Consumers increasingly perceive major brands as indistinguishable commodities
One of the first things aspiring marketers are taught is to target a market and then position products to respond to its needs. But according to one researcher, many companies are ignoring these basic steps. As a result, they risk losing both market share and profits.
"Consumers are increasingly regarding major brands as indistinguishable commodities," said Kevin Clancy, president of Copernicus Marketing Consulting. "When that happens, price becomes the defining factor in purchase decisions and profits fall."
In one extensive survey, Clancy found that despite massive efforts, consumers increasingly can't see the difference between the major brands in 48 of 51 product categories. For example the differences between Visa and MasterCard, L'Oreal and Clairol, and Whirlpool and GE, as well as many other brand leaders are increasingly blurred in the minds of consumers.
Clancy, who will be in town tomorrow to deliver a keynote address to a Montreal Marketing Association conference, is not your typical ivory tower researcher. In fact he quit his tenured position at Boston University to devote more time to industry.
As chairman of Copernicus Marketing Consulting, he's done extensive research for a who's who of international clients including Bombardier, Labatt Breweries and Novartis. And much of his research translates into bad news for marketing professionals.
The blurring of brand identities reflects itself in product advertising, with companies increasingly reverting to image-based and humorous commercials. These ads typically tell the consumer little or nothing about the product Clancy said.
For example Copernicus Marketing conducted a content analysis of 340 U.S. television ads during 2002 and found that only seven per cent of advertisers communicated a raison d'être for their product. That doesn't just apply to run of the mill commercials. Even prize winners from industry competitions aren't very effective said Clancy.
"If you look at award winning ads for the British advertising festival, almost all of them stick to the same formula," Clancy said. "They run a 27 second joke, that often has nothing to do with the product. Then for three seconds they mention the brand name. What does the consumer learn? Not a lot."
Clancy jokingly blames companies' lack of focus on "IT," an acronym for managers with "intuition and testosterone." He defines IT managers as being those who have the certainty of being right, coupled with the personal and professional power to ram their ideas through the organization.
Companies whose marketing programs are driven by intuition typically do little marketing research. As a result have little knowledge of their customers needs, pursue short-term results and produce advertising that is entertaining rather than informative Clancy said.
Much of the problem originates in the unrealistic targets that many companies set.
"Brand managers have been given orders to grow sales by 10 per cent and profits by 11 per cent," Clancy said. "And that not always possible." As a result, these managers will often try to build market share by tactics such as line extensions, deep discounting, coupons and promotional schemes. Although these strategies tend to be successful in the short term, they often dilute brand value and long-term profitability eventually suffers..
Effective brand building starts with a good marketing strategy Clancy said. That means getting back to basics, by redefining target markets, and then creating powerful positioning for their products, so that they are distinctive in consumers' minds.
When targeting a market, Clancy urges companies to go beyond traditional demographic segmentation favored by firms such as Proctor & Gamble, which broadly targets women between the ages of 18 and 54 in almost every product category. Clancy urges companies to be far more specific, using additional criteria such as consumer attitudes, buying behavior and lifestyles.
Once the target market has been identified, a powerful statement should be defined that positions the product in a customer's mind. That statement should confirm brand distinctiveness or quality. Examples include Coke's "It's the real thing," and Budweiser's "King of Beers."
"When you do advertising that doesn't convey superiority, you have a commodity," Clancy said.
Clancy will be the keynote speaker at a Montreal Marketing Association conference tomorrow (October 29th), at Place Bonaventure. For information call 499-1391.
Photo caption: According to Kevin Clancy, president of Copernicus Marketing Consulting, major corporate brands are increasingly becoming indistinguishable from their competitors.
|© 2002 Peter Diekmeyer Communications Inc.|