Growth in saturated markets

Why invented brand legacies are the best competitive advantage

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In the 1960’s in the Bronx, two Polish-Jewish immigrants, Reuben and Rose Mattus, created Häagen Dazs.

The Mattuses knew they were entering a saturated ice cream market. Their strategic focus wasn’t to outcompete the existing ice cream brands, but to make them irrelevant by creating a fundamentally new and superior value in the market.

This new and superior value was social and cultural aspiration. Häagen-Dazs’ European-sounding name gave cultural biography to the brand that didn’t have any. It turned a mundane product into an aspirational one by enriching it with the connotations, associations and references linked to its name.

Aspiration is buyer value. In case of Häagen-Dazs, it lends the buyer a sense of discerning taste that was once restricted to social and cultural elite. Häagen-Dazs name conveys sophistication, tradition, heritage and the old-world artisanship. Its original packaging featured a map of Denmark, despite the fact that “ä” doesn’t exist in Danish and that the words don’t mean anything. Häagen-Dazs shifted consumer preferences and created a market for itself around this aggregate consumer demand.

Value innovation redefines growth. It moves the growth strategy from “what are my competitors doing” on the supply side to “what matters to my customers and how can I deliver it to them” on the demand side. By introducing new value, this growth strategy avoids the “faster horse” trap. As the increasing returns and economies of scale kicked in, Häagen-Dazs successfully stood out. It took almost 40 years for other artisanal ice cream brands to invade its market. 

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