Tuesday, March 06, 2007

Find Your Niche

Credibility is a key element in activating the Curator Effect. Consumers reward the brands that speak to them. The more direct the dialogue, the deeper the connection. Perhaps the most important tool to inspire evangelism and word-of-mouth is finding your niche. This means knowing what business you’re in, knowing your audience, and demonstrating that you authentically understand them and even share their experiences and values.

Toyota has no fewer than 16 sub-brands. I consider Matrix, Corolla, Camry, etc. sub-brands because the primary brand is still Toyota. If you asked a Camry owner what brand of car they drive, I suspect the answer would most likely be "Toyota" or "Toyota Camry." (An exception might be Prius. The Prius has become the iPod of cars because it has eclipsed its parent brand.) Yet, when Toyota wanted to deeply resonate with the luxury buyer, it knew the Toyota name would hinder that connection. Thus, Lexus was born. Same process for targeting the urban youth market with Scion.

Product segmentation is achieved through sub-brands that each target a different demographic and pychographic profile. But, we should not expect a single name to credibly cross wider chasms. Toyota practices sound product portfolio management with its sub-brands and brand portfolio management with its separate brands such as Toyota, Scion, and Lexus.

Even with the Lexus case well established, Volkswagen chose a different route. It’s previous CEO wanted to follow VW’s audience as it grew out of the populist brand into the higher priced luxury market. Even though its brand portfolio included Audi, it launched the VW Phaeton. Almost indistinguishable from the Audi A8, the Phaeton priced out at $75,000 to well over $100,000 for the 12-cylinder version.

At the launch, reps from the company were asked a few questions about the strategy:
Q: Who exactly is the target customer?

A: Fiercely individual self-made people who aren’t label-conscious. They’re expected to be aged 50 to 55, 75-percent male, 85-percent married, 75-percent college graduates, with a $300,000 median household income…

Q: Won’t the Phaeton just erode Audi sales?

A: The company feels that the Audi A8 and VW Phaeton have such completely different personalities that they will appeal to different customers altogether. The aluminum Audi weighs so much less and feels so much sportier that it is seen as a BMW competitor, while the VW should appeal to a more comfort-oriented Mercedes intender.
This implies that Mercedes and BMW don’t compete with each other. But, far more importantly, it shows that VW did not understand the meaning of its brand and where it could credibly extend. Of course, you don’t have to take my word for it…

When VW pulled Phaeton from the US market, even its Bentley brand was outselling the Phaeton.

Toyota, on the other hand, understands the range of its brand and is courageous in marketing each brand in the manner that best positions it. Most companies don’t allow one division to disparage another. But Toyota is not shy to position hybrids against gas-only engines. And, while most companies take great pains to not offend anyone, Toyota lets its brands speak directly and resonantly to its audience, as in this Scion billboard:

1 comment:

fCh said...

Two examples, despite how well chosen, don't make science. And that's not to say that you claimed branding was (only) about science, but then how else could you foretell VW was going to be a failed approach?

In other words, it's much more obvious what happened when hindsight applies. It is much more difficult to build it from ground up, especially when not knowing the future.