How does a brand stand out in a highly competitive market?
Mainly through differentiation that
is relevant to its customers. Many people think differentiation is limited to
offerings (products and services), but as competition increases, a brand's
ability to differentiate itself only on the basis of offerings diminishes. The
problem becomes more severe when there are multiple leading brands in a
category. For instance, it would be difficult for many people to differentiate
between McKinsey and BCG, Nike and Adidas, Harvard and Wharton based on their
offerings.
Interestingly, if a strong identity
can make a brand, a confused identity can destroy a brand. Do you remember
Yahoo? Once upon a time, it was the most
influential internet company in the world. It had brilliant brand visibility,
talent, cash, and products, but it lacked focus on its identity. A vague
identity might not cost a brand as long as the competition is not powerful. But
when competitors with more precise identities emerge, they take away the market
share. In the case of Yahoo, one after another, new internet players such as
Google, Facebook, and YouTube emerged. Gradually, the market shifted to new
players, and Yahoo lost its dominance and advertising revenue. Let's have a
look at the factors that contribute to building a brand’s identity.
Directional elements: When a company knows what its brand stands for and
where it is going, it can focus its resources and talent in a clear direction.
Great companies use purpose, vision, and mission to drive, align and guide
their decision-making process. Since its early days, Google stayed committed to
the mission crafted by its co-founders Larry Page and Sergey Brin. On the other
hand, Yahoo kept changing its mission in the boilerplate of its press releases.
Perhaps, the confusion on what Yahoo is and why it does what it does lead to
its downfall.
Culture and values: Values define employees' behaviour and help shape
the workplace culture. Employees design and deliver customer experience. A
toxic culture can reduce employees’ enthusiasm. In contrast, a positive culture
can motivate employees. If you look at Zappos in terms of its business, it’s
just another e-commerce company selling shoes and clothing. However, Zappos is
looked upon as a role model and receives tremendous word of mouth due to its
popular culture, values and customer service.
Competitive advantage: Competitive advantage makes a brand better than
others at something. For decades, Gillette has ruled the market of razors. The
kind of brand awareness, R&D budget, variety and distribution Gillette has,
no other brand in the razor category would have. However, Dollar Shave Club
transformed the industry's traditional business model through its online
subscription model and significantly lower pricing. Besides, online brands go
directly to the customers and can collect data not directly available to
traditional brands sold through intermediaries. With its new business model,
Dollar Shave Club created a new place for itself in people's minds and took
away some market share from Gillette.
Leader’s reputation: People associate the identity of a leader with the
brands represented by him. For instance, professor Philip Kotler is recognised
as one of the world's leading marketing thinkers. He has taught at the Kellogg
School of Management for over 50 years. Perhaps, due to the popularity of
leaders like Kotler, MBA aspirants associate Kellogg School of Management as a
go-to place for marketing programs.
Personality: Different personality traits appeal to different
people. Therefore, a distinctive personality enables a brand to establish an
emotional connection with its target audience. Both Thums Up and Coca-Cola are
cola drinks from The Coca-Cola Company. But in advertisements, Thums Up
reflects a bold, confident, adventurous, masculine personality, and Coca-Cola
reflects a happy and playful one.
Visual elements: Visual elements such as logo and colour help people
associate with a brand. Any change in visual elements creates the perception
that the brand has changed. For instance, in 1991, Kentucky Fried Chicken
rebranded to KFC to drop the word ‘fried’ from the name as people were becoming
health-conscious. In 2011, Starbucks unveiled a new logo without the word
‘coffee’ because the company’s expansion goals went beyond coffee.
Value proposition: Value proposition is a differentiated value the
specific target audience can get from your offering. For instance, both Ola and
Zoomcar serve customers without cars, but they have a different value
proposition that leads to separate identities. Ola provides a car with a
driver, and Zoomcar provides one without a driver. People who don't want to
drive themselves would prefer Ola. However, people who wish to drive themselves
and don't want to share their privacy and one seat with a driver would prefer
Zoomcar.
Market position: Position of market leader is a powerful
differentiator. Both Pizza Hut and Domino’s are globally popular pizza brands
and entered India around the same time. However, Pizza Hut is known for its
dine-in restaurants, and Domino's for its delivery service. Perhaps, rising
real estate cost limited Pizza Hut's expansion. On the other hand, increasing
traffic, decreasing parking space and growing mobile internet penetration
favoured Domino's growth. In India, Domino's' footprint is vast.
Associations: A brand’s perception is defined by its associations.
Suppose a brand is used by and endorsed by influential people, covered by
reputable media, recognised by renowned industry analysts and backed by marquee
investors. In that case, its perception would elevate in its target audience's
minds. For instance, in 1980, Microsoft, then a startup, formed a partnership
with IBM, then a market leader, to bundle Microsoft's operating system with IBM
computers. This association played an instrumental role in elevating the
perception of Microsoft in the personal computing industry.
Communication: We live in an era of short attention spans. It
doesn’t matter how good your product is, if people don’t understand the
specific value they get, they move on. Steve Jobs mastered the art of
communication. While launching iPod, he pulled the product out of his pocket,
and the slogan: "1,000 songs in your pocket," made the product
memorable. He called MacBook Air the world's thinnest notebook. Significant
media channels widely shared the picture of him pulling the product from an
envelope. Both these products stood out in the market because of communication.
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