CE#324: How To Make Your Competition Irrelevant (Open l Forum AMEX)

Q: Is the right goal to make one’s brand relevant or to make one’s competitor’s brand irrelevant?

A: Both. The goal should be to drive market dynamics by making your brand relevant and competitors irrelevant. Engage in innovation that is substantial enough, or transformational enough, to create a new category or subcategory defined by one or more offering enhancements that some customers will consider “must-haves.” These “must-haves” could involve self-expressive, social or emotional benefits as well as functional benefits.

The task then is to attract customers to the new category or subcategory and create barriers to competitors. Think of Apple’s iPod, Chrysler’s minivan, Mr. Clean Magic Eraser, Westin’s Heavenly Bed and others that changed what people bought with “must-haves” and created years and sometimes decades with no real competitor.

In nearly all categories from beverages to cars to computers to financial services, the only way that a firm can gain a meaningful sales change is through this type of innovation. Expenditures on marketing and product refinements to win the “my brand is better than your brand” battle rarely changes the marketplace because of the momentum of habitual behavior.

Q: What causes brands to lose relevancy?

A: There are three risks. First, a brand can remain strong but customers start buying another category or subcategory. It does not matter how much a customer loves your minivan brand or how strong it is, if they are now buying hybrid sedans. The challenge is to make the brand relevant to the emerging new subcategory or defeat the subcategory—convince people that the minivan is a better choice than a hybrid sedan.

Second, a brand can lose energy and visibility to the point that it is not considered and, thus, not relevant. The task is to either energize the business like Apple and Nintendo have done or to find something with energy like the Avon Walk for Breast Cancer and attach it to the brand.

Third, a brand can create a negative, a reason not to buy the brand. It could be based on a perceived lack of social conscious or a quality problem that undercuts credibility. Avoiding a negative is not always an exciting initiative, but it can have strategic implications.

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