Young and Profiting with Hala Taha - Dave Aaker: Brand Strategies For Market Leadership with The Father of Modern Branding | E187

Starting point is 00:00:00 This episode of YAP is sponsored in part by Shopify. Shopify simplifies selling online and in-person so you can focus on successfully growing your business. Sign up for a $1 per month trial period at Shopify.com slash profiting. You're listening to YAP, Young and Profiting Podcast, a place where you can listen, learn, and profit. Welcome to the show. I'm your host, Halla Taha, and on Young and Profiting

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Starting point is 00:01:15 Podcast. Today on Yapp, we're chatting with Branding Expert David Acker. Building a strong brand is vital. It's what attracts your customers and keeps them coming back. But with so much competition, sometimes it may seem impossible to stand out and make an impact. So when I decided to release an episode about strengthening your brand to gain market leadership, I knew there was no one better to talk to than the father of modern branding himself, David Acker. David has received several awards for his contributions to the father of modern branding himself, David Acker. David has received several awards for his contributions to the science of marketing, and he is the author of 17 books, including his latest, owning game-changing subcategories. David also serves as the vice chairman

Starting point is 00:01:57 of profit, a marketing and branding consulting firm. In this episode of Yap, we'll hear how his Acker brand equity model has helped companies create strategies that increase their brand equity for over 20 years now. We'll gain an understanding as to why the only way to grow your business with rare exception is to find and own game-changing subcategories. And lastly, we'll get the 411 scoop on how to build a loyal

Starting point is 00:02:23 customer base and create barriers for competition. Now let's get right into my conversation with Branding Expert David Acker. Welcome to the show Dave, happy to have you on. Good to be here. So you're known as the father of modern branding and you've written over 17 books on the subject. You're also the vice chairman of Profit, a global growth consultancy, and good branding is crucial to business success. And so I can't wait to break down your branding secrets in this episode as well as your

Starting point is 00:02:51 Acro brand vision model and also super excited to cover your philosophy on owning game changing subcategories. So to warm things up, I'd love for you to share how you first got interested in the topic of branding. See, this goes back a long time from now, 30 years or so. But there was a time when everything was coming together in the late 80s. It was this sort of BCG model of strategy, which was the growth share matrix. It just said, you try to expand market share, you'll get a cost advantage in your win. And that led people to do all sorts of dumb things like to do price promotions

Starting point is 00:03:32 and destroy brands and so on. And I actually did a, it kind of metric study. I'm a, I start off as a statistician. I did a, a study that showed that if you increase market share, you in fact don't increase profitability. If you analyze the data right, because what they were doing is looking at cross-sectional data, which shows that large market share companies made more money than small ones. But that doesn't mean that if you increase market share,

Starting point is 00:03:59 anything good will happen. And then what also happened during that time is the scanner data came out, which meant that for the first time, you could really tell exactly what people bought in the grocery store or the drug store. And not only that, but you could set up a whole town where you could tap into their television,

Starting point is 00:04:19 and says, no exactly what they watched. So now you could run experiments that would show compare zero ads to two ads to four ads, compare this kind of ad to that kind of an ad. And so finally science came to marketing. And everybody was so happy because now you could apply science to everything else, now you could apply it to marketing. Well, what happened was that when you did these experiments, the only thing that paid off was since off promotions or price promotions. So they taught the consumer to several things. One, it's that only important variable is price. And two, if it's not on sale, today, just wait two weeks, it'll go on sale. And so people were realizing this hadn't working. And we've got to go back

Starting point is 00:05:06 to basics. We got to somehow get our brand back. And so the concept of brand equity was then introduced. At the same time, I wrote a book and I taught business strategy and I came to believe that companies were too focused on short-term financials and they needed to build assets. And I had background in market research. I wrote a book on market research and on advertising and on strategy. And so I was sort of well equipped to focus in on branding. That's what I did.

Starting point is 00:05:38 It was, I was really at the right time at the right place. So I wrote my first book on how do you define and understand brand equity and nobody had done that before. And I also told not only what it was, but why it was so valuable to not only the firm, but the customer. And I defined it as being a visibility and awareness and visibility. And then brand image was a second dimension and the third-drenched dimension was brand loyalty. And nobody else had defined brand equity that way. They had always excluded brand loyalty. And that changes everything. When you put that in the mix, no longer can brand's be run by middle management, by the advertising agency, they're

Starting point is 00:06:26 not strategic because it's all tied up with the customer loyalty, which is without question a long-term asset. And so that was pretty, anyway, so that hit really at the right time. Yeah, it was revolutionary. I mean, you put out your Acre brand equity model in 1996 and people are still using it today. It's still in textbooks and things like that till this day. So it was very revolutionary.

Starting point is 00:06:52 So basically you took everybody out of this mind frame that the only way to increase your brand was to get more market share and to lower prices and things like that. And you kind of turned it on its head with your new Acro model. So let's talk about that a bit. It's there's a few different pillars brand loyalty brand awareness perceived quality brand associations and proprietary assets. Could you take us through all of these different components in your Acro model? Well, first of all my first book Manning's in brand equity

Starting point is 00:07:24 your acrimodel? Well, first of all, my first book, Managing Brand Equity, Defined Brand Equity, and showed why it was important. And then people said, okay, I'll buy into that. How do I manage it? And I wrote a second book called Building Strong Brands, and that's where the acrimodel appears. It's on, on how do you manage brands? And the essence of the acrimodel was that the people that were running brands in those days were at agencies and lower-level marketing managers. And the ad agencies wanted to have a single phrase to represent what the brand stands for, because they wanted to create an advertising campaign, and that's what they needed.

Starting point is 00:08:01 And so a brand was a single thought. And not only that, but they they often most of the agencies had a little box, maybe six boxes, eight boxes, seven boxes. And if you wanted a brand strategy, you filled in the box. There'd be a box for personality, a box for brand attributes, a box for benefits and so on. And so I basically said two things. One, a brand is not a three-word phrase. A brand is multi-dimensional. It has eight to twelve seven dimensions, and that's especially true with business to business to service brands. The second thing I said is there's no predefined boxes because every situation is different. And so what you have to do

Starting point is 00:08:48 is to is basically say what do you want your brand to stand for and never mind any prior boxes. What are your boxes? What makes sense for you? And then you take these 10 or 12 things and you prioritize them into a core group and an extended group. And that's really the essence of what's sometimes called as the aqua model. Let's hold that thought and take a quick break with our sponsors. Young and profitors, do you have a brilliant business idea but you don't know how to move forward with it? Going into debt for a four-year degree isn't the only path to success.

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Starting point is 00:12:37 So for example, let's all T you off. So brand loyalty. Can you explain what brand loyalty is? Yeah, brand loyalty is really an essence what you're buying when you buy a brand because a brand has a following. It is a business base generating a potential profit flow. And that's what makes it really valuable. It's a core of it. It's the customer loyalty base. And of course, there's levels of them. There's the people that buy you

Starting point is 00:13:08 and they don't think much about it, but there's no reason to change. There's the people that really like it and the people that are passionate about it and are really involved in your product. And it's part of their identity, it's part of their lifestyle, it's part of them, defines them.

Starting point is 00:13:25 So you want to have as large a group, especially near the top of that pyramid, as you can, because that represents a terrific barrier to competitors, because you know, you've got the most attractive customers, and they can't access them, or it'd be extremely expensive to do so. And each of those customers have a lifetime value, and that's really what your asset is based on. Okay, and then another component of your Acro model is brand awareness. So what do you think my listeners need to know about that?

Starting point is 00:14:01 I've kind of expanded or redefined awareness, because I've gotten real interest in what I call brand relevance. And that's tied into the subcategory stuff because it says when you create a new innovation, you may, you win not because you're better, it's because the other people are not relevant. To be relevant requires awareness and credibility or visibility and credibility. So it's not enough just that people know your brand. Your brand can be known and be what's called in the what I call being in the graveyard means that everybody knows your brand, but they don't even ever think about it when they want to buy or use something. So it requires

Starting point is 00:14:42 awareness, but also credibility, which means you're an option. It doesn't mean I'm going to buy you, but you're in my consideration set. That's the first dimension of brand equity. That's really interesting that you say relevancy, because I think that's really key. There's lots of brands out there, like I can think of like copier brands and things, like everybody knows the Yorox, but nobody's buying Xerox, you know, because they haven't adapted. So would you say that relevancy is really all about adapting to your customer needs?

Starting point is 00:15:13 You lose relevance for a couple of reasons. One is you lose relevance because you're not making what they're buying anymore. You're making, you know, an SUV and they're buying electric cars. So they could love your SUV. They would never buy another SUV. I mean, another kind of SUV. Anybody that asks you,

Starting point is 00:15:37 they would recommend your brand, whether it's not buying SUVs, they're buying an electric car. So it doesn't matter how much they like your SUV. So that's one way to lose relevance. Another way to lose relevance is just to lose energy. They have a sort of your just, your bland, you're taking for granted, your grandfather's product.

Starting point is 00:15:59 And it's, you're fine, but there's no energy there. There's no reason to think but there's no energy there. There's no reason to think about or talk about your brand. Oh, there's one other way you lose relevance, and that is if you create a reason not to buy, it might be because you had a a terrific product mistake here. You make a cola and you had some contaminated water, or maybe you, you know, you took a political view that was unpopular by some people and they created a reason not to buy. So those are the three ways you become less relevant. Yeah, in 2022, they call that being canceled. We have a cancel culture. So your brand could

Starting point is 00:16:42 lose relevancy by being canceled. Yeah, that's so true. Let's talk about perceived quality. So for my understanding, this refers to the public's understanding of your perceived quality of your products and services. What do you think we need to know about that one? Brand image is all the perceptions people have of you. When somebody mentions your name, what comes to mind? That's the brand image.

Starting point is 00:17:05 And a brand image can be, you know, an attribute of the offering like perceived quality, and what lies behind perceived quality is a really important factor, which is called trust. But it also can be a personality, it can be values, it can be your willingness to take on social programs. It can be sort of an application and how that links into your lifestyle. So it can be a wide variety of things. But at the end of the day, what you want something that maybe gives self expressive benefits, it tells people who you are or gives social benefits. It provides a link to other people

Starting point is 00:17:47 where it provides emotional benefits that makes you feel something and it provides functional benefits that ties you to using the brand. Yeah. Okay, cool. So let's move on to your latest book. I think it came out in 2020. It's called Oning Game changing subcategories,

Starting point is 00:18:05 uncommon growth in the digital age. An essential thesis of your book is that the only way to grow your business or with where exception at least is to find and own a game changing subcategories. So first of all, let's define what is a game changing subcategory in your own words. changing subcategory in your own words. It's an offering that contains some must-habs. That's something that customers will insist on. It's either a new or an improved offering or advanced to an old offering that just creates a must-have.

Starting point is 00:18:42 You really must have that. So the electric car is certainly up in that category. Prius, when they came out with the first subcom, it wasn't the first content incidentally. It was the second. Honda was the first, but Prius was the first to get it right, but they went 12 years with no competition. And they had with the must-have. It was several must-haves as is usually the case. There was a design of the car, there was a functionality, there was the all the modifications and improvements they had at each year. But anyway, I started off studying beer in Japan, I've been

Starting point is 00:19:21 in Japan a lot, and I looked at 30 years of beard data, and only four times did the market share trajectory change, even though there was enormous market spending each of those years. Four times, and each time there was a new subcategory developed, like a sawi super dry. And I looked at two dozen other categories, and that's always the same. Computers and banks and so on. When you see a spurt of growth, it's almost always driven by a new subcategory. I'd love to kind of really go deep on this because I really want my listeners to understand this and I think the best way would be to go through some examples of businesses dominating their

Starting point is 00:20:04 own industries who won this way by having their own game-changing subcategories. So why don't we give some examples like how about Airbnb, Etsy, Werby Parker? Do you want to talk about any of those? Yeah, those are all good examples. I mean, Etsy was sort of, I talk in the book about how to compete against Amazon

Starting point is 00:20:24 and there's about seven ways to do it. And they all involve creating most halves, that Amazon doesn't have. And Etsy is a classic example. It talks about a passion for craft, and making crafts, and appreciating crafts, and using craft, built stuff. And that passion, I mean, Amazon has no passion for anything.

Starting point is 00:20:48 Amazon is an amazing at delivering functional benefits. They can give you a, you know, they sell everything under the earth and all kinds of models and all sizes, and they'll build you fast, but they have no passion. And so you have Casper that sells mattress, and they're really passionate about sleep. I think Amazon sells mattress, they don't care about sleep. They just want to functionally get you a mattress. That's one of the most has that Etsy has, is a real passion and an authentic involvement

Starting point is 00:21:21 in that industry that really appeals to people and make crafts and value crafts. Usually when people are starting in business and they're interested in gaining market share, they tend to want to be the best in an existing category as opposed to just creating a new category altogether. What do you think is wrong with that thinking? It just doesn't work. There's almost no people that grew their business that way. Almost none. It's really extraordinary. Actually, one of the probably most robust truths in marketing that's been demonstrated by dozens and dozens of really good studies is that, you know, what the predictor of a success of a new product is, you know, the single most important thing.

Starting point is 00:22:14 What's that? How different it is. And study after study after study, we discover is that having something that's really different is the most thing not only does it give the potentially give you something that you want to buy, it gives you something that people can talk about too. It gives you visibility. I mean, why would you read an ad about something that says, I'm better than, you know, Gillette D'Alt, you wouldn't order something. Instead of somebody saying, I've got something completely different.

Starting point is 00:22:45 And so, and there's a definite correlation between being different and creating new must-have defined subcategories. Okay, so having must-haves really represent features or programs that other brands lack. And you also say that brands need parody must-haves to counteract that reasoning that customers have for not buying their products. So there's must-haves and then there's parody

Starting point is 00:23:12 must-haves. Can you explain that to us? Well, let's say Dollar Shave Club, they came up with some razors that they sold through e-commerce. They did a four-minute video that you should go on. I encourage you to go on the internet and look at it. It's very funny. It's this feisty, unadogged that's making fun of it's a lead making fun of the buying process. You have to go to a lot cabinet and perhaps get arrested for buying this razor. Then you can't figure out which razor you want. And so they have a system where they'll just send your blades every month and they'll give you a simple razor. They got 18,000 subscribers in two days. They sold their company in four years

Starting point is 00:23:54 for a billion dollars to the Inleta. Wow. So, but anyway, they had a problem, in which Werby Parker had, which Casper mattress has, is what makes you, this is probably junk. I mean, you're selling at a low price. I can't taste it.

Starting point is 00:24:11 I can't feel it. There's no drugstore guy that's going to give me a reassurance that it's good. And that's the problem. How do you reassure people that it is, you know, actually a good product? And that's a problem. How do you reassure people that it is actually a good product? And that's a reason not to buy. So one of the challenges that Dollar Shave Club was to convince people was actually a good product. And now a quick break from our sponsors. Hear that sound, young and profitors? You should know that sound by now, but in case you don't, that's the sound of another sale on Shopify.

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Starting point is 00:31:25 like you can get it online and it's inexpensive. But the parody must have is that it has to be at least the same quality as what they'd get in the drugstore for that higher price razor, is that right? Yeah. Got it. Okay, cool. So how do we go about finding the right subcategory?

Starting point is 00:31:44 What is the way that a business can explore and create and define their own subcategory? Generally, it comes from one of two general directions. It either comes from the market, sort of understanding the market and knowing that there's some kind of a need. So if you're talking to customers and you're so on, you find out what they're doing and the problems they're having.

Starting point is 00:32:09 And if maybe they can't initiate a need, but you know, you can probably figure out the need just by hearing what they're doing and groaning about. And that also goes to sort of understanding the market in a macro way, looking at not only your product class, but other product clacks and looking at, in general, what are they trying to get from using this product? So you're not just tied into, let's make it a little better situation.

Starting point is 00:32:40 And the other way is, is from your technology, your product, and you have a new technology. You know, one of the great boons for the new subcategories, why they're more frequent and more important than ever before is because of technology. There's the Internet of Things, there's artificial intelligence, and all this stuff has combined to make offerings and subcategories possible that weren't possible very long ago. That's really interesting. So one of the things that you talk about in your book is that you advise that in order to be successful at this organizations need to also create barriers for their competition that will inhibit their ability to become relevant options. So what are some of the common barrier strategies that you can name off? Well, more general, let me take a step back.

Starting point is 00:33:34 There are dozens, a dozens of books on disruptive innovation. And there are a lot of them are really good. And really innovation we were talking before, we started about the Blue Ocean book. That's lot of them are really good. Really innovation we are talking before we started about the Blue Ocean book. That's one of them. But there's Christians and books on disruptive innovation and Porter. There's really good people doing great stuff and this has been extremely influential. But if you look at all those books, including Blue Ocean, they do two things. One, they always talk about categories and how often can he create a new category.

Starting point is 00:34:08 And I'm very often, but you can create subcategories quite often. So subcategories is actually more important. But more important, you look at all those books. They don't mention branding. They just don't mention, but you look in the index under B, they don't mention branding. It's as if disruptive innovation can come and take over a marketplace without branding. In my research and my belief is that branding is so important in disruptive innovation. You have to do four things to be successful. One, you have to create yourself as an exemplar brand, a brand that represents a subcategory.

Starting point is 00:34:45 Second, you've got to position the subcategory. You've got to position a brand, you've got to position the subcategory, you've got to tell people what kind of dimensions should they be thinking about when they think about sort of some use experience or some buying experience, what really are they after? And you have to keep that in mind.

Starting point is 00:35:05 And the third thing is that you've got to scale, you've got to scale really fast because you've got to own that market. And if you don't scale fast, somebody will come in. The fourth thing you have to do is to create barriers. And one of them is just, you own the best customers because you've scaled so fast, that's a barrier. The positioning creates a barrier,

Starting point is 00:35:27 because you position the subcategory in a certain way that's going to be sort of easier for you to fulfill, because you own the Prius design, or you own the hybrid transmission of Toyota or something. So anyway, those are some of the barriers that you can create. And they're, oh yeah, and another one you can continuously innovate and just be a moving target. But anyway, those barriers are brand barriers.

Starting point is 00:36:00 All those things require branding. And to me, it's puzzling and unconscionable that all those books virtually ignore branding. Yeah, it's so true. They do ignore branding. I just interviewed Gavrbert on Blue Ocean strategy and I don't think we talked about branding in that conversation. We talked about lots of great stuff, but to your point,

Starting point is 00:36:23 don't really talk about branding. So let's talk about the digital revolution. How has this made the subcategory growth that you talk about more wider, shorter, and frequently traveled? How did the digital age really change all this or how did it impact it? First of all, the whole idea of disruptive innovation and new subcategories have been around forever. And it's, they're always the force behind spurts of growth. But it's really quite amazing in the last 20 years. The incidents of these have, and multiplied,

Starting point is 00:37:01 maybe by an order of magnitude. As I said, it's all this technology. The Internet of Things, for example, have permitted amazing new categories to develop that didn't exist before. Because now you can embed these chips and cars and clothing and people, and you can do so many things you couldn't do before. You can do the same things you did before but so much better.

Starting point is 00:37:29 And then there's artificial intelligence and the ability to have a more pleasant interaction with a, you know, with some voice from the sky, that's not frustrating. And somebody that can do that first and do it better and do it well, is might have a must-have in some category. And then, of course, the high-speed internet and all that throughout it have, and then e-commerce, of course, we just didn't have e-commerce not too long ago.

Starting point is 00:38:00 And we didn't have social media. So now, you can, it used to take nine months in an ad agency and $20 million to introduce a new subcategory, or it would take three years to force yourself into retail stores that were an interest in carrying your stuff. But now, in two days, dollar-save club was in the marketplace. Yeah, it's so true. Like, the easiest way to create a subcategory is just take something that's freaking mortar and put it online and then you have a subcategory, right? Yeah.

Starting point is 00:38:33 All right. So my last question before we wrap this up is really talking about higher purpose. You say that more and more organizations are elevating a higher purpose that's driven by things like environmental or social programs. Can you explain why having a higher purpose is becoming more important than ever? Yeah, that's the subject of my book. I've just finished and it'll be out in the fall. It's There's five reasons. But first of all, there's been a battle between the sort of

Starting point is 00:39:03 Milton Friedman view of the world that all you have to do is satisfy shareholders and you're successful. And that's increasingly lost favor in favor, you have to worry about all stakeholders, including the community and society needs and the planet. needs in the planet. Second of all, there's these problems that we have, especially the problems associated with global warming and environmental pollution and the issues around inequality are so now promotes, they're so scary, they're so visible, they're so sort of in your face that people are really petrified and motivated to do something. The third thing is that firms are well suited to help. I mean, they can't do it all by themselves.

Starting point is 00:39:53 There's got to be a government involved, but they're well suited to help. The firms, unlike the government, are very agile. They're often tuned to the local needs and local partners. They're part of the local community, even global firms have offices everywhere. And they have these incredible skills and assets. They know how to do stuff that might be relevant. And if they don't, you know how to do stuff,

Starting point is 00:40:18 they know how to communicate stuff that can be part of the solution. And they have a lot of resources. And they have a lot of customers they can leverage. And they have a lot of relationships they can leverage. So they're really well suited to help. Another factor is that a lot of firms sort of need a little lift. They need an energy lift, they need an image lift, they're boring, they're bland, they're functional, their purpose is, it's not exciting, it's not, the inspiring is not uplifting. And it's, some of this is just what they make, but others is kind of their perceived

Starting point is 00:40:59 attitude. They can benefit from it, it may be desperately need, the kind of burst of energy and the kind of image left that associations with a program can mean. And one of my beliefs is that it's not just to do stuff. You've got to have a signature program or programs that are focused, that are branded, that are managed to have real impact and that become visible. And because most programs have sort of ad hoc grants, they have volunteering, they have energy reduction goals, but they're like everybody else. They don't stand out. People don't view them as people that are committed or firms that are committed.

Starting point is 00:41:45 So people don't view them as people that are committed or firms that are committed. Yeah, it's so interesting. I interview like two people a week and it seems like every year there's like a new theme that everyone's kind of talking about in this year. Almost every interview I have brings up this idea of business purpose, conscious business, conscious leadership, you know, having something aside from profits as your business goal, impacting the environment or society in a positive way. And that's like a huge theme this year across all of my interviews. So it's just so interesting how almost everybody I speak to has some layer of this in their

Starting point is 00:42:19 perspective. There was one fifth dimension I didn't mention and that is employees really insist on it. And so do investors and consumers and others but employees really. This is employer employees choose firms and they choose to stay with firms because of a feeling that this firm has some heart and social responsibility. Yeah, it's no longer just about that paycheck. It's about how am I impacting the world and do I feel fulfilled? And if so, then I'll stay if not,

Starting point is 00:42:52 I'll go become an entrepreneur, I'll go do my own thing, or a freelancer, whatever it is. So I think that's all really important points. So let's wrap this up with two questions that I ask all my guests. The first one is, what is one actionable thing that my listeners can do today to become more profitable tomorrow? Well, I think that there's really important to be have meaning in your life, out of purpose

Starting point is 00:43:16 in your life. And I think that you have to take kind of take stock and ask yourself whether you have meaning and if not, how can you get it? And what direction will give you satisfaction in a sense that what you're doing is worthwhile? And what is your secret to profiting in life? Well, I've been really fortunate. I've fallen into this branding thing and I've been at it now for three decades. And so I've been really lucky that I really love what I do. And there's so much vitality and interest and so forth in the subject matter

Starting point is 00:43:54 that I don't get tired of it. And so if anybody can stumble onto something like that, then I think they're very lucky. But I have a friend that talks about his advice, and which I think has some merit, is you shouldn't do what you like to do, or what you want to do. Instead, you should do what you're good at and what people value. And if you do what you're good at

Starting point is 00:44:21 and what people value, you'll probably end up liking it. But even if you don't, you're going to have a lot of options. Yeah, I love that advice. Dave, where can everybody go learn about you and everything that you do? Well, the Profit.com PRLPHET has my website, and you know, also get there by DavidOcker.com, my blog. But most of what I know and so on are in my books. So if my kind of role is to look at different problem areas and put a brand new lens on it,

Starting point is 00:44:57 like I did with disruptive innovation and with higher purpose programs and which I've done in other areas. Awesome. Well, thank you so much, Dave. Well, thanks for having me. Great conversation. Well, there you go, Yap Fam. Another episode in the books with a legendary expert this time around,

Starting point is 00:45:17 the father of modern branding, David Acker. Before we say goodbye, I did want to spend some time on some key ideas. There's two that I specifically want to touch on that's brand equity and game changing subcategories. So let's start with brand equity. This is a perceived value of your brand in the market and this is a pretty new idea in business surprisingly. It gained traction in the first in the late 80s and David was a pioneer in this space

Starting point is 00:45:42 and his tools like the Acre brand equity model are still used today over 20 years later. To build brand equity, a company must first start building brand awareness to achieve brand recognition, then they deliver a high quality product, and then they create a positive experience for the customer to establish brand preference. With strong brand equity, a business has an easier time retaining customers, charging a premium for products, and also launching new products. So let's dig into this a little bit. Let's talk about loyalty first. When customers like your brand, they are loyal. That means repeat

Starting point is 00:46:16 business and making sales without having to constantly convince new customers to buy your products or without having to spend thousands on advertising. After all, young and profitors, it costs five times more to acquire a new customer than it does to retain an existing one. So you always want to try to retain your customers and have a loyal customer base rather than turn and having them turn one after another and having to always get new customers. And remember, it theoretically costs the same amount for businesses with and without brand equity to bring a product to market. But a business with brand equity can charge much more for the same products and gain higher

Starting point is 00:46:56 profit margins. So let's take a real example that we all know about to kind of put this into practice and make it stick, so to speak. Let's use Tylenol. Since it has incredible brand equity. So a study at the University of Chicago show that even though Tylenol is physically homogeneous, meaning identical, with generic brands of a set of menophanes, consumers without any expert knowledge end up choosing Tylenol almost 30% more than its less expensive generic counterpart. That means people are choosing Tylenol even though it's the exact same of something cheaper and that's the power of brand equity. Brand equity

Starting point is 00:47:38 is also super valuable for product launches as well. A business with brand equity has a much easier time expanding its product line than a business without brand equity, because people are more likely to purchase an unfamiliar product from a familiar brand. So let's take Tylenol again. They've launched many successful products under the Tylenol brand, like Tylenol Extra Strengths, and Tylenol Cold and Flu.

Starting point is 00:48:02 Companies with brand equity like Tylenol will sell their products under a single brand name. While companies without brand equity will sell their products under multiple brand names. This is because once a company has established brand equity, the success of one branded product can translate to other products under that same brand name. And so companies will often put out multiple brand names until one

Starting point is 00:48:25 sticks and gains brand equity and then they'll launch multiple products under that brand name. The moral of the story, young and profitors, is that if you prioritize shaping how customers think and feel about your brand, you're going to set your business up for long term success. Okay, so we've got brand equity down. Now let's dig into the subcategory concept for a little bit. You guys know that I'm a real marketing nerd. So apologies if this outro is a little longer than usual. I just wanted to give you guys some concrete examples and make sure that the main takeaways really stick for you. Traditional views of disruptive

Starting point is 00:49:00 innovation say that you need to invent a whole new subcategory to be successful. But David argues that massive growth occurs more often these days by creating something new within an existing category. And this has to do as much with innovative branding strategies as it has to do with innovative products within an existing category. Let's use Chobani this time as the example. Chobani won yogurt and gained market share from youll plate and danon by marketing Greek varieties as healthier than the thin sugary competition. Chobani essentially created the Greek subcategory of yogurt. Instead of a my brand is better than your brand approach based on marginal improvements or being the cheaper option,

Starting point is 00:49:41 Chobani entered the market with multiple new benefits. This is what David refers to as must-haves. For Chobani, there must-haves were that it was thicker and creamier than traditional yogurt. It was more filling. They had the same calories as other yogurts, but twice as much protein and half the carbs and sugar. It appealed to people with high protein diets and those who were trying to lose weight. They also created a new package design. Their cup was shorter and fatter, and that provided a symbol of a new subcategory that

Starting point is 00:50:11 helped customers recognize which option was Greek on the supermarket shelves. So take a page from the Chobani Playbook app fam, develop offerings that are so innovative that they create subcategories, making competitors irrelevant because they lack a must-have feature or benefit. That's all for now, Young and Profiters. If you want to learn more about this and read more examples, I highly recommend you go

Starting point is 00:50:33 grab David's Game Changing subcategory book. Thank you so much for tuning into another episode of Young and Profiting Podcasts. If you guys learned anything from this episode, give your feedback. Drop us a five-star review on Apple or your favorite podcast platform. We're actually getting a ton of Apple reviews lately. There's so much fun. I'm actually going to go hop on over to check out my reviews and give a couple of you guys a shout out here, especially if you're listening all the way to the end.

Starting point is 00:50:59 You're probably some of my most die-hard listeners, the type of listeners that drop us in Apple Podcast review. And we've been getting so many lily, I think I get like 10 a day these days, which is a lot for a podcast. You know, it takes a lot for people to actually write a review. It means they really love your show. Let's start off with some recent reviews.

Starting point is 00:51:21 So this one is from Kevin Wascom from the United States of America. And he says, it's like a free MBA. Amazing content from top-level business leaders giving insights that can take you to the next level and management of people and business in general. Thank you so much, Kevin, for your awesome five-star Apple Podcast review. I am fiercer from the United States, says expert questions for experts. Hala dives deep into the expert lines of work and you really get great information from each podcast. I feel like I'm learning something new every day from our content.

Starting point is 00:51:52 I just listened to number 186, your customers. Love your customers with Fred Raikel yesterday. And I enjoyed the idea of creating entrepreneurship within a company. Using your ability to innovate new ideas and approaches, it's what can push the company much further into the future. I loved that episode. Love your customers, Rich Fred. Raikald, he created the MPS survey. I agree. Amazing episode.

Starting point is 00:52:15 Thank you so much. I am Fierce Surp for your amazing review. And thank you for listening to this podcast. And thank you to my app team. I couldn't do this without you guys. Love you so much. This is your host, the podcast princess herself, Halata signing off. Are you looking for ways to be happier, healthier, more productive, and more creative? I'm Gretchen Rubin, the number one best-selling author of the Happiness Project.

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Starting point is 00:52:58 and our own experiences about cultivating happiness and good habits. Every week we offer a try this at home tip you can use to boost your happiness without spending a lot of time, energy, or money, suggestions such as follow the one minute rule. Choose a one word theme for the year or design your summer. We also feature segments like know yourself better

Starting point is 00:53:17 where we discuss questions like, are you an over buyer or an under buyer? Morning person or night person, abundance lever or simplicity lever, and lover or simplicity lover. And every episode includes a happiness hack, a quick easy shortcut to more happiness. Listen and follow the podcast happier with Gretchen Rubin. When you download the Croger app, you have easy access to savings every day. Shop weekly sales and get personalized coupons to get the most value out of every trip every time,

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Young and Profiting with Hala Taha - Dave Aaker: Brand Strategies For Market Leadership with The Father of Modern Branding | E187

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