- Created on 24 May 2016
- Written by Don McDonnell
Having worked in marketing in this industry for many years, I have found that there is one marketing concept that often mystifies the mostly engineering-trained energy executives we work with. Competitive positioning. Second only to that is the benefit of brand investments. However, once the idea of competitive position is understood, the notion that branding investments can tangibly reinforce and fortify that position becomes clear quickly.
So what is a competitive market position? According to marketing guru Philip Kotler, “Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.”
This is where psychology meets engineering process thinking head on. Engineers are concrete thinkers, and they generally like data to make decisions. Enter the role of research; specifically market perception research. To understand changes in market perceptions, those perceptions must be programmatically measured at different points and at different times. Just as power networks have telemetry and sensors to guide operators to measure and appropriately adjust configurations at different points, marketing programs need feedback and data for ongoing optimization. By breaking down perception into its key data components, executives—who in our industry are predominantly left-brained—can better grasp the effects of marketing communication and branding in ways that instinctively make sense to them.
For example, if a company has chosen to differentiate its offerings based on their low total cost of ownership relative to competitors, tracking perception data on the perceived performance of products on items such as maintenance costs over time vs. the end customer expectations of these variables formed at purchase is important. It’s equally vital to measure the perception of market competitors against these same variables. Over time this data will tell you if your message is resonating. To decision makers, I’ve seen this approach take what is traditionally seen as a right brained psychology enigma transform into concrete understanding. While branding is inherently the art of influencing perception, the best brands—like people—are true to their real self. And buyers gravitate to brands that project a “true” sense of themselves. So how do we measure the “emotional” side of brands, the things that may not be measurable but which surely impact buyer thinking and behavior and choices? The only answer is research.
Kotler suggests that there are basically four “differentiation strategies” available: Product, Channel, Personnel, and Image. The first three are really about things that exist in concrete form. A product has certain features and capabilities and associated benefits; a channel exists to serve the buyer’s need for information and solutions as efficiently as possible and better than rivals; our personnel are literally physical extensions of the brand they represent and their actions and behavior must reinforce the ideal brand experience. But this last one “image”, what’s that all about? It seems pretty fuzzy sounding to engineers. Well it doesn’t need to be!
In the case where purchase selection variables exist only in the mind of the buyer (think about Kotler’s “image”), it’s even more vital for marketers to measure performance vs. brand expectations and performance relative to competitors. If you truly want to own the premium brand position in a given market, then you have an obligation to both cultivate that brand image via investments and to ensure the results of those investments are tracked via primary research.
Constructing what Kotler calls “points of difference”, PODs for short, in any positioning exercise is vital to the process of constructing an effective market position. To do this, the first step is determining (and re-measuring to validate at regular intervals) the relative importance associated with certain brand and offering characteristics such as total cost of ownership, upfront costs, service after sale, and many more.
In markets like utilities, intangibles such as support during storms, overall industry commitment, and various other selection factors can come into subconscious play. The notion of market “trust” is a precious commodity in a market where risk avoidance is a primary driver of buyer behavior. As buyers trade off these brand evaluations in their heads—and sometimes still choose brands from their heart -- it’s foundationally important to truly understand what your market values and to ensure that you are the top-rated provider in the things that matter to them most.
As cost-driven procurement continues to put a wedge between utility end-buyer preferences and procurement buyer choices, and as this phenomenon creates commodity-driven market purchase behaviors across more segments, the need to revisit the notion of competitive positioning and brand strategies that reinforce it is more vital than ever to today’s energy marketers. We have seen time and time again that energy buyers can indeed be brand loyal, however the days of assuming longevity as an unassailable source of brand strength are waning.
A new generation of energy and utility buyers are now taking on leadership roles. These buyers were raised in a digital world and they are skeptical of premium brands that have stopped investing in their brand leadership or worse neglect a professional digital presence. These buyers are much less beholden to personal and company/vendor relationship history and the bottom line is that legacy energy brands need to be on guard. We see many established brand premiums weakening across various sectors in the face of a lack of marketing investment and because executives work to squeeze profits from today’s aging pack of B2B energy brands. It’s time to return to the blocking and tackling of market positioning and research to validate and monitor progress. After all, the whole energy market is getting more dynamic, and this includes the world of positioning and branding. Download your free copy of Critical Conversations, our energy marketer’s guide for improved marketing performance.