Category: pricing

Brand Commoditization: 6 Ways to Prevent the Death of a Brand

February 23, 2008 by anne

Starbucks has achieved significant growth. And because of their success, their brand is in danger of becoming a commodity brand in the category they created. 

The warning signs were there, as anyone with 20/20 hindsight can see, including a “watering down of the Starbucks experience” where speed and efficiency were emphasized over romance and theater, stores smelled like breakfast sandwiches instead of coffee, and a cookie cutter store design became ubiquitous.

Recently reinstalled CEO Howard Shultz expressed his concerns in a recent memo. “Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead [sic] to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand.”

Schultz’s concerns are well-founded; as brands become commoditized, price elasticity sets in, the death knell for a premium brand.

So, how can you keep your brand from falling into the commoditization trap? Here are six tips to help marketers avoid Starbuck’s predicament:

1. Put Some Muscle In Your Brand Positioning Strategy. Too many marketers deliver puny brand strategies that don’t demonstrate an understanding of the target, fail to differentiate the brand and define the competition too narrowly---which is too bad. A well-honed brand positioning statement defends the brand against commoditization and provides a roadmap for growth.
2. Authenticity Is The Ultimate Way To Avoid Commoditization blogs Buzz Canuck, quoting the book, "Authenticity: What Customers Really Want." Premium brands must deliver differentiated, well-conceived experiences that are authentic to core brand values to resist commoditization.
3. Ensure Employees Understand The Brand Experience. A well known hotel brand reportedly reminds employees they are “Ladies and Gentleman Serving Ladies and Gentleman.” Is there any doubt of the brand experience this company expects its employees to deliver? There’s no need for a long, involved treatise; one succinct phrase or sentence will get the job done.
4. Ensure Employees Deliver The Brand Experience. Show employees how their performance impacts customers and compares to competitors, say the authors of “Communicating Change: Winning Employee Support for New Business Goals.” Then explain how it impacts their work environment and job security---without beating them over the head.
5. Talk to customers and non-customers - frequently. See if they can express if and how you're different from the competition.
6. Use Your Messaging To Communicate Brand Differentiation. A landmark study by Copernicus/Market Facts released in 2001 warned that many brands were becoming less differentiated and more commoditized due to the following factors:

-A shift from brand building advertising to promotional programs
-A shift from informational-oriented advertising to entertainment oriented advertising.
-A shift from communications which communicate distinctive positioning strategy to communications which focus on brand essence or imagery.  

Avoiding the brand commoditization trap isn't easy. But you wouldn't want an easy job, would you? 

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