In the past 30 years we have seen a seismic shift in the way brands build lasting relationships with their customers. Jerome McCarthy’s marketing mix of Product, Promotion, Price, and Place has been undermined by technological advances to the point where it has had to be expanded to 7 Ps. Today’s consumer is looking for a deeper, more emotional bond based on the unique and differentiated experience that the brand can provide. Why is it that the four Ps have become less relevant? In this blog I'll consider the decline of Product and Promotion as brand builders; next week will be the turn of Price and Place.
Product differentiation – a Sisyphean task
The exponential increase in the power of new technologies and the globalised marketplace that marked the Information Age has led to a scale and pace of product development unimaginable even 20 years ago. (I recommend Thomas Friedman’s new book – “Thank you for being late” for a perspective on this phenomenon). This accelerated development process has simply overwhelmed some long-established, product-based brands. Kodak dominated the market for photography and even invented the digital camera; but this could not stop a company that once employed 170,000 people being overtaken by more nimble competitors with less history to confuse their strategies. Remember Polaroid? Blackberry? Nokia? All fell prey to a business environment they could not keep pace with.
Product survival is one thing but product superiority has become increasingly elusive as globalised manufacturing processes, speed of bringing products to market and the internet marketplace have commoditised much of what we buy. Genuinely differentiated products (those with a Unique Selling Proposition) can expect no longer than 6 months exclusive access to markets before ‘copy-cats’ emerge to challenge. There may be a handful of mainstream brands that can claim to be different – Google’s algorithms, Apple’s design or Dyson’s bag-less vacuum cleaner. But these are rarities and brands have had to find other ways of setting themselves apart from their competitors.
Even more remarkably we have seen the emergence in the past few years of brands that neither create nor own the products they sell. Online intermediaries pair product owner and purchaser and, in the process have established significant brand presence. Uber, AirBnB, Insurance aggregators have overturned the concept of product-based brand differentiation in favour of an entirely new model.
Positioning – ‘We won’t make a drama out of a crisis’
Broadcast advertising and sponsorship was the mainstay of branding throughout the latter part of the 20th century. Brands sought to create a relationship with their customers by establishing an identifiable position generated through advertising or sponsorship, through socially responsible behaviour or by cultivating a reputation for continuous and dynamic development. Some have succeeded:
- Nike have consistently sponsored the very best athletes in their discipline – Carl Lewis, Michael Jordan, Roger Federer, Brazil’s football team, India’s cricket team – and in 2016 were ranked the world’s most valuable sports brand by Forbes magazine.
- From its inception Ikea has been focused on delivering ‘a better everyday’ for everyone involved in their business. Their strong sustainability strategy and mission to have a positive impact on people and the planet led to them being recognised as one of the top three brands for ‘Corporate Social Responsibility’ in the UK in 2016.
- Amazon has continuously evolved its brand offer to create an impression of a strong dynamic brand. From books and CDs it has expanded its offer to include e-readers (Kindle), tablets (Fire), web services (AWS), TV streaming (Prime) and now a home assistant (Amazon Echo)
The secret of success for these brands is long-term, consistent investment in a message that is authentic (i.e. rooted in a brand truth and matched by the brand experience). But this level of alignment is rare and out of reach of the multitude of brands. Too often brand-building that tries to shape a perception in the mind of customers leaves itself vulnerable to the vagaries of the market, human nature or just plain bad luck:
- ‘We won’t make a drama out of a crisis’ is a slogan that has far outlived the brand that created it. Crafted in 1978 (for insurance company Commercial Union) it survives while the brand has disappeared, merged with General Accident and then Norwich Union to become Aviva.
- The IPA suggested in 2013 that the average client-agency relationship tenure had dropped in length from seven years and two months in 1984 to just two years and six months. Marketing directors come and go and advertising campaigns are seldom given the time they need to establish themselves.
- In 2016 two global brands with reputations built on technical ability suffered major set-backs. Samsung (with the Note 7) and VW (emissions software) both felt the wrath of the consumer who feels deceived. For VW the scandal resulted in a fall of 13.2 points in its CSR score and a position outside the top 100 companies for CSR.
- Sometimes brand disasters can be self-inflicted. Gerald Ratner famously described the products sold in his eponymous stores as ‘total crap’, managing to wipe £500 million from the value of his company and single-handedly destroy the brand he’d built up. Senior executives can ‘Do a Ratner’ in many ways: personal behaviours failing to match those expected by the brand they represent; rubbishing your own customers (Abercrombie and Fitch CEO suggested “A lot of people don’t belong in our clothes.”); putting your own problems ahead of those whose lives you've ruined (BP’s CEO Tony Hayward after the Deepwater Horizon disaster saying “I would like my life back”.)
What these examples demonstrate is how fragile a brand position or perception can be. Not least because of the spread and impact of Social Media. Gone are the days when brands could control what was said about them through broadcast advertising messages and press releases. Lobby groups and disgruntled customers have been given new force through Facebook and Twitter. Nielsen's Global Trust in Advertising survey shows how 'recommendations from people I know' and 'consumer opinions posted online' are trusted more than branded websites, TV ads and even 'editorial content such as newspaper articles'. A sign of the times.