Like Jaaved Jaffrey in the Maggi sauce ads, marketers for several decades believed that branding strategy revolves around "being different". But brand guru par excellence Kevin Keller and his co-authors warn that it is only half, in fact, only a third of the requirement. An effective branding strategy should first establish a frame of reference ("what it competes against"), then place it within that frame credibly to ensure parity ("how it is at least as good as the competitors"), and finally highlight the compelling differences ("in fact, it is better"). To highlight the difference between the two approaches, we take the example of Microsoft's Windows 8. In its bid to position itself for both the desktop and tablet markets, it has so horribly confused its constituency that Financial Times rates it as the biggest marketing disaster after New Coke that bombed in 1985.
Windows 8 is indeed different but compared to what? Windows 7? iOS?
Seen in this framework, continuous improvement appears to be easier and less risky as it operates within an established framework. Let us examine the success of Maggi's sauce. When it was launched, the market was split 80:20 between ketchup and chilli sauce. Maggi's Hot and Sweet entered to cater to both the segments and knocked every other product out.
Such a strategy, however, is getting increasingly difficult in a cluttered market. Look at the limited success of Ivory, this year's dual-sim phone from Idea. Launched in 2012 it was another "me-too" product that failed to distinguish itself from numerous competitors. The other problem that brands following continuous improvement strategy face is that while the market is dynamic, perceptions stick. Less than a decade ago the mobile handset market was relatively undifferentiated and dominated by Nokia. Today, it is split between high-end players like Apple and Samsung, and bargain-basement ones (dominated by second-hand products and Chinese imports). Stuck in the middle, Nokia was perceived to be value-for-money but not good enough to compare with Apple or Samsung. Result? Unlike Hot and Sweet, the middle path gave Nokia a notable dud in the form of Lumia.
Disruptive innovation, on the other hand, moves away from the clutter to create a new market. Disruptive branding aims to be in an "uncontested" market space that could be created by the Blue Ocean Strategy proposed by W. Chan Kim and Renee Mauborgne of INSEAD. Through value innovation Sony's Walkman allowed the company to move from a known (Red Ocean) to a new market (Blue Ocean). A new category of product was created. It not only changed the way people listened to music but also firmly established the reputation of the company across product lines.
Now, an example from India. Here, women have traditionally used home remedies for skin care, especially for skin lightening. In 1975, HUL was the first to launch a product that formally addressed this demand without appearing insensitive or politically incorrect. Fair & Lovely has created and dominated the category ever since. In the last four decades India has changed in several ways but that sliver of psyche that deals with fair skin remains recalcitrant enough to now include men too.
Evidence shows that companies prefer continuous improvement to a disruptive strategy. This makes sense because companies, like human beings, are risk-averse. It is easier to find support for continuous improvements that is done in small doses. Missteps are less costly. In contrast, disruptive products give a better return but are associated with higher risk. Keller gives the example of Motorola Envoy, a personal digital assistant launched in 1994. It could function like a laptop computer but did not have a keyboard, function like a pager but was too big, and could be used as an organiser but was seen to be too cumbersome. Eventually Envoy, seen as a misfit, was put to sleep.
Should companies then eschew strategies that cause disruption?
In his recent book Brand Relevance: Making Competitors Irrelevant David Aaker leaves companies with few choices. In his opinion, competing through continuous improvement in a crowded market assures mutual destruction. Winning companies have to focus on relatively new categories and sub-categories where competition is insignificant. This does not mean that companies have to pursue a high risk-high return path. Companies can de-risk (to some extent) the process by shifting the focus from being the "first mover" to fulfilling consumer needs - both felt and instilled - that remain unmet. In fact the jury is out on whether there is indeed any first-mover advantage.
Today's most successful innovators, in the true sense, are followers who caught the early movers unawares. Facebook was not first to think of social networking nor is iPod the first digital audio player. Even Sony was successfully sued by inventor Andreas Pavel for unauthorised use of his ideas for Walkman. However, in each of these cases, compared to the incumbent the winning companies did a better job of meeting consumer needs that were often not well articulated. Plus, their entry was perfectly timed, sometime fortuitously. This year's top brand Duster from Renault is an excellent product that entered the market just when SUV as a category was becoming fashionable in India and the competitors, especially market leader Scorpio, were either old-fashioned or over-priced. Similarly, with its Galaxy Note II, Samsung entered a category four years after HTC Advantage just when a 'phablet' ceased to be gobbledygook.
In summary, success depends on early identification and entry into a relatively unexploited category (1) where sufficient points of parity exist to clearly define the category, (2) which is not crowded, (3) where competitors are not focused enough to meet consumer needs, and most importantly (4) which has potential to grow. Sounds easy!.
Sudipt Roy
Assistant Professor, Marketing, Indian School of Business
According to the Business Standard-Ipsos survey, Renault Duster, Kahaani (movie), Samsung Galaxy Note II phablet, Audi Q3 and Ek Tha Tiger (movie) are the five most successful brands of 2012. On a cursory look, there seems to be little in common among these brands, particularly between, say, an almost art-house movie Kahaani and a full-blown Mumbai-style masala movie Ek Tha Tiger. Similarly, while both are SUVs, an Audi Q3 and a Duster don't have much in common in terms of target customer, price and positioning.
However, on a closer analysis, the success of Kahaani and Ek Tha Tiger (ETT) in the same year is a clear indication of varied needs of an entertainment hungry consumer. She isn't looking for a staple formula all the time but is looking for different cuisines every time she goes out to eat. She will pick a Chinese restaurant to take her parents out to dinner; will go to the latest Lebanese joint with her boyfriend and walk into a noisy McDonald's with her nephew. The consumer is looking for variety but is certainly not willing to accept something that is sub-standard or not up to her expectation. ETT is not very different from any other Salman Khan or Akshay Kumar movies of the same genre but the slick production and choice of locations in exotic places, offered a very different experience. It is almost like putting Delhi's street food in a well-appointed restaurant and putting well-dressed and trained waiters to serve as contemporary music plays in the background. And the result is there for us all to see, not only were Salman's die-hard fans thrilled but the so-called classy movie-goers too could not resist watching it.
ETT didn't disrupt the competition with its innovation but actually disrupted Salman's own formula through well-thought and executed innovation in all departments of filmmaking, be it cast, locations, cinematography, music and, above all, marketing and PR. The result was a classier Salman movie that retained old fans and brought in new ones.
Taking a leaf from similar success stories of commercial movies, the makers of Kahaani turned their own formula on its head. Rather than pinching pennies in all areas, they chose to save all the money that could have been spent on sets and distant international locations and shot most of the movie in Kolkata in real life situations. To get the attention of the media to generate PR buzz, they hired a cross-over actor in the lead role and chose mostly unknown actors for other roles. In some other time, a cross- over actor would have been labelled "traitor" for acting in masala movies. But in this case they chose to embrace her and gain from her visibility and popularity. The makers of Kahaani gave up on old notions and adapted to the new ways and accepted that cinema is an art that should be shared and enjoyed with larger audience and if that needs some spicing up and little bit of noise, so be it.
The makers of Kahaani too didn't disrupt anyone but their own self and roped in more audience to garner such huge success. If you look at it objectively, Kahaani isn't necessarily the best suspense movie but it certainly is one of the most successful. So successful that it inspired Aamir Khan to come out with Talaash to cash on the genre's new found popularity. What could possibly be a better compliment than this?
The success of Audi Q3 and Duster is again a proof of how core approach towards consumer segmentation, focused innovation and aggressive communication, works across customer segments. Audi Q3 found a niche for an international compact SUV but at a price closer to luxury sedans. It is probably the same consumer who made Honda CRV successful but has now moved up in life and is looking for something better. Rather than presenting Q3 as a poorer man's Q7, it has been positioned as the right option for the identified target customer.
On the same lines, Duster found a niche segment in the large customer base of a Scorpio that was looking for a compact, international and less macho SUV in the similar price range. Renault launched Duster that has classier, compact and lighter looks, in a range of attractive colors in a category that had stuck to proven formula for too long. In a way, both Q3 and Duster have benchmarked themselves with Honda CRV customers. Q3 went after the customer who owned CRV and wanted to upgrade and Duster went after customers who aspired for CRV but could not afford it but found Scorpio to be too big and masculine. Both of them met with huge success because they didn't try to take away share from either CRV or Scorpio but created a niche for themselves and owned it. Thus it is not necessarily destructive disruption to disturb the incumbents, it is innovation, continuous innovation in all aspects - be it studying the customers, understanding their needs, creating winning products, pricing it right and reaching out aggressively - that certainly delivers success.
The Samsung phablet is a far bigger success as its success is on a global scale and was one of the products that allowed Samsung to dislodge Apple from its market leadership position on smartphone world war. Samsung has disrupted the whole smartphone market rules by coming out with regular launches that keep the market excited and lets Samsung gain newer customers all the time, as compared to other smartphone players, particularly Apple that launches new phones once every few quarters. I reckon that regular launches allow Samsung to get much more recent feedback and inputs from the market that feeds their product design and innovation. Also, they are in a position to adapt the latest in technology and applications. It works very well in emerging markets such as India where consumer incomes and aspirations are changing and evolving rapidly and it syncs better with Samsung's marketing strategies versus an Apple or a Blackberry.
Harminder Sahni
Founder & Managing Director, Wazir Advisors
