How to innovate to stay ahead
Success in business is not about winning the brand preference battle so much as the brand relevance war with an innovative offering that achieves sustainable differentiation by creating a new category or subcategory, according to David Aaker in his book Brand Relevance: Making Competitors Irrelevant. Conversely, brands often decline, not because they have lost their ability to deliver or the loyalty of their customers, but because they have become less relevant.
The book goes on to describe numerous examples of companies which have gained substantial competitive advantages by creating in the minds of potential customers a new category or subcategory of product. Examples from the field of retailing include Muji, IKEA, Zara, H&M, Best Buy, Whole Foods Market, Subway and Zappos. Examples from the automobile industry include the Toyota Prius, the Saturn, the Chrysler minivan, the Tata Nano, Enterprise Rent-A-Car and Zipcar.
Creating brand relevance is a matter of framing new categories and sub-categories and influencing customers’ perspectives by creating mental associations. To create new categories, an organization must be involved in finding concepts, evaluating them, using them to define new categories, and creating barriers for competitors. All is not lost if a company finds itself becoming irrelevant; the author gives plenty of examples of companies which have recovered relevance through renewed innovation.
There are numerous other books available which discuss the importance of differentiation, but none describe it quite in the same way as the present author does. Differentiation is important, but a key aspect of business success lies in communicating the differences to the target market in such a way as to excite ongoing interest. This book is a bit longer than I would have liked, but the author’s advice and conclusions seem to be very pertinent.