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{ aaker on branding }

BY DAVID AAKER

daaker@prophet.com

Preference vs. Relevance

David Aaker is vice chairman of

San Francisco-based marketing
consultancy Prophet and author
of Brand Relevance: Making
Competitors Irrelevant. To read
past columns, go to MarketingPower.com/marketingnews and
click on Featured Contributors.
Follow Aaker at Twitter.com/
davidaaker or on DavidAaker.com.

here are two ways to play the brand

game, but which strategy delivers the strongest win? The first and
most commonly used route to winning the
brand game focuses on generating brand
preference among the choices considered by customers. Simply put, it focuses
on beating the competition. A consumer
decides to buy an established product, say
an SUV. To the consumer, several brands,
perhaps Lexus, BMW and Cadillac, have the
visibility and credibility to be considered.
A brand, perhaps Cadillac, is then selected.
Winning involves making sure that Cadillac is preferred to Lexus and BMW, which
usually means being superior in at least
one of the dimensions defining the product
category and by being at least as good as the
competition in the rest of the dimensions.
The brand preference strategy involves
incremental innovation to make the brand
ever more attractive or reliable or the offering less costly. Faster, cheaper, better is
the mantra. Resources are expended on
communicating more effectively with more
clever advertising, more impactful promotions, more visible sponsorships, and more
social media involvement, but such efforts
rarely break out of the clutter. There is a
focus on and commitment to the existing offering, business model and target
segment. Improvement is the goal but
change is not on the table.
Marketers that use this classic brand
preference model tread an increasingly
difficult path to success in todays dynamic
market because customers are not inclined
or motivated to change brand loyalties in
established markets. Brands are perceived
to be similar, at least with respect to the
delivery of functional or core benefits, and
often these perceptions are accurate. As a
result, customers are not motivated to learn
about or locate alternatives. Further, even
when the offering is improved or effective marketing is developed, competitors
usually respond with such speed and vigor
so that any advantage is often short-lived.
As a result, a brand preference strategy is
usually a recipe for stressed margins, unsatisfactory profitability and, ultimately, a
decline into irrelevance. It is so not fun.

marketingnews02.28.11

Win with Relevance

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The second route to competitive success

is to change what people buy by creating new categories or subcategories that
alter the way existing customers look at
the purchase decision and use experience.
Under brand relevance competition, the
customer selects the category or subcategory, perhaps a compact hybrid vehicle,
making the starting place very different.
The selection of the category or subcate-

A brand preference strategy is usually a recipe

for a decline into irrelevance.
gory is now a crucial step that will influence what brands get considered and thus
are relevant. The customer then identifies
brands that are visible and credible to that
category or subcategory. The brand set is
more in play than under the brand preference model. There might be only a single
brand that makes the consideration set,
perhaps a Toyota Prius.
A relevant brand for a customer is one
for which the target category or subcategory is selected and the brand is in the
consideration set.
Winning under the brand relevance
model is different because it is based on
being selected because competitors were
not relevant rather than not preferred, a
qualitatively different reason. Some or all
competitor brands are not visible and credible with respect to the new category or
subcategory. The result can be a market in
which there is no competition at all for an
extended time or one in which the competition is reduced or weakened.
The brand relevance strategy involves
transformational or substantial innovation
to create offerings so innovative that new
categories or subcategories are created. It
involves an organizational ability to sense
changes in the marketplace and its custom-

ers, an ability to commit to a new concept

and bring it to market, and a willingness to
take risks by going outside the comfort zone
represented by the existing target market,
value proposition, and business model.
The payoff of operating with no or little
competition is huge. It is economics 101.
Consider the Chrysler-made minivan
introduced as the Plymouth Voyager and
Dodge Caravan in 1982 that sold 200,000
during the first year and 12.5 million to
date. For 16 years Chrysler had no viable
competitor, in part because it continuously
innovated behind the product but also
because competitors had other priorities.
In addition to numerous case studies,
there is empirical evidence that creating
new categories or subcategories pays off.
Perhaps the most robust law in marketing is that new product success correlates with how differentiated it is. A
highly differentiated offering is likely to
define a new category or subcategory. A
McKinsey & Co. study is one of many
that support this claim. It showed that
new products that create a new category
or subcategory had a return premium of
13 points during the first year, but that
return slides to 1% by the tenth year as
competitors join the fray. m

1/25/11 6:15 PM

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