6 Strategic positioning and brand identity There are four guidelines to communicating an effective campaign, according to adman par excellence, David Ogilvy (1983: 11–18). First, do your homework by studying the product (or experience) you are about to market. What business are you in? What is the basic character of the institution? How does the institution set itself apart from other organizations? The more you know about it and the position- ing strategies of competitors, the more likely you can come up with the so-called ‘big idea’: something that consumers want that competitors do not offer. Second, ‘what the product does, and who it is for’ is the essence behind positioning. Third, image is associated with personality: ‘Products, like people, have personalities, and they can make or break them in the marketplace’. Fourth, use the above steps to create the ‘big idea’ (or ‘unique selling proposition’). In many respects, Ogilvy was addressing the intersection of strategy and marketing. Auction house Bonhams (www.bonhams.com) is, at the start of the twenty-first century, the brand created by the merger of Bonhams & Brooks with Phillips in the UK. The luxury brands firm LVMH, one of France’s largest compa- nies, purchased Phillips in 1999. Bernard Arnault wants Phillips to be on a par with Sotheby’s and Christie’s. (Of course, Arnault looks at his overall performance against how well LVMH is doing against Richemont, another French luxury brands house, which includes Cartier.) Bonhams in the UK has a reputation of being a British-oriented firm with a strong regional network of salesrooms handling low- and medium-priced antiques. Owing to traditional links to solicitors and estate agents, there has been a perception that estate sales of the middle classes form a core segment; this also means that the opportunity to sell a seven-digit oil on canvas is rare, with the two leading firms carving up the high-priced end of the market. Bonhams seeks to present itself as ‘a fresh and highly credible alternative within the international auction market’ (advertisement in the V&A Magazine,January/April 2002). Does that make a strong statement about Bonhams’s personality? Is a big idea or positioning statement discernible from the following self-declaration: ‘So, while we may currently be the third largest, we should be the first choice’? Three points of reference are highlighted. Strategy as positioning, which is influ- enced by marketing, draws on the work of Michael Porter, who seeks to analyze the ways in which firms compete. Economic clustering encapsulates cities and creativity: issues of wealth creation are important, but innovation also enhances the social 72 Strategic positioning and brand identity fabric of urban living. Branding is assuming what appears to be mythic power. The role of the identity premium is instructive. Recent ruminations at the V&A draw attention to the links between institutional identity and national identity. Strategy as position As a management function, strategy (e.g. corporate strategy, strategic manage- ment) stresses a senior management perspective. Military connotations (e.g. the slogan ‘business is war’; and so-called tribal chants of high-wage earners like ‘wonga, wonga, wonga’) are rife, with particular reference to Sun Tzu’s sixth century BC text translated as The Art of War and Carl von Clausewitz’s On War (1816–30; original German). It is only since the 1960s, with the likes of Igor Ansoff (1965) and Alfred Chandler (1962), that strategy has been articulated within a management context. Like Ansoff and Chandler, Michael Porter is based at the Harvard Business School. Other contemporary management writers on strat- egy include Henry Mintzberg, Gary Hamel and C. K. Prahalad, and John Kay. Strategic management textbooks contain Michael Porter’s models, theories, and frameworks. Porter is one of the most recognizable figures associated with man- agement strategy, with convenient ‘decision-aids’ like three generic strategies, five forces (for analyzing competition and industry structure), and the value chain. In many respects, Porter’s texts, which are used to train management students, impress upon future managers the need to design competitive strategies that pre- serve organizational autonomy while keeping price competition to a minimum. In particular, Porter posits ‘strategy as position’. This is most apparent in Competitive Strategy (1980), a watershed text that met the needs of academics and managers. It cut across many management disciplines – namely marketing but also production, control, and finance – to offer a relatively holistic view of the entire firm. Three generic strategies available to firms in order to outperform industry rivals are: overall cost leadership (i.e. having a cost structure lower than competitors), differentiation (i.e. creating an offering that is perceived industrywide as being unique), and focus (i.e. serving a particular target very well), according to Porter. How should the firm position itself vis-à-vis competitors in its chosen market(s)? What audiences are to be served? According to Porter, firms unable to adopt one of the stated generic strategies will find that they are ‘stuck in the middle’; at best they will ‘muddle through’, while being vulnerable and susceptible to better-positioned competitors: The firm stuck in the middle is almost guaranteed low profitability. It either loses the high-volume customers who demand low prices or must bid away its profits to get this business away from low-cost firms. Yet it also loses high- margin business – the cream – to firms who are focused on the high-margin targets or have achieved differentiation overall. The firm stuck in the middle also probably suffers from a blurred corporate culture; a conflicting set of organizational arrangements and motivation systems. (Porter 1980: 33) Strategic positioning and brand identity 73 This suggests that a clearly articulated position is a necessary first step to success. Moreover, in Competitive Strategy, Porter proffers five competitive forces as an instructive introduction of how to consider micro-level factors shaping the com- petitive structure of an industry: intensity of industry competition, bargaining powers of buyers, bargaining power of suppliers, degree of substitutes, and entry and exit barriers. ‘The underlying structure of an industry, reflected in the strength of the forces, should be distinguished from many short-run factors that can affect competition and profitability in a transient way’ (Porter 1980: 6). Consider media and entertainment conglomerates such as Disney, AOL Time Warner, News Cor- poration, Pearson, and Bertelsmann. Capital costs to enter are relatively high and oligopolistic tendencies are prevalent so that most entertainment industry seg- ments come to be ruled by large companies with relatively easy access to large pools of capital. Marketing expenditures per unit are high, which highlights the importance of marketing to generating revenue streams. Ancillary markets provide disproportionately large returns (e.g. the initial theatrical release of a film is becoming less significant a source for overall revenue when examined alongside revenue from cable and home videos, and merchandising associated with character licences). Strong popular appeal is crucial if a vehicle is to generate revenue. Searching for universal appeal helps to account for the abundance of action flicks starring well-known actors or actresses. Within each industry, there are clusters or groups of firms competing in a similar manner. The firm’s level of success is determined not only by the industry in which the firm operates, but also the strategic cluster in which it competes. The concept of ‘positioning’ becomes important as it implies a frame of reference, that of competi- tors and consumers. Positioning decisions are crucial: they can have an impact on perception and choice decisions. Positioning starts with a product, according to Reis and Trout (1981), and then focuses on what is created in the minds of custom- ers. Positioning is about the image of the product in the minds of the selected target group vis-à-vis competing firms. Who are the primary and secondary competitors? How are the competitors perceived and evaluated? Are the differences significant and meaningful? Analyze customers by trying to get a deeper understanding of their perceptions. Selecting the position usually requires a segmentation commit- ment (i.e. it is necessary to concentrate only on certain segments). Monitoring is important: a positioning objective should be measurable; and it is important to track the positioning strategy over time in order to generate diagnostic information about future positioning strategies. Positioning strategies operate on various dimensions. The Producers, a Broad- way production based on the film by Mel Brooks, opened in 2001 with retail prices in excess of $100. The high price was a signal of quality, a correlation promoted by many branded products. David-to-Goliath positioning is used when a smaller com- petitor wants to promote itself as innovative. The English National Opera, with productions sung in English, cheaper ticket prices, and a more informal code of conduct, has been likened in the Wall Street Journal (10/11 September 1999) to the NASDAQ stock market (listing many fast-growing technology firms), in compari- son to the New York Stock Exchange of its more established rival at Covent 74 Strategic positioning and brand identity Garden. As another opera