Crafting the Brand Positioning

No company can win if its products and services resemble every other product and offering. As part of the strategic brand management process, each offering must represent the right kinds of things in the minds of the target market. Although successfully positioning a new product in a well-established market may seem difficult, Method Products shows that it is not impossible.

Named the seventh fastest-growing company in the United States by Inc. magazine back in 2006, Method Products is the brainchild of former high school buddies Eric Ryan and Adam Lowry. The company started with the realization that although cleaning and household products is a huge category, taking up an entire supermarket aisle or more, it was an incredibly boring one. Ryan and Lowry designed a sleek, uncluttered dish soap container that also had a functional advantage—the bottle, shaped like a chess piece, was built to let soap flow out the bottom, so users would never have to turn it upside down. This signature product, with its pleasant fragrance, was designed by award-winning industrial designer Karim Rashid. “The cleaning product industry is very backwards, and many of the products have a 1950s language,” Rashid said, “They are cluttered with graphics, too much information, and complicated ugly forms.

By creating a line of nontoxic, biodegradable household cleaning products with bright colors and sleek designs totally unique to the category, Method has crossed the line of $100 million in revenues with a phenomenal growth rate. Its big break came with the placement of its product in Target, known for partnering with well-known designers to produce stand-out products at affordable prices. Because of a limited advertising budget, the company believes its atractive packaging and innovative products must work harder to express the brand positioning. The challenge for Method now, however, is to differentiate beyond design to avoid copycats eroding the company’s cachet. The company is capitalizing on growing interest in green products by emphasizing its nontoxic, nonpolluting ingredients.

As the success of Method products demonstrates, a company can reap the benefits of carving out a unique position in the marketplace. Creating a compelling, well-differentiated brand position requires a keen understanding of consumer needs and wants, company capabilities, and competitive actions. It also requires disciplined but creative thinking. In this chapter, we outline a process by which marketers can uncover the most powerful brand positioning.

Developing and Establishing a Brand Positioning

All marketing strategy is built on segmentation, targeting, and positioning (STP). A company discovers different needs and groups in the marketplace, targets those it can satisfy in a superior way, and then positions its offerings so the target market recognizes the company’s distinctive offerings and images.

Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market. The goal is to locate the brand in the minds of consumers to maximize the potential benefit to the firm. A good brand positioning helps guide marketing strategy by clarifying the brand’s essence, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way. Everyone in the organization should understand the brand positioning and use it as context for making decisions.

Entertainment Weekly When publisher Scott Donaton took over Entertainment Weekly, he repositioned the magazine away from celebrity lifestyles to focus more directly on entertainment itself and what actually appeared on the screen, page, or CD. This updated positioning became a filter that guided the content and marketing of the magazine: “Every event, sales program, marketing initiative gets poured through that filter—the goal being to keep and enhance the things that are true to who you are; kill the things that aren’t, necessarily; and create great new things that are even better expressions of who you are.” Out was the glitzy annual Oscar party at Elaine’s restaurant in New York City; in its place was a week-long Academy Awards program at ArcLight Theater in Hollywood showcasing all the best-pictures nominees and featuring a panel discussion with nominated screenwriters.

A good positioning has a “foot in the present” and a “foot in the future.” It needs to be somewhat aspirational so the brand has room to grow and improve. Positioning on the basis of the current state of the market is not forward-looking enough, but, at the same time, the positioning cannot be so removed from reality that it is essentially unobtainable. The real trick in positioning is to strike just the right balance between what the brand is and what it could be.

The result of positioning is the successful creation of a customer-focused value proposition, a cogent reason why the target market should buy the product. shows how three companies—Perdue, Volvo, and Domino’s—have defined their value proposition through the years given their target customers, benefits, and prices

Positioning requires that marketers define and communicate similarities and differences between their brand and its competitors. Specifically, deciding on a positioning requires: (1) determining a frame of reference by identifying the target market and relevant competition, (2) identifying the optimal points of parity and points of difference brand associations given that frame of reference, and (3) creating a brand mantra to summarize the positioning and essence of the brand.

Determining a Competitive Frame of Reference

The competitive frame of reference defines which other brands a brand competes with and therefore which brands should be the focus of competitive analysis. Decisions about the competitive frame of reference are closely linked to target market decisions. Deciding to target a certain type of nconsumer can define the nature of competition, because certain firms have decided to target that segment in the past (or plan to do so in the future), or because consumers in that segment may already look to certain products or brands in their purchase decisions.

Identifying Competitors a good starting point in defining a competitive frame of reference for brand positioning is to determine category membership—the products or sets of products with which a brand competes and which function as close substitutes. It would seem a simple task for a company to identify its competitors. PepsiCo knows Coca-Cola’s Dasani is a major bottled-water competitor for its Aquafina brand; Citigroup knows Bank of America is a major banking competitor; and Petsmart.com knows a major online retail competitor for pet food and supplies is Petco.com.

The range of a company’s actual and potential competitors, however, can be much broader than the obvious. For a brand with explicit growth intentions to enter new markets, a broader or maybe even more aspirational competitive frame may be necessary to reflect possible future competitors. And a company is more likely to be hurt by emerging competitors or new technologies than by current competitors.

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After having spent billions of dollars building their networks, cell phone carriers AT&T, Verizon Wireless, and Sprint face the threat of new competition emerging as a result of a number of changes in the marketplace: Skype and the growth of Wi-Fi hotspots, municipal Wi-Fi networks built by cities, dual mode phones that can easily switch networks, and the opening up of the old analog 700 MHz frequency used for UHF broadcasts

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The energy-bar market created by PowerBar ultimately fragmented into a variety of subcategories, including those directed at specific segments (such as Luna bars for women) and some possessing specific attributes (such as the protein-laden Balance and the calorie-control bar Pria). Each represented a subcategory for which the original PowerBar was potentially not as relevant

Firms should identify their competitive frame in the most advantageous way possible. In the United Kingdom, for example, the Automobile Association positioned itself as the fourth “emergency service”—along with police, fire, and ambulance—to convey greater credibility and urgency. Consider the competitive frame adopted by Bertolli.

 

Bertolli Unilever’s Bertolli, a line of frozen Italian food, experienced a steady 10 percent growth in sales through the recent economic recession, in part due to its clever positioning as “restaurant quality Italian food that you can eat at home.” Targeting men and women with “discerning palates,” Bertolli has aggressively innovated with a stream of high-quality new dishes to keep target customers interested. In its marketing for the brand, Bertolli deliberately chooses to go to places “appropriate for a fine dining brand but not a frozen food brand.” Advertising “Spend a Night In with Bertolli,” the brand has advertised during the Emmys and Golden Globes award show telecasts and hosted celebrity chef dinners in Manhattan.

We can examine competition from both an industry and a market point of view. An industry is a group of firms offering a product or class of products that are close substitutes for one another. Marketers classify industries according to number of sellers; degree of product differentiation; presence or absence of entry, mobility, and exit barriers; cost structure; degree of vertical integration; and degree of globalization.

Using the market approach, we define competitors as companies that satisfy the same customer need. For example, a customer who buys a word-processing package really wants “writing ability”—a need that can also be satisfied by pencils, pens, or, in the past, typewriters. Marketers must overcome “marketing myopia” and stop defining competition in traditional category and industry terms. Coca-Cola, focused on its soft drink business, missed seeing the market for coffee bars and fresh-fruit-juice bars that eventually impinged on its soft-drink business.

The market concept of competition reveals a broader set of actual and potential competitors than competition defined in just product category terms. Jeffrey F. Rayport and Bernard J. Jaworski suggest profiling a company’s direct and indirect competitors by mapping the buyer’s steps in obtaining and using the product. This type of analysis highlights both the opportunities and the challenges a company faces. “Marketing Insight: High Growth through Value Innovation” describes how firms can tap into new markets while minimizing competition from others.

Creating Brand Equity

One of the most valuable intangible assets of a firm is its brands, and it is incumbent on marketing to properly manage their value. Building a strong brand is both an art and a science. It requires careful planning, a deep long-term commitment, and creatively designed and executed marketing. A strong brand commands intense consumer loyalty—at its heart is a great product or service.

While attending yoga classes, Canadian entrepreneur Chip Wilson decided the cotton polyester blends most fellow students wore were too uncomfortable. After designing a well-fitting, sweat-resistant black garment to sell, he also decided to open a yoga studio, and lulu lemon was born. The company has taken a grassroots approach to growth that creates a strong emotional connection with its customers. Before it opens a store in a new city, lululemon first identifies influential yoga instructors or other fitness teachers. In exchange for a year’s worth of clothing, these yogi serve as “ambassadors,” hosting students at lululemon-sponsored classes and product sales events. They also provide product design advice to the company. The cult-like devotion of lululemon’s customers is evident in their willingness to pay $ 92 for a pair of workout pants that might cost only $ 60 to $ 70 from Nike or Under Armour. lululemon can sell as much as $ 1,800 worth of product per square feet in its approximately 100 stores, three times what established retailers Abercrombie & Fitch and J.Crew sell. After coping with some inventory challenges, the company is looking to expand beyond yoga-inspired athletic apparel and accessories into similar products in other sports such as running, swimming, and biking.

Marketers of successful 21st-century brandsmust excel at the strategic brand management process. Strategic brand management combines the design and implementation of marketing activities and programs to build, measure, and manage brands to maximize their value. The strategic brand management process has four main steps:
-	Identifying and establishing brand positioning
-	Planning and implementing brand marketing
-	Measuring and interpreting brand performance
-	Growing and sustaining brand value deals with brand positioning.

What Is Brand Equity?

Perhaps the most distinctive skill of professional marketers is their ability to create, maintain, enhance, and protect brands. Established brands such as Mercedes, Sony, and Nike have commanded a price premium and elicited deep customer loyalty through the years. Newer  brands such as POM Wonderful, SanDisk, and Zappos have captured the imagination of consumers and the interest of the financial community alike.

The American Marketing Association defines a brand as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.” A brand is thus a product or service whose dimensions differentiate it in some way from other products or services designed to satisfy the same need. These differences may be functional, rational, or tangible—related to product performance of the brand. They may also be more symbolic, emotional, or intangible—related to what the brand represents or means in a more abstract sense.

Branding has been around for centuries as a means to distinguish the goods of one producer from those of another.3 The earliest signs of branding in Europe were the medieval guilds’ requirement that craftspeople put trademarks on their products to protect themselves and their customers against inferior quality. In the fine arts, branding began with artists signing their works. Brands today play a number of important roles that improve consumers’ lives and enhance the financial value of firms.

The Role of Brands

Brands identify the source or maker of a product and allow consumers—either individuals or organizations—to assign responsibility for its performance to a particular manufacturer or distributor. Consumers may evaluate the identical product differently depending on how it is branded. They learn about brands through past experiences with the product and its marketing program, finding out which brands satisfy their needs and which do not. As consumers’ lives become more complicated, rushed, and time-starved, a brand’s ability to simplify decision making and reduce risk becomes invaluable

Brands also perform valuable functions for firms.5 First, they simplify product handling or tracing. Brands help to organize inventory and accounting records. A brand also offers the firm legal protection for unique features or aspects of the product. The brand name can be protected through registered trademarks ; manufacturing processes can be protected through patents; and packaging can be protected through copyrights and proprietary designs. These intellectual property rights ensure that the firm can safely invest in the brand and reap the benefits of a valuable asset.

A credible brand signals a certain level of quality so that satisfied buyers can easily choose the product again.7 Brand loyalty provides predictability and security of demand for the firm, and it creates barriers to entry that make it difficult for other firms to enter the market. Loyalty also can translate into customer willingness to pay a higher price—often 20 percent to 25 percent more than competing brands.8 Although competitors may duplicate manufacturing processes and product designs, they cannot easily match lasting impressions left in the minds of individuals and organizations by years of product experience and marketing activity. In this sense, branding can be a powerful means to secure a competitive advantage. Sometimes marketers don’t see the real importance of brand loyalty until they change a crucial element of the brand, as the now-classic tale of New Coke illustrates.

Coca - Cola Battered by a nationwide series of taste-test challenges from the sweeter - tasting Pepsi - Cola, Coca-Cola decided in 1985 to replace its old formula with a sweeter variation, dubbed New Coke. Coca-Cola spent $4 million on market research. Blind taste tests showed that Coke drinkers preferred the new, sweeter formula, but the launch of New Coke provoked a national uproar. Market researchers had measured the taste but failed to measure the emotional attachment consumers had to Coca-Cola. There were angry letters, formal protests, and even lawsuit threats to force the retention of “The Real Thing.” Ten weeks later, the company withdrew New Coke and reintroduced its century-old formula as “Classic Coke,” a move that ironically might have given the old formula even stronger status in the marketplace.

For better or worse, branding effects are pervasive. One research study that provoked much debate about the effects of marketing on children showed that preschoolers felt identical McDonald’s food items— even carrots, milk, and apple juice—tasted better when wrapped in McDonald’s familiar packaging than in unmarked wrappers.

To firms, brands represent enormously valuable pieces of legal property that can influence consumer behavior, be bought and sold, and provide their owner the security of sustained future revenues. Companies have paid dearly for brands in mergers or acquisitions, often justifying the price premium on the basis of the extra profits expected and the difficulty and expense of creating similar brands from scratch. Wall Street believes strong brands result in better earnings and profit performance for firms, which, in turn, create greater value for shareholders

The Scope of Branding

How do you “brand” a product? Although firms provide the impetus to brand creation through marketing programs and other activities, ultimately a brand resides in the minds of consumers. It is a perceptual entity rooted in reality but reflecting the perceptions and idiosyncrasies of consumers.

Branding is endowing products and services with the power of a brand. It’s all about creating differences between products. Marketers need to teach consumers “who” the product is—by giving it a name and other brand elements to identify it—as well as what the product does and why consumers should care. Branding creates mental structures that help consumers organize their knowledge about products and services in a way that clarifies their decision making and, in the process, provides value to the firm

For branding strategies to be successful and brand value to be created, consumers must be convinced there are meaningful differences among brands in the product or service category. Brand differences often relate to attributes or benefits of the product itself. Gillette, Merck, and 3M have led their product categories for decades, due in part to continual innovation. Other brands create competitive advantages through nonproduct-related means.Gucci, Chanel, and Louis Vuitton have become category leaders by understanding consumer motivations and desires and creating relevant and appealing images around their products.

Marketers can apply branding virtually anywhere a consumer has a choice. It’s possible to brand a physical good (Ford Flex automobile, or Lipitor cholesterol medication), a service (Singapore Airlines or Blue Cross and Blue Shield medical insurance), a store (Nordstrom or Foot Locker), a person (actress Angelina Jolie or tennis player Roger Federer), a place (the city of Sydney or country of Spain), an organization (U2 or American Automobile Association), or an idea (abortion rights or free trade).

Shaun White Action sports legend Shaun White survived three open-heart surgeries before he was a year old, and later survived midair collisions and dramatic falls in competition on his way to becoming a champion skateboarder and an Olympic gold medalist in snowboarding. The two-sport legend was signed by gear and apparel maker Burton when he was only 7 years old. His likeability, authenticity, and shrewd business insights have made him one of the most influential endorsers in the $150 billion youth market. Burton’s White Collection of high-priced technical winter outerwear is one of the company’s hottest sellers; HP has used White to market its laptops and flat-panel TV’s (which also showcase his Shaun White Snowboarding video game created by Ubisoft); a White-designed signature goggle has become Oakley’s biggest seller; Target’s Shaun White 4 Target collection focuses on street wear and skateboarding for a mass market; and long-time sponsor Red Bull even filmed White’s snowboarding trip to Japan and released the video on MTV and as a retail DVD.

An action-sports hero, Shaun White is one of the most successful product endorsers for the lucrative youth market, and a brand in his own right.

Defining Brand Equity

Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands.

Marketers and researchers use various perspectives to study brand equity.15 Customer-based approaches view it from the perspective of the consumer — either an individual or an organization — and recognize that the power of a brand lies in what customers have seen, read, heard, learned, thought, and felt about the brand over time.

To reinforce its luxury image, Louis Vuitton uses iconic celebrities such as legendary Rolling Stones rocker Keith Richards in print and outdoor advertising.

Customer-based brand equity is thus the differential effect brand knowledge has on consumer response to the marketing of that brand. A brand has positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified, than when it is not identified. A brand has negative customer-based brand equity if consumers react less favorably to marketing activity for the brand under the same circumstances. There are three key ingredients of customer-based brand equity.
1.	Brand equity arises from differences in consumer response. If no differences occur, the brandname product is essentially a commodity, and competition will probably be based on price
2.	Differences in response are a result of consumers’ brand knowledge, all the thoughts, feelings, images, experiences, and beliefs associated with the brand. Brands must create strong, favorable, and unique brand associations with customers, as have Toyota (reliability), Hallmark (caring), and Amazon.com (convenience).
3.	Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand. Stronger brands lead to greater revenue.