March 4, 2014 § Leave a comment
March 3, 2014 § Leave a comment
Products with low brand equity require different strategies than products with high brand equity.
A recent study showed that encouraging customers with positive experiences to post online reviews can be a powerful strategy for driving customer acquisition. However, such a strategy may not be equally effective for all products. For products with low brand equity, such as new or emerging brands, there is a significant correlation between cumulative online customer reviews (positive or negative) and sales impact. But for products with high brand equity, such as category leaders and well-established brands, cumulative online customer reviews (positive and negative) do not have a significant effect on sales. The study concluded that different strategies are needed for each group.[i]
Low Brand Equity Products
A proactive strategy should be adopted that focuses on generating positive online reviews for product models with low brand equity. This is because they can benefit sales of that particular model directly as well as strengthen equity for the brand overall. This can enable weaker brands to compete more successfully against stronger brands by “flipping the funnel” (Spending less on traditional advertising and more effort on increasing satisfaction and loyalty to drive word of mouth and customer acquisition).
An essential requirement for this strategy to succeed, of course, is a truly superior product offering. One that is relevant, differentiating and, ideally, has the potential to become a category changer. Tactics that can be used to encourage positive online customer reviews include:
- Make detailed information about products available and easily accessible online.
- Establish brand communities and early adopter clubs. Members of these clubs can buy products with incentives before launch to spark the feedback process. Management can also use positive feedback as seeds and negative feedback to modify and improve their products before launch.
- Provide samples to expert review websites. (Anecdotal evidence suggests that customers often refer to expert reviews in their own reviews.)
- Send reminders and incentives to customers to encourage posting reviews.
High Brand Equity Products
Product models with high brand equity, however, have little to gain by pursuing a concentrated strategy designed to garner and leverage positive online customer reviews. That said, “These products models still receive a significant sales boost from being part of a strong brand; therefore, their resistance to positive reviews does not disadvantage them and they are protected to a degree from negative review.”[ii] And, although models of a strong brand are not affected directly by their own online customer reviews, they can be adversely affected by positive customer reviews for models of weak brands, allowing these competitors to draw consumers away from them. Furthermore, while controlling negative online customer reviews may not be as important for strong brands, brand managers are well advised to monitor them and take corrective actions. This is because the cumulative body of negative reviews overtime can become increasingly important if these brands lose category relevance and strength.[iii]
So, to avoid risk of losing category relevance, strong brands have more to gain by being vigilant in their efforts to create barriers to competition instead of on generating online customer reviews. Two leading strategies to consider include:
- Invest to create superior product models that leapfrog the competition by improving performance around common features, adding new features or eliminating major limitations. Such a leapfrog strategy can dramatically reduce incidences of positive online customer reviews on product models of weaker brands and essentially make these competitors irrelevant.
- Create energy through branded sponsorships (e.g., Valvoline motor oil and its NASCAR sponsorship) or branded social programs (e.g., Avon Walk for Cancer). Brand energizers, such as these, can dramatically strengthen brand loyalty and negate the impact of positive reviews on product models of weaker brands.
Brand equity plays a significant role in moderating the relationship between online customer reviews and sales. Products with low brand equity have much to gain by directly pursuing strategies to capture and leverage positive online customer reviews. While products with high brand equity have more to gain by being on the offensive and continually raising the bar through innovation or creating brand energy to strengthen customer loyalty and reduce the impact of positive reviews on competitors’ products.
[i] “The Effects of Positive and Negative Online Customer Reviews: Do Brand Strength and Category Maturity Matter?” by Nga N. Ho-Dac, Stephen J. Carson and William L. Moore, Journal of Marketing, Volume 77: pages 37-53, 2013
[ii] Ditto i
[iii] Ditto i
February 13, 2014 § Leave a comment
Tell your story from the heart. Find those interesting threads that connect your brand purpose and values. This is the art of brand story telling.