Brand Positioning Strategy: 3 Common Errors and How to Avoid Them

Photo Credit: Paul Townsend on Flickr

The last couple of weeks I have been busy discussing and providing brand development estimates for a few start-ups. Ambitions entrepreneurs usually have a very simplistic approach to developing their brand: an attractive logo, a catchy slogan and a user friendly website to showcase their products.

When asked “why should customers choose you over the existing brands” the most common answer I get is “because I will sell for less”. Since my potential clients will compete in well-established categories, with entrenched competition,  my job becomes to educate them on the need for a strong positioning strategy for the new brand.

Below are three of the most common strategic errors entrepreneurs and top management make when launching or re-positioning a brand.

Brand Positioning Strategy Error 1: Not Adding Competition to the Mix

I am surprised at how many managers act as if their business is a monopoly. During SWOT strategy sessions they highlight strengths based on  internal process improvements, rather than competition.

Speaking of strengths, many executives put “excellent customer service” on top of the list. They use arguments such as “we implemented a new CRM software” or “we hired additional customer service personnel” to support the claim.

The real question should be how is the competition perceived in that regard?

If competitors are also  perceived as providing “excellent customer service” ( and many companies are) then this becomes a point of parity, not a competitive advantage.

When crafting your brand’s differentiation strategy always start with your competition, and finding a gap in consumer mind that you can exploit. Then look at your internal capabilities and try to fill it.

Brand Positioning Strategy Error 2: Focusing on Tactics rather than Strategy

When I first meet s new client he/she usually says “I need a website for my new business”. When we get the conversation going and talk about the goals and the messaging on this website, there usually no clear answer.

A website is just one of many communication tools that can be used to position a brand in the mind of the consumer. The cost of having a website has decreased substantially these days, however what is important is the strategy behind it.

What makes a brand strong and a business successful is a simple and sustainable differentiation idea, a unique brand image, great products, excellent distribution, and the use of appropriate communication tools to reach the intended audience.

Brand Positioning Strategy Error 3: Adopting the “Lowest Price” Route

The “lowest price” strategy rarely works for a simple reason: it cannot be sustained over a long period. I tell my clients that if your strategy is to be the lowest price competitor then you don’t need marketing, you need buying power.

With the rise of low cost imports and private label brands there will always be a competitor willing to sell for less. Lowest price might seem the logical way to get started but could also be fastest way to failure. Delay the launch until you find stronger, more sustainable competitive advantage.

There are many variables that contribute to a successful launch and development of a brand. I am curious to know what challenges you have to face in the process.

Check out the brand positioning tutorials page for more articles on how to build strong and differentiated brands.

How To Write A Strategic Marketing Plan

Photo Credit: Ken Teegardin on Flickr

In a previous article I’ve discussed the go to market strategy and its importance for the business.

It’s now time to focus on the document that provides an overview of the strategic initiatives to be implemented in a particular year and the projected outcome: the marketing plan.

The yearly marketing plan supports the overall strategy, and should be developed after the long and medium term goals have been identified.

The document should reflects the short term changes in the competitive landscape and take into account immediate opportunities and threats that didn’t exist at the time the medium term strategy was developed.

A plan that does not align with the long term business objectives is a waste of time and valuable resources.

Strategic Marketing Plan Outline

Objectives

This introductory section lists the Marketing goals for a particular year, such as: increases in sales and profits, attracting more customers, generating repeat purchase, increasing awareness and trial, generating more brand loyalty, and establishing emotional connections with the brand.

A realistic marketing plan lists a maximum two to three objectives.

Summary of Recommendations

These paragraphs provide the strategies and tactics to be employed in order to accomplish the yearly goals. This section will offer the members of the management team who are not willing to take the time and read the entire document with the opportunity to understand what it is about.

Current Market Conditions

This chapter provides a description of the market the brand/company competes in.

It details the current market trends and highlights the changes in user segmentation and profiles. An important section should be dedicated to competition, and how the changes in the competitive landscape affect the company.

Details on new mergers and acquisitions, product launches, new distribution channels or a new competitor entering the market will be included here.

SWOT Analysis

This section provides the reader with a realistic overview of the company strengths, weaknesses, opportunities and threats.

The strengths and weaknesses are internal, while opportunities and threats are greatly influenced by external factors beyond the company control

. An effective analysis takes a close look at the performance of all departments including Manufacturing, Marketing, Sales, Finance, IT, and Administration.

Strategies

Yearly objectives are accomplished through effective strategies that should reinforce the company’s competitive advantage.

The plan then details how the company’s competitive advantage is implemented through product, packaging, distribution and promotion strategies.

Tactics

These are the concrete initiatives (projects) to be completed during the year in support of the strategies above.

Many marketers (and advertising agencies) make the error of starting with a list of tactics, without thinking of the strategy they support.

See my article Go To Market Strategy: Understanding Marketing Objectives, Strategy and Tactics for details on how to distinguish between strategies and tactics.

Sales Forecast

Marketers are usually required to incorporate some kind of sales projections in the yearly marketing plan. The most common forecast breaks down the sales by brand, product category and distribution channel.

Every sales prediction (growth or decline) has to be justified by the strategies and tactics you recommended in the chapters above.

 

If this is your first marketing plan for a particular company or brand make sure you ask about the level of detail expected by management.

Budget

This will be one of the highly debatable chapter of the marketing plan so make sure you back your numbers by solid arguments.

There are many ways to build the marketing budget, and it all depends on the individual business.

Some companies allocate a percentage of sales (usually between 1%-10%) to Marketing initiatives. The percentage depends on the size of the company, competition, industry, how important marketing is to an organization.

Another methods starts with a list of initiatives to be implemented that are then budgeted.

Other companies will simply match what the competitors are spending, while others will apply the “whatever I can afford after all the other expenditures” strategy. If you are working for a company that using the last method maybe it’s time consider a career move.

Tracking and Control

No Marketing plan will be complete without detailing how success will be measured. It is important for you, as a marketer, to keep track of what works and what doesn’t, and how much you have allocated to each initiative.

It’s good practice to set very quantifiable goals and budgets for each project, and review the performance metrics at least twice per year.

Supporting Research (Qualitative and Quantitative)

If your recommendations are based on primary/secondary research make sure you include the supporting data as a appendix to the Marketing plan. This should help you sell your plan to the top management.

Some final words about the strategic marketing plan format. Some managers prefer a one to two page plan that is easy to read. Others demand a well-documented plan that includes detailed explanations for any action. Before you proceed with developing it, make sure you have a good idea of the format required.

Brand Positioning on Emotional Benefits

Brand Positioning on Emotional Benefits

Longines’ “Elegance Is An Attitude” Campaign

One of the strongest positioning any brand can achieve goes beyond product features or the great after-sale service. Building a differentiation strategy on emotional benefits removes the pressure for continuous product innovation which for most companies is hard to achieve and, more importantly, constantly deliver.

Mercedes-Benz is perceived as a symbol of success. Longines does not offer watches, but elegant time pieces (positioning communicated through their excellent slogan “Elegance is an attitude”). Apple does not sell electronic devices but tools for creative people.

Positioning a Brand on Emotions: The Advantages

As I mentioned earlier this positioning is very powerful for at least three reasons:

  • allows companies to charge a premium for their products as price plays a diminishing role in the purchase decision.
  • offers manufacturer’s brands a strong tool to compete against private labels, that in most cases use the “lower price” differentiation strategy.
  • creates a strong connection with the customer which leads to a deeper level of brand engagement.

What Brands Should Use Image Positioning?

People buy emotionally and justify their decisions rationally. Emotions are part of who we are as human beings: we want to feel confident, comfortable, safe, appreciated by others, regarded as smart or good looking,or successful. All these are perfect ingredients for a strong positioning strategy based on emotional benefits.

This type of differentiation strategy is most suitable for:

  • brands that compete in categories that require a high level of involvement in the purchase decision. A company that sells toothpicks will find it hard generate emotional connections with the brand. A car manufacturer, such as Mercedes-Benz, can make use of this positioning very successfully.
  • brands in categories that are hard to differentiate on product features. Most will say that water is a commodity that offers very little or no differentiation opportunities. However Evian has managed to position its brand in the premium segment by capitalizing on every parent’s concern for the health of their new born babies. Using the source of their water, the Alps, to suggest purity, Evian is perceived as the only water for newborn babies.
  • brands with a long tradition and heritage. Almost every brand is launched as a result of a product innovation. However, as the time passes and the brand becomes more known and experienced, consumers attach emotional attributes to it.  Coca Cola has started by delivering a unique product, which was an innovation at that time. Today the brand moved to the much broader positioning on image reflected by the slogan “Open Happiness”, and communication that focuses on people rather than the product characteristics.
  • brands that offer highly personalized products. Rolls Royce owners prefer the brand not for the technical features of the automobile but for the fact that it is hand crafted for each individual needs, and reflection the owner’s personality.
  • brands that offer unique or limited edition products. What makes a painting valuable is not the quality of paint or canvas, but its uniqueness, and the impossibility of ever being replicated. Luxury clothing and accessory brands fit this category perfectly.

You might have noticed that many of the examples above refer to luxury brands. That’s because most of them have achieved this status through the use of image positioning.

The Difference Between Premium and Luxury

In his excellent book “The New Strategic Brand Management”, Jean-Noel Kapferer explains the difference between premium and luxury.

Premium brands differentiate from competition by product characteristics that are easy to identify, compare and quantify. Cervelo, the Canadian bike manufacturer, competes in the premium bike segment because of the superior geometry and aerodynamics. This competitive advantage is easy to demonstrate through wind tunnel tests and race results.

The $2000 USD price tag on a Royal Salute 62 Gun Salute whisky bottle has no rational justification. People who are willing to pay that price do so for the exclusive status that the brand offers.

Moving the focus from the brand’s functional features to the intangible ones should be the goal of every Brand Manager. Besides the competitive advantages listed above, this type of brand positioning offers the opportunity for a more flexible and creative Marketing communication strategy.

More Resources

Check out the brand positioning tutorials page for more articles on how to build strong and differentiated brands.

Developing An Effective Marketing Strategy: Key Issues To Be Addressed

Every business owner should make developing the Marketing strategy for the company and its brands a top priority. A proper process takes into account the overall business goals, internal strengths and weaknesses, the competition and customer profile, among other factors. A well-crafted strategy provides the clear path to success, and makes execution easy.

This article lists the most common elements that should be addressed in a strategic Marketing document. In future posts I will expand on each of the topics.

Company Vision

I always recommend including it in the strategic document because it provides focus, inspiration, and motivation. The vision is usually the owner’s most ambitious goal, almost a dream that seems impossible to achieve. It answers the question “Why are we here?” and ideally it should never change, unless major occurrences make it irrelevant.

Company Mission

This important paragraph includes the answers to the most fundamental business questions such as “What market are we in?”, “What need do we serve?”, “What is the core benefit we are providing to our customers?”, “Who are we serving?” Along with the vision, the mission provide shareholders, management and employees with a sense of direction, pride and purpose. It makes them work toward the common goals as a team rather than separate entities.

Target Market(s) And End-User Profile

Here it is important to be specific about the industry sectors, geographical areas, and the typical end user that the business chooses to serve. The strategic document should provide a clear segmentation of the market based on various criteria such as geographic, socio-economic, product-related etc. The factors that influence the end-user’s buying behavior (social,cultural, personal or psychological) will also have to be identified here. A good understanding of these aspects lead to the employees (the Sales force in particular) focusing on what is really important.

Competitive Analysis

A close look at the competition is needed in order to establish an effective differentiation strategy. The analysis should include product offering, pricing strategy, distribution channels and promotional activities. The good news is that the explosion in communication channels and social media websites makes obtaining competitive information more accessible than ever.

SWOT Analysis

An in-depth and honest look at the company strengths, weaknesses, opportunities and threats is the mandatory foundation on which any strategy is built. It is also one of the most difficult element to implement as team leaders tend to magnify the strengths and minimize the weaknesses. An effective analysis takes into account all departments including Manufacturing, Marketing, Sales, Finance, IT, and Administration.

Marketing Objectives

Developing an effective Marketing strategy starts with clearly defined objectives. Once the SWOT analysis has been performed the team can establish the medium and long term marketing objectives that support the overall business strategic plan. These objectives can be separated into primary and secondary ones, and listed in the order of importance. Below is an example:

Primary objective:

  • grow overall sales by 10% yearly.

Secondary objectives:

  • increase brand awareness by 20% in 5 years
  • expand to 2 international markets in the next 3 years.

The objectives have to be realistic, quantifiable, controllable and measurable.

Differentiation Strategy

This has to do with the company’s competitive advantage and what makes its offering different from its competitors. Without strong differentiation that is constantly communicated the only strategy left is to compete on price. Some of the most common differentiation strategies are based on product, service, personnel, emotional, country of origin or distribution channel.

Unique Selling Proposition

Also known as the slogan, or tagline, it represents the summary of the differentiation strategy. A well chosen USP is meaningful long term, easy to remember, and creates preference for your brand. You can read more about what makes a good slogan here.

Brand Image

Includes the desired perception the company wants to create in the mind of consumers. This is developed over time based on a theme that is consistently communicated through different Marketing initiatives.

Marketing Strategies

Probably the most important chapter of the document, it provides the direction to be followed in order to accomplish the Marketing objectives.The company’s differentiation strategy also plays an important role here, as various elements of the marketing mix have to be adapted to support it. Choosing a particular strategy also depends on whether the business is a leader, challenger, follower or a niche player.

Let’s use the primary objective above (“Grow overall sales by 10% yearly”) and think of a few strategies that could accomplish it. Some of them could include:

-identify and introduce 5 new products per year that each contribute 2% to the overall yearly growth

-add the Internet as a new direct distribution channel

-introduce a new line of products for a target segment the company is not currently servicing

Product Strategy

This chapter provides a clear picture of the company’s product offering divided (if applicable) into categories, sub-categories, classes, units, etc. It also describes the unique features of the product offering that separates them from competition. The product life cycle ( introduction, growth, maturity and decline) has a direct influence on the overall Marketing strategy.

Distribution Strategy

No product or service, no matter how great it is, will be successful if it not easily available to the target audience. Choosing the right distribution channel depends on the type of product being offered and the end-user buying behavior. Properly implemented, distribution contributes to the overall customer experience and satisfaction with the brand.

Pricing Strategy

Equally important in the overall Marketing mix, price greatly influences the purchase decision and helps create the proper associations with the brand, if executed correctly. The strategic document should include a clear definition of the pricing segment in which a particular brand competes, as well as the desired price positioning versus competition. For example, Hyundai Genesis competes in the premium price segment. As a new entrant to the category, the vehicle is priced 10% lower than the segment leader Mercedes-Benz.

Promotional Strategy

This section contains the general guidelines for promoting the company’s offering thorough various communication tools. Decisions have to be made about using mainly a “push strategy”, “pull strategy”, or a combination of both (which is the case with most companies).

The “Push strategy” involves forcing the product through the distribution channel,  which in turn is responsible for generating end user awareness and purchase. Personal selling and trade shows play a major role here.

A “pull strategy”’s goal is to generate end-user awareness by skipping the middle man, the distributor. In order to achieve this the company has to rely heavily on advertising, social media and end-user promotions.

Implementation

Each strategy listed in the “Marketing Strategies” section is implemented through various marketing programs. They require budget allocation to different initiatives and properly combining the elements of the Marketing mix to achieve the desired outcome. The strategic documents should list the project managers responsible for coordination, as well as meeting the budgets and deadlines.

Feedback and Control

These elements are important in order to maintain the relevance of the strategy. Most macro-economic factors remain fairly constant over time. Others, such as competition, pricing, distribution channel can change yearly and even monthly. Te company has to put in place effective tools to monitor and track these changes in order to respond accordingly.

It’s worth mentioning that the structure above is based on my personal experience in developing the Marketing strategy for various companies. You should adapt it to your individual needs and specificity of each market segment.

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Why Marketing Strategy Is Important For Any Business

Welcome to my favorite subject: Marketing strategy. Part of the Marketing planning process, this topic is my favorite for two reasons: a well-developed strategy simplifies our everyday marketing job as it makes the implementation of different initiatives straight-forward. Secondly, that’s what I specialize in, and I love what I do.

Marketing Strategy Definition

As defined in a previous article, the go to market strategy represents the generic direction to be followed in order to accomplish a specific business objective. It represents the “road map” to achieving greater results, such as sales growth, worldwide brand recognition, higher market penetration, etc.

The Benefits for Your Business

Many business owners fail to see the benefits of incorporating Marketing strategy in the overall strategic business process. A well-crafted strategic plan:

  • provides the business with focus and direction by identifying the best opportunities worth pursuing as well as the threats to be avoided
  • identifies the tools that the company can effectively use to fight competition and gain market share
  • saves company time and money by focusing the resources on attracting the right employees and investing only om marketing initiatives that support the overall business objectives
  • differentiates a company from competition by identifying the distinctive advantage and the supporting elements
  • translates the company vision, mission, objectives, into effective Marketing initiatives
  • serves as foundation for all your communication campaigns
  • improves the effectiveness of the Marketing message to customers and partners
  • increases sales and profits
  • creates consumer preference for the brand

Marketing Strategy vs. Marketing Plan

These two concepts create a fair amount of confusion among marketers and business executives. Below are some important differences between the two:

[wpcol_1half id=”” class=”” style=””]Marketing Strategy

  • a collection of medium to long term methods for achieving the company’s objectives.
  • will not change yearly, but only when a major change occurs that affects the business as a whole: the raise of a new strong competitor, implementation of new legislation that greatly impacts the business, a sudden change in consumer needs.
  • supports business objectives
  • generic, with loosely defined budgets and deadlines

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[wpcol_1half_end id=”” class=”” style=””]Marketing Plan

  • a list of initiatives to be implemented in the short term (usually within one year).
  • changes yearly based on competitive actions and short term opportunities and threats
  • supports marketing strategy
  • the “to do list” that includes well-defined responsibilities, budgets and deadlines.

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An effective Marketing strategy is realistic, easy to understand and practical to implement. It also makes communication initiatives easier to develop. In the next articles I will list the major topics to be addressed by an effective strategic document, as well as a well-written Marketing plan.

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Customer-Driven Branding: Market Segmentation

This is a guest post by Richard Baker.

In our last article, we discussed branding transformation. Though business is comfortable with a product-centric methodology, they must transform themselves. Why? Due to the power the internet has bestowed upon the consumer, they now have taken over defining what your brand is. The voice of the business must be heard because if they don’t, someone else perhaps a competitor will define your brand for you.

So how does business design a customer-driven marketing strategy and what is their objective? Their objective is simple: to bring the brand closer to customers and in line with their needs and wants. They must realize branding and advertising has become a two (2) way conversation.

Business must move away from mass marketing. The first step in the process is Market segmentation. This involves segmenting the market into smaller groups of buyers that can be reached more efficiently and effectively with products and services that match their unique needs. The available variables to business include:

  • Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods.
  • Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race.
  • Psycho-graphic segmentation divides buyers into different groups based on social class, lifestyle, or personality characteristics.
  • Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.

So has your business initiated target marketing, and are you engaged in a two way conversation with your customer?

*Baker Branding is a marketing boutique advisory service. We define business distinct brand identity so to be more resilient and predictably more profitable during these tough economic conditions. For a free Brand DNA analysis, contact Richard Baker at richard@bakerbranding.ca or visit our web site: www.bakerbranding.ca.

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Go To Market Strategy: Understanding Marketing Objectives, Strategy and Tactics

Strategic marketing planning is not fun. When it comes to deciding what direction the company should be heading everybody has a different opinion.

That being said, a well-defined go to market strategy plays a crucial role in how the business is performing. And it all starts with defining clear marketing objectives, effective strategies and realistic tactics to accomplish them.

If you had a chance to be part of the team responsible for crafting the strategic plan for a company or brand I am sure you noticed how difficult it is to formulate clear objectives, and distinguish between strategy and tactics. Even experienced marketers struggle to formulate clear objectives, and distinguish between strategy and tactics.

I think this is a good time to clarify them.

Marketing Objectives

The objectives of the go to market plan are the goals that a company aims to accomplish, the motivators that drive the employees and management team forward.

Ideally a firm should focus on a few realistic goals such as to grow sales or maximize profits. Too many objectives result in lack of focus and inefficient allocation of resources.

Marketing objectives should also be clearly defined and measurable. As a result, long term vision and a good understanding of the marketplace are mandatory.

Realistic objectives are the solid foundation on which the strategies and tactics are crafted and executed.

Strategy versus Tactics

These two concepts create most confusion even among experienced marketers.

Marketing strategy represents the generic direction to be followed in order to accomplish a specific objective. There are usually multiple strategies that can be used to accomplish a goal.

Adopting a particular one depends on the company position in the marketplace and the available resources, among other things. A start-up will probably adopt a go to market strategy that is different from that of the market leader.

Marketing tactics are a series of actions that lead to the implementation of a particular strategy. Tactics are the to-do list the marketers focus on their everyday job and unfortunately, the things that take most time.

Many marketers and creative agencies think in terms of tactics rather than strategy. Building a website, executing an email blast, creating and pay-per-click campaigns are not strategies, but rather tactics supporting a specific strategy.

Let’s take a practical example of a company crafting its 5 year strategic plan. The introductory section that lists marketing objectives, strategies and tactics might look like this:

OBJECTIVE:
-double the sales to $10 million in the next five years

STRATEGIES:
-Strategy 1: introduce 3 new products per year
-Strategy 2: increase distributor penetration
-Strategy 3: expand internationally

TACTICS:
Related to Strategy 1:
-attend trade shows to identify new vendors
-invest in primary and secondary research to discover new consumer needs
-invest in manufacturing facilities and know-how

In conclusion, an effective go to market plan starts with a few well-defined objectives, supported by effective strategies, which in turn will be accomplished through a series of tactics. With these concepts clearly understood, the marketing plan has very good chances of being implemented.

Brought to you by: “The Brand Positioning 1 on 1” Workshop

Marketing Management: How to Have Your Brand Strategy Approved by Senior Executives

October is a month that many companies dedicate to planning for the year ahead. Marketers are busy crafting initiatives and allocating budgets, hoping that the brand plan is in line with the business objectives.

If you are planning a new brand introduction or just working on the yearly strategy you might have some convincing work to do. Have you ever been in a position to explain the senior management team that branding is more than designing a logo and choosing nice colours? Are you a new marketing employee that needs to make a first good impression in front of the management team?

If you answered “yes” to any of those questions you know how hard it is to sell the intangible-in our case “brand strategy”. Today I will share with you my approach to making sure the plan I present has very good chances of being approved.

Choose Who You Work For Wisely

Based on my experience there are two types of companies: Marketing-driven ones and the ones that think the role of Marketing is solely to support other departments, in particular the Sales department.

Peter Drucker once said: “Because the purpose of business is to create a customer, the business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs”. 

Marketing-driven organizations believe that Marketing’s role is to drive the company forward, to look beyond the daily tasks and show the management team “the way forward”. Marketers play a major role in the decision making process and are important members of the Management team. In case of a recession the marketing budget is usually one of the last to be cut (pro-active companies actually increase the budget to capture market share).

Then there are companies that see Marketing as a fancy word with no useful meaning. Marketers working in these firms are busy satisfying requests for catalogs, promo flyers and product samples. If they are lucky they might work on developing a program “as the need arise”. They have no involvement in developing the long term strategy.

My advice: as marketer aim to work or collaborate with Marketing-driven organizations. Your life will be much easier and your chances of success in creating a long term impact are increased.

5 Tips For Having Your Brand Strategy Approved

I was lucky enough to be involved in some major brand introductions as well as some brand positioning projects. The tips below worked for me in the critical moments of ensuring the management team’s buy-in into the project:

  • Choose your clients/company you want to work for carefully. As I mentioned above try to find companies that see the real value of Marketing. I know that’s not always possible, but this should be your goal. My strategy is to develop long-term relationships with only a few Marketing-driven companies rather than chase every marketing project I come across.
  • Learn as much as you can about your audience. This is valid anytime you have to deliver a presentation, Marketing-related or not. Top management consists of people with different backgrounds: financial, logistics, manufacturing, etc. Each have their own goals and objectives. Tailor your presentation to address their needs and interests.
  • Plant the seeds in advance. This is one of the most important tactic I employ. Some people have a more important role in the decision making process. Learn who they are and offer them a preview of your strategy. People who know what to expect tend to have a more positive attitude towards a new idea or plan. Moreover, based on their feedback you can tweak your message just in time for the big day.
  • Use plain language and clarify every Marketing term that might create confusion. Concepts such as brand positioning, brand attributes, brand image, are probably unfamiliar to many of the team members. Your chances of success increase greatly if the team actually understands what you are talking about.
  • Make good use of examples. Explain that what makes a brand successful brand is an effective marketing strategy. Provide visual examples using well-known brands.
Based on your experience, what other tactics could we add to the list? I encourage you to post your comments here on this blog, so I can provide effective feedback.
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How To Create a Differentiation Strategy Based On Superior Service

This is the second article in the series about creating an effective brand differentiation strategy for long-term competitive advantage.

In a previous post I explored product-based differentiation and positioning. But let’s be honest: there are only a few companies who are able to implement and support a differentiation strategy based on product.

The main reason is that in today’s global economy outsourcing a product has become easier than ever and its features could quickly be copied.

As a result most companies are looking for alternative ways to distinguish themselves from competition.

One of the most common avenue being pursued is a differentiation strategy based on delivering better/superior service.

Is Service Differentiation The Right Strategy For My Brand?

This strategy is an effective option in highly commoditized categories where product features cannot easily be differentiated.

How Can A Brand Be Differentiated on Service?

Just like product differentiation, there are multiple ways to set your brand apart on service. Here are some:

Speed of delivery-is a benefit that most consumers value and are willing to pay extra for.

If your company is able to deliver goods or services to the consumer faster than the competition, speed of delivery might be the competitive advantage that’s worth pursuing.

This is a great way to differentiate for companies that market durable goods, where products take longer to manufacture or are made to order: furniture, heavy-duty equipment, custom clothing and jewelry, to name a few.

Another example comes from an industry where delivery is the actual product being offered. After 3 years in business and $29 million in losses Fed-Ex decided to narrow its strategic focus to overnight delivery. Their effective positioning was reflected in their famous slogan “FedEx: When it absolutely, positively has to be there overnight”.

Availability-no brand, no matter how great the positioning and communication strategy, will make it to the consumer’s shopping list if it is not present in the places they shop.

A brand that is readily available in more places than the competition could turn availability into a competitive advantage.

Husqvarna, the world leader in outdoor power products, maintains its number one position through a well-established network of independent, specialized retailers that provide greater geographical coverage than competition (combined with superior service and support).

Enterprise made the rental cars readily available by pioneering the free customer pick-up service. As a result they have become the number one car rental company in the US.

Loyalty programs-is a great way to generate repeat purchase and build a solid customer base.

Moreover, rewards can create brand preference particularly when the products are not easily differentiated.

In order for any loyalty program to work it has to be simple to subscribe to, collect, and redeem the rewards.

Loyalty programs are very popular in North America, with the major credit card companies, retail chain and major airlines competing to provide “the most rewarding experience”.

After sale service and training– is a differentiating advantage for companies involved in manufacturing and marketing complex products that require assembly, operating instructions, regular maintenance and updates: plant equipment, furniture, enterprise resource software, etc.

A well-trained sales force and service personnel are required to continually deliver on this promise.

Warranty-is a great way to create brand preference. Warranty coverage provides consumers with piece of mind and reinforces the company commitment to product quality.

When Hyundai first entered the North American auto market with its Excel model, the company quickly built a negative reputation due to the car’s poor reliability. Many dealers made money only on repairs, while others ended up abandoning the product. The company was subject to many jokes such as “Hyundai: “Hope you understand nothing’s driveable and inexpensive”.

Today the South Korean manufacturer has become the fastest growing automaker in North America due significant investments in quality and design, backed by “America’s Best Warranty”: 5 year-100,000 miles warranty program”.

Service Differentiation: The Bottom Line

Building a differentiation strategy on service requires a dedication to attracting, retaining and training the best people in your industry and building a network of extensive, reliable partners.

Since this strategy is based on intangibles such as knowledge, dedication and human touch service differentiation could offer a solid competitive advantage that is relatively easy to defend and reinforce year after year.

Differentiation Strategy: How to Gain Competitive Advantage Through Product Leadership

I am a big believer in the fact that the only way a brand becomes successful is through a smart differentiation strategy. Today I am starting a series of articles that elaborates on the concepts of brand differentiation and positioning. Hopefully these articles will offer new ideas and avenues to explore when developing the marketing strategy for your brand.

There are many options of differentiating a brand, depending on the company’s internal capabilities and competitive environment. In this first post I will talk about how to gain competitive advantage through product differentiation.

Differentiation Strategy: 3 Important Questions

Before developing the differentiation strategy marketers should have the answer to these questions:

  • Is my brand the first in the category to claim this differentiating idea? If one of your competitors already owns that positioning your best bet is to explore a different option.
  • Will my company be able and willing to deliver on that competitive advantage over a long period of time? Brand building takes a long time, consistency and perseverance.  If management is not willing to allocate the necessary resources (which vary depending on the industry and level of competition) then your strategy will die in its infant stages.
  • Does my differentiation idea translate into a meaningful benefit for the consumer? If the consumer is not willing to pay for it then you have to start from scratch.

What Is Product-Based Differentiation

This differentiation strategy involves using the characteristics of the product you market to differentiate from your competitors.

Every brand is built on a product (I include services here as well). As a result, especially in the early stages of the brand building process where not enough emotional connections have been built, product-based positioning might be one of the very few options available.

Is Differentiating On Products The Right Strategy For My Brand?

Companies most successful in using this strategy are those who focus on product innovation. They invest important resources in researching, developing, and introducing new products and improving the existing ones.

If you are marketing a commodity such as natural gas, oil, steel, you will find this strategy very difficult to implement. There are multiple ways to differentiate your brand as you will discover in my next articles.

How Do I Differentiate On Product

There are many benefits that consumer value and look for when purchasing a product. Below are the most common ways to create differentiation:

Product features– a product that solves problems faster, or solves the same problem cheaper is worth paying more for. Hyundai has positioned itself as a car company that offers “more vehicle” for the money. It is important for the Brand Manager to establish what the cost/benefit ratio is before making the decision to add a product feature and use it as a differentiation element. If the overall cost is higher than the premium that can be charged for it this strategy is not worth pursuing.

Manufacturing process- how the product is made can be a great way to set your brand apart from competition. In today’s economy where most products have become commodities, the “secret ingredient” or “proprietary technology” can definitely make the difference. Lululemon®, a well-known Canadian manufacturer of yoga-inspired apparel, has built its success on the proprietary luon®, a fabric that provides shape retention and great stretching capabilities. The brand has basically become synonym with yoga apparel and dominates the segment against giants such as Nike and Adidas.

Performance– is another great product attribute that can be used to separate your brand from competition. BMW makes great use of this concept  by positioning their cars as “The ultimate driving machine.” Cervelo’s dedication to designing and building aerodynamic bikes is what helped the brand carve a distinctive niche in the super competitive race bike segment dominated by much bigger players such as Trek, Specialized and Giant. Their slogan, “Speed. Engineered.” is a great reflection of their philosophy.

Design– Attractive, unique product design is a very effective way to differentiate. Apple is constantly pursuing this strategy which reflects in the entire assortment, from iPods to MacBooks.

Italian companies frequently pursue this strategy, be it in cars (Ferrari), clothes (Gucci), or bicycles (Pinarello, Cogliano). Nordic European countries are famous around the world for their design that combines simplicity, functionality and practicality.

These are just a few examples of how product-based differentiation can be achieved. There are basically unlimited number of options that a company can pursue, depending on its capabilities.

Is “Product Quality” A Good Way To Differentiate?

This question usually generates a lot of debate. Here is my take on it: in mature markets such as North America and Western Europe quality is a term that has become over-used and, as a result, can rarely be used effectively to differentiate a brand.

Faced with tough competition a company that offers sub-standard quality products has little chance of surviving. That’s because consumers take product quality as a given. As I wrote in a previous post, quality has become a point of parity, rather than a differentiation element.

That being said, in emerging markets that are less competitive product quality might be the way to go. If your brand is perceived as offering the best quality products in the category you might have a chance to succeed.

Positioning on product quality is mostly suitable for brands that have a long history of delivering reliable products, accompanied by credentials to prove it. Industry awards and independent test results are great tools to support this type of positioning.

Challenges of Product-Based Differentiation

The “me-too” danger. Product features and characteristics can be easily copied. Your company needs to be one step ahead of the curve and invest in improving and perfecting the product, otherwise it will quickly become obsolete.

The “lower price” danger. Globalization brings a lot of benefits but also many challenges. There is always the threat that a competitor might launch a product with the same features, at a lower price.

The “demanding consumer” danger. Products have shorter life cycles as consumers gravitate towards the” newest stuff”. In order to remain competitive you need to keep up with the latest trends and technologies, or your target audience will switch to competitive offerings.

In my next posts I will explore other ways in which a brand can gain competitive advantage. I invite you to subscribe to my blog by e-mail to make sure you receive all the articles in this series.