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I was recently asked to conduct a workshop on branding commodities. A commodity, per one Merriam-Webster dictionary definition is “a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (as brand name) other than price.” By definition, commodities lack the differentiation and ability to charge a price premium that strong brands have.
Several participants in that workshop represented different energy companies. Each one wanted help in being able to charge a 10-20% price premium for his or her “commodity” products. Here is the good news -- a colorless, odorless, relatively tasteless alcoholic beverage (vodka) has been branded and commands a price premium -- one brand (Absolut) due to its consistently advertised bottle shape alone. And, of course water has been branded. I remember paying $23 for a bottle of Voss branded water at a restaurant in La Jolla, CA several years ago when that brand was first introduced. And bananas and pineapples are branded. Frank Purdue fed his chickens marigolds and ground carrots to give them their differentiated, healthy looking coloring.
I am a firm believer that everything can be branded/differentiated.
I have never encountered a product or service that I could not brand/differentiate. So if it is possible, what are some of the tactics for doing so? For B2B brands, you can pursue any combination of the following to provide differentiation:
- Superior product or service consistency (quality control)
- Superior ability to customize products or services to a customer’s specific needs
- Superior responsiveness (order fulfillment, technical support, customer service)
- Optimal/preferred bundling/unbundling of products and services, creating greater perceived value or better fitting a customer’s approach to purchasing
- Superior range of products and services (one-stop shopping)
- Value chain integration
- Unique/preferred/more accessible distribution approach
- Identify your most important/profitable customers or customer segments and focus on meeting their unique needs
- Conduct conjoint analysis to determine what they value the most
For consumer products, you can add the following:
- Ingredient branding
- Unique packaging
- Emotional branding (‘brand as a badge,’ superior purchase/usage experience)
- Unique attitude/personality
In emotional branding, the brand stands for something important to the target customer. It projects and reinforces his or her intended self-image. Being associated with that brand says something about who he or she is. It says I am sexy, I am stylish, I am rich, I have high social status, I am concerned about the environment, I am frugal, I am powerful, I am smart, I am kind, I am spiritually evolved, I am athletic – the list could go on and on.
For brands in which there is no product or service differentiation, the role of the marketer becomes critical. The brand itself, and what it stands for, may become the primary or only point of difference.
While this is a quick survey of the topic, I hope I have shown you that any product or service can be differentiated/branded in a way that allows for a price premium to be charged. One needs to ideate (brainstorm) in a focused way around each of the differentiation approaches listed above to arrive at a successful differentiation strategy for his or her brand. And, don’t forget, any successful differentiation approach must pass this test: (1) the differentiating benefit is highly important to the target customer, (2) your brand can deliver the benefit well and (3) your competitors cannot. That is, your brand must promise to fulfill a strong customer need for which there is a marketplace gap. I wish you great success in branding your commodity. If you need some help, let me know.
Restaurant Marketing
I recently presented to a local chapter of the National Restaurant Association at their annual meeting. I spoke about “The 10 Things Every Restaurateur Should Know About Building and Marketing Strong Brands.” Here are the ten things:
- Know your customers
- Know what they value
- Build awareness
- Be unique and compelling
- Have a convenient/visible location
- Have convenient hours
- Develop a concept
- Exceed customer expectations
- Focus on front line employees
- Create sensory experiences
For instance, for the first point (know your customers), think about this. What is of the greatest value to each of these customers?
- A harried father with three young children
- A couple celebrating their 25th wedding anniversary
- A large person with a voracious appetite
- Business partners wanting to have a serious discussion over lunch
- A vegan
- A business executive wanting to entertain businesspeople from China
- A delivery truck driver wanting to eat in 15 minutes or less
- A couple on their way to the theater
- A high school boy on his first date with a girl on whom he has a crush
- A group of high school kids hanging out
- A world traveled epicure
- A mother wanting a quick bite to eat while running Saturday errands
- A group of thirty-something women celebrating a divorce
Consider the following attributes:
- Menu (type, variety, ala carte versus fixed price, etc.)
- Flavors, textures, ingredients, freshness, organic
- Presentation
- Food quantity
- Availability of alcohol, wine list, etc.
- Ambience (architecture, light, sound, décor, etc.)
- Upscale versus comfortable/homey, etc.
- Privacy (versus people on display to be seen)
- Wait staff (invisible versus interactive)
- Activities for children
- Total elapsed time (leisurely versus quick)
- Total price
Often, restaurateurs realize that their restaurants need to be repositioned, but they want to do this without incurring the huge expenses of capital projects/leasehold improvements. This can occur when a restaurant gains the reputation of being a “blue hair” restaurant, which can even dissuade 50 and 60 year olds from dining there. It can also occur, when a restaurant located in a hotel is passed over by people in the community because of the general perceptions of ‘hotel restaurants.’ There are cost-effective solutions to repositioning these brands if the restaurateur can identify whom he or she would like to increasingly attract. Often, a simple gimmick, menu change or other market segment-specific cue can be all that it takes to attract new customers. Drive this with a little buzz marketing, and the restaurant is well on its way to attracting a new audience.
Employee-Brand Alignment Incentive Program
I was recently made aware of a fully hosted online system that is designed to provide organization-wide incentives for employees to exhibit attitudes and behaviors that reinforce brand values. The system, which can be completely customized for each organization, involves employees, their immediate supervisors, people who nominate the employees for brand-reinforcing behavior and management. There are several benefits to this approach of internal brand reinforcement:
- It is an overlay to the existing organization design and other HR systems. That is, it does not require huge (expensive and time intensive) OD/corporate culture renewal projects.
- It reinforces brand values on a regular basis for all employees.
- It provides for relatively immediate recognition for brand-reinforcing behaviors.
- Management can observe organizational changes through detailed reporting.
- It is relatively simple and quick to implement.
If you want more information on this system, please contact me.
Good News/Bad News
Years of total quality management (TQM) and customer service improvements have significantly improved the perceived (and actual) quality and value of products and services in many categories. You might think that this would increase customer brand loyalty as well. However, it often has the opposite effect. The more satisfied customers become with all brands, the less loyal they become to any particular brand. Essentially, every brand exceeds their satisfaction threshold and they then are more susceptible to making their purchase decisions based upon price differences. So, in general, brands are not commanding the price premiums that they once did. What is the solution?-- relentless brand differentiation/repositioning. Brands matter less, which interestingly, can make the brand strategist’s job more critical.
Brad VanAuken is president and founder of BrandForward, Inc., a full-service brand management consultancy with clients throughout the world. Previously, Brad was the vice president of marketing for Element K, a leading e-learning company and director of brand management and marketing for Hallmark Cards, Inc. During his tenure as Hallmark’s chief brand advocate, Hallmark received the Brand Management of the Year award. Recognized as one of the world’s leading experts on brand management and marketing, Brad is a much sought after speaker and writer. He wrote the books The Brand Management Checklist and Brand Aid. His free online brand management and marketing newsletter is read by thousands of marketers throughout the world. Brad has a BS degree from Rensselaer Polytechnic Institute and an MBA from Harvard Business School.
Email:
vanauken@brandforward.com
Company Profile:
BrandForward, Inc.
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