Milestone Group Quarterly: October 2005
Articles
By Invitation:
Ron Ricci on Building Brands In Technology
Momentum: Turning Brands into Market Leader
The concept of "momentum" is often used to describe stocks, politicians and sports teams, especially those on the threshold of success where ultimate victory seems inevitable. But it also applies to brands and explains why the iPod's and Google's of the world are winning customers faster than their competitors.
Most of the brand science was developed for static markets like toothpaste, film, beer, food products, cigarettes and airplanes. Traditional brands are an amalgam of symbols and impressions, many having little if anything to do with the products themselves. Instead of simply buying products, people bought into the image that brands were able to create around those products. Rather than buy a cola drink, for example, customers were urged to seek admission to the ever-youthful "Pepsi Generation," rather than buy a pack of cigarettes, customers purchased a ticket to "Marlboro Country."
Our five-year research effort with more than 20,000 consumers and corporate buyers of products like PCs, software, networking products, voice-over-IP, PDAs, cell phones and video game platforms demonstrated that products in digital markets rely on different strategies, what we call Brand Momentum, to out-position competitors. Here's why.
The "Digital Mindset"
People's brains are wired differently for digital brands because technology-based products or services have unique purchase considerations from their analog counterparts. These considerations have created expectations in people's minds about how brand differentiation is achieved. We describe these expectations as the "digital mindset." Two factors have created this mindset with people:
- First, people believe technology-based products are "never finished." In the minds of buyers, every digital product comes with an embedded "future's contract." After years and sometimes decades of upgrading products like PCs and cell phones, people know that next year, next month, maybe next week, the offering will change, advance or fall behind the technology curve. As a result, instead of wondering, "Will this product satisfy the expectations I have from the last time I bought it?," which typified the marketing challenge for static, traditional brands, buyers of digital products ask new questions, based on their new expectations: "Will this product keep up? When is the next upgrade? Can I trust the company that the upgrade is worth buying?
- Second, people understand that technology products "never standalone." Almost all consumer and business applications are an amalgam of components and products from different companies working together to make up the solution. Open standards and flexible business models have created an open competitive environment, attracting companies wherever profits exist and bringing a constant stream of new ideas to product categories. This "herding" of third-party support around product platforms such as Windows and the iPod has deeply affected customers' mindset about how differentiation is achieved. Customers told us that the likelihood of switching from an existing product category leader to a challenger was most often determined by how valuable the third-party support was to them and whether it was too expensive or too much of a hassle to give it up or modify it, regardless if a challenger product actually performed better or cost less than the incumbent. As incredible as the iPod is as a product experience, it is Apple's ability to sustain a content advantage with a library of legal songs, the "herd," on iTunes and with the promiscuity of podcasts, creating an even larger "herd" of content, which will determine Apple's ability to sustain a leadership position in digital music. As a result, the "best" product is almost never the most functional product, nor the least expensive; it is almost always the one that best satisfies this question in the customer's head: "Who else is betting on them?"
Why momentum? As a result of these unique purchase considerations, digital brands require a new brand model and we believe this model is best expressed in context to momentum.
Momentum comes straight from the field of mechanics and the study of dynamic conditions - exactly like the purchase considerations of digital products.Best of all, momentum already has a formula associated with, Mass x Velocity, that serves as a simple vocabulary for marketers, especially when they interact with engineers on brand strategy. By breaking down velocity into its two discrete components, direction and speed, we translated that formula into an equation that more clearly defined the dynamics of the digital mindset:
| Brand Momentum = Mass X Speed X Direction |
Based on our customer research, here are the questions customers ask when looking at brands through a momentum lens:
- Mass: Does the product category solve an important problem for me? What third-parties, if any, are supporting the brand? Are companies or people I aspire to be like using the product?
- Speed: Is the company behind the product moving quickly enough to keep up? Do they have a roadmap that tells me their upcoming product or service milestones? Do they consistently come up with features or capabilities that I'm happy with?
- Direction: Can I trust the company and its CEO to solve my problems in the future? What is their point-of-view of how technology can solve my problems? Are they using themselves the very technology they are trying to sell me?
The 90-Day Plan
Month 1: Determine Your Source of Momentum: Your source of momentum is the best indicator of your genuine brand differentiation. Have an honest conversation about the product or service category you compete in. Where does your category fit on the value chain in the customers' mind? If you are not the enabler or platform to solving a customer problem, you probably don't have a lot of mass. But you might have a speed or direction advantage.
Month 2: Identify What's Required to Sustain Your Differentiation: Do you have a strategic context for how adjacent categories could invade your space and capture your mass? What could you key competitors do to siphon off your mass; e.g., offer a better channel program or a superior software developer model? Do you have a phased and multi-year roadmap of what you need to do to maintain your speed advantage? Do you have a direction advantage by knowing what your customers' future problems will look like and do you have unique ideas on how to fix them? Are you using the latest version of your own product?
Month 3: Build an Executive Communications Platform for Your CEO: Keep your story fresh in the marketplace. Think of your CEO as a product. Position him or her relative to key competitive CEOs and in the context of your product or service strategy. Develop a thought leadership-based "elevator story" for your CEO. Look for sources of validation in the academic or consulting communities and develop a marketing plan for your CEO in the same way you would market a product. Target key influencer relationships with the press and industry analysts to contribute to the dialogue and agenda in your product or service category's broader industry. The most common and effective channels for thought leadership are public speaking, best practices, case studies, original market research, white papers and books. These proven marketing tools put your CEO's ideas into decision-making opportunities and conversations, even when he or she isn't in the room.
Ricci is VP of Corporate Positioning at Cisco Systems and works directly for CEO
John Chambers. He is the author of a book, Momentum: How Companies Become Unstoppable Market Forces from Harvard Business School Press. |
