Friday, 11 December 2009

Social Networks, Geolocation, Recommendations and Double Jeopardy....

      Warren Buffet was attributed to once saying "Your premium brand had better be delivering something special, or it’s not going to get the business”, but is this necessarily true? While logic would dictate that those brands which charge more must deliver a greater value in return, theories such as Ehrenberg's "Double Jeopardy" highlight the power larger brands have in the market place."Double Jeopardy" as described by William Mcphee and more famously, Andrew Ehrenberg, describes the concept that lower market share brands face a double challenge in competing with larger brands as they lack market share and brand loyalty from consumers. In such situations, the advantage large brands have from such jeopardy may encourage consumers to repeat purchasing behavior on factors beyond the value delivered by a specific purchase.

     To combat the advantage large market share brands have in the market place, smaller brands much differentiate. However, as large brands hold the advantage of possessing the promise of a standardized consumer experience, smaller brands must assure the consumer of quality, while still differentiating in tangible ways from larger competitors. Certain sectors allow for this more so than others, with clothing and food retailers serving as an example where double jeopardy and large brand advantage is chipped away by factors such as convenience, location, product differentiation and varied cost. In an example of such, Pizza Hut may provide a standardized dining experience over the Italian bistro down the corner, but consumer taste may eschew what is seen as pedestrian fare for a more personalized experience.

      Using the food retailing example further, it becomes clear how smaller market share (i.e. non-chain) restaurants face the dual challenge of differentiating in image while still assuring the consumer of quality vs. larger chain restaurants. Segments of consumers may always ignore larger brands out of principle (I for one irrationally loathe Arby's), but attracting the majority of consumers hinges on convincing them of not only an interesting and different product, but also of a level of performance and quality. The development of social media use within the last decade provides a unique opportunity for such retailers. Large brands have the challenge of convincing users to trust them in a way small brands don't. The "corporate stigma" of such means that smaller brands have the opportunity to gain consumer trust quicker. While these brands still have to convince consumers of their standard of quality, they have the ability to confer an earnestness to their image that goes well with the communication model found in social media.

The ability of recommendation sites to get the word out about smaller retailers works both ways....

        Sites such as Qype and Yelp operate as a network of consumer reviews and recommendations with an established and growing database of users and locations. Having been established since 2004-2005, these sites have become a hub of user generated information for consumers, providing third party recommendations on the standards of quality provided by smaller/medium brands. Where smaller restaurants lacked the ability to widely spread their message of differentiation and quality, these recommendation sites have taken on the job for them. These recommendations chip away at an already weakened double jeopardy concept (due to the sector's composition and nature), allowing small food retailers to speak with a verifiable quality larger than their size.
        With the benefits of sites like Qype, the next issues for smaller brands and reputation in social media becomes the level to which user recommendations are trusted by others. A recommendation from a trusted source or with demonstrable elements can hold more impact than a glut of others. With the advent of microblogging sites, reviews have become much more instant, allowing users to confer a level of immediacy to their thoughts on smaller brands and retailers. While sites like Twitter may trim the amount of detail that can be given about a business or consumer experience, it does allow for opinions to be disseminated while still in the retail experience. Furthering this, geolocated services such as Gowalla, Foursquare, Rummble, Loopt, Dopplr, etc. add perhaps the highest level of authenticity to consumer reviews, confirmation that the reviewer is currently there or was in the past. By demonstrating consumer action, these services extend the depth of consumer reviews, as well as opening new avenues for promotion through their network.

Just a few of the many networks that are driving the ability of small brands to establish big loyalty

      The opportunities afforded by social media channels may challenge the traditional idea of brand loyalty and scale, but they can be co opted in both offensive (small to medium brands) and defensive (large brands) ways. For small to medium companies attempting to use social media advocacy to build their brand, its important to remember a few concepts:
          1.) Make sure the product delivers on its amount of advocacy will help (or actually be present) if the consumer experience is negative
          2.) Be honest about how your product fits into the consumer's mind.....performance and reputation building will function differently for different products. People are more apt to recommend certain product types overothers.
          3.) If the product fit is right, take advantage of the enthusiasm of networks and network users to grow their community....Just monitoring what people are saying is fine, but to actually chip away at large market share brand dominance, offensive measures promoting consumer involvement are useful. Programs such as Foursquare's "Foursquare for Businesses" initiative are useful to go beyond user recommendations to user interaction.

Larger companies face a more defensive structure when dealing with social networks and their brand loyalty. Without the organizational agility of smaller to medium sized brands, loyalty has to be protected through more thoughtful measures:
           1.)  Make sure the product and the surrounding associated amount of advocacy will help (or actually be present) if the consumer experience is negative or if brand perception is firmly entrenched. Larger brands with multiple locations are at more of a disadvantage when it comes to standardizing the consumer experience.
           2.) Use the scale of the brand to respond robustly to consumer comments. Unlike smaller brands, large brands aren't as likely to be able to build up earnest consumer recommendations as quickly without overcoming perceptions about corporations and size. The increased resources of big brands means that one can go beyond reacting to consumer reviews and opinions and actually respond, rectify and encourage advocacy.
            3.) Don't simply match what smaller brands are doing to increase advocacy, surpass it. If the resources are present to dwarf smaller brands interaction with the consumer, do it. Consider social network partnerships (as long as it fits the brand identity) or cross network promotions. The more users that can be gathered through the brand's scale effectively, the better.

        While the points made about double jeopardy and social media don't easily extend to all market categories, the original concept stays the same. Consumers may be more apt to review bars, pubs, restaurants and other retailers more than cereal brands, but that doesn't mean that something like smaller FMCG breakfast products can't leverage some consumer sentiment to affect distribution and retailer adoption. Within the above example, double jeopardy and brand loyalty is affected by inherent factors within the restaurant market, however the idea is clear that the way brands maintain and generate loyalty and adoption is changing rapidly due to the ongoing advancements in social media.

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