You are viewing Aaker on Brands blog posts from March 21, 2012 through May 23, 2012. You can also view the most recent posts.
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…
May 23, 2012 • Permalink
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”…
May 15, 2012 • Permalink
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…
May 9, 2012 • Permalink
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…
May 2, 2012 • Permalink
I believe that Steve Jobs was among the best CEOs of this generation because he created entirely new categories six times in a decade, and built the largest company market cap ever. Yet two recent and excellent books (Inside Apple, by Adam Lashinsky and Steve Jobs by Walter Issacson) describe a management style that was disturbingly harsh.
To understand Jobs's success, I find it helpful to look at the success of Bobby Knight, the fabled basketball coach at Indiana. Knight was one of two coaches to win over 900 games, won the NCAA championship three times, and was the national coach of the year four times yet had a management style similar to Jobs (described…
April 25, 2012 • Permalink
Every person has a brand, represented by a name and face that has a host of associated characteristics, such as: professional skills and assets, career paths, communication styles, appearance, personalities, interests, activities, friends, family and more. The brand influences all relationships by affecting how a person is perceived and whether he or she is liked and respected.
The “person brand” can be actively managed with disciple and consistency over time, or it can be allowed to drift. There is a huge payoff to employing the active management option, and there are large risks to the alternative. There are three keys to getting your brand under your control.
Your brand needs to have a strategic vision that details what you want it to stand for.
It should be aspirational but realistic in terms of what can be added, changed or made credible. Just the decision to manage your brand and develop a brand vision…
April 18, 2012 • Permalink
A brand extension can be a source of new offering ideas, bursts of energy, brand enhancements, brand building economies and new growth platform. The extension option is not always optimal, but it should be part of most strategy and new product discussions. One key step is to identify extension product categories where a new entry will benefit from and contribute to the brand associations. The process usually involves identifying the associations and brainstorming where they might be relevant. A more systematic approach is to explore the 10 routes to brand extensions that come from an analysis of successful extensions.
A friend of mine, Ed Tauber, considered the father of brand extensions, did a classic and influential 1988 study of 275 successful extensions in which he concluded most companies employed one of seven approaches to extensions. The Parham Santana extension agency, in conjunction with Ed, has reprised that…
April 11, 2012 • Permalink
The Genius Bar is a place dedicated to providing technical support within Apple stores to customers having problems with the product or application. In large part because it is branded, the Genius Bar is a lynchpin of the most successful retail concept of recent times and a builder of the Apple brand and relationship.
The Apple store's financial performance and impact on the Apple brand is amazing. The sales per square foot for its 380 or stores is more than $5,000, which is six to ten times other successful retailers, and the average store pulls in 18,000 visitors a week. Perhaps more important, the stores provide a way to express the Apple brand and showcase its products. No longer are Apple products and brand tarnished by retailers who are unwilling or unable to provide an in-store Apple experience.
And the stores provide a source of energy to the brand and a new link to its rabid fans. The fact that nearly 2,000 stood in line for the opening of its Ginza store is illustrative.
April 4, 2012 • Permalink
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…
March 28, 2012 • Permalink
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…
March 21, 2012 • Permalink