There are three recent eras in the development of marketing strategy:

1. The Brand Equity Era: The late 1980’s was the age of brand-building, when brand assets were regarded as the source of competitive advantage and future earnings
2. The Customer Equity Era: The mid-1990’s saw the age of customer relationship building, which involves the development of lasting customer satisfaction in order to exploit the lifetime value of the customer. The argument here is that it is cheaper to retain the customer for life, than it is to compete for new customers.
3. The Business Equity Era: Now, in the early 2000’s we see the start of a new movement where, to brand equity and customer equity, we add market economics. This is based on the belief that having customers, and owning a brand, alone do not guarantee success, and that one cannot ignore market forces, most importantly the act of the customer-supplier exchange transaction itself - money for product.

The objective of strategic advantage is to grow value. The only real way to grow value is to achieve consistent positive cash-flow. Market share, brand equity and customer relationship management are meaningless concepts unless they are harnessed to produce cash flow and improve shareholder value. And, one cannot create value in the long term without sustained growth.

So, strategic advantage is all about constant, incremental sales growth – getting the right equation between the brand, the consumer and the market. But, to achieve value growth one needs also to run the business efficiently.

Value growth, is achieved when one combines…

• the efforts to achieve strategic advantage and incremental sales growth with…
• the efforts to achieve incremental savings through effective management of the value chain.

For strategic advantage to occur, marketers must study their industry and its market forces in minute detail, zero in on the target consumer needs that they are uniquely positioned to fill, and develop brands that showcase their added value. This means that the correct brand strategy must aim for brand synergy with the consumer and the prevailing market forces - the brand must fit the consumer, and it must fit the market.

The concept of strategic advantage incorporates three important measures:

1. Branding Power / “Signal Strength”: this is a measure of the total strength of branding of the product in question. Specific algorithms are used to measure the brand’s performance on each of four dimensions:
   • Calculation of the “Return on Brand Experience”
   • Calculation of the “Return on Brand Quality”
   • Calculation of the “Return on Brand Imagery”
   • Calculation of the “Return on Brand Identity”

   When theses four “returns” are brought together into a single indicator, then we have the overall “signal strength” of the brand in terms of how effectively (compared to other brands) it projects its image and identity outwards into the market-place.

   Thus, signal strength is the combined power of branding efforts in terms of experience, quality, imagery and identity; a single statistic for comparison purposes across brands.

   The term signal strength is used deliberately here because the statistical tool used is signal detection analysis, which establishes the strength of signal of the brand amid all of the back-ground noise and clutter in the marketplace.

2. Brand-Consumer Fit: this is the extent that the brand values coincide with the consumer’s psychographic make-up. The psychographic elements are measured by the overall scoring and weighting of brand performance in terms of matching consumer needs, motivations, values, personality and lifestyle.
3. Brand-Market Fit: this is measured by:
   • The extent that brand price falls into the consumer’s acceptable price range
   • The extent that the brand is cushioned against changes in consumer budgets / trade practices / distribution factors

   Putting these three factors together results in an overall strategic advantage score for the brand.

In the illustration opposite, the brand’s strategic advantage is on par with the category average.

But closer examination shows that it breaks through parity in terms of meeting consumer needs, lifestyles, personality and values (consumer fit).

But it falls short on market fit – something is wrong with the strategy in terms of price, distribution or trade support.

Comparing the strategic advantage score of a brand to the scores of other brands in the category yields a dominance index, which is a single statistic that indicates the strategic advantage that the brand has over other brands.

This dominance index reflects the extent that the brand strategy has achieved a better balance between the brand identity, the consumer psychographics and the prevailing market forces, than is achieved by its competitors.

A great deal of insight about the brand’s position can be gained from exploring the strategic advantage concept.

One such method of exploration is the strategic advantage grid. This is an analytical tool that makes use of the following variables:

• Branding elements i.e.
  • Brand quality
  • Brand experience
  • Brand imagery
  • Brand identity
• Brand-Consumer fit
• Brand-Market fit

Power brand: this is where the brand leads the category on all six variables. Wilderness brand: this is where the brand lags the category on all six variables. Sensing-Thinking brand: this is where the brand leads on the sensory (experiential) and rational (quality) aspects but lags on consumer fit and market fit Functional-Economic brand: this is where the brand leads on consumer fit (needs and behavior) and market fit (price) but lags on sensory experience and quality. Value brand: this is where the brand leads on sensory experience and price but lags on image and identity (high on intrinsic features, low on extrinsic features) Image brand: This is where the brand leads on imagery and identity but lags on sensory experience and economic fit (high on extrinsic features, low on intrinsic features).