Changing markets and the importance of brand relevance (page 3 of 3)

That requires not only resources and recognition of the expanded brand-building task, but also competence in brand building.

Trend responders closely track the emergence of trends and the evolution of subcategories, and take responsive action to keep their offerings current and relevant. Because neglecting a trend is risky and driving a trend is rarely an option, developing trend responsiveness capabilities is the best strategy for the majority of companies.

Learning to be a trend responder is feasible for most firms, but it is not easy. It involves two primary capabilities. The first is to recognize and evaluate trends. Organizations that do this well share several characteristics: an externally oriented, market-focused culture; an information system that captures and distills intelligence; top management concerned with market dynamics; and solid business strategists who are empowered to act. Evaluating a trend can be more difficult than identifying it. Will it represent a worthwhile opportunity, or are competitive intensity and overcapacity already predictable? Is it real and substantial, with a value proposition behind it? Can the firm realistically participate, given its strategy, assets, and competencies?

Trend responders must also be able to modify, reposition, and/or re-brand their offerings so they remain relevant despite the market's evolution. Any repositioning or re-branding needs to be respectful of the brand's heritage and compatible with the ability of the brand and the organization to deliver on the promise. The company needs to develop a point of difference from competitors, with a unique take on the new product category or subcategory.

A variety of strategic responses is available to trend responders. They can attempt to build sales and loyalty from their core customer group — by improving product quality, enhancing the customer experience, or attempting to inject energy into their brand marketing. In this strategy, growth might not necessarily be a priority. In fact, an "incumbent market" strategy could be accompanied by some downsizing and cost reduction to reflect the downward trend of the still substantial market.

Four other potential response options address the challenge more aggressively. One is to use new products to alter the current brand image and make it acceptable to the new subcategory's customers. A second trend-response option is to go beyond mere acceptance, and, through the creation of strong sub-brands characterized by exceptional products, become a "destination brand" for the new consumer segment. A third option is to partner or co-brand with firms that have credibility in the new category, sharing some of the upside in order to save the time, cost, and risks involved in creating a new brand. A fourth option for trend responders is to create or buy an entirely new brand platform.

The Relevance Challenge

Trend responsiveness, however, carries its own set of risks. The drive to maintain relevance can prompt a company to chase too many subcategories, both real and imagined, resulting in a diffused, ineffective, and expensive strategy. Response must be guided by serious analyses. Is the opportunity large enough to justify? Is it defensively necessary? Is the trend real, or is it a fad — is it MP3, or merely eight-track? Does the firm have the ability to develop the skills needed to compete? Does it have the brand assets needed?

Companies need capabilities beyond the detection and evaluation of emerging subcategories. They require creative, powerful new offerings; entering an emerging category without them is more likely to waste resources than to create relevance. A brand strategy may require developing a new brand, an endorsed brand, or a sub-brand to carry the flag. If the necessary brand assets are not available, they need to be built or acquired. Finally, staying relevant in dynamic environments can require an organization to become more outward looking, customer focused, flexible, and nimble — perhaps the toughest challenge of all.