With each branding project to develop brand positioning and identity strategies, we consider the project research phase just as important as designing the brand identity and later experiences, as it is the core foundation for building the brand’s essence and determining all subsequent steps of the project. Thoroughly understanding the customer (from rational needs to psychological and emotional needs) is almost like finding 70% of the answer for brand positioning, bringing the brand closer to customers and creating competitive advantages in the market.
In the current intense competition context, today’s consumers are increasingly confused by the overloaded information that businesses promote about their products and services on the market. Statistics show that on average, a customer sees nearly 4,000 different advertisements per day.
Even if you launch a truly good product on the market, author Seth Godin in his book “The Purple Cow” pointed out that the general public still lacks the motivation to pay and try a new product if the sole reason it provides is “it’s better”. To explain this, Seth believes that most customers have already been provided with sufficient utilities they need for a particular product. In other words, your customers are completely comfortable with what they have, and no one needs a “cleaner” detergent if the one they’re using is clean and fresh enough for their family’s clothes!
This truth is like a cold shower for marketing managers when businesses continuously spend hundreds of millions of dollars each year promoting their new products with new designs. Continuously added new features to boost performance are constantly used as advertising messages to consumers, but the ability to attract attention is not very effective. Especially in Vietnam, when most businesses still advertise extensively, or even engage in “me-too brand” copycat advertising, without focusing on emphasizing the core value for customers to remember.
The inevitable consequence of choosing product features as the anchor for brand positioning in customers’ minds is that for any product, the number of attributes a business can add or change is limited. And when all the advertising messages about new features of a product line have been exhausted, the final move for businesses to continue to compete and attract customers is to accept lowering product prices. For “me-too” businesses that I mentioned above, their products will gradually fall into oblivion and not be chosen by consumers. The investment capital for production lines, operations, and premises gradually becomes a waste, even before being fully utilized.
This raises the urgent need to find a new direction for business marketing managers. Do we really have no way to promote products and attract customers? Don’t worry too much because the answer is “no”. The problem here is that we focus too much on fixing the obvious external things but forget to understand and fix the root cause deep inside. A mother doesn’t need a detergent that can help her win the neighborhood’s laundry contest. What they need is a product that can help them express their love and care for their family. A product for them to fulfill the role of a capable woman, a kind mother by bringing clean, fresh-scented clothes and retaining a lingering fragrance for the whole family.
In addition to the functional needs when using a product (or the “rational needs”) such as when you choose a car, it must have the ability to transport you (and 3 more people) from point A to point B. Customers also need to satisfy the deep emotional needs hidden in their minds. And this is the most fertile ground for building brand positioning that most businesses have not really been able to fully utilize.
At XDevLabs, we believe that to design an effective brand strategy and help businesses connect their values to customers requires thorough research on the potential customers that the business wants to serve. This research is not only to understand their needs for a particular product or service, but also to build a comprehensive 360-degree view of who they are, their personalities, and even their favorite foods or music genres.
A customer who likes to eat Pizza at a fast-food chain will be completely different from another customer who likes to eat at a Neapolitan-style Pizza restaurant. Not to mention age or gender, but just the preference for food (in this case, Pizza) can tell us that while the customer who likes to eat at the chain will have a faster lifestyle, a more outgoing and extroverted lifestyle. As for the customer who prefers the Neapolitan-style restaurant, they are more introverted people who value private moments with a few close friends or their partners in cozy, secluded spaces.
And we are not the only ones with this view on brand positioning issues. Let’s analyze some famous global brand positioning strategies to get a more visual perspective on this brand positioning battle and understand how businesses have and are addressing not only rational but also emotional needs for customers!
SIMPLE “Easy Banking”
In the early years of the 21st century when the bank 3.0 trend peaked, traditional banks with many branches were quite slow to digitize banking, and creating mobile applications was extremely difficult. Simple was born without any branches, focusing on building great applications at a time when banking apps were not user-experience oriented. They focused on targeting a young, tech-savvy customer group with little time to visit banks. This helped Simple create a new trend for 21st-century banks.
JETBLUE When other US airlines like Delta decided to stop serving snacks and reduce lounge space for passengers, JetBlue entered the airline service market with the prominent advantage of providing free snacks along with spacious lounge areas for passengers. Although they did not have international flights or frequent flyer programs, they broke into the market focused on friendly services, snacks, and lounge spaces. Their brand messaging was driven to convey hospitality and the joy of flying, while large airlines like Delta continued to push their messaging to business travelers. Thanks to this, JetBlue’s brand was firmly positioned in consumers’ minds.
CHIPOTLE
In such an intensely competitive market context, instead of building an industrial, professional image with the ability to serve in terms of output and good services, Chipotle Mexican Grill, a fast-food chain founded in 1993 and present in countries like the US, Canada, UK, Germany and France, chose a very distinct path with the aspiration to create a difference and turn it into a new trend in consumer perception. Chipotle Mexican Grill, with the commitment of “Food with Integrity” and the mission to change consumer eating habits and thinking about fast food by offering clean, fresh, and healthy food sources for consumers, has been increasingly popular as fast food has been criticized for causing obesity.
TESLA Surely no one is unfamiliar with names like Model S or Model X in the automotive market, let alone the electric vehicle (EV) market. First introduced in 2012, the Model S was estimated to be delivered to the market with a base, unupgraded version priced at nearly $75,000. Even higher than some E-class Mercedes Sedans, a long-standing brand in the automotive industry from Germany. No one thought there would come a day when an electric car would cost more than a car representing the upper class like Mercedes, and surely Elon Musk or whoever made the pricing decision for their electric car must not have been sober enough to think carefully about this.
But reality proved the opposite, and although Tesla’s decision seemed crazy, behind it were very complex market research and calculations to ensure the product’s success and market acceptance. By 2013, when the first orders began to be delivered to consumers, the Model S was the first electric vehicle to help the manufacturer rise to the top position in terms of monthly sales in most countries. As of September 2018, global sales of the Model S had reached 250,000 units per year. In the US alone, this figure was around 140,000 cars.
If we compare the Model S to other electric cars released at the same time, the price gap is even much larger. The Toyota Prius Plug-In Hybrid, a hybrid electric and gasoline car, has a retail price of only around $25,000. A more premium option from BMW, the BMW i3, is also priced at around $40,000. A considerable difference compared to the Model S. To explain this difference and the reason why the Tesla Model S is still successful despite costing at least one and a half times more than its competitors in the electric car segment, let’s take a look at the design style of the electric car models released at the same time as the Model S.
One can easily see that the common point of electric car products launched around the same time as the Model S was mainly compact hatchback models with a rounded, gentle, and friendlier design language than the Model S. For a long time, automakers have clung to attributes such as friendliness or youthfulness to build the image and brand for their electric car products. This is also relatively easy to understand when their main customers are young people or housewives who use vehicles not too complicated, just for traveling within the city where they live, combined with the inherent nature of electric vehicles being environmentally friendly, not too fast, cost-effective (low operating costs) and somewhat limited in range.
However, for customers who want to contribute a small part to environmental protection efforts but do not want to compromise their experience or self-limit the scope of their vehicle use, those passionate about speed, or accomplished business people, they do not have an electric car product that can help them express their views on environmental protection while also expressing themselves.
Research has shown that in developed countries, the upper class is increasingly concerned about environmental issues (also known as Environmentalism). In the book “Environmentalism of the Rich,” author Peter Dauvergne – a professor at the University of British Columbia, states that as awareness of environmental issues increases in society through the media and politicians, affluent customers are tending to replace old products or long-standing brands with new, more environmentally friendly, smarter, or cleaner options as a way to help protect the environment and reduce greenhouse gas emissions. Using these products is not only a way for them to express their individual views on environmental issues but also a way to assert their social status.
This is also the customer psychology that explains Tesla’s success today. When placed next to a sports car from Porsche or Audi, it would be difficult to distinguish which one is the electric car if one maintains the old view of environmentally friendly vehicles mentioned above. Tesla’s vehicles are designed with a powerful and sleek style that is no less impressive than other sports cars on the market.
As for Tesla’s brand identity, the brand’s logo creates a sense of technology but is not rigid or dry when balanced with the subtle beveled edges often seen in fashion or luxury brands.
We can see that Tesla’s positioning strategy does not stop at the product price, but extends to all other touchpoints of image and communication to create a user experience ecosystem. It is undeniable that understanding customer psychology and needs is the foundation for building a successful positioning strategy.
BP (British Petroleum) One of the most successful efforts to reposition a brand and gain competitive position in the market belongs to BP (British Petroleum). In 2000, the company partnered with Landor Associates to rebuild its brand image and positioning in the minds of global customers. In the context of a series of mergers that made BP the third-largest oil company in the world, CEO Lord John Browne from 1995 to 2007 set a goal for the company to reduce emissions by 10% by 2010 by providing cleaner and more advanced fuel products. To explain this decision, let’s look at the psychological trends of customers.
With the example of Tesla above, we can see that the trend of green living and clean living emerged with upper-class, high-income customers. However, some studies have shown that this wave appeared much earlier in the mass market. In the 1970s and 1980s in the United States, there was a trend of “conscious consumption” among teenagers from middle-class families. They were labeled as a “rebellious” generation who often participated in peace demonstrations or protests against “evil” – “greedy” industrial corporations that indirectly supported wars. This is not much different from the public’s perception of oil companies like BP. These studies have helped us predict the future of the market when the number of consumers concerned about social and environmental issues will increase and truly explode in the 21st century, when the second or even third generation of families with conscious consumption tendencies are born.
Unlike other old players in the oil industry, BP has taken steps to reposition itself to lead and anticipate the wave of consumer trends. The “helios” sunflower logo replacing the shield has helped emphasize the company’s new development direction. In addition, there were investments in clean energy and solar energy from the management team to reaffirm its commitment to reducing greenhouse gas emissions. BP has gradually transformed itself from being part of the Earth’s climate problem, a “greedy” company destroying the living environment, to becoming “part of the solution,” replacing negative stereotypes with “clean” – “green” values, completely different from its competitors in the market.
The effectiveness of these steps is clearly reflected in the company’s sales and development. Specifically, global retail sales increased by 23%, brand value increased by $7 billion while the brand value of competitors decreased, and the estimated annual revenue growth rate was 5-10% higher than the overall market.
MUJI Another brand that is no longer too unfamiliar to young customers in Vietnam is Muji, a Japanese household goods brand. This brand has a positioning strategy that may seem odd at first: the “No-brand Brand” because most of Muji’s products on the market do not feature the brand logo or have a very small logo placed in an inconspicuous spot. Surely when we hear this, we all question whether this will affect brand recognition when many companies are trying to insert their logos into every touchpoint and make them as large as possible to address this concern. The answer to this question is actually more complicated than simply making your logo bigger or smaller on the product for the greatest brand benefit.
Before addressing this question, let’s analyze Muji’s customers. This brand is targeting young customers from the millennial generation, aged 20-35. Research and observation have shown that customers of this generation are moving towards a minimalist lifestyle, simplifying their lives. One study found that up to 78% of customers in this group are willing to pay for experiences rather than material values, and their concern is for environmentally friendly products that are ethically produced and have sustainable value.
Recognizing this, Muji has developed a unique positioning strategy that sets it apart from its competitors in the market, reflected across all brand touchpoints. From its brand identity to the design of its retail stores, and even printed advertising materials, everything features a minimalist style with neutral colors close to nature. When looking at not just one but all of Muji’s brand touchpoints, or even immersing yourself in the space the brand has created in its stores, you will easily feel a strange sense of peace and serenity, separate from the hustle and bustle of life. This is also the value that Muji provides to its customers, not just household goods and home decor.
Muji’s success began in the early 2000s but truly exploded in recent years as the company expanded outside the Asian market. The minimalist living wave has grown strongly in recent years, thanks to endorsements and promotion by global celebrities and influencers like Marie Kondo. As more and more people learn about and embrace this lifestyle, Muji’s sales and growth rate have also skyrocketed. In 2017, the company’s total merchandise sales were $3.1 billion (108% compared to 2016), and in the last 4 years, the annual growth rate has been maintained at 114%/year.
Going back to the question of whether a big or small logo on your product is better, the answer depends on the circumstances and your purpose. For Muji, since their products are mostly for household use and kept in the owner’s home, having an overly large logo doesn’t create much difference in brand recognition. But when the manufacturer hides its own logo on the products it makes, it enhances the customer experience to some extent and helps them satisfy the need to use a product that is not too brand-heavy or overly complex in design.
Conclusion The examples above illustrate our point that understanding customers’ rational needs alone is not enough; the power behind successful positioning strategies lies in understanding customers’ psychology and emotions, and then designing a positioning strategy that is as close as possible to their mindset and delivers the experiences they are seeking. XDevLabs hopes that in every project, we can accompany businesses, co-create and design successful positioning strategies that deliver sustainable value.
In the next part of this topic, we will continue to share insights gleaned from observing successful positioning strategies of domestic brands, so stay tuned!
