Brand It or Lose It

I nnovation is increasingly at the center of the strategy and the DNA ofmost firms. The logic is that innovation will lead to growth and prof-itability. Growth will come from innovation-driven new products andbusinesses and profit will follow from innovation-inspired margin

increases and cost decreases. Further, as most markets drift toward commoditystatus with offerings becoming similar, innovation is seen as the way to createdifferentiation, thereby shielding firms from price erosion.

Indicators of the interest in innovation abound. Each year some of themost influential books are focused on topics such as how to innovate, organiza-tional characteristics of innovative firms, creating new business arenas, disrupt-ing the market, anticipating trends, and R&D.1 Further, business publicationssuch as Business Week and Fortune regularly have cover stories on, or related to,innovation.

It is hard to find a firm that does not give lip service to innovation. Nearlyevery firm will include innovation as one of its cultural values and as one of thepillars of their strategy. Many have innovation as a corporate tagline—HP’s“Invent” to Toshiba’s “Leading Innovation” to Toyota’s “Moving Forward” toCargill’s “Nourishing Ideas.”

GE, for example, placed a new emphasis on innovation in 2001. The flag-ship program was the internally branded “Imagination Breakthrough” initiative,in which each business is charged to develop three breakthrough proposals with $100 million potential, and which has created some 80 such potential busi-nesses. Externally, GE repositioned its brand around a new tagline “Imaginationat Work,” which replaced their classic but confining “We Bring Good Things toLife.” Proctor & Gamble, another firm emphasizing new innovation initiatives,established in 2000 a goal of sourcing 50% of all innovation outside P&G from

Innovation:BRAND IT OR LOSE IT

David Aaker

CALIFORNIA MANAGEMENT REVIEW VOL. 50, NO. 1 FALL 20078

a global network of innovative sources and bring the resulting ideas into theP&G business units (for example, Swiffer was produced by Unicharm, a compe-titor in Japan).2

With all this interest in innovation, there is little discussion of how inno-vation should be branded. The subject of branding is virtually never raised in thebooks and articles on innovation. The focus is on the benefits and even necessityof innovation, how to make it happen, how to overcome organizational barriers,and how to overcome implementation problems. Discussions of branding areabsent.

However, a brand strategy can be critical to the success of an innovation,particularly in the long-term. There are times when a firm literally needs tobrand it or lose it. Without a successful branding strategy, an innovation can beshort-lived—diffusing into a confused marketplace with its impact dissipated—or become another forgotten internal initiative. In such cases, branding canmake all the difference. That does not mean that all innovations should bebranded. Far from it. There is a real risk of over-branding resulting in confusionand under-resourced brands.

Branding, it should be emphasized, does not mean simply putting a nameand logo on an innovation. Rather, it means that a brand is part of a coherentstrategy, supported by actively managed and adequately funded brand-buildingprograms.

Branded innovations can potentially help advance a business in threedistinctive ways.

▪ They can create or improve the offering, making it more differentiatedand more attractive. In this context, the innovation can be represented bya branded or sub-branded product or by a branded feature, ingredient, orservice.

▪ They can create a new subcategory to change what customers are buying.The branding challenge is to manage perceptions of the subcategory andto influence which brands are relevant to it.

▪ They can affect perceptions of the organization or corporate brand withrespect to innovativeness in order to make it respected, to give it energy,and/or to make its new product offerings more credible.

In each of these roles, the ability of the innovation to achieve its potentialimpact will be enhanced if it is branded, assuming that the innovation meritsbranding and that the brand strategy is well conceived and executed.

Creating or Improving an Offering

Innovations are often directed at creating or enhancing the valueproposition of a business to the customer. The offering is improved perhapsbecause performance is made better, features are added, or the purchase is made more convenient. In any case, the innovation objective is to improve

Innovation: Brand It or Lose It

CALIFORNIA MANAGEMENT REVIEW VOL. 50, NO. 1 FALL 2007 9

the attractiveness of the product for potential customers and to increase theloyalty of existing customers.

Such innovation, properly branded, can influence the marketplace and bea powerful impetus to the business for a long time. It can combat the slide into acommodity status, with the associated margin erosion. However, when the inno-vation is not branded, the impact is usually short-lived, if it occurs at all. Puttingnew or improved on a box of Tide detergent is unlikely to create a lasting senseof differentiation.

Amazon developed a powerful feature, the ability to recommend books or other products based on a customer’s interests as reflected by their purchasehistory and the purchase history of those that bought similar offerings. Unfortu-nately, they never branded it. As a result, the feature became basically a com-modity that is an expected feature of many e-commerce sites. If Amazon hadbranded it and then actively managed that brand, improving the feature overtime, it would have become a lasting point of differentiation that today would be invaluable. They missed a golden opportunity. They did not make that samemistake with One-Click, a branded service that plays a key role in defining Ama-zon in what has become a messy marketplace.

The problem with sliding innovations into the existing offerings istwofold. First, the market contains many who are not motivated, or perhapssimply are not able to sort out the new product claims and the rationale behindthose claims. These people develop a coping strategy that ignores what is seen to be confused and contradictory competitive claims. As a result, the claims of“new and improved” simply fade in the muddled environment. Second, anydramatic, visible improvement is likely to be quickly copied (or appear to becopied) by competitors. Any belief that a unique point of differentiation hasbeen achieved will recede as the perception that competitors have matched theadvance carries the day.

The Value of Branding

Branding changes all that. A new offering can have its own brand (Net-Flix), endorsed brand (Apple’s iPod), or sub-brand (Glad Press’n Seal). Further,an innovation that represents a feature (Cadillac’s On-Star), ingredient (Dove’s

Weightless Moisturizer), or service (Best Buy’sGeek Squad) could also be branded directly. Abrand provides several powerful functions,most of which go back to the basic value of abrand in any context. A brand (as summa-

rized in Figure 1) allows ownership of the innovation, adds credibly and legiti-macy, enhances visibility, and helps communicate facts.3

First and foremost, a brand provides the potential to own an innovation,because a brand is a unique indicator of the source of the offering. With theproper investment and active management of both the innovation and its brand,this ownership potential can be extended into the future indefinitely. A compe-titor may be able to replicate the offering (or its new feature, ingredient, or


UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 50, NO. 1 FALL 200710

David A. Aaker is the Vice-Chairman of Prophetand Professor Emeritus of Marketing Strategyat the Haas School of Business, UC Berkeley.

service), but if it is branded, they will need to overcome the power of the brand.Another firm can copy the objective features of Apple’s iPod or Westin’s Heav-enly Bed, but there will only be one authentic product and that is the one carry-ing the brand name. In fact, it is sometimes possible to have such a strong brandthat it gets credit for innovations by others. Dolby may be an example. Anadvance in audio technology may be attributed to Dolby no matter where itoriginates.

Second, a brand can add credibility and legitimacy to a claim. Anunbranded claim is likely to be interpreted as another example of puffery, a bet-ter fabric or a more reliable engine. The brand specifically says that the benefitwas worth branding. The observer will instinctively believe that there must be a reason why it was branded. Suburu has long emphasized 4-wheel drive andmany car brands now offer this feature. Audi, however, has a branded version,Quattro, which gives them a credibility and relevance that the others lack. Inessence, the message is that there are 4-wheel drives and then there is Quattro.

The ability of a brand to add credibility was rather dramatically shown ina study of branded attributes. Carpenter, Glazer, and Nakamoto found that theinclusion of a branded attribute (such as “Alpine Class” fill for a down jacket,“Authentic Milanese” for pasta, and “Studio Designed” for compact disc players)dramatically affected customer preference toward premium-priced brands.4

Respondents were able to justify the higher price because of the branded attrib-utes. Remarkably, the effect occurred even when the respondents were giveninformation implying that the attribute was not relevant to their choice.



FIGURE 1. Why Brand Innovation?

Aids CommunicationBrand Can RepresentComplex Narratives

Branding the Innovation

Own the InnovationBetter Withstand Competition

Add Credibility/LegitimacyBrand Signals Worth

Visibility EnhancedAids Recall and Recognition

Third, a brand name can help make the innovation visible because it pro-vides a label for the “news.” As a result, it is easier to achieve higher recall andrecognition scores around the new offering or a branded feature, ingredient, orservice. It is much easier to remember a brand name than the details of a newoffering. In fact, one of the characteristics of a good brand name is that it is easyto recall. Further, the job of linking the point of differentiation to the parentbrand is also made much easier. The Heavenly Bed is more memorable thanWestin’s “improved bed.”

Fourth, a brand makes communication more efficient and feasible. A newproduct or product feature, for example, even one regarded as a breakthroughby its designers, may engender a monumental lack of interest among the targetaudience. Even when the communication registers, it can be perceived as toocomplex to warrant processing and linking to an offering. The act of giving theproduct or feature a name can help by providing a vehicle to summarize a lot of information. A name such as Oral B’s Action Cup provides a way to crystallizedetailed characteristics, making it easier to both understand and remember.Imagine if Chevron attempted to explain why “Chevron gasoline” was differentwithout the use of the Techron brand. It would not be persuasive or evenfeasible.

To Brand or Not to Brand, That Is the Question

To own, control, and fully benefit from an innovation, you have to builda brand (as opposed to just giving it a name and logo). Consider the power ofbrands such as the Apple iPod, Toyota Prius, or Tide’s Simple Pleasures asopposed to offerings such as the Apple MP3 player, Toyota’s compact hybrid, and Tide detergent with vanilla and lavender scents. Descriptors attached to anestablished brand would not have been able to adequately represent the innova-tion. Or consider branded features such as Westin’s Heavenly Bed, brandedingredients such as or Cadillac’s Northstar engine, or branded service such asTide’s Stain Detective. In each case, the brands are supported by actively man-aged brand-building programs and provide a point of differentiation that has real legs.

However, there is the danger of over-branding, to put brands on innova-tions that do not warrant brand investments. Such brands are often starved ofthe resources needed to be successful because they never merited investment inthe first place or because their strategic role changed. Branding innovation canthus create a Shakespearean dilemma—to brand, or not to brand.

This crucial decision is influenced by some powerful organizational andpsychological forces. On one hand, there is a pressure to brand everything. Atechnical or a marketing person, who has given birth to an idea and nurturedthat idea through all kinds of budget committees and other organizational barri-ers, wants his or her baby to have a name so that customers (and the businessitself) will more easily recognize its importance. As a result, in the absence ofstrong procedures and policies, names are given. The end result can be a prolif-eration of brands with resulting underfunding, confusion, and lack of priorities.



The goal of branding innovation should not be an excuse to slap a brand oneverything.

On the other hand, there is also a tendency to fail to recognize when amajor innovation can be fully leveraged only by attaching a brand to it. Thistendency is in part an overreaction to the over-branding problem that manyfirms have experienced. When there is a branding mess, one solution is to avoidintroducing more brands. This problem is also due in part to a lack of brandingsophistication. There is too often a failure to understand how a family of brandscan help achieve strategic and tactical goals, how priority brands can advancestrategy, and how an unbranded innovation can drift into the cluttered and con-fused competitive landscape.

So how can the firm recognize when the opportunity represented by aninnovation should be fully realized with the help of a brand and when shouldthe innovation be classified as incremental and be represented by the existingbrand? Basically, the criteria should be whether the innovation is worth brand-ing. This in turn depends on threedimensions, as suggested by Figure 2:whether it is significant advance,whether it is meaningful enough to customers to affect purchase andloyalty, and whether it merits a long-term commitment to building andmanaging the brand.

First, the innovation shouldrepresent a significant advance and it should be newsworthy. Westin’sHeavenly Bed, created in 1999, wastruly a better bed. It was a custom-designed mattress set (by Simmons) with 900 coils, three versions of a cozydown blanket for three climates, a comforter with a crisp duvet, three highest-quality sheets, and five goose down pillows. It was noticeably and experientiallysuperior. Westin, of course, had beds in their rooms before 1999 and could havebranded these existing beds as the “Heavenly Bed.” However, it would not haveworked. The fact that the new beds were demonstrably superior, which resultedin word-of-mouth buzz about the bed, was critical to its success.

Second, the innovation also needs to be an advance that is meaningful tothe customers, meaningful enough to alter their behavior and loyalty patterns.The ultimate level of impact is when the innovation serves to define a new cate-gory by changing what people buy. The Heavenly Bed addressed the very heartof what a hotel room experience is—providing a good night’s sleep. It success-fully changed that experience, and for some it created a new subcategory—hotels with premium beds. The impact of the Heavenly Bed reflected itsrelevance to the customers. During the first year of its life, those hotels sites that featured The Heavenly Bed had a 5% increase in customer satisfaction anda noticeable increase in perceptions of cleanliness, room décor, and maintenance



FIGURE 2. To Brand or Not to Brand?

• Is it a significant advance?

• Do the customers care?

• Will it merit investment over time?

— Sales and profit stream?

— Opportunity to create and hold market leadership?

— Potential to be a moving target?

as well as increased occupancy. The bed was so good that Westin began offeringthe beds for sale, selling $5 million worth in 2005.

Third, time needs to be added to the equation. An innovation worthbranding also warrants active management over time to justify investments toimprove the offering and to engage in brand-building efforts. The value of thebranding effort will depend on the value of the business it will support, which in turn is based on the current and potential business size, its profitability, theintensity of current and potential competitors, and the potential to maintain theinnovation-based differentiation. Added value can also come from the role of abranded innovation to influence perceptions of a corporate brand.

The Heavenly Bed did influence a Westin’s business. The effort to extendthe branded innovation helped prolong its market impact. Heavenly followed up bed innovation with the Heavenly Bath, which has custom designed showerswith dual showerheads (plus such things as Heavenly branded soap, towels, andother amenities). There is a Heavenly Online Catalog where you can order thewhole Heavenly line and access a bridal registry. Can you imagine the frustra-tion of a competitor’s task force assigned to respond to the Heavenly Bed whenthey learn there is now a Heavenly Shower to contend with?

Given that the brand is worth branding and investing in over time, abrand can provide a decisive enhancement to the success prospects of the inno-vation. If the Heavenly Bed were simply an improved bed at the Westin Hotel, itnever would have got buzz and traction and, certainly, would not have emergedas a point of differentiation six years after its introduction and years after com-petitors had introduced competitive beds.

Of course, a brand is only one part of bringing an innovation to market.Success will depend on the performance of the innovation, the value of its bene-fits to customers, and the funding and quality of the brand-building effort aswell as the brand. However, a brand can play a role in enhancing the successprospects.

Managing the Perceptions of a New Subcategory

There is a spectrum of innovation from incremental to substantial totransformational. When a transformational innovation occurs, it is an opportu-nity to create a new subcategory and to change what people are buying.

Why Brand an Innovation Reflecting a New Subcategory?

When an innovation has the potential to create a new subcategory,branding that innovation can help make sure that the opportunity is realized. A branded innovation can provide a vehicle to define, position, and dominatethe new subcategory. The challenge is first to make sure that the subcategory isselected by customers, and second to make the brand the dominant choice. Win-ning occurs when the competitor’s brand is not seriously considered because it isnot believed to be relevant to the new subcategory.



For the subcategory to be selected, it needs to be defined and positionedand a brand can play a key role in this task. There is often little inclination toexpend resources to define and advance a subcategory that may be messy andcomplex, especially when brand-building resources are limited. However, if thebranded innovation can be used to define the subcategory, the task of managingthe subcategory and the brand becomes more feasible. The Westin HeavenlyBed, for example, defines for some a subcategory within the hospitality industry,hotels with premium beds. While others will attempt to gain relevance, Westincan manage the subcategory by, for example, defining premium beds around theHeavenly Bed. By extending the subcategory’s scope with the Heavenly Bathbrand, it can make it harder to copy the concept. It would be much harder,probably impossible, to achieve the desired result without the Heavenly brand.

The early market leader brand has the potential to position or repositionthe whole subcategory. For the leading brand, winning the subcategory battle for relevance is more important and effective than winning a brand share fight.Asahi, as the dry beer subcategory innovator and early subcategory leader in1986, positioned the subcategory with respect to taste (sharp, clean, and lessaftertaste) and personality (young, energetic, aggressive, and innovative). A fewyears later when they became the clear subcategory leader, they repositioneddry beer as being global, a market leader, and delivering the freshest beer—and,as a result, created a market share surge. Focusing on positioning a brand’s sub-category rather than (or in an addition to) positioning a brand is a very differentapproach to competitive strategy. It was more effective for Welch’s grape juice toreposition its subcategory as a healthy product containing antioxidants than toargue it was the best grape juice brand.

The leading brand in an emerging subcategory can be the innovator whoexploits first-mover advantages, including exploiting the authenticity label. Thatwas the case with Asahi Super Dry. Often, however, a leading brand, such asGillette in safety razors or Word in word processing, was not the pioneer. Rather,the leading brand can be a brand that has taken over leadership in the subcate-gory because of its resources and product improvements.

When the brand defines the subcategory, the subcategory will take on the characteristics of the brand. Further, the brand will become the most visibleoption for the subcategory. The inevitable result will be that the brand is alsoconsidered the most relevant brand, perhaps the only relevant brand, for thesubcategory.

One goal of subcategory management is to define the subcategory toinclude features that influence which brands are relevant. Consider the iPod.When it arrived there was the category of digital audio players and, more specif-ically, the subcategory of portable MP3 players. They were all able to collect andplayback music. The iPod created a new subcategory that involved more thanplaying music. With a design that was cool, elegant, and compact with easy-to-use features, it was visually and experientially appealing. Additionally, the com-panion brand iTunes provided easy access to music and other entertainmentvehicles plus computer-based management of the iPod content inventory. Thus



the subcategory was defined in such a way that Apple’s iPod, at least initially,was the only game in town. The iPod subcategory earned credibility and clarityby linking with the Apple brand. Competitors emerged such as Microsoft’s Zune,but they struggled because they were perceived to be deficient with respect tosome of the attributes, even though that perception was not always accurate.Attribute perceptions attached to the iPod brand became difficult to overcome.

Consider also the hybrid automobile subcategory. Toyota, the early hybridleader (even though Honda actually introduced the first hybrid), had an oppor-tunity to manage the perceptions of the subcategory while simultaneously posi-tioning itself as the leading subcategory brand. The Prius brand providedleadership in the compact hybrid subcategory along with the branded ToyotaHybrid Synergy Drive that provided a seamless integration to shape and influ-ence the larger hybrid subcategory. The Prius thus provides a point of referencearound which the subcategory concept can be defined.

Categorization Theory

Categorization theory is helpful to understand the process and the objec-tive of influencing the perceptions of the subcategory.5 Categorization is consid-ered by many psychologists as the fundamental cognitive activity that providescoherence to knowledge and judgments about nearly all aspects of daily life—including people, issues, products, and brands.

There are two prevalent models of categorization. The first model con-ceptualizes a prototypical, hypothetical object in the category that could be an“average” or ideal object. New objects could be evaluated as to how similar theyare to the prototype in terms of overall impression or by an analysis of attrib-utes. The prototype model works best in categories with established objects withavailable information and experience about those objects. The second modelconceptualizes a category as a collection of exemplars of the category, one ormore objects that represent the category well. New objects are then evaluated in terms of their similarity to the exemplars in terms of an overall impression or by using an attribute-based comparison. For a newly created subcategory, anaccepted innovator would become the only or the dominant exemplar and alsothe driver of the subcategory prototype.

Until the 1970s, most categorization studies assumed that an object waseither in a category or outside of it. However, a classic study by the Berkeleypsychologist Eleanor Rosch, published in 1975, showed that an object couldhave a link to a category that ranged from strong to weak.6 Her study involvedten categories including vegetables. She found, for example, that peas and car-rots were good representations of vegetables while green onions and pumpkinswere weak representations. The fact that most categories have strong and weakrepresentatives has implications for the management of emerging subcategories—the goal is to make a brand the carrot of a new subcategory and to position acompetitor as a pumpkin.

There are two key advantages to being considered highly typical of acategory that has been well documented in hundreds of categorization studies.7



First, as the typicality of an object becomes greater, the connection of that objectto the category will be made faster, more accurately, and with more reliability.More important, if the category is cued, the more typical objects will be morelikely to be recalled, and be recalled before others. This later finding is importantto subcategories driven by a branded innovation because the challenge is to berecalled and considered when the subcategory is cued. If you want to buy acompact hybrid, Prius is likely to first and perhaps only model to come to mindbecause of its strength on the typicality dimension.

A second advantage is that objects with high typicality will influence atti-tudes and behavior toward the subcategory.8 If the Westin Heavenly Bed is well-liked, the subcategory “hotel with premium beds” will also tend to be both likedand patronized. As a result, brand-building efforts behind the Heavenly Bedbrand will help the subcategory (hotels with premium beds), which is the fronthalf of winning the relevance challenge.

A branded innovation forming a new subcategory should attempt toachieve and retain the position of being the sole, authentic exemplar of the newproduct subcategory. Going forward, however, competitors will enter, and thechallenge is to inhibit competitors from becoming relevant exemplars. If that isnot possible, the brand should at least retain the position of being the salientexemplar, the one that is considered the most typical of the subcategory, the onethat comes to mind first. How does a firm address that challenge? Categorizationtheory provides some guidelines.

First, evidence suggests that the most influential exemplars will be thosethat are perceived to be superior in terms of quality, performance, and reliability.If the brand is positioned early as the leading brand in terms of both sales andinnovation, it is likely to be considered the best with respect to performance aswell.

Second, a brand that is liked and has generated loyalty will tend to be apreferred over another brand when both have equal typicality. If, therefore, abrand can generate such a relationship with customers, a competitor attemptingto become an equally relevant exemplar for the subcategory would have toachieve a comparable degree of loyalty, which could be a difficult task.

Third, research has shown that the most influential exemplar will be the one with the most exposure. The strongest exemplars have been shown in a variety of studies to be those that are easiest to recall and also the easiest toassociate with the subcategory—two qualities that are linked to exposure. Thus,visibility of a branded innovation will be a driver of its ability to create a pre-ferred exemplar role in a new subcategory. Strong exemplars such as iPod andPrius earned a buzz effect in the marketplace as a result of high exposure.

Finally, the brand should leverage the first-mover position by influencingthe attributes associated with the subcategory. The firm should actively managethe identity of the attributes that will define the subcategory. What attributes are and are not associated with the subcategory? Can the attributes be priori-tized with respect to their importance in defining the subcategory? The objec-tive should be to define the subcategory in such a way that it emphases any



attributes that are likely to be exclusive or at least superior to likely competitorsand excludes or de-emphasizes attributes likely to be stressed by competitors.

By conceptualizing a subcategory, how has the challenge of marketing anew market entry become any different? After all, a new entry to any marketwill aspire to be high-quality, well-liked, visible, and associated with distinctiveattributes. One answer is that the target segments will be those attracted to thenew subcategory rather than a broader market. Another is that focus of the posi-tioning strategy will be on the subcategory rather than (or in addition to) thebrand.

The goal should be to make the subcategory visible and appealing withstrong links to the brand. Winning in the marketplace will take a very differentroute. Instead of being preferred to competitor brands, a brand will win becausecompetitors will not be considered or will not be considered seriously. A basicpresumption is that it can be easier to market a subcategory than a brandbecause it is hard to maintain differentiation with another brand. It is a broadermindset and one that aspires to control the future evolution of the marketplace.

The challenge is to have competitors emerge as less than strong, salientexemplars. The more complex the context, the easier this will be because cus-tomers who are evaluating a new candidate for a subcategory will be uncertainabout some of its attributes and will consequently conclude that it is less than agood exemplar. Zune, the iPod competitor from Microsoft, is at a disadvantagewith respect to becoming associated with the new subcategory defined by iPod,the established exemplar.

Branding Issues

One strategy for a competitor facing a branded innovation that has gotten traction is to appear similar by mimicking irrelevant attributes. Thus, inthe packaged good field, private label products often appear as similar as possiblein look, feel, and packaging in order to associate with the reigning exemplar.Research has shown that this strategy works. Thus, the early market leadershould watch for others that copy features, even those that are less important or irrelevant all together. Asahi earned domination of the dry beer subcategoryby engaging in the “dry beer wars,” which involved making its large competitorKirin stop marketing a dry beer product with very similar packaging and productdisplay materials. These efforts paid off as some distance was created betweenthe pioneering brand and the copy.

When branding a new offering (or its feature, ingredient, or service),there is usually the choice of using an existing brand with a descriptor (AppleMP3 player), a sub-brand (Pontiac Firebird), an endorsed brand (Ralph Lauren’sPolo), or a new brand (Lexus). The choice hinges on two issues. First, is theoffering worth branding (which involves the three dimensions introducedabove)? Second, how much separation is desirable from the parent brand andthe new offering? If a descriptor is used, there is little separation and the asso-ciations with the parent brand will dominate. If there is a new brand or anendorsed brand, there will be enough leeway to chart an independent course.



If a new subcategory is to be created that represents an economic opportunityand is to have (as an exemplar) the brand attached to the new offering, then theuse of a new brand or endorsed brand will usually be the best course. The use ofan existing master brand with a descriptor or even sub-brand will generate exist-ing associations that may limit the ability of brand to clearly delineate theboundaries of the new subcategory.

Subcategory exemplars work best when a single brand takes the lead.When Chrysler developed the minivan, an extremely successful new product, ithad a great run as an innovator. However, Chrysler provided two exemplars, theDodge Caravan and the Plymouth Voyager. The existence of two exemplars mayhave weakened their ability to own the subcategory.

Managing a subcategory is a challenge that is often foreign to marketingstrategists, whose life has always been to beat competitors and gain market sharein an established category or subcategory. Dynamic subcategories introduce anew and different strategic reality.

Affecting the “Perceived Innovativeness” of an Organization

Branding an innovation can also provide another benefit. It can affect the “innovativeness” image of the organization brand (which is often but notalways the corporate brand). In most cases, the organization brand will benefitfrom being perceived as being innovative. As a result, innovation initiatives aredesigned not only to create innovative processes and products, but also to affectthe perception of the organization in the marketplace.

There are practical reasons why a reputation for innovation is desirableover and above simply harvesting the fruits of innovation. First, an innovativeimage provides credibility to new products. Research has shown that an image ofbeing innovative will enhance the prospects for new products, particularly thosethat are significantly different from their predecessors. One study found that theacceptance of a new product was affected by the organization’s reputation forbeing innovative, but a reputation for being socially responsible had no suchimpact.9 Customers reduce their natural skepticism about a new offering whencomes from a firm that has a perceived track record of innovation.

Second, a reputation for innovation will make the firm more attractive to customers. It will provide energy to a firm. In fact, the best energizer is a hotnew product, especially one that has a buzz around it. People are attracted toenergy, whether it is from a person or firm. Further, innovation can contributeto a firm’s stature because innovation is associated with success and leadership.People respect leadership and like to be associated with leaders. Customers havea bias to working with firms they respect. At the end of the day, buyers don’twant to analyze attributes of all-too-similar offerings and usually go with theirgut.



It is not easy to achieve a reputation for innovation. In fact, most firmsaspire to be perceived as innovative but few really break out of the clutter. Howdoes a firm develop a reputation as an innovator? It is not enough to become aninnovative firm or even to demonstrate innovation after innovation. Facts donot automatically translate into perception.

Consider quality reputation. During the past two decades, a host of firmshave developed quality programs that have created high quality. Yet many ofthese firms did not get credit in the marketplace because their prior reputationcould not be overcome or because the quality story could not get traction. Per-haps the firms could never develop a communication program effective enoughto overcome the momentum of their reputation. Consider the U.S. automobilebrands such as Buick and Cadillac that have closed the quality gap yet find itdifficult to change perceptions, while other brands such as Toyota and Mercedesmaintain a quality image even when their products stumble. In fact, one studyshowed that, on average, customers perceptions of quality take six years to“catch up” to actual quality changes—and for automobiles, it is actually 9.5years.10

Similarly, a firm can develop an exceptional program of innovation thatresults in radically new or improved processes and/or offerings. However, it isjust as hard to tell the innovation story as it is to tell the quality story. The fact isthat nearly all organizations are claiming, some quite vocally, that they are “the”innovative firm in their space, complete with advertising and taglines. So break-ing out of the clutter and creating credibility in a claim that appears little differ-ent than others is a challenge.

Why Brand the Innovation?

Branding the innovation can potentially help make the innovation visi-ble, communicate its features, and provide credibility and substance to the per-ceived innovativeness of the organizational brand.

Consider the two firms Samsung and Sharp, both with innovative suc-cessful entries into the television set market. Sharp branded its LCD sets asAquos and its introduction in Japan in 2005 led to a significant boost inperceived innovativeness for Sharp (from 23 to 12 among all Japanese brands).Samsung, on the other hand, chose to introduce its sets under the Samsungbrand without a branded innovation. While Samsung was successful, severalquestions arise:

▪ Was the visibility of the Samsung technological advance as high andwidespread as it would have been if the innovation were branded? And would a brand have helped to communicate the nature of the inno-vation? There will be clutter in the marketplace and the task of gettingthrough with a message about another Samsung product will benontrivial.

▪ Would branding an innovation interject more credibility even forSamsung, which enjoyed a generally positive image?



▪ Would a sub-brand have helped or hindered linking the innovation to theSamsung brand? By making the technology more credible and visible itpotentially could have helped. However, if the technology were brandedunder the Samsung brand the step of linking the technology brand toSamsung would not be necessary.

▪ What about the long-term impact? Will the perceived technologicaladvances of Samsung have a long life or will they dissipate over time?Would a brand like Aquos, properly managed over time, allow the mes-sage to be extended because the brand is owned? Consider Sony’s Trini-tron brand. Introduced in 1968 as a branded television set technology, itserved to help Sony be a market leader for over two decades. A 2000study in Japan revealed that the sub-brands Playstation, Handycam, Vaio,and AIBO (a robot) contributed to the Sony image.11 Certainly these sub-brands and others helped Sony maintain its perceived innovativenessrating long after it had demonstrated real innovative product develop-ment. As late as 2003, Sony was still the top-rated brand in Japan alongthe perceived innovativeness scale even after being a non-factor in majorconsumer electronic categories such as cell phones, flat-screen TVs, PDAs,and the iPod surge.12

The cost and risk associated with a new innovation brand needs to bebalanced against the four advantages (summarized in Figure 1). A key determi-nant is the long-term commitment to the branded innovation and how persis-tent the link is made over time. Certainly, the link between Walkman and Sonyis solid because of the way the Walkman brand was presented and because ofSony’s long-term commitment.

Evidence of the Influence of a Branded Innovation on the Organizational Brand

There is a large body of evidence in psychology that the perceptions of an object will be affected by what is associated with it. A person’s personality isaffected by his or her clothes, friends, activities, and living space, among otherthings. They all send signals as to what type of person she or he is. A brand’simage is associated, for example, with the color of the product or package, theprice, the music in an ad, and the store in which it appears. The organizationalbrand that can be linked to a branded innovation will benefit from that associa-tion. The brand helps make the innovation and its link to the organizationalbrand more salient. That is what a brand does.

Another well-accepted psychological phenomenon is a cognitive drivetoward consistency. If two associations are inconsistent, there will be an effort to reconcile that inconsistency. Thus, one misstep of a well-regarded brand maybe excused or written off as an accident. However, several missteps may result ina change for the worse in brand perceptions. Similarly, a credible branded inno-vation will tend to help build or support an innovative image for the organiza-tion brand.



Further, there is general acceptance of the proposition that one brand canaffect another. The Z sports car series is assumed to help the image of Nissan.The VISA Signature Card is thought to make the VISA brand more appealingbecause upscale people will be using it. The dozen or so designer brands at Tar-get are intended to influence the impression of Target.

There is also some evidence that one brand can drive perceptions ofanother linked to it. One study of a quarterly database of high-tech firms foundthat brand equity as measured by attitude toward the brand seldom varied fromquarter to quarter.13 However, one exception was the observation that the brandIBM significantly improved at the time that the ThinkPad brand got traction inthe marketplace. Even though the brand ThinkPad was a tiny part of the IBMsales, it moved the IBM brand ahead.

More evidence comes from an annual survey by Nikkei BP Consultingthat rates over a thousand brands in Japan along some 15 dimensions, includinginnovativeness.14 The survey, now with seven years of data, provides some addi-tional insights into the power of sub-brands that are perceived as innovative.The results on the innovativeness scale show a familiar long-tailed pattern. Thetop ten brands have scores ranging from 90 to 115, the next 30 from 75 to 90and the following 60 from 60 to 75. The survey includes only a limited numberof branded innovations. Still, there is a high incidence of these sub-brandsamong the top echelon of innovative brands over the seven years of data—15%of the top ten and 29% of the top 100.

The survey results also suggest a relationship between the innovativenessscores of sub-brands with their parent brand. Overall the correlation betweenchanges in the innovativeness scores of sub-brands and changes in their parentbrand innovativeness score over 72 data points is .44, which means that 18% of the variance of changes in innovativeness for an organization brand can beexplained by changes in perceived innovativeness of a sub-brand. Also, if the six sub-brands that were in the top ten sometime during the last five years are



FIGURE 3. Branded Innovation—iPod and au Impact on Apple & KDDI

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90

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110

120iPodApple

Year 3Year 2Year 150

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110auKDDi

Year 3Year 2Year 1

examined, the relationship is strong. For example, Nintendo’s perceived innova-tion went from 70 to 114 in 2007 while the sub-brand Nintendo DS went from73 to 114. The Prius scores went from 78 to 98 to 98 the Toyota scores wentfrom 72 to 79 to 94. As shown in Figure 3, the Apple image went from 74 to 80to 71 while its sub-brand iPod went from 89 to 115 to 106 and the sub-brand au(a cell phone service) went from 82 to 88 to 104 while its parent brand, KDDI,went from 78 to 82 to 94.

Just as innovation need not be limited to an offering, neither do brandedinnovations. AT&T probably still benefits from a branded R&D center, the BellLabs, even long after it was spun out into Lucent Technology. There are brandedprograms that can be a source of innovation and energy, especially for firms for whom it is unrealistic to come out with truly exceptional offerings. Harley-Davidson is more than a brand, it is an experience and a community supportedby several branded programs. The Harley-Davidson Ride Planner allows a personto create a ride plan given starting and ending points plus desired stops. Theoutput is a detailed map that you can save and share with friends. The AvonBreast Cancer Crusade with its Avon Walk for Breast Cancer and other activitieshas added energy and a sense of innovation to the Avon brand. Dove has donethe same with its branded Dove Self Esteem Fund that is part of its “realbeauty/real women” campaign.

A Final Word

The forgotten dimension of innovation is branding. This means not justapplying a name and logo, but creating a brand supported by a strategy and anactively managed brand-building program. Unless an innovation is branded,there is the risk that the innovation could fade into the crowded marketplaceand see its life shortened. The return on investment could then be reduced byorders of magnitude. Branding has the potential to own an innovation overtime, to add credibility and legitimacy to the innovation, to enhance its visibility,and to make communication more feasible and effective. When a transforma-tional innovation that creates a new subcategory is involved, a brand can help to define, position, and dominate that new subcategory. In addition, a strongbranded innovation can affect the reputation of the parent organizational brand.Not all innovations should be supported by a strong, actively managed brand,but the brand decision should be part of the innovation strategy.

Notes

1. Clayton M. Christensen, Scott D. Anthony, and Erik A. Roth, Seeing What’s Next (Boston,MA: Harvard Business School Press, 2004); W. Chan Kim and Renée Mauborgne, Blue OceanStrategy (Boston, MA: Harvard Business School Press, 2005); Gary Hamel, Leading the Revolu-tion (Boston, MA: Harvard Business School Press, 2000); Richard Foster and Sarah Kaplan,Creative Destruction (New York: Currency, 2001); Michael L. Tushman and Charles A. O’ReillyIII, Winning through Innovation (Boston. MA: Harvard Business School Press, 2002); ChrisZook, Beyond the Core (Boston, MA: Harvard Business School Press, 2004); Tom Kelley, TheArt of Innovation (New York, NY: Currency, 2001); Gregory A. Moore, Dealing With Darwin(London: Portfolio, 2005).



24 UNIVERSITY OF CALIFORNIA, BERKELEY VOL. 50, NO. 1 FALL 2007


2. Larry Huston and Nabil Sakkab, “Connect and Develop,” Harvard Business Review, 84/3(March, 2006): 58-66.

3. For a more extensive discussion of the value of a brand to customers and firms see David A.Aaker, Managing Brand Equity (New York, NY: The Free Press, 1991), chapter 11.

4. Gregory S. Carpenter, Rashi Glazer, and Kent Nakamoto, “Meaningful Brands from Mean-ingless Differentiation: The Dependence on Irrelevant Attributes,” Journal of MarketingResearch, 31/3 (August 1994): 339-350.

5. For a summary of categorization theory see Barbara Loken, Lawrence W. Barsalou, andChristopher Joiner, “Concepts and Categorization in Consumer Psychology,” in CurtisHaugtvedt, Paul Herr, and Frank Kardes, eds., The Handbook of Consumer Psychology (Mahwan,NJ: Erlbaum, 2007); Joel B. Cohen and Kunal Basu, “Alternative Models of Categorization:Toward a Contingent Processing Framework,” Journal of Consumer Research, 13/4 (March1987): 455-472.

6. Eleanor Rosch, “Cognitive Representations of Semantic Categories,” Journal of ExperimentalPsychology: General, 104/3 (September1975): 192-233.

7. Loken et al., op. cit.8. Barbara Loken, Christopher Joiner, and Joann Peck, “Category Attitude Measures: Exem-

plars as Inputs,” Journal of Consumer Psychology, 12/2 (December 2002): 149-161.9. Kevin Lane Keller and David Aaker, “The Impact of Corporate Marketing on a Company’s

Brand Extensions,” Corporate Reputation Review, 1/4 (Summer 1998): 356-378.10. Debanjan Mitra and Peter N. Golder, “Customer Perceptions of Product Quality: A Longitu-

dinal Study,” MSI Report No. 050-110, 2006.11. David A. Aaker, Brand Portfolio Strategy (New York, NY: The Free Press, 2004), p. 132.12. This comes from the Nikkei BP survey, “Brand Japan 2007,” conducted by Nikkei BP Con-

sulting, is the seventh annual survey-based evaluation of some 1,000 brands in the Japanesemarket.

13. David A. Aaker and Robert Jacobson, “The Value Relevance of Brand Attitude in High Tech-nology Markets,” Journal of Marketing Research, 38/4 (November, 2001): 485-493.

14. Nikkei BP Consulting, op. cit.

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