The Blake Project, the brand consultancy behind Branding Strategy Insider, delivers interactive brand education workshops and keynote speeches designed to align marketers on essential concepts in brand management and empower them to release the full potential of the brands they manage.
The fracas over at PepsiCo as to whether the company should continue to operate a diversified platform or free the snacks division to pursue its goals independently is a reminder of the ongoing debate over diversification versus focus.
It’s not hard to see why diversification has its advocates. Operational synergies make for a more efficient organization potentially while diversification into other categories, particularly related categories, allows consumers to get more of and from a brand than was available previously. That’s clearly Indra Nooyi’s view. Snacks and drinks belong together.
Diversification also spreads risks, allowing brands to absorb downturns in one area without putting everyone into a tailspin. Again, that strategy appears to be working for PepsiCo with the Frito-Lay division helping to maintain company performance in the face of a sustained hammering from arch-rival Coca-Cola and a general downturn in the carbonated drinks sector in the developed world over growing health concerns.
But is the age of the single minded brand (with its single minded proposition) over? What’s the brand case for being singular – and what does it take to get it to work well? Here’s five reasons why I believe some brands should still look to lean this way:Read More
In a helpful article in Fast Company, Seth Priebatsch provides his insights on how brands can use game dynamics to forge new levels of engagement with customers. He cites three robust principles:
1. The power of we. Brand marketers talk a lot about individualizing these days, but Priebatsch reminds us that people also find huge reassurance in being part of groups and that creating and motivating such groups can be a game-changer. The dynamics of a customer base change, he suggests, when people see themselves within a group setting rather than just the context of one-to-one. There’s more than group-think at play here. The reason this works, I think, is because communities themselves combine bonding with form and mass which in turn adds the all-important elements of momentum and endorsement. So perhaps a more accurate way of describing this is Seth Godin’s concept of tribalism.
2. Visible progress. Everyone loves to think they’re getting ahead, and as Priebatsch reminds us, the many progression metrics that brands use – points, status, benchmarks, levels, progress bars – “all help users visualize and keep track of successes in small increments”. In my mind, progression strategies parallel the ‘upgrade culture’ because they’re all about short-term incremental gains. They’re immediate and they give people small but valued things to work towards. Priebatsch’s advice: “Businesses should constantly strive to devise new and creative ways to allow their customers to visualize and track their success. Hitting goals and making progress is fun.”
There is a downside of course – and that is that consumers who don’t make the progress they feel they deserve (or would simply like) can feel let down or even abandoned. I remember when I was downgraded on my airline loyalty program that the drop seemed an awfully long way down. In fact, in some ways, not having them, turned me off flying even more.Read More
There’s an increasing temptation to see technology as the harbinger of hope and hazard. Every day, the trendy press and commentators on social media carry reports of the next “it” technology together with their recommendations on what every business needs to be doing to ride the wave. Many of these wonder-techs seem to live a few days longer than their press release in the collective conscious. Some though will indeed change the world we live in and how we interact. This report by McKinsey for example identifies 12 such technologies that the company says could have a potential economic impact of between $14 trillion and $33 trillion a year by 2025.
But should our assessment of the risks and opportunities that sectors, and the brands within those sectors, face focus just on emerging innovations and their expected functional impacts? That seems simplistic.
In a report of its own from a couple of years back, KPMG pondered the impact that ten interconnected and interacting sustainability megaforces will have on business over the next 20 years – broadly speaking, a parallel timeframe to the era being considered by McKinsey. Decoupling human progress from resource use and environmental decline, KPMG suggested, represents both the central challenge of our age and one of the biggest sources of future success.
So yes, while there are forces that are clearly pushing economic opportunity forward, there are also clear constraints and restraints that will work to hinder the growth plans of many.Read More
This article from some time back by Jagdish Sheth and Rajendra Sisodia sheds fascinating light on the business case not just for expanding brands but also shrinking them as well. According to the authors’ “Rule of Three”, the quest for scale is quite literally a race first for dominance and then for survival. But if you can’t win, don’t try.
Sheth and Sisodia’s research reveals that in most mature markets, there is only room for three volume-based competitors competing across a range of products and markets. Together, these three players control 70 – 90% of their market. To be viable as a volume driven player, the authors say, companies must have at least 10% market share. Financial performance continues to improve as market share increases, up to about 40%. However, once they expand beyond that 40% threshhold, brands can find themselves subject to a loss of advantage in economies of scale and heightened anti-monopoly scrutiny.
(Bruce Henderson of the Boston Consulting Group has a view that not only must there be no more than three significant competitors but that those competitors must exist in an arrangement ratioed 4:2:1)
The extent to which each of the big three can consolidate market share depends on their respective abilities to alleviate the pressure of fixed costs on their pricing.
While downturns, price wars and market changes can see three top players reduced to two for a time, in the longer run a third player will return or rise to claim the vacant spot. Of these three players, the market leader is generally a responder rather than an innovator while the third placed competitor is most likely to be the market leader in terms of instigating change.Read More
Brands require huge levels of energy. They need to be promoted, they need to be maintained, they need to be serviced … just to keep them going. And that can lead some to believe that that is all they need. Surely, if you invest enough energy in this brand, it will succeed.
You see this in those interesting exchanges which begin, “We’re going to spend this … and we want to achieve this”.
I would argue that the emphasis needs to be reversed, “To achieve this, we’re going to have to spend this …”.
There are some important distinctions in the order of these statements. The first emphasizes the spend (energy) and ties it, hopefully, to an outcome. The second statement begins with the outcome and attributes a required level of energy to achieve it.
A lot of marketers put their hope in the first approach. Egged on by the planners, they spend up and then wait for the tide to come in. It’s a little like saying that you’ll put a certain motor in a car and aim for it to reach a certain speed. It may work. It may not.
The other approach is much more mechanical. Start with the outcome, and then determine the level of energy required to achieve it, both in ideas and spend. But it’s an approach that makes the creatives and the planners sweat because the emphasis is on actions and results rather than impressions. And it shifts the focus – from “what shall be spent and where?” to “why should that amount (or more) be spent?”Read More