The recession's toll on consumer spending has been severe and immediate. Consumers are pulling back and trading down on everything from prepared foods to travel, presenting a real challenge for brands to maintain (much less grow) their market share. In response, most brands are focusing on value positioning, offering price discounts or adding in extra features to entice consumers.
While value positioning seems to make sense in an economic downturn, the best companies are taking a very different approach. They're focusing intently on creating an enduring, emotional connection with their target audiences. It's counterintuitive, but research from the Corporate Executive Board (CEB)—spanning 10,000 consumers and dozens of brands—shows why an "emotional approach" is the best way forward.
The answer lies in how much of a difference consumers see in your products or services and their positioning. Across categories, consumers see very little difference in brands' delivery of product and service features but a huge range in the emotional "wrapper" around them, and that variability matters. In fact, according to CEB research, improvements in differentiating the emotional elements of a brand yield a 50% greater impact on consumer loyalty than do the same improvements in differentiating a brand's functionality.
Of course, using emotions is nothing new to brand management. But there is a distinction between the winning and losing brands that focus on it. The best brands don't just make consumers feel good about a purchase; they intently position their brands around a "shared value"—a belief held by the brand and its consumers about a higher purpose, passion or philosophy that has meaning beyond the category.
For Pedigree dog food, it's "all dogs deserve to be fed well and to have a loving home." For Mini Cooper, it's "the awesomeness of small." For Southwest airlines it's "freedom to travel."
So what can you do to boost the loyalty of your brands?
First, divert resources from less important functional attributes to more important emotional ones.
Second, lift above category-specific consumer insights to identify the right shared value for your brand and your consumers.
Finally, accelerate the development of emotional connection by identifying and attaching your brand to "moments of vulnerability" when the shared value is being tested.
Provided by Corporate Executive Board —What the Best Companies Do™