Unreal attributes, Irrelevant attributes, Brand Uniqueness, and Real differentiation

Consumer’s mind is a space where brands with their attributes/benefits intersect with consumer buying criteria. Winning in this space depends upon how a brand sets itself apart from competing brands on a relevant (appropriate/ pertinent to a context), meaningful (opposite of meaningless, inconsequential) and valued (desirable/of worth) attribute. Consider the following:
When a shampoo brand like H&S communicates that it contains Zinc Pyrithione (ZPTO), this attribute is relevant, meaningful because it helps fighting dandruff and is of worth for people seeking solution to their dandruff problem. But this attribute is not differentiating if other brands are also perceived to have ZPTO.
In an old study, Carpenter, Glazer and Nakamoto explored how meaningful brands can be created out of meaningless differentiation. They started with two examples: Folger’s coffee differentiated itself on the ground that it has ‘flaked coffee crystals’ and Alberto Natural Silk shampoo set itself apart with the proposition,’ ‘we put silk in a bottle’. Are these attributes flaked coffee and silk in a shampoo bottle meaningful? The flaked form of coffee does not improve taste in instant category and silk does not do anything to hair. In both cases these claimed attributes imply benefits but in reality do not create any. These attributes, however, do create differentiation which is meaningless. The question arises does meaningless differentiation create meaningful brand by creating positive impact on consumer response?
Meaningless attribute creates meaningful value: shape of coffee granules does not improve coffee taste yet it may be perceived to create value. Consumer may still infer benefit of an attribute which is meaningless (e.g. coal in a toothpaste technically may not have any effect on gums or teeth yet this attribute can be differentiating and imply benefit to customer). This may happen because some consumers may not be aware of its irrelevance and some may be unable to judge attributes true value (no difference in taste between flaked or non-flake coffee) or some consumers may simply just not care.
Value due to mere information : Consider again the example of ‘coal’ in toothpaste, consumer may not be able to experience the difference that coal causes to brushing yet consumers have a tendency to confirm advertised claims in their experience. The objectively uninformed consumers exhibit this tendency. Second, the mere communication of an irrelevant attribute may cause customers to value it (message in ads). For instance, a hotel may display a sign stating ‘we honor our guests’ (no hotel would dishonor its guest- meaningless/ semantically uninformative). This would automatically cause customers to think why they are telling us. The statement is valuable just because it is communicated. Why would some toothpaste brand contain coal, it must be valuable. Third, this value attachment to an irrelevant attribute works more when it is distinctive (not shared by others) rather than common (there is only one toothpaste brand with coal). Further, novelty factor (newness) of the irrelevant attribute also causes it to be viewed favorably. When brands are compared, the brand with irrelevant unique attribute is likely to enjoy greater salience.
What effect do these factors of attribute uniqueness (uncommon), novelty (newness) and salience (prominence) have on consumer behavior? Consumers are short on cognitive resources and want to simplify buying decisions. In this regard, the irrelevant attribute may offer an easy short cut to deal with complexity of multi attribute decisions making by shift o a single attribute decision.

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Maruti or Suzuki or Nexa or S Cross: killing two birds with one arrow is bad strategy

First came the teaser campaign on television which left audience to wonder what Nexa is. The ad campaign used ambiguity route to creating curiosity to capture attention in otherwise highly cluttered communication scene. These were sleek and finely executed and managed indeed to build expectations that something premium is being launched. The clues that made up the ad- words like ‘feeling’, ‘joyous’, ‘amazing’, ‘pure’, ‘indulgence’, and ‘exclusive’ coupled with visuals of fast moving light, finely cut suit, smart men, expensive watch, trimmed beard, close up of eyes, and expensive box (probably containing keys)- did manage to create an impression of upscale and out of the ordinary. But it was not a campaign for car, as one thought initially. Rather it was campaign of a new car showroom.
The company, Maruti Suzuki launched new branded showrooms with proposition – ‘new hospitality experience’. The purpose is to sell high end vehicles though these Nexa showrooms. The company claims to have hired staff with experience in hospitality and aviation with the focus that these sectors equip their people to deal with wealth customers with high soft and communication skills.
The bread-and-butter Altos and Swifts won’t be retailed at these outlets. The NEXA-branded showrooms will try attracting customers looking to buy vehicles priced Rs 8 lakh and above.
The showroom ads were followed by the launch of X Cross, cross sports utility vehicle. The car is designed to have looks and style distinctively different from its current range. And its print communication reminds of ads of Mercedes Benz (may be due to similarity in font) and ad format.
This twin salvo is aimed to help the company shed its dilute its image of mass car producer to move up the price point. The company has already experienced failures in its earlier attempts to move up the car hierarchy with variants like SX4, Balneno and Kizashi. To undo what it did in past the company the company is seeking to produce high end cars with greater engineering, performance and appearance coupled with new branded channel of distribution (superior in store experience).
In supposedly an innovative way, the company is seeking to reach out the premium customers with premium branded showroom experience. The question arises, is this actually a right move to cater to a segment which earlier refused to patronize Maruti Suzuki’s premium vehicles? And was this rejection based on lack of availability of ‘branded showrooms’ and ‘hospitality experience’?


The ads of S Cross which zoom in on a swanky finely crafted car to reveal its identity through ‘S’ letter on the grill comes as an anti-climax. The hype build by Next and cleaver maneuvering of camera in introducing the vehicle does what it is not suppose to achieve- it is an “S” or ‘M’ car. It should have been a ‘N’ car distantly related to Maruti-Suzuki. But ‘S’ on the grill makes is closer to ‘M’ which is what led to rejection of company’s premium entries. The customers did not reject Maruti’s premium cars on the grounds of their performance. The rejection was due to imagery and perception.


Nexa, different exclusive branded showrooms is a good attempt to physical separation of customers and brands-mass and premium. But car branding reverses it. The premium segment play is certainly about performance, but it only operates at hygiene level. The motivation operates at the psychological level. The most important reason to buy a premium product/brand is to achieve distance from the mass- at psychological level. But ‘S’ and ‘M’ on the premium offerings of Maruti-Suzuki would continue to hound it like an invisible ghost. The lure to leverage brand equity directly sometimes proves fatal, the Company should have learnt it long time back.

BJP, Congress, AAP and their Brand Propositions in Delhi

Every brand makes proposition. But proposition making process is not simple as it may appear. For many strategists a proposition is equal to sloganeering and some take it as an opportunity to release their creative juices. Some marketing minds assume more is better/effective and hence end up linking their brands with many (too many) and conflicting propositions. Strategists also fail to appreciate the difference between their jobs as creator/designer which is essentially is high cognitive state and consumers’ state is usually passive or inactive. Brand propositions can touch chords which may range from lower to higher end.

Crucial to designing a proposition is that that it must end up motivating prospects/customers into desired behaviors. Proposition must clearly signify what a brand offers in terms of attribute, benefits and values. Most successful brands singularly stand for something which has high resonance value and it also stands the brand apart from others in the fray. People often equate brand proposition with unique selling proposition. Propositions differ in their extent of connection development. Consider the following:

  • AAP’s proposition is anticorruption or honest government (Swaraj)
  • Congress: development, basically infrastructure or material development
  • BJP: unclear message- vegetable prices, electricity prices, ‘sewak’, development.

 

Let us test the effectiveness of these propositions.

Clarity- clearly AAP and Congress score over BJP for it is not clear what their core proposition is to their voters. This has resulted from inconsistency of messages and their lack of convergence on to broad theme.

Level: how do these propositions stack up in their hierarchical ordering-lower level/tactical to higher order value? The value embedded in AAP’s proposition appeals to soul or high order existence. It allows you to be a part of a great national transformation. It taps into the need to achieve high order consciousness. Congress’s proposition appeals to material wellbeing. BJP’s discourse on price of vegetable and electricity does not go beyond daily mundane existence. Consider the brilliance of AAP’s proposition, it promises clean governance and once that happens the infrastructure and price rise will automatically get in line.

Connection: brands become powerful when they develop emotional connections with their audience. Explore how powerful is the promise of honest governance and what impact do white caps have when they announce, ‘mujhe swaraj chaheye’.  Symbolically they invite everyone who has been victim of corruption (probably everyone) to join the second battle for the country. You are reminded of Gandhi, Nehru, Patel, Azad, Shastri, and others who sacrificed not aggrandized. AAP seems to be giving ordinary people an extraordinary opportunity to contribute to nation building. It has positioned itself as a movement against the establishment. It is Pepsi in Delhi’s political scene, antiestablishment, rebel, and challenger.  

Congress’s development platform invites negative emotions for flyovers, cluster buses and roads are not the perfect substitute for high inflation in commodities of everyday consumption. The happy faces in ads do not resonate with sad faces of real people who are bitten by inflation. They invite strong counter arguments. In Delhi BJP’s campaign lacks focus and appeal and hence a diffused and suffers from ambiguity. Consequently it fails to hook up an emotional connection with people who are either fall into the category of ‘indifferent’ or ‘swingers’. It is these people who are likely to be the kingmakers this time.

Political strategists often fail to target their campaigns at people who matter- swingers and indifferent- instead create campaigns for those who are already their loyalists. It must be understood that campaigns are designed by loyalists but not for loyalists. 

Allen Solly, Color Lab, Market Segmentation, Customization and Powershift

This season, Allen Solly ready to wear brand of apparels has unleashed a kind of color revolution. Take a look at its advertising campaign, ‘Catch a color and we’ll match it’. A print ad released in news daily shows a young man donning oversized shades on his nose, in twenty something is shown to be confidently crossing a road with his head turned to his right (looking at the traffic or onlookers) against the background of a Victorian structure. The picture of the model in the ad shows him in a  close up shot from tip to toe with a accentuated focus on what he is wearing- mosaic of colors- red jacket, sky blue shirt, peacock blue pocket handkerchief, mustard trouser, light brown socks, and blue shoes.  Allen Solly has launched ‘the color app’ which can be used to ‘create your signature colour’ which the company will dye for customer. It certainly is a step forward for a brand which brought the concept of ‘Friday dressing’.

Ready to wear apparels came in fixed sizes and limited range of colours.               This new strategy introduces a paradigmatic shift in the way ready to wear apparels are produced and sold. As a marketing strategy readymade brands gave customers value by way of providing something ready to wear (instant gratification) but it came with a severe limitation of limited color choice (production constraint).  This strategy involved reconciling two opposing forces that reside in any business- production seeks efficiency by reducing variety (larger production cycles of limited range) but marketing seeks effectiveness  by offering what customers want (customer differences push for choice).  Hence a business organization is typically pulled two directions- the internal forces create pressures in favor of mass production of one thing but external reality (market) seek production as per individual customer’s needs/wants.

It is for this reasons the strategy of market segmentation is called a compromise between efficiency and effectiveness.  Customer would be best served when he or she is provided with a product or service crafted or created according to his or her unique needs. That is each customer becomes a segment of ‘one’. The other extreme is when one product is offered to all customers irrespective of differences in them. This is exemplified by the classic statement that Henry Ford made “Any customer can have a car painted any colour he wants so long as it is black.” Getting close to customer requirements is inevitable in competitive markets. The best insulation against competition is to serve customers better than competition by getting closer to his or her requirements. 

Industrialization which gave birth of large corporations dismantled the one to one marketing that prevailed in old era characterized by craft (furniture, buggy, shoe, jewelry). Consider tailors of the past who provided custom fit service or shoe makers who designed shoe as per feet size.  This direct relationship was broken apart with the arrival of industrial mass production.  But it arrived with a compromise; product and production instead of customer began to assume central position in the business universe.  As competition began to intensify, business tried to juggle opposing goals by adopting a strategy called ‘mass customization’. This is an attempt by firms to deliver variety (customization as per customer needs) retaining the mass production model.  The mass customization strategy may come in different shades- made to order/ build to requirements (enabled by modular production, FMS, computerization) to giving customers an opportunity to individualize non-core aspects of a product (common in cars, houses).

Allen Solly’s strategy follows a co-creation model (also followed by Levis) by which customer is given opportunity to collaborate in production process of product by which he can create wardrobe in colors of his unique tastes and preferences.

Looked at differently it is symptomatic of a power shift- customers are now beginning to run factories without owning them.

Brands, Trade Deficit and Intellectual Property

In his latest speech, ITC chairman beautifully explained the role of brands and branding in a country’s economic development. The point he made is that India’s growth prospects are hindered by unsustainable current account deficit (CAD). This implies that Indian industry is not able to export as much as it should have. India’s trade basket is comprised of imports of high value added items whereas exports are made lower value added products. The Indian industry not competitive, our products and services are pulled by markets abroad whereas our markets pull variety of products from foreign manufactures. The only escape route out this difficulty lies in building competitiveness in higher value added goods and services.

Future belongs to economies and businesses which create intellectual property. Intellectual property is a better basis of creating and sustaining competitive advantage. Large CAD stems from imports of products (based on intellectual property of exporting firms for which we do not have substitutes) which lead to outflow of precious foreign currency. Many products are that made and consumed in within India also lead to outflows because Indian firms use intellectual property of foreign companies in the form of patents, copyrights, design and industrial processes. This over reliance on intangible property owned by foreign companies leads to CAD. The challenge for India is how to reduce foreign exchange outflows and increase inflows. It is in this background intellectual property assets is the key to achieving competitiveness in the international markets.

Indian companies pay to their foreign counterpart royalties for using their intellectual assets. This amount stood at 35000 crore rupees in FY12 (306 listed companies). Another analysis revealed that 75 of BSE 500 companies paid royalty equivalent to 32% of their net profits in FY12. It is legitimate right of a company to demand royalty for the use of their intellectual property but this it is also perfectly valid for a country to plot its own strategy to reduce these outflows and create stream of inflows. Every time a consumer picks up a foreign brand name, a part of the paid price ends up in some MNC’s coffers. The consumption basket of an ordinary citizen is now inhabitated by foreign brands. These categories do not belong to high end complex technology areas rather these include ice creams, soaps, shoes, confectionery, chocolates, batteries, cosmetics, burgers, pizzas, mobiles, refrigerators, and sanitary napkins.

So what is the way out? How can our companies increase their participation not only in domestic consumer’s consumption story rather make inroads into foreign consumer’s consumption basket? The way out that Mr Daveshwar suggests is that Indian need to create world class brands. Truly world class brands transform products and services by huge intangible value addition which allows them to charge premium and foster loyalty. The appeal of true brands cuts across cultural, geographical and physical boundaries of the countries.

The brand creation should not be limited to the boardrooms of a few companies. Rather it must become national agenda. The government must focus on creating an appropriate ecosystem for intellectual property development.

                             

Market, value, boundary spanners and power shift

Marketing is described in many ways including as a boundary spanning function. Marketing operates at a point where the boundary of a firm ends and market boundary begins. There is not guarantee that these two boundaries would automatically intersect with each other. It is the supreme job of marketing to make business and market meet and intersect.  Without an intersection there is unlikely to be any exchange and hence value creation.

In the old times of regulated economies and restricted supply the marketing equation was tilted in favor of suppliers. Back then consumers chased goods. Consider when brands like Bajaj, Hindustan Motors, DCM and Lifebuoy enjoyed unbridled power over their consumers. The markets/ consumer pushed themselves towards marketers. Marketing was an effortless game. Later with the adoption of pro-competition ideology industries were liberalized. This began to spoil the game for incumbent players. In competitive regime consumers don’t seek goods, rather marketers seek them. Consumers need to be pulled and attracted. Too much supply chases too few consumers. Competition strips marketers of their power. Market players win by reducing consumer’s choice set. But competition does the opposite, it expands it. The perceived similarity between Samsung, LF, Toshiba and Sony renders these companies powerless. Now the power to give sustenance stands shifted to consumers. The challenge is how to recapture it and achieve dominance of consumer.

The question arises, what are the sources of power? Power literally means ability to influence or direct behavior of others. In a marketing situation, every firm dreams of wielding power over its consumers so that they buy, buy more, buy regularly, and pay premium for its products. Alvin Toffler in his book Power Shift discusses three sources of power: violence (physical muscle based power), wealth (money-stored time and action) and knowledge (with this both other types of powers can be obtained). What source of power should a firm plug into to gain market power?

All the three sources of powers exist in a business system but it all depends upon the top management which source of power a firm plugs into. The source of muscle or violence power is likely to be production because it controls maximum number of people and physical resources. The wealth power rests with finance (money is power culture or money is most important resource and goal). It is because of their power these two departments often enjoy major sway in decision process. Firms differ in their orientations depending upon which department dominates or drives decision dynamics. Finance and production heads were once considered to be the most influential positions for their assumed significance. They derived their strength from their control over traditional sources of power that stemmed from muscle/violence/ wealth. This was in sync with the realities of agrarian and industrial economy. However environment over time has undergone subtle but profound change. The issue is can business survive by remaining plugged into same source of power in future?   

The businesses and products/ value prima facie appear same as before. But observe minutely, they are in reality not. Both supply and demand side of marketing equation have changed. The mass markets have transformed into smaller segments, niches and micro segments. Mass production with big factories, assembly lines and larger production runs are replaced by flexible and customized production. The concept of big large corporation with one production location have taken shape of hollow organization or networked systems. Unlike the past, the value is now co-created with consumer’s active involvement in product design and production processes. Have these developments altered the hierarchy of power sources in business or their effectiveness stands changed?

These changes on the demand and supply side have made the boundary spanning (information gathering and dissemination) the most important function. The stability of the environment has vanished. Present is usually not a linear extension of past. Things happen sudden and fast. Accordingly, businesses need to be as flexible and fast. This demands discovering and developing the core and shedding the non-core. Organizations therefore are now becoming ‘plug in-plug out systems’. They are coalitions of creators with one in lead role. Information is core to such system. Consider sports shoe companies like Nike and Reebok. Both of these names lead networks. They focus on the most critical value adding activity- design- and the rest is outsourced. Explore how much of a car is actually produced by the company whose badge it displays. A computer on your desktop is a fruit of collaboration.  

What value to create depends entirely upon knowledge & insights of consumer trends and micro movements in tastes and preferences? It is here the role of boundary spanners-marketing department- becomes critical. Marketing is the source of knowledge and if knowledge is the ultimate form of power then it must be brought to the centre of value creation edifice. Marketing (voice of consumer) in other words should dictate what business a business enterprise should be in. But this is not easy to achieve. It is not easy for a department which neither controls material/men nor wealth (traditional source of powers) to assume organization driving role.

Production and wealth is free floating resources. China has become the factory of the world and investment bankers chase good idea. Knowledge is the ultimate source of power-business power. So if a business is not performing well find out whether you are still plugged into old source of power. Instead of drawing more power from the old ineffective source, get plugged into new effective source of power. ‘Right’ is better than ‘more’.

Arbitrariness, desires and different levels of brand meaning

We use language to express our ideas and thoughts. But language is not the only way of expression.  Both verbal expressions and visual images belong to a sign system by which meanings are conveyed and made.  Ferdinand de Sausssure and Charles S Peirce explored the areas of signs and called their approach as ‘semiology’ and ‘semiotics’.  Sign, which comes from Greek word ‘semeion ‘sits at the centre of semiotic theory. People use language to express their concepts and ideas, in a consumerist society, products and brands operate as a system of signs.  Brands and products are signs that we surround ourselves with to send out messages to others.  Brands are valuable for their instrumentality in consumer identity creation and expression. A consumer’s body is like a piece of real estate on which products and logos situate themselves. A lot can be deciphered from the overall constellation of brands that a person transforms himself into.  Brands in this scheme of things need stand for something more than the product or service they envelop. They need to enter in the realm of semiotics or science of signs to achieve value transformation.

There are two aspects of a sign: the signifier (gold) and the signified (concept-precious).  The meaning is interpreted by people as is determined by cultural code. So the term ‘gold’ is immediately linked with ‘precious/costly’ according to cultural norms and values.  It is through the enculturation and socialization process we learnt what to associate with a given signifier.  These codes are essential to interpret everything that we are surrounded by. But the relationship between the sign and signified is not intrinsic rather it is arbitrary (Saussure). The link between ‘status/ luxury’ and ‘Bentley’ is a constructed rather than inherent one. Although Bentley is primarily denotes a vehicle for transportation, but it connotes status/luxury.  This arbitrariness of meaning provides marketers with a fertile ground to imbue their objects with meanings that create desires and promote consumption.

An object is like an empty vessel or a container. Besides its physical property and performance it does not contain any sign value. But when it enters into socio-cultural world, it begins to acquire symbolic or sign value.  Secondary signification or denotation is inescapable. Therefore how an object is initiated in cultural space critical determinant of its sign value. For instance a color is a color. But not all colors are equal. Consider a color like purple which a shade between crimson and blue, but it is not only this.  In its extended meaning it stands for royalty, luxury, power, nobility, wealth, wisdom and creativity. But exact meanings of things vary across cultural boundaries. For instance, in China the color purple signifies spiritual awareness, strength and awareness and in Japan it stands for privilege and wealth. However in Thailand it is worn in mourning.  Imagine the vast possibilities that this phenomenon opens up for a brand’s to acquire meaning other than what it stands for in objective reality.

The semantic perspective is only one way of looking at an object (Eco).  An object like a pen or automobile can be seen from different perspectives: physical, mechanical, economic and social level. Consider ‘black dress’ created by Coco Chanel in 1920s from different perspectives:

Physical level: this refers to the physical properties. The materials used in this dress were materials such as lace, tulle, soft weightless silks in black color.  In terms of its construction it was slash-necked, short and diagonal pin tucks.

Mechanical level: a pen at this level writes and an automobile transports. The little black dress provided simple and comfortable body cover.

Economic level: this pertains to exchange value. The economic value is measured by the maximum amount of other things that a person will willingly give up for something. It is about choices and tradeoffs that people make.  In present economies, it is reflected in the rupees or dollars that people are willing to give for something.

Social level: objects can be linked to a certain social class and indicate status, distinction and hierarchy.  Like caviar and single malts indicate rich class. Also brands such as Rolls Royce and Harry Winston are linked to social status. Starting as a simple wear without any class restrictions, the LBD socially epitomized elegant, stylish, sophisticated women.

Semantic level: at the semantic level the meaning of a sign is ‘cultural unit’, i.e. the meaning of signs is culturally defined.  Here the object does not remain an object, rather it into enters as a  unit into a system of cultural units and forms relationships.

Branding is all about signs and signification. Eco calls ‘signification’ as the semiotic event where a sign ‘stands for something’. Consider the latest communication of Coke-‘open happiness’. How the brand has been achieving semantic transformation in what the brand stands for. The resistance that has been brewing up against junk food in general and some brands in particular makes it essential for the suspect brands to transform what their brands stand for. Coke is reinventing its fit with new emerging cultural paradigm where Coke is beginning to stand for ill health.