Successful Ecosystem Brands Are Win-Win
Companies orchestrating platform ecosystems must evolve their branding strategy beyond products and platforms to the ecosystems themselves. A successful ecosystem brand is a win-win situation for its participants – including customers – and helps enable the continuous co-creation of the ecosystem itself. The shared value of that ecosystem encourages its participants to cooperate in the creation of user value.
Branding is as much an art as a science. While there is a large library on corporate and product branding, the concept of branding an ecosystem is relatively new. Here, we will examine the ecosystem branding of Qingdao-based multinational Haier Group, which has moved well beyond an appliance brand to creating brands around ecosystems, and has been recognized as a leader in IoT ecosystems. This article is based on materials from and conversations with Haier personnel, and the analysis done by the consulting/advertising giant WPP’s brand valuation done by its Kantar Millward Brown unit, as presented in its BrandZ Top 100 Most Valuable Global Brands report.
WPP’s report characterizes Amazon and Alibaba as prototype ecosystem brands that have crossed category boundaries through technology. Likewise, WPP explains that tech brands like Apple, Google, and Facebook derive some of their value from their ecosystems. WPP notes:
Ecosystems are particularly advanced in China because of heightened consumer expectations for radical convenience, and market-specific factors enabling brands to fulfill that expectation. These factors include: more complete personal profiles because of less resistance to providing personal data, and faster delivery because of lower labor costs. Three Chinese ecosystem brands are among the newcomer brands to the BrandZ Global Top 100. Didi Chuxing and Meituan, are online-to-offline service providers.
The Chinese newcomer Haier recently redefined its home appliance business as an ecosystem, adapting to a market in which an increasing number of consumers are looking for smart systems rather than individual products.
Among its IoT ecosystems, Haier maintains an Internet of Clothing ecosystem. A community of washing machine product users interact frequently with Haier, which enables the company to iterate products and services rapidly. At the same time, Haier brings together other suppliers to meet customer needs like high-end clothing care and buying new clothes. Haier’s focus is on the total clothing experience.
Starting with appliances, Haier has added networking to many models (with IoT services), and is now building out networked communities of users. The company identified the need for the progress and the accompanying branding in 2014, and presented some of its concepts publicly in 2015 at its global forum. Its chairman and CEO, Mr. Zhang Ruimin posited that the Internet of Things was the successor to the e-commerce era, and must involve users heavily. As the IoT becomes popular, the product will serve as only one of the carriers for ecosystem service.
As WPP’s report describes it:
The construction of the ecosystem brand is designed to build value interactions that go far beyond the traditional transactional relationship that consumers have with white goods brands. It creates contact points that can help the company perceive and identify user needs. This enables Haier to not only deliver better, more personalized services but also expand its user base as it identifies and senses groups with more diverse needs.
Haier officially announced its strategy to create the IoT ecosystem brand in 2018, following on the heels of its product and platform brands. It describes the product brand as that of typical enterprises and the platform brand as that of e-commerce companies. That progression can be illustrated by the schematic below.
Product branding focuses on delivering high-quality products that can command premium pricing. Good platform brands must supply high quality services that increase the flow of transactions on the platform. Its ecosystem aims to provide high-quality, heartfelt, and interactive experiences to customers over the lifetime of the engagement.
Haier uses connected appliances and what it calls its Touchpoint Network that connects participants through a variety of online and offline means, including social portals, stores, and service providers. It develops an ever-changing user “demand map” and dynamically establish a holistic ecosystem contributing to adaptable, customized service solutions and products. It can explore common and diversified demands from both urban and rural communities.
WPP observes this approach is good for the supplier and for the customer:
This approach not only ensures that Haier is less vulnerable to price wars in consumer goods, partly caused by online marketplaces like Amazon and Alibaba as well as changing consumer behavior.
It also increases Haier’s ability to create brand value and a “stickiness” that will see shoppers continue to buy Haier products and services for years to come. In tracking the growth of the world’s most valuable brands since 2006, we’ve identified that factors such as making people’s lives better; behaving in a socially responsible way; trust; being perceived as innovative and providing an enjoyable user experience are vital to the premium positioning.
The bottom line is that consumers put higher value on the services and products that improve their overall quality of life, often as part of a complex ecosystem. We may be familiar with that in the technology space, but Haier is bringing the same premium philosophy to white goods.