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How to successfully build a (new) brand for millennials

Putting category before product; Why this should be at the heart of your marketing strategy for the millennial and Gen Z audience.

Building a successful consumer brand for the Millennial or Gen Z market is undoubtedly a challenge. Both are notoriously fickle, often driven more by principles and self-education than by fixed habits or blind loyalty to a brand much less the celebrity endorsing it.

This has significant implications for brands creating products aimed at this audience. Indeed, it’s possible that many companies may have their branding strategy back-to-front. Instead of following the latest trends, startups with ambitions to create value in these markets should think about driving them.

Putting category before product

When launching a new brand, companies will typically aim to differentiate themselves from what their competitors are doing. But that brand will have little value if the category or market in which it’s being sold isn’t growing. This is especially important when it comes to Millennial and Gen Z consumers – because they are decidedly less loyal to brands they take greater cues for the category a subset of brands operates in than previous generations’ of consumers.

The habits and interests of Millennials and Gen Z are constantly in flux because there is so much more information thrown at them through social media and other channels. This makes it almost impossible for a company to predict what the next big thing will be in six months’ time, let alone to build its brand strategy around it. Companies should, therefore, look to invent new consumer habits through establishing new categories of products and new subsets of brands within these categories rather than purely trying to time the market. Companies that opt to follow these allegiance shifting consumers down the rabbit hole will find them constantly having to reinvent themselves, which lead to them bleed market share.

At the moment, big corporations have the infrastructure and resources to quickly turn out products that will capitalise on the latest trends. But, in saying that Millennials like this, and Gen Z likes that, brands can be in danger of seriously misunderstanding their target audiences and why they choose to buy what they do.

The habits of an entire generation are changing quicker than ever before. 22-year-olds, for example, are among the last to remember how speaking with their friends on the phone required them to call their parents first. 12-year-olds, on the other hand, probably don’t even know what a landline is. Most of them won’t remember dial-up internet either.

The point is, the way Millennial and Gen Z consumers interact with brands, and the stimuli that leads to this interaction - even their attention spans - are changing at an unprecedented rate. They’re naturally more fickle than previous generations, too, constantly being bombarded with information from various different sources. On the plus side, this effectively makes them a canvas on which brands can superimpose their trends - as long as they get them right - and this is where a focus on building categories before products is important.

As consumer attention spans shrink, the ability for firms to retain customers will become more difficult and the lifecycle of brands will go shorter and shorter. This is where the category build comes in. The category presents an opportunity for industries to codify branding rules that are less vulnerable to changing trends. Done correctly they can even create more value for firms over the long term.

A good example of a category rule in Scotch whisky would be that for it to be scotch the liquid cannot be less than 40% ABV. The value the category has derived from this over time comes from the fact that the Scotch loses alcoholic content as it ages. So the older the scotch the more precisely the Master Distiller had to be in predicting when it could sell. The ability of the categories distillers’ to predict often decades in advance that a bottle can be bottled and sold at 40% ABV at year 30 and not become worthless at year 28 for dipping below 40% ABV is one of the reasons that premium scotch whiskey has outperformed every other asset class on earth over the last 2 decades.

This category rule has also contributed to the growth of the Spirits industry in the face of declining volumes of sales. Millennials and Gen Z are drinking less but they are spending more when they do. It’s not about getting drunk it's about the experience and an appreciation for the experience comes not just from the enjoyment of the brand but a greater understanding of the brand, which is only when viewed in relation to the category.

A millennial investor, Adrian Clarke founded boutique investment firm Delarki Industries Ltd in 2014. Delarki builds and invests in and manages a private investment portfolio that includes Real Estate, Food & Beverage and Technology assets in the UK, US, Bahamas and Hong Kong. Adrian founded Mustard Venture Studio, a venture builder that partners with each of Delarki’s portfolio companies.

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