Brand Marketing: When Perceived Value Wins

In my previous post, I talked about the marketing phenomenom known by many as “Starbucks”. In my opinion, Starbucks is one of the most powerful marketers in present day, up there with powerhouse brands like Disney and Apple. I highly recommend reading this post along with my previous post. I realize they are more long-winded than usual but that just means the articles are loaded with lots of useful gems and nugget of knowledge!

Reviewing my brief Starbucks case study, one of the key points I made was about how consumers often go with what is convenient and familiar, rather than what provides better quality or “value”. After writing that piece, I came across a brand marketing/power of presence blog by Lance Winslow which inspired me to revisit this topic. He is right on-point when he states that the power of presence and brand marketing theories apply to just about every facet of society. Starbucks definitely has the power of presence nailed, especially in Washington and New York. The interesting thing about the Starbucks brand is that many people can’t figure out what the logo really is yet they can spot it from a mile away – now THAT’S powerful!

The beauty of the Starbucks brand, to me, is that they are selling status – yes, STATUS! People figure that, if you can afford Starbucks on a regular basis, maybe two or three times a day, you are doing well for yourself; after all, spending $7-35 a day for coffee and perhaps a snack seems like such a frivolous expense when there are cheaper alternatives. Strabucks has become so viral that many company cultures revolve around people treating others to their products. I can recall many a workplace where there would be designated “coffee guys” that would go on runs for several people at once. Often, these coffee runners would be expected to pay for the coffees of those they are trying to suck up to. Amazingly, this gesture goes a long way. Buy your boss a coffee from the food cart on Main Street and you’ll get a funny look but buy him/her Starbucks and you get the “job well done” look.

Considering the status component to Starbucks buyer habits, it can easily be said that the Starbucks product line is a luxury line. It is not something you need and there are cheaper, more effective alternatives, but the snobs will not hear of it. Starbucks is to Dunkin Donuts what Lexus is to Toyota – you get essentially the same product but one brand carries much more prestige (at least in mainstream society).

Apple’s 1984 Super Bowl commercial is essentially the de facto textbook marketing case study and it certainly teaches some powerful lessons in brand marketing. I’d pair Apple and Starbucks up as similar brands in that they both sell luxury to what some may consider snobs or even elitists. Even though both brands alienate many customers through their pricing and image, there is an undeniable warmth and intimacy to these brands. What Apple has done exceptionally well since day one is selling style and ubiquitous coolness factor to it’s customers. Starbucks does that too, though in a different manner. Starbucks provide a place where people can relax to a nice cup of coffee, decent pastry, and a paper. The Apple Store now has a similar cafe offering as well.

Moving on from the Starbucks-Apple comparison, I have to say that Apple is probably one of the strongest brands ever. People argue that they really mucked things up by not pursuing the computer market dominance that the PC ended up taking. I say that Apple never really wanted to appeal to the masses or else they would have taken a different approach. Back then, the 1984 commercial alienated PC users by essentially calling them mindless drones. Today, we have the “Apple and PC guy” commercials doing the same thing but with a light-hearted approach, of course. I remember some of my fondest memories as a child was having the Apple salesperson come over to my home and show me how cool the Apple computer is. I’d play some games, do some learning exercises, and sit in awe. That’s just it, though: the Apple computer has always been specialized. It seems that Apple has always focused on educaters, graphic designers, and musicians. This focus has created a perceived value that tells the consumer “we do all those things best.”

Whether you detest Apple for their marketing efforts or find them inspiring, you can’t deny that they are brilliant brand marketers. Not only can people recognize the Apple logo anywhere but the style of the new Mac sticks out in anything that tries to emulate their success. Any time I see the clear plastic with underlying white surface, I can’t help but to think “they stole that from Apple.” Many manufacturers are taking pages from the Apple book of style just to grab consumer attention.

As I always say, Apple coined many things. Their crowning achievement, to me, was not the creation of the Mac but, rather, making the word “iPod” synonymous with “MP3 player” – most people don’t even know the difference or that there are other very similar, if not better, products out there! The massive success of the iPod has allowed Apple to cross-sell and cross-promote like never before. iTunes is taking over many PC’s as the preferred multimedia solution. The QuickTime format is being pushed now more than ever. Podcasts are becoming more prominent than traditional blogs. By focusing on very specific things and leveraging a powerful brand, Apple has achieved mass appeal without making that a direct goal. Brilliant.

The power of perceived value kicks in really well when you have a strong brand and high prices to match it. People figure “I am paying for a greater value” so it is worth it. Apple and Starbucks, again, are both notorious for this. If you compare a comparable PC with it’s Apple counterpart, the chances are that the PC will be 50% cheaper, if not more. The prices are becoming more reasonable but, on the mobile computing side of things, Apple notebooks are still insanely pricey by today’s standards. Of course, the perceived value outweighs the obvious price spikes. If you are a graphic designer or sound engineer, you’d be laughed at for using anything other than a Mac. The snob factor rears it’s ugly head once again.

Another thing that Apple does well is listen to their customers. While they alienate potential new customers, Apple continues to cater more to their existing customers; in essence, making them their greatest marketing channels. When you have many extremely happy customers, you’re basically priming brand evangelists to enter the marketplace and spread your word. When you have a powerful brand, you have a powerful message, a story. Marketing is about giving people something to talk about and Apple definitely accomplishes that with a flare that few can even compare to.

Naturally, not everyone can own their own “purple cow” brand but there are still other methods for establishing a good perceived value. I personally think that the value of collaborative thinking has been greatly under-rated, perhaps because there are those out there that water down the value of planning and brainstorming. When you get strong think tanks and community hubs going, you create a different sort of buzz. Sites like WorldThinkTank.com and WorldSentiment.com do a great job of giving people things to talk about though, in their cases, they are not creating the buzz, just facilitating it. The marketplace is moved by people that create buzz (Apple) and those that facilitate it (the media); as a business, if you can effectively leverage both you win the game.

These are the things that fuel strong brands. Buzz and viral marketing is bigger than ever now with all the blogs and online PR that is available. I think my buddy Price has a brilliant business model on WorldSentiment simply because he captures some of the key elements of marketing. I won’t get into too much detail on that but I think he is poised to make WorldSentiment a strong brand because he has set up the site so that content can be easily syndicated, messages are concise, and increasingly busier visitors can quickly communicate their thoughts without devoting lots of time. I myself was a huge WorldSentiment participant until the site got hacked and many popular discussions got lost in the mix (it was then that I decided to focus on my blogs and other writing/creative efforts).

Currently, I am expanding a brand of my own. This brand is TGAP. I have to thank Harry Beckwith and his simple yet effective approach to marketing. If you really think about the concept of “selling through”, it’s all about everything that happens from initial contact to actual service delivery, which includes what most would refer to as sales & marketing efforts. Beckwith hit upon arguably the most important components of brand marketing which are recency and familiarity.

Recency is what helps those with long-term memory issues remember certain brains over others. If you recently saw an ad for a company and then have a consumer decision to make soon after where that company is offering a solution for what you see, chances are you may go with them because they are freshest in your memory. Recency is what helps people decide whether they go with an unknown company or the “devil they know”. Chances are that there are negative items in their recent recollections but, since they know what they are getting into and recognize the brand, they’ll take a gamble. Like I said in my previous post, do not attempt to assume that consumer decisions are logical in any way.

Familiarity is very simple and is supported by the recency factor, naturally. Familiar brands win over the unknowns all the time. It’s the old “Brand X” versus the household brand issue: people are predisposed to certain opinions when all they’ve known is a particular side of the story. Some consumers will never try an alternative solution because they figure if what they have works fine, they shouldn’t have to explore other options. Brand loyalty is another vital component in effective brand marketing.

In the end, strong brands can strong-arm the market. Perceived value will almost always defeat actual value, even if the actual value is far lower than what is being projected to the consumer. When you have developed a wonderful brand identity for your business, people will not see much else, and that is when you have the opportunity to build more hype and, hopefully, deliver quality service to match the hype. These are the methods that keep loyal customers passionate about your brand. These are the things that make your customers the real advocates of your business. If you look at things this way, Apple, Starbucks, and many other powerhouse brands have a marketing force consisting of millions upon millions of people. Quite impressive, I’d say!

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9 thoughts on “Brand Marketing: When Perceived Value Wins

  1. Interesting reading, indeed. Brand strategies have always been in the core of my professional life, so I’d like to comment on some points within your article.

    ***
    “Perceived value will almost always defeat actual value, even if the actual value is far lower than what is being projected to the consumer.”

    Well… I think it is true on the condition that the ‘actual value’ referrs to the value of a company assets as such. I my opinionon, on the modern markets you will find it extremely difficult to measure the “perceived value of a brand”. Well, not only in my opinion, let’s take the extraordinary and brilliant concept of brand preception by Gayle Turner of Beckett&Beckett Co. whom points out – quite sharply – that brand’s value is the level of brnad’s market reputation and cannot be controlled by companies at all. (as explained in his brand image-brand reputaion concept)

    ***
    “When you have developed a wonderful brand identity for your business, people will not see much else /…/”.

    Thinking that on the nowadays makets – you have any control over a brand identity is a serious mistake. in my opinion. I recommend here excellent publications by prof. Kjell Nordstrom and his ‘consumeriate’ concept (from Sweden’s Stockholm University Institute of International Business).

    ***
    “/../people will not see much else, and that is when you have the opportunity to build more hype and, hopefully, deliver quality service to match the hype.”

    Oh, please… what disturbes me the most in your article is this
    notorious ‘brand VS. people’ stance. I daresay, it’be extremelly difficult to design any real brand strategy from a ‘me vs. consumers’ perspective. This doesn’t simply work this way and is a common, yet not correct conviction. The best sources on this issue in my opinion are prof. Susan Fourniers of Harvard Business School publications.

    ***
    “If you look at things this way, Apple, Starbucks, and many other powerhouse brands have a marketing force consisting of millions upon millions of people”.

    It’s exactly the opposite. I have a pleasure of working both locally and internationally on the communication strategies (digital media) for majority of Procter & Gamble brands, Konica MInolta, Hewlett-Packard, Credit Suisse, Sony, Novartis, Miller Genuine Draft, Lexmark, Oracle to mention just few. And I assure you that all these companies in questions use single, the most successfull, brand strategy fundaments avaialble today – to be close with the consumer AND change with him/her (literal referrence to that you’ll find in Jim Stengels’s P&G Marketing CEO interview at UK’s Revolution Magazine, April 2005).

    Bad marketers first try to make a product, then a hype around and finally they try to answer the needs and if the opinion of the market changes they try to tell a new story about the brand.

  2. Very good feedback and much appreciated! If you read any of my other material, I am not pretending to be an expert or pass along my opinion as fact. I take stances mostly to see who is out there, ruffle some feathers, and see if I get a response. Responses like yours please me greatly so, again, thank you!

    Let me just clear up a few things. First and foremost, I base my opinion on my personal experiences with my clients. Theories and market research certainly holds more weight but I am taking a more down-to-Earth approach. Your approach is more the traditional, by-the-book, academic approach. Looking at your list of companies, I can see that we have different target markets: I prefer to work with smaller companies these days than the snobbish, strong-arming large companies but, again, that is what my personal experiences have lead me to do.

    Interestingly enough, I’m worked with some of the very same companies you speak of. You’re right: they know to evolve with the customer. On the same token, it is undeniable that a lot of the large corporations, as opposed to small businesses, try to create a need rather than identify it. Look at all the large corporations that jump on every hot trend rather than trying to start their own. Market saturation says it all. iPod’s make MP3 players popular, then others try to repeat their success by taking their winning formula and, instead of making it different, making it better. These are principles that both Beckwith and Godin profess.

    I think that, in marketing, everyone has a personal approach. It is a very subjective market. You can’t box up people by trying to bind them with loosely-connected interests. Seth Godin especially has a special place in my heart because he professes that going for specific targets rather than mass appeal is key, whereas there are many marketing efforts TODAY that are hard to describe. It’s a marketplace dominated by a lot of similar products so it’s only natural that the brands often create a vital edge. It’s not always the case or the case most of the time but it does happen often enough.

    Though your defensiveness is unwarranted, I agree with you that a “brand versus people” stance is disturbing. I personally do not subscribe to such nonsense but it doesn’t mean it does not happen. I’ve worked with clients that have this very attitude. If you look at the growing number of articles citing declining customer service issues in US companies, the core issues are obvious. Heck, just about every company I’ve done business with lately exhibits a clear disregard and lack of appreciation for the individual consumer because their focus is on mass appeal rather than isolated situations. Again, this is not to be construed as a gross exagerration but I do speak of my own first-hand accounts with the way some businesses manage their image and market presence.

    One of my underlying themes is that some companies could stand to do better in their respective markets if they dropped the ego and snobbery. I’ve worked closely with clients that profess that their unique advantage is that they have a better product. In the marketing world, that says all of nothing yet we still see people dealing in empty statements and excessive superlatives. By taking a more vehement stance, I get to play devil’s advocate and show people that there are softer sides to marketing and not everything has to be a hard sale.

    On your final note, I wholeheartedly agree: marketing efforts are a part of the design and implementation processes, not merely a support channel. I think companies that departmentalize marketing and do not make the effort to manage every point of contact misses the point of marketing. A good story is consistent and genuine so, naturally, stories that keep changing to meet changing times are anything but.

    Your comments were a great read and I hope you return to share more of your feedback as, really, this is all about providing different perspectives. I believe marketing needs a fresh look for the world to realize that it’s about a whole lot more than advertising and sales support. Education is key, but that doesn’t have to start or end at the university level. 8)

  3. I see. First, my intention was not to box up anyone, so accept my apologies. I’m not an English language native speaker and sometimes my attitude in the written form may be unclear due to ‘verbal registry missmatch’ as linguists call it. Sorry.

    Let me comment on several things, though 🙂

    1. Well, you are an expert, obviously.

    2. All the authors and experts I mentioned are among the very top ‘marketing practitioners’ of this planet (…check it up) and they are not randomly inserted within my comment, but they are globally recognized experts exactly on the particualr subject I was referring to.

    3. I do not agree with the ‘create needs’ marketing idea of late 90’s. I is a wishfull thinking, a sheer belief. The fact, that a brand may increase a popularioty of something, means very very little on the long run and for a brand the effect is unpredictable. iPod, iPod+phone… that’s a minor brand case study (… a true heresy of 21th century marketing, I know). I am not in a postionon to elaborate on this here, but maybe we’ll come to this later so I could give my explanation.

    Finally,

    4.

    “I’ve done business with lately exhibits a clear disregard and lack of appreciation for the individual consumer because their focus is on mass appeal rather than isolated situations. ”
    Most true. But what’s the meaning on wasting the energy on the people or brands that – due to all possible limitations – are not going to reform?

    Thank you,
    T.

  4. All valid points!

    I have a pretty unique perspective and some may just write it off as liberal or hippy ideas. I think that buzzword marketing has cheapened the effectiveness of once powerful terms. The word “expert” is one of those words, in my humble opinion. While I am flattered to be considered an expert by some I personally would never use that word for myself.

    The reason for my logic on this is that you will often see companies dotting their marketing pieces with words like expert, distinctive, and best but, in the end, those words do not quantify anything. I believe the best kind of marketing makes unique advantages obvious while not overselling the quality of product or service. This may seem like common sense to some but, believe me, after interviewing several folks and checking out some of the research out there, I can see that it’s not that common.

    By the way, do not worry about my reference to “boxing”. I was not offended in any way and, believe me, I know how it can be when things are lost in translation. I have colleagues worldwide and it’s easy to come off as crude when you do not really know of colloquialisms, connotations, and tones. In your case, it may have been better to gone with “concerned” instead of “disturbed” in your previous comment, for example.

    I am very well aware of the authors and experts you cite; however, due to my feelings on experts, I take everything with a grain of salt. In business, you’ll always receive contradicting advice and it is up to the business owners to match the tone of their customers and constantly try new things, as necessary. As you yourself said, it’s really a matter of mutual growth, which is exactly how I build my businesses little-by-little: developing long-term relationships with our clients and following through with our projects rather than treating them as isolated events.

    The “create needs” concept has reared it’s head on and off for many, many years. In the late 90’s, it was pushed harder because people saw a rise in the service industry and things that were previously not needed, supposed “commodities”, were being sold to customers by way of such methods. When your product is “soft” and the marketplace is not ripe, creating the need is necessary at times. Certainly, there are other approaches such as identifying the small, specific markets that really ARE asking for what you are offering but that alone can be a huge undertaking, especially if you are a small business that doesn’t have the business capital to invest.

    You’re right about the iPod/Apple card being played too much but my effort here is to make marketing a bit more simple for the average person. If someone is not as privvy to marketing case studies as the experts you cite, discussing older or more obscure case studies may not make much sense. I know this is not within the scope of our discussion but it’s still something I want to make known. I am not saying that the success of the iPod is by any means the end all of marketing but it is something that has the recency and familiarity factors attached to them. Apple coined certain terms and entire markets, which is powerful, no matter how you “chop it up”.

    Marketing in itself is unpredictable which is why, as your own mentor says, one must constantly gauge the effectiveness of marketing efforts and do things beyond the campaigns and events that seem to take the foreground for most businesses. A strong brand still goes a long way for the masses. Costumers all over the world take measured risks, almost completely based upon knowing a brand rather than going with what some may say is a cheaper or better option. The realization here is that we are no longer in the industrial age so production and product delivery are not as important. Strategy outweighs tactics and, since those items are mostly tactical, then they are not nearly as relevant as they once were.

    On your last note, believe me, I have cut ties with any clients that do not share a common worldview with my firm. As I said, it’s important for people to do business with those that share common principles. When you have clients that say marketing and strategy is a load of crud and they just want to get things done, you know that they are not going to invest in their business; at least not in the right things. Sadly, this has been more the rule than the exception, at least in my little corner of the world.

    The reason I focus now on small businesses is because they are growing and have an easier chance adopting to new methods. Small businesses also keep the large corporations from strong-arming their market shares and creating monopolies. Most importantly, I feel small businesses tend to focus on people rather than “facts and figures” marketing. They’re more active and sincere in their PR efforts.

    Again, this just my personal experience but I find that, the bigger companies get, the more they lose focus on individual attention, customer service, and the like. All you need to do is call the local cable company, tech support, phone company, or some other servicer to see that, more times than not, your experience is quite lackluster. That’d bad PR and bad business but it still happens.

    It’s a shame really… But not all is bad, of course; there are good ones out there still! Thanks for reminding me of that as it seems you have a positive, customer-focused approach to business yourself, which inspires me even more!

  5. I thank you for citing my work and very much enjoyed your comments on branding. This is a subject that should be looked at as we watch the branding of Chinese Products entering our market. You can bet their first automobiles as they enter the US by 2008 that you will watch branding in rapid action.

  6. It was my pleasure!

    It is one of my biggest hopes to syndicate more quality work like your analysis and that of others. Really, the fascinating thing here is that modern marketing is now rehashing old techniques as if they are new discoveries. The difference now is how technology helps facilitate faster and more effective communication than ever. Packaging of old techniques has also changed to make room for new buzzwords.

    That being said, word-of-mouth and viral marketing is still huge and mostly offline. It’s great to have others spreading a real awareness of the core issues driving businesses today. All too often, people treat marketing like a department or just throw it under the ubiquitous sales umbrella, working on the events but not the complete follow-through that true marketing efforts require.

    It’s interesting that you mention the presence of products from China in the US marketplace by 2008. There have been products coming into the US little by little yet, when this effort reaches critical mass, I am sure people will treat it as if it was an overnight success, which you and I know is far from the truth. I would definitely bet that there will be some powerful brands coming into the foreground and the price competitiveness should be quite significant, maybe sooner than we may expect.

    The way I see it, as globalization continues at a rapid rate and the US moves away from being a major producer of goods, China and Japan will be able to take advantage more than ever. I wouldn’t dismiss Mexico and other key world market players. These are good things for the consumer because it will drive quality of service, product delivery, customer service standards, and price competitiveness. I am curious to see how it all pans out in the next 3 to 5 years.

    Thanks for the feedback – I look forward to our next encounter! Cheers!!

  7. *BUMP*

    I just wanted to add that, due to the tremendous response I have received both via comments here on WordPress and e-mail messages, I have decided to share this on Digg to open up the discussion more. I want to touch upon one of the points Tomasz brought up. I believe he misunderstood me as this item here supports more argument:

    Well… I think it is true on the condition that the ‘actual value’ referrs to the value of a company assets as such. I my opinionon, on the modern markets you will find it extremely difficult to measure the “perceived value of a brand”. Well, not only in my opinion, let’s take the extraordinary and brilliant concept of brand preception by Gayle Turner of Beckett&Beckett Co. whom points out – quite sharply – that brand’s value is the level of brand’s market reputation and cannot be controlled by companies at all. (as explained in his brand image-brand reputaion concept)

    While I do not agree that a company cannot control their perceived value, it is true that a major part of the perceived value has to do with the level of market competition, active advertising efforts, and the need/demand for products/services of the specific grade. That is, if the marketplace is not primed for a product or the competition is very stiff, very little can be done to create even the illusion or pretense of “actual value”. When I refer to perceived value, I refer to the consensus a target market reaches before actually trying a product/service or comparing it to the competition. Consumers generally don’t go for the best product or consider the wealth of a company; instead, they go for the first great product that provides the least amount of complication or potential risk.

    When customers do not have a baseline for which to compare something against, it either means the product is very unique or the company behind it was smart enough to place the product on a class of it’s own. Concerted marketing efforts can control what image and message is being projected but how those signals are received by the marketplace depends wholly on the circumstances and biases of each customer. That being said, it is true: perceived value is controlled by the market, not the marketer.

    What I wish to make clear is that when I refer to actual versus perceived value, I refer to the objective and subjective assessments of a product or service. Actual value is far more measurable and can be supported with market research, consumer surveys, QC analysis, and the like. Perceived value varies from consumer to consumer and has more to do with personal worldviews than actual facts and figures. In that manner, it’s not about providing the best product or service but, rather, making customers feel that they are making the best (or safest) choice.

    Active PR efforts and hype-oriented marketing continues to create noise in the marketplace because it works, for the most part. If you generate enough buzz and put marketing messages out that are viral in nature, you can help control and shape perceptions. Let’s face it: at the heart, marketing is about providing a consistent message at every point of presence so that you don’t let someone else fill in the blanks. If a business covers all their metaphorical bases, they can drive the momentum rather than let it wash them away.

    Hope that clears that bit up. I will discuss this in more detail in the future, since it seems to be one of the most-searched items right now! Stay tuned and keep the feedback coming!

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