Positioning and Branding

Introduction

In the last chapter (Chapter 11), we looked at choosing how to divide a market (segmentation) and then how to choose the segments on which to focus marketing efforts (target market). In most industries, however, there are multiple companies competing for the same target market in the same product and service categories (think of how many cars there are in each car category). For this reason, marketers use positioning and branding to help differentiate their brands from their competition. Each of these concepts is explained in this chapter. While the topics are discussed separately, they are actually part of a single phenomenon that has to do with creating distinctiveness. The chapter starts with positioning and then discusses branding.

What is positioning?

Positioning aims to set your product and brand apart from your competitors. The positioning of a product or brand is used to describe the mental point that it occupies on a competitive grid inside your consumer's mind.[1],[2] This is a key part of turning a product into a brand. What is your promise to your consumers, and how will the shortcuts your brand provides help your targeted consumer believe your product is number one on a mental shopping list of the competitive products available? Marketers, primarily through their marketing communication efforts, aim to get consumers to associate an attribute, ethos, personality and product category with a product or brand. This helps consumers to easily recall the brand and understand its benefits at the moment that they need to make a decision between competing brands. This is what marketers call the consideration set: there will always likely be several brands that can deliver the required benefit. Marketers must make sure their brand is, at least, on the list.

The question to ask is: what is the one thing the brand should be known for? If you are looking for jeans, what is the first product or brand name that comes to mind? How do you create that mental connection with your product in the mind of the consumer? These questions may be answered by a combination of product and service messages. What positioning attempts to do is to allow the consumer the ability to rank the product or brand against competitors. It aims to try to 'own' a word or phrase that lives in consumers' minds and that ranks the product against competitors. Think of the following: Levi's = jeans; Absolut = vodka; and Volvo = safety. In many parts of South Africa, when a person talks about Omo they really just mean washing powder. Similarly, Colgate is often used as a generic term for toothpaste. These brands have created strong and clear positions in many consumers' minds through consistent marketing efforts over time.

Using a positioning grid

A positioning grid is a perceptual map on which important aspects of a category of products can be drawn and individual brands within the category can be understood in relation to each other. Positioning grids can be used for every product category and you can use them to create a competitive view based on the attributes that you determine are most relevant to your consumers. The axes of positioning grids typically use opposites along a spectrum of choices that consumers use to weigh up their attitude or purchase intention towards a brand.

From Figure 12.1, some observations can be made about which positions are more crowded and where possible gaps exist. A challenge with perceptual maps like this is that many brand categories are complex and two-dimensional maps are not able to bring sufficient understanding to the complexity of the category. This kind of grid is just a tool to help and is not meant to be conclusive. Below are some examples of attributes that could be plotted on a grid:

• Traditional ↔ Exciting
• Cheap ↔ Expensive
• Everyday ↔ Special treat
• Playful ↔ Serious
• Low risk ↔ High risk
• Youthful ↔ Mature
• Oldfashioned ↔ New
• Sporty ↔ Luxurious

Think about the example of chocolates in South Africa. The ingredients in a range of chocolate bars might be similar, but the brands work hard to position themselves in a unique position. Figure 12.2 shows an example of a hypothetical positioning grid using the South African chocolate market. In the example, one axis has a continuum from affordable to expensive. Notice that no exact prices are given as this is about perception and not necessarily fact. The other axis has a continuum from playful to serious. As mentioned, in order to create a positioning grid, all kinds of axes can be used to create a better understanding of existing perceptions and positions that occupy consumers' minds. A crucial role that these grids play is to understand where possible positioning gaps may lie.

From the example in Figure 12.2, you can see that the affordable–playful quadrant is quite crowded, but that there is definitely room for growth in the playful–expensive quadrant. However, people may associate high price with a more serious, indulgent chocolate, which is perhaps why the market is as it is. In that case, there may be more of a niche in the serious–expensive sector. Once the market is mapped out with competitive positionings, the marketer could do further research to test some concepts in the areas of opportunity to see what the viability of each segment is.

These grids are ideally drawn up through research but even an intuitive understanding of the market will allow a marketer to determine whether they have a sufficiently differentiated position in their consumer's minds or whether there is a gap that is currently unfilled that they could occupy. This then forms the basis of a communications strategy.

Differentiation or distinctiveness?

One of the fundamental ways that marketers create a positioning strategy is to differentiate their offering. In differentiating a product, it becomes easier to occupy a position. A classic older example is Volvo cars that initially invested heavily in safety features. They then communicated consistently about these features and occupied the safest car position in people's mind. In this case, product differentiation was a means to create a position. Over the last 30 years in South Africa, there has been a major increase in competition in most sectors. With so many, often sophisticated, brands competing for similar positions, marketers have to question whether it is possible to differentiate products and brands sufficiently enough to create a strong position, whether there is actually a more important need to be distinctive or to recognise the role both differentiation and distinctiveness play in creating competitive advantage.

Much marketing theory on brand differentiation takes the perspective that achieving strong differentiation from competitor brands is necessary for consumers to have a reason to buy the brand. In research done by the Ehrenberg-Bass Institute, they found that buyers often do not explicitly state that they perceive their brand to be differentiated from other brands.[3] The main implication of this research was that differentiation plays a role, but it is certainly not all that marketers must do to persuade customers. Ehrenberg et al. (1997) and Romaniuk and Sharp (2004) suggested that 'awareness and salience' play an important role. In other words, if a brand is distinctive, it stands out, and allows a consumer to instantly recognise and identify it, without confusion. Given that so much buying (especially in the FMCG sector) is done habitually, this is a critical job for marketers to achieve.

The job of a brand is to provide a shortcut for what the product or service is, does, or represents, so that the consumer can easily notice and recall the brand when the need for a relevant product arises (I'm thirsty: Coca-Cola).

Distinctive elements can include brand names (Nando's), logos (KFC), colours (Nivea), payoff lines (Nike – Just Do It), symbols or characters (Nike swoosh), and advertising assets (campaign ideas, celebrities, and sponsorships), essentially anything that communicates the brand name and identity. Consistent use and application of these core brand assets will over time 'create, refresh or reinforce consumer memory structures in order to build consumer-based brand equity'.[4] In summary: Professor Byron Sharpe wrote, in his research article titled It is Not a Choice: Brands Should Seek Differentiation and Distinctiveness, that:

A brand achieves distinctiveness when it has a unique and unmistakable identity, which could be based on a number of things: brand name, logo, packaging, colours, advertising style, etc. It is all about identity. Differentiation, on the other hand, is grounded in how a brand is experienced. 'Experience' includes both tangible and intangible brand assets as well as the context in which a brand is encountered. In reality, meaningful differentiation is related to distinctiveness. They are not exclusive. They might better be thought of as a continuum.[5]

Branding and brand building are a crucial way to create positioning and distinctiveness. The next section defines and briefly explain brands and branding.

Developing a positioning statement

Developing a positioning strategy requires the marketer to associate the product or service with a set of particular needs that rank high on the consumer's priority list. One way of achieving this is developing a positioning statement. This statement will guide all communication to ensure that the voice of the brand is consistent throughout any marketing tactics. However, the process of writing a brand positioning statement is difficult, as there are few words and positions that have not already been used.

A brand positioning statement should be a summation of everything a brand stands for. It should clearly identify the audience the brand is targeting and the promise it is making to consumers. The brand positioning statement is what the creative brief (for communication tactics) is based on, and everyone involved with the brand should always make decisions based on what the positioning statement says.

A brand positioning statement includes the following four components:

• A description of the target market
• A definition of the category the brand falls into
• The brand promise
• A reason to believe the brand promise

In order to crystallise their thinking, marketers sometimes make use of a template, such as the one below, which helps to distil the brand's benefit and what it can actually offer the selected target group:

For [target market], [your brand] is [category], that [promise], because _________________

A successful brand positioning statement is always very specific in its claims. It is important that the target market is as narrow as possible, that only one brand promise is stated, and that the reasons to believe the brand promise are convincing and to the point.

The fictional example above shows the target market as 'young adults, in the process of establishing their own financial identities' who need a bank that understands their life and their needs. This positioning statement refers to Capitec's promise to be straight-talking, in a way that other banks are not (disruptively honest attitude). The main benefits of Capitec to this market is that they operate in a simple way, with low costs.

Well-crafted brand positioning can lead to the development of a descriptive sentence or slogan with which the brand becomes associated. This is the one specific idea that first comes to mind about the product or the one characteristic that sets the service apart from its competitors. In the case of Capitec, it might be simplicity or the anti-bank. This positioning idea would drive everything from store location and layout, to product development to communication. It is a way of keeping the brand and the business true to what they stand for and creating consistency and distinctiveness.[6]

In order for a positioning to be good it should:

• Be real and credible
• Reflect the way people really think and use real language
• Be simple, specific and consistent (while still being competitive)
• Say something that indicates how you can offer a solution to your target group
• Be ownable (just because a competitor can make the same claim, it does not mean that you cannot)
• Avoid generic words that are really quite meaningless (for example, unique)
• Be tangible, vivid, snappy and specific

Closely intertwined to positioning is the concept of branding. While the term brand is used often in many contexts (including earlier in this book), the next section gives a more detailed definition and analysis of branding in consumer marketing.

Branding

A brand is an identifying symbol, mark, logo, name, word or sentence that companies use to distinguish their products from others. A combination of one or more of those elements can be utilised to create a brand identity. The legal protection given to a brand name is called a trademark.[7] Ultimately, what a consumer marketer wants to achieve through the marketing process is the transformation of a product or service into a brand.

There are a number of benefits of branding for both consumers and marketers. For marketers, the benefits of building a brand are to:

• Clearly differentiate the brand from competitors, through positioning and distinctiveness
• Appeal to different segments (for example, Toyota and Lexus both owned by Toyota Motor Corporation).
• Build loyalty and trust
• Gain a competitive advantage
• Justify a price premium
• Launch new product variants leveraging off trust in the mother brand
• Improve communication effectiveness (better ROI on ad spend) through memory structures from consistent messaging
• Have legal protection of ideas and distinctive brand assets (for example, colour, pay-offline, and shape of bottle)
• Build the value of the intangible asset (brands can be bought and sold and can build significant value for a company).

For consumers, the benefits of branding are:

• To simplify choice
• To reduce search costs and time
• To minimise risk (financial, social, physical, etc)
• To express a desired self-image
• To build trust (based on experience or word-of-mouth referral)

Branding helps a consumer to make a purchase decision and, when done correctly, will guide consumers to your product instead of others. Brands are built on differences in images, meaning, and associations. Marketers need to try and have clear differentiators so that consumers can instantly comprehend the offer and have faith in the promise.

The four points to remember about a brand are that:

• A brand is more than a name or symbol.
• Creating a consistently good customer experience is the essence of branding.
• Perceptions of a brand can be measured.
• Brands are a form of shorthand communication with the consumer about what they can expect.

Building brands can take years and require the application of a consistent and intentional strategy. The turnover of senior marketers means this is often neglected. Done correctly, brand building leads to tangible financial benefits for the company, as discussed in the next section.

Brand equity

Brand equity is a term used to describe the total picture or rather what everyone who comes into contact with the brand thinks and feels about it over time. This represents the true value of the brand. The question is: what do your consumers, competitors, suppliers, retailers and distributors feel about your brand? One definition is: 'A brand's power is derived from the goodwill and name recognition that it has earned over time, which translates into higher sales volume and higher profit margins against competing brands.'[8]

Another definition is that brand equity is 'the value of brand recognition increases the value of an otherwise indistinguishable product.'[9]

A simplistic way to illustrate brand equity is to think of a white T-shirt. Brand equity is the reason why a consumer is willing to pay a high price for a white T-shirt with a Gucci logo on it, compared the same shirt with no logo.

Brands that manage to achieve high levels of brand equity experience benefits in terms of long-term loyalty and price inelasticity. People will be willing to pay more for the product than for competitors' brands and they will stick to that specific brand. Apple Computers has perhaps achieved perhaps the highest level of brand equity ever recorded. Woolworths is a South African example of a company with a high level of brand equity.

Brand equity translates into profit for the business but, as mentioned before, this takes time and money. This is why there is so much value in the notion of achieving consistency through the careful management of a brand. This concept is sometimes called brand stewardship. The foundation of effective brand stewardship or communication is crystal clear positioning that is consumer-based and competitive.

The financial value of building brand equity means that brand building should have the full attention of the board of a company and is not just relevant to marketing activities. The growth in intangible assets and the changing role of marketing means senior executives need to understand the role of brands in creating value for shareholders and businesses. It is important to note that brand equity and brand value are both indicative of income- earning potential in the future, so they can help determine the health and prospects for a business (traditional accounting, which gives a historical perspective of an organisation's performance).[10]

According to BrandFinance, a company specialising in brand equity and determining the value of brands, international accounting standards define an intangible asset as an 'identifiable non-monetary asset without physical substance'[11]. It must also be identifiable, result in a flow of future economic benefits and be controlled by the entity (demonstrated by the power to obtain future economic benefits from the asset or to restrict the access of others to those benefits).

Furthermore, an intangible asset meets the identifiability criterion only if it is separable (i.e., capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, asset or liability). Another criterion could also be that it arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business's revenue is contributed by the brand. Some of South Africa's most valuable brands include: Capitec Bank, Castle Lager, FNB, Sasol, Telkom and Discovery.[13]

Brand development

In order to develop a brand from the beginning, there is a general process that involves four steps: brand positioning, brand name selection, brand sponsorship and brand development (Figure 12.4). Each of these steps is described below.

Brand positioning

Brand positioning has been described in detail in the previous section. It is very important that positioning happens relative to competitors. What does a brand have that sets it apart from similar products or services?

Brand name selection

Brand name selection involves finding a name that carefully considers the product and its benefits, the target market and the marketing strategies that follow. A good brand name has the following qualities:

• It can be easily pronounced (for example, White Star and Omo).
• The name is unique and distinctive (for example, Spur, Avis, Simba, and Clicks).
• The name can be easily extended (for example, Virgin Atlantic, Virgin Active, Virgin Mobile, and Virgin Money).
• The name can be registered and legally protected (i.e., it does not interfere with existing registered brand names).

Brand name selection will also take into account whether the brand is sold under its own individual brand name, such as White Star or Omo; under a family or umbrella brand name, such as Virgin; or as a company brand name, such as Nando's.

Brand sponsorship

Brand sponsorship is the decision that takes into account the investment required to launch a new brand into the market, the company's financial resources to support the launch, the competitive arena, and determines the most advantageous way to sell the brand into the market.

Examples of brand sponsorship options are the manufacturer's brand (or individual brand), private brand (or store brand), licensed brand or co-branded product.[14] These will be discussed in greater detail in the section on brand architecture, but some definitions are included below.

• Manufacturer's brand or Individual brand. With a manufacturers brand, the products found on the store shelves are packaged with branding that identifies the manufacturer. This manner of branding is common in the fast-moving consumer goods category and includes examples like Kellogg's cereals, Coca-Cola beverages and Clover dairy products. An individual brand is another strategy used by FMCG companies and others: the manufacturer is not identified and the brand is self-standing. An example of this is Coca- Cola. Its brands of water, coffee, iced tea and energy drinks are promoted individually under their own brand names, with scarce mention of the manufacturer (see Figure 12.8 for examples).
• Private brand. Private brands are a brand created and owned by a reseller of a product or service. This approach is increasingly popular. Examples include the Ritebrand products in Shoprite stores, No Name products in Pick n Pay stores and Woolworths branded products.
• Licensing is when a company makes use of a name or symbol for a fee.Licensing is also done with celebrities and characters from well-known movies and books. Examples include children's clothing that features Marvel Comics characters and Disney shampoo for kids.
• Co-branding is the practice of using the established brand names of two different companies on the same product. Co-branding benefits the companies in that the combined brands create broader consumer appeal and greater brand equity. This provides companies with an opportunity to expand into foreign markets. An example is when Simba co-branded its chutney-flavoured chips with Mrs Ball's chutney.

All of these options have benefits and costs and need to be considered carefully. Large companies with multiple brands need to make decisions based on the larger brand architecture of the company, as discussed below.

Brand architecture

Most companies have more than one product in their portfolios. Having multiple products brings new branding questions. Should all the products be under the same brands or should they have their own separate brands? These issues are discussed under the topic of brand architecture.

Brand architecture options

Brand architecture is the structure of brands within and organisational identity. It is the way in which the brands in a company portfolio are related to – or differentiated from – one another. The architecture should define the hierarchies within an organisation: how the parent, umbrella, master or corporate brand works in synergy with the sub or endorsed brands; how they support or detract from one another; and how the sub or endorsed brands reflect or strengthen the strategic objectives of the corporate brand to which they belong.

Brand architecture can be summarised as such:

• Branded house

- Monolithic (master brand)

- Endorsed (sub-brands connected to the master brand)

• House of brands

- Branded (free-standing brands)

- Hybrids (combination)

Branded house

In a monolithic structure, everything is unified under a single master brand. Thus, there is one brand name and logo, one visual brand identity (colours, typeface, etc), and all variants, no matter the features or benefits, exist under the overarching brand promise. Brand extensions may be built using simple descriptors or codes. Think of Bokomo Corn Flakes, Oats, All Bran, and the BMW range.

Endorsed sub-brands are when marketing synergy is created between product and service name and the master brand. In other words, when either the product or the parent brand adds value to the other. Usually, the sub-brand has a clear market presence and will benefit more from the master brand association than if it were a free-standing brand. The master brand endorses the sub-brand, so it is critical that there is an alignment of values. Often this strategy is chosen for communication budget efficiency. Below is an example from Virgin, the master brand of which is represented across many business categories.

House of brands

A house of brands as a collection of individual free-standing brands that have a separate identity from their parent company. These brands have names, lifecycles, personalities of their own and often compete with each other within the same company and sometimes within the same category. This is called a portfolio of brands and necessitates a portfolio strategy, so that each brand has a clearly demarcated position. Examples of this are often found in fast-moving consumer goods (FMCG) companies, like Unilever, which has Omo, Surf, and Sunlight, all in the detergent category. It is said that ten food companies account for almost all the branded food products in the world.[16]

Lastly, there is the hybrid approach, which is a mixture of all the above, monolithic, endorsed and individual/branded. These are often the result of mergers and acquisitions, when the brand owners see value in preserving the goodwill associated with the acquisition.

Microsoft uses a multiple brand architecture. Its master-branded products, like Microsoft Teams, Microsoft Project and Microsoft Internet Explorer, use descriptive product names under the Microsoft master brand. Its sub-brands include Microsoft Windows and Microsoft PowerPoint. It has endorsed brands like XBox and Bing, which target more defined target audiences and it has individual free-standing brands through acquisitions like Minecraft, Skype and even Nokia.[18]

The hybrid brand architecture of master brand and sub-brand strategies uses the power of the corporate name to advantage in some categories and industries, and uses endorsed and individual brands for audiences who may view the corporate brand negatively.

Brand development

When making brand architecture decisions, a company has various options, among which are line extension, brand extension, multi-brands and new brand. These decisions are based on whether the brand name is new or existing and whether the product category is new or existing (Figure 12.4).

• Line extension means extending an existing brand name to new forms, colours, sizes, ingredients or flavours of an existing product category. This method offers a low-cost and low-risk way to develop your brand, and helps meet consumers' desire for variety. The risks of an over-extended brand include causing consumer confusion and brand cannibalism. An example of line extension is how the Coca-Cola Coke product extended into Coke Light, Coke Diet and Coke Zero.
• Brand extension means extending an existing brand name to new product categories. This strategy gives a new product instant recognition and faster acceptance. It also allows the company to avoid the high advertising costs that would be incurred if a new brand was launched. The risks of this strategy include introducing confusion around the image of the main product. Moreover, should the product fail, it will likely harm consumer attitudes towards the brand. An example of this is Caterpillar, manufacturer of earthmoving equipment, who introduced a range of footwear and fashion accessories. Victorinox, formerly only a knife and pocket tool manufacturer, moved into fashion and luggage production.
• A multi-brand strategy is when companies introduce additional brands within the same product category. This strategy allows companies to establish different features and appeal to different buying motives. It also allows the company to acquire more shelf space in stores. The risk behind this strategy is that a company may end up spreading its resources over many unprofitable brands instead of building a few brands to a profitable level. Examples include Procter and Gamble's shampoo product ranges, which includes the Pantene and Head & Shoulders brands.
• With a new brand strategy, a company creates a new brand name as it enters a new product category. Companies do this when their existing brand name is weakening and a new brand name is necessary or when it enters a new product category for which none of its existing brands is appropriate. An example is when South African Breweries introduced Bacardi Breezer as a new brand to target younger generations of the beer market.

Conclusion

Positioning and brand strategy are ultimately about managing perception and creating value. Externally, it helps your consumers easily navigate your offerings in a way that is relevant to their needs. Internally, having a well thought through brand strategy helps optimise marketing efficiency and performance and helps determine your innovation opportunities. It enables the company to target and meet the needs of specific target markets in a way that clearly separates its brand from its competitors, through differentiation and distinctiveness, and helps determine relevant messaging and communication platforms. All of this done well will build the brand's equity and value.