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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Develop winning brand strategies by focusing your team on the key strategic choices that drive organizational growth and learning. This book presents a system of six practical choices that articulate exactly how to launch and grow brands. Big Picture Strategy shows readers how limiting and focusing the strategic options available to company stakeholders can unlock previously inaccessible levels of productivity and growth. Strategist, consultant, and author Marta Dapena Barón describes the six key decisions facing organizations and teams today and how to develop a winning strategy by approaching these decisions systematically. The book includes discussions of: * The critical choices that leaders must make to define a marketing strategy and to align their teams to be able to execute on it * The four strategies companies use to launch and grow brands successfully * How to use strategy-integrated metrics to promote continuous learning in organizations * How to increase communications efficiency in commercial organizations through the use of a common vocabulary to frame customer-based issues Unlike many of its competitors, Big Picture Strategy does not pretend that your organization has unlimited resources or capacity to pursue every area of possible strategic advantage. Instead, the author lays out a systematic and integrated choice-based framework that will drive growth in your organization for years to come.
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Veröffentlichungsjahr: 2021
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Table of Contents
Cover
Title Page
Copyright
Introduction
Planning: You Are Using the Wrong Tools
Big Picture Strategy in 6Bs: Searching for Simplicity in Complex Markets
What Big Picture Strategy Gives You
1 Your Strategy, Your Choices
Giving Up Possibility to Realize Value
The Go-to-Market Matrix: Only Four Approaches to Going to Market
Choice 1: Brand
Choice 2: Business Category
Choice 3: Bodies
Choice 4: Beliefs
Choice 5: Behaviors
Choice 6: Benchmarks
Notes
2 Four Go-to-Market Strategies
Strategy One: Category Development
Strategy Two: Brand Expansion
Strategy Three: Brand Commitment
Strategy Four: Brand Switching
How to Select a Go-to-Market Strategy
Notes
3 Brands
Who Are We? Brand Architecture Enables Customer Choice
What Are We Good At? Competences Enable the Brand Promise
The Brand Choice and the Go-to-Market Matrix
Notes
4 The Business Category
Why Category Matters
Define the Business Category
How: Using Features to Define the Category
What: The Product as Category
Why: The Category as Customer Purpose
Category Names
Leadership-Focused Strategies: Expanding the Category
Share-Focused Strategies: Growing Within the Category
The Category Choice: Leadership or Share?
The Category Choice: The Competitive Frame
Notes
5 Bodies: The Customer Focus
What Is a Customer?
How to Measure the Value of a Customer
Categorizing Customer Relationships
Who Is the Customer? Defining Customers
Customer Loyalty
The Customer Journey Map as a Planning Roadmap
Customer Acquisition Investment
Customer Retention Investment
The Customer Choice: Acquisition Versus Retention
Notes
6 Customer Beliefs
Step One: Discover Beliefs that Drive Brand Choice
Step Two: Evaluate Brand Benefits
Step Three: Choose the Positioning Benefit for Your Brand
Step Four: Write the Target Audience Persona
Step Five: Develop the Value Proposition
Step Six: Develop Proof
Value Proposition Considerations
The Beliefs Choice and the Four Go-to-Market Approaches
Notes
7 Behaviors: Designing Brand Customer Experiences
Products and Services as Brand Attributes
Pricing as a Communication Tool
Communications: Telling the Brand Story
Distribution Channels: Managing Delivery of the Brand Experience
Summary: Aligning the Brand and the Customer Journeys
Notes
8 Benchmarks: Learning from Our Work
Using Marketing Metrics to Evaluate Strategy
Using the Brand Experience Map to Operationalize the Strategy and Assess Execution
A Final Note about Metrics
Notes
Acknowledgments
About the Author
Index
End User License Agreement
List of Illustrations
Chapter 1
FIGURE 1.1 The 6Bs.
FIGURE 1.2 The strategic quadrants: just four go-to-market approaches.
FIGURE 1.3 Brand focus and the four strategic quadrants.
FIGURE 1.4 Customer focus in the four strategic quadrants.
FIGURE 1.5 The category and the competitive plots.
FIGURE 1.6 Customer beliefs and the four strategic quadrants.
FIGURE 1.7 Customer behavior objectives and the four strategic quadrants.
FIGURE 1.8 Financial benchmarks and the four strategic quadrants.
Chapter 3
FIGURE 3.1 The customer journey and the brand journey.
FIGURE 3.2 Product lifecycle and brand lifecycle.
FIGURE 3.3 Brand and product value.
FIGURE 3.4 Four types of brand architecture.
FIGURE 3.5 Brand decision matrix.
FIGURE 3.6 Core competence, strategic assets, and customer benefits.
FIGURE 3.7 Value disciplines (core competence types).
FIGURE 3.8 The worlds’ most valuable brands and the worlds’ most admired compa...
FIGURE 3.9 Brand focus and the four strategic quadrants.
Chapter 4
FIGURE 4.1 Categories are consideration sets. Brands are customer choice units...
Chapter 5
FIGURE 5.1 Customers as relationship assets.
FIGURE 5.2 Aim and align customer stakeholders.
FIGURE 5.3 Retained customer definitions.
FIGURE 5.4 Relationship between core competence, brand attributes, and custome...
FIGURE 5.6 Using the customer journey for customer acquisition and investment ...
Chapter 6
FIGURE 6.3 Feature-benefit-value (FBV) laddering – Peloton example.
FIGURE 6.4 Evaluating customer needs to brand benefits.
FIGURE 6.5 Category plot examples.
FIGURE 6.6 Competitive plot examples.
FIGURE 6.7 Target audience persona examples.
FIGURE 6.8 The value proposition 6-Box tool.
FIGURE 6.9 The value proposition 6-Box tool, Peloton example.
FIGURE 6.11 Belief emphasis by brand strategic focus.
Chapter 7
FIGURE 7.2 Product and service attributes and the four go-to market strategies...
FIGURE 7.3 Solution attributes, the product life cycle and the brand customer ...
FIGURE 7.4 The price waterfall and the four go-to-market strategies.
FIGURE 7.5 Pricing and the four go-to-market strategies.
FIGURE 7.6 Communications and the four go-to-market strategies.
FIGURE 7.9 Benefits of distribution channels and the four go-to-market strateg...
FIGURE 7.11 Brand experience and execution for Peloton.
Chapter 8
FIGURE 8.2 The customer opportunity funnel: tracking customer journey progress...
Guide
Cover Page
Title Page
Copyright
Introduction
Table of Contents
Begin Reading
Acknowledgments
About the Author
Index
WILEY END USER LICENSE AGREEMENT
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BIG PICTURE STRATEGY
THE SIX CHOICES THAT WILL TRANSFORM YOUR BUSINESS
MARTA DAPENA BARÓN
Copyright © 2021 by John Wiley & Sons, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Introduction
Planning: You Are Using the Wrong Tools
Back in the early 2000s, I was a vice president of marketing at GE, a diversified global company then admired for its management discipline and track record of steady growth. I worked for the equipment leasing arm of GE Commercial Finance. We financed equipment such as copy machines, computers, earth movers, etc. A few years before I joined, the company had adopted the “balanced scorecard” methodology to develop a prioritized list of goals as well as metrics to track progress toward those goals.
The objective of using the scorecard method was to align all departments on the health and direction of the company. The scorecard was a one-page summary divided into financial, human resources, commercial, and operational measures, and it reported whether or not each department met the prescribed goals. The scorecard was calculated weekly.
But if the scorecard method was supposed to create a consensus on a forward-focused strategy, it failed. The only way the system brought us closer was physically: leaders from each team would meet in a room every Monday morning to review the latest scorecard. Yet because each team was motivated by different incentives, the metrics conflicted. Reaching some of the targets made achieving others impossible.
For example, the operations team had aggressive cost-cutting goals, while the sales and marketing teams had double-digit revenue growth goals. These turned out to be diametrically opposed objectives.
As a case in point, to achieve its expense-shrinking goals, the operations department outsourced customer service to a low-cost overseas call center. At the same time, it also established stricter standards for the condition of equipment coming off lease. Customers returning equipment that were missing manuals, or that had slight scratches, were charged additional fees. Although this helped with operations’ bottom-line goals, it generated lots of complaints and calls to the customer service number. Because the call center staff were poorly trained and weren't native English speakers, this worsened rather than improved our customers’ service experience.
Needless to say, many customers were not willing to increase their business with GE, and our sales that year were nothing short of disappointing.
My time at GE taught me a memorable lesson: lack of organizational alignment can derail performance, even as everyone is working hard to achieve their own goals.
Popular models like the balanced scorecard are ill-suited to overcome problems that are embedded within the culture, values, and habitual ways that people in companies think and act.
I eventually left GE to become a management coach and consultant – to GE as well as other large companies – and have worked to remedy the learning gaps I see in the planning-to-execution process in organizations.
Big Picture Strategy represents an evolution of the Big Picture Framework, a method I describe in the textbook Marketing Management: The Big Picture. The methodology presented here has evolved over years of working with global organizations, and from teaching as well as learning from coaching thousands of executives. The Big Picture Strategy approach centers on six choices any company needs to make in developing a marketing strategy.
The idea behind the Big Picture Strategy model is a straightforward one. You have six choices to make when creating a go-to-market plan for your company. Yes, they are hard choices. But there are just six. These six choices are represented by the 6Bs, which stand for brand, business category, bodies, beliefs, behaviors, and benchmarks. Make them thoughtfully – use facts and logic rather than intuition. Include your cross-functional team. And you're on your way.
Note the word we used: choices. It's an important one, so keep it in mind as you read on.
Big Picture Strategy in 6Bs: Searching for Simplicity in Complex Markets
What led me to this choice-based method was my experience working with a variety of organizations both large and small. It taught me that organizations capable of creating incredible value could wallow in debilitating dysfunction.
As a consultant and as a marketer both, I was frustrated to see that teams facing difficult problems often resorted to simple solutions, often based on intuition, because they lacked adequate tools for a more thorough analysis. The tools and methodologies they were using did not take into account the complexities of the many interrelated variables involved in broad market-based issues.
The hope is that these tools will drive managers to use logic in place of intuition, and cross-functional problem-solving instead of siloed decision-making.
It all starts with creating a common purpose around the banner the company carries to market: its brand (the first B).
Companies may be organized in silos, but they go to market as a single or limited set of brands. Each of those brands competes against others that customers consider when looking for a solution that addresses some problem they have. Brands are arranged in categories as customers try to make sense of what is commercially available. In other words, companies are systems that operate in business categories, that are themselves systems. And the Big Picture Strategy methodology is itself a system-based methodology.
What is a system? A system is a set of interdependent agents, each vying to progress with, or at the expense of, other actors. When we conceive of a company as a system that is represented by a brand, we realize that planning needs to take into account all the cause-and-effect relationships within that company / system. What happens in customer service affects sales. What happens in operations affects finance. What happens in marketing affects operations and, of course, sales.
Within a system, to communicate everyone needs to speak the same language. And to know what decisions to make, everyone needs to know the right questions to ask. This is what Big Picture Strategy delivers.
What Big Picture Strategy Gives You
Developing go-to-market plans using the Big Picture Strategy systems-based method returns important benefits.
Getting Rid of the “In-the-Drawer Strategy”
The Big Picture helps companies avoid “in-the-drawer” strategies. Let me explain.
During my corporate career, I participated in many strategic planning cycles. Almost all of these strategy development projects were painful – and most were not worth the pain.
The traditional strategic planning season is a difficult time for marketing and strategy directors: our teams have to facilitate work sessions with cross-functional partners who'd rather be anywhere else. We spend many hours collecting data, running analyses, and preparing many versions of the strategic plan. Then, when the big day comes, presenting the plan to management feels like a college exam – replete with butterflies in the stomach.
But even when the plan is clever and the presentation goes well, everyone simply goes back to work. The plan is forgotten, and the status quo endures.
Most strategic plans I worked on during my corporate tenure ended up in a virtual or physical drawer, never to be looked at again.
The lesson? Great strategy without execution is a waste of time and resources. Alternatively, great execution without strategy yields erratic performance and missed learning opportunities. The model presented in this book solves both of these situations by linking strategic decisions with their executional implications.
Pulling Down the Organizational Tower of Babel
Over my years working with commercial organizations, I have noticed that marketing vocabulary is used loosely. Even basic terms like customer or market are defined differently, depending on who is speaking and in what context. More sophisticated terms like segmentation or customer profitability are even more broadly interpreted.
And the divide between teams can be about more than just words. Much of the gap between functions is due to organizational structure or incentives that drive an us-versus-them mindset. A salesforce compensated on short-term sales will pursue low-margin transactions and resent the marketing manager who resists discounting. These gaps can be made worse due to different philosophies that drive teams to undergo different training and orientation.
Unspoken assumptions and mental models can pit teams against each other. Ineffective cross-functional communications are difficult to change. What's required is a common methodology with a powerful common vocabulary. That's what Big Picture Strategy offers.
Moving from a Product to a Customer Orientation
Most companies still focus strategic planning around products rather than customers. They measure product profitability, which drives a short-term sales orientation. The alternative is to build a customer-focused company; one that is driven by customer profitability, which is attentive to customer retention rates, not just product margins.
Moreover, a customer orientation drives a brand orientation, as the brand – rather than the product – is the locus of customer loyalty. Products are still important, of course, as they are delivery vehicles for the brand promise, but as such, they are tools, as opposed to the primary hub of organizational activity.
By shifting strategic planning units of analysis from products to customers and brands, you can have a transformational impact on your entire organization. Key decisions your company makes, such as what business categories to participate in, which opportunities to pursue and prioritize, which customers to service and in what ways, how to develop value propositions, how to price… all these decisions shift when we build our strategy starting with the brand and we adopt a customer and long-term value approach rather than a product and short-term sales mindset.
Stryker Corporation, a global medical device company based in Kalamazoo, Michigan, used these principles to catalyze growth across its entire corporation. It shifted away from price-competition in orthopedic implants, as its competitors were doing, and instead focused on helping its hospital customers drive patient demand by co-promoting robotic-assisted knee and hip surgery.
Going from a product focus to a customer focus is a paradigm shift for everyone in the organization. This is in part why the marketing language needs to be shared across the organization, rather than being limited just to the marketing department.
The Big Picture Strategy method teaches you this. Marketing is no longer the name of a department that prepares sales aids and organizes trade shows. Marketing is the process and discipline that the entire organization shares to successfully develop and sell products and services. Importantly, the marketing-driven organization conceives of brands and customers as strategic financial assets and thinks of products and services as the tools used to build those assets. It uses 6Bs to steer the company in creating and expanding category-leading brands and customers who wish to partner with them.
From a Goods-Dominant Logic to Value-Dominant Logic
Moving from a product focus to a customer focus shifts the mindset of the organization toward providing customer value. This is a good thing. Because when companies move from product profitability to customer profitability, success metrics also move downstream, closer to customers.
The focus of the organization thus transforms from selling the next product to demonstrating the potential for value co-creation by cooperating with customers.
Organizations that make this transition successfully develop intimate knowledge of how customers can derive value from working with them. The focus of the company is thus no longer on sales transactions alone but on cooperating with customers to co-create value. The selling organization is no longer being paid just to deliver a product but is being compensated for providing proven expertise. The brand's value proposition becomes a value promise, and the execution of that value promise is carried out through a combination of services and products that are tightly integrated.
Futura Industries, an aluminum extrusion company based in Utah, built a tremendously successful business using these principles. It segmented customers not by purchase volume, as their competitors traditionally did, but rather by identifying companies whose business models would benefit from responsive and reliable service. It shifted its pricing method from the industry standard practice, which is based on weight, to value of the end application: aluminum shower enclosures are priced significantly higher than aluminum designed for carpeting applications.
Core to this shift is developing a value focus that is product-service agnostic. This is one of the key tenets of the Big Picture model.
From a More-Is-Better View to a Strategy-as-a-Constrained-Choice View
The view that more is better applies to some things in life but not to strategic choices. To use a metaphor, a key principle in modern warfare is that successful strategy involves concentrating firepower on the right battlefield, not scattershot over a large geographic area.
Likewise, a prime directive in marketing is to define business categories precisely, to identify specific customer opportunity in a chosen market category, and to develop single-minded promises to customers. In developing innovation, companies may be overwhelmed by the magnitude of the opportunities available. Successful brands follow a very precise path to developing strategy, however. As it turns out, a limited set of choices is available for each company and each brand. The Big Picture Strategy method uses 6Bs to force a sharp focus on what those choices are.
Not surprisingly, great marketers are disciplined in the methods they use to uncover the choices that exist for their brand(s). They are careful to select the one(s) that looks most promising, given the unique strengths of their teams. This principle of selection and focus is particularly important in marketing because our decision-making takes place under a great deal of uncertainty.
Moreover, the market is a very noisy place, and we cannot control many factors that affect us. We need to be purposeful in the selection of the battlefield – that is, the business category we compete in – and concentrate our firepower (our organizational resources), if we are to learn what works and what doesn't. This is why choices are so important in the Big Picture model. The right strategy is as much about what you choose not to do, as it is about what you choose to do.
In this book, you will learn about the Big Picture Strategy model, and how to use it to help your company's strategic planning process. Chapter 1 defines the 6Bs in the model and explains why they are important. Chapter 2 explains that there are four go-to-market strategies and explains how to use the 6Bs to select a strategy. Chapters 3 through 8 explore each of the 6Bs in depth.
My hope is that this book will change the way you approach, analyze, and solve customer-based and competitive strategy problems.
Organizations that implement the Big Picture framework in a disciplined manner experience transformative change in their marketing strategy and commercial practices. Integrating the Big Picture methodology into organizational processes involves the following practices:
Define and continuously enhance the company's core competence.
Define and prioritize shared goals over individual functional ones.
Follow a long-term consistent approach to developing yourself, your organization, and your business category.
Tightly integrate strategy development and tactical execution, using the right operational and evaluation benchmarks.
Measure and disseminate critical customer and category information across the organization.
When adopted at a broad organizational level, the framework can generate the following outcomes:
Substantially increase marketing investment efficiency and effectiveness.
Improve the organization's ability to learn from its strategy-to-execution efforts.
Drive customer retention and loyalty.
Differentiate your brand.
1Your Strategy, Your Choices
The traditional view of business strategy is that growth requires finding multiple wide-open market spaces, developing a portfolio of diverse breakthrough innovations, and achieving numerous “wins.” But is this really true?
The problem with the “more-is-better” view of strategy is that it is complex and causes businesses to lose focus. Teams and resources are stretched. They are given too many so-called priorities. And, ultimately, they end up with little differentiation between their brand and others in their market.
Blame traditional strategic planning tools. Traditional strategy frameworks lack a systematic way to help businesses narrow down their options. And when it comes to planning and building successful brands, more is simply more, not better.
My work with some of the most successful companies in the world has convinced me that the best commercial plans emerge from constraints – from strategic choices. Some business leaders loathe choice because, in a sense, making a choice means accepting a loss in the hopes of scoring a greater gain. When companies develop customer-based strategy, choosing to focus on a specific group of customers requires that they not focus on others. The loss is clear, and painful to the company that sees each and every customer as a profit-generating opportunity. The gain still needs to be materialized. After all, there are no guarantees that we have chosen the right customer opportunity.
So, rather than developing a strategy that delineates a clear but finite path forward, many organizations develop vague plans that leave their options open. Their teams do not have a single goal but a long list of goals. Some organizations make this noncommittal approach work. After all, when not committed to any single metric, you can claim success when any metric improves.
During my time as VP of Marketing at GE's commercial equipment leasing business, we started the year with a double-digit sales growth goal. By October, as it became apparent the sales goal wasn't going to be met, management would shift to a bottom-line goal and start slashing spending, lowering pricing, and selling loan assets to be able to show a profit by year's end.
This way forward can work in the short term, but it will not deliver sustained growth. Absent a clear strategy that is supported throughout the organization, priorities will shift as personnel do.
Brands that lack a clear strategy can get by and become “familiar” to customers, but because they lack specific meaning, they fail to deliver high value to the organizations that own them. This is what happened to GE Appliances – known for making mid-market appliances but lacking a clear value proposition; Scion cars – focused on young drivers but lacking a youthful design – and Nokia smartphones, which focused on perfecting functionality but missed the importance of software and apps as the iPhone became popular.
Perhaps worst of all, this execution-without-strategy approach stands in the way of organizational learning. If a company doesn't make a choice, it might do well or it might do poorly, but either way, managers won't have a clear sense as to why things played out the way they did.
Giving Up Possibility to Realize Value
Go-to-market choices involve uncertainty because they are made within a system with many moving parts. And, as discussed, committing to a single strategy is hard because it requires giving up all the other possibilities.
But the good news about strategic choice is that just a few big decisions are required to develop with a successful strategic plan. As shown in Figure 1.1, a company needs to only make six choices to build its strategy: the brand, its business category, which bodies or customers to target, which customer beliefs and behaviors to drive, and which specific integrated benchmarks help operationalize the strategy and learn from its results.
FIGURE 1.1 The 6Bs.
There are just six decisions a company must make in developing a go-to-market strategy.
Big Picture Strategy is a choice-based method that generates integrated strategy-through-execution plans. Each choice naturally constrains others that follow. This process forces discipline becaus it comes with strong internal logic that connects all elements.
Each choice bifurcates decision-making and leads to other logical choices, and then to others. Eventually, you build an integrated go-to-market plan – one that enables learning from each strategic cycle.
Teams that use this method end up with plans that actually get executed and measured, as opposed to simply being shelved and forgotten. Big Picture Strategy uses 6Bs to turn strategic planning into a learning tool.
While constraining your choices to drive competitive advantage might sound counterintuitive, the Big Picture Strategy method is very effective. Any business in any industry can use it. A variety of successful companies already use this framework to drive their most critical commercial decisions:
Johnson & Johnson
uses it to develops strategies for its medical device businesses.
Ecolab
deployed the framework to pinpoint growth opportunities in its institutional and food service businesses.
Copa
, the national airline of Panama, has used the framework to build its value proposition and identify relevant metrics, and to communicate strategy throughout the organization.
Stryker
aligns all its medical device business, enabling employees to share a common language to solve commercial problems.
W.L. Gore
develops strategy across its Gore-Tex fabrics business, alongside its industrial and medical device divisions.
Global companies that use the Big Picture method find that teams in disparate geographies learn from each other despite being in different business categories. Even when they use different technologies to solve customer problems, they finally have a lingua franca to communicate about customer-based strategy.
This book explains how to apply this decision-based framework of integrated choice to any business or goal-oriented organization. It is meant to be helpful to executives at any level and to function and in any size company.
This chapter addresses all 6Bs before diving deep into each one in subsequent chapters. But before we begin, I want to expand on the four different strategies that brands use to go to market. In our consulting practice at Big Picture Partners, we use a tool we call the “Go-to-Market Matrix” to compare these four approaches. Selecting one of the four is the foundational choice you need to make to align your organization on a single path forward. This go-to-market choice determines the trajectory of your options for the other six choices.
The Go-to-Market Matrix: Only Four Approaches to Going to Market
No two companies are the same, but when it comes to go-to-market strategy, there are just four approaches. And which of these go-to-market approaches is best depends on the business category orientation of the company, as well as its analysis of customer opportunity.
Throughout many years of working with a wide variety of companies, I have observed that having a strategy is much better than having no strategy at all. Just like that song says: “You gotta have a dream, if you don't have a dream, how you gonna have a dream come true?”
Choosing a strategic focus, a way to approach the market, is driven by how the company wants to grow.
There are only two ways to grow a brand when you take a customer-centric point of view: acquisition and retention.
And there are only two ways to grow a brand within a given market, or business category: growing by expanding the category (leading the way) or growing at the expense of a substitute within the category (through explicit competition).
The business category choice and customer choice are interdependent, and when combined, they yield four ways to go to market: the four strategic quadrants or the Go-to-Market Matrix, as shown in Figure 1.2.
There are two leadership-focused strategies and two share-focused strategies.
The two leadership-focused strategies, category development and brand expansion, represent go-to-market approaches that seek to lead customers and competition, by influencing how the former make choices and how the latter compete. These types of strategies are absolute in the sense that they present a way to go to market that avoids comparisons to competition.
Rather than spending to develop and lead a category, brands executing market-share-focused strategies grow at the expense of a competitor, presenting themselves as an acceptable alternative. The two share-focused strategies, brand commitment and brand switching, are relative in that they invite comparisons. If successful, these strategies are short term, and they are chosen for efficiency reasons.
FIGURE 1.2 The strategic quadrants: just four go-to-market approaches.
The four strategic quadrants present four go-to-market approaches built around customer opportunity.
Strategy One: Category Development
Companies that possess significant innovations can reframe category boundaries. In this quadrant, the company creates a new category by increasing the importance of a benefit that it uniquely delivers. Growth comes from motivating noncustomers to try, and ultimately adopt, a new way of doing things.
In industries as diverse as snowboarding, high-performance electric cars, robotic surgery, and at-home boutique fitness, companies like Burton, Tesla, Intuitive Surgical, and Peloton have successfully executed category development strategies.
While diverse in their industry affiliation, these companies follow a common method to building their businesses: naming the new categories in a way that ignites market interest, creating customer awareness and excitement by identifying and engaging influential lead users, and building the regulatory and distribution infrastructure to turn that early excitement into sustained sales.
Importantly, they also communicate key features of their product and service offerings, enabling competitors to follow. A sign of the success of this strategy is the use of the category name by competitors and customers entering the category.
Strategy Two: Brand Expansion
Companies that have become category leaders, or that are hoping to establish leadership, may elect to execute brand expansion strategies. This is the most efficient path to growth for companies that have a large base of loyal customers. These companies expand their business by inviting “retained” customers to use the brand more consistently, or by upgrading to a higher-value version of their products or services. We call these volume and value strategies, respectively.
In this quadrant, companies develop incremental innovations to motivate retained customers to become more involved and loyal to the brand. Loyalty increases with product performance, especially if customers integrate the brand into their existing processes. This is a noncomparative strategy, and to maintain customer loyalty, brands shift from advertising product and service benefits to featuring customers in their advertising, reinforcing their brand choice and their affiliation to the brand. Pricing, distribution channels, and communications tools are also used to reward loyalty and encourage continued use of the brand.
Companies as diverse as Johnson & Johnson, Apple, and Volvo have successfully used this strategy to efficiently grow their businesses while cultivating ever-more intimate relationships with their customers.
Strategy Three: Brand Commitment
Companies executing a brand commitment strategy grow by focusing on multibrand customers, increasing their share of customers’ wallets at the expense of a competitor.
Multibrand customers use the brand as part of a brand set but, unlike loyal customers, are not committed to a single brand. Companies that execute a successful brand commitment strategy are able to increase preference for their brands within a competitive set by creating a customer experience that is superior to that of the other brands within the set.
In executing a brand commitment strategy, companies present themselves as the best option within the specific competitive subset from which the customer purchases.
The success of brand commitment strategies is predicated on companies’ ability to encourage consolidation of purchases. This can be achieved by integrating components of the product-service portfolio to increase pull-through to the brand, or by using contracts and financial incentives to gain a greater share of the customer's category usage. Airline loyalty programs and the streaming content wars waged by Netflix, Amazon, and Disney are examples of brand commitment strategies.1
Strategy Four: Brand Switching
Companies executing brand switching strategies grow by getting competitors’ customers to switch to their brand. They research the target competitor's customers to understand the strength and type of relationships they hold with the competitive brand, and they mine those relationships for areas of relative dissatisfaction.
They then develop a similar solution portfolio, and also price it similarly to achieve a comparable offer. They select distribution channels that are similar to the competitor's and use implicit or explicit comparative communications.
A key to successfully executing this strategy is to enter competitive customers’ consideration sets and become an acceptable alternative. They then execute to exploit their relative advantage and use comparisons to create the perception of substitutability.
Customer stories emphasize similarities between the brands and downplay the cost of switching. This strategy was used by Hyundai when it entered the US car market, Apple when it targeted IBM's corporate computer users, Samsung when competing against the iPhone, Sprint when it competed against Verizon, and countless others.
Selecting a Strategic Quadrant
Developing customer-based strategy requires assessing customer opportunity, delineating the major executional actions involved in each strategy, and comparing the entire strategy-through-execution implications of the quadrant choice.
The four quadrants offer a way to divide the universe of potential customers available to the brand: those inside the category and those outside; and those working with the brand already and those working with a competitive brand.
Go-to-market execution is relative to who the customers are and what they are doing today. The goal of a source-of-growth analysis is to construct a plan to reach those customers who are the most likely to benefit from working with your brand.
Once established, this method enables sustained growth in the face of changing customer and competitive dynamics. It's important to revisit the choices made with regular frequency as well as anytime there are any major changes in the competitive or customer landscape.
It's also crucial to use strategy-integrated customer metrics to pinpoint which strategic quadrant to choose and when to pivot from one quadrant to another as conditions change. This four-quadrant approach builds customer-based strategies that evolve as market conditions, customer behaviors, and company benchmarks change.
To select a strategic quadrant, first evaluate the four strategic approaches against each other – the 6Bs are hugely helpful as you conduct this a priori opportunity evaluation. And once you choose a strategic focus for your brand, make sure you use each of the 6Bs to ensure you approach commercial execution in a way that is consistent with the choice you have made.
The 6Bs: Choices That Drive Strategic Advantage
The choice as to which of the four strategic quadrants will deliver the most growth naturally involves considerable uncertainty. And some management teams opt to not choose, instead directing their sales and business development teams to secure “growth” wherever they see opportunity. The 6Bs should be used in conjunction with the four quadrants to frame and constrain choice, because these variables are interdependent.
An ideal strategy evaluation process entails analyzing each strategic quadrant one at a time, and then choosing the one the team is most excited about and feels most confident about executing. To “try on” a quadrant, the team considers each of the 6Bs decisions in that quadrant and then brings them all together to assemble a strategic narrative. Using the 6Bs to choose a strategy enables rapid iteration through go-to-market scenarios. Teams use the 6Bs and the four quadrants as a toolset to drive alignment and build a shared vision.
The Big Picture Strategy method gives teams a shared understanding of what they stand for, who is and who is not yet a customer, as well as who belongs to their competitive set. They use the four quadrants and the 6Bs to agree on a single goal that prioritizes all their activity. By the time they get to execution, teams that use the Big Picture Strategy approach are pulling in the same direction. Commitment to a single way forward and the curiosity to collect feedback along the way are the hallmarks of the learning organization. A learning organization is one that grows with each successive strategy cycle.
Choice 1: Brand
Many companies approach brand as a tactical rather than strategic question. I have worked with countless product development teams who treat branding as simply a naming exercise. They develop a product or service, determine its features and benefits, select a target audience, price it, and leave the “what should we call it” question to the tail end of the innovation process. This is incredibly shortsighted. More than ever before, in today's hyper-branded environment deciding what brand to assign your innovation should not be left to the last minute.
The choices you make about brand go well beyond its name and can make the difference between top-of-mind awareness for your product or service – and irrelevance. Whether contemplating a purchase within a grocery store or looking for consulting services, today's markets offer a dizzying array of options for both consumer and business buyers.
So when thinking about differentiating your products and services from your competitors’, the role of brand as facilitating your customers’ decision-making processes must be reframed. A brand is not simply identity. The brand is the promise the company makes to its target customers.
Your choices about brand should leap from an afterthought to the first question your development teams ask as they contemplate innovation. Also, when developing strategy, rather than starting work by asking about the market, competitors, and supply-and-demand forces, ask what you want your brand to achieve as it goes to market, what skills and resources are needed to support this ambition, and why customers might choose to ally themselves with your brand, given the multitude of functionally equivalent alternatives.
In short, think of the brand, rather than the product or service or even the company, as the strategic unit of analysis.
Here comes a choice – your first one.
If you intend to focus on a single value proposition and wish to concentrate on related business categories and customer groups, you should go to market as a single brand for all your products and services. This is called the umbrella brand approach.
You should use a distinct brand approach, with different brands for different product and service portfolios, if you intend to work with very different customer segments and categories and articulate divergent value propositions.
Alternatively, you can choose to combine these two approaches into a hybrid brand model. A hybrid umbrella is a brand structure with a dominant corporate brand – that is, one overall differentiated customer promise for all products and services – that uses sub-brands to help customers segment their needs more specifically.
And, finally, you can choose a hybrid distinct approach, which is a brand structure with relatively independent brands, each resourced with specialized skillsets to enable them to offer differentiated touchpoints across their customers’ journeys. However, these independent sub-brands include a few common elements across the brand portfolio that remind customers of their membership in the corporate brand family.
The Brand as a Strategic Unit of Analysis
Adopting the brand as strategic unit of analysis is required in order for your brand to function as a customer unit of choice – that is, for the brand to deliver uniquely valuable customer experiences.
Branding is the discipline required to make your brand matter, and it involves much more than designing arresting logos and attention-grabbing visuals. The design of brand architecture needs to be done in concert with fundamental strategy decisions, such as what business or businesses you choose to be in, and what the brand should stand for in those businesses.
To orchestrate your brands, you must first look within your organization and contemplate what is uniquely valuable about it. Of course, value is relative, so you must consider very specifically what skills and resources you have relative to your competitors and relative to your own commercial ambitions. In other words, connect the brand to the core competence of the organization.
A core competence is a set of distinctive skills that are unique in the category, that are difficult for competitors to imitate, and that lead to differentiated brand promises. But here is where your choice of brand approach matters. If you're building an umbrella brand, you should utilize a single core competence across all your service and product portfolios. But if you are going to market with distinct brands, you must build additional core competences by customer segment.
Conversely, if your organization has different teams endowed with highly diverse skills, you may want to cultivate those resources separately and go to market with different brands; whereas if you have a single team with a single set of skills and resources, and limited ambition to expand beyond the existing scope of your business, you may choose to go to market with a single brand.
The point is, brand and core competence choices are inextricably linked. They must also be integrated with customer and category choices, which together drive downstream decisions about value proposition and execution.
FIGURE 1.3 Brand focus and the four strategic quadrants.
Creating a new category often involves launching a new brand. Retention strategies are most efficient if they leverage existing awareness through an umbrella or umbrella-driven hybrid brand.
Although many companies choose a brand architecture and a strategic focus independently, customer acquisition strategies, especially those involving the creation of a new category, generally involve creating new brands. Retention strategies, conversely, are more efficient when the company utilizes an existing brand, either under an umbrella or umbrella-driven hybrid brand architecture. Umbrella brand architectures facilitate customer retention because they benefit from the brand awareness already created with existing customers. Figure 1.3 elucidates the relationship between brand architecture and strategic focus.
The brand decision is interdependent from the business category decision, which is the second B.
Choice 2: Business Category
Brands compete in categories. Managers can conceive of business categories as battlefields – spaces where their brands vie for attention from customers in competition with functionally similar offerings.
