Product or brand differentiation is an age-old problem for marketers, made even worse by the relative lack of geographical barriers that exist online. When a retailer doesn’t need to differentiate itself, it probably won’t, but one of the main retail problems experienced online is how to get customers when they have so much choice.
For example, most people reading this in the UK will do their weekly shop at Sainsbury’s, Tesco, Asda or Morrisons. I’m willing to bet that decision is motivated almost entirely by convenience. If you live near a Tesco, but move to the other side of town and it’s now easier to do you shopping at Asda, do you care? Probably not.
The same is true of other retail sectors that have physical shops. You’re about to redecorate your bedroom and need some paint. Do you choose between B&Q, Wickes or Homebase because you have a deep affinity with them? Or do you choose whichever happens to be the easiest to drive to?
When it comes to online retailers that sell similar products, at similar prices to their competitors, they simply must find a way to differentiate themselves.
However, it’s not enough to simply recognise that, organisations simply must find a way to put it into practice.
In this blog post we’ll be exploring two ways in which retailers differentiate themselves in their marketing, using real examples and tips for how you can do the same.
Retail with a conscience
In 2019 and beyond, consumers are becoming increasingly aware of social, environmental and economic issues that are facing the world, and many are taking their hard-earned money and spending it with retailers who have differentiated themselves from the competition by having a conscience.
In 2016, Morgan Stanley surveyed 1000 customers in the UK for their views on clothing retailers and found that while price and quality still rank as the most important factors affecting buying decisions, ethical concerns have increased by 9% in importance since 2010, especially among the younger consumer demographics.
A study of 2000 US adult internet users in 2015 found that more than half of respondents stop buying from companies they believe are unethical.
It’s clear that this is a growing trend and retailers that wish to succeed and differentiate themselves in 2019 need to make sure that they’re ethical.
So, what’s an example of an ethical company that succeeds?
The high-end outdoor company that’s beloved of explorers, #vanlifers and trendies in equal measure is also a fantastic example of a company that’s differentiated itself in its market by walking the walk, not just talking the talk.
It should seem like a no brainer for an outdoor company to be ethical but Patagonia have been the trendsetters that others have followed.
Patagonia’s entire supply chain is ethical which includes certified organic cotton, a high percentage of recycled fabrics, excellent labour conditions, strong animal welfare policies and a general willingness to change when issues arise.
Listed as one of 2018’s most Innovative Companies, they have openly bucked the trends of other major companies trying to stay neutral on hot topics and have encouraged their staff to take days off to vote in elections, to champion environmental protections, sued the Trump administration, and even donated their unexpected $10m windfall from Trump Tax Cuts to grassroots organisations that fight the causes of climate change.
It’s something that seems to be working. Every time they amplify their social mission, their revenue grows even more.
In fact, it’s estimated that from 2014 to now, revenue and profits have nearly quadrupled and now stand close to $1bn. Like it or not, the younger generation of consumers are increasingly conscious of how and who they spend their money with… and retailers need to act.
In fact, it’s suggested that 92% of millennials are more likely to buy products from ethical brands and retailers.
If you’re a retailer rather than a brand, you may not have the flexibility to be able to make wholesale changes, however, there are a number of things you can do to appeal to the ethical concerns of your customers. Examples could include:
- Ensuring your logistical partners are aware of and committed to reducing their carbon footprint.
- Committing to your own environmental policies. It could be committing to become carbon neutral, or plastic free by a specific date.
- Ensuring that any external delivery providers you use are committed to respecting worker’s rights. Shout out to Hermes here who have recently committed to do doing so.
- Ensuring your own workers are treated properly as a minimum and go above and beyond to treat them great. For example, compare the press coverage of Sports Direct with that of Richer Sounds.
- Investing in your own CSR efforts.
Cultivate and Embrace a Community
As we’ve already discussed, it can be hard to differentiate yourself from the competition, especially if the products you sell or the service you provide is similar. Currently it’s estimated that:
- 93% of millennials have made a purchase based on a recommendation from a friend or relative
- 89% of millennials trust these recommendations over the claims of the brand itself
- By 2025, 75% of the American workforce will be millennials
Clearly, cultivating and embracing a community of customers and advocates could ensure an organisation’s continued success. So how do you go about this when every other retailer is looking to do the same?
Broadly, brands that take something unique about their brand or service and amplify it tend to perform best when it comes to creating a community. And naturally, some industries lend themselves to this better than others.
Let’s have a look at one of the best examples of this happening organically, and then explore how their lawyers very nearly ruined it all.
This blog, started by Malaysian IKEA fan ‘Jules Yap’ in 2006 has grown to be one of the most well-known home and DIY blogs online. It’s also spawned social media communities on Instagram, Facebook and Reddit as people post their own hacks of famous IKEA furniture. These sorts of online communities and groups are worth their weight in (flat packed) gold and many retailers spend significant amounts of time and money to grow them, so the fact that this one grew organically is even more special.
Of course, IKEA aren’t the only company that sells flat pack furniture, but through their product differentiation they certainly are the most associated with modern, sleek and innovative home furniture, and they have an army of devoted fans.
That’s why what happened in 2014 is even more baffling.
A tl:dr version of that link is that IKEA got their lawyers involved in a trademark dispute over the small amount of advertising revenue that Jules was making from her site. As Gizmodo put it…
“It’s petty and tone deaf, a rare misstep for a company that has a knack for good PR. Instead of encouraging a blogger who has spent years creating what amounts to free publicity for Ikea—and helping people find more reasons to buy products they may otherwise have overlooked—the company is bullying her over a tiny amount of advertising revenue.”
Ultimately, IKEA saw sense and reversed their decision, so long as the site doesn’t contain any commercial elements. Ultimately, they must have seen the value in an engaged and devoted online community. They probably didn’t want the bad PR either.
The French beauty giant Sephora quite rightly gets lauded as one of the best when it comes to growing and maintaining an online community.
Their Beauty Insider forum was created off the back of thousands of online reviews and questions on their main site. It acts as a hub for their customers to share beauty tips, ask questions, and help solve others’ problems. It also allows customers to upload their latest looks with Sephora products and the platform automatically links to the products for people to purchase them directly.
At the time of writing there are over 3000 pages of forum entries, and the retailer themselves have barely had to lift a finger! Users have access to thousands of unbiased reviews and queries, with the added bonus that they become influencers themselves. It’s been described as “like Reddit for beauty lovers”
So how do you go about creating a community?
Creating a community to differentiate yourself from your competition is not easy, but if you invest the time and effort to do it properly then the effects can be priceless.
- Identify a theme or area to build around. In the examples we’ve seen, the people involved had a clear idea or theme to focus their efforts on. Potential members of that community are much more likely to get involved if they know what it is… obviously.
- Do something different. While not impossible, it’s unlikely you’re going to draw people away from an existing community if you don’t offer them something new and/or better. Identify a gap, solve a problem, do something new and exciting, or make life easier for someone.
- Don’t Give Up. These things take time, money and a lot of effort but if it’s done right then it’s money well spent. Have a plan and follow it through. It’s also important not to get too hung up on ROI and measurement. These things can often be based on ‘feel’ rather than raw data.
- Recognise when to hand it over. Ever been to a party where the host tried to force the fun? Well this is the same. Despite building it and putting in the effort, a community always belongs to the users. Allow them the freedom to express themselves as they like.
- Make sure to choose the right platform. If you’re making your own, then you have more autonomy but if you plan to use an existing platform then you need to consider who uses it and for what. IKEA Hackers probably isn’t very active on LinkedIn, for example.
We’d love to hear some examples of online communities you’ve seen online, or perhaps you’re part of. Let us know in the comments or on social and if you need assistance identifying and growing your user marketing then don’t hesitate to get in touch. You can call us on 01273733433 or via the contact form below: