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  • 1. Brand Relevance:Making Competitors Irrelevant DAVID A. AAKER Vice Chairman, Prophet Blog: davidaaker.com Haas Dean’s Lecture Series February, 2011 Proprietary and confidential Do not distribute
  • 2. Brand Market Relevance Dynamics Note: market dynamics can be explained by brand relevance competitionBrand Relevance 1
  • 3. Asahi-Kirin Beer War 70 Kirin 60 Asahi 50 40 30 20 10 0 1971 1975 1980 1985 1990 1995 2000 2006 Note: Only change in market share—introduction or reposition of a subcategoryBrand Relevance 2
  • 4. The Computer Industry • Minicomputers • Network Workstations • Graphic Workstations • Build to Order PCsNote: Meaningful changes in sales/share comes only with new categories/subcategories Brand Relevance 3
  • 5. Customer Decision Process Brand Relevance Brand Preference Select Product Determine Select Category or Brands Brand Subcategory To Consider to Buy  SUV  Lexus  BMW  BMW  CadillacNote: Shows the definition of Brand Relevance vs. Brand Preference. Wining at brandPreference means both getting category/subcategory selected and being considered. Brand Relevance 4
  • 6. Routes to Winning Brand Brand VS. Preference Relevance Competitor Competitor Winning Brand Brand Means Not Not Preferred ConsideredBrand relevance competition--creating new categories/subcategories with substantialor transformational innovation. Brand preference competition--marketing andincremental innovation and usually results in little marketplace change. Brand Relevance 5
  • 7. Innovation Continuum Innovation Incremental Substantial Transformational Noticeable New Category Game Offering Impact on Enhancement Or Subcategory Changer Brand Preference Hybrid & Electric Body Armor Fleet with duPont KelvarBrand Relevance 6
  • 8. Why? The Payoff From New Categories or Subcategories Note: the book contains 100 examples of firms with brand relevance success. Chrysler minivan--16 years with no competition/ Enterprise Rent-A-Car 35 years.Brand Relevance 7
  • 9. The Pay Off • 108 Business launches: Those creating new categories subcategories: • 14% of sample • 38% of revenue • 61% of profits • McKinsey Study: 1,000 firms, 40 years • New entrants • Return premium over average for their industry • First year 13% • 3% in fifth year • 1 % in tenth year • New Product Success Correlated with Differentiation Note: new categories/subcategories are highly differentiatedBrand Relevance 8
  • 10. How? Ideas Come from All Over Timing is Everything Become Category or Subcategory Exemplar Create Barriers to Competitors Look at Underserved SegmentsBrand Relevance 9
  • 11. Observe CustomersNote: Teams observing businesspeople using lobbies led to new designredefining the experienceBrand Relevance 10
  • 12. Be a Customer Note: Quicken idea came when wife struggles with on line bill paying. Zappos.com when the founder had trouble finding his size in stores.Brand Relevance 11
  • 13. Partner with a CustomerNote: Walmart worked with P&G on ordering, logistics, warehousing, promotions etc. Brand Relevance 12
  • 14. Technological Innovation Note: Dreyer’s had a technological breakthrough in making low fat ice creamBrand Relevance 13
  • 15. Innovation: Design Note: Categories/ subcategories can be based on design—a “must have” for some.Brand Relevance 14
  • 16. Innovation: Systems SolutionBrand Relevance Note: Changing the category from components to (CRM) systems. 15
  • 17. Augment the Product Note: for some the Geek Squad has become a “must have” defining a categoryBrand Relevance 16
  • 18. CEO Vision of a Value Proposition Mike Harper Henry Ford Ted TurnerNote: ConAgra’s Mike Harper’s heart attack led to need for healthy frozen dinners Brand Relevance 17
  • 19. How? Ideas Come from All Over Timing is Everything Become Category or Subcategory Exemplar Create Barriers to Competitors Look at Underserved SegmentsBrand Relevance 18
  • 20. Timing Is Everything! Market All Need Technology to be Firm ReadyBrand Relevance 19
  • 21. The Apple iPod Memory Stick Walkman Viao Music Clip October 2001 October 1999Brand Relevance Note: Jobs genius is more timing than vision 20
  • 22. Chrysler minivan • Ford in 1978: • No front wheel drive • No CEO support • Good station wagon • • Chrysler in 1982: 1982 • Front wheel drive • CEO believed • No station wagon • Vans not garageable • Competitors occupied • Crisis 1999Brand Relevance 21
  • 23. How? Ideas Come from All Over Timing is Everything Become Category or Subcategory Exemplar Create Barriers to Competitors Look at Underserved SegmentsBrand Relevance 22
  • 24. Become the Category or Subcategory Exemplar The Exemplar Brand Represents Category or Subcategory Defines ConnectsBrand Relevance 23
  • 25. Exemplar Brands iPod SwifferBrand Relevance 24
  • 26. Becoming an Exemplar • Market the category/subcategory and not the brand • Be the early market leader • Be the authentic brandBrand Relevance 25
  • 27. How? Ideas Come from All Over Timing is Everything Become Category or Subcategory Exemplar Create Barriers to Competitors Look at Underserved SegmentsBrand Relevance 26
  • 28. Create Barriers • Execute over the top • Continuously innovate Nano Shuffle Touch Ipad • Go beyond functional benefitsBrand Relevance 27
  • 29. Social Concern Eco-solutions Promote sustainability Green Business lifestyles Solar cells Energy management Reduce CO2 Emissions Promote Sustainability in LifestylesNote: Panasonic, one of the to five brands in Japan, creates for some a category offirms that have curable sustainability products and programs.Brand Relevance 28
  • 30. How? Ideas Come from All Over Timing is Everything Become Category or Subcategory Exemplar Create Barriers to Competitors Look at Underserved SegmentsBrand Relevance 29
  • 31. Underserved Customer Heavy user Graphics Young Speed Male Violent action Moms Involving Girls Educational Family Fun for familyNote: Nintendo is the brand story of the decadein Japan moving from 165 to 1 by looking tomoms, girls, families Brand Relevance 30
  • 32. Underserviced Segments Nutrition Bar • 110 Calories Targeting Women • Great taste and texture • Calcium + 23 vitamins and minerals • Energy and nutritional kick • Women supplements • Light crunchy • LemonZest & Chai TeaBrand Relevance 31
  • 33. How? Ideas Come from All Over Timing is Everything Become Category or Subcategory Exemplar Create Barriers to Competitors Look at Underserved SegmentsBrand Relevance 32
  • 34. You do not merely want to be considered just the best of the best, You want to be considered the only one who do what you do. Jerry Garcia, The Grateful DeadBrand Relevance 33
  • 35. Challenge What % of marketing budget goes to Establishing and defended offerings that dominate a category or subcategory vs. Support brands fighting established competitors in established categories or subcategories Set goals in increase that %Brand Relevance 34
  • 36. Relevance Threat Lose Brand Relevance No Longer Make Lose Energy What Customers Visibility Are Buying Consideration Note Kirin lager lost relevance for many to dry beerBrand Relevance 35
  • 37. Parity Note: McDonald’s goal with McCafe was to gain parity with StarbucksBrand Relevance 36
  • 38. Remove Negative Note: 8% of US boycotted Walmarts before their sustainability program startedBrand Relevance 37
  • 39. Relevance Threat Lose Brand Relevance No Longer Make Lose Energy What Customers Visibility Are Buying ConsiderationBrand Relevance 38
  • 40. Extend the Brand • Body Wash with Nutrium • Facial Core Cleanser • Antiperspirant & Deodorant • Shampoo with Weightless Moisturizer • Nutrium Beauty Bar $200M 1990 • Men & Care $4B 2010Brand Relevance 39
  • 41. Avon--Branded Program • Raised $640 million since 1992 • Educated 100 million women Note: Find or create something with energy and attached your brand to itBrand Relevance 40
  • 42. Brand Market Relevance Dynamics Note: market dynamics can be explained by brand relevance competitionBrand Relevance 41
  • 43. Brand Relevance:Making Competitors Irrelevant DAVID A. AAKER Vice Chairman, Prophet Blog: davidaaker.com Haas Dean’s Lecture Series February, 2011 Proprietary and confidential Do not distribute