Observation 7: Brands in established categories need to differentiate.
Scores show great potential for Internet-driven brands
Brands in both established and Internet-driven categories achieve their Brand Power scores with differing mixtures of the ingredients that comprise Brand Power: Meaningful (meeting functional and emotional needs in relevant ways), Different (begin distinguished from the competition and trend setting), and Salient (coming to mind quickly at the moment of purchase).
To understand the various ways brands achieve high Brand Power, we analyzed the Meaningful, Different, and Salient (MDS) scores of the brand that scored highest in Brand Power in each category. In most instances, the highest scoring brand scored significantly above average, which is 100, but the variations indicate challenges and opportunities.
The brands in established categories scored 160 in Meaningful compared with a score of 143 for the brands in the Internet-driven categories. This finding reflects the longer time period that brands in established categories have had to understand the needs of consumers and meet them in relevant ways.
In contrast, the brands in established categories scored only 91 in Different, while the brands in Internet-driven categories scored 129. The lower Different score for brands in established categories results, in part, from the extensive competition in each category, and the sameness among competitors that happens over time.
Salience scores were higher for Internet brands, 113, than for established categories, 104. The Salience score was computed in part from the volume of searches on Google across the seven markets studied. The number of searches for brands in Internet-driven brands was 2.6 times greater than the number of searches for brands in established categories. Search indicates Salience. It reveals what brands the consumer thought about when considering a purchase or looking for a solution.
The need to strengthen differentiation is especially important for brands in established categories. This need to raise Different scores is common across Chinese brands, according to recent BrandZ™ Top 100 Most Valuable Chinese Brands research. A high score in Difference is important because it raises the likelihood that consumers will pay a premium for the brand, and it correlates with higher brand value. Over a 10-year period, brands ranked in the top half of the BrandZ™ Top 100 Most Valuable Global Brands ranking increased 124 percent in brand value. In contrast, the brands ranked in the lower half of the ranking increased only 24 percent.
Salience was critical when brands in established categories grew in prominence in China. But, in the digital age, Difference becomes somewhat more important. Difference acts as the stop sign, particularly when Chinese brands enter developed markets in North America or Europe, where a lot of shopping is habitual. Difference is the reason why consumers with a lot of choice might pause and pay attention to a new brand. Difference is also an important quality for appealing to new generations of shoppers who are more open to trying new products and brands. The Internet-driven brands are good at projecting Difference, which they derive from their strength in technology and innovation. Difference alone is not enough, however. Once the consumer is paying attention, only Meaningful Difference that meets consumer needs in relevant ways will lead to a sale.