strategy+business is published by PwC Strategy& Inc.
 
or, sign in with:
strategy and business
Published: June 1, 2004

 
 

The Innovator's Prescription: The Relevance of Brand Relevance

Four other potential response options address the challenge more aggressively. In the fast-food industry, these are the ones the traditional chains, for the most part, are pursuing.

One is to use new products to alter the current brand image and make it acceptable to the new subcategory’s customers. McDonald’s modified its menu to appeal to consumers in search of healthy fast food. It developed a way to make its signature fries with dramatically reduced “bad” fat and eliminated some of its super-sized offerings; for several years it offered the (since discontinued) McLean Deluxe burger. Burger King introduced the BK Veggie Burger, and Taco Bell launched reduced-fat “Fresco Style” offerings. Such a strategy, however, is like turning an ocean liner; there is a lot of inertia to overcome. Overall, the traditional fast-food chains lack brand credibility in the new subcategory. They are too strongly associated with traditional offerings such as the Big Mac and the Whopper, which are not linked to healthy eating. Such brand strength can become a liability when a restaurant attempts to adapt or change an image. In addition, the loyalty of the traditional customer segment can be put at risk when the basic menu is altered.

A second trend-response option is to go beyond mere acceptance, and, through the creation of strong subbrands characterized by exceptional products, become a “destination brand” for the new consumer segment. In the fast-food industry, Wendy’s Garden Sensation Salads line has the potential to draw health-segment customers. It not only provides relevance for new customers but also protects the original brand from being contaminated by the new initiatives — no customer will confuse Wendy’s core offerings with the branded salad offerings. To create such a category, however, the company must hit a home run, creating a branded product or line that generates buzz and a following. It’s far from easy: A host of McDonald’s attempts, from McVeggie Flatbread to McPizza to Salad Shakers, have failed to gain acceptance.

A third option for trend responders is to partner or cobrand with firms that have credibility in the new category, sharing some of the upside in order to save the time, cost, and risks involved in creating a new brand. McDonald’s successfully introduced a line of premium salads complemented by “all natural” Newman’s Own dressings. The alliance with the actor Paul Newman’s flourishing line of food products provided a boost by generating interest, acceptance, and credibility.

Although cobranding is a powerful tool for responding to a relevance problem, it can be difficult to find the right cobrand, generate an exclusive arrangement, and develop a product that will deliver against the emerging subcategory. Starbucks and Barnes & Noble — which saw mutual benefits in linking the former’s “third place” coffee experience with the latter’s development of customer-friendly book superstores — went through several permutations of their relationship before settling on the simple supplier–buyer affiliation. Furthermore, managing the relationship between two organizations whose needs and priorities may change over time can be tricky; among other things, customers may develop a relationship with a cobrand whose long-term availability is uncertain.

A fourth option for trend responders is to create or buy an entirely new brand platform. Wendy’s has Baja Fresh, a Mexican chain; McDonald’s invested in Boston Market, the Pret A Manger sandwich chain, and the Chipotle chain of gourmet burrito restaurants. This option recognizes that success in the new subcategory requires a brand that is on-market, is relevant in the new category, has a sound value proposition, and requires no brand compromises. It is difficult, though, to find a concept that will resonate with customers and stand out from competitors in a cluttered marketplace, while being scalable enough to make the business significant. McDonald’s, for example, needs concepts that can support at least a thousand locations; anything smaller won’t deliver appropriate shareholder returns, fit with the firm’s operating skills, or benefit from its economies of scale.

 
 
 
Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store

 

Resources

  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)