Defining a brand only by product innovation is high-risk, high-reward.
Many years ago, I remember doodling during a lull in a research presentation at Gillette, a brand that revolutionized its category through continual product innovation. The latest shaving system had just been launched successfully, but I found myself wondering what would be next. First it was two blades, then three, then four. Each new launch created new consumer demand and kept the competition playing catch up; however, it was a business model that required self-inflicted obsolescence. And while Gillette owned something absurd, like 92% of market share, the question I found myself asking was ‘Is this sustainable?’
While each category is different, the challenge facing brands defined purely by product innovation is always a double-edged sword (or blade, in Gillette’s case). Just ask the folks at Apple, who have built the world’s most valuable brand by creating the desire for what’s next. Each new introduction brings increased scrutiny, forcing the media and more importantly, customers, to ask the question ‘How much better is this from its predecessor? Is it just a tweak or a true breakthrough?’
While having the new Apple iPhone may be more about status than substance, the same may not be true with other brands. Just ask Pizza Hut. Competitors were eating their lunch (couldn’t resist) and stealing market share by offering a basic, everyday $5 pizza, even though Pizza Hut was always coming out with newer, more innovative, more exciting pizza concepts. Customers would try them and love them, but then go back to the best deal from Papa John’s or Domino’s on a regular cheese pizza when the family wanted to order out. To complicate things, Pizza Hut would often discontinue their innovative pizzas after a short time, creating a vicious cycle of enticement and disappointment. In a highly promotional category, this was not a sustainable strategy, especially given the operational pressure new product introductions put on their franchise organization. The solution? Create their own everyday $5 pizza. Brilliant.
Getting back to Gillette, I remember Jim Kilts, the CEO at the time and maybe the smartest person I ever consulted for, say, “All of the new ideas my people come to me with cost $1 billion in capital investment. What about innovations that don’t require re-tooling our manufacturing facilities?” Jim was right. Innovation can come in many forms. I thought of this recently when I saw a spot for Gillette Sensor repositioned as a value brand. I thought it was a really smart move, especially given the challenge of e-commerce competitors like Harry’s and Dollar Shave Club.
The truth is, when brand innovation is just about product innovation, you are betting the farm with each new launch. After all, how many people need a hair dryer that costs $299? Sir James Dyson is clearly hoping there are a lot of them.
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