The Game Changer: The Source of Real Growth
The only way to achieve real growth is to engage in what I call brand relevance competition, using innovation to create new categories or subcategories for which competitors are irrelevant and build barriers to keep them out of the game. The alternative - fighting the brand preference battle with “my brand is better than your brands” strategy based on incremental innovation and expensive marketing - virtually never changes the marketplace. There is too much inertia. Customers simply lack the motivation to change habitual brand purchases even in the face of brilliant market programs that ask them to do just that.
In virtually every industry the only meaningful change in market share patterns occurs when one brand succeeds in changing the game by establishing a new category or subcategory. Enterprise Rent-A-car, for example, created a subcategory that focused on those needing to replace a car being repaired that did not need or want an airport-based car. Another game changer was SalesForce.com who championed cloud computing software.
Two companies currently seeking to carve out subcategories in established arenas include Hyatt and Columbia Sportswear.
Hyatt’s plan is to create a new extended stay subcategory with its Hyatt House concept which aims to provide a “home” experience for travelers. There will be a central lounge within an oversized social area, chairs with gadget resting spots, and an “H Bar:” an island that serves as a breakfast bar, a cocktail bar, and a gathering place. A glass-enclosed game room with a home entertainment system and a backyard with a fire pit also elevate the social life style. The Suites will also have residence-like touches like a multi-task island, a variant of the familiar kitchen island, where you can not only prepare meals but also watch TV and use your laptop. The fact that a relatively small player such as Hyatt is the innovator is a common occurrence. The larger firms generally suffer from the curse of success and are reluctant to take risks.
Columbia Sportswear is attempting to turn a sportswear brands under the Columbia umbrella, which suffers from a value image with limited relevance for younger users, into an innovation machine designed to provide unique advances to improve clothing performance and the way it is evaluated and selected. The Omni-Heat line allows a user to press a button and generate warmth through the garment. Their Mountain Hard Wear brand adapted their lower-weight mountaineering gear into a line designed for athletes. The Montrail shoe line is marketed in terms of applications with a web-based visual that allowed customers to showcase different shoe types based on the intended use. Customized online videos help make their Sorel line of winter footwear relevant to young, fashion-forward women.
Will these two initiatives be successful at creating new subcategories, of being game changers? It really depends on three questions. First, do the innovations represent a “must have” for a worthwhile segment: are they truly meaningful? Second, can the firm deliver on the promise going forward: is there the needed capability, resources, and commitment? Third, can barriers to competitors be created with enriching the offering, ongoing innovation, owning the category, branding the innovation, over-the-top execution, or other means?
There are uncertainties and risks for sure. But the upside can be so strategically significant for a firm, that failing to pursue a possible game changer can be nothing less than tragic. In general, firms overspend on brand preference competition and underspend on brand relevance competition.
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