Fast Company

Stop Wasting Money on Brand Preference. Think Brand Relevance.

David Aaker, vice-chairman of Prophet, shares thought-leading views on applying branding to innovation in his new book Brand Relevance: Making Competitors Irrelevant.

<a href=David Aaker" width="200" />I first met David Aaker when I was an undergraduate at U.C. Berkeley. Aaker, a world-renowned marketing professor, was charged with bestowing me with an academic award. I was very impressed and have been a long-time admirer of his contributions to branding both as a professor and now as vice-chairman of Prophet.

I was thrilled to have the opportunity to read the galleys of David's latest work, Brand Relevance: Making Competitors Irrelevant. His brilliance shines again in this must read book. There is so much that resonated with my experience in the tech industry in which branding is often an afterthought, or relegated to the corporate mothership for logos and catchy advertising. Aaker provides a compelling argument as to why brand needs to be an integral part of the innovation process itself.

Brand RelevanceBrand Relevance demonstrates the importance and role of branding and perception in defining new white-space product or service categories (or subcategories) - a topic overlooked by other innovation and strategy books. Aaker provides a provocative view that managing perceptions about the new category and making the brand relevant to the unique category/subcategory should take higher priority than managing perceptions about the product or service; a counterintuitive view of traditional brand notions.

Here's my interview with David about his thought-leading work:

Adrian: What is brand relevance?

David: To be relevant to a category or subcategory a brand needs to have the credibility and visibility to be considered. In brand relevance competition the goal is to develop offerings so innovative that competitors are simply not relevant. In contrast, brand preference competition, where the goal is to be superior to other brands in an established category, is a context in which there is ongoing pressure on margins and profits.

Adrian: You describe how companies tend over-invest in brand preference and how often it is a waste of resources because consumers are stuck by inertia and habits to existing brands. Why is innovating a white-space category (or subcategory) and the perceptions around it (Brand Relevance) an imperative for market success today?

David: Because in nearly all established categories from beverages to cars to computers to financial services all the expenditures on marketing and product refinements rarely change the sales or profits of any brand because of the momentum of habitual behavior. When there is any meaningful movement in sales, it is almost always caused by an offering created by substantial or transformational innovation that has formed a new category or subcategory. This observation has been documented not only by industry case studies but by empirical analysis of marketplace data.

Adrian: How does Brand Relevance: Making Competitors Irrelevant differ from other strategy and innovation books?

David: First, it emphasizes the importance of defining and managing the new categories and subcategories. Second, it emphasizes the need to create barriers to the categories or subcategories formed. Third, the book explicitly includes substantial innovation as a route to new categories or subcategories while other books focus on transformational innovation. Finally, it includes subcategories as well as categories which means that most businesses can identify a relevance opportunity - it is not a once in a decade event.

Adrian: Unlike many brand books that are about promoting the brand and associated products via the use of logos and jingles, you provide a refreshing view that executives should focus on managing perceptions of the unique category (or subcategory) first and then link the brand/product/service to the unique category in a relevant way. In other words, the book has everything and nothing to do with "brand" as most people know it. What prompted you to take this view?

David: Marketing professionals are hard wired to build brands and building a category or subcategory is foreign to most. Yet that is exactly what is needed in brand relevance competition, to manage the image of and preference for the new category or subcategory. The process is very much like brand building but with a different objective. Ironically, the process of focusing on the category and subcategory is usually a way to add interest and credibility to the brand so it often turns out to be an effective brand building strategy even though that is not the goal. One key to success is to make the brand the exemplar or representative of the new category or subcategory because the exemplar is in a position to control the definition of the category or subcategory.

Adrian: What are examples of companies that have eliminated their competition through brand relevance?

David: Apple has at least six times created or became the early market leaders of new categories-the iMac, iPod, iTunes, the Apple store, iPad, and iPhone-- in just over a decade. In automobiles there is Jeep, Ford Thunderbird, Ford Mustang, VW bug, Pontiac Firebird, Dodge Caravan and Plymouth Voyager, Lexus LS 400, Mazda Miata, Saturn, Prius, Minicooper, Nano, Enterprise Rent-A-Car, and Zipcar. In retailing examples include Zara, H&M, Tokyo Hands, Best Buy's Geek Squad, Whole Foods Market, Zappos.com, Muji, REI, and IKEA. Every industry has a host of examples.

Adrian: How can executives distinguish between a sub-category that is perceived as unique and defensible vs. incremental innovation that contributes to unprofitable product proliferation and noise?

David: Good question. It goes to the fundamental judgment as to whether a conceived subcategory is meaningful enough to affect buying, whether the target segment is worthwhile, whether the firm can deliver on the value proposition, and whether barriers to competitors can be built so that any success will not be short-lived. An erroneous judgment to build a subcategory based on an incremental innovation will waste time and resources. An incorrect judgment that a substantial innovation is incremental could mean that the firm passes up a rare opportunity to create a profit flow and growth platform. Both are serous strategic blunders.

Adrian: What key steps should executives take to apply brand relevance to their innovation processes?

David: They should develop an organization that has three somewhat inconsistent qualities. First, it needs to be selectively opportunistic based on ongoing external intelligence, the willingness to engage in substantial and transformational innovation, and the ability to pounce on opportunities. Second, it needs dynamic strategic commitment, the willingness to fund and execute behind an opportunity and to engage in incremental innovation to support. Finally, it needs to be able to engage in organization-wide resource allocation so that initiatives that do not fit into large business units can be funded.

Final Takeaway: This book not only advances the fields of strategic marketing and innovation, but it should be a staple on your bookshelf with your other business classics. Brand Relevance is so abundant with wisdom about how to build unique categories in the mind of the consumer that you will want to refer to it again and again.

Library Journal says Adrian Ott is, "revolutionizing marketing by adding the concept of time." She is the award-winning author of  The 24-Hour Customer: New Rules for Winning in a Time-Starved, Always-Connected Economy and CEO of Exponential Edge® Inc. consulting. Follow Adrian on Twitter at @ExponentialEdge.

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