Meaningful difference drives sales, but the time for effective action is limited
The number of brands in China has skyrocketed over the past decade. Enterprises work hard to match competitors’ offerings with similar products, prices, and packaging. Some brand owners tend to say: “Building a meaningful differentiator for a brand is a long-term endeavor, but we face more urgent sales pressure, and moreover, a good meaningful differentiator, however good it is, cannot translate into sales success.” Is this conception right? The answer is an emphatic NO!
A look at the asset change of more than 50,000 brands over 10 years in the WPP BrandZ™ database shows that brands with a strong meaningful differentiator, highly connected with consumer needs, record average sales growth that is more than four times that of other brands in the same industries.
Meaningful differentiation is obviously a very important salesdriving factor.
Meaningful differentiator: key driver behind responsible sales growth
Ten years ago, China’s wine market was dominated by three brands – Great Wall, ChangYu and Dynasty. Today, Great Wall and ChangYu remain leaders in the wine market, while Dynasty has gradually faded away from the once three-pillar market structure. In the past 10 years, what has happened to the brand strategies of the three brands?
The Great Wall brand has remained committed to its mission of providing Chinese consumers with top-notch wine products, with the emphasis on quality and trust. In the case of ChangYu, over the past 10 years it has established an image associated with “culture, fine taste, long history, and winemaking expertise.” In contrast, the one-glorious Dynasty, due to its weak brand positioning, now only conjures up in consumers’ minds the impression that “Dynasty should be a big brand,” and nothing more. What Dynasty represents and what wine experience it gives consumers remain murky to this day. The market shares of the three brands are the best evidence of what they have experienced.
Meaningful differentiator: Magic wand to avoid price competition
Meaningful differentiation is also a magic wand that extricates enterprises from the mire of price competition. Price competition is a weapon that Chinese enterprises are most expert at, but it is a double-edged sword that, while helping build a competitive advantage, also shakes the very foundation of brand value. China’s TV market is just an example. Many of the big names in the old days almost disappeared from the market after a few years of fierce price competition.
On the contrary, brands with perceived differentiation are able to justify a price premium and give consumers a strong reason to buy their products. Of the 50 brands with extraordinary growth identified in BrandZ™ research from 2001 to 2010, many enjoy a sizable market share in spite of their higher prices, such as Apple, Starbucks and Red Bull. They are perceived as different and able to command a price well above the category average.
Have a clear purpose.
A brand must have a purpose. It must intend to make some difference in people’s lives and it must provide something consumers want or need. Brand owners need to ask themselves some tough questions: “Why does my brand exist? How can I set my brand apart from others?” One prominent example is COFCO. The largest food and beverage company in China is committed to improving the quality of life of the over 1.3 billion people of China and creating a safe beautiful life through building a whole industry chain from the field to the table.
Communicate and deliver the purpose clearly.
Good delivery is critical to a brand’s long-term success, because meaning originates from the brand experience. Ensuring that the brand’s meaningful difference is inherent across all touch points is the key to good delivery. In the BrandZ™ database, a rising star brand like Blue Moon detergent turns out to be characteristic of a new crop of Chinese brands that are willing to take on the multinationals and charge a premium price. In addition to the aggressive marketing tactics, Blue Moon offered consumers a completely different and meaningful brand experience. The brand encouraged the consumers to smell the product as if it were a fine perfume.
Form emotional connections. A clearly defined purpose and a company organized to deliver around that purpose will do little to build brand value if the brand’s offer is not meaningful and relevant to consumers. The brand must address a real need, and build strong emotional bonds to connect with consumers. These emotional connections are formed when people feel that a company or product genuinely relates to them and offers them brands that are not just useful but also emotionally rewarding. A good example in China is Delux Milk from Mengniu. The focused benefit of extra protein, captured in the line, “Not Every Milk is Delux,” makes their targeted high-end consumers feel strongly connected with the brand. The consumer appreciates the brand’s premium stature and perceived differentiation from the other milk products.
Finally, it’s better to establish a meaningful differentiator sooner rather than later. Because China is experiencing a dynamic brandbuilding era, sooner means now, when the opportunity is prime and the necessary conditions are favorably aligned.