The biggest threat facing most brands today is the loss of relevance, because the category or subcategory they are serving is declining. If a group of customers wants a battery-powered car, it doesn’t matter how much they love your hybrid brand. It will not be relevant.
A newspaper can have the best new coverage and editorial staff, but if readers are diverted to cable news or blogs, relevance declines. If a customer becomes health conscious, loyalty to a high calorie beer goes out the window. The threat emerges when customers are no longer buying what the brand is perceived to be selling. New categories or subcategories emerge as competitor innovations create “must haves.”
The ultimate tragedy is to achieve brilliance in achieving differentiation, win the preference battle, create a better-than-ever offering with incremental innovations, and build a powerful brand…only to have that effort wasted because of a relevance problem.
So, how does a brand stay relevant?
The goal is to create an option that competes with a competitor’s “must have” that is close enough in performance so that your brand is no longer excluded. Over the last few years, several fast-food brands introduced menus items like salads and fruit smoothies designed to be “good enough” so that their brand is no longer excluded by the healthy-eating segment. Others have developed breakfast items for those that have gone elsewhere for that important meal of the day. McDonald’s, facing a threat from Starbucks to their breakfast and other off-hours business, introduced the McCafe sub-brand that created for many customers a point of parity with Starbucks in respect to coffee quality. McDonald’s got close enough to escape being excluded.
One challenge facing the parity strategy is that your brand may be perceived to lack credibility in the new area. Gaining visibility may be difficult because your parity addition may not be very newsworthy. It might be difficult to actually deliver on the promise given the fact that the culture, assets and skills of the operation were not designed to support the parity initiative. But you have to work against these challenges.
Leapfrog the Innovation
Instead of being satisfied with being relegated to a parity product, a brand could also attempt to take over the new category or subcategory. Or at least, they could attempt to become a significant player with a substantial or transformational innovation, leapfrogging the competitor. Nike+ products allows a runner to hear his or her music while they track their workout.
The Adidas miCoach also provides a way to monitor workouts, but it also provides an active forum, the ability to create a unique program, and even contact trainers to design customized programs.
Cisco has faced a gap in their product lines many times that they filled with an acquisition. Then they add Cisco-driven synergy and systems benefits to that acquisition, creating a leapfrog result. The leapfrog strategy represents a formidable challenge because substantial or transformational innovation is necessary. Getting established in a marketplace in which a competitor likely has scale and momentum will be difficult. But again – worth trying.
Sometimes you must modify and reposition your brand so that its value proposition becomes more relevant given the market dynamics. Madonna has transformed throughout the years to maintain her relevance. L.L. Bean, originally built on a heritage of hunting, fishing and camping, repositioned to a broader outdoor brand relevant to the interests of outdoor enthusiasts such as hikers, mountain bikers, cross-country skiers and water-sports enthusiasts. The outdoors was still treated with the same sense of awe, respect and adventure – but from a different perspective.
The challenge here is to have enough substance to earn credibility in the new position and to implement the rebranding strategy well. Madonna and L.L. Bean had to live and breathe their reposition efforts in order to see the benefits.
Stick to What You’re Good At
Sometimes, instead of working to adapt it’s better to keep pursuing your original strategy with your original value proposition – but just do it better by continuously improving and creating brand energy. The safety razor, for example, was threatened in the 30s by the electric shaver with its compelling benefits. However, an incredible stream of innovations from Gillette allowed it to beat back the new category and enjoy robust growth.
In-N-Out Burger, a chain in the western United States that has developed intense loyalty with a menu of burgers, fries and shakes, has made no effort to adjust to the healthy trend. They simply continue to deliver the same menu with uncompromising quality, consistency and service under the assumption that worthwhile segments will either ignore the healthy trend altogether or at least indulge periodically. The risk of the stick-to-your-knitting strategy is that the new category or subcategory might be based on such a strong trend or such a compelling set of benefits that avoiding it might prove futile and even disastrous.
The selection of the optimal response will be context specific, but it will involve two questions. What is size of the relevance threat and its supporting trend? And what is a realistic judgment about the firm’s ability to innovate, add needed capabilities, and be successful in the marketplace? Both questions are not easy to answer because of complexities, interactions, and future uncertainties. But both questions are worth asking…and answering.