Guru in a Bottle

Ardi Kolah

Mid-tier brands will require intensive care in the next 12 months unless they rewire their sales & marketing now!

This stark warning will be delivered by Dr Erich Joachimsthaler, CEO, Vivaldi Partners in his key note address to the Global Brand Forum 2009 at Cass Business School, London next month.

Joachimsthaler argues that emerging brands such as TATA’s Nano, which will sell for under GBP 2,000 will cause turbulence within the global motor industry and the effects of this will be felt more widely outside of that sector.

“What we’re witnessing within the global motor industry is the emergence of brands that are able to develop a global platform that works at the extreme ends of the market. So Toyota and Honda with mid-market strategies are likely to come under greater competitive pressures.

“Looking at the global picture right now, the key to profitable growth for consumer brands is to cross-leverage capability at both ends of the customer market – at the high and low ends,” says Joachimsthaler.

As evidence for this trend, Joachimsthaler points to the change of strategic marketing direction within Proctor & Gamble.

In the past, P&G’s strategy was to trade up consumers to more expensive brands at a time of affluence. That strategy no longer serves the needs of the business and now the focus within P&G is on ‘affordable luxury’ for hard pressed consumers.

Sales & marketing efficiency within this context means producing a quality product at a lower price point that will attract more consumers rather than just appeal to smaller customer segments.

Within the retail sector, struggling mid-tier brands that are struggling to define a value proposition for themselves in this highly competitive environment include Karstadt in Germany) and Macy in the US. Both are on the ‘danger list’.

“The paradox for brand owners is to think they can appeal to more consumers as a result of being mid-priced but in fact financial success over the next five years will increasingly depend on appealing to niche ends of the market,” he says.

The tequila market in Mexico is another example of market polarisation – the higher end is dominated by Cuervo and the bottom end is dominated by local 120 percent proof brands – with nothing in the middle.

Closer to home, on-line retailer Amelie Fashion is seeing a dramatic increase in demand for haute couture for women - a pair of True Religion Disco Jeans will set you back a cool GBP 200.

Successful marketers are now shifting their focus from ‘inside out’ to ‘outside in’ when looking to position their brands in the age of extreme.

“The focus for successful brand building is now on capturing a larger share of ‘consumption episodes’ irrespective of market segment you’re in, rather than focusing on building brand attributes in the hope that this will attract customer segments for the product or service or indeed historic purchase data.

“Taking an outside-in approach necessarily requires marketers to tap into actual consumer behaviour in order to drive innovation as well as the sales & marketing effort,” he says.

And living in this age of extreme, marketers need to re-think the place of the brand as a means to an end rather than then end itself – which has to be about consumption in the daily lives of consumers.

Ardi Kolah is CEO of sales & marketing training company Guru in a Bottle