For a brand to be your favorite, it must be relevant
For a consumer to have preferred brands, they must first be relevant to him/her. David Aaker, author of the book Brand Relevance: Making Competitors Irrelevant, is a branding expert who has studied in depth two possible growth strategies:
• Focus efforts to ensure that a brand is preferred over the competition, or
• develop categories or subcategories of products relevant to specific groups of consumers or customers.
For a brand to be a consumer’s favorite, it must be relevant. Despite this, what most companies tend to do is work to achieve brand preference. They focus on making one brand preferred over other brands in an established product category or subcategory. Despite being the most common, it is not the easiest way. Instead, the second strategy seeks to obtain the relevance of the brand against the competition. Create or develop new categories or subcategories where competitors become irrelevant.
For these reasons, this second approach is more productive, and is the only one capable of real growth. Of course, brand preference is important. Too often companies overlook the long-term impact they can make by shifting their culture, strategy, and resources toward brand relevance.
Competition based on brand preference
The competition based on brand preference aims to have customers choose my brand among the options by those considered. Let’s say the underlying message is like “my brand is better than yours.”
For example, a consumer decides to buy an established category or sub-category of products, such as scooters (automatic city bikes, without manual gear shifting). Several brands, such as Honda, Kymco, Yamaha … have the credibility and visibility necessary to be considered and, therefore, will be relevant. Thus, if Yamaha wants to be the preferred brand, it must ensure that it is ahead of the others. This normally implies being superior in at least one of the dimensions that define the category or subcategory. And be, at least, as good as the competitors in the rest of these.
Consequently, to achieve this brand preference requires investment in reinforcing the conventional brand construction. Create more influential advertising, make more impactful promotions, make more visible sponsorships, have more presence in the most related social networks, etc. Likewise, this also implies innovating more and more to make the brand more attractive or trustworthy. Or that the offer is less expensive. In short, the focus and commitment are centered on the existing offering, the business model, the target segment and the established category or subcategory.
Thus, we see that this would be the traditional model. An increasingly difficult approach in an increasingly dynamic market. Because customers rarely change their loyalties to certain brands in established markets. Brands are often perceived as similar even though there is a real difference. Consequently, customers are not motivated to accept or learn about alternatives. Also, even if the offer is improved or more effective marketing is developed, competitors tend to move quickly, so the advantage is often short-lived. The result is that the brand preference strategy ends up focusing on the short term. Margins are tightening and profitability is less satisfactory. Since the strategy is incremental, more of the same is always expected. Instead, the brand relevance strategy implies a transformational or substantial innovation, creating proposals within new categories or subcategories.
Competition for brand relevance
The second alternative to competitive success is to make competitors irrelevant through proposals so innovative that they become “essential” and come to define a new category or subcategory. With this approach, to the characteristics such as attributes and benefits, we can add a certain personality, company values, link to social programs, self-expression benefits or benefits for the community.
In the competition for the relevance of the brand, the consumer selects the category or subcategory (for example, scooters), instead of certain brands, with which the starting point is different. Then, identify the brands that are most visible and credible to you, and therefore relevant to that category or subcategory, and evaluate each of those brands.
For example, the appearance of 3-wheel scooters in its day meant not an incremental benefit, but the creation of a new subcategory that not all brands have been able to implement in the short term, and that has given many benefits to brands that sooner they bet on her. We see, therefore, that it was not only a technological innovation, but that it was accompanied by social values (use by people with little skill with two wheels, access by older people without riding a motorcycle, a greater perception of safety among the urban traffic, etc.)
We already see that the point of view is very different: brand relevance allows creating a new category or subcategory context. In this way, that brand is selected by consumers because the other brands are not relevant to it, rather than being preferred. This nuance is so crucial that it can allow the selected brand to remain for a long time in a market in which there is no competition or in which competition is reduced or weakened. And this results in continued financial success.
In the competition for brand relevance, the category or subcategory and its associated set of relevant brands are essential. Because now this category or subcategory influences which brands are taken into account and, therefore, are relevant. And this “set” of brands is not something static.
For this approach to be capable of substantial or transformational innovation, the company must:
• be able to perceive how the market and its consumers or customers evolve.
• Be able to commit to a new concept and bring it to market.
• Accept the risks that you may have to leave the comfort zone represented by your current target market, your value proposition and your existing business model.
The problem is that a company that is successful in the competition through brand preference will not always see the other approach clear. Changes in culture, structure, process, and resource allocation are likely to be necessary. And if there is not a strategic commitment at all levels to introduce these changes, they will not happen by themselves.
Shaken, not stirred
We have already discussed that, with rare exceptions, creating new categories or subcategories is the only way to generate significant sales growth. In general, unless there is an innovation that defines a new category or sub-category, the relative positions of brand shares remain fairly stable. In fact, the very changes generated by heavy investments in marketing or advertising usually have a relatively short-lived impact.
To break the inertia of the market, it is necessary to “shake” it, generating proposals that incorporate essential elements capable of defining new categories or subcategories that make competitors irrelevant for a long time.
Real case studies provide empirical evidence for this approach. For example, a McKinsey financial study corroborates this and shows that new brands entering a market, which often carry a high percentage of new categories or subcategories, achieved a performance premium of 13 points in the first year, which was reduced to one. percent in the tenth year.
On the other hand, new brands or those entering a new market are more likely to provide new business models than existing companies, so those who create new categories or subcategories tend to gain higher returns in part because relevant competition will be low in the short term.
We will give clues
If we detect the opportunity to create and own a category or subcategory, we should not miss it, because it may be the only way to change the position of a brand in the market. Therefore, it is necessary to observe some key guidelines:
• First, we must ensure that innovation is truly a ‘must have’ for consumers. It cannot be an incremental improvement, but a substantial one, based on transcendental values, which must even be maintained when the brand must face barriers and difficulties.
• Second, it is necessary to become the paradigm or example of the subcategory, in order to be the only visible and credible brand. Therefore, it is necessary to define and build the subcategory very well instead of the brand. As far as possible, the brand should be perceived as the thought leader, not only with new products, but also by demonstrating in-depth knowledge of the sub-category and its future (trends).
• Third, impeccable execution is required. Delivering on the promise up front is essential to creating critical momentum in the marketplace. We have already mentioned that superior execution contributes to creating a higher barrier against competitors, especially if it focuses on the values and the organization behind it.
• It is also necessary to try by all means that the innovation spreads over time. Thus, on the one hand, it creates a “moving target” for competitors and, on the other, brings energy to the brand and a sense of leadership to the company as an organization. Example: The Chrysler minivan stayed 16 years without serious competition in part thanks to innovations like sliding side driver doors, removable seats, all-wheel drive, and Easy-Out roll-up seats.
• Finally, it is necessary to include in the definition of the subcategory not only functional benefits but also self-expressive or social benefits, organizational values or personality.
In conclusion, we would say that the ultimate goal of the strategy is to create a market in which there is little or no competition, based on the premise that, if we execute something better than others, we create a higher barrier for competitors.
Bibliographic source: “Brand Relevance: Making Competitors Irrelevant”, David A. Aaker, 2011 Ed. Jossey Bass