It’s 2006 and John delivers a victorious share story to the board. As a first-time CMO, he takes excess pride in the persistent market share increase of their mobile phone brand. The only problem is that the category itself is decreasing. Months later, smartphone usage exploded, and their own business collapsed. Nokia, Blackberry, and even Kodak fit the description: they were growing in a declining category.
Danger lies ahead if you only look at market share.
Yorkshire Tea knows this first-hand, as the volume sales for ordinary tea have been on a steep decline over the last three years. Despite their own successive annual share gains, they needed to find new space and remain on the lookout for stretching opportunities, for their own brand, and the broader category.
Everything revolves around the consumer.
Never mind the market research critics. Steve Jobs took the Macintosh leap, then checked his instincts with consumers and verified he was on the right track. Philip Knight found Nike’s raison d’être in the market and thanks to that, they never made – as he puts it - museum pieces. Karlijn Ris’s most nagging thought was about The Vegetarian Butcher being in sync with what people need. Sheila Cunningham ripped up the rulebook and focused on Diageo’s constant relevance in people’s lives…the list goes on and on. Good marketers realise they are not the consumer. They need to focus on consumers for answers, but where exactly do they look for clues?
To innovate or to not innovate?
It’s a no brainer: ‘to innovate’, but make it strategic, purposeful and incremental.
Finding new space is imperative for brands. Our data proves that brands that find new uses for their range double their chances of growth. Sometimes it’s about renovation; Lurpak butter simply inspired more people to use it in more ways. More often though, it’s about finding a rich new incremental space to innovate in. Think of Warburtons moving into pitta breads, belVita cracking the breakfast biscuit occasion, McDonald’s finding their coffee culture, Dove complementing their range with Dove sensitive, Dettol expanding into home hygiene, Uber Eats stretching into food delivery, LinkedIn prepping candidates with training, Tesco helping a little bit more with mobile phones. The list goes on and on.
But how do brands decide what’s the best new incremental space for them?
Size matters here and our data highlights the following:
- Smaller brands tend to take share from dominant competitors by finding incremental usage within their category.
- Larger brands remove frequency barriers around existing moments, create new usages in the category or even create a new category. They hold Future Power and embrace innovation with relevance and differentiation, like the brands referenced above.
Larger brands need to have sufficient momentum and Future Power to extend into new or adjacent categories
Which innovation route is best for you?
To find out, the steps are three:
Step 1: Map your penetration today vs. your validated prediction of future growth**, based on your brand’s strength today (Future Power).
Depending on where your brand sits, you’ll need to focus efforts in different places.
Step 2: Know that your brand’s penetration can always be improved. The real world is messy, and people (in contrast to marketers) focus on the need, and seldom make linear choices. “Look beyond the products that are ranked beside you in tracking or on the aisle”, Mark Visser, Global Consulting Lead, advises. “Subscription Video on Demand services compete with books and trips to the cinema, painkillers compete with heat treatments and massages, wine competes with tea and biscuits.”
So, whatever your penetration appears to be on paper, make it your mission to know about emerging contexts. Grab the latent opportunities and extend your distribution to be more present.
Step 3: Pull a Guinness or a Baileys.
If you are a big brand with a weaker prediction of future growth, you show up in the bottom right quadrant of our map. Take stock and ask yourself: ‘Am I still relevant?’
Guinness did so and broke the paradigm of usage occasions they were locked into. They challenged preconceptions that Guinness was all about St Patrick’s Day and Six Nations Rugby, became more inclusive with their low or no alcohol options, enabled consumers to pour themselves the perfect pint at home with Guinness Nitrosurge’.
If you are big brand with a stronger growth potential, you find yourselves in the top right quadrant of our map. That’s when you “Look up and out”, as Sheila Cunningham, Bailey’s global planner, says.
Just to be clear, Baileys didn’t innovate randomly; before they extended their offering, they understood the need and never ever stopped holding true to the essential qualities of their brand. Their new variants Apple Pie, Deliciously Light, and Colada are reported to have driven a 31 percent net sales volume increase between July 2020 and June 2021. Their new, paper-based bottle simplified the recycling process and built the brand for the long term, not just short-term sales.
It's not a good sign if you feel too comfortable.
It’s hard to keep striving for the next best thing when the outside world believes you do a lot of things right. To deliberately want to break things that are not broken, to feel the itch to shake things up.
But staying with the uncomfortable and questing after the deep human truths about how people consume are prerequisites to keep growing. Colgate-Palmolive wasn’t crippled by their maxed-out penetration; they soldiered on to tackle waste reduction. And Mastercard didn’t rest on their laurels just because they were leading the pack in payment technology. They used their existing infrastructure and brand equity to leapfrog into the “fast growing and totally broken” space of healthcare.
Both brands self-injected meaningful difference, which paired with consistent innovative behaviour, doubles a brand’s chances of value growth.
Brands that innovate in a meaningfully different way also double their chances of growth
In contrast, our CMO character John stayed well into his comfort zone, failed to hear the first faint murmurs of discontent, and neglected to redefine the business he thought they were in. Meanwhile, his competitors were happily exploiting and gaining ground in the ever-growing smartphone blind spot.
To never step outside one’s comfort zone is likely the enemy of growth, both for businesses and the CMOs themselves. A gentle push of your brand’s ceiling and that of your category’s is, on the other hand, a proven facilitator for growth. Just one thing: before you make your next breakthrough innovation move, first secure your core and defend your current position. This way, you will enjoy consistent support along your innovation journey.
If you are looking to create a winning portfolio growth strategy or simply want to Find New Space for your brand, we are here to help.
Whether you are starting now or are an established brand, our promise is this: Blueprint for Brand Growth will help you stay on track to sustainable growth and healthy profits.