Building Your competitive edge in 2010

It's always exciting to see what a new year can bring, and with the glimmer of economic recovery, brands need to be clear in communicating their competitive edge to consumers in order to secure their success. They must also understand where consumer behaviour is headed in 2010 and align their strategies accordingly.  

Understanding the past in order to move forward

The turbulent economic climate of the past two years led customers to rapidly change their spending behaviour; 2008 saw the trend toward thriftiness and bargain hunting, and over the past year, consumers have developed a more conscientious approach to purchase decisions.

In the majority of sectors, the companies advertising low-priced, no-frills offers have thrived such as Accor Hotels, AirTran and the UK's TK Maxx, while high-end brands such as British Airways have struggled to adapt and compete effectively in this environment.

The year of "true value"

This conscious change in focus by the customer is set to continue into 2010 and, rather than looking for the lowest prices, above all, consumers will seek out those brands which provide the bestvaluefor them. You may think this seems like nothing new, but it means much more than exchanging money for an equal amount of value as consumers reconsider the importance of the overall brand experience. Therefore, understanding how your customersperceivethe value associated with your brand and your ability to deliver on your brand promise in a unique and relevant way will be crucial to achieving success in the coming year.

This shift to true value is evident in the European hard discount retail sector, which is starting to show signs of stagnation. This is in contrast to this time last year, when brands such as Lidl and Netto were flourishing and Aldi had just recorded a 25% year-on-year growth. A typical consumer will now look at the total offering, which may include convenient locations, customer service, availability of shop staff and an attractive store loyalty programme; rather than a simple like-for-like price comparison.

Key considerations for businesses

Going forward, consumers will look for brands to provide absolute clarity on their value proposition over competitors.  Loyalty reward levels and offers should be simplified and communicated in a regular and timely manner that engenders customer intimacy, through relevance, value and trust. The need for tiered rewards accessible across multiple platforms - both instant and downloadable - will be paramount in meeting the value expectations of consumers. Companies should encourage desired behaviours and support instant recognition through real-time reward and redemption options.

Marketers will therefore need to be very clear on their key differentiators, especially as consumers become increasingly savvy in understanding loyalty offerings. Tools such as Perkler.com, that help Australian consumers compare and analyse loyalty programmes, and global social media peer-to-peer interaction, will also assist in exposing actual value.

Companies will need to evolve core loyalty propositions by offering programme extensions that create additional value for the member but that also drive ancillary revenue for the brand.Australia's Virgin Blue achieved this successfully with its Velocity Rewards 'Shop and Earn' store where customers earn points for everyday shopping, thereby extending the value of their membership into other areas of their life.

Partnership strategies are being revamped to eliminate those that provide little or no true value, in favour of more solid partner alliances with like-minded brands that provide their customers with directly relevant and unique products and services.

And finally, mobile and other social platforms will become even more important as consumers increasingly seek access to information and the ability to engage with a brand or other consumers anytime and anywhere - including at the point of sale. Companies need to be ready to help facilitate and add value to this interaction where possible.  

Two three years out 

Looking beyond 2010, purchase behaviour is expected to shift toward a more niche and potentially premium focus as consumers grow more confident and the economy becomes more buoyant.  Economies recover at different rates and it could be argued that countries such asChinamay already be moving in this direction.

For today and tomorrow, marketers need to retain a heavy emphasis on improving their intelligence and staying closer than ever to the consumer. Implementing and learning from customers directly, new marketing and business initiatives must encourage greater brand interaction whilst meeting the customer's need for value. This will ensure that companies are continually aligned and proactive in their approach, rather than being sluggish and reacting too slowly to customer and market changes.