Ffirs.indd ivFfirs.indd iv 11/18/10 7:11:10 PM11/18/10 7:11:10 PM

“ What always amazes me about Dave Aaker is his uncanny ability to see through the fog and mist and discern a new and fundamental truth that in retrospect seems so perfectly obvious as to seem simplistic. It is just that no one else sees what Dave does. That is exactly the case with Brand Relevance. Aaker perceives that it is no longer brand pref-erence that is pivotal but rather brand relevance has now become key. Brand relevance that yields sustainable differentiation resulting in new categories or subcategories of products or services where competitors are less or even non-relevant. Forget your line extensions and white space analyses, get on the brand relevance bandwagon.”

—Peter Sealey, former chief marketing offi cer, Coca-Cola and Columbia Pictures

and author, Simplicity Marketing

“ Aaker offers a fresh approach to brand strategy by observing that most marketers spend their time trying to build or maintain brand preference when they should focus on building brand relevance wins through inventing new categories and sub-categories to meet consumers’ changing needs.”

—Philip Kotler, S.C. Johnson & Son Distinguished Professor of International Marketing at the

Northwestern University and management guru

“ Dave has done it again! Students of brand management from the classroom to the boardroom will appreciate the insights, challenges, and practical perspectives of Brand Relevance. Like many of Dave’s works, this will have a prominent place on my shelf of well-read, frequently-referenced business books.”

—Denice Torres, president, North America CNS Ortho-McNeil-Janssen Pharmaceuticals, Inc

“ Dave Aaker has become the foremost authority on branding because of his knack for providing insightful, practical advice to marketers. Brand Relevance is Aaker at his best: Tackling a challenging problem with fresh ideas and compelling examples. He convincingly shows how brands can mean the most to consumers.”

—Kevin Lane Keller, E. B. Osborn Professor of Marketing at the Tuck School of Business at Dartmouth,

and author, Strategic Brand Management

“ Aaker’s concept of brand relevance provides an innovation-based path to win in the face of market dynamics.”

—David Stachon, chief marketing offi cer, ERGO Insurance Group

Ffirs.indd iFfirs.indd i 11/18/10 7:11:09 PM11/18/10 7:11:09 PM

“ Dave Aaker has taught me a lot over the years. Here he goes again. Always redefi n-ing. Clarity jumps off the fi rst pages—it’s less about the brand-preference battle than the brand-relevance war. We work hard at business schools to build students’ capac-ity for clear problem statements. By bringing clarity to the real problem, he delivers great opportunity. I especially appreciate his focus on establishing relevance through disciplined process. I also appreciate his links to innovation and how to make it pay.”

—Richard K. Lyons, dean, Haas School of Business, University of California, Berkeley

“ Aaker has hit the nail on the head with Brand Relevance, perhaps the biggest chal-lenge 21st century brands face is to risk innovating and—even more terrifying—transforming oneself. You’ve gotta take the leap or risk getting left behind.”

—Ann Lewnes, chief marketing offi cer, Adobe

“ David Aaker’s Brand Relevance brings branded insight to the process of innovation. Loaded with powerful examples, his defi nition of ‘sub-categories’ provides a contex-tual sweet spot between close-in product improvements and highly elusive “trans-formational” innovations. David’s strategic model brings a potent and practical question for business leaders to ask: ‘Does this innovation create a new sub-category to which competitors are no longer relevant?’ The numerous examples really help bring it to life”

—Ian R. Friendly, executive vice president, General Mills

“ David Aaker’s latest book is a downright challenge to marketers and strategists—stay the course with familiar approaches to building brand preference and risk the likeli-hood of being made irrelevant by those who jump right on Aaker’s lessons. Despite the challenges involved with brand relevance, it’s clearly a path to potential substan-tial growth.”

—Meredith Callanan, vice president corporate marketing and communication, T. Rowe Price

“ For an established brand like Allianz, Aaker’s insights are a “wake up call” because a market leader like us can lose our position if new brands leverage innovation and tech-nology to redefi ne insurance. We have a lot to lose if we lose the relevance game.”

—Joseph K. Gross, executive vice president, Allianz SE

Ffirs.indd iiFfirs.indd ii 11/18/10 7:11:09 PM11/18/10 7:11:09 PM

Brand Relevance

Ffirs.indd iiiFfirs.indd iii 11/18/10 7:11:09 PM11/18/10 7:11:09 PM

Ffirs.indd ivFfirs.indd iv 11/18/10 7:11:10 PM11/18/10 7:11:10 PM

Brand Relevance

Making Competitors Irrelevant

David A. Aaker

Ffirs.indd vFfirs.indd v 11/18/10 7:11:10 PM11/18/10 7:11:10 PM

Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved.

Published by Jossey-BassA Wiley Imprint989 Market Street, San Francisco, CA 94103-1741—www.josseybass.com

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com. Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at www.wiley.com/go/permissions.

Readers should be aware that Internet Web sites offered as citations and/or sources for further information may have changed or disappeared between the time this was written and when it is read.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifi cally disclaim any implied warranties of merchantability or fi tness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profi t or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986, or fax 317-572-4002.

Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books.

Library of Congress Cataloging-in-Publication Data

Aaker, David A. Brand relevance : making competitors irrelevant / David A. Aaker. — 1st ed. p. cm. — (The Jossey-Bass business and management series) Includes bibliographical references and index. ISBN 978-0-470-61358-0 (cloth) ISBN 978-0-470-92259-0 (ebk) ISBN 978-0-470-92260-6 (ebk) ISBN 978-0-470-92261-3 (ebk) 1. Brand name products. 2. Branding (Marketing) 3. Technological innovations. I. Title. HD69.B7A21535 2011 658.8'27—dc22 2010036007

Printed in the United States of Americafirst editionHB Printing 10 9 8 7 6 5 4 3 2 1

Ffirs.indd viFfirs.indd vi 11/18/10 7:11:10 PM11/18/10 7:11:10 PM

The Jossey-Bass Business & Management Series

Ffirs.indd viiFfirs.indd vii 11/18/10 7:11:10 PM11/18/10 7:11:10 PM

Ffirs.indd viiiFfirs.indd viii 11/18/10 7:11:11 PM11/18/10 7:11:11 PM

ix

Contents

Preface xiii

1. Winning the Brand Relevance Battle 1Cases: The Japanese Beer Industry and

the U.S. Computer Industry 1

Gaining Brand Preference 9

The Brand Relevance Model 13

Creating New Categories or Subcategories 17

Levels of Relevance 25

The New Brand Challenge 26

The First-Mover Advantage 30

The Payoff 34

Creating New Categories or Subcategories—Four Challenges 39

The Brand Relevance Model Versus Others 41

2. Understanding Brand Relevance: Categorizing, Framing, Consideration, and Measurement 47

Categorization 48

It’s All About Framing 53

Consideration Set as a Screening Step 62

Measuring Relevance 64

3. Changing the Retail Landscape 69Cases:

Muji 71

IKEA 73

Zara 74

ix

TOC.indd ixTOC.indd ix 11/18/10 7:12:22 PM11/18/10 7:12:22 PM

x CONTENTS

H&M 76

Best Buy 77

Whole Foods Market 81

The Subway Story 86

Zappos 88

4. Market Dynamics in the Automobile Industry 97Cases:

Toyota’s Prius Hybrid 98

The Saturn Story 106

The Chrysler Minivan 110

Tata’s Nano 115

Yugo 118

Enterprise Rent-A-Car 119

Zipcar 122

5. The Food Industry Adapts 127Cases:

Fighting the Fat Battle 129

Nabisco Cookies 134

Dreyer’s Slow Churned Ice Cream 136

P&G’s Olestra 139

From Fat to Health 141

General Mills and the Health Trends 142

Healthy Choice 148

6. Finding New Concepts 157Case: Apple 157

Concept Generation 165

Sourcing Concepts 169

Prioritizing the Analysis 192

7. Evaluation 197Case: Segway’s Human Transporter 197

Evaluation: Picking the Winners 200

Is There a Market—Is the Opportunity Real? 202

Can We Compete and Win? 215

TOC.indd xTOC.indd x 11/18/10 7:12:22 PM11/18/10 7:12:22 PM

Does the Offering Have Legs? 220

Beyond Go or No-Go—A Portfolio of Concepts 223

8. Defi ning and Managing the Category or Subcategory 227Case: Salesforce.com 227

Defi ning a New Category or Subcategory 234

Functional Benefi ts Delivered by the Offering 239

Customer-Brand Relationship—Beyond the Offering 254

Categories and Subcategories: Complex and Dynamic 260

Managing the Category or Subcategory 261

9. Creating Barriers: Sustaining the Differentiation 269Case: Yamaha Disklavier 269

Creating Barriers to Competition 275

Investment Barriers 276

Owning a Compelling Benefi t or Benefi ts 283

Relationship with Customers 290

Link the Brand to the Category or Subcategory 294

10. Gaining and Maintaining Relevance in the Face of Market Dynamics 297

Case: Walmart 298

Avoiding the Loss of Relevance 301

Product Category or Subcategory Relevance 302

Category or Subcategory Relevance Strategies 304

Energy Relevance 311

Gaining Relevance—The Hyundai Case 320

11. The Innovative Organization 327Case: GE Story 327

The Innovative Organization 332

Selective Opportunism 334

Dynamic Strategic Commitment 339

Organization-Wide Resource Allocation 344

Epilogue: The Yin and Yang of the Relevance Battle 355

Notes 359

Index 371

CONTENTS xi

TOC.indd xiTOC.indd xi 11/18/10 7:12:22 PM11/18/10 7:12:22 PM

To my wife Kay and my daughters Jennifer, Jan, and Jolyn who inspire with their support,

vitality, compassion, love, and friendship.

TOC.indd xiiTOC.indd xii 11/18/10 7:12:23 PM11/18/10 7:12:23 PM

xiiixiii

Preface

During the last ten years, I have been struck by how the concept of brand relevance could explain so much about strategic suc-cesses, market dynamics, and even brand declines. A brand could develop great marketing supported by large budgets but not make a dent in the market unless it drove a new category or subcategory of products or services, unless a new competi-tive arena in which the competitors were no longer relevant emerged. Then success could be dramatic in terms of sales, profi ts, and market position. It seems clear that success is about winning not the brand preference battle but, rather, the brand relevance war with an innovative offering that achieves sustain-able differentiation by creating a new category or subcategory.

When you start looking, it is amazing how many examples of new categories and especially subcategories that appear in virtually all industries. It is clear, however, that achieving that result is not easy or without risks. There are many failures and disap-pointments, few of which are visible. Success requires timing — the market, the technology, and the fi rm all have to be ready. Further, the offering concept that will drive the new category or subcategory needs to be generated and evaluated, the new cat-egory or subcategory needs to be actively managed, and barriers against competitors have to be created. All of these tasks are diffi cult and require support from an organization that may have confl icting priorities and resource constraints.

fpref.indd xiiifpref.indd xiii 11/18/10 7:11:58 PM11/18/10 7:11:58 PM