A New Brand Model for Innovation

The concept of a "brand" has become pretty confused. Once a simple mark on the rump of a cow, it has become so diluted as to be nearly meaningless. People are equating "name recognition" with "having a brand". We don't see it that way. We developed a 3-layer model for product (or service) differentiation that defines "brand" -- and helps guide your efforts to innovate. The 3-layer model starts with a foundation -- the COMMODITY level. All products and services have a commodity element. This is the basic level of performance expected by potential customers. For instance, all vacuum cleaners suck. If all you are interested in is basic dirt removal, you will likely buy the cheapest vacuum cleaner you can find. Price is the basis for competition at this level, and opportunities for innovation are geared toward reducing costs. Next up is the FEATURE layer. In our example, if you are interested in something more than mere suction, then you've entered that level. This is where vacuum cleaners start to differentiate along a variety of performance vectors: power; attachments; filters; bags; wet/dry; ease-of-use; self-propelled; quality; handheld; battery operated; headlights; robotics; and so on. Customers will research and compare various offerings before buying -- and will pay more for the features that are important to them and improve upon the commodity element. Product and service innovation happens most often in this level. The ultimate layer is the REPUTATION layer. This is where a company has established trust and formed an emotional bond with existing and potential customers that engenders loyalty, drives repeat business (without consideration of competitors!), and commands premium pricing. When these characteristics are met, a "brand" exists. "Hoover" is a brand. "Oreck" may be a brand. Dyson, by all accounts, makes a terrific vacuum cleaner but isn't a brand (yet). There are two very important aspects to a brand. First, it must be earned over time -- you can't invent a brand or wish it into being. No amount of promotion will make a brand: Only customers can make a brand. The second aspect is that a brand is very fragile -- they can be broken quickly (and may be impossible to repair). A brand must be managed and cared for or it will become tarnished or meaningless. (Think "Oldsmobile".) This model is simple, but has profound implications for innovation. Innovation can:

• Give cost advantages at the commodity level;
• Lift products and services out of the commodity level;
• Create new features and benefits for customers (and create new customers, too!); and
• Drive the development of a reputation that can become a source of competitive advantage -- a brand.

P.S. For those so inclined, there's a very complete story on the evolution of the vacuum cleaner at the American Heritage website (thanks, Peter!)