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Brand Insistence

Brand Strategy: Creating A Brand Advantage

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Sometimes when I am faced with a problem, I can only see it from one viewpoint. The result is that I get stuck and can’t figure out how to solve the problem.

I was reminded of this the other day when a group of us were discussing how best to grow the financial value of a brand. Because we tend to think about a brand’s status in the context of its product category, we often forget that the biggest opportunity for growth may exist outside the current definition of that category.

In spite of the fact that most of our efforts as marketers and researchers are focused on growing market share, the evidence suggests that fighting for share within an existing product category is likely to be a long hard battle, with little prospect of victory.

In most established product categories in developed economies, brand market shares change very little from one year to the next. Any action is likely to be countered by the competition resulting in a stalemate. It is not that you can afford to ignore the share fight, because if you don’t fight, you risk losing share. But equally, there is a distinct risk that overly aggressive competition will result in unprofitable share fights and price wars.

So what should a brand do to generate growth? In many cases, this requires stepping back from the current situation and looking at it from a different viewpoint. How can you best change the game to your brand’s advantage? This requires finding ways to change the way customers think about the category, not fighting for share within the category.

I think there are three basic ways a brand can change the brand game to its advantage:

1. Expand the category

2. Disrupt the category

3. Exceed the category

Brands expand the category when they find new ways to make their category relevant to consumers. By effectively communicating a new use, the brand will gain a temporary advantage over the competition. The challenge is to ensure that the brand is strongly associated with the new usage before other brands copy it.

Brands disrupt the category status quo when they come up with new, meaningfully different innovation. Real innovation challenges people’s existing perceptions of the category and gives them pause for thought. Often, the innovation is simply adding a new level of benefit, e.g. Colgate Total promised 12 hour fresh breath protection. Adding the anti-bacterial and copolymer required charging more for the new product versus standard Colgate, but many people perceived it was worth paying a premium for the added benefit.

Finally, exceeding the category means meeting the same need but with radically better delivery. When Apple first launched the iPod, it changed the way people thought about personal music players. The iPod met the same need as the Sony Walkman, but did so in a far better way. Similarly, people switched from Blockbuster to Netflix because it was far more convenient to get a DVD through the mail than have to go to the store.

So what do you think? Do these three ways of escaping the share fight make sense to you? Are there other ways a brand might transcend its category? Please share your thoughts.

Sponsored byThe Brand Positioning Workshop

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1 Comment

Pete Canalichio on October 04th, 2012 said

Nice post Nigel. I would argue there is a fourth strategy to go along with expanding, disrupting and exceeding the category. That would be to “extend” the category.

Not only has Colgate been successful in disrupting the category by adding Colgate® Total® to their line of toothpaste, but they have been successful in “extending” the category with products such as Colgate® Peroxyl®, a rinse for minor mouth irritations and Colgate® Orabase®, a pain relieving paste. By extending the brand experience, Colgate also extends the consumer experience while increasing their overall brand awareness through additional shelf space in the retail aisle.

There are several ways for a company to extend a brand. A company can choose to manufacture or source (often from less expensive manufacturers overseas) the new category of product. These two methods require existing sales and marketing teams to drive demand and customer commitment. However, if the company is not familiar with the extended category, they will have to invest in building a minimal level of competence or risk a possible failed extension.

There is another option if the new category is a perfect fit for the brand but the company has no expertise. In this instance, the company can choose to acquire a company that currently manufactures or sources the product or they can choose to license their brand to a third party. Through licensing, a brand owner or licensor can extend a brand into a new category without having to make a capital investment and go through months of business integration. The third party manufacturer in exchange for rights to the brand in the category, becomes responsible for all manufacturing, distribution, marketing and sales. Moreover, the company (now called a licensee) is required to pay the brand owner a royalty (normally a percentage of net sales) on the Net Revenue for the total sale of branded products in the category they have licensed.

So before limiting yourself to expanding, disrupting or exceeding a brand when desiring to build a brand advantage, consider extending. And while you are at it, consider extending the brand via licensing.

Pete Canalichio
Chief Brand Licensing Strategist
The Blake Project

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