What is Brand Equity and Differentiation?
Firstly what is Brand Equity:
As indicated in the previous blog Brand equity is the sum total of the consumer perception on the brand, the relative quality of the products and services, financial performance, customer loyalty, customer satisfaction and the brand esteem. It is the collective experience of all customers, vendors, employees and stake holders and how they relate to the brand. It is the moral obligation of every employee to build the brands equity and enhancing the perception of the brand in the eyes of the consumer by living and breathing the brand day in and day out.
Brands are the strategic assets of the organisation. Marketing budgets are not a constraint for building brand and enormous opportunities can be leveraged to enhance the brand equity if all the employees and stake holders including vendors collectively believe in the brand and understand the mindset. In order to leverage the brand and grow the brand equity substantial budgets are not required.
In order to build brands Duane E Knapp has indicated that the first step in building brands is differentiation which I touched upon in my last blog. Differentiation should be the first step to enable service or product to cut through the clutter of multitude of offers and occupy a distinctive position in the target audience’s mind.
What are the drivers of brand Equity and differentiation?
In “Managing Brand Equity” David Aaker describes them as Perceived quality, brand association, name awareness and brand royalty.
It is evident that perceived quality is important in order to differentiate your brand along with quality of service the customer expects, as indicated in my previous blog.
Awareness was discussed by me in my previous blog, however awareness alone is not adequate without differentiation as it will be just another commodity that is known, become marginally profitable commanding little or no loyalty liable to be extinct.
Brand associations are also helpful in relating to brand when brands are associated with other brands e.g. Starbucks with Marriott, Nike with Michael Jordon, McDonald with Disney and Intel for example has a very distinctive tone. Singapore Airlines has been long associated with service. In order for brands to build a loyal customer base and differentiate themselves in the market quality of service is of paramount importance. Hence Brand Loyalty is of paramount importance. Nothing like a satisfied customer to promote your brand. So how does a brand create unflinching loyalty? In order to create unflinching loyalty brands need to exceed customer expectations and delight them at every opportunity. Customer delight will not only build a loyal customer base but also build it further and get further business. You must believe in “wow” factor for the customers and exceeding their expectation at every stage to achieve customer delight.
Brand Strategy to adopt
- Define the brand and the reason for its existence and define the brands promise to its customers
- Distinguish yourselves in the market place
- This in turn will enable you to gain a competitive advantage
Why is building brand equity and differentiation necessary?
Distinctive brands will enable you to command a premium, stand out in the clutter of offerings and given the harsh fiscal climate will enable you to distinguish yourselves in the market place. The more distinctive a brand the more competitive advantage it will enjoy. You need to create a perception of quality of products and the quality of service. You will need to consistently create that perception of quality, continuously delight and continuously leverage the brand. Research your customers well, base all your decisions on the facts of the market and base your judgment on your brand values and goals consistently. There is little doubt that customer delight is important and it is a well recognised fact due to the attention it has always received through the Malcom Balridge Awards for quality Management and J.D. Power and Associates Satisfaction research and closer home Customer service awards from the Institute of Customer Service and UK Customer Experience Awards.
Differentiation is utmost importance and the promise must elaborate on the unique benefits a brand has to offer to its customers. After developing a promise and crystallizing the benefits develop a blue print of the key messages that will communicate this promise. (Do not forget to develop a content blueprint based on the keyword research). This will include the name, byline, tagline, and representation. As a next step outline the brand principles. In order to develop the brand strategy and course correct if necessary first establish the current state and objectively assess the current positioning through customer research and do a complete SWOT that may affect the brands performance. In order to deliver on the promise you must internally communicate the brand promise and values to all employees so that they may abide by the values of the brand and deliver on the promise made. This must be universally done throughout the organisation. This will enable the organisation to live the brand values and deliver on the promise delighting the customers through exceptional customer service exceeding their expectations at all times. It was mentioned in the last blog that you do not need a mammoth marketing budget to build a brand. You must leverage the brand and differentiate yourself in the market through customer service. Customer service should be one of the foremost areas to be explored by a company. The purpose is to serve the customer in the best possible way and desires to achieve customer delight in every possible way earning repeat business and referrals. A sale is the start of the customer journey on the path of a long term relationship. Some large MNC’s that I worked in the past with tied their bonus of their employees to the customer satisfaction scores which served as a driver for living the brand values.
It is the customers who determine the reputation of a brand and this is where Social Media Marketing comes. It consists of all the elements of Social Media Optimisation, Online reputation Management and the Content Plan including Video Content. Michael Treacy stated that to capture a larger share of the customers wallets the organisation needs to excel in either operational excellence, product leadership or customer intimacy. Historically companies who have dominated have excelled in on e of the above areas common denominator still being customer delight. Satisfied customers will grow your revenues through repeat business and referrals. It is far easier to leverage an existing relationship than build a new one for additional revenue streams as also the acquisition cost will be minimal in existing relationships. Beginning with communicating brand values and adopting a service attitude does not cost much. Research has time and again reflected that a unhappy customer tells 10 and a happy one tells one. Unhappy customers will go to the social media platforms and complain to others which will depreciate your brand. As per the statistics in the last blog the Internet usage and online media spends are growing by leaps and bounds this is leading to the transformation of the marketplace to the market space. All the online and offline elements of the brand must work in harmony and be consistent in look and feel and consistent with the strategy of the brand.
Pareto analysis in my past experience has demonstrated 80/20 rule. That 20% of the customers generate 80% of your profits. More sales will not necessarily translate into greater profit. Hence it is more important than ever to take of these 20% customers and provide them a unprecedented service to delight them.
In today’s economy, it is easy to justify making cutbacks. With so many companies hard up for cash, finding areas to cut corners seems like the right approach. Statistics show that when companies look to cut down costs, marketing and advertising are among the first to receive a smaller budget. This is not necessarily the best approach. I also pointed out in my previous blog that leverage the brand equity to drive profits and consolidate your position in the market so that when the times are better your business profits would only head North. Differentiate yourselves in the market and in order to do that you must work on three things. 1) What are the best ways to build a brands image, 2)how will the marketing budget be directed to optimise the brand equity 3) last and the most important, what is the distinctive benefit to be communicated to the target audience. Leverage the spends that you had made in building a brand or start building brand if you have not in the past. Harvard Business Review Article referred to in my last blog that you do not need mammoth marketing spends to build a brand.
Many companies have relied on alternative communication channels, other than mass media, to create brand awareness, convey brand association and build loyal customer base. Our experience has revealed that when an organisation is able to differentiate its brand, product, services public relations and third party consumer endorsements can be very powerful tools to help build brands, create brand awareness and credibility in a product and service. We offer a unique services that manage your Online Brand Reputation and Customer Testimonial Service. Segment your database and profile your customers for a more targeted approach. E-segmentation is turning the world upside down, we help you build a database and segment your customers.
Tell your brand story to all your stakeholders, put a regular company newsletter as a drip marketing strategy you can do that through email marketing, use it for building brand equity and differentiation.
Harvard Business Review in one its articles had stated, “ The fundamental difference between a product centric and a brand centric company lies in the attitudes of the people throughout the organisation- not just the marketing-in their understanding of what is means to shift from selling products or services to selling a promise of value”
Given the harsh fiscal climate differentiate your brand by leveraging your marketing budget to build brand equity. This does not require massive spends and Internet Marketing helps you in this regard and provides a measurable ROI.
As Michael Porter on Competitive Strategy points out that a lack of differentiation where product or service is perceived as a commodity, choice by the buyer is largely based on price. Building a differentiation based on brand will enable the company to command a margin of preference, leverage the existing customer loyalty, delighting 20% of the customers that deliver 80% of the profits.
If through positive association the brand is able to add value to the consumer, the brand becomes distinctive and makes the communication with the consumer easier. If the experience enables the consumer to enjoy the experience, feel good factor is experienced during consumption as they did when they procured it, enables the brand to be distinctive. A distinctive brand consistently delivers on its promise. The brand should occupy a distinctive and valued position in the consumer’s mind.
Michael Porter in his book on Competitive Advantage, elaborates that Buyers will not pay for value that they do not perceive, no matter how real it maybe. Thus the price premium a firm commands will reflect both the value actually delivered to its buyers and extent to which the buyer perceives this value. A firm that delivers only modest value but signals it more effectively may actually command a higher price than a firm that delivers higher value but signals it poorly.