Positioning and Branding
Digital Transformation, The Customer-Centric Approach
It’s essential to ascertain, implement and sustain a company’s positioning and branding to profit from a customer-centric marketing approach fully. Let’s unpack what’s involved and review some practical tools and methods.
Strategic positioning
Peter Drucker, author and academic, narrowed the focus of every business to two crucial functions, marketing and innovation. Everything else, he declared, is an internal cost. A company’s strategic positioning directly impacts these functions and becomes the necessary origin of every subsequent strategic decision. It’s no wonder that companies emphasize strategic positioning and why this requires leadership involvement from across the organization, often extending out to suppliers.
Michael Porter, author and academic, taught that strategic positioning reflects the intentional choices a company makes about the value it will create and how that value will differentiate them from rivals. He suggests that strategic positioning should lead to one of two conclusions: premium and lower costs. These choices can be narrowed or broadened through focus; this can be envisioned through his generic strategies quadrant (see below) and mapped against competitor choices to help identify market opportunities.
Strategic positioning drives business decisions from pricing, sales strategies and customer services to manufacturing and supplier procurement, providing a clear, consistent and cohesive path for operating a business’ entire ecosystem (Sullivan, 2019). Companies are becoming more aware that competitive advantage includes the whole supply chain rather than exclusively within their organizations (Knox, 2004).
Branding
While positioning is externally focused, branding is internally focused. Consumers equate a company’s branding to its personality. And like a personality, the values expressed through branding bring attention to the essential beliefs of a company. These values then drive employee and company actions and become principles that guide their decisions. Branding, expressed through marketing, helps create the emotional bond that a company develops with its customers. Branding drives a company’s public voice and the way it’s perceived. Ultimately, however, a company’s brand lives in the perceptions of its target market as they associate a company’s brand with the memories, interactions and experiences with the company and its products and services (Leigh).
Brand positioning
Brand positioning represents the actions a company takes to put their brand in its intended place, in the minds of its target audience. It influences beliefs and, ideally, behaviour toward their brand while using de-positioning strategies to distinguish their brand away from competitors, and by contrast, closer to their target’s identified pain-points (Marion, 2019).
Brand positioning is challenging because it involves complex intangibles, such as feelings, beliefs, perceptions, mental imagery, and attitudes. It’s implicitly comparative to secure the brand as the only choice that uniquely aligns with your target customers’ aspirational needs (Boykin).
Brand equity
Companies that favourably establish their positioning and branding build brand equity rewarded through an accounting term called goodwill. Investopedia defines goodwill as the intangible portion of the purchase price of a company. It's the sum of the net fair value of all of the assets purchased in the acquisition and the liabilities assumed in the process, such as the value of a company's brand name, solid customer base, good customer relations, and good employee relations. All influenced through positioning and branding.
Professor Simon Knox, in 2004, shared the following examples of the value of brand equity:
Nestle paid £2.6 billion for Rowntree though the company’s balance sheet value was only £0.4 billion.
Coca-Cola calculates that only about 4% of its value comes from its plants, machinery, and locations. The real value lies in its intangible assets, and the first amongst these is its brand.
Intel believes that 85% of its worth lies in its brand equity and intellectual capital: the brand name, patents, know-how, people and processes.
Accenture increased its turnover from $800 million to $2.5 billion within five years of repositioning itself in the IT-led change management marketplace.
Brand equity accounts for value beyond the functional performance of a company’s products and services. It helps customers differentiate based on their preferences and loyalties. It protects a company’s brands from commoditization, growing competition, and the incessantly fast pace of innovation.
Brand equity reduces customer anxiety at the point of purchase concerning whether their choice will provide its promised aspirational benefits. Customers evaluate the perceived quality they receive from the brand against the total costs (and sacrifices) of owning it. Each brand experience provides context which customers use to evaluate the brand's image and reputation. Called "moments of truth," they must adequately address expectations or risk permanently damaging the brand's reputation and, ultimately, their equity (Knox, 2004).
After the purchase, brand equity develops through the company's customer relationship management capabilities and service values, instilled by company executives and delivered by impassioned staff (Knox, 2004). The brand's promise must be integrated into an organization's DNA to be realized, underpinning all functions, including culture, employee performance, management, and operations (Lawson, 2019).
Tools and approaches
Marty Marion, the founder of Master Positioning LLC, recommends using a positioning platform and matrix to help companies deliver an effective strategy. Whereas Niraj Dawar and Charan Bagga from the Harvard Business Review suggest a centrality-distinctiveness (C-D) map to help discover “white space” in the marketplace.
Positioning Platform and Matrix
Marty Marion affirms that customers behave according to their beliefs, and beliefs don't easily change. Instead, you have to gradually build perceptions through "influence moments" nurtured through layers of experiences, education, trusted word-of-mouth, and marketing messages that, when aggregated, slowly form beliefs.
Marty Marion uses two tools that he refers to as a positioning platform and a positioning matrix to gain the most from marketing messages. The positioning platform is the result derived with the assistance of a positioning matrix. A positioning platform includes:
FOR: (insert target audience definition)
BRAND: (insert core benefit statement)
BECAUSE: (insert proof statement)
The positioning platform is a guide to all of a company's marketing messages.
A position matrix encourages teams to evaluate potential positioning platforms against an acknowledged weighting matrix (see below).
The four positioning elements listed vertically include:
A meaningful benefit - how well will it resonate with your target audience?
Provable and readily evident - how legitimate and believable is your claim?
Differentiated from competitors - is it clearly and distinctly different?
De-positioning the competitors - will it create doubt or dissatisfaction about the competition? Will it complement and support your differentiation?
The four elements listed horizontally represent the environment that you’re entering:
Introductory - when you’re introducing a new product or creating a new category class
Offensive - when you’re trying to take market share away from a competitor
Defensive - when you’re protecting your market share from an attack
Remedial - when you have a damaging public relations issue that needs to be resolved
The weighting formulas will differ based on the following:
Urgency/necessity of your objectives
If the competitive landscape includes a dominant competitor
Your current position in your business lifecycle
If there’s an opportunity to create a new disruptive category class
Centrality-Distinctiveness map
Niraj Dawar and Charan Bagga recommend a brand strategy map called the Centrality-Distinctiveness or C-D map (see below). The C-D map allows companies to connect a brand’s perceptual position to business outcomes (sales revenue, price and profitability) and evaluate and track strategic decisions against competitors over time.
Prominent brands are popular and shape category dynamics. Their lack of distinctiveness reduces their pricing power but, in return, increases their sales volume potential.
Distinctive brands stand out from the crowd, seek to avoid direct competition, and as a result, tend to command higher prices but sacrifice sales volume.
The C-D map has four quadrants:
Aspirational - are highly differentiated with wide appeal
Mainstream - are first that come to mind when consumers think of the category and tend to be risk-averse
Peripheral - have little distinction and are unlikely to be top of mind or first choice for consumers. They’re the me-too brands and use cost advantage to attract consumers
Unconventional - have unique characteristics that distinguish them from traditional products and other competitors in the market
Like the C-D map, positioning maps help companies visualize the competitive landscape and pinpoint benefits that may be attractive to consumers (D’Aveni, 2007).
Final thoughts
Without well-defined positioning and branding, a company lacks focus and purpose. Companies that invest in positioning and branding and strenuously enforce it throughout their organization, from their customers to their suppliers, gain a competitive advantage that’s difficult to unseat.
References
Boykin, G. What Is the Difference Between Branding & Positioning? Retrieved from https://yourbusiness.azcentral.com/difference-between-branding-positioning-3747.html
D’Aveni, R., A. (2007, November). Mapping Your Competitive Position. Retrieved from https://hbr.org/2007/11/mapping-your-competitive-position
Dawar, N. and Bagga, C., K. (2015, June). A Better Way to Map Brand Strategy. Retrieved from https://hbr.org/2015/06/a-better-way-to-map-brand-strategy
Hargrave, M. (2020, April 30). Goodwill. Retrieved from https://www.investopedia.com/terms/g/goodwill.asp
Knox, S. (2004). Positioning and branding your organization. Journal of Product & Brand Management. Volume 13, Number 2. Pp. 105 - 115. Retrieved from https://eclass.uoa.gr/modules/document/file.php/D344/%CE%A3%CE%B7%CE%BC%CE%B5%CE%B9%CF%8E%CF%83%CE%B5%CE%B9%CF%82/Positioning%20and%20branding%20your%20organisation.pdf
Lawson, A. (2019, July 21). Branding vs. Positioning. Is there a difference and why does it matter? Retrieved from https://www.messagesthatmatter.com/branding-vs-positioning-is-there-a-difference-and-why-does-it-matter/
Leigh, R. What Is the Difference Between Branding & Positioning? Retrieved from https://smallbusiness.chron.com/difference-between-branding-positioning-22564.html
Marion, M. (2019, February 26). Branding vs. Positioning Clarified. Retrieved from https://medium.com/@martymarion/branding-vs-positioning-clarified-a72eba53e5d2
Marion, M. The Positioning Matrix. The Science of Brand Positioning & De-Positioning to Outflank Competitors, Dominate Your Niche and Explode Your Revenue. Retrieved from https://masterpositioning.com/free-brand-positioning-pdf-download/
Porter, P. Strategic Positioning. Retrieved from https://www.isc.hbs.edu/strategy/business-strategy/Pages/strategic-positioning.aspx
Sullivan, F. C. (2019, February 18). Let’s Talk About Brand Positioning and Purpose. Retrieved from https://medium.com/s/how-to-build-a-brand/lets-talk-about-brand-positioning-and-purpose-b74a51da9896