Brands that don’t ring true become roadkill

Third in a series on communications strategy.

The first major strategic insight at the Boston Consulting Group, which pioneered the concept of business strategy in the 1960s, was the “experience curve,” writes Walter Kiechel in The Lords of Strategy. A company with dominant share in an industry will have the lowest costs, and, therefore, can lower its prices to gain further share, driving its costs even lower, allowing it to protect its dominant position versus competitors who remain at a perpetual cost disadvantage.

This most basic insight propelled BCG into consulting superstardom and its clients to greater marketshare and profitability. Like a law of nature, the experience curve was seen as constant and inviolable. But a closer look reveals it to hold water only for commodities competing solely on price. It fails to account for non-price distinctions customers make on many, if not most, purchases. “Brand” is the essence beyond commodity that allows favored products to sell for substantial premiums over generics (for example, bottled water where brand and packaging are the most notable distinctions between competitors). “Corporate reputation” is the halo of trust and respectability engendered by upstanding companies, or the millstone of disrepute and suspicion hanging over products offered by companies tainted by poor reputation.  Without a passing corporate reputation, brands exist outside many customers’ consideration set; that is, brands cease to exist for these customers.

“Brand” and “reputation” cause substantial market distortion for the strategist expecting share to be determined solely by price.  But they are fundamental to the choices customers make every day and, therefore, they are tangible and real. For the sellers of most products and services, cultivating brand value and protecting/enhancing reputation are as important as any aspect of business and require as much forethought and deliberate execution as any element of strategy.

Let’s look again at the three basic elements of strategic positioning: cost, customer and competition.

Cost: Selling purely on price is seldom a winning strategy. Desirable characteristics of a product (or service), especially those that are truly unique, add value that enables the product to be sold at a premium, or to dominate the market. Desirability is the measure of the strength of a brand, and communication (advertising, other forms of marketing communications, media coverage, social media “buzz”, etc.) helps the brand resonate with the customer.

Customer: ”Markets are conversations,” (meaning that conversations among customers and potential customers shape, even define, brands) was the opening thought of The Cluetrain Manifesto, way back in Web 1.0 at the turn of the century. It’s even more true today. Brand management is less about crafting a clever identity and shouting it from the highest hill at whomever will hear it, than it is engaging in authentic conversations with real Roadkill people.

Competition: You aren’t alone in wanting to engage in market conversations. Your competitors are working overtime. Fortunately for you, most of them are still shouting at the market, they’re just using Twitter and YouTube to do their shouting. If you can help the market of people “out there” discover your product, and if you invite them inside your brand–and they like what they find there–you will be well ahead of your competition. Companies whose brands aren’t seen as authentic will end up as reputational roadkill.

Next post: The learning organization and dynamic strategy.

- Jon Harmon

Comments

  1. Ava Amateur says:

    There is no worse lie than a truth misunderstood by those who hear it.

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