Mercedes-Benz – Brand Engagement

Mercedes-Benz is a premium, German automobile manufacture.  But as a brand worth, $30,097m – according to Interbrand – chances are you already know that.  What is particularly interesting about the Mercedes-Benz’s brand is that it’s valuation has increased by a rapid 10% in 2012.  So what are Mercedes-Benz doing right?

I think part of the success of the Mercedes-Benz brand is down to engagement; Mercedes-Benz World (pictured above) is a great example of this.  Mercedes-Benz World, is essentially a mash-up of different ways for consumers to interact with the Mercedes-Benz brand.  This includes learning about the brand’s history, taking part in driving experiences and viewing past, present and even future Mercedes-Benz cars.  While being the ‘holy grail’ from a  marketer’s perspective, from the consumers’ perspective the site is considered a great experience – and not just an attempt to brain-wash visitors with Mercedes-Benz advertising.

But what can marketer’s learn from Mercedes-Benz?  How can other brands increase their engagement with consumers?  Here are three key lessons that can be applied to just about any brand:

1)  Get permission!

Perhaps the most important ingredient to successful brand engagement is that consumers must want, and be willing to, interact with a brand.  Mercedes-Benz World is so effective because consumers choose to visit the place.  By doing so they essentially given Mercedes-Benz permission to engage with them.  This extends further: visitors enjoy sitting in the cars and testing them out as much as possible, whether this by a test-drive or track experience.  All this is done without a car salesman; the consumer is in total control of the service encounter.

Hence, successful brand engagement can be achieved by creating compelling content that ‘sells itself’.

2)  Do not rely on social media.

Although social media is an efficient way to connect with consumers, to an extent, I think there has been an over-statement of its effectiveness.  Namely, ‘engagement’ has almost become inter-twined with ‘online’, like engagement can only be achieved by digital technology.  However, it could easily be argued that when consumers physically interact with a brand with experience is more powerful and longer-lasting.

Having a consumer drive a car at Mercedes-Benz World has to have a greater impact than getting a click-through via social media.  This holds true when today consumers may be ‘following’ your brand, but they are also following 100+ other brands…

The lesson here is: social media is a great tool for efficient, low-cost engagement, but cannot rival offline engagement for effectiveness.

3)  Help consumers remember the engagement.

Lastly, Mercedes-Benz World augment the experience with memorabilia and merchandise that is available for sale on-site.  In addition to generating a quantifiable return on investment – via profit margins – physical products help extend the experience when consumers return home.  The amount of visitors likely to be converted into brand advocates should mean there are no shortages of consumers willing to wear a Mercedes-Benz t-shirt.  I cannot think of any other type of advertising medium where the brand is paid for having its logo on display.

Simply, consumers should receive both physical and emotional reminders of their brand engagement.

Earlier I said that these lessons can be applied to almost any brand; and I would like to re-enforce that brand.  Consumers have shown willingness to engage with even low-involvement products: take a look at the success of Cadbury World and M&Ms World.

This demonstrates low-involvement products can become high-involvement through brand engagement – and benefit financially from it.  With regards to finances, brands do not need to break the bank and develop these ‘worlds’ to engage effectively with consumers.  Rather applying the three above rules, where applicable, to a brand strategy can help generate incremental, low-cost engagement.

© Joshua Blatchford, author of Manifested Marketing, 19/05/2013

Coca Cola – Global Marketing Communications

The Coca-Cola brand has been ranked by Interbrand as the world’s most valuable at $77,839 million.  But what has lead to the creation of such a strong brand?

It would be next to impossible to name one reason for this; however, as suggested by Interbrand, the Coca-Cola corporation has managed to consistently strike a balance between leveraging the traditional values associated with the drink and supporting this with innovative marketing campaigns.

Heinz has also grown its brand through a very similar method: strong heritage, augmented by exciting campaigns and new products.

The latest innovation from Coca-Cola is the ‘Share a Coke’ campaign that has recently launched in the United Kingdom (U.K.). The said campaign entails bottles and cans being printed with customer names in place of the traditional Coca-Cola logo.  The aim of this is to primarily to engage consumers in the brand, particularly through social media.

Customisable Coke Can

Regarding social media, consumers are encouraged to share their bottles digitally on Twitter using the hastag ‘ShareACoke’ or through the ‘Share a Coke’ Facebook app.  The latter allows consumers to create their own digital bottle and share it with friends (see below).  Furthermore, kiosks, in town centres and shopping malls, will be created to allow consumers to create their own custom cans or bottles, in the case that their name is not one of the one hundred and fifty being mass-produced.

 

While the same programme has already been a success in Australia and New Zealand, will simple a ‘copy and paste’ of the campaign work for the U.K. market?  I think for the most part, it will.  However, despite  the below video giving the impression of an unqualified success there is not such thing as a perfect campaign…

Some marketers (see comments section) have criticised the campaign for simply being ‘lame’, while others – more constructively – allude to the idea being too novel.  As Coca-Cola Great Britain managing director, Jon Woods, identifies, there is an inherent risk of replacing the brand name.  According to Kotler’s model of a ‘product’, a given product is composed of not just the tangible item that is purchased, but also intangible benefits, such as branding.

Therefore, for this campaign to be a success, the increase in consumer engagement – generated by featuring a name on the product – needs to off-set the decrease in brand-derived benefits – lost via the removal of the ‘Coca-Cola’ logo.

Hence, given the power of a brand, particularly one of this statue, to influence consumer consumer behaviour this truly is a risky decision.

Additionally, I believe that the campaign’s call-to-action is rather weak.  Namely, it is a bit ambiguous whether you are supposed to buy a drink for yourself – with your own name on it – or a drink for a friend – with their name on it.

On this point, there may be a missed opportunity here to try and promote non-digital sharing.  Perhaps there could have been a multi-buy offer to support the campaign?  Such an offer might have re-enforced the encouragement to buy a drink for friends, rather than purely rely on the novelty of the campaign.

One last piece of criticism I have is regarding Jon Woods’ claim that ‘no other brand has gone to this level of personalisation’.  In fact, as you can read here, Starbucks has already used a very similar tactic on a global scale.

Share a Coke Facebook App

I think, simply, the question boils down to: ‘Do people care about having a name on a product?’.  In New Zealand and Australia this was a resounding ‘Yes’. As these markets are similar, the campaign will probably be replicated successful in the U.K.; consumers are starting to share their drinks over Twitter.

There is one final issue I will briefly touch upon.  Namely, will more and more companies start replicating national campaigns from one region into another?  To an extent this might be seen as a cost-effective way to ‘think globally, act locally’ and customise global campaigns more efficiently.

What do you think: will the campaign work and  will more corporations start to replicate national campaigns in several regions?

© Joshua Blatchford, author of Manifested Marketing, 05/05/2013

Heinz and Glaxosmithkline – Balancing Diversification

While Heinz and Glaxosmithkline (GSK) appear to be two heterogeneous companies – the former is food processing company while the latter is a pharmaceutical-focused conglomerate  – they have both utilised diversification strategies in recent years.

As per Ansoff’s matrix, below, diversification is where a company launches – or acquires – a new product/brand in a different market.  Depending on how much experience the company has with the new product or marketing, ‘diversification’ can be considered to be related or unrelated.

However, while Heinz have thrived, GSK have turned their diversification strategy on its head with a planned sale of its Ribena and Lucozade brands.

But what lessons marketers learn from this?  What is the main success factor for the implementation of a diversification strategy?

I believe that – nine times out of ten – a successful diversification strategy depends on striking a balance between utilising a firm’s competencies while also expanding to take advantage of new opportunities.  If you like, this can be considered to be the ‘Goldilocks’ Zone’ of diversification: the strategy should avoid being too similar to current products/markets, and at the same time it should not be too dissimilar from current products/markets.

GSK, unfortunately, appears to be recognising that the firm’s Lucozade and Ribena brands are too-divergent from their mission to help people ‘feel better and live longer’.  Namely, it seems contradictory for a pharmaceutical company to sell and endorse products that have been criticised for their sugar content. This conflicting portfolio is only set to become more evident in the near-future as GSK plans to focus more on consumer health in emerging-markets, where Lucozade and Ribena are weak brands.

Heinz, in contrast, has become general food product giant through continuous diversification.  For instance, if we take a look at the firm’s history, Heinz started with horse radish in 1869, tomato ketchup in 1876 and baked beans and tomato ketchup in the 1910s.  The range of condiments and soups continued to expand throughout the 20th Century.  And still today Heinz diversifies with more bean-variants like Heinz Five Beanz; this product, as the name suggests is a new mixture of five types of beans.  Five Beanz is designed to target the new market – created by the pro-longed recession – of adults that can no longer afford to eat out but want an exciting, new meal that is easy to prepare at home.  Further to this, Heinz has also recently launched a range of spicy sauces.

Hence, while GSK has expanded beyond their core business of health, Heinz’s products are all supported by its original, founding principals.  For example, it does not strike one as unimaginable that a horse radish manufacture may also produce a spicy sauce; whereas, it does not appear logical that a malaria vaccine (GSK’s first research project) business would also sell soft and fizzy drinks.

However, I am sure many readers are ready to cite Virgin as an example of a company that has ignored the rules of diversifying not too little and not too much: the Virgin conglomerate is composed of numerous seemingly unrelated businesses.  Yet if you take a closer look at Virgin’s successful brands – Virgin Atlantic, Virgin Active and Virgin Media – at their heart is excitement and great customer service.  Interestingly, one or both of these components appear to have been absent from Virgin’s failed ventures, such as Virgin Cola, Virgin Make-Up and Virgin Megastores.  Therefore, the point I am trying to make is, although Virgin appears to have expanded into unrelated businesses, the successful brands have still retained Virgin’ core values and competencies.  In comparison to most other firms, Virgin’s key skills are highly applicable to a wide range of industries allowing the firm to diversify further than GSK or Heinz.  Thus, Virgin’s successful diversification strategies may be still be considered to be in the ‘Goldilocks’ Zone’.

© Joshua Blatchford, author of Manifested Marketing, 26/04/2013

2012 in Review

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

4,329 films were submitted to the 2012 Cannes Film Festival. This blog had 54,000 views in 2012. If each view were a film, this blog would power 12 Film Festivals

Click here to see the complete report.

Nissan – Juke Unique Extension Strategies

The product life-cycle (below) for a given product consists of introduction, growth, maturity and decline.  Given that the product is most profitable during the maturity phase, marketers want to extend that phase for as long as possible.

Product Life Cycle

One of the ways of doing this is, as the above graph demostrates, is through the use of extension strategies.  Extension strategies employ the use of Market Penetration or Product Development strategies (see Ansoff’s Matrix) to delay the decline stage as much as possible. If the former is used, often the price may be lowered or a new marketing campaign is commissioned; if the latter is undertaken, an adjustment is made to the product to give it a ‘refresh’.

Although Market Development can achieve similar – if not greater – levels of sales by taking the product into a new market, it is not an extension strategy as the product will still enter the decline phase in its original market.

But how does this relate to, Nissan’s crossover car, the Juke (below)?

Nissan Juke

Well, Nissan have used unconventional extension strategies – to extend the life of the Juke – which I feel are worth exploring.  Many people believe that all extension strategies follow like Apple’s iPads or Sony’s Playstations: that is, #1 product is launched, then replaced by #2 product, then possibly #2 product thinner / more colours edition, then #3 product and so on and so on.

Product extensions, however, do not always follow this pattern – particularly, Nissan’s Juke.  Namely, each product update serves not to replace the preceding product but to increase the originals sales at the expense of the new product, which is akin to a loss leader.

Here is a time-line of the Juke’s extension strategies and quick summary of each new update:

Juke Timeline

  1. Juke Ministry of Sound – updated with an iPod docking station and Ministry of Sound exterior styling.  Limited production run of 250 units.
  2. Juke-R – updated with a 545 break-horse-power engine to take the car to almost 200 miles per hour.  Very Limited production run of an unconfirmed number of units – likely to be less than ten.
  3. Juke Nismo ‘Dark Knight Rises Edition’ –  faster version of the original, with styling cues taken from the bat-mobile, with a launch to coincide with the Dark Knight Rises DVD release.  One-off car, used solely for marketing purposes (not for sale).
  4. Juke Nismo – a faster version of the original with exterior styling updates.  The car will have a full – rather than limited – production run, however supply will be kept very limited making the car more exclusive.

As you can tell  from the limited productions, each new model never intends to replace the original.  Instead, the use of extension strategies is used to generate news coverage and favourable PR that raises awareness of the Juke.  Hence, the Ministry of Sound version, for instance, is used to grab new car buyer’s attention in the news and encourage them to research into the original Juke or visit a Nissan dealership.

But why is this method of extension strategies not used for every car?  Namely, because the Juke is targeting a younger consumer that is more influenced by the status and intangible benefits of owning a car – marketing sizzle – rather than its functionality – product sausage.

Boston Consulting Group Matrix

Therefore, the Juke requires a heavy investment as a ‘Rising Star’ in the BCG Matrix (above) to keep its momentum, particularly so as the car is faced with many new competitors to the crossover car category .  In contrast, although the Qashqai is a similar car it is targeted very much at someone in their mid-late adulthood.  Consequently, in the five years the Qashqai has been on sale for, only two updates have been made.  This allows Nissan to milk profits from the Qashqai, its ‘Cash Cow’, in order to fund the Juke, its ‘Rising Star’ which has a more ‘marketing-lead’ target consumer and stiffer competition.

Related Posts:

Nissan Leaf – Tangiblity-Intangibility Continuum

Audi – The Boston Matrix

Toyota and Geeley – Provenance Paradox

© Josh Blatchford, author of Manifested Marketing, 22/12/2012

The Co-Operative Group – Brand Repositioning

The Co-Operative Group (Co-Op) is the UK’s largest mutually-owned business. In such a ‘mutual’ business, the owners of the Co-Op are not shareholders, but consumers and the general public, who can opt to become a member of the company and participate in decision-making.  The Co-Op group has brand-extensions into a wide range of services, including groceries, funeral care, travel, banking and even more.  Having said that – until now – the Co-Op’s strap-line has been ‘Good with food’; this seems rather narrow given the diversity of the firm.

Hence, it is, to an extent, no surprise that the Co-Op has updated their strap-line to reflect the firm’s diversification into wider consumer services.  Unveiled in their new Christmas campaign, the new strap-line is: ‘Here for you for life’.

Unfortunately for the Co-Op, this change has received a mixed-reaction among marketers.  However, this is often the case when any firm changes its logo, strap-line and almost any part of its brand-identity.

Click here, or on the image below to view one of the 20+ Co-Op Christmas TV advertisements.

Given the extent of the Co-Op’s diversification, I do feel the old strap-line – ‘Good with food’ – does not help create a strong corporate brand across the Co-Op’s full-range of services.  Furthermore, as the Co-Op continues to expand with a takeover of 600 Lloyd’s TSB bank branches, the old strap-line is only going to become even more ill-fitting of the mutual group.

Gill Bar, Co-Op’s Chief Marketing Officer, has told Marketing Week that ‘one of the objectives of our advertising is to make the links between the businesses more clear’. Thus, the old strap-line is clearly not in-line with the firm’s wider marketing strategy.

But – and this is a big but – although the old strap-line does not make the links clear between the Co-Op’s businesses, neither does the new strap-line!

Albeit this is down to personal opinion, the new strap-line – ‘Here for you for life’ sounds generic and dull.  Despite having read around this topic a lot, I am constantly having to remind myself what the new strap-line is.

It seems that the Co-Op have gone from a strap-line that is too specific to a new strap-line that is too general.

What I would have suggested to the Co-Op is to have an individual strap-line for each sub-brand that is centered around the  ‘Good with..’ message.  For example:

  • Good with insurance
  • Good with banking
  • Good with funeral care

I believe this would be more memorable and specific than ‘Here for you for life’, while still general  enough to allow the Co-Op to continue to diversify.  But ultimately, my suggestion clearly strengthens the links between the various sub-brands – it may also help consumers identify them as belonging to the Co-Op. And isn’t that what the chief marketing officer is trying to achieve?

The downside of my suggestion is that it is not consumer-focused, which other writers feel is important to build upon to leverage the Co-Op’s strengths as an ethical brand.

Sources and further reading:
Marketing Week – News

Marketing Magazine

The Grocer

Retail Gazette

The Guardian

Marketing Week – Opinion

© Josh Blatchford, author of Manifested Marketing, 05/10/2012

London Olympics 2012 – Ambush Marketing

As the 2012 Olympics in London are set to begin, the media has been reporting on the London Organising Committee of the Olympic and Paralympic Games’ (LOCOG) huge crack-down on ambush and guerilla marketing.  In some cases, LOCOG have gone to extreme measures.

Ambush marketing, the main problem for LOCOG, is when a brand wishes to associate themselves with a sporting event, without having paid sponsor fees to become an ‘Official Partner/Supplier’.  To do this, guerilla marketing, may – but not always – be used.  Guerilla marketing essentially involves planning a form of promotion, or a PR stunt, that does not look like it is conventional advertising (see below).

How does ambush marketing work and what does it achieve?
Essentially, ambush marketing works the same way as, and achieves the same outcomes as, sponsorship.  The difference being ambush, marketing tricks people into believing a brand is a sponsor when it is not.  Hence, the same benefit of greater brand recall can be achieved through ambush marketing without paying for the rights to do so.

The reason why there is greater brand recall is because of a process called classical conditioning (see below).

Let me put this in the context of ambush marketing.  Brands repeatedly expose themselves to consumers alongside olympic-related symbols/people/colours so that consumers become conditioned to associate the olympics with a particular brand.  Consequently, when advertising from the brand stops, but consumers are still watching the olympics, they are reminded about the brand.  Given the importance of the olympics, you can see why this is something nearly every brand wants.

Example of ambush marketing at London 2012

Despite LOCOG’s best efforts, and the fact that the games have not even started, I have noticed some ambush marketing already:

Virgin Media and Nissan using Usain Bolt

Despite BT sponsoring the olympics, Virgin media have used Bolt and a subtle Union Jack logo to make a tenuous link to the olympics.

Again, Nissan have used a similar strategy regardless that BMW are the official partners of the olympics.  Although Usain Bolt does own a GT-R, the timing of the campaign makes this an obvious ambush marketing tactic.

Haribo Union Jack Sweets
Regardless that Haribo are German sweets, and that Cadbury is an official sponsor, the confectionary now comes in Union Jack packets (see below).  This packaging is to position the sweets at ‘key occasions in 2012’ – which really means the jubilee and olympics.


If you have spotted attempts at ambush marketing, please share in the comments below.

© Josh Blatchford, author of Manifested Marketing, 23/07/2012

 

3 Marketing Lessons from The Apprentice Series 8

The BBC’s, highly popular, ‘The Apprentice‘ series involves 16 candidates – divided into two teams – taking part in a series of business tasks, after which typically one person from the losing is fired.  The eventual winner of the show wins £250,000 to set up a business in partnership with Lord Alan Sugar.

Besides being great fun to watch, the show also has some great lessons for marketers.  Here are three that I think stand-out from the most recent series:

1) The importance of getting a brand/product name right

I have been a long believer that a good name of a brand can never be responsible for the success of the said brand, but a bad name is frequently the major cause of an unsuccessful brand. Unfortunately, Stephen Brady learnt this the hard way.

During episode 3, ‘Condiments’, and episode 9, ‘English Bubbles’, Stephen came up with two very poor brand names.  In the former episode, Stephen named an Italian sauce ‘Belissimo’ (below) – rather than ‘Bellissimo’, which is Italian for very beautiful.

The result of this was a product that looked very unprofessional, and was disliked when the team tried to sell the product to Italian restaurants; this meant that they could only target less-knowledgeable consumers, and not sell in both Business-to-Business markets and Business-to-Consumer markets.

In addition to this, in the latter episode ‘English Bubbles’ Stephen decided to call a new English Sparkling wine ‘Grandeur’, which is French for ‘splendor’.  This was a stupid decision, as it obviously contradicts the whole brand position of the English drink – see my post on Provenance Paradox.  A name does not need to describe the product – such as Google or Apple – but it must not be misleading and should be coherent with the other elements of the marketing mix.

2) The importance of interactive marketing

According to the services marketing triangle (below), successful marketing involves three facets.  External marketing involves marketing communications, such as advertising or public relations; internal marketing concerns motivating and training employees; lastly, interactive marketing is how front line employees interact with customers and the purchase/consumption environment.

The fourth episode ‘Junk Shops’ showed how interactive marketing can increase consumers’ perceptions of quality and allow firms to increase profit margins.  In the episode contestants had to source second-hand products that were considered ‘junk’ and sell them for a profit in London’s ‘hip’ East End.

To make these junk products appear to be trendy – besides making minor improvements to them – both teams created a retail space that had ‘hip’ connotations.  Some of the methods used included adding dead leaves to the store, using minimalistic merchandising and, lastly, all contestants had to truly admire and believe in what they were selling.  Showing true passion for the products is often what made consumers part with their money.

3) The importance of having a clear brand image

In episode 12, ‘Affordable Luxury’, the two competing teams had to create a new good-value luxury brand.  One team went for a new male grooming brand, while the other created luxury confectionary – or was it chocolate? – what about the cocktails? – and jelly was also being sold for good measure.  The brand under which these products were sold was ‘Sweet Thing’.

Although the team’s flagship store – which represents the brand – had great atmosphere and entertainment, there was simply too many products being sold.  This meant that no one product stood out and the overall brand was diluted.  Ultimately, the male grooming brand won .  Hence, despite the male grooming brand image was very dull in comparison, it was far more consistent and clear, which is critical when launching a new brand.

In summary the three points to take home are: 1) brand names need not be amazing, but can undermine other elements of the marketing mix; 2) interactive marketing is often more important than internal and external marketing; 3) clarity in brand images is critical.

 

Amazon – Should Amazon Open Retail Stores?

Please forgive me on being late on this subject, but I would like to return to some of the rumours that were floating around previously in February (2012).  Namely, Amazon reportedly has plans to open a retail store in Seattle before the end of 2012.  The said store would stock high-margin items such as Kindle e-Readers, Kindle Fire and a plethora of accessories – from cases to lights to screen protectors.  Moreover, as Amazon’s own publishing division grows further and multiple stores are opened, the stores could also stock books.

So is this a good marketing strategy for Amazon?

Before debating if they should open a retail store – with the intention of eventually having national changes across the US – I believe that if they do open a store the firm definitely needs to only stock Kindles and related high-margin products.  Stocking physical books, would incur far too many overheads to be worthwhile and confuse the overall theme of the stores.

There are definitely compelling reasons for Amazon to open stores.  One only has to look towards Apple’s success and their retail store design to see lots of lessons that Amazon can learn from the Apple stores.  Ultimately, I think that there are three marketing benefits that Amazon will gain from having its own stores:

1)  Product  Engagement

Firstly, by having a boutique-styled store Amazon can show case its Kindle products – and potentially a smartphone later this year.  Given one of the challenges for online services is reducing the tangibility of their product offering, if consumers could try-out products in store they would be much more willing to make large purchases.

Further to this,  it would help to speed up the adoption rate of Kindles.  Currently, the firm relies on early adopters spreading word of mouth.  However, by having Kindles on show for prospective customers to try, qualms and worries about reading on a screen that customers may have can be quickly over-come; also, having a physical store would help target older customers.

2) Improve Customer Service

There are a number of benefits that customers would gain from having the store: order products online and collect in-store, customer returns service and even a Genius Bar-inspired customer support desk.  Not only would these facilities allow Amazon to compete in the physical world against Best-Buy, Target and Wal-Mart, these are services that help augment their products with added-value.

This is in-line with CEO Jeff Bezos’ vision of ‘Building premium products at non-premium pricing’.  So in order to compete against Apple – which it is competing more and more directly as it launches its own technology products (See  Cloud below) – they need to offer the same level of service, without the huge price-tag.  Moreover, as Amazon’s own range of electronic devices gains popularity, there will be a greater need for after-sales service.

 

3) Brand Engagement and Publicity

As I mentioned in a previous post about Apple, a lot of their new product success comes down to lavish product launch events that generate lots of free press coverage.  It also lets customers show their devotion towards the Apple brand.  Amazon could potentially use the same strategy, which would work well for future tablet computer – and even smart phone – launches.

But, I can see two potential drawbacks of opening the stores.

Firstly, is copying Apple a good idea?

Of course, Amazon does not have to mimic Apple stores – albeit they probably will – but ever since the rumours emerged the two firms have been up for direct comparison.  Microsoft has launched stores and have been criticised – somewhat fairly – for copying Apple.  Also, Amazon do not have sufficient own-brand hardware to truly fill out a retail outlet.  This could be overcome by stocking other electrical goods – such as laptops, TVs and digital cameras, but it would weaken the differentiation between Amazon stores and general electrical retailers.  This is what Microsoft stores currently suffer from (see video below) by stocking diverse hardware brands.

 

Secondly, will a retail presence damage Amazon’s brand identity?

Amazon currently has the second highest retailer brand value of $28,665m (the firm is behind Wal-Mart who has the highest retailer brand value).  Accordingly, to the world Amazon is known as the world’s largest online retailer.  But what will the company be known as afterwards?  To many outside the US, this brand identity will remain the same; however, opening retail outlets does confuse its brand identity.  By having an online and offline presence, it just becomes more and more similar to its competitors and loses differentiation.  Moreover, as the firm will be in closer competition to other electrical retailers (Bestbuy, Target, Wal-Mart) and any short-comings in its offline service will be scrutinised against them.

What is the overall verdict?

Despite the issues I have just highlighted, I think that, on the whole, it is a good strategy.  Primarily because it supports Amazon’s related diversification strategy and potentially will allow it to offer greater customer service, which will make future technological product’s more likely to be adopted by consumers.

But there is a slight catch-22 dilemma: Amazon does not yet have sufficient own-brand products to open a viable store based on their high-margin and tech products.  But in order to successfully launch such products, such a smartphones later in 2012, they would probably need a physical retail presence.

I will be monitoring Amazon’s diversification plans over the year and another Amazon post will be coming on why cannibalising your own sales might be a good strategy – keep informed by subscribing!

© Josh Blatchford, author of Manifested Marketing, 12/04/2012

Research in Motion – How Branding Can Save BlackBerry

As you may have heard Research in Motion (RIM) is not having the best of times, to say the least.  The firm made a loss of $125m for the first 3 months of 2012 and had a decline in net profit for the full financial year of $2.2bn.  Moreover, this comes amongst major organisational change, with co-chief executives Mike Lazaridis and Jim Balsille only having resigned in January of this year.  Clearly,the new CEO, Thorsten Heins, has to make some serious strategic and marketing decisions.

The first of these decisions has been to focus less on the consumer market and focus more on their core – or orignal customers – of business executives.  It is important to note that RIM is not abandoning consumers, as many report, and there is plenty of opportunity to turn the business around.  The firm simply hopes this business-orientation will mean it will compete less directly with the likes of Apple, HTC and Samsung – to name a few.

Other business writers have already discussed whether or not this is a viable strategy.  Many have criticised it:

‘RIM chose a strategy based on how easy it would be to execute rather than how successful it would be’ – Macworld.

Others have said that the firm should focus on consumers, as that is where the revenue growth is.

But marketers have come out in favour of targeting business users.  According to the Elaboration Liklihood Model, for a high-involvement product like a mobile phone, it is the ‘Steak’ or the ‘Sausage’ (the core product) that persuades people – or businesses – to purchase a BlackBerry.  Whereas, the ‘Sizzle’ (branding and advertising), is less persuasive.  David Taylor, argues that BlackBerry phones have become all Sizzle and no Sausage.

The general consensus that BlackBerry phones, the core of the product,  are the problem has led to many business writers primarily focusing on the features and innovations that future phones need (see Sydney Morning Herald and Mobile Opportunity). But I think the critical issue is branding.

So to clarify there are the following combination (depending on market and whether to focus on the Sausage or Sizzle) of strategic options:

Blackberry’s current position is strategy 3 (see below), and has announced a return to strategy 2.  Which will hopefully allow it to use a combination of 2 and 4 in the future: keep its products up-to-date and add profitable value through marketing.

However, I think the strategy Blackberry needs is initially strategy 1, and then move to have a combination of strategy 1 and 4 once it has revitalised its product range.

Hence their strategy should be in three stages:

1) Look to consumers’ needs to develop new product features = improving the Sausage;

2) Use branding to target business users with these new product features = improving the Sizzle.

3) Ultimately, these two improvements will allow RIM to use Laswell’s (1948) triple appeal to encourage business customer’s egos to choose BlackBerry (this will be returned to later).

(There should be no debate about targeting consumers vs business users or having Sausage vs Sizzle – they need to be good at all four to compete in a saturated market.)

1) Improving the Sausage:
Now, this might seem contradictory to target business users by focusing on the needs of consumers.  But an underlying assumption that others seem to have made is the belief that consumers and businesses have different needs.  I strongly believe in order to be able to appeal to business users, the firm must firstly target consumers.

Part of BlackBerry’s problems is that they have attracted lots of teenage consumers (see graph, from Ofcom, below) who use the phone’s keyboard to send text messages – or use BlackBerry messenger – easily and quickly.  But this was once a feature that appealed to business users for sending emails.

At the same time the iPhone has become more popular among business users than BlackBerries:


So it would seem that BlackBerry have become popular among teenagers by making a phone designed for business use; and that Apple have become popular among business users by making a phone designed for consumers.  Therefore, both market segments must have converging needs.

Hence – and please hear me out – the features that BlackBerry needs to implement  are consumer-orientated even if it means loosing short-term brand identity with business customers.

This, like I said, is because consumers and business users actually have similar needs (after all, executives are only human!)

I would suggest the following changes to be made:

1) Introduce touchscreens for all phones – better for users playing games and watching videos;

2) Move to Android or Windows Mobile operating systems – allows more apps to be downloaded;

3) Ditch the keyboard – makes the device more portable/allows larger screen depending on the phone design.

Obviously, these would only allow BlackBerry to maintain market share in the consumer market, as these features are nothing new/innovative, but that would still be sufficient to improve their products for business customers.

The next part of my proposed strategy is taking the new Sausage and giving it a business-orientated Sizzle.

2) Improving the Sizzle:

Unfortunately for BlackBerry, as mobile phones are public necessities, the choice of brand is highly influenced by reference groups.

Therefore the trend of teenagers adopting the phone looks set to continue:  as teenagers seek self-verification goals within social groups, if they own a BlackBerry they believe they will popular;  as business users seek self-enhancement goals, they can improve their esteem if they own an iPhone.

According to Heider’s (1958) balance theory, teenage users of BlackBerry phones has changed  consumers attitudes towards BlackBerry

Original attitudes towards BlackBerry:

There used to be a strong positive connection between business users and BlackBerry and, as a public necessity, this was highly evident to potential consumers who could associate business men with the BlackBerry brand.

Thus anyone who believes that their actual sense of self is a business person, or their ideal self-concept is to be a business person, they would purchase a BlackBerry as it would be seen as appropriate group behaviour to be a business person, whom they have favourable attitudes towards.

Current attitudes towards BlackBerry:

Now, however, there is a strong positive connection between teenagers and BlackBerry.  Consequently, those who like BlackBerry for business reasons must also view teenagers positively or in the same light as BlackBerry.  Thus, if they saw teenagers unfavourably there is a good chance they now also see BlackBerry negatively.

So, in order to improve the brand or the Sizzle, BlackBerry need to get business users to start using their revitalised phones again and also act as opinion leaders.  They can replace teenagers with business people, as personifiers of the brand, by using any or all of these strategies:

1)  Use opinion leaders as the target market segment – approach select businesses directly and offer to supply their firm with company phones for free.  Using high-profile firms with a corporate reputation, such as IBM, would help re-condition consumers to associate BlackBerry and business people.  Ideally, BlackBerry needs to pair being a successful business person/company with using their phones.

2) Create opinion leaders – offer a referral scheme for work colleagues in professional jobs.  For instance, a BlackBerry customer, who uses the phone for personal use and work, can ‘introduce’ a colleague and they are both rewarded with BlackBerry Playbook tablets.

3) Use opinion leaders in marketing communications – RIM need to use advertisements that feature opinion leaders, whether or not it is clearly scripted.  This has recently been used by rivals HTC to target a youthful segment:

In addition to using word-of-mouth communications, I recommend RIM taking an upward brand stretch to make the product more exclusive:

1) Bring out a new brand name – this new brand name should be used to categorise RIM’s phones that are designed for business users; the existing BlackBerry name/devices should be left to target emerging markets as low-tech and cheap smartphones.

2) Premium price – to reflect the overall positioning of the new line of RIM phones for business people, they need to become a status symbol and, in our Western society, this can be easily done with a premium price.

Thus, by now RIM should have improved their Sausage with features consumers want, and, dressed it up with Sizzle to give it a business brand image.  The third and final step is to combine these seemingly polar strategies into a triple appeal.

3) Creating a triple appeal

According to Freud our personality consists of an Id, which seeks immediate pleasure (naughty side), a Superego that seeks to conform to societal expectations (nice side) and an Ego that balances the two.

In order to create a triple appeal RIM must appeal to the Id, Superego and Ego; this will have been done by giving their phones consumer features with a business brand image.

The appeals to the Id include: ability to download apps, play games, watch videos on a larger screen.  But conversely these can be viewed to also satisfy the Superego: download productivity apps to use on commutes and business trips, ability to play games is an indicator of hardware quality, larger screens makes emails easier to read.

Ultimately, these are easy to balance by the Ego through positioning the new phones as ‘naughty but nice’.  This is very important because there are two situations that RIM should sell their new range of business smartphones

1) Allow them to go on sale through consumer retail outlets to target business customers who want to use the phone at work and for personal uses.

2) Selling directly to firms.  Here the triple appeal is still important even in B2B markets.  Namely, although the deciders and purchasers within the firm will want the order for the Superego benefits, they will be heavily influence by others in the firm who subconsciously want the phone for its more fun/consumer benefits.

Further to this, the triple appeal strategy needs to be communicated explicitly to consumers, as well as being ‘baked-in’ to the product.  This means featuring the triple appeal in advertising, as successfully done by Aero chocolate and Maltesers (it is chocolate, but a ‘lighter’ option).

Thanks for reading a second in-depth post in a row!  To summarise: I think RIM need to make the phones better consumer experiences, use reference groups to target business users and combine everything to create a triple appeal.

What do you think they should do?  Leave your comments below.

© Josh Blatchford, author Manifested Marketing, 06/04/2012

P.S Happy Easter 🙂

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