Why Brand-building Matters: The HTC Anomaly
However, historical financial performance paints a lesser image of the Taiwanese cell phone manufacturer. Past quarter sales in the US have been less than stellar and Global sales have continuously declined for the last ~8 quarters.
Meanwhile, consumer electronic powerhouses, Samsung and Apple, continue to drive strong sales in the US, collectively holding approximately 60% of total smartphone market share, according to data from comScore.
Why the anomaly? It’s in the brand.
HTC failed to address that smartphones have become as much a status symbol as they have a utility. HTC’s first major campaign promoted “Quietly Brilliant,” a subtle nod to the brand’s understated yet high quality appeal. While the concept embodied the brand’s positioning, it may not have created enough emotional resonance to give consumers a good reason to consider the brand when shopping for a phone.
To make matters worse, variations of the same model of the HTC smartphone were released across four different US carriers. Each phone had slightly different specifications that created a lack of product consistency, which diluted the effectiveness of marketing individual product brands.
Compare HTC’s brand strategy to that of the Apple iPhone, which both embodied the core essence of the Apple brand and also created a new, powerful product brand. The iPhone is now a euphemism for a smartphone, while additionally helping the Apple parent brand’s strong identity (see Figure 1).
Despite missteps in brand management, the current state of HTC presents marketers with a unique opportunity. While brands such as Apple and Samsung are in the 99th percentile in brand equity performance, HTC’s BAV brand equity pillar composition positions it perfectly for movement into a Leadership position on the BAV PowerGrid. As shown above, HTC portrays an ideal pillar pattern for future momentum, leading with high Energized Differentiation, which measures a brand’s magnetism and ability to stand out from competitors (for more insight into how we at BAV view brand building, check out Four Minutes to Brand Value).
It seems HTC has finally recognized this great opportunity, making headlines this week by kicking off a $1 billion dollar brand campaign titled, “Here’s to Change,” starring Robert Downey Jr. as spokesperson. The campaign is intended to, “demonstrate HTC’s role as a change-maker,” according to a press release from HTC earlier this week. Additionally, the release of the HTC One indicates an attempt to create a more deliberate and unified product brand marketing experience.
Critics of the campaign say that the big push in spend may have come too late, nearly half a year after the release of the flagship HTC One. While the success of the campaign remains to be seen, our BAV data indicate that HTC’s decision to increase spending on advertising is necessary to move the brand into the smartphone category. As illustrated in Figure 2, Brand Strength is strongly correlated to advertising spend.
HTC’s bold move to increase ad spend amidst continuous declines in sales performances highlights a significant shift in the organization. It is a sign that the HTC brand is now being treated like an asset that needs persistent investment and attentive management. More organizations should take note of HTC’s newest strategy and reconsider how brand management is prioritized in the value chain of current operations.
I’m rooting for “change” in HTC’s image, both as a marketer and recent convert from an iPhone to the HTC One.