Loving the low end

I've had a bee in my bonnet for some time now about the challenges facing established brands in targeting low end markets. Scott D. Anthony's recent article on the Harvard Business site therefore (literally) struck a chord. In it he notes how a premium brand guitar maker - C.F. Martin & Co. - responded to the recessionary environment by cutting production costs and introducing a cheaper model. This wins applause from Anthony who believes every business should have a “love the low end” model. The argument is that it’s better to own budget conscious consumers than ceding this ground to low cost competitors.

Traditionally, marketers are trained to aim their sites on the higher end of the market whether it be blue chip clients in B2B environments or deeper-pocketed consumers in B2C. After all it makes sense to go where the money is. However, the airline industry has amply demonstrated how difficult it can be for incumbents to respond to low cost competition (cf. BA vs Ryanair, et al).

This suggests that even if you’re lucky enough to be playing in the high end of the market you do need that low end offering. Assuming that your business has the capability to deliver a cheaper product profitably then one of the key questions for marketers is how do you stop yourself competing with yourself? This can be both existing customers who perceive they can get the same product for less or prospects that might otherwise have invested more.

The answer, or course, is in effective differentiation and segmentation. Customers need to be clear what the differences are between the high and low end offerings and then the appropriate target groups directed towards purchasing the right one for their needs.

A low end offering can be a great way for customers you would never have had to develop a relationship with your brand. Tread with care however as the path is littered with examples where brands have got it all wrong. First of all cutting cost to create a low end offering mustn’t mean cheap as it can damage the entire brand (e.g. Mercedes A class circa. 2000). Secondly, if your offering is all about exclusivity you can't credibly offer a slice to everyone.

I know in business we like to focus on success but it would be informative and fun (in a morbid way) to gather people's examples of brand over stretch for a future discussion...

Community building: principles of mass collaboration

A recent post by Beth Harte: "Organic vs Inorganic Communities" looked at the characteristics of top down groups created for a specific reason - such as promoting a brand - and those that evolve organically around the interests of their participants. In my last blog post, I grappled with the question of how to create a community that allows a brand to promote itself effectively. Beth's post was very timely in this respect, not only in its helpful classification, but in highlighting that people know then they're "in a controlled and constructed environment".

This set me thinking about one of the case studies in Tapscott and Williams' "Wikinomics". In it they describe how IBM joined the open source community. A great example of how a major corporate brand entered into and built trust and credibility in a collaborative environment. IBM made a significant investment in integrating its activities within this organic community - ultimately to its substantial financial benefit.

By studying this example and several others the authors identified a number of "principles of mass collaboration". I've replicated these below and consider their relevance in the context of effective community building.

1. Take cues from your lead users - these are your opinion formers that others will follow. However, in the same way as listening to your customers is a good thing the art is in assessing these cues and seamlessly integrating with your business strategy (rather than being led down unprofitable paths).


2. Build critical mass - successful communities have a core group of participants that contribute their energies and enthusiasm to keep it motoring. This contribution of social capital creates the momentum that draws others in.


3. Supply an infrastructure for collaboration - there is plenty of infrastructure in social media whether it be Facebook, LinkedIn, Twitter or others. The decision is really in selecting the appropriate platforms to participate on.


4. Take time to get structures and governance right - in Wikinomics this is written in the context of managing intellectual property, investment of resource, etc. However, the governance part is particularly important in the community context.


5. Make sure all participants can harvest some value - this is interesting the context of social networks comprising professionals. There will be partipants with non-commercial objectives (e.g. there to learn, develop their professional standing) and others that are looking to pick up business. Unresolvable tensions could evolve between these participants.


6. Abide by community norms and create conditions for trust - understanding these norms and thinking about ways in which you can genuinely add value to the community builds trust.


7. Let the process evolve - this highlights the fact that it is very difficult to engineer a community. Back to the point that people know when the're in a constructed environment.


8. Don't lose sight of your business objectives - these should probably be carved on the frame of your computer screen.


9. Collaboration starts internally - creating vibrant and multiway collaboration within organisations is good practice before heading outside the walls of the enterprise.


10. Finding internal leadership for change - even the most innovative of organisations can be very conservative when it comes to breaking down barriers between themselves and the outside world. "Are we going to lose our competitive advantage by disclosing our thoughts to the outside world?" will be a typical questions for many executives.


11. Hone your collaborative mind - this may mean shutting off the "compete at all costs" mindset to work for the common good. For brands that have historically operated on a "command and control" basis this can be a significant shift.

In summarising these points it's notable that a number of them are worthy of expansion and further discussion. What do people think?

Using Social Media to Build Brand Awareness

One of my current marketing objectives is building brand awareness. This to make sure that folks in our target markets know to turn to us when they have a problem we can present a relevant solution to. Social networking sites offer a means to achieving this. There are a lot of channels but to get going the basic starting points are:

1. Find and join existing groups with interests related to our subject area
2. Add value to these by following discussions and blogs and actively commenting on them.

The natural progression from this, assuming I want to create a focus around my own particular subject area and build more visibility, would to start my own group(s). To make such a group credible and attractive then it must:

1. Incorporate powerful value-added content to build respect and credibility (not just be more top 10 lists for success!)
2. Have liquidity: in other words, there must be enough participants with enough goodwill to want to contribute their time and knowledge to the community
3. Be open with a willingness to take the good hits with the bad (but have a “listen and respond” strategy for dealing with the latter)
4. Have balance and not be perceived as a promotional tool for my products or services.

Experience shows that folks are willing to take a pinch of promotion with a main meal of value-adding content but any over-seasoning and the whole lot goes in the bin.

So here’s to my question, assuming I don’t want to brazenly promote my brand but do want to associate it with thought leadership, in creating my new community do I give it:

1. My existing (company) identity
2. A distinct but related sub-identity
3. A de novo identity
4. None of the above?

A community of individuals is a living, breathing thing that moves and shifts with time. It creates its own identity – its own brand based on its values. Arguably, therefore it shouldn’t (or even can't) have one imposed on it. On the other hand, there has to be some sort of identity for people to aggregate around in the first place. What's more, we all like to attach to certain identities – as long as it helps to take us to where we want to be.

The sequence of events in catalysing a community could therefore be:

1. Give it a label
2. Seed the community with quality content
3. Invite in proactive participants with relevant interests
4. The community builds its own values
5. The values in 4 become inextricably linked with the initial label.

If enough of a buzz is created around the first few steps then the bees should be attracted to the pot (or do bees just go to flowers and wasps and flies go to pots?).

Of course, there's no reason why web-based social networks should be any different from face-to-face ones in all of this. The National Slugwatchers Association might have an annual Slugfest meet and an online Slugfest community. Slime-All, a marketer of slug-related products, would want to be a participant in these communities.

So, before we get any more insecty (okay, slugs aren't insects), what are the experiences of B2B brands in this area? Am I being too obsessed with the whole branding of the community when the focus should really be on the value of the community itself? After all, we're all given names at birth but all the evidence is that it's our parents and peers and not our names that affect what we become (read Freakonomics Chapter 6 for the gen on this).

Please leave your comments so we can develop this dialogue. Cheers!