Brand Growth Through Innovation

Innovation is a keyword for brands as it allows them to be relevant in a constantly changing competitive market. If we start from the definition itself, it’s to create value from ideas that are new for a product or service, whose primary objective is to seek incremental volume, obtain a benefit for the brand and achieve an impact on brand equity. But how can I make my brand meaningful through innovation itself?

Through various Kantar studies, we know that brands perceived as significantly different and that demonstrate innovative behaviors grow at twice the speed of those that are significantly different on their own.

How, then, can you drive your brand to faster growth through innovation?

We must first recognize that innovation can be a risky business, and we know that most of the time it isn´t completely successful when carried out in isolation from other aspects of brand building.

Innovation Is the Fuel for Differentiation

A brand requires innovation to help it be perceived as significantly different and grow at a dizzying pace. While we mentioned earlier that brands perceived as significantly different and demonstrating innovative behaviors grow at twice the speed of those that are significantly different on their own. It’s important to mention that to grow faster, brands must innovate to build on what the brand represents and maintaining a significant difference can allow progress. Perceived differentiation is important because it helps people justify paying the asking price.

In our most recent study, Connected Innovation, we know that brands that have these values ​​mentioned above grow by 54% versus 25%, which only has a significant difference.

Innovation Must Help Generate ‘Excess’ of Differentiation

Most innovative brands have an excess of perceived difference, more than can be explained by brand size alone, indicating that the brand's difference is perceived beyond its existing user base.

This means that difference not only distinguishes a brand from the competition, but also positions it for growth. That is, perceived differentiation enhances the profitability of the brand.

Therefore, innovation-driven difference can be used to differentiate a brand from competitors and drive innovative growth, particularly when a brand has excess differentiation that makes it stand out. However, we've all come across new product launches from well-known brands that simply don't make sense and leave consumers a little bewildered, unimpressed or, at worst, disappointed. The failure of new products like these highlights that difference alone is not enough for success.

Significant Difference, the Remedy for Disconnected Difference

Successful innovation starts with what the brand stands for, what people already know and expect from it, but it really shines when it’s done in a meaningful way, meeting the needs of a brand's target audience effectively.

While significance and prominence drive sales volume, what will really drive pricing power is knowing how significant and different a brand can be. Making it worth paying more because it meets the needs of the target consumer in a unique way that only that chosen brand can.

Therefore, the above shows that while the spread may allow you to move forward, doing so significantly will allow you to be picked at the right price, leading to higher margin returns. Therefore, innovation plays a vital role in connecting the two and allows brands to evolve successfully without forgetting their DNA.

It’s important to mention that 8 out of 10 brands achieve their growth by gaining new consumers, and focusing on repurchase is not the most solid strategy, since only 16% of brands grow in this way.

AI Helps Boost Innovation Process

When a new technology emerges, brands often adopt a perspective on how best to implement it. Under a scheme known as the substitution effect, brands seek to improve what they did before thanks to the help of new technology.

And this leads us to question how AI can make innovation processes more meaningful. It must be brought closer to reality, so that products can be created when and where needs arise, instead of designing all at once. But the really interesting thing about AI is that it can make connections that we otherwise wouldn't make, because it doesn't have the same biases as humans.

What's more, I have no doubt about the positive impact that AI is having on brands, but currently it is like learning a new language that can be difficult, so let's be less afraid and let's start using and taking advantage of the benefits that AI can bring us.

Consumer Knowledge Adds to Power of Differentiation

The “excessive” difference is the main indicator of growth potential. Brands must innovate in ways that create value not only for existing consumers, but that also expands their relevance and attracts new buyers, while still aligning with what the brand stands for. The challenge, then, is to identify something new in customer needs that allows a brand to expand its ability to differentiate itself with meaning. This is where consumer insight can be enormously valuable. Knowing what consumers think of your brand (current and potential new users) allows you to understand the who, what, why and where of your innovation.

Innovation is a huge challenge, but also very important. For innovation to reach its full potential, it must be aligned with what the brand represents in people's minds.

Successful innovation requires more than identifying an unmet need, it requires understanding all the ways in which the relationship between consumer and brand can be improved and then doing so in a way that builds on the significant difference that exists between the brand.

Exploring the unmet needs, aspirations and frictions of people at different times allows us to discover opportunities, understand the choice factors at different times and show how to win from these opportunities.

Taking into account that the “innovation journey” can range from launching a new product, pursuing a new category subcategory, rebranding and/or repositioning an existing offering or simply expanding your portfolio with line extensions, you can find new sources of meaningful difference in any part of the brand experience, but to be successful, that means innovation must be connected to all other aspects of brand building, and cannot occur in isolation.

The most successful brands understand what they stand for and their consumers know it too, and their innovation is based on those expectations. That is why consumer knowledge is so important for the innovation process. This ensures that consumers understand the who, why and what of the innovation, and guides development and implementation to ensure potential buyers know and appreciate what the brand has to offer.