The following guest post is by brandchannel reader Mike Covert:
We all know that brands carry value. Name recognition and reputation can help protect pricing, anticipate sales, allow for more adventurous product lines and provide a credible default brand for consumers who value market longevity. But just as business models should be flexible enough to respond to changing consumer dynamics and market pressures, marketing strategies must similarly evolve their brand-building tactics.
Brand equity is eroding
Brands are no longer the signifiers of quality they once were, and brand equity is eroding. With more choices flooding the market, there’s growing acceptance that a good product experience can come from anywhere.
According to a study by Mintel, there are 20,000 new products introduced worldwide every single month. In the US, only 15 percent of those will be around in two years. Consumers won’t hesitate to leave a familiar brand in order to find greater value, because they fully expect something better is right around the corner. [more]
Faced with an ever-growing pool of choices, consumers are using the internet to access valuable product information that informs their purchases. Even before the recession, the free exchange of product reviews, opinions and specifications on the internet had bred a new age of the educated, empowered consumer. 80 percent of consumers do their research and solicit online feedback before making a purchase, and 30 percent of those trust the recommendations of strangers on sites like Yelp and Amazon more than they trust brand-centric advertising.
During lean times, price and quality replaced brand loyalty as primary market drivers. As the recession lingered on, this value-conscious mindset became an ingrained market characteristic. This is especially true among Millennials, who have never known an adult world where cost was not the determining factor in the purchasing decision. 80 percent of Millennials shop for the lowest price, and 60 percent have no problem passing over their favorite brand if there’s a cheaper option. Every penny counts, and brand loyalty is no match for the power of readily available product information.
The accelerating consumer research trend enabled by the internet and exacerbated by the recession has made room for the rise of a major player in the market: private labels. 88 percent of consumers think that private labels are just as good as national brands. Major retailers like Walmart and Target have their own labels they successfully market on price equanimity—consumers know they can get a comparable product for a significantly lower price. In a world of cheaper, generic products, 65 percent of buyers choose private labels over their name-brand equivalents. Consumers have become wise to the wiles of marketers, and they largely ignore the significance of the brand name at the point of purchase.
Today, brands are built by the product experience
Because of these forces, brands must develop a symbiotic relationship with products, in which the experience builds the brand. Frequent innovation has become critical for companies to fight brand erosion, and the secret weapon of this innovation lies in the product launch. Product lines that continuously prove to be a good value can leverage the launch to provide the type of purposeful narrative that builds individual brands. This narrative was once primarily built by above-the-line efforts and mass mediums that are not as pervasive in today’s consumer environment. Therefore, with each new product experience, the brand has an opportunity to seed a message that resonates with consumers and turns fickle buyers into brand advocates.
Convention says that product launches should be based on practical benefits that distinguish a product from its competitors, and this remains the primary point of emphasis in this value-conscious market. Some brands have built their success on stressing their price, functionality and convenience. But for a truly impactful campaign that helps to build the brand, marketers must go further.
People look for products that help them satisfy an emotional need to fill a certain role. Want to be a better father? This toy can help you have quality time with your kids. Want to be the perfect housekeeper? Buy this cleaning product, and save time while making your kitchen sparkle. Campaigns that carry an emotional element that helps consumers identify with the brand leave a deeper impression than those solely focused on practicality.
In addition to a practical benefit and an emotional benefit, consumers are now looking for a societal benefit. They want to know there’s a purpose behind the product. When brands listen to what their consumers are saying, they gain valuable insight to help direct their marketing strategies. In this way, consumers actually help shape the brand.
CVS, for instance, paid attention to the conversation their customers were having about the hypocrisy of a wellness brand selling tobacco products. They left $2 billion on the table when they removed those products. However, by doing so, they made a long-term investment in their brand. Consumers will choose brands that share their interests and social causes 42 percent more often than those that don’t. When brands stand for something larger than profit and practicality, they leverage an enormous, often untapped influence on consumers.
Where brands used to be able to promote a marketing message and focus their product launches on practical value, today’s consumers want value-conscious and purpose-driven brands they can connect emotionally with. The best brands leverage all three areas of benefit, and as a result, have a large base of strong brand advocates. IKEA, Patagonia, REI, Whole Foods—they all emphasize their value by helping consumers identify with a purpose, standing for something larger than themselves and continuously proving their worth at the product level.
Product launch tells the story in a more complete way
Innovation also turns heads. There’s no word more powerful than “new” for generating interest and consideration from a variety of stakeholders, including consumers. What companies do with that powerful platform separates the relevant from the irrelevant. Today, there can be no effective brand-building without a cohesive, purposeful product launch that capitalizes on the innovation necessary for vitality.
Products must be able to hold up under the scrutiny of consumer research and prove to be a good value. Once a company overcomes that hurdle, it can position the product as part of a larger brand narrative that speaks to consumers on a deeper, emotional level and aligns with their social causes.
The product launch provides brands a valuable opportunity to tell consumers who they are and what they stand for. Marketers that successfully leverage that opening can build brand equity by creating communities, generating conversation and continuously reinforcing their brand narrative with every product launch.
—Mike Covert is President and Co-Founder of Ignite Partnership. For more than 15 years, Mike has helped launch and sustain hundreds of products and services for both B2B and B2C companies, customizing strategies and a full-spectrum of marketing support for brands like Kraft/Nabisco, ESPN, Miller Brewing, Frito-Lay, PepsiCo, Walmart and Samsung. Follow him on Twitter: @mccovert