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Subcategory Competition could help firms deliver high sales; think Chobani!



In the future, branding and business in general is
going to involve more subcategory creation and
competition and less “my brand is better than
your brand” competition. This is because, with
rare exemptions, that is the only way to achieve
real profitable growth. In category after category,
real growth results not from market share
increases, but from brands that have created a set
of “must haves” that define a new subcategory
and then manage that subcategory by becoming
its exemplar. These brands continue to innovate
and create a moving target. By managing the
perceptions and attitudes toward the subcategory,
the subcategory wins.
I’ve previously discussed in my blog and my
book, Brand Relevance a host of examples of
brands that have created subcategories and won a
subcategory battle. The Chrysler minivan, Asahi
Super Dry, Enterprise-Rent-a-Car, Muji (the no-
brand retailer), Patagonia, Zipcar, Tesla, Red Bull,
IKEA, Gillette razors in India, the list goes on and
on. Most recently, I discussed Whole Foods
Market. Chobani, recently written about in
Marketing News, is another good example.
Mamdi Uludaya, a native of Turkey and the owner
of a small cheese business, bought a former Kraft
yogurt plant in New York in 2005. His goal was to
produce Greek yogurt, back then a miniscule and
unnoticed part of the yogurt scene dominated by
Yoplait and Dannon. He named it “Chobani,” and
in just over five years, was making 1.4 billion
dollars. The share of the yogurt market held by
the Greek subcategory went from 0.7% in 2006 to
52% in 2014. The Greek subcategory won.
Four observations about Chobani’s achievement:
First, the product has a distinct value proposition.
It’s thicker, which makes it have a richer,
creamier texture. With the same amount of
calories, it usually has twice the protein, half the
sugar, and half the carbs as regular yogurt. That
has an appeal to those interested in high protein
diets as well as those that want or need to avoid
meat. The low sugar, carb, calorie counts are
valued by anyone into health or trying to lose
weight.
Second, Chobani created a unique package
design. Their cup was shorter and fatter than the
prototypical yogurt container and displayed vivid
colors. That provided a symbol of the new
subcategory that helped customers recognize
which option was Greek. It also provided the self-
expressive benefit of knowing that what you are
buying and eating was the authentic Greek yogurt
with all its attributes.
Third, Chobani positioned itself as a subcategory
and not as a specialty product. It wasn’t to be
used only by those that would want a niche,
ethnic product. That enabled the brand to become
a mass product with appeal to a broad segment.
Fourth, Chobani fought back. When its rivals,
particularly the big players Dannon and Yoplait,
attempted to become relevant Chobani leveraged
its exemplar position by innovating and framing
the subcategory. As a result, the upstart Chobani
still retains a 40% share of the Greek yogurt
market.
Chobani innovated. It now offers a 100-calorie
version (Simply 100), a flip yogurt with added
toppings such as blueberries, a breakfast line
labeled Chobani Oats, a line of seasonally inspired
yogurt flavors called Chobani Indulgent, a line of
dips, and a full-fat yogurt in large containers for
cooking and as a substitute for sour cream. They
have even opened retail cafes that stock more
exotic versions of their product.
Further, Chobani framed the subcategory to
include natural ingredients, where Chobani has an
edge. Their “How Matters” campaign highlights
the Chobani production process and will become
a theme of a larger campaign about how
important process is when training for the
Olympics, as well as making yogurt.
How could the two dominant yogurt brands sit by
while a newcomer with very limited resources
grew to a 1.4 billion business in under six years?
It’s an amazing story, but the answer is familiar.
The dominant players were engaged in vigorous
“my brand is better than your brand” competition
and were focused on winning share points in a
static category. And they were successfully,
steadily growing profits. But this new subcategory,
that in their mind was worth less than 1%, was
not worth investing in because they believed it
could not materially affect their business.

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