Connecting brand position with business outcomes
This post is based on a a piece by Ivey Marketing Professor Niraj Dawar and PhD student Charan Bagga published in the June 2015 edition of Harvard Business Review. The link to the article is broken on the HBR website, so I am providing this link to the coverage article on the Ivey website.
In the article, the authors argue that traditional brand positioning tools such as Perceptual Maps aren’t aligned with business goals. This disconnect often leads to the implementation of actions that have little—or negative—effect on performance as measured by key business indicators such as profitability or sales volumes.
The solution, the authors argue, is to use of a Centrality-Distinctiveness Map (C-D Map) that aims at syncing the marketers’ plans with those of the business, resulting in a better orchestrated overall business strategy. More specifically, the C-D Map provides allows marketers to:
- Assess the brand positioning strategy by answering the question “are the marketing goals aligned with the business goals and the resulting business performance?”
- Focus on real competitors by answering the question “does consumer perception of who my competitors are the same as my own perceptions?”
- Track the results of specific actions by answering the questions “are pricing changes or advertising campaigns moving the brand in the right direction on the C-D Map?”
The C-D map plots brands across a two-dimensional axis. The X axis represents Centrality, or how popular or representative of its segment a brand is. Think Coca-Cola in soft drinks or McDonalds in fast food. The Y axis represents Distinctiveness, or how unique a brand is in terms of its capability to stand out from its competing brands. Think Tesla, the carmaker. The authors then proceed to label each quadrant as: Unconventional, Aspirational, Mainstream and Peripheral, as shown in the diagram below:
To illustrate the characteristics of the brands on each of the quadrants and to begin identifying strategic implications, I will use well-known carmaker brands, as follows:
Aspirational brands such as BMW are in the best possible position on the C-D Map. These brands command a price premium thanks to the quality of their products. This price premium results in high profits at lower sales volumes than those seen in the mainstream. These brands are also well-known amongst consumers.
Mainstream brands such as Ford enjoy massive popularity, perhaps leading the chart in terms of sales volume. These “run-of-the-mill” brands rely on heavy advertising to maintain their position. Despite their perceived dominance, their products aren’t as profitable as those of aspirational brands.
Peripheral brands such as Kia have low sales volumes. Therefore profitability depends on the brand’s ability to stay low in terms of marketing and R&D costs. These brands follow a “me too” approach to innovation and are perceived as lower cost substitutes.
Unconventional brands such as Tesla Motors suffer from low recognition amongst consumer but command a price premium that allows them to compete in niche markets.
Aspirational brands should consider creating wider appeal while defending from mainstream brands trying to climb upmarket with premium products.
Mainstream brands should focus on defending their position from peripheral brands boosting their marketing and advertising in order to gain popularity.
Peripheral brands should focus on staying low cost in terms of marketing and innovation. Historical data suggests that efforts to move into the mainstream are rarely successful.
Unconventional brands should work to increase centrality in order to sell more. The ideal path forward for these brands is to move towards the aspirational quadrant.