CEO at Econsultancy
13 September 2005 13:35pm
I wonder just how much impact the internet has had in driving the increased polarisation we're seeing into mega brands and micro brands?
By a mega brand I mean a brand which can stretch into almost any product or service line and take its customers with them. Obvious examples are Amazon or Tesco. You want Books? Clothes? Pet Insurance? DVD rentals? Downloadable movies etc. etc.
Micro brands are one which are well known for a particular thing. For example, figleaves.co.uk or confetti.co.uk in the online world, or people like Lush, or Innocent drinks, in the offline world.
It's getting much, much harder to play in the spaces in between. I'm thinking companies like Boots, or Woolworths. So what exactly do they do? They're neither one nor the other. If they used to be able to compete on their retail locations and convenience, and possibly price, the internet has helped erode those advantages a lot.
But I would suggest the internet is applying further, subtler, pressures towards increased mega / micro polarisation.
Search Engine Marketing. We know how hard it is to get high search rankings on competitive terms, and it will get harder. Which means that unless you're a mega brand, rolling in a wealth of inbound links if the customer doesn't know your URL anyway, you are going to have to think a lot harder about where exactly it is you compete, and what you do, and therefore what more specialist keywords and phrases you actually stand a chance competing on (for both paid and organic search).
Furthermore, if you want to get inbound links that are thematically relevant and within your sphere of activity, then you need to be very clear on what that sphere is. You have to think like a micro brand.
Site Design and Conversion. If search engines can drive traffic to your site, conversion is the next battleground. And if you look at studies into improving conversion rates on your site, including usability work, then it is clearly a good thing if a) it is very clear, very quickly, what you do and what you offer b) the navigation is very clear and easy to use c) often less choice equal higher conversion rates d) your content and copy need to engender trust that you really know your product / service area. Which again tells me that you need to present yourself like a micro brand.
Customer service and "customer promise". Customers' expectations are rising all the time. Their patience and tolerance levels are dropping because they know if you can't help them out quickly then someone else can. So speed, relevance and quality of customer service are becoming much more important even as the physical aspect of most goods further commoditises.
But if you're to provide really good information, good supporting content, with deeply knowledgeable staff, and excellent response times, can you do this as a somewhere-in-the-middle / we-do-a-bit-of-everything player? No. You have to be like a micro brand - absolutely committed to what you know best.
If this is all true it raises the question for larger companies about their brand strategies going forwards. It suggests that you either need to go hell for leather becoming a mega brand or that you are better off being a large holding/owning company but having a large portfolio of increasingly micro brands within your stable.
Associated New Ventures recent acquisition of both Zambeasy Ltd, the owner of Top-Consultant.com and Office Recruit Ltd, the owner of officerecruit.co.uk are perhaps a good example of this. The press release states that the smaller acquired companies will "retain their brand names and strengthen the DMGT portfolio with an aim to provide a more specialised service for job hunters and recruiters."
eBay's acquisition of Skype, on the other hand, is a brand behemoth that just got bigger.
You can see this all happening in financial services. Look at all the micro brands springing up in insurance alone: esure, elephant, Privilege, Diamond etc. If you're a woman, over 50, living in London, with 5yrs+ no claims, then there's a micro car insurance brand just for you.
I was wondering what kind of threat this posed to the likes of Direct Line who pioneered selling insurance over the telephone, and spend a lot on branding, but must surely be wincing at the levelling affect of the internet?
Until I realised that RBS, which owns Direct Line, also owns Privilege, Churchill, Lombard Direct, Tesco Personal Finance, The One account... A portfolio of micro brands, one of which will win your business to keep you within the mega group.
Head of Commercial & Supplier Management at BBC
14 September 2005 09:37am
I think that the Internet has changed the way we interact with the micro brands. They were always there, but until telecoms were de-regulated in the 1980's, they were geographically defined. People would travel miles to visit a specific specialist shop. Think of Savile Row tailors, or private banks in London.
Initially call centres (which spawned Direct Line), then the Internet made it easier to be an international micro brand without the traditional costs of doing so. The web has made it much easier for them to target their customer using online marketing.
I completely agree that the middle ground is being squeezed. With comparison shopping on the internet, the traditional high street shops are under real pressure to match the prices on the web. Also, traditionally people may have settled for whatever they could get on the high street. Now they can usually find exactly the product they want online, get it cheaper and with less effort.
Ultimately though, I think that the internet is a tool that can be used to strengthen a brand. Every brand needs a message, whether is a broadly based brand like Disney which is about family entertainment or Confetti which is about organising weddings and special occasions. Success in either sphere requires being very clear about what the brand stands for and how it is perceived.
The organisations that understand this are generally good at SEO. They also tend to be better at using SEO as a strong feedback mechanism for ensuring that they have got their brand message right.
Principal Consultant at Experian Integrated Marketing
16 September 2005 17:47pm
Ashley, your example of Boots relates to an experience I had this very week!
"It's getting much, much harder to play in the spaces in between. I'm thinking companies like Boots, or Woolworths. So what exactly do they do? They're neither one nor the other. If they used to be able to compete on their retail locations and convenience, and possibly price, the internet has helped erode those advantages a lot."
When I was comparing gas hob prices on kelkoo and saw an ad from Sainsburys Kitchen Appliances my mind could make the leap and I felt comfortable soon enough. When I saw one from Boots Kitchen Appliances the circuitery took a little longer to find the same comfort. So they don't specialise in things home. So what? Do I trust the brand? Well I ordered the hob from them. It's cheeky behaviour and they'd probably not succeed offline quite so easilty but if Virgin can leap from records to planes offline then Boots Kitchen Appliances should do just fine online on Kelkoo.
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