February 2013 : Persona Design

Is Your Price Right? Does It Strengthen Your Profitability or Undermine It?

February 25, 2013/0 Comments/in Brand Profiling & Positioning, Brand Strategy, Brand Values, Branding, Business, Marketing, Return On Investment /by Lorraine Carter

For some companies, the pricing policy for goods and services is based purely on a combination of covering costs and making a reasonable profit. Smart management however, understands that pricing is one of the most obvious indicators of a brand’s competitive strategy.

Pricing policies determine where your offering is positioned in the market. It is a reflection of your brand’s core values and helps shape customer quality expectations of your product or service. With this in mind, ask yourself, what is your pricing policy telling your market about your brand?

Top 3 Most Common Pricing Mistakes to Avoid

1. Lowest Price Does Not Always Mean Best Value

Most customers care about value for money rather than lowest price. In tough economic times people still have to spend money and so their tendency to focus on the value of their ROI is even more pronounced. Customers are far more than one-dimensional money savers. They want brands that will serve their needs and offer value for money.

2. Cost Cutting

The current economic situation has come companies cost cutting and lowering prices in an effort to survive until things improve. Brands need to accept the current economy as the new normal. Look at it not as a bad economy but as the economy. Companies should implement a pricing structure that best reflects the core value of the brand, rather than clutching at the lower end of the market.

Companies need revenue more than ever. Cost cutting can position your brand as the low cost provider and that is a risky place to be in. Brands that focus on being the low cost provider are left with little to offer the market if suddenly undercut by competitors.

3. Inconsistent Pricing Strategies

Frequently changing pricing strategies makes it difficult for customers to calculate the value received with each purchase. It can lead to consumer confusion and can trigger a lack of confidence or mistrust in what appears to be disorganized management. Identifying your most appropriate pricing strategy and keep it consistent.

Top 5 Strategies That Can Strengthen Your Brand Positioning

1. Emphasize Benefits

Lowest price doesn’t always win. Customers develop feelings through their brand experience that impacts on their judgment of value. Customers care about value. By remaining consistent in your pricing strategy and focusing on communicating the value proposition of your brand you will provide your customer with the confidence they need when making a purchase and help them feel more positive about the way they spend their money.

2. Focus on Core Values

Core values are the foundations on which brand identity is shaped. Re-examining your brand’s core values can help refocus your pricing strategy and provide the guidelines to strengthen your relationship with your customers. If your brand’s core value was to provide greater quality at a fair price then moving to a low price strategy will damage the very nature of your brand. Customers tend to be more willing to spend a little more money for better value.

3. Bundle Costs

Customers feel a loss when they spend money. Separately listing all the elements they are paying for highlights the extent of the loss in the transaction. Bundling the items into one price is easier to change the customer’s perspective, encourages purchasing and can provide a sense of increased value for money.

4. Stagger Price Increases

Webers Law is a strategy adopted by Starbucks in their pricing strategy. It states that customers do not register price increases until they become highly significant. By raising their prices by only a few cents at a time Starbucks did not deter their customers and managed to rise prices without consumer backlash.

5. Make Your Offering Incomparable

You don’t want to be forced to lower prices, but how do you deal with low price anchors set by your competition? The easiest way to make your offering incomparable to your competitors is by changing the way you present your offer.

For example, if you are in the B2B software industry, rather than a generic offering; “software solutions for business”, try “software solutions for business that maximize productivity”. That one small change can make sure that your solution is incomparable and will make it harder for customers to reference the low price anchor.

Do not compromise your brand integrity by slashing prices. Focus on your brand’s value proposition and articulate it clearly to your employees and customers alike. Make sure the pricing strategy you employ supports a sustainable and profitable future for your brand.

• Do you need to reposition your brand to increase your profitability?

• Are you undermining your brand with unsustainable discounting?

• Could re-evaluating your core brand values help you increase your profitability?

Brand Commoditization : How Safe is Your Brand?

February 18, 2013/0 Comments/in Brand Profiling & Positioning, Brand Relevance, Brand Reputation, Brand Revitalisation, Brand Risk Management, Brand Risk Mitigation, Brand Strategy, Brand Values, Brand Voice, Branding, Business, Customer Service, Global Branding /by Lorraine Carter

A question to ponder this week… What would your customer’s identify as the number one reason for buying your brand?

If the answer is ‘low price’ or ‘convenience’ your brand could be at major risk of becoming just another commodity brand; a very risky position for any brand to be in.

When it comes to commoditization, no industry is safe. Whether you produce consumer products or supply professional services, when your customers can no longer differentiate your offering from that of your competitors it puts the company’s success and profitability in jeopardy.

Commoditization is a never ending reality in business today. No matter how hard a successful brand works to be different, their competitors are working equally hard to replicate it.

Markets are awash with ‘me too’ products. Customer choice has never been greater online and offline. Brands need to be very proactive in reinforcing their differentiating factors to their customers i.e. the reasons why their customers should choose them. But without a truly unique product or service that process is becoming more and more difficult.

Is Your Brand At Risk?

How easily can you quantify the differences between your products and services from those of your competitors? Think then about how easily your customers and prospective clients can make the same distinction? What’s your big why for your brand? What does it stand for?

When the tangible differences between competing brands diminish, the danger of commoditization grows. But all is not lost. Many brands enjoy a sustainable longevity in their market, despite aggressive copycatting, and do so by identifying the broader value offered by their brands.

Articulating the extended intangible values of your brand creates a tougher opposition for competitors. Replicating a product is easy, replicating a brand identity is not.

5 Ways To Safeguard Your Brand Against Commoditization

1. Brand Values

The first step for any company in safeguarding against commoditization is to use internal knowledge to identify the company’s broader value. Take time to consider the intangible benefits of your brand, the perceived benefits to customers, and the desired emotive response when someone experiences the brand. Think back to the very beginning and refocus on the brand identity. What were the core values that established the brand?

Apple’s strength lies not just in innovation but on a dedication to producing a high quality product. Their product prices are amongst the highest on the market but their willingness to lose a portion of market on price reaffirms their dedication to their core value of quality and establishes their brand identity in the mind of the consumer.

2. Relationships

Tangible elements are easy to replicate. Strong brands succeed in developing strong relationships with their customers. Leverage face-to-face interactions and social media to learn more about your customer and start a dialogue that fosters a meaningful relationship that extends beyond the brand experience.

3. Leverage the Corporate Brand

The corporate brand often has sustainable equity. Leveraging the corporate reputation and trust can deliver broader value to product brands and help shape a comprehensive offering to customers that extends beyond the product service attributes.

4. Package Design

Innovative packaging that creates an aesthetic beyond function can help increase perceived value to the customer and enhance market share. The O’Egg brand focused on package differentiation to turn a commodity product into the pre-eminent egg brand in Ireland.

5. Brand Experience

When a product or service is easily replicated, innovating brand intangibles can strengthen the position of the brand and protect it from the threat of commoditization.

Think differently about your business. Change how its’ perceived. A unique service area, outstanding customer support, or special loyalty rewards can set your brand apart.

Starbucks’ strength grew from creating a brand experience around a commodity product. What set the brand apart were the various elements that nurtured the customer’s experience of the brand; from the service setting, to the coffee ordering system, to the interactions with staff. They changed the way the world ordered coffee.

Global giant that it is, Starbucks is now under threat because the brand experience has become the commodity and the Starbucks focus has drifted to profit margins and market growth rather than extending customer value. The brand is currently in the process of returning their focus to their core value, putting the customer’s coffee experience at the heart of their operations again.

One of the biggest problems that lead to a weakening of brand equity is a lack of awareness in the company of the causes of commoditization.

Businesses end up spending valuable resources on updating products and expanding product lines without having a real understanding as to what their customer’s really need and value.

• When was the last time you surveyed your customers or researched your market properly?

• Do you really know what’s happening at grass roots level in your market?

• Do you need a brand audit?

In short, how safe is your brand?

De-Branding to Differentiate; Is Your Brand Strong Enough?

February 6, 2013/0 Comments/in Brand Experience, Brand Strategy, Brand Values, Branding, Communication, Customer Engagement, Global Branding, Innovation, Marketing, Retailers, Trends /by Lorraine Carter

Selfridges department store in London made waves recently with consumers and marketers alike with the launch of their “No Noise” branding project.

In an aim to address the increasingly cluttered world of 21st century marketing, Selfridges opened the Quite Shop in-store. Minimalist art and music, and a ban on mobiles and shoes set the scene for a tranquil consumer experience, but bucking the very core of consumerism, the store went beyond by launching brand-free retail.

Global brands such as Levi’s, Heinz, and Dr Dre Beats all produced products that were void of logo or product information for the project, leaving customers to experience the products without the usual assault of marketing design.

Arguably a campaign for media publicity the project did highlight two important branding issues:

1. How Strong Is Your Brand Without Its Logo?

A truly strong brand transcends its logo, as was evident from the No Noise project. Not only were the brands instantly recognizable when void of logos but critically, consumers had developed such an affinity with the brand through the intangible intrinsic values that even the un-branded product still offered value.

2. With the Prevalence of Brand Clutter, Can De-Branding be a Valuable Differentiator in the Market?

The de-branded products of the No Noise project also created exclusivity out of normal brands. Void of logos and product information suddenly made Heinz baked beans tins a desirable limited edition unique offering. In a world where branding information is bombarding the consumer, could the simple brand-free product be the one that makes the biggest impact?

Starbucks might be one of the most recognizable brands in the world but it too has started to explore reducing its brand imagery in an effort to differentiate its business and extend its market catchment.

Starbucks global reach meant that the visibility of the brand worldwide was almost having a negative effect with consumers. Over saturation of the corporate logo was almost making it uncool with consumers, with a trend towards local coffee houses emerging.

Starbucks began removing their name from their cups, and even redesigned their newer stores to fit into the local environment. In the UK no two stores are the same and the brand is focusing on less corporate branding and offering a more personalized experience to their customer. In a high street with Costco chains blatantly visible, would the de-branded Starbucks coffee house offer a more welcoming personable experience to the consumer?

De-branding to gain attention was a strategy adopted by VO5 last year in an effort to target the teenage boy market. The brand’s strategy focused on building brand equity through a meaningful narrative in their advertising. They wanted to be less pushy with their products and thought that un-branded advertising adds to their credibility with their target market.

An unbranded 30-second teaser on YouTube spearheaded its new integrated campaign ’Pageant’. The short trailer achieved 180,000 views in two weeks after its launch in October and was also voted one of the most popular videos on YouTube’s comedy channel. The trailer was followed by an online film and a TV spot as well as a YouTube channel and Facebook page.

The viral success of the campaign means that there might be credence to the claim that de-branding might just be the key to breaking through brand clutter and gaining the attention of the audience.

Branding and logo saturation is something that is having an impact in the luxury brand industry, an industry that once thrived on the power of their logos. Recent years have seen brands like Gucci experimenting with logo-free products where they have achieved success targeting a more sophisticated customer.

The customer’s affinity with the product was defined by their interest in the quality of the product materials and design rather than perceived status attained from the visibility of the logo.

With a logo-free product the brand has achieved enhanced positioning and exclusivity with their target consumer. By recapturing a more knowledgeable customer and developing an aspirational product, the brand was rewarded with a 25% increase in annual profit last year.

Eliminating the brand name from marketing activity is also evident in the professional services industry. While many brands strive to develop brand awareness in the market, sometimes negative brand connotations make it necessary to de-brand. Coutts private bank recently did just that, dropping the well known but unpopular RBS parent brand from their name in an effort to extend business.

The common thread in the examples above it that, before the de-branding took place, each company had developed an offering that presented value to their customers that extended beyond that tangible product itself. The strength of customer’s brand loyalty enabled the brands to experiment with the de-branding process. For obvious reasons de-branding won’t work in every case.

Tesco explored removing their brand name from some products but research has shown that the products were more popular with the Tesco name included as the customer has a better understanding of perceived quality that the brand represented.

De-branding certainly is not for every company, but it does force you to think about what elements of your brand make the biggest impact with your customer. Could de-branding be part of your brand strategy?

• Does your brand offer value to your customers that extends beyond the tangibles of the product or service?

• Do your customers have a clear understanding of your brand and its story, what it stands for?

• If you de-branded your product, what are the remaining elements that would have the biggest impact with your customers?