Tag: 5 forces

How to drive power for your brand, by taking Porter’s 5 forces model to the next level

I remember 20 years ago when I was in business school and I learned Michael Porter’s 5 forces model as a way to understand the industry attractiveness and competitive intensity. It’s a great starting point for thinking strategically. I’m not an economist, academic or even analytics junkie. But I do see Porter’s Model as a great starting point to assess the power of your brand.  

The connectivity of Brand Love is a source of Power

We believe that brands can sit anywhere in the consumers mind from Indifferent to Like It to Love It all the way to being a Beloved brand. They sit somewhere on a made up mythical Brand Love curve. Slide1At Indifferent, you’re basically a commodity and you are only picked when your “product” is in front of the consumer. Margins are low, price goes with the market and all off your marketing effort is around distribution and price. As you move to Like It, you become competitive but the consumer only usually picks you if they see something logical in your offering that makes you appear to fit their needs. At this point, brands should be trying to figure out:  are you better, different or cheaper?  Because while you might be playing in the mix of the other brands, if you’re not one of those three, then you might not be around for very long. As you get more into the Loved and Beloved stages, the consumer starts to feel more and possibly think less. You have a connection and bond with your consumer. They are a fan, your brand is becoming a favourite part of their life and they build you into their normal routines. They defend you, sell you and crave you at times.

The challenge for Brand Leaders is to start seeing that love as a source of power. And that source of power as a means to making more money than if you had no love.  Marketers that “get it” see the connection between Love and Power and Profits.

Looking at Porter’s Model we can see that a Beloved Brand can leverage all 5 forces–new entrants, buyers, substitutes, rivalry and suppliers–as a competitive weapon to beat down on the less loved brands. porter.001

A Beloved Brand starts with a certain power over the buyer–whether that’s consumers or the channel. In terms of CONSUMERS, beloved brands get their consumers to feel more and think less. The brand becomes a part of the consumer’s life. They are fans, craving the brand and build it into their life. They can’t live without the brand.  

And the CHANNEL needs the brand, caters to them, cannot stand up to them. People would switch customers before switching brands. The channel finds themselves powerless in negotiations. They need the brand. Once the Beloved Brand has a power over the two main buyers–consumers and channel, they can use it over the other forces.

No real SUBSTITUTES can match the Beloved Brand. It becomes less about the product and more about the connection and how consumer feels through the brand. You end up with a monopoly on feelings which then takes away ability to substitute. Unless it is truly “better” what really can the substitute do. Indifferent brands are seen as a commodity that “will do the job for now” but there is no real connection with the indifferent brand.

It is hard for NEW BRANDS to break through. New brand starts in the rational position difficult to break the emotional bond. Even in categories where there might be a leap-frog technology, it’s hard for new brands to gain traction when a brand like Apple dominates the connectivity with consumers. Before the new brand can gain traction, Apple has likely managed to replicate their technical competitive advantage.

And SUPPLIERS are at the mercy of the brand. High volumes drive down costs and margins. Suppliers build completely around brand. They want to be part of the beloved brand, and many times they can’t get out. They proudly display themselves as suppliers of the beloved brand to generate other business.

Even with a high degree of COMPETITIVE RIVALRY a beloved brand uses consumers connectivity to create a bond that replicates the power of a monopoly. The beloved brand commands a power over their competitors in relative terms to their competitors whether it is buyers, substitutes, suppliers or new entrants. If you look at the love consumers have for a brand like Apple, you can start to see how it becomes a power. Think about the last 10 years: would you rather own shares in a monopoly or own shares in Apple?

Going Beyond Porter

Porter is a great starting point for assessing brand power, but now we can see 3 new forces that help to show the power of the beloved brand–looking at the impact of brand on employees, key influencers and media. love power profit.003KEY INFLUENCERS are more likely to actively recommend a beloved brand they feel emotionally connected. Look how Apple uses key influencers to their competitive advantage, whether that’s positive reviews from experts, coverage on the news or even conversations at the lunch table. We can see the influence of popularity on our decisions as a line up attracts more of a line.

The area many brand leaders are missing is the influence of EMPLOYEES as a source of brand power. Think about brand and culture being one and how important it is for the brand to drive the culture behind the brand. Advocates want to work there and fully engaged and knowledgeable on Day 1. Employees at an indifferent brand see it as a job that pays the bills–they lack passion for their brand and it shows in their delivery. Brand Leaders should look to Culture as an asset to make the consumers’ brand experience more powerful. Brand Values should come from the brand’s big idea, and act as guideposts to ensure that the behavior of everyone in the organization is set to deliver upon the brand’s promise. Having values is one thing, but the other component of culture is the right people leadership. Use the values to help people deliver upon the right behaviors, skills and experiences.  Leaders must embody the brand’s big idea and live by the values. Employees will be watching the Leaders to ensure they are living up to the words on the wall.  Leaders need to believe that by investing in their people, the business results will come. Talent management means hiring the right people and providing the right training. Too many companies are skimping on training and development, which is equal to cutting back on your R&D. 

Most brand leaders think of MEDIA as a tool to drive awareness, but better brand leaders are starting to see that media is a source of power that beloved brands can use to their competitive advantage.

We look at media as 5 types of media: paid, earned, social, search and home media.love power profit.004

Back in the 1970s, we used to think advertising through PAID MEDIA was just the 30second TV, print and out of home ads. However, with digital there are more paid options than ever before. A beloved brand has power over the paid media as they can generate better media slots, lower rates and more integrations into the media itself.

Brands that can capture and leverage EARNED MEDIA to become part of the conversation at home or at the lunch table at work. A beloved brand is more newsworthy and their new product launches become lead stories. Look at the amount of positive press Apple gets from the news media. Even the world’s best PR agencies can’t get the media to talk about an indifferent brand.

For SOCIAL MEDIA, a beloved brand has an easier time generating social spins, where advocates follow, share and spread the news. When consumers pose a question in social media, usually the beloved brand becomes the answer. No one would ever dare put forward an indifferent brand for fear of social stigmatization.

As part of the SEARCH process the beloved brand wins because being a famous brand moves consumers quicker to the solution than any version of paid SEO. No one ever googles Apple, they just go the Apple website.

HOME MEDIA would be how you use your home page–whether to influence or sell. Indifferent brands don’t know what to do with their website. For a beloved brand, the website can engage inform, design and sell. 

So with these sources of power, the beloved brand can leverage this power to drive higher growth and deeper profits. The Beloved Brand commands a premium price, lower costs, better shares and the ability to move into new categories. Each of these drives profit for the brand.love power profit.005

A beloved brand uses the power of brand love to be more competitively powerful in the market 

To read more on this subject, read the following presentation:

Also, if you’re interesting in Beloved Brands Training Programs for brand management, feel free to contact us to learn about our one day or three day boot camps for brand leaders. We believe that better leaders make better work which produces better results. Here’s more information.

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We offer Brand Coaching, where we promise to make your Brand better by listening to the issues, providing advice that challenges you, and coaching you along a strategic pathway to reaching your Brand’s full potential. For our Brand Leader Training, we promise to make your team of Brand Leaders better, by teaching sound marketing fundamentals and challenging to push for greatness so that they can unleash their full potential. Feel free to add me on Linked In, or follow me on Twitter at @belovedbrands If you need to contact me, email me at graham@beloved-brands.com or phone me at 416 885 3911

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Building from Porter’s 5 Forces, up to 13 Sources of Brand Power

I remember 20 years ago when I was in business school and I learned Michael Porter’s 5 forces model as a way to understand the industry attractiveness and competitive intensity. It’s a great starting point for thinking strategically.  But, by any means, I’m not an economist, academic or even analytics junkie. I’m just a simple brand guy, who sees Porter’s Model as a great starting point to assess the power of your brand.  I’m not here to debate the model, just use it.

Using Porter’s Model for Brands

First of all, Brands can be anywhere from Indifferent to Like It to Love It all the way to being a Beloved Brand.  They sit somewhere on a made up mythical Brand Love curve. At Indifferent, you’re basically a commodity and you are only picked when your “product” is in front of the consumer.  Margins are low, price goes with the market and all off your marketing effort is around distribution and price.  As you move to Like It, you become competitive but the consumer only usually picks you if they see something logical in your offering that makes you appear to fit their needs.  At this point, brands should be trying to figure out:  are you better, different or cheaper?  Because while you might be playing in the mix of the other brands, if you’re not one of those three, then you might not be around for very long.  As you get more into the Loved and Beloved stages, the consumer starts to feel more and possibly think less.  You have a connection and bond with your consumer.  They are a fan, your brand is becoming a favourite part of their life and they build you into their normal routines.  They defend you, sell you and crave you at times.

The challenge for Brand Leaders is to start seeing that love as a source of power.  And that source of power as a means to making more money than if you had no love.  Marketers that “get it” see the connection between Love and Power and Profits.

Looking at Porter’s Model of the 5 Forces, we can see that a Beloved Brand can leverage all 5 forces as a competitive strategy to beat down on the less loved brands.  McDonald’s beats down on Burger King, Wendy’s and Hardee’s with such a force those brands now find themselves confused and suffering.

A Beloved Brand starts with a certain power over the buyer–whether that’s consumers or the channel.  In terms of CONSUMERS, they feel more and think less. It’s a part of them. They are fans, craving the brand and build it into their life. They can’t live without the brand.  And the CHANNEL needs the brand, caters to them, cannot stand up to them.  People would switch customers before switching brands.  The channel finds themselves Powerless in negotiations. They need the brand.  Slide1

Once the Beloved Brand has a power over the two main buyers–consumers and channel, they can use it over the other forces.  No real SUBSTITUTES can match the Beloved Brand.   It becomes less about product and more about connection and how consumer feels though the brand.  You end up with a Monopoly on feelings which then takes away ability to substitute.  Unless it is “better” what really can the substitute do.  It is Hard for NEW BRANDS to break through.  New brand starts in the rational position difficult to break the emotional bond.  And SUPPLIERS are at the mercy of the brand.  High volumes drive down costs and margins.  Suppliers build completely around brand. Can’t get out.

The Beloved Brand commands a power over their competitors in relative terms to their competitors whether it is Buyers, Substitutes Suppliers or New Entrants.  If you look at the love consumers have for a brand like Apple, you can start to see how it becomes a power. Apple uses the love to replicate the power of a monopoly.

Going Beyond Porter

Porter is a great starting point for assessing brand power.  But Brands are in the midst of a huge change on a few fronts. The obvious one people can see and touch is Media.  But don’t forget to look beneath the surface and you’ll start to see a bigger change in brands than media and that’s the Brand Culture and the Conversations.

Slide1There are now 5 types of media:  paid, earned, social, search and home media. Back in the 1970s, it was all about advertising through PAID MEDIA, with 30 second TV, print and out of home ads.  Even with Paid media, the Beloved Brand can get Better slots, lower rates and more integrations.  The first social media I would argue is PR, capturing EARNED MEDIA and becoming part of the conversation at home or at the lunch table at work.  A Beloved Brand is more newsworthy and their New Products are lead story. Look at the amount of positive press Apple gets from the news media.  HOME MEDIA would be how you use your home page–whether to influence or sell.  For a Beloved Brand, the website can  engage inform, design and sell.  As part of the SEARCH process it can be the destination.  For a Beloved Brand, search is a winner, because Being a famous brand beats paid SEO.  For SOCIAL MEDIA, a Beloved Brand has an easier time generating social spins, where advocates follow, share and spread the news.

As we take all that influence of media, we can start to see the influence of others can have on brand choices.  KEY INFLUENCERS are more likely to actively recommend a Beloved Brand they feel emotionally connected. Look how Apple uses key influencers.   And what is a growing area for Brand is CONVERSATIONS and the influence of popularity on our decisions.  Beloved Brands know that a line up attracts a line.

Brand = Culture.  Brand and Culture are one.  Advocates want to work there. Fully Engaged on Day 1. The area many brand leaders are missing is the influence of CULTURE as a source of brand power.  Brand Leaders should look to Culture as an Asset to make your Brand Experience more powerful.  Brand Values should come from the DNA, and act as guideposts to ensure that the behavior of everyone in the organization is set to deliver upon the Brand’s promise. Having values is one thing, but the other component of Culture is the right  people leadership.  Use the values to help people deliver upon the right behaviors, skills and experiences.  Leaders must embody the Brand’s DNA and live by the values.  Employees will be watching the Leaders to ensure they are living up to the words on the wall.  Leaders need to believe that by investing in their people, the business results will come.  Better people produce better work and that drives better results.  Talent management means hiring the right people and providing the right training.   Too many companies are skimping on training and development, which is equivalent to cutting back on your R&D.

So with these 13 sources of Power, the Beloved Brand can leverage this power to drive higher growth and deeper profits.  The Beloved Brand commands a premium price, lower costs, better shares and the ability to move into new categories.  Each of these drives profit for the brand.

The more LOVED the brand, the more POWERFUL the brand.  

To read more on this subject, read the following presentation:

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  1. How to Write a Creative Brief.  The creative brief really comes out of two sources, the brand positioning statement and the advertising strategy that should come from the brand plan.  To read how to write a Creative Brief, click on this hyperlink:  How to Write a Creative Brief
  2. How to Write a Brand Plan:  The positioning statement helps frame what the brand is all about.  However, the brand plan starts to make choices on how you’re going to make the most of that promise.  Follow this hyperlink to read more on writing a Brand Plan:  How to Write a Brand Plan
  3. Turning Brand Love into Power and Profits:  The positioning statement sets up the promise that kick starts the connection between the brand and consumer.  There are four other factors that connect:  brand strategy, communication, innovation and experience.   The connectivity is a source of power that can be leveraged into deeper profitability.  To read more click on the hyper link:  Love = Power = Profits

 

I run the Brand Leader Learning Center,  with programs on a variety of topics that are all designed to make better Brand Leaders.  To read more on how the Learning Center can help you as a Brand Leader click here:   Brand Leadership Learning Center

To reach out directly, email me at graham@beloved-brands.com 

About Graham Robertson: The reason why I started Beloved Brands Inc. is to help brands realize their full potential value by generating more love for the brand.   I only do two things:  1) Make Brands Better or 2) Make Brand Leaders Better.  I have a reputation as someone who can find growth where others can’t, whether that’s on a turnaround, re-positioning, new launch or a sustaining high growth.  And I love to make Brand Leaders better by sharing my knowledge.  Im a marketer at heart, who loves everything about brands.  My background includes 20 years of CPG marketing at companies such as Johnson and Johnson, Pfizer Consumer, General Mills and Coke.  My promise to you is that I will get your brand and your team in a better position for future growth. Add me on LinkedIn at http://www.linkedin.com/in/grahamrobertson1 so we can stay connected.

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