The Cause and The Cure of Marketing Malpractice

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The Cause and the Cure of Marketing Malpractice  _______________________ ________________________ _________________________ _________________________ _________________________ _________________________ ________________  ____   ___________

 Thirty thousand new consumer consumer products are launched eac each h year. year. But over 90% of  them fail—and that’s after marketing professionals have spent massive amounts of money trying to understand what their customers want. What’s wrong with this picture !s it that market researchers aren’t smart enough That advertising agencies aren’t creative enough That consumers have "ecome too di#cult to unde un ders rsta tand nd  We don’ don’tt th thin ink k so. so. We "eli "eliev eve$ e$ inst instea ead$ d$ th that at some some of th the e fundamental paradigms of marketing—the methods that most of us learned to segment markets$ "uild "rands$ and understand customers—are "roken. We’re not alone in that udgment. &ven 'rocter ( )am"le *&+ ,.). -aey$ argua"ly the "est/positioned person in the world to make this call$ says$ We need to reinvent the way we market to consumers. We need a new model.1  T  To o "uild "rands that mean something to customers$ you need to attach them to prod produc ucts ts that that mean mean some someth thin ing g to cust custom omer ers. s. ,nd ,nd to do that that$$ you you need need to segment markets in ways that reect how customers actually live their lives. !n this this artic article$ le$ we will will prop propos ose e a way way to reco recon2 n2gu gure re the the prin princi cipl ples es of mark market et segm se gmen enta tatio tion. n. We’ll e’ll desc descri" ri"e e how how to crea create te prod produc ucts ts that that cust custom omer ers s will will consistently value. ,nd 2nally$ we will descri"e how new$ valua"le "rands can "e "uilt to truly deliver sustained$ pro2ta"le growth.

Broken Paradigms of Market Segmentation  The great 3arvard marketing professor Theodore -evitt used to tell his students$ 'eople don’t want to "uy a 4uarter/inch drill. They want a 4uarter/inch hole51 &very marketer we know agrees with -evitt’s insight. 6et these same people segmentt their markets segmen markets "y type of drill and "y price point7 they measure measure market market share of drills$ not holes7 and they "enchmark the features and functions of their drill$ not their hole$ against those of rivals. They then set to work o8ering more features and functions in the "elief that these will translate into "etter pricing and market share. When marketers do this$ they often solve the wrong pro"lems$ improving their products in ways that are irrelevant to their customers’ needs. egmenting markets "y type of customer is no "etter. 3aving sliced "usiness clie client nts s in into to small small$$ me medi dium um$$ and and large large ente enterp rpri rise ses— s—or or havi having ng shoe shoeho horn rned ed consumers into age$ gender$ or lifestyle "rackets—marketers "usy themselves with wit h tr tryi ying ng to unde unders rsta tand nd the the needs needs of re repr pres esen enta tati tive ve cust custom omers ers in thos those e segments and then create products that address those needs. The pro"lem is that that cust custom omers ers don’ don’tt confo conform rm their their desi desire res s to matc match h thos those e of the the avera average ge consumer in their demographic segment. When marketers design a product to :

 

address addr ess the needs of a typical typical customer in a demographically demographically de2ned segment$ therefore$ they cannot know whether any speci2c individual will "uy the product —they can only e;press a likelihood of purchase in pro"a"ilistic terms.  Thus the prevailing methods of segmentation that "udding managers learn in "usi "u sine ness ss sc scho hools ols and and then then prac practi tice ce in the the mark market eting ing depa depart rtmen ments ts of good good companies are actually a key reason that new product innovation has "ecome a gam"le in which the odds of winning are horrifyingly low. low.  There is a "etter way to think a"out market segmentation and new product innovation. The structure of a market$ seen from the customers’ point of view$ is very simple< They ust need to get things done$ as Ted -evitt said. When people 2nd themselves needing to get a o" done$ they essentially hire products to do thatt o" for them. tha them. The markete marketer’s r’s task is there therefor fore e to unders understan tand d what what o"s o"s period per iodica ically lly arise arise in custom customers ers’’ lives lives for which which they they might might hire hire pr produ oducts cts the company could make. !f a marketer can understand the o"$ design a product and associated e;periences in purchase and use to do that o"$ and deliver it in a way that reinforces its intended use$ then when customers 2nd themselves needing to get that o" done$ they will hire that product. ince most new/product developers don’t think in those terms$ they’ve "ecome much too good at creating products that don’t help customers do the o"s they need to get done. 3ere’s an all/too/typical all/too /typical e;ample. !n the mid/:990s$ cott *ook pr presi esided ded over over the launch launch of a softwa software re pr produ oduct ct called called the =uick =uicken en >inanci inancial al 'lanner$ which helped customers create a retirement plan. !t opped. Though it captured over 90% of retail sales in its product category$ annual revenue never surpassed [email protected] million$ and it was eventually pulled from the market. What happened Was the ?A9 price too high id the product need to "e easier to use use Cay Cay"e. "e. , mor more lik likely ely e;plana lanati tion on$$ howe howev ver$ er$ is that hat whil while e the demo de mogr grap aphi hics cs sugg sugges este ted d

th that at lots lots of fa fami mili lies es need needed ed a

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constructi cons tructing ng one actually actually wasn’t a o" that most people were looking to do. The fact that they should have a 2nancial plan$ or even that they said they should have a plan$ didn’t matter. !n hindsight$ the fact that the design team had had trou"le 2nding enough planners1 to 2ll a focus group should have tipped *ook o8. Caking it easier and cheaper for customers to do things that they are not trying to do rarely leads to success.

Designing Products That Do the Job Wit ith h few few e;ce e;cept ptio ions ns$$ ever every y o" o" peop people le need need or want want to do has has a soci social al$$ a functional$ and an emotional dimension. !f marketers understand each of these @

 

dimensions$ then they can design a product that’s precisely targeted to the o". !n other words$ the o"$ not the customer$ is the fundamental unit of analysis for a marketer who hopes to develop products that customers will "uy. "uy.  T  To o see why$ consider one fast/food f ast/food restaurant’s e8ort to improve sales of its milk shak sh akes es.. D! D!n n this this e;am e;ampl ple$ e$ "oth "oth th the e comp compan any y and and th the e pr prod oduc uctt have have "een "een disgui dis guised sed.E .E !ts marke marketer ters s 2rst 2rst de2ned de2ned the marke markett segmen segmentt "y pr produ oduct— ct—milk milk shak sh akes es—a —and nd then then segm segment ented ed it fu furt rther her "y pro2 pro2lin ling g the the demo demogr grap aphi hic c and and person per sonalit ality y charac character terist istics ics of those those custom customers ers who fre4ue fre4uentl ntly y "ought "ought milk shakes. Fe;t$ they invited people who 2t this pro2le to evaluate whether making the shakes thicker$ more chocolaty$ cheaper$ or chunkier would satisfy them "etter. The panelists gave clear feed"ack$ "ut the conse4uent improvements to the product had no impact on sales. , new researcher then spent a long day in a restaurant seeking to understand the o"s that customers were trying to get done when they hired a milk shake. 3e chro chroni nicl cled ed when when each each milk milk shak shake e was was "oug "ought ht$$ what what other other prod produc ucts ts the the customers purchased$ whether these consumers were alone or with a group$ whether they consumed the shake on the premises or drove o8 with it$ and so on. 3e was surprised to 2nd that A0% of all milk shakes were purchased in the early morning. Cost often$ these early/morning customers were alone7 they did not "uy anything else7 and they consumed their shakes in their cars.  The researcher then returned returned to interview the morning customers as they left the restaurant$ shake in hand$ in an e8ort to understand what caused them to hire a milk mil k shak shake. e. Cost Cost "oug "ought ht it to do a simi similar lar o"< They They face faced d a long long$$ "ori "oring ng commut com mute e and needed needed someth something ing to make make the drive drive more more inter interest esting ing.. They They weren’t yet hungry "ut knew that they would "e "y :0 am7 they wanted to consume something now that would stave o8 hunger until noon. ,nd they faced constraints< They were in a hurry$ they were wearing work clothes$ and they had Dat mostE one free hand.  The researcher in4uired further< T Tell ell me a"out a time when you were in the same situation "ut you didn’t "uy a milk shake. What did you "uy instead1 ometimes$ he learned$ they "ought a "agel. But "agels were too dry. Bagels with cream cheese or am resulted in sticky 2ngers and gooey steering wheels. ometimes these commuters "ought a "anana$ "ut it didn’t last long enough to solve the "oring/commute pro"lem. oughnuts didn’t carry people past the :0 am hunger attack. The milk shake$ it turned out$ did the o" "etter than any of  these competitors. !t took people @0 minutes to suck the viscous milk shake through thr ough the thin straw$ addressin addressing g the "oring/comm "oring/commute ute pro"lem. pro"lem. They could G

 

consume it cleanly with one hand. By :0<00$ they felt less hungry than when they tried the alternatives. !t didn’t matter much that it wasn’t a healthy food$ "ecause "ecoming healthy wasn’t essential to the o" they were hiring the milk shake to do.  The researcher o"served that that at other times of the day parents of often ten "ought milk shakes$ in addition to complete meals$ for their children. What o" were the parents trying to do They were e;hausted from repeatedly having to say no1 to their kids. They hired milk shakes shakes as an innocuous way to placate placate their children children and feel like loving parents. The researcher o"served that the milk shakes didn’t do this o" very well$ though. 3e saw parents waiting impatiently after they had 2nished their own meals while their children struggled to suck the thick shakes up through the thin straws. *ust *u stom omer ers s were were hiri hiring ng milk milk shak shakes es fo forr two two very very di8e di8ere rent nt o"s o"s.. But But when when marketers mark eters had originally originally asked individual individual customers customers who hired hired a milk shake for either or "oth o"s which of its attri"utes they should improve—and when these resp respon onse ses s were were aver averag aged ed with with thos those e of othe otherr cust custom omer ers s in the the targ target eted ed demographic segment—it led to a one/siHe/2ts/none product. +nce they understood the o"s the customers were trying to do$ however$ it "ecame very clear which improvements to the milk shake would get those o"s done even "etter and which were irrelevant. 3ow could they tackle the "oring/ commute o" Cake the milk shake even thicker$ so it would last longer. longer. ,nd swirl in tiny chunks of fruit$ adding a dimension of unpredicta"ility and anticipation to the monotonous morning routine. Iust as important$ the restaurant chain could deliver the product more e8ectively "y moving the dispensing machine in front of the counter and selling customers a prepaid swipe card so they could dash in$ gas up$1 and go without getting stuck in the drive/through lane. ,ddressing the midday and evening o" to "e done would entail a very di8erent product$ of  course. By understanding the o" and improving the product’s social$ functional$ and emotional dimensions so that it did the o" "etter$ the company’s milk shakes would gain share against the real competition—not ust competing chains’ milk shakes "ut "ananas$ "oredom$ and "agels. This would grow the category$ which "rings us to an important point< Io"/de2ned markets are generally much larger than product categoryJde2n categoryJde2ned ed markets. markets. Carketers Carketers who are stuck in the mental trap that e4uates market siHe with product categories don’t understand whom they are competing against from the customer’s point of view. view.

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understanding the typical1 customer. !t came from understanding the o". Feed more evidence 'ierre +midyar did not design eBay for the auction psychographic.1 3e founded it to help people sell personal items. )oogle was designed for the o" of 2nding information$ not for a search demographic.1 The unit of analysis in the work that led to 'rocter ( )am"le’s stunningly successful wi8er was the o" of cleaning oors$ not a demographic or psychographic study of people who mop. Why do so many marketers try to understand the consumer rather than the o" +ne reason may "e purely historical< !n some of the markets in which the tools of  modern market research were formulated and tested$ such as feminine hygiene or "a"y care$ the o" was so closely aligned with the customer demographic that if yo you u unde unders rsto tood od the the cust custom omer$ er$ you you woul would d also also under underst stan and d the the o". o". This This coinc co incid idenc ence e is ra rare re$$ howe howeve verr. ,l ,lll too too fr fre4u e4uen entl tly$ y$ mark market eters ers’’ focus focus on the the customer causes them to target phantom needs.

How a Job Focus Can Grow Product Categories

Few growth markets are created when innovating companies design a product and position its "rand on a o" for which no optimal product yet e;ists. !n fact$ compan com panies ies that that histor historica ically lly have have segment segmented ed and measur measured ed the siHe siHe of their their markets "y product category generally 2nd that when they instead segment "y  o"$ their market is much larger Dand their current share of the o" is much smallerE than they had thought. This is great news for smart companies hungry for growth.

Purpose Brands and Disruptie !nnoations Knderstanding and targeting o"s was the key to ony founder ,kio Corita’s appr ap proa oach ch to di disr srup upti tive ve in inno nova vati tion on.. Corit Corita a neve neverr did did conv conven enti tion onal al mark market et research. !nstead$ he and his associates spent much of their time watching what people were trying to get done in their lives$ then asking themselves whether ony’s electronics miniaturiHation technology could help them do these things "etter$ easier$ and cheaper. Corita would have "adly misudged the siHe of his market had he simply analyHed trends in the num"er of tape players "eing sold "efore he launched his Walkman. This should trigger an action item on every marketer’s to/do list< Turn Turn o8 the computer$ get out of the o#ce$ and o"serve. *ons *o nside iderr how how *hur *hurch ch ( wigh wightt used used this this st stra rate tegy gy to grow grow its "aki "aking ng soda soda "usiness. The company has produced ,rm ( 3ammer "aking soda since the :LM0s7 :LM 0s7 its iconic iconic yellow yellow "o; "o; and Nulcan’ ulcan’s s hammer hammer/hef /heftin ting g ar arm m have have "ecome "ecome O

 

enduri end uring ng visual visual cues cues for the the standa standard rd of purity purity.1 !n the late late :9M0s$ :9M0s$ marke markett resea researc rch h direct director or Barry Barry )old"l )old"latt att tells tells us$ manage managemen mentt "egan "egan o"serv o"servati ationa onall research res earch to understand understand the diverse diverse circumsta circumstances nces in which consumers consumers found themselves with a o" to do where ,rm ( 3ammer could "e hired to help. They found a few consumers adding the product to laundry detergent$ a few others mi;ing it into toothpaste$ some sprinkling it on the carpet$ and still others placing open "o;es in the refrigerator. There was a plethora of o"s out there needing to get done$ "ut most customers did not know that they could hire ,rm ( 3ammer "aking "ak ing soda soda for these these cleanin cleaning g and fr fresh esheni ening ng o"s. o"s. The single single pr produ oduct ct ust ust wasn’t giving customers the guidance they needed$ given the many o"s it could "e hired to do.  T  Today$ oday$ a family of o"/focused ,rm ( 3ammer products has greatly grown the "aking soda product category. category. These o"s include< •

• •



• •

3elp my mout 3elp mouth h feel feel fr fres esh h and and clean clean D,rm D,rm ( 3amm 3ammer er *omp *omplet lete e *are *are toothpasteE eodoriHe my refrigerator D,rm ( 3ammer >ridge/n/>reeHer ridge/n/>reeHer "aking sodaE 3elp 3e lp my unde undera rarm rms s st stay ay clea clean n an and d fr fres esh h D,rm D,rm ( 3amm 3ammer er Kl Kltr tra a Ca; Ca; deodorantE *lea *lean n and and fr fres eshe hen n my carp carpet ets s D,rm D,rm ( 3amm 3ammer er Nacuu acuum m >re ree e carp carpet et deodoriHerE eodoriHe kitty litter D,rm ( 3ammer uper coop cat litterE Cake my clothes smell fresh D,rm ( 3ammer -aundry etergentE. e tergentE.

 The yellow/"o; "aking soda "usiness is i s now less than :0% of ,rm ( 3ammer’s consumer revenue. The company’s share price has appreciated at nearly four ti times mes the the avera average ge rate rate of it its s near neares estt riva rivals ls$$ '()$ '()$ Knil Knilev ever er$$ and and *o *olg lgat ate/ e/ 'al almo moliv live. e. ,l ,lth thou ough gh the the over overal alll ,r ,rm m ( 3amm 3ammer er "ran "rand d is valu valua" a"le le in each each instance$ the key to this e;traordinary growth is a set of o"/focused products and a commun communica icatio tion n strate strategy gy that that help help people people realiH realiHe e that that when they 2nd themselves needing to get one of these o"s done$ here is a product that they can trust to do it well.

Bui"ding Brands That Customers #i"" Hire ometimes$ the discovery that one needs to get a o" done is conscious$ rational$ and e;plicit. ,t other times$ the o" is so much a part of a routine that customers aren’t really consciously aware of it. &ither way$ if consumers are lucky$ when they they di disc scov over er the the o" o" they they need need to do$ do$ a "ran "rande ded d prod produc uctt will will e;is e;istt that that is perfectly and unam"iguously suited to do it. We call the "rand of a product that is tightly associated with the o" for which it is meant to "e hired a  purpose brand.. brand

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 The history of >ederal &;press illustrates how successful purpose "rands are "uilt. , o" had e;isted practically forever< the !/need/to/send/this/from/here/to/ there/with ther e/with/perfec /perfect/certa t/certainty inty/as/fa /as/fast/as st/as/poss /possi"le i"le o". ome K.. customers customers hired the the K.. K.. 'ost 'ostal al erv ervic ice’ e’s s airm airmai aill to do this this o"7 o"7 a few few despe despera rate te souls souls paid paid couriers to sit on airplanes. +thers even went so far as to plan ahead so they could ship via K' trucks. But each of these alternatives was kludgy$ e;pensive$ uncertain$ or inconvenient. Because no"ody had yet designed a service to do this  o" well$ the "rands of the unsatisfactory alternative al ternative services "ecame tarnished when they were hired for this purpose. But after >ederal &;press designed its service to do that e;act o"$ and did it wonderfully again and again$ the >ed&; "rand "egan popping into people’s minds whenever they needed to get that o" done do ne.. >ed&; ed&; "eca "ecame me a purp purpos ose e "r "ran and— d—in in fact fact$$ it "eca "ecame me a ver" ver" in th the e international language of "usiness that is ine;trica"ly linked with that speci2c  o". !t is a very valua"le valua"le "rand as a result. Cost of today’s great "rands—*rest$ tar"ucks$ Pleene;$ eBay$ and Podak$ to name a few—starte few—started d out as ust this kind of purpose purpose "rand. The product did the  o"$ and customers talked talked a"out it. This is how "rand "rand e4uity is "uilt. Brand e4uity can "e destroyed when marketers don’t tie the "rand to a purpose. When they seek to "uild a general "rand that does not signal to customers when they should and should not "uy the product$ marketers run the risk that people might hire their product to do a o" it was not designed to do. This causes customers to distrust the "rand—as was the case for f or years with the post o#ce. , clear purpose "rand is like a two/sided compass. +ne side guides customers to the right right pr produ oducts cts.. The other other side side guides guides the compan company’s y’s pr produ oduct ct design designers ers$$ marke mar keter ters$ s$ and advert advertise isers rs as they they develo develop p and marke markett improve improved d and new versions of their products. , good purpose "rand clari2es which features and functions are relevant to the o" and which potential improvements will prove irre irrelev levan ant. t. The The pric price e premi premium um that that the the "rand "rand comm comman ands ds is the the wage wage that that customers are willing to pay the "rand for providing this guidance on "oth sides of the compass.  The need to feel a certain way—to feel macho$ sassy$ pampered$ or prestigious— is a o" that arises in many of our lives on occasion. When we 2nd ourselves needing to do one of these o"s$ we can hire a "randed product whose purpose is to provide such feelings. )ucci$ ,"solut$ Cont"lanc$ and Nirgin$ for e;ample$ are purpose "rands. They link customers who have one of these o"s to do with e;periences in purchase and use that do those o"s well. These might "e called

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aspirational o"s. !n some aspirational situations$ it is the "rand itself$ more than the functional dimensions of the product$ that gets the o" done.

The $o"e of %dertising Cuch advertising is wasted in the mistaken "elief that it alone can "uild "rands. ,dvertising cannot "uild "rands$ "ut it can tell people a"out an e;isting "randed product’s a"ility to do a o" well. That’s what the managers at Knilever’s ,sian operations found out when they identi2ed an important o" that arose in the lives of many o#ce workers at around A<00 in the afternoon. rained of physical and emotional energy$ people still had to get a lot done "efore their workday ended.  They needed something to "oost their thei r productivity$ and they were hiring a range of ca8einated drinks$ candy "ars$ stretch "reaks$ and conversation to do this o"$ with mi;ed results. Knilever designed a microwava"le soup whose properties were tailored to that  o"—4uick to 2;$ nutritious "ut not too 2lling$ it can "e consumed at your desk "ut gives you a "it of a "reak when you go to heat it up. !t was launched into the workplace workpla ce under the descriptive descriptive "rand oupy na;. The results results were mediocre. mediocre. +n a hunc hunch$ h$ the "ran "rand’ d’s s mana manage gers rs th then en relau elaunc nche hed d th the e pr prod oduc uctt wit with advertisements showing lethargic workers perking up after using the product and renam renamed ed the "rand oupy oupy na;—A na;—A<00 <00.. The reaction reaction of people people who saw the advertisements was$ That’s e;actly what happens to me at A<0051 They needed something somet hing to help them consciously consciously discover discover "oth the o" and the product product they could hire to do it. The tagline and ads transformed a "rand that had "een a simple description of a product into a purpose "rand that clari2ed the nature of  the o" and the product that was designed to do it$ and the product has "ecome very successful.

Fote the role that advertising played in this process. ,dvertising clari2ed the nature of the o" and helped more people realiHe that they had the o" to do. !t informed people that there was a product designed to do that o" and gave the pr produ oduct ct a name name people people could could remem" remem"er er.. ,dver ,dvertis tising ing is not a su"sti su"stitut tute e for designing products that do speci2c o"s and ensuring that improvements in their features and functions are relevant to that o". The fact is that most great "rands were wer e "uilt "uilt "efore "efore their their owners owners starte started d adverti advertisin sing. g. Think Think of isney isney$$ 3arley 3arley// avidson$ eBay$ and )oogle. &ach "rand developed a sterling reputation "efore much was spent on advertising. ,dver ,d vertis tising ing that that attemp attempts ts to short/ short/cir circui cuitt this this pr proce ocess ss and "uild$ "uild$ as if from from scratch$ a "rand that people will trust is a fool’s errand. >ord$ Fissan$ Cacy’s$ Cacy’s$ and many other companies invest hundreds of millions to keep the corporate name L

 

or their products’ names in the general consciousness of the "uying pu"lic. Cost of these companies’ products aren’t designed to do speci2c o"s and therefore aren’t usually di8erentiated from the competition. These 2rms have few purpose "rands "ra nds in their their portfo portfolio lios s and no appar apparent ent strate strategies gies to cr creat eate e them. them. Their Their managers are unintentionally transferring "illions in pro2ts to "randing agencies in the vain hope that they can "uy their way to glory. What is worse$ many companies have decided that "uilding new "rands is so e;pensive they will no longer do so. Brand "uilding "y advertising is indeed prohi"itively e;pensive. But that’s "ecause it’s the wrong way to "uild a "rand. Carketing mavens are fond of saying that "rands are hollow words into which meaning gets stu8ed. Beware. &;ecutives who think that "rand advertising is an e8ective mechanism for stu#ng meaning into some word they have chosen to "e their "rand generally succeed in stu#ng it full of vagueness. The ad agencies and media companies win "ig in this game$ "ut the companies whose "rands are getting stu8ed generally 2nd themselves trapped in an e;pensive$ endless arms race with competitors whose "rands are compara"ly vague.  The e;ceptions to this "rand/"uilding rule are the purpose "rands for aspirational  o"s$ where the "rand must "e "uilt through images in advertising. The method for "rand "uilding that is appropriate for these o"s$ however$ has "een wantonly and wastefully misapplied to the rest of the world of "randing.

&'tending()r Destro*ing(Brand &+uit* +nce a strong purpose "rand has "een created$ people within the company inevita"ly want to leverage it "y applying it to other products. &;ecutives should consider these proposals carefully. There are rules a"out the types of e;tensions that will reinforce the "rand—and the types that will erode it. !f a company chooses to e;tend a "rand onto other products that can "e hired to do the same o"$ it can do so without concern that the e;tension will compromise what wh at the the "ran "rand d does does.. >or e;am e;ampl ple$ e$ ony ony’s ’s port porta" a"le le * play player$ er$ alth althou ough gh a di8erent product than its original Walkman/"randed radio and cassette players$ was positioned on the same o" Dthe help/me/escape/the/chaos/in/my/world o"E. o the new product caused the Walkman "rand to pop even more instinctively into customers’ minds when they needed to get that o" done. 3ad ony not "een asleep at the switch$ a Walkman/"randed C'G player would have further enhanced this purpose "rand. !t might even have kept ,pple’s i'od purpose "rand from preempting that o".

9

 

 The fact that purpose "rands are o" speci2c means that when a purpose "rand is e;tended onto products that target di8erent o"s$ it will lose its clear meaning as a purpos purpose e "rand "rand and develo develop p a di8ere di8erent nt charac character ter instea instead—a d—an n endorser  brand.. ,n endorser "rand can impart a general sense of 4uality$ and it there"y brand creates some value in a marketing e4uation. But general endorser "rands lose their a"ility to guide people who have a particular o" to do to products that were design des igned ed to do it. Witho Without ut appro appropria priate te guidan guidance$ ce$ custom customers ers will will "egin "egin using using endorser/"randed products to do o"s they weren’t designed to do. The resulting "ad e;perience will cause customers to distrust the "rand. 3ence$ the value of  an endorser "rand will erode unless the company adds a second word to its "rand architecture architecture—a —a purpose purpose "rand alongside the endorser endorser "rand. "rand. i8erent i8erent  o"s demand di8erent purpose purpose "rands. Carriott !nternational’s e;ecutives followed this principle when they sought to leverage the Carriott "rand to address di8erent o"s for which a hotel might "e hired. Carriott had "uilt its hotel "rand around full/service facilities that were good to hire for large meetings. When it decided to e;tend its "rand to other types of hotels$ it adopted a two/word "rand architecture that appended to the Carriott endorsement a purpose "rand for each of the di8erent o"s its new hotel chains were intended to do. 3ence$ individual "usiness travelers who need to hire a clean$ 4uiet place to get work done in the evening can hire *ourtyard "y Carriott—the hotel designed "y "usiness travelers for f or "usiness travelers. -onger/ -onger/ term travelers can hire Residence !nn "y Carriott$ and so on. &ven though these hotels were not constructed and decorated to the same premium standard as full/s ful l/serv ervice ice Carriot Carriottt hotels hotels$$ the new chains chains actual actually ly reinfo reinforc rce e the endors endorser er 4ualities 4ualit ies of the Carriott Carriott "rand "ecause they do the o"s well that they are hired to do. Cilwaukee &lectric Tool has "uilt purpose "rands with two—and only two—of the products in its line of power tools. The Cilwaukee awHall is a reciprocating saw that tradesmen hire when they need nee d to cut through a wall 4uickly and aren’t sure what’s under the surface. 'lum"ers hire Cilwaukee’s 3ole 3awg$ a right/angle drill$ when they need to drill a hole in a tight space. *ompetitors like Black ( ecker$ Bosch$ and Cakita o8er reciprocating saws and right/angle drills with compara"le performance and price$ "ut none of them has a purpose "rand that pops into a tradesman’s mind when he has one of these o"s to do. Cilwaukee has owned more than L0% of these two o" markets for decades. !nterestingly$ Cilwaukee o8ers under its endorser "rand a full range of power tools$ including circular saws$ pistol/grip drills$ sanders$ and igsaws. While the dura"ility and relative price of these products are compara"le to those of the :0

 

awHall and 3ole 3awg$ Cilwaukee has not "uilt purpose "rands for any of these other products. The market share of each is in the low single digits—a testament to the clarif clarifyin ying g value value of purpos purpose e "rands "rands versus versus the genera generall connot connotati ation on of  4uality that endorser "rands confer. !ndeed$ a clear purpose "rand is usually a more mor e formid formida"l a"le e compet competiti itive ve "arrier "arrier than than superio superiorr pr produ oduct ct perfor performan mance— ce— "ecause competitors can copy performance much more easily than they can copy purpose "rands.  The tri"ulations and successes of '()’s *rest "rand is a story of products that ace the customer o"$ lose their focus$ and then "ounce "ack to "ecome strong purp pu rpos ose e "ran "rands ds again again.. !ntr !ntrod oduc uced ed in the the mid/ mid/:9 :9O0 O0s$ s$ *res *restt was was a clas classi sic c disr disrup upti tive ve

tech techno nolo logy gy..

!t !ts s

>luo >luori rist stan an/r /rei einf nfor orce ced d

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made made

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preventing uoride treatments cheap and easy to apply at home$ replacing an e;pe e; pens nsiv ive e and and in inco conv nven enie ient nt tr trip ip to the the dent dentis ist. t. ,l ,lth thou ough gh '() coul could d have have positi pos itioned oned the new pr produ oduct ct under under its e;ist e;isting ing toothp toothpast aste e "rand$ "rand$ )leem$ )leem$ its managers chose instead to "uild a new purpose "rand$ *rest$ which was uni4uely positioned on a o". Cothers who wanted to prevent cavities in their children’s teeth knew when they saw or heard the word *rest1 that this product was designed to do that o". Because it did the o" so well$ mothers grew to trust the product and in fact "ecame suspicious of the a"ility of products without the *rest "rand to do that o". This unam"iguous association made it a very valua"le "rand$ and *rest passed all its K.. rivals to "ecome the clear market leader in toothpaste for a generation. But one cannot sustain victory "y standing still. *ompetitors eventually copied *rest’s cavity prevention a"ilities$ turning cavity prevention into a commodity. *r *rest est lost lost share share as compet competito itors rs innova innovated ted in other other ar areas eas$$ includ including ing avor$ avor$ mouthfeel$ and commonsense ingredients like "aking soda. '() "egan copying and adve and advert rtis isin ing g thes these e attr attri" i"ut utes es.. But But unlik unlike e Carr Carrio iott tt$$ '() did did not not appen append d purpose "rands to the general endorsement of *rest$ and the "rand "egan losing its distinctiveness. ,t the end of the :990s$ new *rest e;ecutives "rought two disruptions to market$ each with its own clear purpose "rand. They ac4uired a start/up named r. Iohn’s and re"randed its agship electric tooth"rush as the *rest pinBrush$ which they sold for ?O—far "elow the price of competitors’ models of the time. They also launched *rest Whitestrips$ which allowed people to whiten their teeth at home for a mere mere [email protected]$ [email protected]$ far less less than than dentis dentists ts charge charged. d. With With these these purpos purpose/"r e/"rand anded ed in inno nova vatio tions ns$$ *res *restt gene genera rate ted d su"s su"sta tant ntia iall new new grow growth th and and regain egained ed shar share e leadership in the entire tooth care category. category. ::

 

 The e;hi"it &;tending Brands Without Without estroying Them1 diagrams the two ways marketers can e;tend a purpose "rand without eroding its value. The 2rst option is to move up the vertical a;is "y developing di8erent products that address a common o". This is what ony did with its Walkman porta"le * player. When *rest was still a clear purpose "rand$ '() could have gone this route "y$ say$ introducing a *rest/"rand uoride mouth rinse. The "rand would have retained its clarity of purpose. But '() did not$ allowing Iohnson ( Iohnson to insert yet another "rand$ ,*T Dits own uoride mouth rinseE$ into the cavity/prevention o" space. Because '() pursued the second option$ e;tending its "rand along the horiHo hor iHonta ntall a;is a;is to other other o"s o"s Dwhiten Dwhitening ing$$ "r "reat eath h freshe freshenin ning$ g$ and so onE$ onE$ the purpose "rand morphed into an endorser "rand.

#h* Strong Purpose Brands %re So $are )i )ive ven n th the e powe powerr th that at purp purpos ose e "r "ran ands ds have have in cr crea eati ting ng oppo opport rtun unit itie ies s for for di8erentiation$ premium pricing$ and growth$ isn’t it odd that so few companies have a deli"erate strategy for creating them *onsider the automo"ile industry. industry. There are a signi2cant num"er of di8erent o"s  o"s that people who purchase cars need to get done$ "ut only a few companies have staked out any of these o" markets with purpose "rands. Range Rover Duntil rece recent ntly ly$$ at least leastEE was was a clea clearr and and valua valua"le "le purp purpos ose e "ran "rand d Dthe Dthe tak take/me/ e/me/ anywhere/w anywh ere/with/t ith/total/d otal/dependa ependa"ility "ility o"E. The Nolvo "rand is positioned positioned on the :@

 

safety o". 'orsche$ 'orsche$ BCW$ Cercedes$ Cercedes$ Bentley$ Bentley$ and Rolls/R Rolls/Royce oyce are associated associated with wit h vario various us as aspi pira rati tion onal al o"s o"s.. The The Toyot oyota a endo endors rser er "ran "rand d has has earn earned ed the the connotation of relia"ility. relia"ility. But for so much of the rest !t’s hard to know what they mean.  T  To o illustrate< *layton *hristensen recently needed to deliver on a long/promised commitment to "uy a car as a college graduation gift for his daughter ,nnie.  There were functional and emotional dimensions to to the o". The car needed to "e stylish and fun to drive$ to "e sure. But even more important$ as his "eloved daughter was venturing o8 into the cold$ cruel world$ the "ig o" *lay needed to get done was to know that she was safe and for his sweet ,nnie to "e reminded fre4uently$ as she owned$ drove$ and serviced the car$ that her dad loves and cares for her. her. , hands/free telephone in the car would "e a must$ not an option. , version of )C’s +ntar service$ which called not ust the police "ut *lay in the even ev entt of an acci accide dent nt$$ woul would d "e impo import rtan ant. t. , syst system em th that at remin eminde ded d th the e occasionally a"sentminded ,nnie when she needed to have the car serviced would take a load o8 her dad’s mind. !f that service were delivered as a prepaid gift from her father$ it would take another load o8 *lay’s mind "ecause he$ too$ is occasionally a"sentminded. hould *lay have hired a Taurus$ &scape$ *avalier$ Feon$ 'riHm$ *orolla$ *amry$ ,valon$ entra$ *ivic$ ,ccord$ enator$ onata$ or something somet hing else The "illions of dollars dollars that automakers automakers spent advertising advertising these "rands$ seeking somehow to create su"tle di8erentiations in image$ helped *lay nott at al no all. l. >in indi ding ng the the "est "est pack packag age e to hire hire was was very very ti time/ me/co cons nsum uming ing and and inconvenient$ and the resulting product did the o" a"out as unsatisfactorily as the milk shake had done$ a few years earlier. earlier. >ocus ocusin ing g a prod produc uctt and and it its s "ran "rand d on a o" o" crea create tes s di8e di8ere rent ntia iati tion on.. The The ru ru"$ "$ however$ is that when a company communicates the o" a "randed product was designed to do perfectly$ it is also communicating designed communicating what o"s the produc productt should should not "e hired to do. >ocus is scary—at least the carmakers seem to think so. They deli"erately create words as "rands that have no meaning in any language$ with no tie to any o"$ in the myopic hope that each individual individual model will "e hired hired "y every customer for every o". The results of this strategy speak for themselves. !n the the face face of compe compelli lling ng evide evidenc nce e that that purp purpos ose/" e/"ra rand nded ed prod produc ucts ts that that do speci2c o"s well command premium pricing and compete in markets that are much larger than those de2ned "y product categories$ the automakers’ products are su"stantially undi8erentiated$ the average su""rand commands less than a :% market share$ and most automakers are losing money. money. ome"ody gave these folks the wrong recipe for prosperity. SSS :G

 

&;ecutives everywhere are charged with generating pro2ta"le growth. Rightly$ they "elieve that "rands are the vehicles for meeting their growth and pro2t targets. But success in "rand "uilding remains rare. Why Fot for lack of e8ort or resources. For for lack of opportunity in the marketplace. The root pro"lem is that the theories in practice for market segmentation and "rand "uilding are riddled with awed assumptions. -aey is right. The model is "roken. We’ve We’ve tried to illu illust stra rate te a way way out out of the the deat death h spira spirall of seria seriall prod produc uctt fail failur ure$ e$ miss missed ed opportunity$ and s4uandered wealth. Carketers who choose to "reak with the "roken past will "e rewarded not only with successful "rands "ut with pro2ta"ly growing "usinesses as well.

D, compilation "y< 'rofessor ameer Pulkarni$ @0:A$ strictly for private circulation only$ Cook, and  and Taddy HallE originally pu"lished in 3BR/@0 3BR/@00O$ 0O$ authors< Clayton M. Christensen, Scott Cook,

:A

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