To succeed in this fast-moving environment, management must pay attention to a new — and, for most, unfamiliar — attribute of the company’s products, services, and brands: their relevance.
Relevance is fundamentally different from the characteristics conventionally associated with a brand’s potency. All too often, a brand seems strong because tracking studies show that it retains a high level of trust, esteem, perceived quality, and maybe even perceived innovativeness. Customers remain satisfied and loyal. However, its market share may be slipping — perhaps significantly — and fewer customers, particularly new customers, are considering it. Conventional marketing theory and practice have difficulty explaining this paradox. Experience and research are now showing that a brand in decline often is in trouble not because of an intrinsic problem, but because the product category or subcategory with which it is associated is fading — undermined, augmented, replaced, or subsumed by a new, faster-growing category. Older brands may actually be inappropriate for the new category.
Brand management in the past focused on achieving preference on the basis of differentiation, benefits, and customer satisfaction within a set of brands under consideration for a given application. But in today’s environment, unless a brand can maintain its relevance as categories emerge, change, and fade, narrow application preference may not be sufficient. AOL faces a relevance challenge with seasoned Internet users in the broadband category because of its legacy as a friendly interface for new users in the dialup category. Hardware, paint, and flooring stores have struggled to remain relevant as The Home Depot and Lowe’s, with their broad selection of products and services, have subsumed existing categories and, in effect, created a new kind of brand.
The relevance problem is apparent in categories as “soft” as fashion and as “hard” as manufacturing. Imagine you were an automaker 15 years ago with a leading brand in the minivan category. As the category of sport utility vehicles (SUVs) emerged, it attracted a segment of buyers who previously might have considered buying a minivan. These potential SUV buyers still respected your minivan and believed it offered the best quality and value on the market; they may even have loved it and recommended it to friends interested in a minivan. But because this segment’s changing needs prompted its interest in an SUV, your brand, so identified with minivans, was irrelevant to it. This may have been true even if your company also made SUVs or had an SUV subbrand, because customers interested in the new category will not consider brands that have not developed interest and credibility within that category.
The challenge of brand relevance is akin to the challenge of innovation articulated by Clayton M. Christensen in The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997). Professor Christensen showed how industry leaders often are caught unawares by disruptive innovations precisely because they focus too closely on their most profitable customers and businesses, ignoring niche offerings for low-value subordinate segments that have the ability to grow in strength and value. Brand managers, likewise, are often blindsided by changing product categories precisely because they focus too closely on the traditional attributes of brands within their old categories. Their ultimate tragedy is to achieve brilliance in creating preference and differentiation, only to have that effort wasted because of a relevance problem.