From big box retailers who can no longer grow, to supermarkets going backwards on average basket sales, to household name products becoming commodities, to service brands who are losing their ability to generate a sustainable margin, brands are under threat like never before.
While the industries where brands are challenged are disparate, the commonality is that they are all under increased pressure resulting from the rise of the digital economic age. What is frequently called ‘category disruption’ perhaps should actually be called what it is, a business suffering a permanent loss of competitive advantage through a fundamental shift in market dynamics.
The dynamics used to be that if you or your channel partner controlled the way your product or service was distributed, then you controlled the market for it. To rework author Simon Sinek, businesses didn’t need a ‘why’ as they controlled ‘what’ and ‘how’ and were rewarded for it. The new dynamic is that a brand must control the ‘why’ to win, as their customers will pick the ‘how’ and the ‘what’ that best suit them.
The digital age reduces search and acquisition costs for consumers to near zero. This can be seen everywhere from niche brands finding sustainable success through to the latest tech start up gaining share from the establishment. It is no longer about how to gain control through a distribution advantage for your brand, but about how to control through developing a genuine brand advantage.
Here are a few ways to think about building brands that offer enough control to win, but not enough freedom to totally crash your business.
1/ Brand architecture matters
Which brand architecture will allow you to deliver your purpose most consistently is the best question to ask before thinking about a particular brand model. Tesco have recently rationalised their brand portfolio back to just ‘Tesco’ following the likes of Apple firmly into a one purpose, one brand model. Others such as Westpac and Fiat Chrysler believe multiple brands all based on each having a clear purpose are the way to go.
2/ The golden rules still apply
Tight target profiles like those developed by Tiger Air, a clear consumer insight such as that developed by Wholefoods and differentiated brand values supported by expected behaviours such as those developed by Nike are more important than ever for brands when you have no control over anything else. The old rules are the best rules for the new economy.
3/ Purpose plus permission is critical
Having a clear brand purpose is one thing but you also have to have permission to deliver it. Google and Yahoo have roughly the same purpose of cataloguing the world’s information but only one has permission to use it (hint, it’s not Yahoo). A simple rule of thumb to follow: If you have to ask if your brand has permission to do it, it probably doesn’t. The other important point is to not extend past the point of irrelevance. Brands that get this right such as Virgin only work in categories where their approach can help bring fresh competitive energy. They don’t always work out but successful brands tend to remove the ones that don’t, a good example of this being Virgin Cola.