*This content is brought to you by Thomas Oosthuizen
I recall, having a debate some months ago, with a very excited investor in Netflix, who believed the share price can only increase. He made good money and believed it can only get better.
I disagreed.
It was clear to me as a marketer, that trouble was looming for Netflix. I was told, “look at the facts”. At the time, the facts showed a winner, the underlying issues, ignored or not noticed.
The signs of trouble were there on their trajectory. Since then, we have seen similar results from other major technology firms, down from their high growth rates during the pandemic. Once a business starts to grow fast, competition expands, investors become less “forgiving” and revenue sources more restrained. All businesses everywhere then need to reassess their strengths and assess their positions. It is often easier to be a first mover and to pre-empt other entrants, than to retain a lead amidst more agile new entrants with even lower barriers to entry. We also know many investors believe the first entrants may not always be the ones to “back” (My Space versus Facebook). Let them learn the lessons the next group can improve upon. Anyway, many roads lead to the same outcomes, just know what road you chose!
Then there are categories like airlines and Amazon, where disintermediation is now so large, that traditional brands are only one small solution to a problem. Brands one has never heard of (retailer-own-brands), are offered at lower prices and the difference is not important enough to pay for. Why care about the batteries you buy?
For more information on Dr Thomas Brand, click here.
Back to streaming companies like Netflix.
Can one grow audiences indefinitely? Can one share memberships in households and even across households? Can one retain such a lead with many streaming competitors with deeper pockets like Amazon Studios? And the many others like The Walt Disney Company. Is the streaming brand more important than the content per se? Is a move like Sky Glass (a supposed “first”) able to ever lead? I doubt that very much. Will the industry evolve like all of those that came before, where content per se determines support?
Fact is that investments are good only if the investment can retain its leadership and grow in value. If not, market factors will predict a decline. It is evident to attuned marketers when a brand will hit headwinds – long before noticed by others.
Whilst I believe Netflix will weather the storm, they are in a market space that is becoming extremely crowded and with it, a lowering of their dominance and the relative margins they are able to demand. The content space is the most important aspect of the digital era, whether it is the sheer number of products Amazon offers one to choose from, or the number of new movies a company can produce at a desired level of audience.
For more information on Dr Thomas Brand, click here.
The digital era brought another major negative for content brands, it evened-out the asset-value of traditional first-mover brands. Devices, formats, financial models and the like, are making it hard to remain ahead.
The content space is the most pervasive space, and this will only increase, whether through series, movies, formats, the metaverse, media or devices. People buy content before anything else.
The key question is “why?” use a brand? The equity of a brand lies in this very question. When the equity itself becomes fragmented, like it did with all the traditional movie producers, then the producer or streaming brand is superseded by the content it produces. So, I can see a time when content aggregators will only collate the best content and become known for that as its positioning angle. Or be like The New Yorker, where editorial style will dictate content, creating a viable audience with similar needs.
Positioning and distinctiveness of a brand is as important as it always was. Brands need a “reason why” they must be supported, albeit rational, emotional or whatever we want to call it. Leaders like Procter & Gamble and Unilever live this discipline. Gillette does. BMW Group does. Apple does.
Yet, most brands are not clearly positioned in the minds of their prospects, sometimes not even amongst their current users.
In the beginning, being different was easy. To be the first telco in a country, the first bank, the first movie streaming company, gives an automatic advantage to a brand. Then, as is the case with many fast-moving-consumer-goods brands (Nestle, Unilever, Coca-Cola), distribution is a major advantage. The same applies to the strength of the product formulation (Proctor & Gamble). The same applies to a unique design like Dyson vacuum cleaners. Whatever angle of uniqueness is chosen, that drives brand support.
That despite the following trends I have noticed over the years, 1. Strong brands retain and grow their lead when economies wane, 2. Strong brands often invest in marketing when economies are weak, 3. Investing when economies are weak, means strong brands grow faster when economies improve, 4. Number two and smaller brands mostly suffer more than leaders when economies are weak, 5. Research indicates weaker brands are less profitable than strong brands, 6. Challenger brands succeed when they are assertive and clearly differentiated, 7. Consumers, at weak economic times are likely to buy brands they know, than to risk buying brands that may not “work”, and 8. Disruptive brands work when they fill a gap of unmet customer needs. This means they create their own “market space”, arguably the strongest thing any brand can do.
For more information on Dr Thomas Brand, click here.
The latter explains the success of eight of the top ten global brands today.
Amazon is as clearly positioned as can be and created many downstream competences to support that. A vertically integrated business that is dominant almost everywhere they compete. They now sell redundant capacity to others. Yet they know they need to build redundancy “in” to lead ongoing.
Retail is a very sad example of this issue in many places the world over. Let me use that to illustrate the importance of brand positioning.
Nowhere is this clearer than in the UK and South African grocery retail sectors. Yet, many seem oblivious to it. You can market as much as you like, when consumers are confused about why to shop with you, they will eventually stop. Incremental innovation is good, but serious disruptions will leapfrog competitors.
Positioning adds “one-upmanship”.
The SA and UK retail sectors, I am using a few as examples, tell a sad story about brand positioning. Traditional leaders like Waitrose and Tesco in the UK, are lagging the growth of companies like M&S, ASDA and Aldi. The latter are clearly positioned and have taken the lead at a time when consumers struggle to retain their lifestyles with economic turbulence.
Then, in SA, Woolworths has neglected its lead. Checkers and Shoprite are clearly segmented and targeted. Checkers amplified the store experience significantly. It realised its lead is not only in new product lines but in the overall customer experience.
Pick & Pay lost its way years ago and do not see able to win it back. It seems unlikely it will.
Lack of positioning have led to the loss of century old retailers in the UK, like Debenhams. It simply lost is position and instead of being something, it become nothing to anyone.
What still surprises me, is that brand managers and CEOs seem so oblivious to these critical issues.
If I don’t know why to buy a brand, why care? Then the cheapest will do. This is often the legacy of lazy brand management and executives.
Compare my summaries below. Beware the problem of oblivion.
For more information on Dr Thomas Brand, click here.
Read also:
- The Metaverse: The Message is the Medium
- True leadership demands the spirit of a pioneer
- Customer experiences factually drive revenue and margins – well done Checkers
