What makes one brand better than the other? Why do we select and decide one is more reliable than the other? Why do we associate something with quality or desirability? Questions which are inward driven and mostly associated with emotions and a response to what appeals to our senses.
In an increasingly competitive world where differentiation is the cutting edge, marketing the product becomes a key differentiator to appeal to our senses.
If I can explain through an example: In a downturn when things begin to look bleak, ‘mergers and acquisitions’ take on a new life and meaning. Most companies tend not to spend; whereas those with a vision and outlook commence a hunting exercise to see which target acquisition has got more value and meets their strategic imperative. This results is an increased market share and profitability for shrewd and sensible companies when the markets rebound.
The same analogy can be used for marketing. In an economic downturn we see companies do away with marketing as an expendable ‘nice to have but of no value’ approach, so they are out of sight with their target group and lose out on both share of mind and promotional opportunity as there is barren ground whilst consumers are still there looking for value -which is a constant. (Nay – value not being defined as another price reduction) When the upturn does eventually occur they would have already lost valuable ground and spent twice as much to be where they were before the ‘exercise’ began. Remember opportunities are always created in a downturn. You ride the wave in an upturn.
That said I am not advocating irrational marketing or blatant advertising. In times of economic downturn professional marketers move their approach from more – ‘in your face’ to latent public relations etc, in other words alongside the reduction in expenditure they maintain the presence through media interviews, sponsorships or general news frontage to keep the brand awareness alive. Marketers have a bundle of tools at their disposal and building a right chemistry with a perfect combination is a difference between creating a symphony and producing utter noise
We have multitude of examples of clever brands – look at Coke and Pepsi, look at Apple and Samsung. Look at FedEx and DHL. Hypothecate if in the 2009 -2010 downturn if any of examples mentioned decided that they should not do marketing as it is expendable.
Today companies put a value on the balance sheet to a ‘brand’. Both Coke and Pepsi are sweet sugar water drinks at the end of the day. What makes them different from any other sugar drink?
A quick look at the valuation of these companies best demonstrates the power of marketing and will surely convince doubters.
In a recent article in South China Morning Post compiled by Campaign Asia and global information provider Nielsen, brands with a known vintage and sharp marketing had made major gains in China, Hong Kong and other Asia Pacific markets. Brands such as Samsung, Apple and Nestle are top of that list ranked by most consumers – I attribute that to a solid tonic of marketing
In reality, all consumers are the same in the sense that they would like to see ‘value’ which is a very human quality and is essential in driving our desire to over-achieve. This is true for any industry, irrespective. In the last 30 years I have been actively involved in marketing in FMCG, financial services and the shipping Iindustry. All end users of the service sector have essentially the same desire and that is that the product or services add value. This is true for the Business to Consumer sector or even the Business to Business sector
In that respect, shipping is no different. The big issue is that the shipping industry wants to commoditise itself, leading it towards self destruction by under pricing or by over supplying itself. In a recent article by Aphaliner it is reported that 844,000 teu more capacity has been added by the Top 20 in the 12 months prior against the total losses of $6bn in 2011 as reported by another research company. An 11.2% increase in capacity against an 11% reduction in revenue as reported by Logistic Management. One can only shake one’s head and ponder the inevitable.
The shipping industry is essentially a ‘service’ industry and the focus should primarily be on developing value propositions, just like any other service industry globally, which plans on becoming successful and profitable by measuring its service barometers. In my view the question is more of an identity crisis within the industry which finds itself on the cross roads of a ‘commodity’ or a ‘service’ image
The search for ‘adding value’ is the essence of any business and that is the common denominator in any industry, either financial services, consumer goods or within the shipping industry.
Hong Kong-based Jimmy Safdar has 30 years experience working with the biggest brands in the world, including in shipping. Contact him at jamshed@ibrandconsult.com