Positioning Brands Against Large Competitors to Increase Sales

Neeru  Paharia; Jill  Avery; Anat   Keinan

Article | Journal of Marketing Research (JMR)

Positioning Brands Against Large Competitors to Increase Sales

by Neeru Paharia, Jill Avery and Anat Keinan

Abstract

We explore the effect of having a large dominant competitor and show the conditions under which focusing on a competitive threat, rather than hiding it, can actually help a brand. We demonstrate through lab and field studies that highlighting a large competitor's size and close proximity can help smaller brands instead of harming them. We find that support for small brands goes up when faced with a competitive threat from large brands, versus when they are in competition with brands that are similar to them, or when consumers view them outside of a competitive context. This support translates into purchase intention, real purchase, and more favorable online reviews in a study of over 10,000 Yelp posts. We argue that this "framing the game effect" is mediated by consumers' motivation to express their views and have an impact on the marketplace through their purchasing.

Keywords: marketing; Brands; brands and branding; brand management; brand positioning; competitive positioning; Brands and Branding; Marketing; Marketing Strategy; Consumer Products Industry; Retail Industry; Food and Beverage Industry; Air Transportation Industry; United States;

Format: Print

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Citation:

Paharia, Neeru, Jill Avery, and Anat Keinan. "Positioning Brands Against Large Competitors to Increase Sales." Journal of Marketing Research (JMR) 51, no. 6 (December 2014): 647–656. (Lead article.)

Shiseido was in the midst of a six year corporate turnaround, trying to reverse the effects of decades of under-investment in R&D and marketing which had led to a cycle of declining customer support and brand value. Would the CEO’s VISION 2020 plan, centered on four strategies: 1.) increasing R&D spending from 1.8% to 3% of sales, 2.) investing an incremental ¥120 billion in brand-building marketing, 3.) moving to a “think global-act local” matrixed brand management structure, and 4.) rethinking brand portfolio strategy, be enough to achieve aggressive 8% per year sales goals while simultaneously increasing the company’s operating margin from 8% to 10% in the highly competitive and slow growing beauty industry?

On Friday, February 22, 2019, following an unexpected and disappointing earnings report, The Kraft Heinz Company’s stock price fell 27%, wiping out $16 billion in market value. CEO Bernardo Hees had announced that the company had taken a $15.4 billion asset write-down, that the company would be cutting its annual dividend from $2.50 to $1.60 and that it was under SEC investigation for accounting irregularities related to its procurement process. $8.3 billion of the asset write-down was related to a loss in value of the firm’s intangible assets, specifically its Kraft and Oscar Mayer brands. As Kraft Heinz looked ahead to the future, it was time to recalibrate its brand management strategies. With $50 billion in brand assets remaining on its balance sheet, effectively managing its brands going forward was critical to avoiding another brand asset write-down and to regaining the $8 billion brand value the company had just lost. Was Kraft Heinz's brand asset write-down the beginning of the end of the market dominance of "Big Food" brands across the board or was it idiosyncratic and a result of the firm's brand management resources, capabilities, and strategies?

Case | HBS Case Collection | January 2019 (Revised June 2019)

Glossier: Co-Creating a Cult Brand with a Digital Community

Jill Avery

Glossier’s proclaimed strategy was “born from content; fueled by community.” The digital-first, direct-to-consumer beauty brand had experienced rapid growth, with sales up 600% in 2017 and a customer portfolio that grew by threefold. But, its founder, Emily Weiss, was not complacent. Instead, she dreamed of creating the world’s first socially driven brand that inserted its community into the buying experience so that the company was merchandising people, their opinions, and their content, just as much as they were merchandising products. As her team debates marketing strategies for 2018, they recognize the opportunities and challenges associated with managing Glossier’s rapidly scaling brand community. While the community’s support had emerged organically in the past, the team was now debating whether the company’s next phase of growth would need to be fueled by a greater emphasis on paid peer-to-peer sales representatives, professional influencer marketing, paid media, and a physical market presence.

Keywords: Brands; brand management; brand communication; retailing; e-commerce; DTC; influencer; digital marketing; social media; Startup; internet marketing; big data; crowdsourcing; Marketing; Marketing Channels; Marketing Communications; Brands and Branding; Marketing Strategy; Entrepreneurship; Venture Capital; Consumer Behavior; Distribution; Growth and Development Strategy; Consumer Products Industry; Beauty and Cosmetics Industry; Retail Industry; United States; North America;

Citation:

Avery, Jill. "Glossier: Co-Creating a Cult Brand with a Digital Community." Harvard Business School Case 519-022, January 2019. (Revised June 2019.) View Details

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Positioning Brands Against Large Competitors to Increase Sales

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