Porter found the process not only useful for developing the strategic plan, but also critical to understanding the structure of the industry. Nothing happens in a vacuum, but for some reason advertising agencies expect strategy for their clients to work that way. For those who employ it, the five forces allows them to have a look around the world their client’s business inhabits and map out the wider context. It’s impossible to make decisions without that context. Or at least, intelligent decisions.

The First Force Is Competitive Rivalry. This force looks at the intensity of the competition in the industry, but goes beyond the traditional. We start with the known category players and examine their offerings, pricing and customer base. When we describe rivalry, it’s considered high if there are few players, product or category parity and low or no barriers to prevent customers from switching brands. The cola wars are a great example of high competitive rivalry in an industry. Two big players, nearly identical products and ease of switching. In this environment, advertising and price wars often occur.

The Bargaining Power Of Suppliers Is Force Two. As in any industry, and in the first force, competition drives cost. This goes levels and levels deep. Apple has a potential problem with screen manufacturers because suppliers are rare. The fewer suppliers, the more control they have over pricing.

This is why the DeBeers Corporation goes to such lengths to control the supply of diamonds. They’re the only supplier so they get to keep costs high. If you’re a manufacturer that uses diamond for your product, profitability is threatened by the control DeBeers has. If they raise prices, you are forced to choose between raising prices of your own product or cutting margins.

Force Number Three Is The Bargaining Power Of Customers. When there are many brands in a category, and high ease of switching as identified in competitive rivalry. Customers can impact pricing, especially when they are an in-demand or smaller audience. This all relates back to the laws of supply and demand. Many options for consumers usually drives down cost and makes business harder and less attractive.

Mattresses are an example of an industry that has suffered from increased bargaining power of customers. Going back 10 years, there were only a few players locked into tight distribution deals and (overly high) prices. But advances in materials, production, shipping and distribution via the internet has loosened the choke hold of Sealy and Serta. Customers rarely need to buy in this category, and they finally have some control, which they are happily exercising. A handful of foam mattress brands have broken through, thanks to renewed bargaining power of consumers. Leesa, Tuft & Needle, Loom & Leaf, Lull; too many to count. Now, prices are coming down as competition has increased bargaining power of customers.

As with industry attractiveness, strategists must look at the ability for other companies to enter the market. Force Number Four Is The Ability Of New Entrants. Especially today, this is a huge concern, which is often (always?) overlooked. See: Amazon buys Whole Foods. What other companies or brands could enter the market we’re examining?

Using our cola example, Virgin entering the market was a splashy move based on their understanding of the marketing and distribution needed to compete. Ultimately failing in US markets, they did well in the early stages. The critical piece for strategists is to look at the marketplace and investigate what other brands could make a move to enter the market. Not easy to do, but necessary to protect brand and business interests over the long term. Most companies don’t look for indirect models. Look at your client’s business and make some educated guesses about who may enter their category based on similar audiences, distribution, products or supply chain.

In the same vein is The Fifth And Final Force – The Threat Of Substitutes. Once, Blackberry was a powerful company because of the uniqueness of its flagship product. It’s barely mentioned anymore. Why? Touchscreen smartphones from Apple and Google’s partners et al replaced it. So, why did consumers switch? The product was superior and offered at a competitive price point through intelligent distribution with mobile carriers. In Apple’s case, they also built a unique supplier network that kept Blackberry from making any defensive moves. If you remember, the co-CEOs of Blackberry dismissed the iPhone because of battery life and security deficiencies – core strengths of their device. They didn’t understand that people would be willing to make that substitution for a touchscreen experience. “We’ll be fine,” Jim Balsillie was quoted as saying.

The five forces model helps fill in the context, but it leaves out partnerships and strategic alliances. It’s also just the model, and importantly does not include guidance for action. As a strategist, that’s where you come in. None of these tools mean anything on their own. They have strength when you tie tools together with marketing prowess to draw conclusions. When competitive rivalry is high, advertising needs to stand out. Niche markets create more power for the brand, so you need to figure out ways to put your brand or your client’s brand in a niche or to emulate one.

Contributed to Branding Strategy Insider by: Adam Pierno. Excerpted and adapted from his book Under Think It.

At The Blake Project, we help clients worldwide, in all stages of development, define and articulate what makes them competitive and valuable.  Please email us to learn how we can help you compete differently.

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To succeed today, brands must define audience segments in terms of demographics, as well as psychographics and behaviors. Here’s how brands can reach these niche segments of consumers based on their mindset.

Targeting Audiences Based On Demographics

Consider the profiles of these two British men. Each born in 1948, each married twice, each has two children and each has considerable wealth. They appear to have important similarities from a targeting standpoint until you learn that one of them is Prince Charles and the other is Ozzy Osbourne. This being a clear demonstration of the limitations in targeting audiences based on demographics.

Market research generically defines consumer demographics in terms of age, gender, region, household income, household size, educational and ethnic background. Today, these groups have become too broad and tell us very little about what people stand for. For example, marketers often rely on household income to target prospects. But with the exception of homes, cars, high-end luxuries (think of 6-figure jewelry) and niche lifestyle goods, a consumer’s income level is not very relevant. Consider leisure and entertainment. The cost of an NFL seat is comparable to a night out in Las Vegas. Or, the cost of a premium concert ticket for Ariana Grande is comparable to a dinner at a Michelin-Starred restaurant or a day at the spa. Given how many people attend NFL games (The New England Patriots’ Gillette Stadium holds 66,000+; the AT&T stadium 100,000+), it would be naïve to think all football fans are ‘high-income earners’. These people rather choose to allocate a significant share of their income and/or trade down on other products to attend the game or indulge in other leisure activities that feel meaningful and fulfilling.

Targeting Audiences Based On Their Behavior

Behavioral targeting may earn better engagement and conversion rates, but it also commands high CPMs, as the audience is supposed to be ‘in-market’ and is often highly targeted (think of a patio-furniture buyer in Lexington, KY). By the time consumers are in the lower-funnel, it is too late to create a meaningful brand experience.

Digital, Rosenblum says, is the mid-funnel playground and content marketing is one of the most effective way to move these mid-funnel metrics. To be impactful, content marketing must teach the audience something new, as The North Face does with the athletic events it hosts. In the physical world, retail outlets are best positioned to create experiences that transform their stores into community hubs and entertainment destinations. For example, the cycle brand Rapha gives its stores an Italian cafe vibe, offering cyclists a place to gather, learn and browse the brand’s products.

These experiences establish an emotional connection between the brand and its prospects, turning them into loyal customers and advocates who build awareness for the brand in the upper-funnel.

Targeting Audiences Based On Their Mindset

Targeting based on consumers’ mindset is achieved by combining demographic, psychographic and behavioral information. Components include, but are not limited to:

• Pending life-stage change. That is, consumers who bought moving supplies from The Home Depot last month are highly-likely to buy decorative items for their new home this month.
• Environmental data, such as weather conditions, time of the day and local events enable advertisers to deliver highly-relevant mobile advertising.
• Psychographics that describe consumers’ personality and interests.
• Opinion, attitudes, beliefs, and hobbies. Think of targeting high-end spirit drinkers, scrapbook makers, users of teeth whitening products, fitness enthusiasts and donors to the arts, culture and political parties.

Once defined, these segments can be activated. That is, a segment ‘seed’ made of individuals that best represent the target audience is scaled by a Data Management Platform (DMP) through a look alike model. For example, insights company Kantar identified consumers open to staying at Holiday Inn hotels. Scaled by a leading DMP, the seed provided by Kantar led to 38% increase in consideration lift and a 500%+ increase in hotel bookings started on the hotelier’s website.

To summarize, our target customers are overwhelmed with advertising messages aimed at raising brand awareness, and coupons that are supposed to trigger conversion. The brands that succeed are the ones that connect emotionally with niche audiences of consumers and target them with relevant and meaningful offerings. Younger consumers, in particular, tend to block broadly targeted ads, but seek content from brands that is educational, meaningful and culturally relevant to them.

Mindset based targeting works because it brings brands closer to what matters most — the person.

The Blake Project Can Help: Accelerate Brand Growth Through Powerful Emotional Connections

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Discussion #1 – The True Definition of an Insight:

How many times a day do you say the word “insight”?

Have you ever paused to think about what that word means?

Cherri Prince ran a fantastic session on the 7 habits of highly insightful people and shared some of the key properties of an insight.

An insight…

• Is an undiscovered, unexpected, yet strangely familiar truth that is not obvious;
• Provides a clearer understanding to a complex situation;
• May have elements of a revolution within it;
• Acts as a springboard to new thinking; and
• Reveals a deep, intimate understanding of human behavior.

Cheri went on to describe how insights are different from, and deeper than, facts. When a person is exposed to a fact they are likely to react with a dull sense of curiosity, perhaps responding with “Really? I didn’t know that”, whereas a person being exposed to an insight would likely react with a great sense of having uncovered something that was hidden right under their nose with “Yes! That’s so true!”

Discussion #2 – The 4 Stages of Evolution for Insights Teams:

How evolved is your insights team relative to other organizations?

There are different levels of sophistication that an insights team can achieve and this impacts how much influence they have within their organization.

Mario Simon from BCG offered an excellent framework in mapping out the evolutionary path of an insights team and suggested that even if you are still in the early stages of your evolution (i.e. Stage 1 or 2), there are steps you can take to evolve to the higher stages (Stage 3 or 4) and have more impact and influence within your organization.

Each Stage shows an evolution of how the insights team is perceived by their stakeholders:

1. Internal Market Research Provider (Stage 1)
2. Business Contributor (Stage 2)
3. Strategic Insights Partner (Stage 3)
4. Source of Competitive Advantage (Stage 4)

At one end of the evolutionary scale, Stage 1, the insights team is led by the organization and is reactive, tactical, and very activity focused. It conducts “research” projects based on the requests of its stakeholders and is perceived as an “internal market research provider”.

Contrast this with the other side of the spectrum, Stage 4, where the insights team now leads the organization, and is proactive, strategic, and growth focused. It delivers knowledge that accelerates short and long term brand growth and is perceived by stakeholders and the organization to be a “source of competitive advantage”.

The most interesting stat related to this framework was that only 20% of organizations feel that they are at Stage 3 or 4. That said, this has doubled from 10% of organizations that felt this way in 2009. We still have a long way to go as an industry, but we are headed in the right direction. The call to action from this discussion was finding ways to influence your own insights team evolution and ensure that it has a seat at the executive table and decision making aperture.

Discussion #3 – Marketers Must Embrace and Adapt to Transience:

How are you adapting to and dealing with the disruptive world we are in?

Kathy Sheehan from GFK discussed the “New Era of Transience” sharing several examples demonstrating just how transient our lives are and offered suggestions on how to face non-permanence.

Some of the consumer themes she touched on were the shift to short-term thinking, living in the moment, life by subscription, and the rise of micro-moments. One colleague I discussed this with, a global insights leader at a leading CPG company, suggested that this topic made her pause and re-evaluate how consumers think about the future and how this might influence her marketing communications. She suggested that for consumers, the view of the future is “no longer a year, two years, or five years, but rather tomorrow or this weekend”. One can see how applying this deeper consumer understanding can influence our innovations, communications, shopper-based design and in-store marketing.

In closing, consumers, marketers, and insights leaders are facing incredibly transient times, and permanence will only continue to shrink as we move into the future, a future measured in fleeting micro-moments. That said, times of change and disruption will unearth new opportunities for insights leaders, so it is a perfect time for us to dig deeper into our craft to proactively pave the path forward, one micro-moment at a time.

The Blake Project Can Help: Accelerate Brand Growth Through Powerful Emotional Connections

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I was struck immediately by the extent to which brands don’t. Too often it seems research functions as something of a confirmation bias – reinforcing beliefs that are already deeply held.

Wren’s challenge to participants to take the path of greatest insight rather than the one of least resistance was a reminder to every brand strategist and manager in the room that customer-centricity is not always convenient or personally intuitive. In fact, it may require us to pursue paths and approaches that fight with everything we think we know, want to know or believe we have been told.

“Data and research are only powerful if they are acted upon…Even if it seems crazy.” In the Western Union case study that he gave to support his point, Chris explained that while money may have seemed the obvious point of connection, in reality that was not what really connected Western Union consumers with their homeland at all. Money was the transactional basis, but not the emotional basis for the relationship. What motivated those customers was what was going on at home and what they really missed was food – not just any food or even the food of their country, but specifically a home-cooked meal. So Western Union set out to celebrate the things that their customers yearned for most by preparing and serving them their favorite dishes.

“When you are away from your home you long for those things that connect you to your culture, and nothing is more fundamental than the family dinner table,” says Diane Scott, CMO of Western Union. “Through the #WUHomeCooked campaign, Western Union is continuing to get to know our customers on a personal level, and connect them with their families back home to demonstrate our gratitude for all they do.”

So here we have a company in the money transfer business exploring motives that, on the face of them, seem well removed from the business at hand: loneliness; isolation; homesickness; familiarity; nostalgia; gratitude. And yet, framed in the terms that Scott expresses them above, they make complete sense. Retrospectively. For a team working through these insights at the time though, I can well imagine that at some point they must have wondered whether they were on the verge of uncovering a human gem or in real danger of going off-course. Kudos for making the right call.

Those of us who have followed a 5Y approach to discovering motivation will know that the insight uncovered at the first “Why?” can be a very long way indeed from the understanding that one has arrived at by the fifth “Why?”. The temptation as we work to increasingly curtailed timeframes is to shortcut the process: to take the first answer or the most apparent insight and build everything on that – when in reality, that insight may only be an expression of the truly human driver. If we succumb to this temptation, we risk short-changing our communications (and customers) emotionally.

But equally, the secret to having what Annette Gleneicki neatly describes as a “sixth sense” around customers is knowing when you have reached an intuitive point in your pursuit of an insight that is refreshingly perceptive and, at the same time, delightfully workable. Pursuing an insight beyond that point risks over-shooting the framework that consumers recognize and respond to. So knowing when to stop is just as important as knowing when to continue.

Here’s the thing. If it’s hard to explain the value of marketing when it’s rational, imagine the challenge of explaining what you’re planning to those around and above you when it’s irrational – or at least not obvious. Ironically, marketing at its most powerful, at the point where it is an expression of everything that insight has guided it to, can also be the most difficult to explain.

The Blake Project Can Help: Brand Equity Measurement

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•    The insurance industry is highly fragmented. While there are dozens of companies whose names consumers recognize, less than a handful receive significant unaided first mention.
•    While there is high behavioral loyalty, there is low attitudinal loyalty.
•    Consumers have a low emotional connection to insurance brands.
•    Less than one in five people indicated that their insurance company “has never disappointed them.”  (One sign of emotional connection.)
•    While consumers perceive there to be differences between insurance companies, they don’t perceive those differences to be significant.
•    Price and rates are among the most important points of difference between companies, suggesting the category is commodity-like among many consumers.
•    The following are the seven most important consumer benefits in the insurance industry. Of these seven benefits, consumers perceive only two of them to be addressed to any large degree:

o    Paying claims fairly and promptly
o    Good rates/prices
o    Honest, trustworthy representatives
o    Accessible, available representatives
o    Knowledgeable, competent representatives
o    Easy to understand policies
o    Company financial stability

•    The following benefits have the widest variation in delivery and therefore provide the greatest opportunities for differentiation:

o    Representatives can provide unbiased recommendations (all insurance categories)
o    Good rates/prices (all categories)
o    Have knowledgeable, competent reps (life insurance)
o    Have honest, trustworthy reps (life insurance)
o    Can establish a personal relationship (home and auto insurance)
o    Strong overall reputation (financial services)

•    The sales representative and claims adjusters’ points of contact with consumers are critical to the success of insurance company brands.
•    There is the most brand preference in the auto insurance category (roughly a third with “no preference”) and the least in the financial services category (two thirds with “no preference”).
•    State Farm is the preferred brand by a wide margin (especially in home and auto insurance).  It also has a wide lead in the emotional connection it has created with consumers.
•    GEICO is an aggressive brand in auto insurance.
•    Prudential is the preferred life insurance brand.

While State Farm seems to be doing many things right, almost all of the other insurance companies seem to lack any significant brand equity. But my post is not about State Farm. It’s about GEICO Direct, the aggressive auto insurance brand. And, this is a very simple, short story: GEICO began to advertise its brand at a level that was the talk of the industry. And its message was very simple: “You could save 15% or more on car insurance!”

We have more to share on this study here.

The Blake Project Can Help: Contact us for more on BrandInsistence brand equity measurement

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