Want to Become the Brand of Choice? Pick Two!
Want to become brand of choice? Who doesn’t? It’s not easy, but developing a strategy doesn’t have to be complicated. Making concepts like becoming brand of choice simpler and more pragmatic empowers more people to use them to their benefit. Robust, fact-based discussions using simple well-understood concepts produce the best results. So let’s start with the basics of becoming brand of choice. Your brand will be preferred when your customers perceive and believe you deliver distinctively greater value then they can get from someone else. So far that’s a no-brainer and simple to understand. Right?
Value is the keystone concept in the definition of brand of choice. So let’s simplify the way we can talk about value. From a buyer’s perspective determining value is a straightforward calculation that looks something like:
This formula is so simple and well understood it is often “calculated” as a subconscious or intuitive thought – by buyers and sellers. My point here is there is no need to make discussing value as rocket science.
Determining value from a buyer’s perspective certainly has its nuisances based upon the nature of the product, experience of the buyers, cost relative to other inputs or impact on the purchasing budget, just to name a few. As an example, in a category where the product is complex, the switching cost is high or a buyer is inexperienced there is a general pre-disposition to pay a premium price in hopes of getting more and minimizing the risk or perceived risk in buying the product. That is to say the buyer places more emphasis on the “what I get” in determining value.
Of course the seller has a mirror-like perceptions of the value equation.
Simply stated a strategy to becoming brand of choice boils down to deciding whether you can deliver and create the perception of providing greater “what we deliver” and having the benefit of charging higher prices. Or are you willing to concede parity, i.e., commodity products and service, in “what we deliver” and focus on a lower price or a complex pricing strategy (lower initial price, increasing under certain conditions) that hopefully yields incremental revenue under certain conditions.
Like most things in business (and life) value is based upon perceptions, of the buyers and sellers. Sellers can be frustrated when they think buyers “miscalculate” value by underestimating the “what I get” portion offered by their product or service. By the same token buyers believe sellers over-estimate the numerator of the value equation. (My friend Kevin McArdle recently wrote a blog providing insightful tips for sellers to help buyers realize the full value the sellers provide. Check out his blog)
While this blog entry isn’t meant to be a class on competitive value strategy, I would suggest a few basic ideas. First be sure you embrace an outside-in perspective when determining your value strategy. (I can’t emphasize enough the importance of perceptions!)
In general there are more value possibilities in the numerator, than the denominator. Ask yourself a few basic questions, like:
How confident are that you know customers’ perceptions of “what they want”? Are your judgments fact-based or anecdotal?
Have you done the research to determine if there is much of a perceptual gap in buyers’ understanding of “what they want” and “what they get”?
Why do some customers perceive more value in your offering and pay higher prices or complain less?
How much effort has your organization placed behind molding customers’ “what they want” perceptions to be in line with your organization’s strengths?
Is your long-term value strategy based upon the distinctive strengths of your organization or is your organization trying to play major league baseball with a rugby team?
Be sure to consider all of the factors that deliver value in a customer relationship, including certain intangible factors that can increase the “what they get” part of the value equation. Do not underestimate the value of a well-respected corporate brand. Also do not underestimate the value of the personal brand relationships built by salespeople and other key individuals in your organization. Of course keep in mind those organizations that build strong corporate and personal brands have more value to offer beyond just the features/benefits associated with their products.
Certainly this list is only meant to get you thinking and challenging your approach to creating distinctive value, the platform for becoming brand of choice. But using a fact-based robust approach to answer basic questions can lead to powerful value strategies.
The alternative to the more strategic approach is to follow the value proposition my curmudgeonly Uncle Harold offered to his customers – “You can get it fast, good or cheap. Pick two!”