They’re called by different names such as premium brands, luxury brands or even high-road brands. Regardless of the name, the value of attaining premium status in your industry comes with high rewards and the greatest return on sales (ROS) or margins in the industry. Moreover, as you attain premium status, you jettison the need to “push” ceaseless messaging and advertising and tip of field of gravitational pull in your favor by becoming a “pull brand” that attracts the right customers with less effort.
That said, not every brand can be a premium or high-road brand. For those brands seeking that status, however, I submit that pursuing a thought leadership marketing strategy is one path toward premium status. Let’s have a look at some of the characteristics of premium brands and how they correlate with thought leadership marketing.
What is a premium brand?
Premium brands are those that typically lead their category through innovation, innovation and more innovation. They also tend to earn more than 20% ROS (according to a Harvard Business Review article from 1997) while non-premium brands earn as little as 5% return on sales. Clearly there are financial advantages to being a premium brand. The consumers of premium brands also tend to be very loyal, willing to pay the premium price and continue to seek innovation (or tradition – the other side of the innovation coin in premium brands). While you may jump to BMW’s and Tumi luggage when you think of premium brands, let’s set our sights a bit lower. Kraft Macaroni and cheese is a great example of a ‘premium’ brand that has consistently outperformed competitors and store brands alike through constant innovation. Premium brands come in all shapes and sizes.
Characteristics of premium brands
When brands reach premium status, they typically exhibit a series of common characteristics:
Certainly there are other attributes that we could use to describe premium brands. However, these give us a reliable proxy for understanding what a premium service or product brand should look like.
Where does thought leadership fit in?
Thought leaders offer their market a unique and authentic value based on a differentiated point of view. Thought leaders are unique in their market position in that they are often the companies with the most profitable ongoing relationships with their clients and the industry that they serve. If we take a cross section of brands that practice thought leadership marketing, we’ll soon find that they have many of the same characteristics that are often attributed to premium brands. McKinsey consulting commands a premium for its services, Cisco extracts a higher return on sales than is peers in part due to its thought leadership in the computer networking market and everyone from vegetable distributors to startup internet companies command impressive returns by delivering tangible use value by producing thought leading content for their market than their downmarket peers.
Thought leaders, like premium brands, cannot go to market without something unique, innovative, authentic and valuable to offer. Moreover, just like premium brands have shown us the way on how define the best in a category, thought leaders use their passion and penchant for market stewardship and education to show us ‘how it’s really done’ by their industry leading standard.
Exploring the characteristics of premium thought leaders
You’ll see that we can begin to establish premium brand status for our organization by applying the same criteria from premium brands to our thought leadership marketing go-to-market strategy:
If premium brand status is your destination. There are a few tried and true paths to get there. However, I submit that for business-to-business marketers, professional service firms, non-profits and nascent startups they path of the thought leader is the way to go en route to premium brand land.
Dana, this post coincides really well with Dunay’s post from yesterday. As a B2B marketer for nearly 10 years, I believe that thought leadership is definitely a differentiator, but it’s also very challenging to initiate and then feed such a program.
There are also similarities with a social media strategy in that with a thought leadership program you really cannot go half way and expect significant results.
Paul,
Thanks for the comment! You are 100% right on. Neither thought leadership nor social media are meant for the episodic marketer. Commitment and consistency are required to succeed in either. I submit that if one (or a firm) does commit to either (or, ideally, both) that the rewards are significant and long lasting!
As for initiation and feeding – I agree – but also feel that thought leadership is well aligned with being a ‘good’ company with ‘purpose and usefulness’ in the marketplace. True thought leaders lead with a point of view that accounts for the industry challenges and their keen perspective on how to help their clients meet those challenges (which requires an equally keen understanding of the clients, the industry and the respective challenges). I don’t know that I can make a case/claim that thought leaders are “better companies” on an empirical basis, but I sure do believe that they are!
Dana,
Would you also say that ‘true’ thought leaders don’t need to tell people that they are thought leaders? So often I see b2b companies staking claim on thought leadership. I know they want to jockey for that position, but such status is determined by your audience, eh?
Sharon,
AAARRRGGHHHH! It drives me nuts when I see marketers trying to simply “claim” thought leadership. You can try to lead through thoughts, sure, but thought leadership is ATTAINED, NOT CLAIMED. (in my very less than humble opinion).
Needless to say, you’re 100% right – the audience ordains you a thought leader…you don’t put that crown on yourself… (kind of like becoming a saint, so to speak…saints DO things and are then proclaimed as saints…)
Perhaps you’d enjoy a post on this that I put on my own blog… http://www.marketingsavant.com/2008/11/20/thought-leadership-marketing-attaining-vs-claiming/
Dana,
Thanks for the affirmation and the link to your post. I subscribed to your feed along the way…looking forward to following your thoughts!