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 vs focus.
I’m always fascinated when companies blame market conditions or competitor behaviour for their own misfortune. Fascinated – because, dig a little deeper and often their dilemma is a result of their own intransigence.
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.
Tactics are like torchlight. You switch them on, they show you a way forward, you act on them there and then. They’re logical, reactive, contemporary. Your customers and your competitors probably see and react to them in exactly the same light. Great strategy is like starlight. What you’re seeing coming out of a company now was established and agreed upon a long way back. It started its journey many many years ago, has been influencing the way the company thinks and competes for ages, and has taken all this time to become visible.
It’s hard to develop a brand. It takes enormous effort, huge willpower, confidence, resources, patience and a thick skin. You’ll face doubt, distractions and problems. It’s gruelling …. But none of that is the toughest bit. Far from it. The most intimidating aspect is actually building a brand that consciously and clearly stands apart from everything else that is being built – everything else that is competing for the same audience you want to reach.
So many companies build their brand around their business. They establish the tangible assets and processes and look to extrapolate the intangible value of that as brands for their buyers. They transit in other words from the physical to the emotive.
Provocative question: Why do IP law firms generally have such ugly identities? I suspect it’s because most of them are about protection rather than attraction. And it’s interesting isn’t it that, for two parties that should work closely together, brand and IP strategists tend to remain curiously separated.
We’ve just had Guy Fawkes here in New Zealand. In Wellington, there was a big fireworks display in the harbour as there is every year. It got me thinking about what brands consumers go crackers over, why and is that changing? Recently, the research firm APCO Insight released its list of the top 100 most loved companies. Their study measured consumer attachment to brands based on eight emotions: understanding, approachability, relevance, admiration, curiosity, identification, empowerment and pride. There are some interesting results. Yahoo beat Google. Disney beat everyone (OK, maybe that’s not so much of a surprise) and Apple came in at ninth (which certainly would surprise many). According to the study: The tech sector outperforms across all emotions, and rates especially well on relevance, meaning people see these brands as fitting with them and playing a meaningful role in their lives. But they could inspire more curiosity. Retail brands are seen as highly approachable but people are less enthusiastic about wanting to be associated with them. Restaurants are also approachable for the most part, …
Anyone proposing something new in an organisation is likely to be hit by four questions that represent two contradictory lines of enquiry. They serve perhaps to highlight the ironies of trying to quantify demand. On the one hand: The search for precedent Question 1: Who else has done this? Wrong answer: If the real answer is that many others are doing it, you have signalled what should be a non-starter. That’s because if others are doing what you are suggesting, it is not an innovation. It is, at best, catch-up. If you present it as a competitive opportunity, then you are, as Michael Porter has pointed out, relying on the incompetence of your rivals and that is not the basis for a sustainable competitive position. Right answer: The idea is new for the sector, and a similar concept, using a parallel model, has worked well in other sectors with a similar competitive profile. Question 2: Is there a demand for it? Wrong answer: You think so, or there should be, or it’s a great idea …
At a recent presentation, I introduced the concept of the “goodness movement”. I defined this as a global wish for social wellness that is driving corporate social responsibility today: a recognition by brands that those that are seen to do good perform better; and a response to a wish by consumers to make a difference. Buyers want to tell themselves they are doing the right thing, and as part of that, they want affirmation on the part of the brands they buy from that good is being done. That’s never been easier. Purchases are increasingly tied to beneficial actions that, if I can refer back to my direct marketing agency days for a moment, amount to a “social premium”. The new coupon is social. Once consumers clipped physically to get money off. Increasingly, when they buy the brand, a good action is now included. Pampers, for example, have teamed up with UNICEF in a programme that sees one dose of the tetanus vaccine donated for every pack of product bought. Brands are increasingly presenting consumers …
