To weather the current economic storm, companies must take a step back and assess their core business and brand for continued relevance.
Dramatic changes in behavior by cash-strapped consumers have had an impact on respected brands ranging from Starbucks (closing 600 stores) to automotive giants, which have announced cutbacks in North American production and are asking the federal government to help save them from bankruptcy.
Did these organizations anticipate the downturn and make the necessary adjustments in advance?
Consider one forward-thinking company, Starwood Hotels & Resorts Worldwide, which apparently did. In May 2006, Starwood announced a plan to reduce its dependence on real estate, concurrently creating new brands tailored to a new generation of travelers. The company implemented an "asset right" strategy in 2006, which included the sale of more than $5 billion in non-strategic properties. At the same time, it retained ownership of its most attractive assets that could be redeveloped or repositioned, or possess vacation-ownership opportunities. Starwood continued to churn its real estate portfolio as it mined the value in its retained assets. As a result, in the second quarter of 2008 it was rewarded with an 11.7% increase in year-over-year management and franchise revenues. Starwood also connects emotionally with its guests with brand-specific innovation and the creation of memorable experiences, resulting in the cultivation of preference and brand loyalty.
It's healthy for a company to step away from its business and conduct a strategic, situational analysis. How often do organizations collectively assess their business and brand in unison? Furthermore, do they take time to understand the current and future landscape of the industries they serve? Finally, do they take this information and plot a trajectory, as Starwood Hotels did, to ensure the vitality of their core business?
Imagine a Brand Toolbox
Imagine a "toolbox" that can help your firm both assess and reposition your brand now and for the future. After my first book (www.ibranz.com), in November 2008 I released a second (www.brandtriad.com), which takes the marketing practitioner through the mechanics of evaluating both the business and brand as well as helps determine its future trajectory.
What is the value of this process? Many organizations maintain the status quo when it comes to their brand strategy. The focus of their activities primarily resides in tactical promotion and short-term planning. Very little time is devoted to evaluating their current state (brand position), and much less to plotting a future direction. This process also goes beyond the brand itself and incorporates strategic business planning. Using a toolbox that examines both your business and your brand strategy at the same time will afford the management team the necessary vision to face current challenges and future opportunities.
This toolbox centers around three basic elements and compares two of the three at any given time. These three elements include attributes of your offering, how consumers behave when they interact with your brand, and the circumstances that surround this interaction. By evaluating all three combinations, you begin to develop an understanding of your current position—and, through this process, anticipate the ever-changing economic landscape.
Let's view each element that constitutes the brand toolbox.
Attributes
Whether you are discussing people, places, or things, attributes are the basis by which you compare, contrast, and distinguish levels of acceptance for use or consumption. Everything we do on a daily basis draws upon attributes to discern and validate who we are and our place on this earth. Why do you buy a certain car, brand of clothing, or a cup of coffee? And why do you connect with certain associates, friends, neighbors, etc.? Conversely, why do you reproof, reject, and distance yourself from other products or services? Whether we want to admit it or not (intellectual versus emotional), we rely on associations (aka brands) that surround the attributes of people, places, and things.
In short, attributes are imperatives in our daily discrimination process and form how we make choices. Attributes alone will not satisfy anyone. There must be a foundation and process by which these attributes are executed and delivered to form such perceptions. Next, we will consider behavior in response to attributes and what that means to us as we consume.
Behavior
Would you consider yourself a rational consumer? Most of us would say yes. But, interestingly, what we do and how we do it often defies reasonable thought, despite our best intentions. Don't we all behave the same way?
You walk into a store to buy a can of soup. You see two products on the shelf: one has a no-name white label, another red with the brand name Campbell's written on it. Which one would you buy? Remember, the type of reasoning that both buyer and seller share enables the basis of a relationship. As a consumer, you are buying more than a can of soup, and this purchase reflects who you are (at the cash register), the perceived quality you provide your family (brand trust), and what you deem as acceptable in your world (values). This synergy between behavior and attributes, however contrived, becomes the paradigm by which we consume.
Marketers could gain greater insight into the attributes/behavior relationship by observing how people actually behave verses what people say they do (as in surveys). If you had asked owners of CD players how to improve those players, they probably wouldn't have come up with the iPod concept. If you had observed how they use CD Players, their behavior would have spoken volumes about the gap that exists between the offering and a desired solution (runners' use for mobile music devices).
Now let's consider the last element, which is the setting where we consume.
Circumstances
The circumstances surrounding how we make purchasing decisions are situational at best. As a marketer, you may have the right attributes and behavior in place... but if the setting isn't appropriate, the whole concept falls apart. As an example, let's discuss the auto industry.
Buyers were seeking the next-generation consumer vehicle. Automobile companies had the same relative resources, processes, and values to compete fairly for this emerging market. The attributes of design, functionality, and capability pre-existed, along with the behavior of consumers to continuously improve their driving experience.
However, the problem for one Auto Company came into play with circumstances: The public wasn't prepared to give up its gas-consuming cars for a sub-compact, range-limited electric vehicle (EV) that this company had so heavily invested in.
The technology of EVs under the circumstances was not a good fit at the time, and as a result the electric vehicle died a timely death. Conversely, Japanese automakers like Toyota and Honda took the next, logical step and created a hybrid (gas/electric) vehicle that was closer to a standard car but with all the benefits of high mileage while environmentally friendly.
What valuable lesson was learned? Although people desire higher-mileage vehicles (attributes/behavior), the idea of a car that relies solely on battery technology (charge each night, limited range, and very small size) defies the circumstances of mainstream consumers.
How Does This Toolbox Function?
Now that you have considered your current attributes, behavior, and circumstances as they relate to both your overall business and brand(s), the next step is to compare and contrast any two of the three on a scale.
Evaluating one element against another is important to understand three things: your current position, controllable and uncontrollable variables, and plausible trajectories your organization may consider. This triangular approach allows each of the three elements to be gauged against the other.
Within this toolkit also resides a more subtle scale that enables a future view of your business. This "second dimension" prompts the marketing practitioner to monitor nuances in the marketplace and affect change before these tremors become a major shift in consumer demand.
Once all three combinations (including the second dimension) have been assessed, the next step in the process considers the controllable and uncontrollable aspects of your environment. This may include socio-political, economic, or other events that are outside of your control. Rather than view these variables as negative influences on your business, factor these insights into your overall strategy. Most likely, your closest competitors will eventually face the same limitations, either now or sometime in the future. Starwood Hotels anticipated developments and repositioned its business model, and it now holds a leading hotel pipeline of growth potential (20% higher than its closest competitor).*
The final step in this process is to consider your next move. After assessing your current position and variables that may limit directional changes, scenario planning helps the management team select a future trajectory. By reviewing scattergrams based on actual consumer usage and constructing radar maps, the team can plot a series of movements along each leg of the triangular model. The outcome of this exercise yields a "Brand Triad Map" that illustrates a current position and future direction. This exercise complements fundamental business and financial analysis and in no way usurps traditional practices. What it does provide is both a visualization and convergence of your brand and business strategy. With this information in hand, the management team may begin the process of repositioning the organization for change and signaling to the marketplace of your new direction.
*Goldman Sachs Lodging, Gaming, Restaurant, and Leisure Conference, June 2008
