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strategy and business
 / Summer 2004 / Issue 35(originally published by Booz & Company)


The Innovator's Prescription: The Relevance of Brand Relevance

1. A new product or service dimension expands the boundaries of an existing category. By personalizing and improving service, the Saturn and Lexus automotive brands changed the way customers interacted with car dealers, creating a new product subcategory that made other brands less relevant to a segment of consumers. In both cases, GM (Saturn’s owner) and Toyota (creator of Lexus) felt that new brand names were needed to support the novel dealer experience that in part defined the subcategory. In the yogurt business, the “eat-on-the-go” trend led Yoplait to develop Go-Gurt, delivered in a colorful nine-inch tube designed to enhance portability and to appeal to kids. Go-Gurt helped Yoplait forge ahead of Danone’s Dannon, a brand it had trailed for decades. A new subcategory had been created in which Dannon was not relevant.

2. A new product or set of products carves out a fresh niche in an existing category. The energy-bar market created by PowerBar ultimately fragmented into a variety of subcategories, including those directed at specific segments (e.g., Luna bars for women) and some possessing specific attributes (such as the protein-associated Balance and the calorie-control bar Pria). Each represented a subcategory for which the original PowerBar was not relevant. New subcategories can also be defined by new and distinct applications. Bayer Aspirin, for example, recognized a new application — heart-attack prevention — and created a subcategory with its Aspirin Regimen Bayer Adult Low Strength 81mg, which has an enteric safety coating to prevent stomach upset.

3. A new competitor devises a way to bundle existing categories into a supercategory. In the late 1990s, Siebel created Internet-based customer relationship management software by pulling together a host of applications, including customer loyalty programs, customer acquisition, call centers, customer service, customer contact, and sales force automation. In doing so, Siebel rendered irrelevant, for some customers, the more specialized application programs of competitors.

4. A new competitor repositions existing products or services to create an original category. Starbucks reshaped the coffee retail experience by positioning its outlets as the third place (after home and office) to define a person’s day. The use experience involved aroma, a break from routine, an affordable luxury, social interaction, and some self-expressive benefit from the appreciation of great coffee. In the U.K., Ford positioned its Galaxy minivan in relation to first-class air travel — comfortable enough to be suitable for busy executives. By highlighting attributes far different from those that would appeal to a buyer looking for a family vehicle, the automaker created a new minivan subcategory.

5. Customer needs propel a new product category or subcategory. Dual trends — wellness and the use of herbs and natural supplements — have supported a huge new beverage category, healthy refreshment beverages. It now contains a host of subcategories, including enhanced teas, fruit drinks, soy-based drinks, and specialty waters. The pioneer and category leader is SoBe, which started in 1996 with SoBe Black Tea 3G with ginseng, ginkgo, and guarna, and now has an extensive line of teas, juices, and energy drinks.

6. A new technology leads the development of a product category or subcategory. Asahi reshaped the Japanese beer market by introducing an innovative brewing process that reduced “body” and bitterness while increasing alcohol content. Its new product, Asahi Super Dry, had a very different taste from that of other Japanese lagers, and generated a new category, dry beer. As a result, Kirin, for decades the leading brand, with a dominant 60 percent share of market, suddenly was not relevant for the many customers attracted to the new category. Asahi’s market share — 8 percent when Super Dry was launched in 1986 — rose continually until it took share leadership in 1998.

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  1. John Gorham, “Charles Schwab, Version 4.0,” Forbes, January 8, 2001
  2. David A. Aaker and Erich Joachimsthaler, Brand Leadership: Building Assets in an Information Economy (Free Press, 2000)
  3. Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Harvard Business School Press, 1997)
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