Tag Archives: Social Media

My Question :‘’Dave, How to Handle Strategy & Business Transformation Alignment with Brand Perspective in times of Social Media ” :Answer By David Aaker

My  Question: Dave, how would you like to advise handling ‘’Strategy & Business Transformation alignment with Brand Perspective in times of Social Media ”?

Answer by David Aaker

Brand Preference vs. Brand Relevance

My book Brand Relevance: Making Competitors Irrelevant discusses two ways to compete. The first is to win the brand preference competition by making a brand preferred over other brands in an established category or subcategory. The second is to win the brand relevance competition by creating new categories or subcategories for which competitors are irrelevant. These two routes to winning are very different in terms of strategy and ability to deal with market dynamics.

The first and most commonly used route to winning focuses on generating brand preference among the choices considered by customers, on beating the competition. A consumer decides to buy an established product category or subcategory such as SUVs. Several brands, perhaps Lexus, BMW, and Cadillac, have the visibility and credibility to be considered. A brand, perhaps Cadillac, is then selected. Winning involves making sure that Cadillac is preferred to Lexus and BMW which usually means being superior in at least one of the dimensions defining the category or subcategory and being at least as good as competitors in the rest.

The brand preference strategy involves incremental innovation to make the brand ever more attractive or reliable or the offering less costly. Faster, cheaper, better is the mantra. Resources are expended on communicating more effectively with more clever advertising, more impactful promotions, more visible sponsorships, and more involving social media programs but such efforts rarely break out of the clutter. There is a focus and commitment on the existing offering, business model, and target segment. Improvement is the goal but change is not on the table.

This classic brand preference model is an increasingly difficult path to success in today’s dynamic market because customers are not inclined or motivated to change brand loyalties in established markets. Brands are perceived to be similar at least with respect to the delivery of functional benefits, and often these perceptions are accurate. As a result, customers are not motivated to learn about or locate alternatives. Further, even when the offering is improved or effective marketing is developed, competitors usually respond with such speed and vigor so that any advantage is often short-lived. As a result a brand preference strategy is usually a recipe for stressed margins, unsatisfactory profitability, and, ultimately, a decline into irrelevance. It is so not fun.

The second route to competitive success is to change what people buy by creating new categories or subcategories that alter the way that existing customers look at the purchase decision and use experience. Under brand relevance competition, the customer selects the category or subcategory, perhaps a compact hybrid, making the starting place very different. The selection of the category or subcategory is now a crucial step that will influence what brands get considered and thus are relevant. The customer then identifies brands that are visible and credible to that category or subcategory. The brand set is more in play than under the brand preference model. There might be only a single brand that makes the consideration set, perhaps a Prius.

A relevant brand for a customer is one for which the target category or subcategory is selected and the brand is in the consideration set.

Winning under the brand relevance model, now very different, is based on being selected because competitors were not relevant rather than not preferred, a qualitatively different reason. Some or all competitor brands are not visible and credible with respect to the new category or subcategory. The result can be a market in which there is no competition at all for an extended time or one in which the competition is reduced or weakened, the ticket to ongoing financial success.

The brand relevance strategy involves transformational or substantial innovation to create offerings so innovative that new categories or subcategories are created. It involves an organizational ability to sense changes in the marketplace and its customers, an ability to commit to a new concept and bring it to market, and a willingness to take risks by going outside the comfort zone represented by the existing target market, value proposition, and business model.

The payoff of operating with no or little competition is huge. It is econ 101. Consider the Chrysler minivan introduced as the Plymouth Voyager and Dodge Caravan in 1982 which sold 200,000 during the first year and 12.5 million to date. For 16 years Chrysler had no viable competitor in part because it continuously innovated behind the product but also because competitors had other priorities.

In addition to numerous case studies there is empirical evidence that creating new categories or subcategories pay off. Perhaps the most robust law in marketing is that new product success is correlated with how differentiated they are and a highly differentiated offering is likely to define a new category or subcategory. A McKinsey study is one of many that supports. It showed that new entrants into a market which likely involve a high percentage of new categories or subcategories had a return premium of 13 points the first year sliding to one percent in the tenth year.

Brand relevance competition, when it works, is more profitable and more fun.

Follow Dave on Twitter: @davidaaker and visit his blog at davidaaker.com

David Aaker is Vice Chairman at Prophet. He is based in the San Francisco office.


As a small medium business why should I blog? ROI Rationale.

ROI Actions for Blogging
ROI Actions for Blogging

As a small medium business why should I blog?   ROI Rationale.

You have a valid question. More so when you have 4G, great smart phones and latest tablets. You have been using voice and data for years and have been rightly wondering to use blog or not. You have concerns regarding ROI from blogging.

Cost of Blogging:

What is the cost of blogging effort?

3 Components of Cost

  • Technology (Hardware/Software) (Hosting, domain renewal, software-per year say 400 USD)
  • Time (writing, editing, replying to mails after the blog. Hours x per hour cost(50 USD) 252 hours x 4 weeks x 12 months x 50 USD per hour = 60,000 USD or whatever)
  • Opportunity Cost (If I don’t blog, what do I do, and use of resources is what? How valued? or being paid for the time saved due to not blogging by doing something else: If it is more than 60,000 USD you can add the differential to total cost because either we should take cost of time or opportunity and delta in case the opportunity cost is higher)

Benefits (ROI) from Blogging

4 values to be considered:

1. Comparative Value: The value f asset created through Blogs. A number of tools help here: Simply Google blog worth or blog value; and get tools that user either uses in bound links or number of visitors, blog growth, feed subscribers and so on, to compute comparative value of blogs.

2. Direct Value: Make money off your blog through AdSense or other services to display alongside your blog or maintain a job board, place ads in their feeds, find related business, gain referral or recommendations etc.

3. Non Traditional value: Blog facilitates customer/stakeholder evangelism. This medium is unique and can be leveraged e.g. not using traditional PR etc, saving on direct ads, etc.

4. Unquantifiable value: On the blog email address, phone number etc are mentioned. Many people may write and can start a new relationship which was not possible otherwise. It can turn into happiness, joy, satisfaction of business which was not otherwise likely.

In nutshell, through business blogs 6 business metrics can be achieved.

a) Raw author contribution

b) Audience Growth

c) Conversation Rate

d) Citation/Ripple index

e) Costs

f) Benefits

As long as the costs are less than benefits and joy/happiness more than pain, the ROI of blogging is positive. By putting exact values one can calculate ROI = {(Profit -Cost)/Cost} X 100

Costs and benefits are already explained. The other 4 metrics are explained hereunder:

1. Raw author contributions or do I deserve to be successful?

Posts per month = # of posts / # of months

Content created = # of words in a post / # of posts

It can be calculated in WordPress by downloading relevant plug-in or use Joost’s plug-in if there are more than 1 author on the blog site.

2) Holistic audience growth or is anyone reading my content? This can be calculated from the RSS feeds sign up by the readers, then tools like FeedBurner can compute offsite audience growth (RSS subscribers).

3) Conversation ratio or are we having a conversation?

Conversation rate = # of visitor comments/# of posts. One can also look into positive, negative, neutral conversation as well as net promoter score, etc. One can also apply detailed text and sentiment analytics for digging deeper values.

4) Citations and Ripple Index or Are people talking about my blog/me/my company? Am I causing any ripple?

Citation metrics

Technorati Authority (the number of unique blogs that link to your blog in last 6 months)

Tweet Citations (A measure of how many people tweet about your post)

Authority of blog will measure the number of blogs that have discussed something related to your blog and linked back to you.

Tweettheme helps to compute ripple caused by tweets of people who have link to an individual post, talked about it and passed it on to others.

The other benefits are the cross connection of various SM efforts where integrated marketing helps better. In this connection Blogs bring in value like diamond in the crown, the value which is brought in by an effective blogs increases the sum total of total value and effectiveness. Blogs add gross value in a way which makes all other Social Media and even traditional media become more effective as well as rewarding.


  • Blogging is the central tool and the hub of your digital media marketing plan. The way you are responsible for your small medium business, same way your blog will take care of deeper questions while leading your own digital media marketing efforts. Blag can easily connect with your Social Media channels like Facebook, LinkedIn, Pinterest, Twitter, Email etc.
  • Blog will provide you a superb opportunity to improve your search engine optimization ranking, will work as a hub to the spokes of social media and digital marketing efforts. Blog will give you an opportunity to engage with your stakeholders in an interactive way.

Do write your comments about the usefulness of blogs in your business, forward this blog to your friends and family.

So long, till we interact again.