Wednesday, March 30, 2011

Social Media Marketing I: Quick & Compelling Reasons for Branding in Social Media

Why a post on social media marketing?
There are millions of articles on the importance of marketing on social media. I read plenty of them last summer, when I developed the social media strategy for a couple of consumer brands.  During my research I always felt it’d be useful to capture the importance of social media for branders in a quick and compelling post.  So, here is why social media is important for branders:

Because your customers are in social media
According to an eMarketer study, more than 164 million people in US have social media profile[1]. To put the number in context, the total circulation of top 100 newspapers in US is 5.34 million[2]. Even assuming a single copy of newspaper is read by 5 persons, that takes the combined reach of top 100 newspapers to 27 million, which is only 16% of the US people in social media.

Because your customers want to promote your brand in social media
In social media people are talking brands. According to a study by ExactTarget[3], 39% people follow a brand just to let their friends know of their support to the brand!  Now, that is a lot of free goodwill! There are customers who are ready to promote you.  
Let me address one common misconception here. Many branders think people only promote cool brands in social media. Nothing can be farther from truth. Success on social media does not depend on a cool brand, but on a cool strategy. How else can you one explain the successful campaign of Duct tape (an adhesive tape, hardly a cool brand or product) in Facebook, where they acquired more than three and half million followers! In subsequent posts, we will see several other success stories of regular brands.

These customer driven promotions in social media influence further purchases
You may be saying, "OK! I got it. There is a lot of customers. Plenty of them even ready to be my advocate. But tell me, all these chatter, reviews, opinions, do they really bring the money in?"
A thumping YES! People trust online opinions as much as newspaper editorials.  According to a Nielsen company study[4], 70% of the responders trust anonymous online reviews (as against 69% for editorials and 33% for online banner ads). You know, few brands will ever be on the editorial of a newspaper for a positive reason! It looks like that this trust sways purchasing decision. Bazaarvoice has compiled useful stats on social media impact, where we see that 74% consumers use social network for a purchasing decision[5].
Social media presents an unforeseen opportunity to marketers to use every satisfied customer as a brand promoter. In subsequent posts in this series, I will address strategies to leverage this opportunity and case studies from regular brands, who have been successful.


[1] http://www.emarketer.com/%28S%28zirsohyg43qcsoncdweyveyu%29%29/Article.aspx?R=1008247&AspxAutoDetectCookieSupport=1
[2] http://abcas3.accessabc.com/ecirc/newstitlesearchus.asp
[3] http://mashable.com/2010/09/16/facebook-users-interact-brands/
[4] http://blog.nielsen.com/nielsenwire/consumer/global-advertising-consumers-trust-real-friends-and-virtual-strangers-the-most/
[5] http://www.bazaarvoice.com/resources/stats

 

Wednesday, March 23, 2011

Parent Company's Dilemma: Associating a new brand with an established one

While coming up with a new product, parent companies of successful brands often face a common dilemma- How to associate the new brand ( let us say, B) with the established strong brand ( let us say, A) even while keeping the strong brand separate from the new one?  

Essentially what the company wants is to associate the new product with the established one, without modifying the branding of the latter. What parent company is trying to achieve is to position product B as a product extension of A (most common example of product extension: Coke and Diet Coke. The latter takes the branding of the former, without changing former's brand equity).

To make this association, first the brand manager must look at the points-of-parity and points-of-differentiation between A and B. The manager probably will be able to identify one of the following three relationships between products A and B.

1.   Product B can either be marketed as one, which complements usage of A for specific purposes. Example: Colgate toothpastes (Product A) and Colgate Peroxyls ( cleans canker sores) or other Colgate OTCs ( these are products B). They complete the suite of oral care.
2.   Product B can act as a substitute for same usage occasion, but for different tiers of customers. Example: Jet Lite (budget airlines owned by Jet airways India) and Jet airways. Jet has an amazing reputation as a full service airline at domestic Indian market and they share the stardust with JetLite (though different website and all).
3.   The value of product A can easily get transferred to B. That is, customers feel whoever does a good job of making product A should be doing a good job of making product B.  Example: Samsung does a good job of making cellphone; hence Samsung will do a good job of making tablets.