Why do companies routinely succumb to the lure of rebranding? The answer, say A.G. Lafley and Roger L. Martin, the authors of “Customer Loyalty Is Overrated,” is rooted in serious misperceptions about the nature of competitive advantage—namely, that companies need to continually update their business models, strategies, and communications to respond to the explosion of options that sophisticated consumers face.
Research suggests that what makes competitive advantage truly sustainable is helping consumers avoid having to make a choice. They choose the leading product in the market primarily because that is the easiest thing to do. And each time they select it, its advantage increases over that of the products or services they didn’t choose, creating what the authors call cumulative advantage.
Lafley and Martin offer guidance for building cumulative advantage:
Become popular early. Back in 1946, Procter & Gamble gave away a box of Tide with every washing machine sold in America.
Design for habit. When P&G introduced Febreze, consumers liked it but didn’t use it much. The problem, it turned out, was that the product came in what looked like a glass-cleaner bottle, so users kept it under the sink. When the company redesigned the bottle so that customers would keep it in a more visible spot, they ended up using it more often.
Innovate inside the brand. Efforts to “relaunch” brands can lead people to break their habits. Changes in product features should be introduced in a way that retains cumulative advantage. For customers, “improved” is much more comfortable than “new.”
Keep communication simple. A clever ad may win awards, but if its message is too complex, it will backfire.
