You are viewing Aaker on Brands blog posts from January, 2011 (4 total). You can also view all blog posts.

Why are some incremental innovations considered game changers?

In my last blog posting, I discussed why some projects with the potential to lead to the creation of a new category or subcategory are killed or defunded prematurely. There is the other side of the coin. Some projects that are based on incremental innovations that at best will affect brand preference at the margin are evaluated too optimistically. An incorrect conclusion that an offering enhancement will create a new category or subcategory and should be managed accordingly not only wastes resources, but can set back the business strategy by years.

Why are such misjudgments so prevalent? Why is there such a rosy picture bias in the evaluation process?

One reason is psychological. The innovation champion may have focused for months and maybe years on the attributes and potential upside of the innovation and is excited about the prospects. There has been a well-honed logical argument that the advances are transformational, that it will create a new category or subcategory.…

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January 27, 2011  •  Permalink

How potential breakthrough offferings get killed off

One key to winning the brand relevance battle by creating new categories or subcategories is to evaluate and select the right concepts to develop. In doing so there is a risk that a concept with high potential is not funded or has its funding cut-off. As a result a firm loses the opportunity to create a new category or subcategory in which the firm could hold an ongoing advantage and a potential source of profits and growth. The problem is hard to correct because the results of such decision often are forever hidden .

What kills concepts with potential to make a difference with an innovative offering? Many are terminated by a gloom and doom bias that takes on several forms.

Pessimism about technological advances. GM killed the EV1, a battery operated car in 1998 just before a breakthrough in battery technology occurred—in what the GM CEO Rick Wagner opined in 2005 was GM’s biggest strategic blunder. Synthetic detergent was under development at P&G for five…

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January 19, 2011  •  Permalink

Another take on why online advertising is ineffective

Chris Anderson of TED fame provides some fresh ideas and metaphors as to why online advertising is ineffective in a 30- minute video. And it is ineffective. He noted that the advertising value associated with one hour of an Internet user’s time is less than $.10 and one third of that goes to Google. This number is low even compared to the challenged performance of television which comes to $.25 and print which is $1.00. It gets worse. A current solution, to impose a 15 or 30 second ad in the form of a video segment, is designed to engender frustration and even hatred, worse than pop up ads. The online audience, as opposed to TV couch potatoes, is in control and resents losing that position.

According to Anderson, one reason for ineffective advertising is a preoccupation with reach and attention with little consideration with intensity. To Anderson the North Star is passion, to get the audience to have an interest in a relationship…

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January 12, 2011  •  Permalink

Why wasn’t the iPod a Sony brand?

In October 2001, Apple launched the iPod which was an instant success and sold over 220 million units over the next eight years. The iPod became the exemplar for a new entertainment category.

Why was it Apple and not Sony that created the iPod? Sony has always been the brand for portable personal music using clever compact vehicles. From the portable radios of the 50s to the Walkman introduced in the late seventies and beyond Sony, has been the innovator. The iPod was classic Sony.

The answer is timing. Apple got the timing right by entering the market when the technology came together. Of course, the Apple design flare, its brand, and its iTunes store were all important, but the timing was the key. Technology that was just emerging made the Apple iPod feasible. In particular, one enabling advance was an inexpensive, 1.8-inch hard drive from Toshiba that could hold over one thousand songs.

Remarkably, Sony introduced not one but two iPod-like digital music players…

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January 3, 2011  •  Permalink