In one of the most popular TED speeches Simon Sinek articulated that purpose driven organizations have greater impact than those, which just focus on their basic function. But is that really the case?
Turning back the wheels of time, customer expectations were on moderate levels. At the same time, the variety of products and demand amongst customers was equally low. Additionally, advertising in the past focused rather on the product’s basic functions or just highlighted the availability.
In contrast to this, in current market conditions the purchasing power, number of brands, products and communication channels are enormous and the trend is rising. The wide choice of similar products from different brands further complicates purchase decisions and the potential differentiation. Nowadays, advertising is not only used to sell products, but also to establish and further develop brands with their social purpose – especially, when products from different brands are interchangeable.
Apple is no longer the most valuable brand
At first sight, amongst today’s leading brands such as Apple the social purpose seems to have been put in the limelight rather than simply making customers aware of the products as it was the case before. Apple and recently even Volkswagen are regularly mentioned as prime examples, when it comes to communication activities with the social purpose. Especially Apple, which claims to think differently by putting emphasis on inspiring their customers. However, when having a closer look, it appears that Apple is heading south. According to BrandZ, Kantar Millward Brown’s brand equity database, Apple is no longer the most valuable brand in the world since 2016, having lost its title to Google. Why has this happened? Is the purpose centric approach not paying off anymore?
Capability and customer centric ads stand out
Generally, three basic advertising approaches can be found: product centric- , capability centric- and purpose centric advertising. Investigating advertising databases reveals that capability and purpose centric advertising are equally promising strategies, whereas product centric advertising falls behind. Although appearing similar, capability centric and purpose centric advertising differ in terms of the focus they have. For example, let’s take a look at the automotive industry. Capability centric advertising for electric cars focuses on demonstrating that the car is special due to its performant engine, fast charging capability or long reach. Purpose centric advertising focuses on telling why the electric car was built. This could mean making living in the city nicer thanks to less noise pollution and less emissions.
Brands sometimes require a strategy shift
Ten years ago, Apple introduced the first iPhone meeting the pulse of time and society. They established a new computer era putting customer needs at the centre of everything they do. This highlighted Apple’s social purpose to exist. Today, however, Apple seems to have transformed itself into an ordinary company that offers lots of evolutionary products at premium prices. Meanwhile, most customers have realised that Apple changed mobile life. However, many competitors like Google and Samsung have caught up with great products and communication activities as well. Today, customers might not see the added value or differentiating features of newly launched Apple products. Current or competitor users often hesitate to change to the latest models available. They simply do not see the need to do so. The innovative perception of iPhones seems to be saturated. However, Apple appears to focus their advertising no longer simply on the purpose they have. Indeed, basic functions like water resistance, camera functionality or touchscreen features, now play a more prominent role. It seems that the purpose centric approach solely is not enough to strongly activate customers any more. Thus, Apple’s higher social purpose is enriched with information about the product’s key capabilities. Now, they prove that they still can deliver their higher purpose and remain innovation leader. This suggests that purpose led communication on its own should not always be pursued and sometimes needs adaptions: a further adjustment of the purpose with the help of evidence might be required.
In the past Volkswagen mostly was centred on the car’s capabilities, such as demonstrating how features work, solving challenging driving situations or introducing innovative features. However, end of 2015 they faced the diesel emission scandal. Volkswagen’s brand reputation substantially changed for the worse and they had to take action, changing the focus in advertising in order to regain trust. Since then, Volkswagen’s focus appears to be on explaining the brand’s purpose in a simple and relevant way, for instance making people’s lives better. In fact, Kantar Millward Brown advertising databases confirm that purpose centric ads do tend to better convey the responsible image and to help present a brand as more trustworthy. However, just talking to customers about the purpose is not enough. The key to success is to convince customers that the brand can deliver its purpose - with the help of the key capabilities.
Brand purpose should address the basic human needs
Creating a clear and relevant expression of the purpose is worth adopting for all brands. They just need to tell what aspects of life the products make better by proving that the purpose can be delivered. Data furthermore confirms that purpose centric advertising is much better in making people remember the brand. That is the decisive point in the current competitive market environment, where products are exchangeable.
Thus, the trend is towards enforcing the social purpose in order to satisfy customers’ basic needs: Stability, community and love, independence and convenience. Focusing these needs adds clarity and relevance as it shifts the focus of the brands’ argumentation away from the product towards to customers.
Key to success: prove the brand’s purpose
This brings us back to the initial question: whether all brands should consider highlighting the social purpose more than their basic function. Yes! Highlighting the brand’s social purpose increases the potential to differentiate in an environment with large variety, but still exchangeable products. Thus, the purpose centric approach drives the commercial value and helps to build brand equity. However, just highlighting the social purpose is no magic formula. The key to success is providing the evidence that the brand can deliver its purpose.