You are viewing Aaker on Brands blog posts from May, 2012 (5 total). You can also view all blog posts.

Ries & Trout Were Wrong: Brand Extensions Work

I am deeply indebted to Al Ries and Jack Trout for advancing branding with their classic book, Positioning: The Battle for Your Mind, in which they introduce the concept of positioning, defined as the brand perception residing in a person's mind. It is an excellent book in many ways and still relevant. However, their judgment that practically all extensions are strategic mistakes is just wrong. In a subsequent 1993 book, The 22 Immutable Laws of Marketing, they doubled down on their anti-extension advice saying "a line extension ultimate leads to oblivion" and warning that to be successful you have to narrow a brand's focus.

Their argument is that brand positioning strength is context sensitive, and if the brand is exported to another product area, its image — particularly…

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May 30, 2012  •  Permalink

Coca-Cola Struck CEO Gold

Muhtar Kent, CEO of Coca-Cola, is a reminder of how much a talented CEO can do for a firm in just a short amount of time. Since he took over in July of 2008, the stock has increased 50% over 5 times that of the S&P and 10 times that of Pepsi. Even more impressive is how he has transformed Coke and set the stage for its future growth and relevance. Let me provide a few reasons for this judgment.

He has a strategic vision for the company that has a visible social component. There is the audacious goal of doubling the sales by 2020 that has energized the organization. It is coupled with a headline goal of becoming water neutral by that date. For every gallon used, a gallon is replaced in part by innovation in factory processes, packaging and recycling. And there is much more. For example, the firm invests…

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May 23, 2012  •  Permalink

Entering (vs. Creating) New Categories — Get the Timing Right

Creating a new category or subcategory using substantial or transformational innovation is difficult, can be diverting, and involves the ultimate risk that it may not work in the marketplace. Many firms explicitly or implicitly avoid innovating new categories or subcategories because of these risks and because they want to focus on existing product markets. Their strategy is to allow small firms to innovate and prove the new category or subcategory has traction. They then enter the category or subcategory by acquisition or by creating a competitive offering.

For this strategy to work, the timing needs to be exactly right. If the timing is too early, market and offering uncertainly will still be high and the category or subcategory sales level will be inadequate to justify organizational support. The far more prevalent problem with this “enter” strategy, however, is that the timing is likely to be late.

One “enter” option with a category or subcategory that has “arrived”…

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May 15, 2012  •  Permalink

Before Branding A Subcategory, Ask 4 Questions

During my recent webinar around brand relevance, I noted as usual that you need to brand innovations in order to own them and to provide the basis for defining a new subcategory with a “must have.” Someone from the floor noted that over-branding can result and asked how that can be avoided.

Over-branding is a risk. Innovation champions usually inflate the potential importance of their ideas and are overly optimistic about sales impact, for both personal and professional reasons. When there is a policy in place to brand important innovations, these champions expect and usually receive a brand. After years of this pressure to support innovation with brands, the result can be a bewildering and unsustainable blizzard of brands that are not supported adequately and ultimately become, at best, expensive descriptors.

Any innovation that is

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May 9, 2012  •  Permalink

Fight Off Your Heavy User Obsession: What About Noncustomers?

As noted in my book, Brand Relevance the only way to grow is to innovate, creating “must haves” that form new subcategories. One source for innovation are noncustomers that are usually ignored by firms trained to look to the heavy user, where the money (and competition) resides. But there can be a substantial market that is lying dormant because there is a deficiency or omitted feature in the current offerings that prevents these people from buying.

Turn the heavy user obsession on its head. How would you define the customer that wouldn’t qualify as part of the heavy user group? What segment would be the opposite? What offering modification would turn off the heavy user? What new application wouldn’t be of interest to the heavy user?

The noncustomer might be attracted if the offering were augmented or changed. Energy bars pioneered by PowerBar had very male taste, texture, ingredients, packaging and associations when Luna and then Pria created an energy bar…

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May 2, 2012  •  Permalink