Every brand wants to own the exemplar position. The process takes four not-so-easy steps:
Step 1: “Concept Generation”
To come up with the next best thing, explore “unmet needs” or improve “organizational creativity.” Sometimes traditional or ethnographic research and observation can uncover an unmet need. For instance, Best Buy’s research noted that unfamiliar technology was difficult for customers to install and frustrating to use. This gave birth to The Geek Squad, a team of IT professionals who help customers to use and understand electronics they purchase from Best Buy.
Sometimes new ideas come from customer feedback. Arm & Hammer discovered that customers were placing boxes of baking soda in refrigerators to absorb odors. The company capitalized on this by promoting that application and expanding into other deodorizing products. Social media makes it easier to get input from customers. Dell operates a site called Ideastorm, and Starbucks has the MyStarbucks Idea site. LEGO relies on buyers to test new products, offer suggestions and submit designs. Some companies successfully take high-end products and create less expensive versions for emerging markets. In other cases, new technologies spawn new products. For example, Microsoft’s Encarta encyclopedia CD-ROM made Funk & Wagnalls’s printed encyclopedias obsolete, and Encarta later became obsolete itself before closing in 2009.
Organizations must promote creativity to find such category-changing innovations. Try to do the following:
- “Be curious” – Toyota asks “why” over and over as a method of problem solving.
- “Soak in information” – Ideas come from anywhere, so broad knowledge is essential.
- “Access diverse people” – Varying perspectives, backgrounds and experiences generate different ideas and viewpoints.
- “Know and use brainstorming” – Regular brainstorming sessions will help you generate new ideas.
- “Force new perspectives” – Challenge convention and think in new ways. For example, can a surgeon learn something from working in a fast-food diner?
- “Don’t look only for breakthrough ideas” – Sometimes a simple idea is the best one.
Step 2: “Concept Evaluation”
First, offerings must fit an organization’s strategy, and then the idea must be appropriate for the market. Not every good idea is. For instance, in the 1990s, AT&T attempted to enter three new business segments – mobile phones, computers and cable broadband – and lost billions. When considering a new offering, ask three questions: “Is there a market?” “Can we compete and win?” and “Will a market leadership position endure?” Companies must have the capabilities – production, distribution, and so on – in place to ensure the success of the new product or service.
Enough customers must show interest to make an idea worth the time and money to execute it. A niche should have growth potential and staying power. Brand practitioners must differentiate between trends and passing fads. For example, Schwinn, a leading bike manufacturer, misread the emerging enthusiasm for mountain biking and failed to enter the subcategory, with damaging results. The opposite is also true: If too many competitors crowd a category or subcategory, or an exemplar already exists, bide your time.
Step 3: “Defining and Managing the Category or Subcategory”
The process of winning the dominant position in a category or subcategory begins with defining up to five primary associations that are related to your product or your service. Probably one or two of these associations will drive the brand’s popularity. For example, when the Westin hotel chain introduced the Heavenly Bed, it formed a whole new hotel category around a premium sleep experience. Your differentiating function or benefit can come from a great design innovation, a new look, a high standard of customer service, a niche focus, a distinct price advantage, a new application, or a special feature or mix of features. A brand might also create or lead a category based on customers’ emotional associations with the brand. For example, people who are passionate about eating healthy foods relate to the philosophy of Whole Foods Market. Culture, shared interests, passion for an activity and corporate responsibility programs influence the customer-brand relationship.
Step 4: “Creating Barriers”
Exemplars and first entrants in a category or subcategory enjoy a period of little or no competition. This leads to above-normal profits for a significant time. How significant depends on how well the brand erects barriers that prevent competitors from entering the category or places them at a disadvantage when they try. Competitive barriers include:
- “Investment” expense – The cost of entering the category outweighs the benefits.
- “Compelling benefit” – Customers perceive the exemplar brand to be the most authentic and credible.
- “Relationship with customers” – Buyers’ emotional attachment to a brand goes beyond its practical benefits.
- Integral in “the category or subcategory” – The connection between brand and category is so strong that customers can’t consider the category without it.