The 3B model - Business, Brand, and Behaviour - constitutes an indispensable conceptual tool for effectively managing any commercial activity. These three dimensions intersect and complement each other, providing a clear and comprehensive guide to addressing challenges and capitalising on opportunities in today's market.
- Business: at the heart of every commercial activity lies the business itself. This involves identifying market opportunities, developing products or services, allocating resources, and creating value for customers. Understanding that customers are at the core of every business decision is fundamental.
- Brand: represents the identity and reputation of the company. It is what customers perceive and associate with the company or the product. Building a strong and coherent brand is essential for differentiation from the competition and fostering customer loyalty.
- Behaviour: customer behavior is crucial for the success of the business. It involves understanding how customers interact with the company, what their needs and preferences are, and how they can be influenced in the purchasing decision-making process. Customer behavior analysis can be represented through a "sales funnel" or an inverted pyramid, which illustrates the path that customers take from becoming aware of the product or service to the purchasing stage and beyond.
In the process of building a business, it's crucial to consider the value offered to customers compared to the costs incurred to create it, as well as understanding customer behavior along their decision-making journey. This approach enables companies to identify opportunities, improve the customer experience, and maximize the value generated.
Initially, it's necessary to consider the total available market, asking the right questions to map out customer categories along this funnel: how many customers are aware of needing products and services? How many of them are aware that we have the solution? How many of these are considering us? How many of these have tried us, bought from us, and adapted, perhaps choosing us over time?
On the business side, things are produced. On the customer side, efforts are made to convert the consumer from one level to another.
The traditional model, attributed to Peter Drucker, often referred to as the father of management, posits that the role of a company is to create and continue creating customers. In this model, the role played by brands is straightforward. Considering products and services that have certain functional components, the brand serves as another tile in the wall, offering something extra to the consumer. It's another brick where the value equation and the brand image reside in the minds of customers. Brands present themselves as identities, where that logo, that name, that image, and the meaning attributed to this brand, the expectation, reside in the minds of customers.
This is the traditional approach, and there's nothing inherently wrong with the traditional approach except that it doesn't really differentiate, or not much more, in today's environment. Consumers are not static recipients of an offer but rather embark on a dynamic journey through a variety of experiences. Do they know what the brand is about? Do they understand what we do and deliver? The brand in this sense is an articulation of our business strategy, something consumers engage with. Does it motivate them? Do they believe in it?Marketers believe that their job is to enhance the brand's image by negating negative associations and elevating positive ones. And, of course, the visual identity of their brand is safeguarded.
How has the competitive environment changed for brands? In what kind of scenario do brands compete now?
According to the concept of perfect competition, a perfectly competitive environment is one in which competition is so fierce that industry players are forced, in terms of prices, to their base cost, and therefore no profit is generated because all the value created goes to the consumer. The conditions under which perfectly competitive markets are created include: a large number of sellers with low entry barriers and free exit, perfect information (everyone has accurate information on prices, quality, availability), presence of homogeneous or commodity-like products, and absence of additional costs related to transportation and transactions.
Consider a product like Google's iPhone, which many retailers sell the same product. So, when considering retailer profits, they are practically under great pressure because everyone sells the same products.
The concept of perfect information, especially in a global environment, has taken on a new form. Today, if you look at the Internet, search engines like Kayak, which is a meta-search engine, and Google, consumers have access to much more information. Not only do they have more information today than they did yesterday, but often they have more information than the sellers themselves, at least about the products that interest them. Often, when a consumer goes to make a purchase in a physical store, they may have done online research beforehand. They may have selected two or three different models, thoroughly studied them, and when they go to the store, they want the salesperson to help them make a decision. Salespeople often have a lot of other merchandise in mind, so for them, it's really difficult to know more than what the customer already knows through their previous research. The entire information dynamic has changed. The customer has increasingly more information about the company.
And finally, consider the idea of products akin to commodities, which generate homogeneous markets.
In any supermarket, observe the hair care products aisle. Many low-cost competitors essentially mimic the packaging of leading brands to resemble them. Most of them are very, very similar among competitors. In business-to-business products, it is increasingly difficult to differentiate products from one another. Not only that, but customers are driving this commoditization. Products are becoming more alike, and competition is shifting towards price.
The question is, what role does a brand play in this environment? Does it really matter if the same product comes from one brand rather than another?