This model is an extension of Aaker’s model for leadership brands, mentioned in his book “Brand Leadership” (by Joachimsthaler & Aaker, 2001).
Leadership brand types
First, let us define leadership brands. A leadership brand inspires employees by setting high expectation levels. It also provides additional benefits to consumers – both emotional (empowerment through brand association) and functional (high quality standards). In the table below, I will demonstrate how leadership brand types position themselves and what their USPs are generally based on.
Here is how you can use this model for building a branding strategy.
Analyze your competitors. Is there a predominant strategy they are using? A lot of times, companies go by the “industry standard”, thus selecting the strategy common in their niche.
Investigate if you can use another strategy to differentiate from your competitors (provided you have the resources for that).
Do market research (e.g. focus groups) to verify if your strategy resonates with the target customer.
Launch the brand, monitor and evaluate the results.
Let us take an example of a B2B market for industrial cooking ovens. The majority of producers and distributors base their branding strategy on the “power brands” method, featuring qualities of their products and what they deliver.
A somewhat fresh approach would be to use “explorer brands” strategy. For example, talking about how the food industry professionals can benefit and produce better quality food for the end consumer. For example, Baxter markets its ovens by stressing how the ovens can be used to produce the desired result: “We understand that advanced technology is there for one thing: to help you create an authentic experience for your customers”.
An even more daring strategy would be to use “icon brands” strategy. One of the leading brands in this segment, Rational, is deploying this strategy. Although it features the products on its website, it rather focuses on being passionate about food production and experiencing the world of professional cooking. MAM brand (pizza ovens) clearly uses the Italian origin of its brand as its USP, featuring Italian lifestyle and cooking and stating “Italian product. Italian technology. Italian taste” on its website.
It is also thinkable to come up with identity brands strategy in this segment (e.g. personifying the brand or centralizing the brand around the personality of its founder or a brand ambassador). For example, BULL Outdoor Kitchens uses the logo featuring a bull, thus personifying its brand “Don’t underestimate the power of the BULL”. This makes the brand stand out from the competition and creates a strong image in the minds of customers.
As follows from these examples, you can use the leadership brand model to create or to optimize your branding strategy, independently of the market segment you are operating in.
As I have mentioned in my previous posts on marketing strategy, one of the most important things you do in marketing is researching, formulating and communicating your USP – unique selling proposition (sometimes called a unique selling point).
What is a USP?
USP in marketing is a short phrase that highlights the main benefit for your customer, is unique to your company or product and makes the customers choose you over the competition. USP may, but does not have to, be identical to your company slogan. USP is directed at the customer and is the core of the marketing communication strategy.
The USP can be formulated for your company, product, service or brand. It includes one or maximum two points and is never a list.
There are different approaches to finding your marketing USP, below I will describe three most common approaches and provide you with examples. I will also outline some typical mistakes.
The first approach logically focuses on customers and what they perceive as valuable.
Who are your customers?
This includes correctly segmenting the market you are in and selecting the appropriate target segments. Do not try to position your product for too many segments at once, focus is the key to success in marketing.
What is important to them?
Try putting yourself into your customer’s shoes. A good exercise for this is creating buyer personas, as this helps to understand the target customer better and even develop more empathy towards them.
What wants and needs do your customers have?
An obvious way of finding out what represents value to your customers is asking them about their wants and needs (i.e. doing a marketing survey). However, this will be only be the top of the iceberg. Generally, when formulating your USP it is better to go a level deeper and consider more hidden (secret) needs.
For example, the Rituals brand is built around the need for relaxation and escaping from stress instead of a very basic need of keeping one’s body clean.
How do they make buying decisions?
According to neuromarketing, people are often driven by subconscious stimuli that have little to do with their rational decisions. The rule of thumb is: the lower is the price, the less rational is the buying decision. (Think of candy and chocolate bars at the cash register).
In case of larger sums, customers tend to rationalize the decisions more, sometimes taking days or weeks to compare price and quality of similar products. However, what is considered a high price buy will largely depend on the income or the psychometric qualities of your target group. Besides, even rational decisions can be influenced by marketing tools.
Why do they buy your product?
If you already have a product that enjoys customer acceptance, make it part of your USP. If your product solves a particular customer problem, this has obvious value to them. For example, the USP of Walmart is “Every day low prices on a broad assortment – anytime, anywhere.” The reason why customers go to Walmart is that they are able to find a large range of products at guaranteed low prices. In addition, Walmart in the US offers a good store coverage with over 5,000 stores. It also offers its products online.
How do targeted segments differ from one another?
Sometimes it is not possible to communicate a USP that will work across all customer segments. Depending on how different the segments are, you might need to come up with a different Unique Sales Proposition for each segment.
When doing competitor analysis, you can pay attention to the following points:
– The range of products and services they offer
– The target customer segments
– The marketing channels and marketing instruments they use
– What unique value they try to communicate to customers through their marketing
Having looked at several most prominent competitors, you will find some key differences between you and the competitors (whether real or perceived).
What are you doing or can you do better than your competitors?
During a thorough competitor analysis, you will find out what they are currently doing better than you and where you can possibly learn from them (benchmarking).
During your analysis you are also likely to find some “weak spots” of your competitors. For this, you can use, for example, reviews and customer opinions. Dig deeper to find if this is something that you are already doing better (or can do better).
Why should customers choose you over the competition?
When formulating your USP based on Competition approach, select something that both makes you stand apart from your competitors and is relatively difficult for them to imitate. This will eventually come back to customers because your USP should induce them to choose you over the competition.
The next approach focuses on your company and the unique capabilities you have.
What do you do?
Start with listing all products and services you currently offer or would like to offer in the near future. The list may get quite long, but this is just the first step.
What do you do especially well?
After you have a full list of what you could possibly do, select the areas where you really feel comfortable and possess a high level of expertise. Ideally, this should not be a kind of tacit knowledge that only one person has but something that can be shared and transferred between team members.
How is that valuable?
Analyze, what products or services are already popular within your target audience and what makes them sell so well.
What is difficult to copy?
Your USP should not only reflect what you can do especially well but also set you apart from competitors. The unique quality of your product can be real (e.g. a patented recipe or a geographic origin of a product) or perceived (a strong brand). For example, part of Chanel’s USP (female liberation and wearable haute couture) is the unique personality of its founder, Gabrielle Chanel.
What don’t you do?
A successful brand positioning always includes a target segment. There is nothing more dangerous for your brand and your USP than trying to serve too many market segments. This dilutes your marketing message and leads to waste coverage during any marketing campaign.
Compare these USPs by two different IT companies: “Creating value for our customers with our expertise” vs “Innovative IT-solutions for Retail and Logistics”. I think that the second one offers much more clarity and is more attractive to their target customers.
What is your company mission?
Mission is basically a reason why a company exists. This is the value it brings externally (customers & stakeholders) and internally (employees & shareholders) on a day-to-day basis.
What is your vision?
As opposed to mission, vision is future-oriented. It is a description of an “ideal self” of a company or where it wants to be in the future. A vision should be (@robert.lueders):
– Easy to remember
– Clear to understand
– Oriented towards your primary goal
Sometimes, mission & vision statements resemble the USP or even replace it in the company communication. Although they can be interrelated, the essential difference between them is that mission and vision are directed internally reflecting company philosophy and the way things are done.
The USP, on the other hand is what the company wants to communicate externally toward the target customer. Besides, if a company offers several products geared towards different customer groups, it may have several USPs, however, it will only have one mission and one vision statements.
Some USP ideas
Below I will list some ideas that can be used for creating your USP:
Exceptionally large product variety
Offering exclusive products symbolizing status and wealth
Providing high standards of security or reliability
The lowest price in the given segment or for the given type of product
A complex product or technology made easy to use
Saving time for your customer
Doing good by selling the product (e.g. fair trade)
Providing flexibility and customized solutions
Making the process of utilizing the product or the service enjoyable
Expertise for a given (niche) topic
Unique company or product history
Local company with high awareness of the local market
Mistakes in USP
And last, but not least, I will list some typical mistakes in formulating your USP:
Ignoring your present state (how you position yourself now)
Choosing a USP that is too different from your present market positioning you will cause confusion and diminish the credibility of the USP.
Being too generic (selling everything to everyone)
If someone completely unfamiliar with your company hears your USP, they should get an idea of a) what you do b) who your customers are. Thus, avoid too generic USPs such as “improving your life”.
Not considering the customer
Independently of what approach to creating a USP you will choose, you should by no means disregard the customers and their needs.
Including too many benefits into a USP
A USP should not include more than 1-2 benefits. These are the key points you focus on, the ones that stand for the highest customer value. Do not dilute your message by including too many points into your unique selling proposition.
Not being unique (different from competition)
In order to cut through the clutter, you should try to avoid “standard” phrases and formulate your USP in a more unique or creative way. E.g. the Red Bull energy drink uses the phrase “Gives you Wiiings”
Ignoring the market trends
Sometimes a USP needs to be changed or re-formulated over time due to the changing market trends, new technology, changes in the tastes of your target audience or in case of a major event that affects your industry. For example, due to the increasing importance of environment protection, some brands started to use USPs highlighting the sustainability of their products.
Not being truthful
When working on your USP, always make sure that it connects to reality. Negative customer opinions can spread really fast nowadays, so it is essential that the benefit you claim really exists.
As a final thought, I would like, once again, to hightlight the importance of selecting the right USP that reflects your internal expertise, presents value to your customer and sets you apart from competition.
Cooper (1992) talks about fifteen critical success factors for innovative products, based on the NewProd Study. In this short article, I want to describe several reasons why innovative projects fail.
The product/service developed does not have a real competitive advantage against competing products (also substitutes) and does not offer any added value for the customer. In this case, you have to compete on price, which is often not possible for innovative products due to high R&D costs.
The target market is unattractive and the product is not scalable to other markets (including the markets abroad).
The necessary research on the target market, as well as financial and technical feasibility of the project had been skipped or insufficiently conducted before the project was pushed into the pipeline. There was too much rush in implementing the project. Think of the time-to-profit, not time-to-market.
The product or service were not defined clearly from the start (including technical specifications, distribution channels and market positioning). I think the reason behind it is the desire to leave the side door open for sudden changes. But without any clear definition the project cannot be successfully managed by a cross-functional team.
The project team members cannot (missing competencies) or are not willing (missing understanding) to work on the innovative project. The human factor must not be underestimated!
The company has too many projects in the pipeline, the decisions to “kill” do not take place on time. This leads to the resources being spread too thinly and insufficient time and money granted to the potential winner projects.
The organizational structure and the culture of the organization do not allow for the necessary flexibility in the innovative process. The innovative projects have no “advocates” in the company management.
Cooper, Robert. (1992). The NewProd System: The Industry Experience. Journal of Product Innovation Management. 9. 113-127. 10.1016/0737-6782(92)90003-U.
If a company is planning to grow its turnover on a given market, it should craft a detailed marketing strategy. Below I will describe three main strategic directions for revenue growth. Please note that this excludes the cases when a company is moving to a new market or expanding its product offer to achieve sales growth.
First, let us define what a market is: a sum total of all buyers and sellers for a commodity or a service in a certain area or region. So, the important criteria include: the presence of buyers (potential buyers), the presence of sellers and the ability and desire of both parties to exchange goods, services and monetary equivalents.
By definition, markets are often limited by geographic borders (however, this is becoming obsolete in times of digitalization and globalization). Furthermore, there is time aspect as markets tend to go through significant changes over time and even disappear.
When talking about markets we start at the level of available market (that is the total number of available buyers on the market, e.g. people living in a certain area).
The market potential is the sales that could be generated from the customers who are not currently purchasing the product but would buy it if the company applied the sufficient marketing effort. With this in mind, there is always a share of customers who would not be profitable to acquire or who would not buy the product at any rate.
Customers who are already purchasing the product comprise the current market volume, which, in turn, consists of the company own market share and that of competitors.
As you can see on the diagram, there are three main strategies to achieve revenue growth:
Market exploration: attracting the customers from the “potential market” segment. This is a good strategy if the market is relatively new or less attractive to the competitors so that there are a lot of opportunities to expand.
Market invasion: in this strategy, the company tries to capture the market shares of the competitors. This is a viable strategy for declining or aging markets with a lot of market players and high competition.
Market deepening: turning towards the existing customers in order to grow the revenue (increased product usage or cross-selling and upselling). This strategy is often used as a complementary way of achieving revenue growth in addition to the two strategies mentioned above.
Let us look at the example of a chewing gum market. The exploration strategy would involve targeting the customers who are currently not buying chewing gum (explaining the product benefits, etc.). The invasion strategy would be competing with other producers of chewing gum for the same customers. The deepening strategy will try to market a larger amount of product to the same customer (e.g. suggesting using two strips of chewing gum instead of one or using the chewing gum after each meal).
Using one of these strategic directions (or their combination), a company can create a more detailed marketing strategy to achieve a growth in revenue over time.
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