Danai Pathomvanich
May 29, 2015
In Asia and other parts of the world, powerful brand owners have used their highly distinctive characteristics to successfully introduce innovative new products.
In their recent article “Incumbents as attackers: brand driven innovation”, Jean-Baptiste Coumau, Victor Fabius and Thomas Meyer show how several well known companies with dominant positions in saturated markets carved out new business spaces by capitalizing on the unique link its brands have formed with customers.
“All of which to say: innovation isn’t just for start-ups. With the right brand equity, incumbents can do it too.”
New innovations
According to the authors, today’s brands are increasingly defined not by what they communicate or the campaigns they run but by the kind of customer experiences they provide.
Some powerful brands have highly distinctive characteristics or associations in consumers’ minds.
“When they capitalize on them to enter new territories....they bring innovation to their new domain.”
Disney in China
In 2008, Disney English opened its first school in Shanghai in 2008, just as the Shanghai Disneyland Park went into development, and has since expanded to 33 language centers in nine cities.
“Disney’s venture into the $US4 billion children’s English-language teaching business in China capitalizes on its brand essence of representing the American way of life, entertaining children, and offering a great customer experience.”
The schools offer English-language courses that make learning fun for two to 12 year olds.
Children “interact” with Disney characters and stories via huge video monitors, and they are taught in small classes by native English speakers supported by bilingual Chinese assistants.
Great entry point
The authors noted that Disney is using language-learning as an entry point to attract small children and their families in the world’s biggest market .
Although Disney has yet to establish a broad presence for its films an merchandising, this investment will help nurture a future consumer base for Disney products.
Virgin Money
Using its distinct “maverick outsider” image, Virgin has driven innovation in the UK, Australia and South Africa with its Virgin Money banking platform.
Initially launched with limited products in 1995 as Virgin Direct, the company bought Northern Rock in 2012, rebranded branches as Virgin Money, and introduced a full suite of banking and insurance products.
“Virgin positioned itself as the customer’s champion with its “quest to make banking better,” opening inviting customer lounges as an alternative to the stuffy formality of established banks and branches.”
Its strategy paid off. By 2013, the authors said new deposit and mortgage accounts significantly outpaced the market average.
“A year later, Virgin Money launched a successful initial public offering.”
Incumbent advantages
The authors said incumbents have a number of assets and advantages that they can exploit to act as attackers in new markets.
Several fundamental factors have contributed to their success:
1. Distinctive brand equity and trust – strong relationship with customers
Virgin’s entry into banking when trust was at an all-time low enabled it to capitize on its status as a brand known for giving customers a better deal.
2. Established brands: powerful endorsements for new markets
National Geographic Society’s shift from magazines to television channels, expeditions, and more recently, retail stores—that sell books, clothes, and travel gear—is just one example.
3. Access to data, capabilities, and other institutional assets.
“Disney’s expertise in delivering distinctive customer experiences enabled it to rethink language learning in the Chinese market and create and execute a value proposition that no other provider could match.”
In Europe, the Zara fashion chain, combined its intimate knowledge of customer preferences with its extensive supply and distribution networks and operational expertise to launch its interiors chain Zara Home in 2003.
Defining brand’s value proposition
Successful brand attackers, the authors said are careful to deconstruct their assets and understand which ones can drive value in new markets.
After selecting target markets, they clearly define their brand.
