Thursday, April 28, 2011

Moving marketing from competition to creation - Nigel Hollis Milward Brown

The title of this post may seem bizarre. After all, isn’t all marketing about competition? Well, bear with me for a little while.
This is the last of a series of three posts sparked by an article by McKinsey’s global managing director, Dominic Barton, that called for business to abandon short-termism and become a force for good, worthy of the public’s trust. If that is to happen, then I believe one of the things that has to change is marketing’s fixation with market share.
As the American car companies found to their cost a few years ago, you can have a big market share and still make no money. Fighting for market share is a zero sum game that is far too easily lost when margins suffer in order to benefit volume growth. The real challenge is not how to beat the competition, but how to avoid it in the first place. When a brand is recognized as having no direct substitutes by its customers, loyalty and a price premium are assured. And to achieve this position, a brand must create meaningful differentiation.
Meaningful differentiation is most powerful when it is tangible and functionally based. The Toyota Prius, theNintendo Wii and Red Bull are all brands that created new categories, outside the established norms of their product category. By stepping outside the bounds of their category, these brands have created a space that they can call their own.
The advantage may not last, but the Nissan Leaf, Microsoft's Kinect for Xbox 360 and Hansen’s Monster Energy, not only have to deliver a compelling product experience, they must also overcome mental barriers to competition. Being first to mind when a need arises has always been a powerful driver of sales, and being known as the category creator is a powerful way to gain that position.
Of course, in many companies marketing has little influence over radical innovation of this sort. But people’s appreciation of a product is not independent of their knowledge of the brand. Effective marketing frames the brand experience to best advantage, even when the differentiating feature is not apparent on its own merits.
The sources of differentiation are not limited to physical attributes and ingredients. Provenance, a track record of innovation or increasing social and environmental responsibility, can all form the basis of perceived differentiation.
If Dominic Barton’s call to reinvent capitalism is to succeed, then marketing will need to play a leading role in that reinvention. We must help craft meaningfully different brand experiences, focusing on innovation not novelty, substance not fame, and creativity not buzz. Perhaps the biggest creative challenge facing brands will be to encourage consumers, the archetypal short-termists, recognize and adopt products that are not as convenient or as cheap as previously but which are far more sustainable.
Can marketers elevate their game and create advantages that support a price premium, and not simply steal market share? Please let me know your thoughts.

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