Brand Relevance: Making Competitors Irrelevant - always yours

WINNING THE BRAND RELEVANCE BATTLE 37
return. One such study of over fi ve-thousand announcements
from sixty - nine fi rms in fi ve high - tech industries, such as printers
and desktop memory, found that when the announcements
involving selecting a technology, developing it, and bringing
it to market were combined, the response of the stock market
was prompt and substantial. 11 Because many of these developments
involved a new category or subcategory, this study provides
evidence that the stock market believes such activities
will pay off.
Most of the economic vitality in the United States comes
from new businesses. In fact, from 1980 to 2008 the net new
jobs were created by fi rms under fi ve years old. 12 It is reasonable
to assume that a large percentage of this set of successful new
fi rms, in order to gain sales growth, had to generate new, differentiated
offerings that created or nurtured new categories and
subcategories.
Although these studies do not distinguish between new categories
and new subcategories, it is certainly true that there are
many times more subcategories created than new categories.
However, because the same fundamental profi t drivers — reduced
or nonexistent competition and compelling value propositions —
will be in place, abnormal profi ts should ensue for each.
New Product Research
New product research, whether it takes the form of test markets
or product or service introductions, suggests that new offerings
creating new subcategories receive abnormally high profi ts.
Dozens of studies have shown that new product success is substantially
driven by differentiation — it must be one of the most
robust empirical relationships in business. Differentiation affects
not only the value proposition but also visibility, the ability of
the new product to gain attention in the marketplace. New
products tend to fail if they are not suffi ciently differentiated
from the existing offerings.