To grow your brand, you must create “must haves” that define subcategories
The only way to grow a business (with rare exceptions) is to create “must haves” that define subcategories, manage those subcategories to success and build barriers to inhibit competitors from becoming relevant. In conducting research for both of my books, Brand Relevance: Making Competitors Irrelevant and Aaker on Branding, I found that most major bursts of growth are associated with the creation of new “must haves.” Those who aspire to grow will learn to shift focus from competing for brand preference to subcategory competition.
Subcategory competition starts when a firm creates a “must have” that defines or redefines a subcategory. The “must have” can involve:
- A feature or benefit such as the high fiber content in Fiber One
- A systems offering that combines existing components such as Microsoft’s Office which integrates suites programs • A new technology like cloud computing that Salesforce.com pioneered
- A product designed for a segment such as Luna, the energy bar for women
- A dramatically low price point like that provided by JetBlue airlines
- A shared interest such as Sephora’s BeautyTalk • A personality such as the competence of Charles Schwab or the humor of Southwest Airlines
- A passion such as that shown by Whole Foods Market for healthy foods
Organizational values such Patagonia’s concern for the environment In selecting a “must have” opportunity, there are two risks. First, the difficulties of creating the “must have” driven offering should not be so exaggerated that the opportunity to own a growth subcategory is missed. Second, professional and personal biases resulting in inflated incremental innovations should not lead to investing in subcategories that are not viable.
There are three tasks required of brand strategists who are creating subcategory:
- A firm must manage that subcategory so that it wins the subcategory battle. Subcategory energy, appeal and associations need to be conceived and communicated. Customers need to be knowledgeable about the subcategory and motivated to first make the decision to buy into the subcategory and then the brand, not the other way around.
- A firm must also win the brand relevance battle. When the subcategory is the focus of a buying decision, the goal is to have your brand be the only one that is visible and credible with respect to delivering “must haves.” If your brand is not the only one, it should be the most relevant.
- The subcategory creator/exemplar brands need to build barriers to prevent competitors from gaining visibility and credibility, and thus relevance in the new subcategory. Creating a subcategory will not be valuable if competitors are capable of becoming relevant or even appear to be relevant to the new subcategory. The barrier need not be technological. It can be anything that inhibits competitors such as scale, brand equity, customer loyalty and more.
Brand Preference Competition
Far and away, the most common strategy is to engage in what I call brand preference competition, which focuses on making a brand preferred among the choices considered by customers in a defined subcategory. The goal is to beat competition through the use of incremental innovation: faster, cheaper, better. Resources are expended on communicating more effectively with clever advertising, more impactful promotions, more visible sponsorships, and more involving social media programs. You win by making your brand preferred as opposed to making your brand the only relevant brand, the only brand considered.
The problem is that “my brand is better than your brand” marketing rarely changes the marketplace no matter how much marketing budget is available or how clever the incremental innovation. The stability of brand positions in nearly all markets is simply astonishing. There is just too much customer and market momentum.
Brand preference competition is also so “not fun.” The opportunity to create “must haves,” which are responsive to an unmet need and meaningful to a worthwhile market segment, will not happen frequently. However, when it does, brand strategists need to seize that opportunity, recognizing that something bigger than a point of differentiation is present, and manage it accordingly.
The luxury of competing in a market for which their brand has a monopoly or near-monopoly position is so worthwhile that it is worth accepting risks when the opportunity arises. It’s really astonishing how much growth is due to subcategory competition and how underinvested most firms are in substantial or transformational innovation; failing to bring to market the resulting “must have” driven offerings. For more on subcategory competition see my prior posts on framing subcategories, How Uniqlo is Winning, and How Chobani Won the Subcategory Competition.