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Winning in the Post-COVID-19 World: Trends Here to Stay

Employees yearn for more meaning at work and customers are looking for brands they can respect and admire.

In the talk themed “Winning in the Post-COVID-19 World,” I reflected on what changes prompted by COVID-19 are likely to persist and what strategies and programs winning organizations are likely to employ, drawing from the books Aaker on Branding, Creating Signature Stories and Owning Game-Changing Subcategories.

There have been a host of changes in human attitudes and behaviors that have been stimulated or more frequently accelerated by COVID-19.  Many of these will persist, some at a high level, and will affect the strategy options for many industries.

Here are the changes that are here to stay beyond 2020.

1. Search for meaning in life and work.

The virus has prompted many to reevaluate their life and work and assess what is really important. The result is often a realization that their hopes and time allocation need to change to elevate what is truly meaningful and rewarding to them.

One implication is that it is more important than ever for organizations to have a higher purpose that engenders inspiration among both employees looking for meaning at work and customers looking for brands they can respect and admire. A higher purpose can be offer-driven (we make insanely great products), culture-driven (our students and faculty have confidence without attitude) or social/environmentally driven (Avon walk for breast cancer; Unilever’s Sustainable Living Plan)

2. Need for social connections.

The shelter-in-place world made even more vivid what is universally known and true, that for most people, social interaction and connection is a valued and, indeed, a necessary part of human existence.

“It is more important than ever for organizations to have a higher purpose that engenders inspiration among both employees looking for meaning at work and customers looking for brands they can respect and admire.”

That means that brand communities will be even more valuable to both people and brands. A brand community is a group of people that share involvement in an activity, issue or interest area with a brand as a focal point.  Examples are the Harley-Davidsons HOGS (motorcycles and rides), Etsy craft makers (how to make and market crafts), Sephora Beauty Insider (talk, be inspired and get advice about beauty).  They all provide opportunities to interact, connect and belong to a group in addition to providing the brand with a strong link to a committed customer base

3. Valuing trust and authenticity

The importance of earning trust in brands and institutions, which has been eroding for well over a decade, was reaffirmed in the days of the pandemic and surrounding events.  In this context, being able to communicate in an authentic, trustworthy way becomes critical. That means that stories must play a more important role because facts by themselves are not effective communication vehicles and often do not suggest trust or authenticity.

Stories, particular signature stories that “Wow!” and communicate a strategic message, are more able to communicate values and programs that engender trust and authenticity.  When well selected and presented, they will attract attention, change perceptions, distract from counter-arguing, affect behavior and be authentically remembered.

4. Acceleration of change

There were a host of changes that were underway before COVID-19, like working from home, the use of remote conferencing, concern about health and safety, the rise of e-commerce and the power of social media. But all these trends and more have accelerated as has the level of market dynamics. It is increasingly problematic to assume that future business will look the same as the past and that a “my brand is better than your brand” marketing strategy will work.

Strategically, there needs to be a realization that the best path to growth is now owning new subcategories that change the customer experience or brand relationship. The first task is to find or create a compelling set of “must-haves” that are valued by a core customer group. The second is to become the new subcategory exemplar brand that positions, scales and builds barriers.

On May 22, 2020, David Aaker shared these insights with a live audience of 180,000 in India at the MastersSpeak series sponsored by Future Generali, a major India Life Insures Company.  To learn more about creating subcategories that drive uncommon growth at a time of disruption, pick up a copy of his new book, Owning Game-Changing Subcategories: Uncommon Growth in the Digital Age. It is available wherever books are sold.      


FINAL THOUGHTS

As the world moves through the pandemic, marketers must stay alert to the zeitgeist. Many of these changes–especially the need for human connection,, the search for meaning and comfort with the ramped-up pace of change–will be with us for some time. Brands should respond accordingly.

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Owning Game-Changing Subcategories: A Conversation with David Aaker About His 17th Book

Digital powerhouses like Airbnb, Salesforce and Dollar Shave Club demonstrate the transformative power of subcategories.

It’s been nearly 20 years since I started working with my mentor and friend David Aaker. Dave inspired me to write my first book, Brand Asset Management and my second, with my Prophet partner in crime, Michael Dunn, called Building the Brand Driven Business.  Dave remains a shining light in helping all of us think of brands as true assets that cannot only unlock true accretive enterprise value but can be also leveraged as a strategic north star in helping a company reach its longer-term growth aspirations.

“To grow you need to become the exemplar brand to position, scale, and build barriers.”

David’s ability to evolve his business acumen, while grounding it into his key landmark idea – brand relevance – has made him an icon in the eyes of generations of marketers like myself. His 17th and latest book, Owning Game-Changing Subcategories: Uncommon Growth in the Digital Age, tackles brand-building amidst digital transformation – a topic that could not be more important today.

As organizations and brands face unprecedented change, opportunities and challenges (i.e. coronavirus), they must turn to digital to continue to grow. Dave and I had a (virtual) catch-up recently to learn more about his book and what marketing leaders can gain by creating “must-haves” in the digital age.

Your new book, Owning Game-Changing Subcategories: Uncommon Growth in the Digital Age, is launching in early April. Why did you pick this subject and why now? 

I observed in category after category— from Japanese beers to automobiles to computers— bursts of growth were almost always explained by the formation or reframing of a subcategory created by a new or improved customer experience or brand relationship.  It almost never was caused by a “my brand is better than your brand” strategy.  So, I felt that there would be value in a compact book that explained why that assertion was true and how to implement a subcategory growth strategy.

Of course, digital is putting subcategory growth strategies on steroids by enabling subcategories and their exemplar brands to pop up more often and grow at incredible rates. I knew that I needed to factor in digital’s prominent role into the book’s insights as it is a true accelerator in both overall brand and the use of subcategory growth.

You dive into several real-world examples of brands that are achieving growth by creating categories of their own. What are some of your favorite brands you discuss? Why?

The first was Asahi Super Dry which immediately took 10 share points from Kirin because it defined a new subcategory with a new taste AND a young, cool personality. Then there was the Chrysler minivan, which created and owned the minivan subcategory for 15 years with no competition. Enterprise Rent-A-Car became, for decades, the exemplar and only relevant brand for a subcategory that targeted an underserved market, those with a car under repair.

My favorite brands of the digital age include Airbnb, Dollar Shave Club and SalesForce.com.  Each developed a new subcategory and customer experience and then expanded and enhanced that experience over time.  Each also created a persona and brand relationship that delivered energy, passion, and creativity.   Airbnb inspired and enabled the owner/managers to be entrepreneurial hosts.  Dollar Shave Club and SalesForce.com both burst onto the scene as a feisty underdog ready to take on the established giants with an irreverent sense of humor.

What is the biggest takeaway you hope readers gain by reading your book?

There are four takeaways.

First, real growth comes from relevant subcategory creation, not from “my brand is better than your brand” competition based upon differentiation.

Second, to grow you need to become the exemplar brand to position, scale, and build barriers. Unlike other innovation strategy books, this book recognizes the role of brand building that makes a new subcategory come to life and win the day both win the short term and over time.

Third, brand communities in the digital age are an important way for customers to become involved in the subcategory and bond with the brand and others that share a common interest and/or activity.  Brand communities can be built around B2B products or even at companies with ‘commoditized’ products or services but a social program that has relevance and energy like that illustrated by Dove’s self-esteem initiatives.

Fourth, digital has put subcategory creation on steroids through the Internet of Things (IoT), e-commerce, social media and websites, and brand communities.

You wrote your first book in the seventies, now you’re about to publish your 17th book in 2020.  What are some of the biggest changes you’ve seen over the decades?  What has remained the same?

The concept of brand equity is the same.  It is brand visibility, brand associations, and the size and strength of the customer base.  And the process involved in creating and building brands is much the same as well.

One change is the enhanced role of higher brand purpose, particularly social higher purposes.  Employees, especially, younger ones, need motivation that raises above increasing sales and profits.  And customers increasingly value a higher purpose as part of a brand relationship.

Another is the power of digital—the IoT impact on offerings, e-commerce and social media providing customer access, and brand communities all have created a more dynamic marketplace, accelerated innovation and new subcategory formation. The digital era makes it more challenging to create messaging that breaks through. One answer is to package content into stories that involve, entertain, engender emotion, intrigue etc. in order to attract attention, change perceptions and avoid counter-arguing.

How has the necessity for brands to “go digital” shaped your current perspective on topics like “brand equity”?

In my view, digital transformation has an important strategic role to play in marketing and organizational strategy. Digital can enable the creation and success of new subcategories providing strategic growth platforms that become the basis of strategic vitality and success.  Too often the focus is on the tactical role of digital. Its exciting to see the way Prophet is changing to help our clients with their digital transformations.

One of your passions is brand relevance. Not only did you write the book about it, but you’ve entered it into the lexicon of marketers and executives everywhere. What does it mean to be a relevant brand in the digital age?

Being relevant means being visible and credible with respect to a subcategory.  So, it is context-specific.  A brand that is relevant to automobiles does not mean it is relevant to compact hybrids.  Becoming the exemplar brand is critical because it is not only the one positioning, scaling and building barriers, but its status as the subcategory representative makes it the most relevant or even the only relevant brand.

In this digital age, the road to relevance almost always needs to involve digital-enabled communication to provide both visibility and credibility and a website to represent the brand message in all its multiple dimension richness.  And digital enables brand communities, a loyalty driver, to thrive.

You’ve been called the “father of modern branding.” What is your personal brand?

My purpose and my brand has been to encourage organizations to manage for the long-term by building brand assets that will be the basis of their future success.  That has not changed even though digital has expanded the challenge and enabled new routes to that goal. My brand also involves aspirational process elements such as research-based ideas, rigorous conceptual thinking, and humor.

Look out for David Aaker’s book wherever books are sold, including online and e-book retailers. Learn more about Owning Game-Changing Subcategories and reach out if you’d like to connect with David or any other experts from Prophet.


FINAL THOUGHTS

While many of the principles of modern branding remain the same, digital continues to make some more powerful than ever. The right subcategories can add rocket fuel to growth strategies.

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Understanding and Enhancing Brand Communities

They don’t just add to a brand’s credibility. They bring together people with shared passions and purpose.

A fifth key topic in the book Owning Game-Changing Subcategories is brand communities that are enabled or enhanced by websites and social media. A major and often overlooked contribution of digital to business strategy is brand communities—groups of people that bond because of shared interest or passion in something connected to a brand.

Consider, for example, the community experience of the buyers and sellers on Etsy. They bond with each other through crafting and homemade goods,  and with Etsy and its supporting programs. The affinity is strong and lasting and provides an Etsy “must-have.”

What Brand Communities Offer

People hunger for connection and a brand community delivers. Brand communities have been around forever. The Harley Owners Group (HOG) was founded in 1983. However, digital technology has radically enhanced the power and relevance of communities, allowing the membership base to quickly expand geographically and demographically by leveraging digital tools not available to HOG members of the early ‘80s.

“People hunger for connection and a brand community delivers.”

A brand community can be offering-focused, centered around the buying and using experience. That was the case for communities formed at Salesforce.com (where members seek to improve their use of the Salesforce.com software), at LEGO (where LEGO builders interact) and at the Marriott Vacation Club (with members who live for travel and to experience the Marriott vacation options).

If a brand lacks an offering-driven following, it may develop a shared interest that fits the brand to form the locus of a community. That was the case at the Sephora Beauty Insider (which centers on skincare and beauty), Nike Run Club (work-out programs) and the Dove “self-esteem” movement (a shared passion for inner beauty).  Such communities also can lead to social benefits created by the involvement of like-minded customers.

How Brand Communities Help Exemplar Brands

Brand communities help exemplar brands and their subcategories by:

  • Creating or enhancing a brand relationship. When an exemplar brand is involved as an active partner with an activity that is important to a customer, it provides a relationship that could not be obtained by communicating functional benefits of an offering. A person has a special affinity for others that share his or her passion, goals and activities. If the brand is associated with that interest, it too will be highly regarded. When a community helps to represent a person’s identity, its impact is magnified.
  • Adding energy, visibility and involvement. These are critical elements of brand-building that are difficult to achieve using conventional media and methods. Every time a person interacts with the community, the brand is rewarded with some energy and visibility, accentuated because a person initiated the interaction, not the brand.
  • Providing credibility to members and brand partners. For many, online communities may feel like a grouping of valued and trusted friends. As a result, the information sourced from the community is not seen as biased, phony or self-serving. Further, the brand gains credibility because it is no longer a seller but is, instead, “one of us.”
  • Becoming a barrier to competitors. An exemplar brand that has created a brand community that can regularly involve the customer with a shared interest often will earn a core group of customers with a high affinity toward the brand. Those customers will be hard for competitors to attract.
  • Sourcing new or enhanced product/service ideas and evaluating these ideas. Being involved in product/service development and refinement provides useful and timely information to the brand team and a feeling of being an active part of the community for the customers.

The e-book version of Owning Game-Changing Subcategories is now available. The book will be available April 7, 2020. 


FINAL THOUGHTS

Brands that encourage communities grow and achieve relevance faster, uniting like-minded people around shared passion points. Whether it’s cooking, fitness or gaming, communities help people belong to something larger.

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Breaking Down the Importance of the Exemplar Brand

Make building the subcategory the priority. The brand is just the vehicle for doing so.

A fourth big idea in the book Owning Game-Changing Subcategories is the concept and role of the exemplar brand in subcategory creation and management. To own a game-changing subcategory, a major task is to become its exemplar brand. An exemplar brand is the brand that represents the subcategory and becomes its most visible and credible brand option.

The Role of an Exemplar Brand

The exemplar brand has the power and authority to build the subcategory into a market winner. It has several jobs, which include:

  • To develop and evolve “must-haves” that will frame the way people view and evaluate the subcategory
  • To create visibility and credibility for the subcategory and use the “must-haves” to position it in the marketplace
  • To nurture the growth of a core customer base committed to the “must-haves” and the subcategory
  • To build barriers to competitors so that they will struggle to be relevant

In addition to building the subcategory, the exemplar brand will simultaneously be making the exemplary brand the most relevant subcategory brand. But it should be recognized that building the brand is a secondary byproduct of the effort to build the subcategory, which should be the priority. The brand is the vehicle to build the subcategory.

“Building the brand is a secondary byproduct of the effort to build the subcategory, which should be the priority.”

How to Become the Exemplar

So, how do you become the exemplar brand?  It really depends on the context. Every subcategory story is different, but there are four guidelines that have proven successful.

Act Like One

First, to become an exemplar brand, act like one out of the gate.  Promote the “must-haves” of your brand and use them to frame the conversation.  Be the subcategory innovator and thought leader.  Build subcategory loyalty.  Do not sound like a “my brand is better than your brand” marketer.  Rather, sound like you are introducing a game-changer, a new experience or relationship.

Successful exemplar brands like Warby Parker, Uniqlo and Tesla did exactly that. They made visible and credible “must-haves,” and created a core customer group that not only valued them but also talked about them to friends and family.

Scale, Scale, Scale

Second, scale as fast as possible even if that means taking financial risks. Aggressive scaling will create buzz and, more importantly, will build the core customer base that will support the initial growth platform and inhibit potential competitors.  It is critical for the “must-haves” to get established.  That might mean taking risks, overinvesting in “must-have” creation, refinement and promotion. It is not important, or even common, for an exemplar brand to be the first brand in the subcategory. It just needs to be the first to get it right and have the commitment, talent and means to scale aggressively.

Game-changing subcategories often can and should start as a crude test product. Airbnb started with two guys with air mattresses wanting to make some extra money to pay the rent. They were able to expand and refine their “must-haves” ahead of competitors.

Brand the “Must-Haves”

Third, brand the “must-haves” or the subcategory itself. For example, Uniqlo’s innovative fabrics have “must-have” brands like HeatTech, AIRism, and LifeWear. Airbnb branded its guest experience program “Airbnb Experience.” The success and power of Amazon is due in part to its branded “must-haves,” such as 1-Click and Prime. A brand signals that the innovation is worth a brand of its own. It also signals that the organization will support it and branding makes the communication task easier. That is what a brand does.

The subcategory itself could be branded as in the case of Asahi Super Dry, Dannon’s Light & Fit or Burton’s Snowboard (far better than Snurfer, its predecessor). 

Build and Enhance Barriers

Fourth, keep building and enhancing barriers.  Become a moving target.  Don’t allow competitors’ openings to become relevant.  Look to Amazon as a role model.  In particular:

  • Reinforce and enhance existing barriers. Improve them. Make them visible.  Energize them.
  • Add new “must-haves” over time to make the subcategory dynamic.
  • Create barriers involving “beyond functional” relationships like personality, values or higher purpose programs that connect with consumers and are hard to duplicate.
  • Own the “must-haves” by branding them and then actively manage and support those brands.
  • Play defense by delivering on the promise every time. Don’t give a competitor a route to relevance because customers have become less satisfied or even annoyed with some aspect of the promise delivery.

The e-book version of Owning Game-Changing Subcategories is now available. The book will be available in early April. 


FINAL THOUGHTS

Exemplar brands are powerful game changers and the source of uncommon growth. By developing “must have” features, they can change the way consumers consider their purchases. And because they are new, they attract attention and build credibility.

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Rosy and Gloomy Biases When Evaluating Consumer Insights

It’s easy to be either an Eeyore or a Pollyanna. Here’s how to take a more realistic view.

A third big idea in my book, Owning Game-Changing Subcategories: Uncommon Growth in a Digital Age, is the role that rosy picture and gloomy picture biases play in building a subcategory. The stakes are high. Backing a “must-have” idea that has serious deficiencies can result in not only a loss of resources but a loss of time and innovation momentum. Conversely, erroneously terminating ideas that would create a major growth platform may be even more costly.

What Is the Rosy Picture Bias?

The rosy picture bias assumes that customers will be as impressed with the new offering as its loyal brand champions and that any problems can be easily overcome. This bias has several causes. First, the innovation champion, someone who is focused on the “must-haves” for months or even years, may have obsessive optimism and fear that killing the initiative might be career damaging.

Second, there is perceived organizational commitment that creates a momentum that is hard to stop. Finally, the innovation may just feel like a winner, logically or emotionally, and may have a buzz in the marketplace, even with minimal or inadequate testing.

“The rosy picture bias assumes that customers will be as impressed with the new offering as its loyal brand champions and that any problems can be easily overcome.”

In the context of the rosy picture bias, the following questions need to be addressed and assumptions challenged:

  • Are the “must-haves” real? Are they so appealing and differentiating to a worthwhile segment that customers will avoid buying or using offerings that lack that “must-have?” Or is it only an incremental innovation that will not create loyal customers? Do you have confidence backed by market testing?
  • Is the market substantial enough? Can it be accessed? Is there a Plan B – a way to find new applications and segments if the going-in targets fall short?
  • Will significant competitors be attracted if the subcategory will be a success? Can barriers be constructed that will inhibit them from entering or handicap them upon entry?

What Is the Gloomy Picture Bias?

The gloomy picture bias suggests that a proposed new subcategory initiative will be costly in time and resources, have an uncertain outcome and involve risk without a clear payoff. This bias may be supported by unfavorable evidence from the market and is influenced by a tendency for people to be risk-averse. Tversky and Kahneman’s Prospect theory (for which they won a Nobel prize) demonstrated that individuals do not make decisions rationally by selecting options with the highest expected value, because “losses loom larger than gains.”

That helps explain why firms tend to overinvest in incremental innovation and underinvest in “big” innovations with more uncertain returns. To avoid having the gloomy picture bias kill off subcategory ideas that could be the basis for uncommon growth, it is worthwhile to analyze some of the assumptions being made with questions like:

  • Could disappointing test results be turned around by identifying and remedying problems internally?
  • Are flawed offerings that have appeared in the market caused by obsolete technology or organizational limitations that do not apply to us? Digital readers for a long time just didn’t get traction. Then came Kindle, which sold over 1 million units in a year and showed that sales of prior products were not a predictor of Kindle’s market acceptance.
  • If planned applications or markets are inadequate, could we have “Plan B” applications or markets that will support a business? There are a host of successful subcategories that occurred when an application or market was found after the original turned out to be inadequate.
  • Might it be possible to scale a subcategory market that is initially too small? Could the offering be extended into new applications, markets, or product variants?  Other brands, like Nike and Starbucks, have taken subcategory markets into the mainstream. Is this possible?
  • Might it be feasible to create or find new assets and competencies? Other organizations have done it successfully or found partners to help.

FINAL THOUGHTS

The lesson is to be objective and analytical when testing assumptions.  And a good way to sniff out rosy or gloomy picture bias, especially in the digital age, is simply to try it out. Get a prototype, a crude version of the concept and put it in a test market or even release it so learning can occur. The live version of the concept will evolve as corrections and improvements are made, and your decisions will be clearer.

The e-book version of Owning Game-Changing Subcategories is now available and the book itself will be available in early April.

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4 Examples of Digital Transformation’s Role in Strategic Growth

E-commerce, social media and branded communities are all intensifying the pace of innovation.

A second big idea in David Aaker’s new book, Owning Game-Changing Subcategories: Uncommon Growth in a Digital Age is digital’s role in the dramatic increase in subcategory competition.

Digital transformation is on the minds of most marketing executives.  Digital’s purpose is often assumed to be tactical in nature–generating customer leads, data analytics or making the customer experience more efficient.  But digital has a key role in strategic growth as well.

The Owning Game-Changing Subcategory book posits that the only way to grow is to create “must-have” subcategories, become the exemplar brand, and build barriers. That has always been true. But in the last decade or two, digital has put subcategory creation on steroids.

“In the last decade or two, digital has put subcategory creation on steroids.”

The frequency of new subcategories emerging has increased by an order of magnitude.  A firm that might have seen a new subcategory every half-decade might now see one every year or every quarter.  Digital is without question the driver of strategic growth and market dynamics. Let’s take a look at four ways in which digital has emerged to play this role:

Digital Technology

Digital technology in the form of sensors, microcomputers, voice recognition, smartphones, cloud computing, analytics and much more provides new avenues to “must-haves.”  Artificial Intelligence (AI) has unleashed new or changed capabilities throughout the value chain. The Internet of Things (IoT) has created smart cars, smart appliances, smart hotels and so on. Nest Thermometer, for example, created a new subcategory by using AI and IoT to control the temperature of homes, offices and industrial buildings.

E-commerce

E-commerce has provided fast, inexpensive market access that bypasses the cost of storefront retailers and personal sales teams. Nearly every product arena has a subcategory created by brands like Dollar Shave Club, Warby Parker, or Casper Mattresses that brought products to market via e-commerce. Even Amazon has developed its own subcategory with a host of digital-enabled “must-haves” surrounding its e-commerce model.

Social Media and Websites

These tools enable communication with reach and impact that is more effective and budget-friendly than traditional advertising or event marketing.  Dollar Shave Club shot out of the gate with a two-minute video that went viral largely because of its humor, establishing a customer base in a matter of weeks.  There was no advertising creative that required specialists and no media budget involving TV and magazines. The Dollar Shave Club experience has been replicated by many of the successful new subcategory entrants.

Brand Communities

Brand communities are groups of people that bond because of shared involvement or even passion in some activity, goal or interest area connected to a brand, and are enabled by digital. This provides a high level of involvement and social benefits resulting in loyalty to the subcategory and its exemplar brand.  The Sephora Beauty Insiders community, for example, is a magnet for people to gather and exchange information about skincare and beauty.


FINAL THOUGHTS

Digital has a tactical and operational role for sure.  But it also has a role to enable strategic growth and thus should be a key business priority.

The e-book version of Owning Game-Changing Subcategories is now available. The book will be available wherever books are sold in early April.

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How Game-Changing Subcategories Drive Business Growth

The only way to grow? Create, position, and own a new “must-have” defined subcategory.

My new book, Owning Game-Changing Subcategories: Uncommon Growth in a Digital Age, is now available wherever books are sold. In a series of blogs, I will detail the big ideas from the book. These are:

  1. Growth by subcategory creation
  2. Digital’s role in accelerating subcategory competition
  3. Rosy and gloomy bias affecting organizational decisions to commit to a new subcategory
  4. The role of the exemplar brand
  5. Brand communities

I’ll start with the first big idea: the assertion that the only way to grow (with rare exceptions) is to create, position, and own a new “must-have” defined subcategory. This subcategory must change how a customer experiences the brand or creates a new relationship with the brand. To generate a growth platform, you need to create game-changers like Chobani, Tesla, Enterprise Rent-A-Car, Dollar Shave Club, Airbnb have done.

About two decades ago, Peter Drucker argued in an interview that innovation should not be the goal.  Rather, an organization should aspire to be a change leader.  That is what the drivers of a new subcategory are: change leaders.

Identify or Create Must-Haves

A “must-have” does not have to be functional – it can be a personality or attitude.  Airbnb has created entrepreneurial hosts, as opposed to owner/managers, who are in it from more than just a financial transaction. They join the platform because they are passionate about their role as a host. It is an attitude, a job guide, an objective and a “must-have.” They aim to make the guest experience special through personal connection, augmenting it in creative ways, and enhancing their property and its presentation.

“The only way to grow is to create, position, and own a new “must-have” defined subcategory.”

The first step, of course, is to identify or create “must-haves” – elements of an offering for which customers will have a high affinity. The existence of a set of “must-haves” (there are nearly always more than one) will create a basis for a core loyal customer group— the cornerstone of a growth platform. Prius dominated its market for over 15 years with a loyal customer base and “must-haves” that included the Hybrid Synergy Drive, outstanding gas mileage, a unique design that helped deliver self-expressive benefits (“I am doing something for the planet”), and excellent reliability.

A “must-have”’ can also involve a higher purpose.  People want to connect with brands they admire and resonate with their own values and passions.  Patagonia shares with its core customer a reverence for the environment.  Avon with its Walk for Breast Cancer and Lifebuoy with its “Help a Child Reach 5” all create energy, visibility and a strong connection with many customers.

Differentiate Yourself and the Subcategory from the Competition

Creating subcategories is not enough — there are two additional tasks. First, become the exemplar brand that represents the subcategory. Then, use that status to build the subcategory’s visibility, positioning it around its “must-haves.” It is like brand building but with the focus on the subcategory and its “must-haves” and not the brand.  It involves moving from “my brand is better than your brand,” which almost never results in growth to subcategory competition.

Second, create barriers to competitors inhibiting their ability to become a relevant option. Barriers could include the committed customer base, “must-have” associations and brand relationships that go beyond functional benefits. Without barriers, even a successful subcategory will quickly attract others that will enjoy the benefits.


FINAL THOUGHTS

Organizational growth means vitality and opportunity for customers, employees and partners. It is (or should be) a strategic priority. In these dynamic times, it is critical to understand subcategory creation because it is usually the only path to disruptive growth.

The e-book version of Owning Game-Changing Subcategories is now available. The book will be available wherever books are sold in early April.

BOOK

Owning Game-Changing Subcategories

DAVID AAKER

Summary

The only way to grow (with rare exceptions) is with “must-haves” that define game-changing subcategories. These subcategories must offer new or markedly superior customer experiences or brand relationships, an exemplar brand that positions the subcategory and creates barriers to competitors.

Subcategory-driven growth has exploded in the digital era because of technological advances and the fast, inexpensive market access made possible by e-commerce and digital communication.

The alternative, “my brand is better than your brand” competition, rarely generates growth because markets are so stable and difficult to disrupt. The book includes case studies from numerous companies including Airbnb, Etsy, Warby Parker, Prius and Muji to illustrate how subcategory creation has led to uncommon growth.

Highlights

  • Explanation of why growth almost always involves “must-haves” defining new subcategories, earning exemplar brand status, and creating competitor barriers
  • Tips for finding “must-haves” and examples with case studies featuring notable leading brands
  • Deep dive into how digital tech trends like e-commerce, the Internet of Things, brand communities and more that drive growth through subcategory formation

Endorsements

I really LOVE this book!! It is so right for organizations looking to drive growth. Through compelling insights, Aaker shows how to employ the Digital Revolution to create and own  Subcategories highly relevant to customers. A MUST READ book for our Digital times!

Joe Tripodi
Former CMO of Coca-Cola, Allstate, MasterCard, and Subway

David Aaker uses economics and case studies to show how growth comes from inspired breakthroughs that create new subcategories and not from expanding market programs.  Use the 20 takeaways to find your own subcategory breakthrough.

Philip Kotler
The Father of Modern Marketing

David Aaker teaches us how to grow in the digital era by harnessing the power of subcategories. A must have for all business leaders.

Yong-Jin Chung
Vice Chairman, Shinsegae Group (Korea’s Largest  Retailer)

Media

“From Brand to Subcategory Competition” in European Journal of Marketing, Fall 2018

“Winning in the Sharing Economy—Six Keys to Airbnb’s Success, ‘ Journal of Brand Strategy, February, 2019.

About the Author

David Aaker, is the author of more than one hundred articles and 17 books on marketing, business strategy, and branding that have sold over one million copies. A recognized global authority on branding, he has developed concepts and methods on brand building that are used by organizations around the world.

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Which Brands Have a Purpose Customers Believe In?

Whatever their mission, brands like AARP, Fitbit, NPR and Peloton energize and evangelize audiences.

Many brands attempt to create a customer relationship by having a purpose that inspires and engenders respect.  Such a purpose can form a customer bond that goes way beyond functional benefits.  What brands have a purpose that is known, understood and admired? And which have disappointed?

The recently-launched 2019 U.S. Prophet Brand Relevance Index® (BRI) measures the strength of 225 top brands from over 27 categories among respondents that are active in the category and are familiar with the brand. One of the measures in the survey, which I will be evaluating in this post, was centered around brand purpose. Prophet talked to consumers about the brands they loved, inquiring whether they agree with the statement: “The brand has a purpose that I believed in.”

Observations on Brands With a Purpose We Believe In

Of the media brands, NPR (Ranked No. 1 for the dimension) and TED (7) were significantly above news outlets like CNN, The New York Times, and Fox – all of whom were near the middle of the sample.  This is likely because NPR and TED are not perceived as biased. Entertainment brands Disney (No. 6 in purpose rankings) and Pixar (25) did well probably in part because they are well-positioned as companies that use technology to produce entertainment experiences that bring happiness to others. Consumers believe in Disney and Pixar’s purpose because it is easy to understand and authentically integrated into their products and services. It is no surprise these same entertainment and informational media brands dominated the top ten brands on the “connects with me emotionally” scale.

Of the 18 insurance brands, two brands stood out with respect to purpose—USAA and AARP, both ranking in the top 12 brands on purpose metrics.  With USAA focused on military families and AARP on retired seniors, they have a clear and niche focus, which helps them understand their consumers to an intense degree. They can then evolve their purpose e to fit their needs, making it more meaningful to their customers.  Aflac also is in the top 20 percent on purpose— the top insurance brand (30) in the “connects with me emotionally” scale.

Two fitness brands, Fitbit (3) and Peloton (5) were in the top five brands. Both had brand purposes that resonated with their customer base.

Financial services firms did not score well against the dimension, with most of the brands surveying in the bottom half.   The exceptions were Vanguard (3), Fidelity (16), TurboTax (23) and Paypal (36). Vanguard is a customer-owned company that focuses on low-cost funds and Fidelity adds to a low-cost goal, a commitment to make financial expertise broadly accessible. Consumers who are attracted to these brands share the goal of finding low-cost financial options and so the brands’ purposes clearly align with their customer base.  (It is noteworthy that both brands were way ahead of Charles Schwab on this measure).

“The brand has a purpose that I believed in.”

Restaurant brands also didn’t do well with respect to purpose.  Of the 21 brands, eight (mostly fast-food brands) were in the bottom 10.  A notable exception was Chick-fil-A, whose purpose includes “to be a faithful steward of God and to have a positive influence on all who come in contact with the brand.” One manifestation of this purpose is their practice of not operating on Sundays – a day for rest, family and church services. It led to a place in the top 20 percent and was number 13 on the scale “aligned with customer beliefs and values.”  Even restaurants oriented to quality or health, like In-N-Out and Hello Fresh, did not make the top half, perhaps because their purposes were not differentiated enough.

Tesla was a winner among automobile brands with a top ten position undoubtedly driven by its passion to accelerate the movement to all-electric cars as a way to combat global warming but also for its features and driving experience.  Honda finished in the top 10 percent perhaps because of its history of technological innovation and Toyota in the top 25 percent because of the Prius and its associations with the fight against global warming.

Social media and Internet services did well, with most in the top 25 percent.  The top social media brands were Spotify (8), Pinterest (15), Roku (21), Waze (22) and Airbnb (26).  Facebook and Twitter were at the bottom of all the brands in the sample, likely because of the roles they play in controversial political and social discourse.

Which brands have a purpose you believe in? Leave a note in the comments.

For more information on the 2019 Prophet Brand Relevance Index, please visit the dedicated report microsite.


FINAL THOUGHTS

Prophet’s ongoing relevance research proves that an authentic purpose is one of the surest ways to achieve relevance. Consumers–especially younger ones–want to do business with brands they admire.

VIDEO

Aaker on Subcategory Competition

Why be one of many in a crowded category, when you can create one you can have all to yourself?

2 min

VIDEO

Aaker on Signature Stories

The best stories grab attention and don’t let go, with interesting characters and intriguing details

2 min

Summary

David Aaker says that brand marketers shouldn’t communicate important messages using facts, they should use signature stories. The narrative is more likely to capture the consumer’s attention, peak their interest and be remembered.

Learn how to create strong signature stories on Dave’s ‘Aaker on Brands’ blog: https://prophet.com/2018/03/create-strong-signature-stories/


VIDEO

Aaker on Brand Vision

Visions are compelling and unifying. Just make sure you can really bring it to life.

1 min

Summary

What do you want your brand to stand for? The answer to this question usually leads to 2-3 attributes that differentiate your brand, resonate with your target audience and drive your brand-building programs.


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