To succeed in this complex environment, firms need to communicate the specific value they bring to customers. Claiming that your company is the “market leader” is just too soft nowadays.
Companies often must manage a portfolio of brands sold through a variety of distribution channels. To help companies develop winning strategies that meet the needs of multiple customer segments, Smart Business spoke with Bob Segal, a principal at Frank Lynn & Associates and the leader of the firm’s Brand Strategy Practice.
What does it mean for a brand to communicate added value?
More than 60 years ago, psychologist Abraham Maslow described consumers’ needs using a pyramid with basic needs such as food or sleep at the base and higher-level needs such as acquiring knowledge, being creative or contributing to society at the top. We have developed a similar approach on the business-to-business side, emphasizing higher-level needs like improving customers’ productivity, reducing their life-cycle costs or helping them develop new products. For consumers or corporations, adding value means linking your brand with these higher-level needs.
Is it enough to merely link your brand with these higher-level needs?
A successful brand position must satisfy three conditions: it must be unique, compelling and credible. Linking your brand with a compelling customer need in a unique way is a good start. However, many companies falter in the implementation phase when credibility is proven or refuted.
Can you give us an example?
For one of our business-to-business clients, we developed a position that emphasized how the company works closely with its customers to reduce costs and production setup time. The client used a variety of internal media to educate its employees about setup time reduction in its own manufacturing facilities, created employee-client cost-reduction teams, and even created a setup time-reduction institute on its Web site.
Even if you have a unique, compelling and credible position, how do you get the message out in such a ‘noisy’ environment?
The key to getting your company’s message heard is developing an integrated marketing effort. You need to coordinate your advertising, Web site, brochures, distributor training and motivation, employee communications, word-of-mouth and telemarketing scripts. Then you need to translate all of this into a campaign focused on specific, targeted customer groups or segments.
We talked earlier about customer needs. What can a company do if it has a diverse set of customers with different needs?
In the world of branding, we often talk about brand architecture. This concept addresses how many brands a company requires and the relationship among those brands. My default position is, the fewer brands the better. Using a single brand costs less, is easier to manage internally and easier to understand externally.
However, your question is astute because many markets today are fragmented. We have a client that sells nail guns to consumers, contractors and industrial users. Each of those groups is composed of multiple subsets. In a perfect world, you would stretch your single brand to cover all those groups. In reality, finding a single compelling message for such diverse groups is difficult. Many companies often develop new brands when a single brand simply won’t due. Toyota’s launch of the Lexus brand is a classic example.
How does a company with multiple brands coherently communicate different messages to different markets?
The answer is complex, but one key is to carefully coordinate which brands are sold through which distribution channels. In my Toyota/Lexus example, Toyota recognized the premium or luxury message it wanted to communicate with its Lexus brand would be undercut by the middle-class nature of its existing dealerships. To carry the Lexus brand, Toyota required its dealers to establish separate Lexus-branded dealerships that oozed the luxury image.
Physically separate distribution channels is one way of helping customers easily understand brand differences. Of course, making sure that each brand’s message is unique is a prerequisite
Can’t companies just outsource this work to their advertising or public relations agencies?
Some agencies do stellar work. However, many agencies -- particularly those that work for smaller companies -- are often more comfortable designing brochures or writing press releases than developing overall brand strategies. Brand strategy reflects a company’s overall mission and the vision of the CEO. While advisers can help, the true success of any brand strategy is the creation of an idea that uniquely and credibly solves key customers’ compelling problems.
BOB SEGAL is a principal at Frank Lynn & Associates and leader of the firm’s Brand Strategy Practice. Reach him at (312) 558-4828 or (800) 245-5966.