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.

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.