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.

There was an important and potentially market changing report released by IBM last year called ”Attaining Sustainable Growth Through Corporate Social Responsibility,” that the sustainability lobby and bloggers picked up, but marketing bloggers seems to have ignored. So here is the video on it for those who missed it.

Now, there is likely to be a belief that because of the recession, we can throw out all of this information. We can unwind our CSR efforts. Finally go back to massive cost cutting and focus on the bottom line by continuing to do business in the way we once used to, without having to worry about ethics. When it comes to the recession, ethics fly out the door. Or does it?

Consider the massive consumer and even governmental back-lash against the massively unethical behavior of the banks that threw the world economy into a tailspin. Governments are calling for more regulation and an end to runaway capitalism. While consumers are calling for a return to the old-days when bankers were trusted members of the community and knew their individual customers. Take a look at the latest Natwest campaigns on YouTube to see where that industry is headed. 

The fact is, we are entering an age where CSR will be what keeps a brand from tanking in the post-recession world. So though marketers and CEO’s might be inclined to shelve their CSR plans (for now), they may want to think twice and start using the recession as the reason to re-engineer their marketing departments and their business.

Here are four ways for companies to rethink the way they approach marketing in order to ensure coming out of the recession ahead of the competition.

Re-thinking corporate marketing

The most worrying statistic in IBM’s report is that 76% of surveyed business leaders don’t know their customer’s CSR expectations. Read another way, one could almost say that these business leaders don’t really understand their customers at all. They may have insights into the consumer’s purchasing patterns, but they don’t really know what makes them choose one product over another, let alone what they really think concerning ethical behaviour. For marketers to really understand today’s consumer market, there are some fundamental marketing behaviours that need to change.

First, marketers should no longer attempt to classify and pigeonhole customers into artificial segmentation models. These are old-fashioned research methods that belong in a previous age and should be left behind. Marketers need to recognise and identify people as individuals, each with their own unique needs and desires. Against popular perception, powerful privacy busting databases are not needed to do this. One simply has to be in a position to ask them to share the information, or better yet, to empower them with better ways to control and share their own data.
 
Second, marketers should stop thinking in terms of persuasion, selling and manipulation. Marketers have been waging psychological warfare against their customers for decades, and many still continue to do so. Armed with the latest psycho-babble from their ad agencies, they rush out to attack the individual’s sense of purpose, family, confidence, self image and integrity and to supplant it with a belief that shopping cures all ills.
 
Not content with brainwashing adults, many marketers are even falling into the legal and ethical landmine that is marketing to children, in the belief that brainwashing a future generation of consumers will ensure long-term growth. In truth, they are merely opening themselves up to an extremely litigious future, when parents of these children start class action suits against these companies for violating parental rights. The law may appear to insulate today, but laws change as quickly as the politicians who push them through. And what is legal today, necessarily won’t be tomorrow.

Third, marketers and CEO’s both need to stop thinking CSR as a public relations department or a new form of marketing opportunity. As Benetton and Marks & Spencer have learned, there is massive business growth for companies who embrace CSR, not as a new product division, or even as a communications platform, but rather as core business practice, one that runs horizontally and vertically through the organisation. One only needs to look at the runaway success of companies such as CaféDirect, Innocent Drinks, Body Shop, FairTrade labelled products and many other new players, to realise where the consumers’ money is going to be spent. These ethically focused companies will dominate the 21st century post-recession landscape.

Even the term marketing itself is out of date. A new term should be coined to more accurately describe what these departments need to do. Perhaps Customer Partnership Manager or Community Engager would be more accurate titles.

Fourth, marketers need to be empowered by CEOs to focus on delivering results annually or even bi-annually rather than quarterly. And their benchmarks shouldn’t solely be focused on sales returns. By changing the measurements for marketers, CEO’s can empower their front-line to think and act strategically over the long-term, rather than tactically over the short term.

Concepts such as, ‘the lifetime environmental and social costs of a product or service’ need to be part of the marketer’s daily vocabulary. They need to be able to think about softer but critical issues such as ‘consumer confidence’ and ‘trust’ over profit margins. The current trend of overcharging for ethical and organic products on the premise that customers will be gladly pay extra for a clean conscience is happening because marketers still prioritise their commercial imperative to endlessly increase profit. The real cost of this bi-polar thinking is a growing damage to brand reputation.

For example, there is growing resentment among consumers who buy high-priced organic products that they are being ripped off in a land grab by opportunistic supermarkets. So as one hand of a supermarket brand is trying to create a sustainable and ethical reputation by committing to FairTrade, organic and local sourcing standards, their other hand is seen as robbing customers blind. 

There is a way forward, but one which will be a bitter medicine to swallow for today’s profit obsessed marketers and CEO’s. That medicine is called total transparency, and it requires a great deal of trust and faith between the corporation and the consumer. That trust and faith can be developed at low cost using the Internet.