There are a number of different ways brands can establish leadership online, from providing a groundbreaking service like Amazon.com, to creating a strong brand position that completely resonates with a core customer base, which is what RedBull has done. To identify potential leadership strategies that a brand can adopt in any given category, I have created a 7 stage positioning chart.

Brand strategies for traditional and empowered consumers

Now the first 4 stages are the brand positions that have defined traditional marketing since the 1980’s. These are Stage 1: Generic or unbranded, Stage 2: Brand as reference, Stage 3: Brand as personality and Stage 4: Brand as icon.

Stage 1, or Generic Brands are often commodity products, such as oil or aspirin – products which, for the most part, are all pretty much the same. In generic brands, volume, price and accessibility determine sales. As you see in the chart, it occupies the bottom corner of our “differentiation versus consumer” matrix. Which basically mean’s that it’s a brand positioning that appeals mainly to value-oriented consumers. As such, loyalty is practically non-existent. The cheapest item typically rules. Marks & Spencer has used this positioning recently when it created its new low priced, value line of “Basics” as a way to keep their recession concerned shoppers from defecting to Tesco.

In Stage 2 we move to the Brand as Reference stage. This is when a brand becomes the category. Think Xerox or Gatorade, where your product name becomes synonymous with it’s benefit. Gatorade = sports drinks and Xerox = photocopying. Interestingly, Google has been trying hard to ensure that “googling” something, to mean they are searching the web, doesn’t appear in any dictionaries as a way to keep their brand out of this troublesome space – a strategy that has so far proven effective.

Stage 2 brands often live in areas of intense competition. Take Colgate for instance. It’s a toothpaste competing with Aquafresh and a number of other brands, which all, to varying degrees of success, do exactly the same thing – clean your teeth. So marketers of reference brands tend to focus on traditional value-based segmentation models to understand needs, “I need/want to look good,” so “white teeth is important”. Advertising then looks for hooks to find good ways of matching rational product benefits with these needs.

Because Stage 2 brands are often low involvement brands, loyalty is often based on “points and rewards” schemes, essentially turning loyalty into a commodity business that you can buy and sell. Naturally this is problematic because a challenger brand can always offer to “buy” up loyalty by purchasing points from customers who defect. Frequent flyer miles are a good example, where airlines have been known to purchase each other’s customer’s frequent flyer miles.

Stage 3 brands work hard to differentiate themselves by using personality as a point of difference. The UK softdrink Tango used this to brilliant effect in its advertising in the early 1990’s. Historically, the strategy was effective because it made brands more humanistic and appealing. It also created emotional reasons to purchase rather than rational ones. In markets where TV still dominates, personality can still work as a brand strategy. However, in the online world, its impact tends to be more limited. Once you start, you have to constantly reinvent the creative to keep it fresh, alive and interesting. And even then, consumers eventually grow bored or tired with the effects. Just track the rise and fall of Diesel Jeans. What was the last ad from them that you can remember? When was the last time you visited their website? And why would you anyway?

Much of the value-based segmentation that exist today came from the drive to give brands a personality that resonates with consumers. Loyalty for Personality Brands tends to be driven around brand experiences. This is why you have a lot of product trialling in supermarkets for instance. Or why brands like Kraft spend millions on creating recipes around its products to get you to try them in new dishes.

Most of today’s top global brands, from Nike to Nokia, are at Stage 4, the Brand as Icon stage. In this stage, the brand is part of the psychological make-up of the consumer. It becomes a way for people to identify themselves. So the 18 year-old football fanatic wears Nike and Quicksilver and drinks Red Bull because those brands help him define who he is. Loyalty among icon brands tends to be fairly strong, as it’s built on an emotional basis that is linked to the way the customer wants to be perceived.

As much of this brand ID creation is influenced by the brand behaviours of peers and tribes, the community, both online and off, plays a growing part in our brand preference list. If we extend this thinking further, we see an evolution where the brand itself becomes a type of community, one defined by common interest and preferences. This is why owners of Harley Davidson motorcycles often feel a bond or affinity with other owners. Or why drinking a can of RedBull is like being part of a club of hi-energy fanatics.

There is an interesting variant on this brand space which is quite strong among today’s prosumers, and that’s called the Brand as Activist/Philanthropist. Currently this is a highly attractive and powerful niche positioning that appeals heavily to prosumers. The more empowered a consumer is, the more cynical they become about corporate behaviour and blatant profiteering. By linking the brand to its social/CSR behaviour, the brand gains real meaning and impact online. The opportunity for customer involvement is also very high as you can make the customer part of your “giving back to society” activity.

With the exception of a few key brands such as Newman’s Own in the US, which is founded as a social enterprise, most brands utilise this not as a brand positioning, but rather as a tactical strategy. Which is a shame really, because as global problems increase, the opportunity for brands to stand out with this strategy are significant.

One could argue that the Brand as Activist/Philanthropist is not really an evolutionary step up from Brand as Icon stage, but rather a comparable strategy in itself. However, I have put it here simply because I believe that Iconic brands will have to align their brand values with their behaviours to survive. Prosumers are looking for brands with real meaning. Not just marketing fiction. And how the corporations and the people behind the brands behave determine that meaning. We have seen enough evidence of this in the last decade, between Shell, Nike and now Texaco, to know that a business and brand has to be more than its products and marketing. It has to be also its mission, beliefs, values and most importantly, its behaviours against the first three.

An equally powerful brand position to adopt online is Brand/Customer Partnership, our Stage 6. I see a lot of Iconic brands trying to move into this coveted online brand space with mixed results. The idea is that the brand becomes defined with the participation of it customers interacting within a community or conversational framework.

The power of this position is that it leverage’s the needs of prosumers to create deeper reasons to engage with brands beyond marketing fluff. Remember, most of society lives in a world beyond their control. Corporations and government seem to have all the power and generally are seen to exploit people. The Brand/Customer partnership strategy recognises this and helps empower customers more directly by allowing then a greater degree of control over key aspects of the business, from product creation using Customer Made strategies, to distribution and sales using social affiliate marketing. The customer becomes a virtual member of your business and hence is rewarded for contributing to the business. In a sense, the customer becomes a “brand owner” via their active involvement and participation. This sense of ownership offers them the psychological rewards of being more in “control over their lives” while also being able to contribute to something larger than themselves that they can believe it.

The last point it critical and is why many iconic brands continue to fail in this strategy. Most iconic brands were built up off the back of stellar marketing budgets over decades. If you have spent a billion dollars or more on building your brand, it can be very hard to suddenly start surrendering its development over the masses. The other problem is that Iconic brands typically see their CSR initiatives and marketing as completely separate entities. In fact, some see Brand and Corporation as separate entities as well. And this is where the positioning becomes hard to implement.

To work in true partnership with consumers, you not only have to be willing to surrender a degree of control over your brand development, you also have to give them a reason, that is larger than themselves, to want to become involved. So just letting customers create commercials for you or asking them to give ideas for new products simply isn’t enough. You have to have a goal, a mission that they can believe in and want to be part of. Think of Dove’s Campaign for Real Beauty. The effectiveness of the campaign was that it not only gave people a reason to believe, but it also empowered them to contribute to the debate and be part of a mass movement.

Which is why the Brand as Activist/Philanthropist sits before Brand/Customer Partnership. If you adopt the first strategy, you will have powerful motivators for customers to work in partnership with you to make it happen.

In this space, the community of like-minded buyers are key to thriving in this space. Suddenly the brand is no longer a brand of me, but a brand of we. As marketers, we need to look beyond the individual to also look at their networks.

The final positioning is Stage 7, Brand as Democracy, in which you literally use your brand as a platform for tackling global problems working in tandem with your customers. Brand as democracy enables the community to turn the power of the brand into direct social action in an effort to affect global change. Whether it is to use the brand as a media or to use the brand as a platform for doing good.

In essence, you allow them to decide what problems you should be addressing to solve. For instance, if you are Coca-Cola, your customers may dictate that you should be addressing the problems of global obesity and water shortage. Using democratic principles and digital platforms, you can empower your customers to vote, debate, propose and participate in finding solutions to these problems together with you. To make this work, you would need to align your agenda with that of the community and create a triple win alliance between you, the customer and NGOs. Here, the customer and society win through the community action; the NGO wins through greater reach, participation and finance; and you win through a level of loyalty that cannot be beat by any other brand or strategy.

The key to making this positioning model work is to know how to apply positioning strategies of this nature is to have a detailed understanding of your market, competitors, business trends and consumer behaviours. This is why I typically recommend starting with a quick internal and external audit that involves your marketing and sales staff, as well as anybody else with who may have a unique insight. I then work with you to define a number of likely brand positioning scenerios to find the one or ones that best fits the business needs and objectives. As it’s possible to be at different stages at the same time in different markets or for different consumer groups, it helps to look at your business holistically and understand which positions are the best for which markets.

Many of the more competitive brand strategies rely on new forms of online marketing, or even require the creation of new online services and products. In the later articles, I will explore some of the more popular methods being used today.

Typical arguments against the idea have been: “Our products are more expensive than our competitors.” “Our prices are higher than our retail because we are afraid to undersell them.” Or my all-time favourite: “It’s our company’s policy not to promote our competitors on our sites.”

Yep. All seemingly sound arguments…. that is if you live in a traditional marketing world. But we don’t. We live in a friction-free economy dominated by empowered consumers. So the rules have all changed.

From my view, having a price comparison service just makes perfect sense. Think about it. Your customers are on your site anyway. They are checking out your products and in the “consideration” zone. Everything we know about consumers is that they will look at the price and go, “hmmm… I wonder if I could get that cheaper somewhere else.” And as sure as the rising sun, they click away from your site, and onto Kelkoo, PriceRunner and wherever, to see if they can get the same product for less somewhere else. Chances are, they can and often do. Which makes me wonder why.

After all, shouldn’t the manufacturer be able to offer the cheapest price, always? Offer it marginally above wholesale price and you have the cheapest price online, and slightly better margins as well. The hotel industry has figured this out, and now many hotel chains, from the Marriott to the Hilton, guarantee the lowest prices direct from their website. Ask yourself, when was the last time you booked via an agent rather than direct? Once you know they have the best price, that’s where you go.

Research has now finally come to light to back up the argument for price comparisons on brand sites.  The new survey by e-tailing group, “Comparison Shopping is a Way of Life”, shows that putting shopping comparisons on brand sites has a significant impact on visitor loyalty and trust.

The survey revealed that consumers are 78% more likely to return to a retailer who displays competitor prices and are 36% more likely to feel an increased sense of loyalty. More importantly, 53% feel that they no longer need to comparison shop for the given product. So essentially, that means you effectively keep every other visitor from leaving your site during those critical last stages if the consideration phase. Although consumer trust in competitor prices displayed over retail or brand sites is quite high, at 52% believing it, you can easily raise this by relying on trusted third parties.

PriceRunner now offer both white-labelled or co-branded comparison engines, for your own site. So customers will know that the pricing you give is exactly what they will find on the comparison sites.

The e-tailing group survey also indicates that consumers often spend up to half an hour using a variety of tools to research products before they make the purchase, so everything you can do to keep them engaged for that time, from providing consumer reviews, good and bad, to transparent pricing, all makes the difference in closing the sale online.

Original article here: http://www.marketingforecast.com/archives/2672

[Source: Hauss, Debbie. Research Shows Providing Price Comparisons Wins Shopper Loyalty, Retail Touchpoints. September 2009]

For the past three years, I have become a huge advocate of using the Internet as a way to create dynamic, lasting business change. There is a phenomenal amount of corruption, incompetence and greed in the corporate world, with AIG being just the latest example. If one were to compile a comprehensive global list using a 12pt font, it probably would be a mile and a half long. And toping the first tenth of the list would be much of the global banking, hedgefund trading and other financial industries that have so screwed up the current global economy. So while government’s tinker with throwing good money after bad into a system that is either corrupt, incompetent, broken model or all of these, here are my own strategies for how business could be using the Internet as a way to rebuild what they have lost and are in danger of never getting back, consumer trust.  

Strategy 1: Implement a policy of total transparency

We are currently at the cusp of a fundamental change in business, and even political thinking. Customer activism and watchdog groups are growing apace. Each day, they get better at revealing corporate and government dirty laundry. Each day they seem to gain greater access to information that was once considered confidential and proprietary, either through various freedom of information government movements, or a near endless resource of existing and former company employees whose own loyalty and trust have been wiped out by a decade of loyalty-busting labour practices. Each day, they are grow in influence among an ever-growing cynical consumer base whose most powerful weapon is the easiest to utilize, to stop giving money to people obsessed with other people’s money. Their message: “if profit is your sole reason to exist, your days are numbered.” 

The time has therefore come to fundamentally rethink the notion that secrecy is vital to the successful functioning of business and government. The Internet should be used to publish information proactively. Useful information to publish will depend on the nature of the business and product. For some, detailed ingredients lists, along with explanations as to what each ingredient is, its health risks and why it’s used, are important. For others, cradle-to-grave environmental statistics and policies will be key. How much energy did it take to make the product? How much to ship and recycle it? What materials are used in packaging, construction, so on, and how are they collected and recycled and by whom?

When mistakes happen, CEO’s and business leaders need to get tougher skin, fess up and talk about immediately. Errors are forgiven. Customers are actually reassured to know that companies are human after all. Lies and obvious omissions won’t be forgiven. They will make it look like you have something to hide and customer’s won’t trust you, something they are more inclined to do anyway.

US footwear company Timberland provides a useful benchmark on product information transparency. Their product labels, which are designed like nutritional labels, indicate the name and location of the factory where the shoes were made, the amount of energy used in production and the percentage of renewable energy used. It even shows the percentage of factories assessed against code of conduct standards and the number of hours employees have volunteered in the community. When it comes to information transparency, it’s safest to err on the site of too much rather than too little.

Price transparency is also critical, while also being the most difficult part of total transparency to implement. In much the same way as Marks & Spencers exposed what was behind its labels to reveal its ethical supply chain, price transparency shows the real cost of delivering a product to the shelves. What percentage of the product’s total price is made up by sourcing, manufacturing, packaging and marketing cost? What are the margins for the seller and the manufacturer? For many marketers, this is indeed a bitter pill as few customers will support a 400% or more mark-up, especially on household necessities such as chicken and eggs. This is where having ethics at the core of the company’s business will really pay off. Customers are probably more willing to pay higher margins to company that gives 100% of its profits to charity, and less willing to pay the same knowing that profits will go to finance the purchase of a super yacht for top shareholders. If you are not sure you should implement price transparency because you believe that consumers don’t know your real cost, here’s a simple exercise. Go to Google and enter: “the real cost of product x” or “profit margin on product x” where product x is what you sell. I ran this exercise on the cost of a pair of £100 Nike trainers (£2 was the conclusion) and on a $0.99 McDonald’s Cheesburger (89 cents was the conclusion). Whether or not these numbers are accurate is irrelevant. Because they’re the only answers I found, they’re now the only answer I believe. So you can let consumers dictate what people believe is the truth, or you can be transparent and let them know the truth and use good business strategy and product differentiation strategies to justify your profit margin.

Increasing label sizes to communicate all of this information can be daunting for a consumer to read and even counter-productive as it increases the amount of packaging. A more environmentally friendly solution is to use QR codes. Essentially square bar codes, QR codes can be read by mobile phones and link consumers instantly to websites. Larger codes can even convey the needed data in the code itself. With Nokia starting to ship new phones with pre-installed QR code software, the technology is becoming a feasible alternative to labeling.

Strategy 2: Foster dialogue with stakeholders

Business partners are typically considered to be critical stakeholders. However, a growing number of corporations are realising that they can’t monitor their long supply chain alone and are starting to partner with watchdog organisations and NGOs. As independent groups, watchdog organisations are often more effective than the companies themselves at finding out what is really happening in their own supply chain. By using the Internet to provide open communications between the NGO’s, corporate managers and suppliers, companies can stay on top of any violations of its codes of practice and change suppliers who fail to live up to them.

Partnering with employees seems obvious, but 69% of companies surveyed by IBM don’t partner with their employees. These companies view employees at best as resources that can be cut from the bottom line to suit quarterly profit returns. This short-sighted and dangerous thinking has completely eroded employee trust. Through the own behaviour, CEO’s have taught employees to look after their own personal interest above the company’s. 

By creating internal web communities that connect employees and management around the company’s CSR objectives and initiatives, employees can be empowered to drive real corporate change and customer confidence. They can share best practice, discuss problems as they arise and create solutions. They can participate in the charity process or even help shape the way it functions.

Strategy 3: Empower your customers

The final strategy is to view one’s customer base as partners rather than consumers. As partners, the company needs to empower them with the ability to help define and drive the corporate agenda and business practice. This goes far beyond UGC, or participatory marketing. As with the second strategy, customer empowerment requires using web 2.0 tactics to involve customers in every aspect of the business. In practice, this means letting local customers define the community issues that are most relevant to them. It means letting customers voice their concerns about the way the company does business locally and globally. It means giving customers a conduit directly to the CEO or even to Board management rather than filtering their opinions through layers of corporate bureaucracy. Board level decisions are too far removed from the customers that keep their businesses running.

Just as the NGO and watchdog organizations can be partnered with to follow one’s supply chain, customers can be partnered with to follow one’s reseller and sales network. Not all outlets will act in the best interest of the brands it sells. By encouraging customers to report overcharging or questionable service bundling practices, companies can reign in rogue sellers and protect their own customer base.

In short, the more information, control and involvement one gives to customers, the more likely are they to remain so for life. For involved customers are committed customers. And committed customers are far less likely to quite on you when times get rough or migrate to your competitors for a promotional gain. By involving and empowering customers in such a core, critical fashion, you generate a loyalty that far supersedes anything currently experienced by today’s loyalty programs.

Further reading:

http://www.prweekus.com/Profit-transparency-top-consumer-study/article/123629/

http://hbswk.hbs.edu/archive/1801.html

http://www.clickz.com/2221951

http://www.fas.org/sgp/crs/misc/RL34101.pdf

http://www.gaspricewatch.com/new/default_V3.asp

http://www.corpwatch.org