My book Brand Relevance: Making Competitors Irrelevant discusses two ways to compete. The first, to win the brand preference competition by making a brand preferred over other brands in an established category or subcategory, is tough and expensive. The second, to win the brand relevance competition by creating new categories or subcategories for which competitors are irrelevant, is a route to growth and profitability.

What is Brand Preference?

In its simplest form, brand preference involves incremental innovation to make a brand even more attractive or reliable to customers or potential customers. Faster, more affordable, and better is the mantra. It is also the first and most commonly used route to win the competition among other brands considered by customers.

Resources are expended on communicating more effectively with more clever advertising, more impactful promotions, more visible sponsorships, and more engaging social media programs but such efforts rarely break out of the clutter. The problem is that incremental innovation and investments in marketing rarely change the market share structure. Customers are just not inclined or motivated to change brand loyalties in established markets.

Brands are perceived to be similar at least with respect to the delivery of functional benefits, and often these perceptions are accurate. As a result, a brand preference strategy is usually a recipe for stressed margins, unsatisfactory profitability, and, ultimately, a decline into irrelevance. It is so not fun.

Brand Relevance vs. Brand Preference: Which Is Preferred?

Brand relevance, the second route to competitive success, is to change what people buy by creating new categories or subcategories that alter the way that existing customers look at the purchase decision and use experience. Winning under the brand relevance model, now very different, is based on being selected because competitors were not relevant rather than not preferred, a qualitatively different reason.

Some or all competitor brands are not visible and credible with respect to the new category or subcategory. The result can be a market in which there is no competition at all for an extended time or one in which the competition is reduced or weakened, the ticket to ongoing financial success. The brand relevance strategy involves transformational or substantial innovation to create offerings so innovative that new categories or subcategories are created. It involves an organizational ability to sense changes in the marketplace and its customers, an ability to commit to a new concept and bring it to market, and a willingness to take risks by going outside the comfort zone represented by the existing target market, value proposition, and business model.

The payoff of operating with no or little competition is huge. It is econ 101. Consider the Chrysler minivan introduced as the Plymouth Voyager and Dodge Caravan in 1982 which sold 200,000 during the first year and 12.5 million to date. For 16 years Chrysler had no viable competitor in part because it continuously innovated behind the product but also because competitors had other priorities. Brand relevance competition, when it works, is more profitable and more fun.

Read this blog in Chinese: 品牌偏好和品牌相关性 — 两种竞争方

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    1. Yes, the opportunity to create new subcategories is rare and many firms do not see such opportunities or cannot exploit them for reasons you suggest. That means the only way (with rare exceptions) is not available. The solution is to face market dynamics and play defense (see Chapter 15 in Aaker on Branding) to make sure you maintain your relevance while others are changing what people are buying. Also you may be able to be an agile follower that can capture a new niche.