Brands in the News

New Product Strategy, Romney and Obama

24 Oct 2012  

This week I talked about launching new products in my marketing strategy class at Kellogg. The students and I spent a lot of time discussing new product strategy in familiar categories including technology, FMCG, pharmaceuticals and financial services.

We didn’t spend a lot of time on the biggest new product battle taking place right now: the presidential election. We should have.

A political candidate challenging an incumbent is much like a new entrant challenging a product in an established category; there is a known player in the market and the new entrant has to find a way to get people to embrace the new option.

Entering an established category is not easy because the existing player has many advantages: relationships, a well-known brand and financial resources. In most cases the established player will take steps to defend and a good defensive effort can highly effective, as I explain in my new book, Defending Your Brand: How Smart Companies Use Defensive Strategy to Deal with Competitive Attacks.

Looking ahead to the election, I believe the final decision will come down to a simple question: how eager are voters for a change?

When assessing an established category it is critical to understand customer motivation to learn. In some markets, customers are actively looking for new alternatives. This makes it easier for a new entrant because people will seek out the new option. In other markets, customers are satisfied or uninterested and not looking for new things. This is much more difficult for the new player; the challenger has to work very hard to get people to pay attention.

Motivation to learn will drive the upcoming election. If people are looking for a change, then Romney becomes the obvious choice. If people are generally satisfied, then they will stick with Obama.

The debates mattered this year because Romney emerged looking like a viable option. He spoke well and said fairly reasonable things. He didn’t come off as extreme or reckless. Which means the election will come down to one thing: motivation for change.

Given the state of the economy I predict this will be a very close race and Romney may well emerge the victor.

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My new book is now available! Defending Your Brand: How Smart Companies Use Defensive Strategy to Deal with Competitive Attacks looks at the critically important but rarely discussed world of defensive strategy. The core question: how can you protect your business when competitors attack?

You can find it at B&N, Amazon and all the usual spots.

Here is the Amazon link:


4 Responses

  1. Per Ohstrom KGSM '94 says:

    An observation to Manish’ comment: the paying customer in the case of the A/C unit is not necessarily the consumer living in the house, but the builder.

    As long as he is building homes, he will be buying A/C units and can much better appreciate features, benefits and value. The same is true for other components like windows, electric wiring and gear, PVC pipe, or sump pumps, all of which are branded and consciously marketed to their target segment.

    Per Ohstrom ’94

  2. Joan Crownover says:

    Thank you for your thoughtful snippet. Id venture to say that another thing to consider is that while the customer is not particularly satisfied with the existing player, they nevertheless cannot envision risking trial of the new player.

  3. Manish Virmani says:

    Professor, you are doing a great job promoting your new book…… Very enterprising!

    Anyway, I have a question instead of a comment. What about consumer behavior when it comes to durable goods such as air conditioners. You don’t see or touch them everyday so design and novel features, etc aren’t all that important. So how can an entrant displace an incumbent and what can an incumbent do to protect its market share? Thanks!

    • Tim Calkins says:

      Manish—That is a big question! But the challenge for a new entrant is clear: provide a motivating point of difference for customers. Without a clear reason to choose a new brand, people will generally stick with the established player. This is what happened with Barack Obama this week.

      The goal for a well placed incumbent is to block the new entrants. The best way to do this is to constantly innovate; if you launch the new ideas first, you effectively stifle new entrants. And if a new entrant comes up with a fresh idea first, just copy it and invest heavily to capitalize on the concept. Good ideas can come from anywhere.


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