There are three accelerating branding trends that affect nearly every business. The winners of tomorrow are going to be riding these waves rather than swimming against them.
First, there is a trend from “my brand is better than your brand” marketing to subcategory competition driven by the fast pace of innovation in the marketplace and a growing recognition that, with some exceptions, meaningful brand growth spurts are caused by a new “must have” defining a new subcategory for which competitors are not relevant.
The evidence that subcategory competition is driving growth is abundant. For me, the insight started with my analysis of some 40 years of Japanese beer data. During that time there were only four major changes in market share trajectory. Three of these were caused by new subcategories being formed or solidified: Dry Beer, Ichiban, and Happoshu. The fourth were when two subcategories, Dry and Lager, were simultaneously re-positioned.
I have found the same pattern in dozens of categories such as cars, financial services, computers, retail concepts, water, airplanes and many more. Growth, with rare exceptions, comes only when new subcategories are formed.
In the automobile space, for example, we know that was true for the Chrysler minivan, Prius, Enterprise Rent-A Car, Tesla and others. There are several implications. Firms need:
- To shift some investments from incremental innovation to “big” innovations.
- The ability to recognize what is a “must have” in the marketplace and what is not.
- The will and capability to manage subcategories rather than brands, to make sure that their subcategory wins and that it evolves so it keeps winning.
- To own the subcategory by creating barriers to competitors.
One route is to brand the “must have” innovations. A branded technology, for example, like Uniqlo’s HeatTech fabric that retains heat, is hard to duplicate because Uniqlo owns the brand.
Second, there is a growing shift from communicating facts about the brand, offering, or firm to developing content that interests and involves customers and populate that content with stories in addition to facts. The digital world, where customers are increasingly gaining control of the communication vehicles, is one driver of that shift. The tragic reality is that people are not interested in your brand, offering, or firm. They are just not.
An alternative is to look to what they are interested in, what activities occupy them, what they talk about, what are their passions. I call it the customer “sweet spot.” Then, find or develop content or programs around that interest area with the brand as an involved partner. Customers are not so interested in:
- Diapers, but they are in baby care and the Pamper’s LoveSleepPlay baby care site.
- Cosmetic products, but they are in beauty and Sephora’s BeautyTalk.
- Farm equipment, but they are in improving farming and the rural life style and in John Deere’s’ Furrow magazine now over 100 years old and read by over 2 million farmers around the world.
- Hardware products, but they are in building homes for the homeless and thus Home Depot’s link with Habitat for Humanity.
A sweet-spot driven content or program can generate interest and energy, create or enhance perceptions, engender trust and authenticity, and stimulate a social network.
Third, the trend toward having and elevating a higher purpose should continue to grow. In addition to being the right thing to do and addressing real society problems, a higher purpose can provide inspiration and meaning to employees. Being engaged in reducing global warming or enabling students to be more creative is more rewarding than just increasing sales and profits.
A higher purpose can also promote cross-silo collaboration by providing a common goal that encourages people to perceive colleagues as teammates instead of being irrelevant or even competitors. It comes more likely for the employee to assert “How can I make us succeed?” than “How can I get ahead?”
Another motivation for a higher purpose is to provide a route to customer relationships. Starbucks quest to inspire and nurture the human spirit one person, one cup and one neighborhood at a time provides a way to connect that means something to customers. Patagonia, the ultimate in having environmental considerations in their heritage, in their products, and in their programs attracts customer loyalty among those that share their values.
Even if a modest percentage of the market is motivated to buy based on the respect and shared values of the higher purpose, the result can mean the difference from struggling in the marketplace and success. A higher purpose can be and often is simply empty words. To impact internally and externally, it needs to be and feel genuine with substance behind it. Actually, substance is becoming more common as more and more firms are supporting a higher purpose with links to organizational culture and meaningful programs that draw upon the assets, skills, and strategies of the organization and are guided by tangible measurable objectives.
However, for customer relationships, this substance has to be not only real but visible. Making a higher purpose known and meaningful to customers is for many a huge branding challenge going forward. These trends represent forces in the marketplace that are making a real difference, determining winners and losers. Every firm would do well to assess how these trends will affect strategies going forward.