You are viewing Aaker on Brands blog posts from March, 2012 (4 total). You can also view all blog posts.

The Biggest Relevance Challenge Ever? Why Millennials Aren't Buying Cars

The fact that the 18 to 30 age group are buying cars at much reduced rate is one of the largest and most significant relevance challenges of our time. Much of the sharp decline in new car purchases is due to the younger segment. The average age of new car buyers advanced from 43 up from 48 just two years ago due to shrinkage of young buyers. According to the Federal Highway Administration, the percentage of those under 19 with a driver’s license declined from 64 in 1998 to 46 in 2008. For many youths, cars are simply not relevant. What can car makers do to resist this trend?

Underlying reasons such as college debt, unemployment, interest in digital games and social media, and urban living with its mass transit and Zipcars are difficult for firms to address. Even more frustrating is the reality that the magic of owning a car is all but gone. There was a time where cars like the VW bug, the Pontiac muscle car, the flashy Chevy Camero, or the Mazda Miata provided a community…

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March 28, 2012  •  Permalink

Why Companies Under-Invest in “Big” Innovations

There’s evidence that firms are no different.

Firms over-invest in incremental innovation and under-invest in innovations that would create “must haves” that would define new subcategories, which, with rare exceptions, are the only innovations that create real growth. I won’t review this evidence here (If you’re interested, see Brand Relevance) but will instead explore the question: Why do we see this suboptimal, timid investment pattern? There are four interrelated reasons:

1. Firms and key decision makers are simply risk-adverse. Prospect theory, developed by Tversky and Kahneman and reported in a classic 1979 article (for which the Nobel Prize was awarded) demonstrated that individuals do not make decisions rationally by selecting…

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March 21, 2012  •  Permalink

Which Firm has the Best Brand Portfolio Strategy?

When I was writing my book, Brand Portfolio Strategy, I would ask executives which firms had excelled in developing a brand portfolio strategy. The most mentioned firm was L’Oréal. L’Oréal today maintains an admirable “house of brands” strategy in which some 20 brands are used to span the relatively narrow area of cosmetics and skin care in the US. There is a high level of clarity, differentiation and leverage.

The portfolio is first divided into four groupings, with little overlap in customers and outlets. Out of the 20 L’Oréal brands, four are “consumer products” and are distributed through drug and discount stores, 13 are “luxury products” distributed through department and specialty stores, four are “professional products” used by hairstylists, and four are “active cosmetics” sold to dermatologists and other specialists.

Within each grouping the brands have very distinct positioning. Consider the four consumer product brands. Maybelline…

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March 14, 2012  •  Permalink

What Drives the Top Brands of Japan?

BrandJapan 2012 is an annual tracking study that measures perceptions along 20 dimensions of 1,000 Japanese brands. I have been an advisor during its decade-plus life. There are a few brands at the very top year after year. Why? The answer will vary by brand and by category, but there are some generalizations. Innovation/energy, relevance/involvement, personality and relationships all play a role.

One big innovation/energy story in BrandJapan 2012 is the charge of Apple to the number one position from number 11. In addition, iPad is now 15 (up from 90), iPod is at 18 (up from 50), and iPhone is 38 (up from 73). So, Apple now has three brands in the top 20 and four in the top 40. Very impressive. The move was stimulated in part by being in the top position in both the perceived innovativeness (where iPad was 2 and iPhone was 4) and uniqueness scales, and being in the top three in both the appearance and charming scales reflecting a bit of personality as well. The publicity surrounding…

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March 7, 2012  •  Permalink