Howard sits on the Advisory Board of the the Brand Museum South Africa.
From Brand Week Exhibition at The Gordon Institute of Business Science 27 October to 1 November 2014.
If you have enough money, there is virtually nothing you cannot buy. The value of possessing some physical goods, I would contend however, is now reducing in some instances to only slightly above the value of the commoditised functionality the goods provide.
There was once a time, not that long ago, that arriving at your favourite purveyor of fine burritos late at night in a Ferrari, differentiated oneself as being in the economic elite. Certainly put you in the ‘1%’. And such differentiation was worth a premium. You remember – for the brand – all those attributes carefully crafted by us marketers.
No more. Could be that you have deadmau5 (a DJ of some not inconsequential repute), as your Uber driver, in his Ferrari.
No need to buy the Ferrari yourself, to impress, then.
Want to really impress your neighbours in the Hamptons NY? Catch a helicopter using the latest flight sharing scheme: “We want to make it approachable and easy and transparent for young people who think only billionaires fly planes,” Evan Licht, general manager at “Blade” an app that facilitates booking helicopter trips from Manhattan to the Hamptons for just $450 a ride, reportedly told The New York Post. That is far less than the usual $3 000 beating the traffic to your Hamptons holiday-home normally costs, and is infinitely cheaper than watering and stabling your own helicopter in New York City.
Diamonds are forever. At least de Beers hopes so. But what if previously exclusive, extraordinarily expensive, diamond necklaces became accessible to the masses? http://hautevault.com – “The savvy approach to luxury, rent.” Or Adorn.com – “The look worthy of a princess – rent the Middleton earrings for only $160”. Accessible luxury means such “luxury” becomes far less differentiating for the limited few who truly can afford to own it outright.
The ideal type of luxury goods, such as top branded champagne, designer handbags, jewellery and luxury cars, are what are known to economists as ‘Veblen goods’, named after economist Thorstein Veblen, who famously identified the concepts of conspicuous consumption and status-seeking. Veblen goods are the holy grail of luxury brands because their desirability increases with an increased in price. In effect they are desirable because they are only accessible to those prepared to pay a high price. Conversely, decreasing their price (even through sharing apps or rental arrangements I contend) decreases peoples’ preference for buying them because they are no longer perceived as exclusive or high-status products.
What does this new-age, increased product-accessibility mean for brand owners? Consumer access to brands used to mean having to buy the actual associated physical good (excluding services and intangibles, obviously). Now that is no longer a requirement, and it doesn’t take much of an increase in accessibility to significantly reduce the exclusivity and thus differentiation of such branded goods. This could be crippling for luxury brand owners. More troubling is that brand owners lose control of their brands to others (e.g. such as the Blade app) who leverage the value of the brand to their own benefit, while reducing the brand’s exclusivity and brand premium to all other purchasers – to the clear determent of the actual brand owner.
I foresee brand owners resisting the sharing and rental of their branded goods to protect brand exclusivity. Lawyers, start your engines.
Based on a talk by Alan Hilburg, internationally acclaimed reputation management expert.
Speaking at a recent GIBS forum, Alan Hilburg, president and CEO of Hilburg Associates, discussed the relationship between brands, trust and crisis and common mistakes many CEOs make in times of crisis.
Alan’s career includes guiding six of the top 30 branding campaigns of the 20th century including Johnson and Johnson’s Tylenol brand recovery. Known for his senior perspectives and judgment, The Los Angeles Times wrote that Hilburg is “a first call for those who find themselves in difficult high-risk crises.” The Wall Street Journal called him the “earliest practitioner of reputation management in litigation contexts” and he was identified by the London Times as a “leading corporate brand architect.”
According to Alan, crisis management is not just about the crisis, reputation management or PR – it is first and foremost about business continuity, protecting the brand and trust. These three vital elements should be the foundation on which all thinking, planning and business strategy is based.
But how can we define and establish trust? “Reputation is not trust”, says Alan. “Trust is about building long-term relationships, and a good starting point for this is for a company is to stand behind great values. Companies should ask themselves what their values are and how they communicate, live and most importantly, make decisions based on those values.”
Once a company can create solutions that enhance their competitiveness while simultaneously advancing social and economic conditions, they are able to form shared values. These shared values are an underlying driver to help create connections between a company and its community. “A community refers to those who are important to us, those whose behaviours we want to align with our interests and those whose trust we want to earn” says Alan. “When you engage with your community you speak to emotional drivers rather than rational ones, this is important as trust is an emotional thing.”
According to Alan, a brand fundamentally behaves like a guarantee and thus needs to provide real-time transparency, something Alan believes is a key element to avoiding a scenario of broken promises. A lack of transparency can easily contaminate a brand in times of crisis as it will bring trust to an all-time low. Mistrust and distrust also have costly ramifications and Alan refers the high cost of low trust as ‘trust tax’, whereas when trust is high, a ‘trust dividend’ is established.
What is also significant to note is that while a crises plan protects you brand and reputation, crises are more about the victims. It’s what Alan refers to as an “outside- in” instead of “inside-out” viewpoint. We’ve seen cardinal mistakes being made time and time again, most recently in the BP oil disaster in the Gulf of Mexico when CEO Tony Howard famously proclaimed, “There’s no one who wants this over more than I do. I would like my life back.”
Alan believes that communication in times of crisis is not about press releases or statements; it is about getting people to listen. “That’s important in every relationship” says Alan “and if you get people to listen and you have the values and the experience that builds relationships of trust.” Alan has worked on over 250 crises around the world, and notes they all have three ingredients – one is mistrust, one is disengagement, and one is flawed decision making.
“Nothing good happens without trust. It is often one of the most overlooked concepts in crisis management yet it can change everything. Why? Because it’s the only thing that means everything.” Alan Hilburg
Article written by Clea Dias of the Gordon Institute of Business Science.
#Kissforpeace ? | Watch the ad, then decide:
Quote: “AXE + purpose: the concept divided the Contagious office as we heatedly debated whether it even counted as purpose in the no-nonsense way of brands in the Unilever stable, for instance Lifebuoy and its health hygiene programme designed to help children reach their fifth birthday.”
Link to full Contagious article.
Watch the commercial, then take poll below…
Remember that redhead from school? Or that really tall, thin guy you used to see hanging around all the time? They were different. Memorable. Some would say unique. No one remembers “Neville”, that average, kind-of-invisible guy at the back of the class, who now, oddly, is the convener of your matric-reunion Facebook group.
How about your products; are they first-team players or “Nevilles”? It all comes down to just how unique your selling proposition is. A unique selling proposition (USP) is a description of the specific qualities or attributes that make your product or service different, so that customers want to buy it rather than its rivals. Think of it as the elevator pitch for your offering, a succinct way of describing what you have to offer.
A brief history of marketing
In the early days of the modern consumer economy, if you made a half decent product consumers would buy it. Our great grandparents, pleased to even get the opportunity to own the first domestic appliances, were less concerned about branding and marketing puffery than whether the new-fangled device would work.
Take the snappily named Modell A washing machine offered by German manufacturer Miele in 1903, for example. It came complete with “counterweights to simplify working the central agitator”. Untouched by a marketing practitioner, this exciting addition to the 20th century kitchen looked remarkably like the butter churn the company had been touting a couple of years earlier. This production orientation had manufacturers trying to increase product quality and reliability at an acceptable price.
As you can imagine, these happy times couldn’t continue forever. By the mid-1950’s (in western economies) markets were becoming more saturated, consumers had wised up, competition intensified and companies had to take on more of a sales orientation. However, companies still tried to simply sell what they were good at making. It wasn’t until the 1960’s that Professor Theodore Levitt (editor of the Harvard Business Review) pointed out to marketers that perhaps they should start off by finding out what consumers actually wanted, before making and trying to sell ill-suited products.
Fast forward to today. Unless you are a rare earth miner (outside of China), you face stiff competition. Your competitors can probably replicate your products relatively easily, patent protection is increasingly difficult and expensive to defend, production technology is often commoditised and “innovation” is increasingly really just incremental product improvement. What you really need is an offering your customers can’t get somewhere else – a unique value (or selling) proposition.
Being unique may lose you some customers
Your uniqueness may lose you some business, but it will gain you far more. The reason many business owners fear having a highly defined value proposition is that that it means that they can no longer try to be “all things to all people”. No one wants to exclude potential customers. But if you can’t define what is unique about your product, you risk becoming irrelevant. Neville from school was neither nerd nor jock. He offended no one, but no one wants to date Mr Average.
If you can’t outline what makes your product different in a couple of sentences, then, sorry, but you don’t have a unique selling proposition. If the difference from your competitors’ offering is so arcane that it requires a lengthy complex explanation, then you don’t have anything unique either.
Of course your product is only really differentiated if the “unique” attribute is important to the market. Just being different for the sake of being different isn’t enough. In business-to-business sales for instance, once your product has achieved the minimum purchasing spec, and is therefore fit for purpose, further differentiation is unlikely to offer the purchaser greater value. It goes back to the good Professor Levitt’s advice: ask the market what they want before you spend time and resources on differentiating on something irrelevant.
How unique do you really need to be?
In the perfect world, you would be able to offer something no competitor can. In today’s markets this is relatively rare, outside patented prescription medicines perhaps. Charles Holland Duell, commissioner of the United States Patent and Trademark Office, is famously misquoted as saying: “Everything that can be invented has been invented” in the early 1900’s. In reality your uniqueness relies on choosing to develop a specific, different attribute to highlight against those emphasised by a competitor, even though both might share a similar overall set of attributes.
Take Korean car brands in South Africa for instance. A decade ago, these cost-effective vehicles didn’t enjoy the quality reputation of their European competitors. This was exacerbated by the (otherwise attractive) lower price point. Astute marketers appeared to recognise this and introduced an extended guarantee, longer than those offered by European competitors renowned for “quality”. The market recognised that a supplier confident enough to extend a guarantee is unlikely to deliver a product that encourages warrantee claims. This has, in my view, repositioned the vehicles from being “cheap” to “reliable at a reasonable price”; an attractive USP.
How to create a new USP
Product features, how services are delivered, how your staff interacts with customers and your reputation and brand can all be leveraged to create a USP. If you’ve exhausted these opportunities, you may need to relook at your offering; here are a few ideas to get you started:
Highlight benefits rather than features or attributes. Caltex petrol contains a proprietary additive “Techron”. The differentiating benefit that interests consumers is “maximum performance and economy”.
Think about your proposition in a contrarian way. You could do this by offering fewer features. While your opposition are packing in more and more features, consider focusing on simplicity. Take cellphones for young children and senior citizens, for instance, in which fewer features and simplicity are a plus. Or think differently about “quality”. Plastic “brass look” house-numbers (rather than the real, metal thing), are suddenly attractive because they are less attractive to scrap metal thieves.
Focus on style and design. Philippe Starck made the humble lemon squeezer uniquely his own entirely through superb design. His famous “Juicy Salif” squeezer retails for about R750, a significant premium over cheap plastic competitors, while requiring exactly the same lemon squeezing effort from the user.
Conform to a stringent standard. Some products, chemicals for instance, increase significantly in value just by being tested and guaranteeing conformance to a more stringent specification. “Pharmaceutical grade” chemicals sell at a significant premium to “industrial grade”.
Personalise your offering. If you enjoy only a small market share and consequently low volumes, consider offering a customised product or service. Larger competitors will struggle to compete given the size and inflexibility of their production process.
Offer unusual combinations. Consider “WCBO” – the World Chess Boxing organisation. As its name suggest it has combined two very different activities into a truly unique sport!
Every business deserves to have “first team” product and service value propositions that are memorable and stand out from the crowd. They are the foundation of sustainable businesses. The time invested in defining exactly what makes your business unique will doubtless be rewarded through increased market share and profitability.
This article was first published in Your Business Magazine