I have noted before that brands operate in categories called consideration sets. The categories are diverse, the accumulation of different sets of needs. For instance, the consumer needs to eat, so will make a selection from a consideration set consisting of foods.
But the consumer also needs to be clothed and have shelter, so those are two additional consideration sets. Simplified, it is the rich scope of Maslow in action.
The classical capitalist approach has been for the brand to compete for the consumer’s budget within a category as well as across categories. For instance, a food brand can compete with other food brands in a set, but it can also compete with different sets such as clothing or monthly payments to banks for mortgages.
The core concept that comes into play here is competition. Capitalist idealism uses ideas broadly linked to supply and demand to posit gains at the expense of other players in the market. Capital, labour, resources and IP create demand at the expense of the other producers. Yet those other players can operate at the expense of any similar enterprise.
This leads to the idea of a trade-off between expenditure on productive resources and profitability. The lower the level of profitability, the less attractive expenditure on resources becomes.
To counter the decline in profitability and the growing cost of resources, smart brands opt for the more subdued approach of niche positioning in the consideration set. In effect they limit resource expenditure and optimize profitability by focusing on a smaller market segment with specific needs and wants, rather than attempting to dominate a larger share of the consideration set.
What this implies is that there should be a conscious understanding of position in the consideration set. However, this may be arrived at through trial and error. Conscious understanding of position makes for quicker optimization of the position and better opportunities for management.
Call this collaboration between brands. A fuller range of need satisfaction is developed in the consideration set. The approach is not competitive, but seeks to find and exploit gaps.
By understanding the differentials that make up the position, the brand manager reduces the need for competition. If two or more brand managers have the same approach within the set, competition is reduced in the consideration set, and each brand and the entire category becomes more efficient. Although this is achieved with informal cartel behaviour an industry association would be a sensible platform to regulate collaboration on diverse product benefits and features. However, in general, when producers organize, the specter of uniform, anti-competitive pricing emerges.
An example of informal collaborative positioning can be seen in the market for vegetables. There is fresh produce, complemented by frozen and canned goods. Diversity is supplemented by price, weight and packaging, among others.
The point of this riff is that by understanding the gap, the brand manager can profitably occupy and hold a niche.
This reasoning is an internally directed chain of thought, managerially based. The brand and marketing benefit in strong differentials lies in loyalty. The consumer who responds to the differential will do so repetitively in the medium to long term will do so repetitively and with a lower need for push marketing.
*Pierre Mare has contributed to development of several of Namibia’s most successful brands. He believes that analytic management techniques beat unreasoned inspiration any day. He is a fearless adventurer who once made Christmas dinner for a Moslem, a Catholic and a Jew. Reach him at pierre.june21@gmail.com if you need help.
