September 14th, 2009
By Al Ries
From General Electric in New York to The Walt Disney Company in Los Angeles, a velvet curtain has descended across the country separating marketing from management.
Take Chrysler, for example. In 2006, Chrysler sales fell 7 percent and the company lost $1.5 billion. Which is why Daimler virtually gave away the company to Cerberus Capital Management.
So what did Cerberus do? They hired a new CEO, Robert Nardelli, to lead the company out of the wilderness.
And what is Robert Nardelli’s expertise? According to most media reports, he’s a cost-cutting manufacturing expert.
They got it, Nardelli said of Chrysler management, which planned to cut 13,000 jobs. If we can do it faster, if we can do it more efficiently, that’s what we want to do.
Faster? More efficiently? Is that what Chrysler’s problem is? Any marketing person knows what Chrysler’s problem is. It’s not a manufacturing problem and it’s not a pricing problem.
August 28th, 2009
By Al Ries
March Madness lasts only three weeks, but Metric Madness goes on all year long. What is Metric Madness? It’s the notion you can run anything by the numbers, and it’s become the hottest concept in business today.
In 2007 14 Tesco stores closed their doors following bomb threats. Speculation grew about the motives. An initial suggestion that Tesco was being targeted by religious extremists was immediately rejected by police. Several national newspapers then suggested a link to animal liberation and pointed out that on the day of the threats there was a national day of action against Tesco by several animal rights groups.
While I do not know the identities or motivations of those who made the threats, I can provide some insight into why Tesco was targeted rather than key competitors Sainsbury's or Waitrose. It was almost certainly not down to ethical or religious reasons, but rather a number – specifically, a proportion: 31.3%.
To understand this numerical significance, we have to look back even further. On 29 September 1982 Adam Janus, a 27-year-old postman from Arlington Heights, Illinois, dropped dead unexpectedly. Adam's family gathered to discuss funeral arrangements. His 25-year old brother Stanley and his 19-year-old wife, Theresa, were both suffering from headaches. Stanley found a bottle of Extra Strength Tylenol in Adam's kitchen; within minutes he and Theresa were dead.
Chicago police realised that all three victims had been poisoned. Eventually seven people died in what became known as the 'Tylenol murders'. Investigators concluded that the culprit had visited various stores in Chicago and added cyanide tablets to bottles of Tylenol before returning them to the shelf. Why Tylenol? In 1982 it was the leading pain-relief brand in the US with a 35% market share.
A few years ago I set off with a bunch of friends to follow England's cricket tour of Sri Lanka. The beautiful hill town of Kandy promised to be a spectacular location for the first Test, but it was not the scenery that grabbed our attention when we arrived. Sri Lankan newspapers were warning of an illegal brewing scam, in which bandits were manufacturing their own moonshine, refilling empty bottles of beer and spirits and then reselling it back into regular channels. Unfortunately, the booze was not just illegal – it was dangerous. Several local people had been blinded after drinking it.
Our group faced an unexpected existential crisis. On the one hand, no one fancied the prospect of being rushed to a local hospital and potentially losing their sight. On the other, five long days of Test cricket without a beer was something we all found hard to contemplate. Two minutes later we set off to the local liquor store. There is a reason the England cricket team's band of fans is called the Barmy Army.
At the store, clearly we wanted to minimise the chances of selecting a potentially lethal brew. Scanning the aisles, however, we saw only unfamiliar brands. Suddenly my eyes rested on the familiar image of a lion staring proudly back at me. I remembered it from a fancy import shop back in England. Lion was the only Sri Lankan beer I had ever drunk before. I knew the brand. If I had to place my trust in a beer this day, it would be that one. In a dangerous jungle of mystery brands, Lion Beer was my totem.
During the first session of play that morning I sat in the stands enjoying my beer and a whole new appreciation for the gift of sight. With the glorious sound of leather on willow in the background and the pleasing sensation of a late-morning beer buzz, I pondered my experience, and began to appreciate where brands derived most of their equity in ancient times.