PR for Product Differentiation


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PR is an excellent way of differentiation commoditized products and services in highly competitive markets and for explaining and giving credibility to those differences.

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PR for Product Differentiation

  1. 1. Differentiating commoditized Products with PR May 2012 By Justin Pugsley of JJPAssociatesIts a fact that the vast majority of companies sell commoditized products and services –few have truly unique and original business models. But that doesnt mean they need toget caught up in a race to the lowest common denominator in terms of profits and in factmany avoid such a fate.In highly competitive industries where companies are selling commodity like products orservices public relations can play a key role for developing and reinforcing productdifferentiation, which is so crucial for sustaining and building profit margins, to increasemarket share and for economies of scale. The business world is full of examples ofcompanies, which through product and marketing innovation have managed to avoid sucha fate.To achieve differentiation, marketing professionals typically employ a range of strategiessuch as emphasizing better quality, higher levels of safety, superior levels of service, morein-depth experience, a unique supply chain benefit, strong credit worthiness and so on.Therefore creating a brand, which emphasizes such benefits, can be a very effective wayof differentiating a commodity-centric product or service. To be effective and to resonatewith consumers, a brand needs to be associated with qualities and attributes thatconsumers value and feel are either worth paying extra for or are worth their loyalty – i.e.repeat business and making recommendations to others.More specifically, those values could be related to producing a product in a moreenvironmentally friendly way than most of the competition, a unique level of service, aguarantee of some sort that is not common across the industry, better payment terms andso on. Identifying, which qualities and attributes customers most appreciate and thereforewhich ones should be focussed on, comes down to thorough market research.Where PR comes in is to explain and accentuate those values in the market place, whichwill hopefully define the organisation from most of the competition. That involves givinginterviews with targeted media outlets, whether it be traditional publishers or bloggers andbeing on hand to comment in articles dealing with relevant topics to build up the correctassociations with consumers.For instance, people are more likely to believe the value of a unique or unusual guaranteeif they read or hear about it from a third party media channel they regard as beingtrustworthy. These days that channel could just as easily be a major news outlet, aspecialist publication or some form of social media, such as a recommendation from afriend on Facebook or a tweet on Twitter.Explaining clearly how that guarantee works, how it is possible and why it hasnt beendone before all ads to the credibility and believability of the offering and therefore supportsthe marketing message and potentially makes it much more effective.Copyright © 2012 by Justin Pugsley - 1
  2. 2. PR & Product Differentiation: Premiumizing Palm OilPalm oil production in southeast Asia has developed a bad reputation with the public in theWest in that it is associated with the clearing of rain forest to make way for thousands ofacres of monoculture plantations – which hardly benefits the environment or plant andanimal diversity.That image problem opened an opportunity for a different kind of palm oil producer tomake its product in a more environmentally sensitive way, often planting on scrub land ortaking over poorly run and mismanaged existing plantations and implementingsustainability programmes.Yet palm oil is an important ingredient in margarine, crisps, cereals, animal feedstuffs aswell as soap, washing powders and even bio-fuels and demand for the oil is growingacross the world.However, its all very well for a palm oil producer to advertise that it makes its product in asustainable way, the implication being that it deserves a premium for not destroyingpristine rain forests. The only problem is that the public is often sceptical of such claimsthinking: “oh they would say that” or “theyre just jumping on the conservation bandwagon”and at the very least want some third party proof of those claims. There are various NonGovernmental Organisations that can verify such claims, though such validations are ofgreat value, theyre not enough.Getting that story covered by the media, providing solid verifiable evidence that itsproduction is indeed done in a sustainable manner, carries far more weight with the publicthan just seeing an advert that makes those claims. At the very least content provided byneutral third parties – i.e. respected publications – gives the marketing and branding a lotmore credibility. The next stage is to stay in the loop in terms of the debate on theseissues, such emphasizing techniques for sustainable production and initiatives to help rainforests, and gradually that will solidify that companys image as a responsible palm oilproducer.By continuously driving that message home makes it easier for responsible palm oilproducers such as New Britain Palm Oil to sell their oil to multinational Fast MovingConsumer Goods manufacturers such as Unilever and charge them a premium for doingso – why? Because Unilever wants to show to their market that they source theiringredients from responsible suppliers. For producers like NBPO there is the opportunity tobuild relationships with such strong off-takers, drive economies of scale and sustain profitmargins.Now theres a commodity called palm oil and a premium product called sustainablyproduced palm oil, but both are basically still the same commodity. And by continuouslyreinforcing to the public through PR the benefits to the environment and to rainforestpreservation of buying products made from sustainably produced palm oil actually helpscement market position and reduces competition from those that dont produce palm oil ina sustainable manner.The huge value of PR is that by continuously reinforcing the message to the media helpsCopyright © 2012 by Justin Pugsley - 2
  3. 3. highlight the need for buyers such as Unilever to carry on purchasing that product and ifnecessary pay a premium for it, which it does. Its a classic case of PR not only supportingthe marketing, but actually giving it very considerable leverage and arguably helping tocreate a premium for a commodity product.PR & Product Differentiation: Charging A Premium For CementAnother fascinating case study is that of Mexico-based international cement producerCemex. Cement is an exceedingly tough and competitive business and is about ascommoditized as an industry can get. Also, transporting already mixed cement is difficultas it dries and the timing of demand from a project can be difficult to forecast as it is oftensubject to delays or even weather related events.From the late eighties Cemex tackled the problem in Mexico where communications arechallenging and traffic jams are notorious by developing fast and robust communicationssystems to reduce waste and make sure cement could be delivered to its customers whereand when it was neededThis necessitated investing in satellite-based communications systems, greaterautomation and linking customer order information all the way down the supply chain in asnear real time as possible so demand could be better anticipated and met. The systemwas able to quickly check inventory levels route trucks with cancelled orders to other siteswhere cement was needed and so on. In effect, Cemex guaranteed deliveries within a settime frame, which became very popular with construction companies.One of the problems the construction industry faced was having to wait for cement to bedelivered and while waiting would often have to pay work crews to stand around doingnothing, it could also feed into expensive project delays. Such was the popularity ofCemexs innovation in the Mexican cement market that its clients were willing to pay apremium for its product.Cemex offered a supply chain or delivery advantage to its client base, which others didnt –and as such was able to differentiate its product and even its brand i.e. looking more like asolutions provider rather than a commodity maker. Naturally, its a path most of the bigcement makers now follow. But PR can play an important role in communicating thosebenefits to an industry explaining how end users gain from using it, showing how thesupply chain process was developed and why it is unique.As for the media it is always looking for the next new story or trend. In the case of adevelopment like the Cemex one actually demonstrating to journalists from the tradepress, such as specialist cement and construction publications, how the whole processworks can be of enormous benefit to supporting claims of guaranteed delivery times forexample to a potentially sceptical audience.PR & Product Differentiation: The Estate Agents ConundrumIn the UK, the estate agent or realtor market is highly competitive and home owners aretypically charged a commission of 1-2% or even a flat fee on the sale of their homes, amuch lower rate than in other countries. Besides, there are many providers that for aminimal fee allow home owners to market and sell their own properties – thereby cuttingCopyright © 2012 by Justin Pugsley - 3
  4. 4. out estate agents altogether.When it comes to marketing those properties many estate agents, particularly in Londonand the south east of England, are faced with getting most of their leads for home buyersfrom a highly successful property website called For many estate has replaced local newspapers as the main channel for property buyers.The risk for an estate agent is to get caught in a pincer movement of rising marketing costsand having to charge lower commissions in order to get business from home sellers.Differentiation in this type of market, enough to charge higher commissions than rivals,takes a lot of effort, and PR is an ideal way of communicating that superior offering.In terms of finding properties to market, that often comes down to having a presence onthe high street, adverts in the local newspaper(s) and possibly local radio, a website anddirect marketing activities such as leafleting to households. Since it is the seller who paysthe commission it is important to convince this group of people over the value of theservices being offered and why they should pay a premium.Some estate agents successfully differentiate themselves from the competition on theirlocal knowledge and their ability to find the right buyers, possibly through careful selectionprocesses, who are willing to pay market prices or sometimes more for properties. Forinstance, a one branch estate agent run as a family business for several generations cancredibly claim to have an in-depth knowledge of the local market.Where PR can reinforce that local expertise is for the nominated spokesperson to be onhand to comment to the local media about developments, which effect the local propertymarket, whether it be related to local planning permission issues, moves in interest ratesand so on. A way of demonstrating to local journalists that willingness to be interviewed isto quickly send them a news releases commenting on the latest developments, whichimpact the local property market and also to have a news page for the releases withcontact details of the press spokesperson on the website. After a while journalists willsimply get used to contacting that person for comment – making the whole PR exercise alot easier.That public persona can be further built upon if the editor of the local newspaper can bepersuaded to allow the estate agent to write a regular editorial column about conditions inthe local property market or give home owners advice on how to get the highest price fortheir property. With local newspapers and sometimes even with local radio stations – a fiveminute slot for example – this can be quite a successful strategy as these types of mediaorganisations are often cash strapped and need regular quality content.This can also be done on a blog on the website with the posts e-mailed out to the list ofprospects on the mailing list. Also, sometimes a good blog piece can actually be turnedinto a news release providing that it is topical to events in the property market.All of this builds an impression of market expertise. However, it is critical that the contentprovided contains useful information for readers interested in the local property market andis not merely self-promotion – if it is, it will not be taken seriously or even read.Other ways for a local estate agent to generate publicity is maybe to sponsor or back aCopyright © 2012 by Justin Pugsley - 4
  5. 5. local charity cause – if this can be done in conjunction with local media then all the better.Yet another form of differentiation is maybe to go further than the competition in terms ofmarketing properties – maybe via a video, clearer explanations, more better pictures etc...all factors that could get more potential buyers through the door. Also, factors that coulddeserve a higher level of commission for the estate agent. Most home owners would bewilling to pay a higher commission if they believe an estate agent can negotiate a higherprice from a buyer for their property as ultimately theyll be better off anyway.PR & Product Differentiation: Living Up To ExpectationsThese days consumers are becoming increasingly sophisticated and well informed. It isvery common for people to first research a company on the Internet before purchasingfrom them by trawling forums, twitter feeds and so on for comments from other users andto get their experiences. Other peoples experiences can form a major part of the decisionmaking process towards making or not making a purchase from a particular provider. Also,links to articles tend to be shared in the social media arena to back a point or to sharesome new or interesting information with the group, which is why an all round approach toPR is important.The growth of social media makes it even more crucial that companies walk the talk inthat they live up to values and claims contained in their branding, PR and marketing. Forcompanies that really do practice what they preach in very competitive markets and thatoffer genuine reasons for positive differentiation stand to greatly benefit from social media.That also creates positive reinforcement of the brand.Failure to live up to claims implied in the brand and made in the marketing will see thecompany identified by prospective customers as being nothing special, therefore notdifferent, or worse hypocritical and dishonest, a message that could quickly spread onsocial media platforms creating a very negative form of differentiation. Companies whichdo live up to their values and marketing claims also find it easier to defend themselveswhen faced with criticism. They also find it easier to apologise and rectify the cause of theproblem when they are wrong.For companies which do create a differentiator of some sort, PR can be very useful fortalking down the competition – something that is not well suited to advertising. This cancome down to explaining to journalists that the company has developed a competitiveadvantage uncommon in the industry and invite the media to investigate that claim.Indeed, a report in a trade publication writing about the superior performance of product Aover B is far more credible to readers than if the maker of product A makes that claim in anadvert.Another tactic often used by large well known firms is to leak details of an upcominginnovation or new product and create a buzz and excitement – car manufacturers do thisregularly ahead of the launch of a new model. Often these deliberate leaks (or scoops tojournalists) are made to a well known blogger or journalist and that in turn is picked-up bythe rest of the media and soon it turns into a debate and speculation over the nature of thisproduct and when it will be launched. It helps drive anticipation and creates an audiencehungry for more information ahead of the official launch when all is revealed. But becareful not to over-hype and create disappointment.Copyright © 2012 by Justin Pugsley - 5
  6. 6. Also, the media is increasingly fragmenting, a necessary response for sifting and dealingwith the huge and growing torrents of information that is easily available to most people. Insome ways this is good as it can make it easier from a PR perspective to reach moretargeted audiences with a specific messages. The downside, particularly for massconsumer brands, is that it is potentially more work to spread the message out to thegreatest number of people and there is a risk that different messages to differentaudiences could sow confusion as to what the brand really stands for and to whom theproduct is aimed at.Differentiation is crucial for the long-term profitability or even the survival prospects of mostcompanies competing in highly competitive markets with commoditized products andservices. Ideally, the positive qualities associated with that differentiation should bemirrored in the brand and PR can play a vital role in bringing that about.For more reports: us on Twitter at: © 2012 by Justin Pugsley - 6