The “Key City” strategy for building iconic consumer brands

The main challenge in building a category defining brand is a question of getting through the noise. It is to overcome a “tipping point” of awareness, to become relevant in the consumer’s mind. In this sense, building a brand has seemingly become easier in the age of Social Media. So easy in fact that it becomes once again challenging to cut through the abundance of competing brand messages. The bar remains high for entrepreneurs to build a truly category defining and lasting brand.

So, how do you get to the tipping point and over the awareness hurdle after all? How does a brand become or remain relevant in its target group? And where do you invest to build your brand effectively?

Adidas believe they have found an answer to those questions for their brand in context of our digital age. The German sportswear giant were looking for a way to stay relevant in streetwear and shape trends, not chase them. Instead of aggressively pushing above-the-line with big, national media flights or shifting all budget online, Adidas have decided to focus on a small number of “Key Cities” where they maximize the number of touch points with their customers and other stakeholders. The theory being that this creates strong ripple effects beyond those cities on a national and international scale by actively shaping trends, as well as being relevant in the eye of influencers and the media.

Source: Adidas Group

Early numbers show positive effects on Adidas’ revenue in the last two years (their stock price has doubled as a result) and even see a higher revenue growth than its bigger peer and rival Nike who have been following suit by adopting a very similar brand entrenchment strategy.

Learning from Adidas, entrepreneurs that want to build large category defining consumer brands today might do good in rolling out brands with a city-by-city mindset instead of the traditional way of conquering country by country. And simply speaking from a brand building perspective: there are some cities that are better than others. Instead of Amsterdam -> Rotterdam -> The Hague -> Utrecht, think Amsterdam -> London -> Paris -> Berlin. The common denominator: iconic cities, that hold a special cultural significance for consumers and multiplicators like influencers, journalists or celebrities alike. The argument here is that the latter type of select cities should be a better nurturing ground for a young consumer brand.

When a journalist spotted multiple women in New York’s posh Upper East Side wearing the same green Orolay winter coat from Amazon it snowballed into a national fashion hype ( → Rebecca from vox.com did the detective work and backtraced how this coat became a best selling product). Certainly an extreme case, but it shows well why certain cities and certain neighbourhoods have a higher propensity to create trends and breed iconic brands. It is because they hold cultural authority in our collective mind, and there being multiplicators present that get the word out.

When scaling marketplace models, the best practice approach is to create dense liquidity in smaller subsets of a market first and to then scale from there. Translating this into a branding strategy it seems sensible and most effective to create a dense presence in a few places that have the biggest multiplier effect for your brand, rather than going national right away. 20 people wearing the same coat in New York might make it a trend, 20 people across the US likely not…

PS: thanks to my friend Vincent from Creative Agency Amsterdam for his valuable input.

Photo: Robert Bye

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Venture Capitalist at Heartcore Capital, heartcore.com

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