the category in much greater detail than any focus group will.

Your goal is to make this group aware of your brand, but not through advertising. No amount of advertising will convince these people your brand is worth considering.

The discovery has to happen as a result of their own research. All you can do is be ready to take advantage of the opportunity when it presents itself. Category connoisseurs are the greatest endorsement your brand can hope for.

Opportunists

If your marketing strategy focuses on offering freebees and steep price discounts your brand audience is probably dominated by opportunists.  Also known as “bargain hunters” and “professional contest enterers”, these consumers’ only reason for buying is a “good deal”, regardless of the brand.

These people a very price sensitive, and respond well to comparative pricing strategies that show how much they will save. They collect coupons and points, buy off promo flyers and use apps that show the lowest price for a particular product.

Advertising works well when targeting these consumers, but only when a “deal” is being offered. The long term effect of servicing the opportunists is shrinking margins and no brand loyalty.

Pragmatics

This is the third category that is not brand loyal, and only interact with the category when it’s absolutely necessary.

They are also not as price sensitive as the opportunists. Pragmatics make their buying decisions based on a combination of price, product characteristics, brand image, and convenience that is very difficult to per-determine.

The foundation of their buying decision is the need, not the deal. They are not early adapters and rarely choose brands based on the image they reflect.

Car buyers who are looking for a vehicle that will take them from point A to B fall into the pragmatics category. Those buyers don’t care that much about a brand that reflects their personality and status-what they value is the car’s reliability, gas mileage and warranty.

Another category that attracts a large number of pragmatics is air travel. We often choose our tickets based on a combination of objective factors such as price, flight time, number of stops and airline reviews.

Brand Loyalists

Brand loyalists are the most sought-after audience.

What brand doesn’t want to have customers who will not switch brands regardless of constant temptations from its competitors, and refer the brand to friends and family?

Study after study show that brand loyalty is on the decline, which is understandable. The main reason is increased competition, which makes differences between products indistinguishable.

Secondly, the brands themselves are responsible for the decrease in consumer loyalty, by not living up to their original promise.

Blackberry promised to be an innovator in mobile communication. The brand had developed a passionate and loyal following their keyboard phones, until competitors offered superior alternatives Blackberry was not able to match.

Every brand’s target audience consists of a mix of all four categories.

In an ideal world, the percentage of brand loyalists and category connoisseurs will greatly exceed the number of pragmatics, and opportunists. This is something we can control through our marketing strategy and actions:

  • If you are constantly communicating “limited time deals” and “price discounts” you will invariably attract a large number of opportunists.
  • If your strategy focuses on providing quality, informative, factually comparative information you will get on the radar of category connoisseurs and pragmatics.
  • An aspirational brand that has move beyond product features and benefits, and constantly deliver on its promise, has the best changes of building a loyal following.

Each of us belong to all four segments depending on how we relate to each category. I am a connoisseur when it comes to cars, pragmatic when it comes to cell phone plans, opportunist when it comes to cable TV, and brand loyalist when it comes to bikes.

So next time you review your marketing plan, ask yourself: what type of audience is a particular initiative most likely to attract: connoisseurs, opportunists, pragmatics or brand loyalists?

Brand Positioning Basics: Establishing The Competitive Frame of Reference

Brand's Frame of Reference

When we come across a new brand, we try to make sense of it by using reference points to file it into our mental library.

We think of the category it fits in, competitive brands we already know in that category, the product/service being offered, and its price point.

This is how a brand’s frame of reference is created. Frames of reference help us deal with the overwhelming number of choices we have to make every day.

The frame of reference is a complex and multi-dimensional concept: it can be broad or narrow, shallow or deep. Choosing the right frame of reference for your brand has a direct impact on its positioning.

Competitive Frame of Reference: A Definition

A brand’s frame of reference is the context in which consumers view it. The first thing consumers will try to figure out is the category the brand belongs to.

In many instances, brand-category associations are straightforward:

Pepsi belongs to the carbonated soft drink category.

Lululemon is a brand of yoga wear.

Changing the frame of reference for these established brands leads to brand stretching, which rarely produces the desired outcomes. However, that doesn’t stop Management from trying:

Pepsi recently announced Pepsi 1, the company’s first Android-based smart phone that will retail in China for approximately $205.

pepsi-phone

Lululemon also signaled its intention to move into the liquor business “one day (and can) at a time” with Curiosity Lager.

curiosity-lagerImage source

You don’t have to be a marketing genius to realize these endeavors that stretch the brand to its limits have very little chances of making a meaningful impact against established category players.

Hence the importance of choosing the most convenient frame of reference for your brand and sticking to it.

Choosing the Ideal Frame of Reference

The ideal time to decide on a brand’s frame of reference is at the time of launch.

The more well-known the brand becomes, the more difficult its context.

Here are some things that should help you make the right decision:

Choose a competitive frame of reference that reduces the number of brands competing for attention. You can achieve this by narrowing your focus so you don’t compete head to head with established players for consumer’s attention.

When I decided to start an online store specialized in original paintings, I noticed that my big competitors were framing their business as an “online art gallery”. “Art” is a very generic word, which was reflected in their broad offering: paintings (originals and prints), photography, sculpture, digital media.

In contrast, I decided to build my brand around a much narrower frame of reference that can be summarized in three words:  “original paintings online“. That is, I want people to associate Brush Treasures with “paintings”, and not the more generic “art”.

Do not choose technology as a frame of reference. Sooner or later technology becomes obsolete. The photography industry is the perfect example.

What do most people associate Kodak with? Film photography. The brand never managed to escape this strong association when it was obvious that digital photography would replace film, although Kodak launched the first digital camera in 1975.

The frame of reference should support your brand positioning. Your brand’s frame of reference is the foundation of its positioning. It will determine the points of parity the brand has to meet in order to be considered a legitimate player, and highlight opportunities to differentiate.

How Sony Used A Smart Frame of Reference To Influence Consumers’ Expectations

Aibo Sony's AIBO. Photo Credit: aptx4869 on Flickr In 1999 Sony launched the world’s first mass-marketed robot: AIBO.

Most people would associate robots with things such as “flawless operation” and “the ability to perform repetitive tasks with the highest degree of accuracy”. In addition, typical robots are not able to replicate human emotions.

Interestingly enough, Sony didn’t frame AIBO as a robot. Instead, AIBO was positioned as an human companion, an entertaining and cute pet (AIBO means companion in Japanese).

Unlike the typical robots, AIBO could express emotions. It was able to wag its tail when patted on the head, and could be trained by the owners to play different sports.

In the early stages, AIBO had many flaws, and could act unexpectedly sometimes, to the amusement of the owners. Instead of complaining about its flaws (as you would expect when dealing with the robot) owners regarded AIBO’s disobedience as part of its pet character.

Sony’s strategy illustrates the power of choosing a convenient frame of reference in shaping consumers’ expectations.

By positioning AIBO as a pet, Sony was able to overcome obvious technological flaws. AIBO “the pet” offered what customers were expecting from a human companion: affection and unpredictable behavior.

The Shortcut To Establishing the Frame of Reference

The brand name is the most direct way to signal the context in which the brand should be judged.

If Apple wanted people to see the Apple Watch as a fitness device they should have named it differently. By naming the product Apple Watch, the frame of reference was already established.

Based solely on its name and the online reviews, I decided the Apple Watch is not for me (although I am very passionate about watches). In my mind the most basic function of a watch is to tell the time in an instant, without going dark when it thinks you are not using it.

Final Thoughts

Competitive frames of reference can be narrow and deep, or shallow and broad. The latter offers brands more short term opportunities, but the former offers more substantial profits and the opportunity to dominate a category.

6 Common Causes of Brand Failures

Image Credit:  Nicholas Eckhart on Flickr

The news earlier in 2015 that Mexx is closing all its Canadian stores came as a huge disappointment for my family.

Disappointment because The Dutch retail chain was our favorite place to shop for clothes: the quality was good, and prices reasonable.

Surprise because Mexx stores were some of the busiest places at the malls around us.

The Mexx brand is just one of the few that are struggling, or have disappeared completely. Sony also announced the closing of all its Canadian stores, while US retail giant Target completely exited the Canadian market, less than 2 years after launch.

It’s hard to believe that brands that once defined a category have now vanished or struggle mightily: Nortel, Blockbuster, Nokia (cellphone business), Blackberry.

It’s like saying that Apple will not be around in the next five years.

The first question we ask ourselves as marketers is: what happened? How can a brand that was once so strong and dominant, become so irrelevant?

A closer look reveals some common causes of brand failures. Here are some of the most “popular”, ranked in the order of “fix-ability”, starting with situations that can be easily corrected, and ending with the ones that are almost impossible to recover from.

Building a Product, Not a Brand

There are many companies that offer an exceptional product but fail to build the brand around it. The Management team that runs these companies invariably believes in the “we offer a great product at the right price” selling strategy.

Reality has proven the best product doesn’t always win.

From a product perspective, Fage qualifies as the authentic Greek yogurt on the US market: the brand is owned by the same company that enjoys the leading market position in Greece. However the undisputed US market leader is Chobani, a brand launched 9 years after the Fage brand.

Lack of Brand Communication

This is another common scenario: the marketing budget for building the brand is not nearly enough to achieve anything meaningful. In reality, management believes, just like in the above scenario, that marketing is purely ego-building and a waste of money, and what really sells is product and price.

Consistent communication of the brand message is key to getting into the minds of consumers. Brands that are not on the radar do not exist. In order to become a player, the brand communication budget has to be on par with the competitive brands you are trying to displace.

Being Stuck in the Middle

A brand is “stuck in the middle” when it holds no defined positioning in the marketplace. These brands usually struggle to remain profitable and eventually die.

Gap was launched in 1969 and quickly became synonym with cool, affordable American-style apparel.

In recent years Gap is struggling to define its identity, both internally (stuck between Old Navy and Banana Republic), and externally, facing competition from more focused brands such as H & M and Zara.

Brand Cannibalization

Changes in the marketplace require bold strategic moves that affect a company’s brand portfolio. Such moves include launching new brands to fight newly emerged competition, or meant to capture a new market segment.

These strategic moves have to be carefully planned in order to avoid cannibalization of the existing brand(s).

Consider a common scenario: an established premium brand decides to launch a lower cost alternative to capture a new market segment consisting of consumers who currently cannot afford it. Many companies choose the shortest way to market: strip the existing product of some of its premium features, and market it under a very similar brand name, that would create an obvious connection with the premium brand.

Great strategy, at least on paper. In reality, these companies run the risk of alienating their core customers who currently pay a premium for the premium brand.

In order to avoid cannibalization, enough separation has to exist between the two brands in order to keep them both relevant to appealing to different consumer groups.

Not Keeping Up With The Competition

Competitive advantages are very difficult to preserve.

In her excellent book “Different: Escaping the Competitive Heard“, Harvard Business School Professor  Youngme Moon talks about “augmentation-by-addition”: differentiated features are quickly copied by competition and become points of parity, something all consumers expect to get.

Brand survival requires constant innovation.

The first mistake companies such as Blackberry, and Blockbuster made is not acknowledging that the market is changing. Blackberry believed for a long time that the touchscreen phone is just a marketing fad. Management also failed to see the evolution of the smartphone from a communication device to a full entertainment hub.

Not being able to keep up with the competition (even if you invented the category) invariably leads to brand failure, especially in fast chancing categories, where it’s almost impossible to catch up.

Purposely Deceiving Customers

At the time of writing this article (September 2015) the news just broke that Volkswagen has installed software in its cars equipped with TDI engines that activated emission controls only when being tested. Otherwise, the cars were exceeding the pollution levels by as much as 35 times.

Many car brands managed to survive crises caused by manufacturing defects. However, choosing to deceive your customers on purpose in order to gain market share causes irreparable damage.

No amount of money and PR can save a brand that has lost that much of its reputation. I just don’t see how Volkswagen, a brand with a tiny 2% market share in the highly competitive auto market can maintain its North American presence.

There are usually a combination of factors that lead to brand failures. The situations above highlight the challenges and responsibilities brand managers have in making sure that brand survives and stays relevant long-term.

A Simple Guide to Writing an Effective Brand Positioning Statement

When it comes to business strategy, many companies tend to be reactive, rather than proactive. Managers of all sorts are quick to deviate from the strategic plan for short-term gains, rather than staying the course and pursuing initiatives that match the brand’s strategic objectives.

Writing a compelling brand positioning statement is often the solution to the internal strategic struggles every company faces to some extent.

Brand Positioning Versus Brand Positioning Statement

Before we dive deeper into how to write a brand positioning statement it is important to understand the distinction between brand positioning and brand positioning statement.

Brand positioning is the “mental angle” your brand owns in the marketplace. It is what your brand is known for, which might be different from what you wished for.

Brand positioning is greatly influenced by external factors such consumers’ direct interactions, feedback from friends, or the stuff they read on the internet.

A strong brand positioning can be summarized in a few words:

Google=search

Trivago=hotel search

Southwest Airlines=low-cost air travel

Brand positioning statement serves as an internal guide that illustrates, in a paragraph or two, how your brand wants to be perceived in the marketplace. Its purpose is to summarize what the brand is all about to the company employees and outside partners, and serve as foundation for every marketing decision.

Brand positioning is what you are. The brand positioning statement is want you want to be.

How to Write A Branding Positioning Statement

An effective brand positioning statement (sometimes called “mission statement”) includes your target audience, the brand’s differentiation point(s), frame of reference, and elements that support your differentiation claim. Here is the template suggested by Cornell University:

For [insert Target Market], the [insert Brand] is the [insert Point of Differentiation] among all [insert Frame of Reference] because [insert Reason to Believe].

Let’s explore the four elements in more detail.

The brand’s target audience consists of all market segments that benefit from it. If your brand is sold through intermediaries, such as distributors, dealers, affiliates, then the brand positioning statement has to be relevant to them as well.

Brand differentiation explains how your brand differs from the competition. Some experts recommend making the brand promise part of the BPS. My preference is to explain how the brand is different, rather than listing a promise any other brand can make.

The frame of reference defines the category your brand competes in. This is a very powerful tool as it can help position your brand as a number one brand in a new category, rather than a new entrant into an established one. More on establishing your brand’s frame of reference in another article.

The arguments that support your brand claim are pretty straightforward. Any brand has to provide compelling and credible reasons why its target customers should believe in it.

Can a Brand Have More Than One Brand Positioning Statement?

A brand that targets multiple market segments needs to have a brand positioning statements for each.

Let’s think of the brand positioning statements for a company that markets Eco-friendly household cleaning products through a network of specialized distributors. Here are two possible BPS suggestions for the two segments:

BPS for Distributors:

For our distribution partners, [The brand] is the source of higher profits, by providing the most attractive partner discounts and eye-catching point-of-sale displays that will help move product and increase distributor revenue.

BPS For Consumers

For those who believe in the need to protect our environment, the brand is the number choice for Eco-friendly cleaning products because of its low price and immediate availability.

One brand, two distinctive segments and needs, two positioning statements.

Writing and Effective Positioning Statement: a 4-Point Checklist

It’s about the brand, not the product. Focusing on what makes a product different might be a short-lived statement, as products evolve, change or become obsolete. Additionally, a brand might expand beyond one product category, which will make the current BPS obsolete. A BPS should always allow room for growth.

It’s specific, yet comprehensive. An effective BPS is explicit, thus eliminating confusion. Its purpose is to be relevant to all departments, not only Sales and Marketing. You also want to avoid using clichés such as “we want to be the best at what we do”, or “we offer superior service”.

It’s consumer-focused.  Instead of focusing on what you can do well as a company, focus on the unique benefit your brand provides to consumers.

It provides motivation, focus and direction. This is probably the number one benefit of having a brand positioning statement: allowing the company to focus on what’s important, and discount the rest.

An effective brand positioning statement should bring everybody inside the organization on the same page and pulling in the same direction.

I will leave with two examples from an established brand (IKEA) and a relatively new market entrant (WARBY PARKER) that I hope will inspire you:

IKEA:

At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.

WARBY PARKER:

Warby Parker was founded with a rebellious spirit and a lofty objective: to offer designer eyewear at a revolutionary price, while leading the way for socially conscious businesses.

Brand Packaging: The Secret Weapon To Creating Buying Preference

Photo Credit: Nike

About 6 years ago I was in charge of launching a new brand in the durable goods category, consisting of over 1000 products, with everything it involves: brand differentiation and positioning, product sourcing, brand identity creation, packaging design, and communication strategy development.

The most difficult decision we had to make was how to differentiate the new brand from the current (established) players. The product itself offered very little opportunities to set the brand apart.

During the brainstorming process I noticed a commonality with all our future competitors: their packaging sucked.

The Role of Packaging In Building a Brand

The wine industry taught me the importance of packaging in selling the product. Hence, I immediately saw an opportunity to differentiate the new brand: using packaging to gain a competitive advantage.

Many organizations see packaging’s role as purely functional: it is designed to contain the product, protect it from damage during storage and transit, and comply with the regulations that govern the industry.

In the constant battle for differentiation, packaging should be used at its full potential: as a silent ambassador for the brand.

Brand packaging is part of the intimate interactions consumers have with brands.

On the shelves, it has the huge task of getting noticed, and convince undecided consumers the product it contains is the best choice. Packaging gets examined, read, flipped over, and often abused.

Here are some ways brands can create purchase preference through smart packaging.

Make it Informative

One the packaging’s basic function is to communicate what the product inside is all about.

Smart brands use packaging to communicate more than the manufacturer’s name, product number, contact information and website. They make it easier for consumers to choose their brands by using packaging to provide answers to many additional questions:

-how does the product look like? (include a product shot)

-what should I expect to get when I open it (list all the components, parts and accessories)

-how should the product be used, maintained, cared for (if it’s practical have all this information on the packaging, rather than an insert inside it)

-what is the warranty

I personally avoid specific brands of over the counter drugs because their instructions are written in such a small font that makes them impossible to read. With so many options available, why bother even trying?

Reinforce Your Brand Message

Packaging is a great opportunity to communicate what your brand stands for and make customers feel good about choosing it.

Brands can achieve this multiple ways: by writing inspiring copy, carefully selecting packaging materials (a common practice among eco-friendly brands), or through unique design and functionality.

Apple pays as much attention to its packaging as it does to its products and marketing message. I still have all the packages my iPhone, iPad and Mac Book came in, and remember the great experience I had opening them for the first time.

Make It Functional

A functional packaging eliminates the perception that packaging becomes waste as soon as the product is bought and used. Brands that pursue functional packaging turn a need (product container and protector) into a value-added benefit.

Returning to the wine industry, most wine comes packaged in bottles or carton boxes that get discarded, or, best case scenario, recycled.

The wine package designed by Icon Packaging for Aquilegia turns an ordinary carrying case into a beautiful and reusable wine rack. What a great and beautifully executed concept!

Tresdon-wine-wooden-packaging-design

 

Make it Eye Catching

Good design costs as much as bad design. With so much competition and our attention span getting shorter and shorter, brands have seconds to get noticed and make a good first impression.

When it comes to designing packaging, make sure you study the competition, and add as many value added elements that are missing from their packaging, to yours.

The next step is to go beyond my direct competitors and borrow ideas from industries where packaging is vital in selling the product, such as beverages and personal care markets.

Aside for being more noticeable, attractive packaging can help you gain more distribution for your brand. That’s exactly what happened to the new brand I had to launch: independent distributors appreciated the modern look and bold color scheme that elevate their showrooms to those of retail stores.

How do you make your package stand out? Through the use of colors, shapes or graphic design. If your competitors use conservative colors, go for bold ones. If they use rectangular boxes, go square. If their packaging looks busy, adopt simplicity.

In the highly commoditized categories most businesses compete in, brand packaging can become the secret weapon for creating awareness, desire and preference for your brand. And unlike other aspects on the business environment that a brand can’t control, “out of the box” packaging is within its reach.

How Important Should Social Media Be In Marketing Your New Business?

Image Credit: Sean MacEntee on Flickr

On March 20, 2015, Elon Musk, the visionary CEO of Tesla, put out this tweet:

“Major new Tesla product line — not a car — will be unveiled at our Hawthorne Design Studio on Thurs 8 pm, April 30”

Within 10 minutes of posting, Tesla shares jumped 4%, adding close to $US 1 billion to its market cap.

Examples such as this one make new entrepreneurs pencil social media at the top of their marketing to-do list for launching their new business.

And I don’t blame them.

If you are searching for advice on how to market your new business you will invariably come across a common recommendation: you have to “engage” your target audience on social media with compelling content that everybody will want to share.

Social media experts have long predicted the disappearance of traditional marketing communication channels, and the dominant role Facebook and Twitter will have in influencing consumer choices.

The rationale behind the prediction was that consumers hate advertising pushed through traditional mediums, such as TV, newspaper and magazines. The only way for brands to build reputation is by engaging in organic, spontaneous two-way conversation.

Judging by the Tesla example above, social media is a powerful tool for established brands with millions of followers.

But what about new businesses? Can social media help business owners reach potential customers more effectively, and ideally at a lesser cost?

People Socialize with People, Not Brands

The reality is that for most businesses social media play a minuscule role in finding new customers who will want to buy from you.

The word “social” refers to people, not businesses, and that’s how all social media platforms were initially designed.

Remember the first screen that appeared when you signed up for a new social media platform? It invariably presented you with a list of your friends and co-workers that you should add to your community.

There is only one problem with targeting your friends and family: they don’t want to buy from you, or “engage” with your brand. No matter how engaging your postings are, they want to know about you, and not what you have for sale.

Social Media is Unpredictable, and No Longer Free

Once the number of users becomes significant, social media platforms face the big challenge of monetizing this success. This is when they invariably turn to businesses for help.

Let’s take Facebook as an example.

In 2007 the most popular social media platform introduced Fan Pages and Facebook Ads, as a “revolutionary” opportunity for brands to move away from the traditional way of marketing to consumers and engage in conversations that will eventually translate into sales. Brands took notice and started investing time in building communities of fans, and delivering content to hopefully be shared with their friends.

But in 2012, brands were in for a big surprise.

Facebook announced that organic posts by brands were only reaching up to 16% of the fan base. In addition, the platform would further restrict organic reach of posts deemed to be too promotional.

The solution? In order for brands to become more visible, they would have to pay for it.

Needless to say these changes were met with frustration and even anger by business owners who spent years building an audience, just to discover that due to recent changes in algorithms and strategy by social media sites, they can no longer reach that target audience organically.

If you are curious to visit pages with impressive followings, you will notice the fans’ engagement is very low. According to Forester Research, only 0.07% of users interact with each post.

That is a ridiculously low number by any marketing metrics.

Those constant changes and updates makes it impossible for business owners to create any meaningful strategy around social media. And with organic reach nearing zero, the argument that maintaining a social media presence is free is no longer valid.

Social Media Revolution That Never Was

Social media will not revolutionize marketing as the expert predicted. Facebook, Twitter and Instagram are becoming alternative paid communication options, just like other forms of digital, print, outdoor and TV advertising.

So what should be the role of social media in the overall marketing communication for a new brand?

Once you build your community (through paid advertising), social media can successfully be used to augment the level of customer service your brand provides and to always improve your overall brand experience. Surrounded by the anonymity the internet provides, people are more comfortable expressing their true feelings about a brand and its actions.

This is not to deny the impact social media had on how brands communicate with their audience. I just want to set realistic expectations for new entrepreneurs, who are counting on social media to build their new brand: the days of building a brand through free organic reach are over.

Just like email, direct marketing and personal selling, social media requires knowledge, dedication, time, and money to effectively use.

Fifty Shades of Branding

This is a guest post by Melissa Kelly*.

From building brand authority to dominating the market, what does it take to manage your brand in a changing digital world? In this work-appropriate slide show, you’ll discover statistics on brand management and best practices for helping your brand evolve today.

Here are some interesting statistics from the slide show:

Melissa Kelly is the marketing manager at WebDAM, a leading cloud-based digital asset management platform helping brands grow and thrive.

Better or Different? An Introduction to Horizontal Brand Differentiation

Horizontal Differentiation

The options to differentiate a brand can be narrowed down to three: “better”, “different”, or “cheaper”.

In a previous post we discussed the “better” strategy a brand can pursue through vertical differentiation. A brand can differentiate vertically by positioning itself on the quality ladder, and supporting that claim through price and attributes to justify it.

With vertical differentiation consumers are in agreement on which product is better, and buying choices are made based on individual needs and budget.

Now it’s time to focus on the “different” strategy.

What is Horizontal Differentiation?

Unlike vertical differentiation where product quality ranking is possible, a brand that chooses to use horizontal differentiation will offer a product that is different, but not necessarily better.

In other words, with horizontal differentiation the good-better-best options are not easily identifiable, and brand choices are made based on individual beliefs.

To illustrate the concept of horizontal differentiation let’s take a look at the smart phone market.

The question “Which smart phone is better: the IPhone or the Galaxy?” generates an intense debate with no definitive conclusion. Each of us has a different (and strong) opinion, but the reality is there is no unanimity on which smartphone is better.

Each of the two companies carved its own niche market, with very little overlap. Apple die-hards will never buy a Samsung product, and vice-versa.

Hence the main benefit horizontal differentiation provides: the ability to build a truly differentiated product and attract a loyal customer base, that will reduce the pressure to compete on price.

The key to success is to identify a less competitive market niche that you can profitably target, instead of launching a better alternative into an overcrowded segment.

Some Examples

Let’s take a look at some more examples of brands that use horizontal differentiation to successfully compete in crowded categories.

Subaru carved its unique niche in the automotive market, by deciding to focus exclusively on offering 4-wheel drive vehicles, and reinforcing the “car for people who love the outdoors” message.

The car rental market is dominated by big players such as Hertz, Avis and Enterprise. Zipcar pioneered the car sharing concept as a way to differentiate and gain market share.

The company offers the option of renting a car for only a one or two hours, and convenient pick up and drop off locations.

For Zipcar customers who calling themselves “Zipsters”, the brand encompasses not only the convenience of short term car rental, but also the “green” philosophy that comes with it.

The Subaru equivalent in the digital camera market is the GoPro brand. While big players such as Nikon, Canon, and Olympus compete on the number of pixels and LCD screen size, GoPro positioned itself as “the best action camera in the world”. In a few short years the brand has become the preferred choice for those with an active lifestyle.

Benefits of Horizontal Differentiation

There are a few benefits of the horizontal differentiation that are worth mentioning:

A more loyal customer base. Since consumers have less viable alternatives, they are less likely to switch brands or expect price reductions.

Less pressure to compete on price. Horizontal differentiation eliminates head to head comparison, resulting in less pressure for price reductions.

High barriers to entry for newcomers. Niche brands usually create a strong emotional connection with the consumer. As a result, a new entrant will have a difficult time changing customer perceptions, even if able to offer a product with similar features.

Vertical and horizontal differentiation usually coexist within the same category.

While Apple and Samsung are horizontally differentiated, Vertu, the luxury mobile phone division of Nokia, chose to differentiate vertically, by positioning their phones as luxury objects and highlighting the craftsmanship, exclusivity and personalized service, rather than screen resolution and camera performance.

Implementing horizontal differentiation implies that a brand chooses not to target the whole market and dominate the category, but rather focus on a niche segment and service it very well. It can be a highly profitable strategy that can pay huge dividends, however mass appeal is not part of the package.

Understanding Vertical Brand Differentiation Strategy

Vertical Differentiation

In today’s fiercely competitive and noisy environment, the need for strategic brand differentiation is acute.

At the macro level, a brand can be differentiated vertically, horizontally, or pursue the cost strategy.

This article explores the vertical differentiation strategies. Horizontal differentiation and the cost strategy will be addressed in future blog posts.

What is Vertical Differentiation

Products in most categories can be differentiated by their perceived quality level. The primary indicator, and the most visible, consumers use to evaluate quality is price.

Vertical differentiation involves finding a quality/price mix that will differentiate the brand from its competitors, that appeals to enough consumers and can be profitably implemented.

A company can also use this strategy to differentiate between products in its portfolio designed to target multiple consumer segments.

With vertical differentiation consumers agree on which product is better, and choices are made based on individual needs.

A product’s points of differentiation should be easy to explain, at least in theory. Its price should be reflective of the features it provides, vis-à-vis its competitors.

If you are in a market for a digital camera for example, there are plenty of options to choose from.

You might want to get a camera with interchangeable lens, that takes amazing pictures in low light conditions, and has a high enough resolution that allows you to create large format prints from your shots.

Or, you might just want to save money and buy a lightweight camera that takes decent enough pictures for you to publish online and share with your friends on social media.

There is no right answer as to what camera you should go for. It all depends on what’s important to you: you might want to become a professional photographer, or just capture your life’s moments with ease.

Pursuing Vertical Differentiation

Vertical differentiation requires a brand to find that quality/price value proposition that (ideally) no other competitor claims, and own it. Here are a few things to consider:

Identify the features/quality levels that justify a price difference. That is, make sure you understand what’s important for your customer when deciding on a product in your category. In the digital camera example above, the weight of the camera is a sought-after feature that justifies a price difference, while the camera color might not.

Ensure there is enough demand for your new offering. The goal with this strategy is to design a product or service for which there is enough demand to justify launching it. Surveying your consumers might not offer you a complete picture, as many will tell you they want highest quality product at the lowest price.

Ensure the quality level you choose to offer can be profitably implemented. It’s great to offer a product for which there is enough demand, but what’s driving a business forward is profits, not the number of consumers who like its products.Too many features at an attractive price is sure to create enough demand, but your profitability will most certainly suffer.

Disadvantages of Vertical Differentiation

Companies pursuing vertical differentiation face two potential risks.

Vertical differentiation is impacted by sudden or unexpected changes in the marketplace that might make this strategy obsolete.

Consider the fast-changing technology market. When a new feature-packed product comes out, its price is usually appealing only to early adopters. Once the market catches up, the “advanced” features quickly become obsolete, and the price goes down accordingly.

The second danger is imitation. Most innovative products, when proven successful, are forced to compete with virtually identical products at much lower products.

The Onda tablet, an identical copy of Apple’s Ipad,  offers users a dual operating system (Windows and Android) at a third of the Ipad’s price.

Even reputable manufacturers such as Lenovo are capable of shamelessly copying successful products. Just take a look at their latest phone, S90 “Sisley”, an otherwise decent device, but an identical copy of Apple’s Iphone.

In conclusion, claiming a spot on the “quality” ladder is a viable way to differentiate. The higher the quality (and consequently the price), the more “niche” your brand will become.

But that doesn’t mean you should always aim to launch products in the more crowded low and medium price segments. Niche brands might not enjoy mass appeal but are usually much more profitable.