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.
Category: Brand Strategy
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
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
Isn’t this such a great thought? “Don’t build a product, then try to market it. Instead, build a customer attitude, then build a product to match that attitude.” It’s part of an absorbing and insightful article by Graeme Newell on why you shouldn’t focus your advertising around your product.
And it points to a parallel thought for me that clearly distinguishes brands with purpose from those that lack purpose. Purposeful brands focus on the history of the attitude that drives them far more than their chronicled timeline. They talk about what first motivated them to want to change the world and what impels them to continue shaking the tree. That’s powerful precisely because it’s timeless. And it’s relevant because it’s so connective. It explains to those of a similar mind how a brand they like came to the very same realizations that they have.
By way of a structure for such a story, I hacked Emma Coats’ wonderful Pixar code to render my take on how marketers might retell how they came to be the brand they are. This is the result:Read More
In this article in Business Week, Howard Schultz talks about how the mighty Starbucks brand lost its way – mistaking aroma rather than coffee for the core of its business and embarking on a strategy that saw it shift seriously off-course. The problem, as Schultz explains, is that by the time the company realized that they had diluted their brand position, breakfast sandwiches had become 3 percent of the company’s total revenue. Getting back on track was a big call. He did it anyway.
We talk a lot these days about thought leadership – but really, I see that as a component of a bigger objective: market authority. You may or may not want to be the biggest in a sector, but the article says there are three actions that you need to take if you have lost your mojo and, like Starbucks, are looking to re-establish brand authority.
I actually picked up five:
The first decision is obvious – decide what you want to be the authority in as a brand, and keep the faith. Schultz recognized that while CDs, movies, and breakfast sandwiches all represented revenue streams, they also cluttered stores, diluted the brand and eroded its authority.
The second decision is about doing everything you can to retain and foster that authority. In Starbucks’ case, that meant perfecting new roasts and shutting down every store in North America for an afternoon to retrain its baristas.Read More
The opinionated consumer is on the rise. Brad Tuttle cites numerous examples of boycotting, protesting, petitioning and venting in this recent article in Time Magazine. Encouraged by the galvanizing effects of social media and mass action against brands that they perceive to have done wrong, people everywhere it seems are pointing the finger and calling upon others to do the same.
Brands are now so much of our daily experience that we quite literally take their actions and attitudes personally says Martin Zwilling in a recent article in Forbes. And because of this we look for, and judge brands by their “worthy intentions”. Relationships, he says, are now the cornerstone of value and that potentially makes brands vulnerable to the opinions and agendas of others in a world where “your customers now have near-instantaneous power to hold companies and brands accountable for their words and actions”.
This situation puts brands in an apparent dilemma. They can attempt to appeal to everyone and risk being likeable but bland. Or they can go out on a limb, take a position and incur the wrath and potential actions of those who disagree with them. Actually, I don’t think that’s a dilemma at all. To me, most brands, except those deliberately built around globally-scaled mass appeal, need to be opinionated, even argumentative, with the world around them, and the rise and rise of the opinionated consumer should be a catalyst for that rather than a deterrent.
In many cases, the issue isn’t actually whether people agree with you as a brand. It’s very hard work indeed to please all of the people all of the time. The question is what they are arguing with you about.Read More