They are the world’s premier marketing consultants, the father and daughter duo of Al and Laura Ries, who together run Ries & Ries Focusing Consultants. “One of the most successful companies in the world is Proctor and Gamble and they have got twenty two brands that each do more than a billion dollars of business in a year. Last year for example Procter and Gamble had a net profit margin after taxes of 17.2%. I don’t know how accurate this is but I worked out…that the Tata group of companies has a net profit margin of 2.7%. The most successful companies in the world are ones that have multiple brands,” says Al Ries. The duo was in India to address a seminar organised by Curtains Up, a company focused on presenting high-end business seminars to corporate leaders. In this interview the father-daughter duo speak to DNA.
The Toyota Production System is world famous for its focus on “continuous improvements.” With all those improvements continuously taking place, why has Toyota suddenly found itself in deep trouble having to recall so many cars that had been sold? You call the problem ‘Modelitus’. Can you explain that to us?
Al Ries: Fundamentally my feeling is that they were into far too many models. There isn’t just one Toyota production line. There are dozens. Currently the company produces 18 different Toyota models. Starting prices range from $12,605 for the Yaris to $65,970 for the Land Cruiser. In addition, Toyota makes three Scion models sold in showrooms adjacent to Toyota showrooms as well as 15 different Lexus models. In total, Toyota Motor Corporation produces 36 different models, up from 18 a decade ago. Thirty-six models? It’s one thing for a company’s engineering staff to continuously improve one model. But thirty-six? And what about all the new Toyota models currently on the drafting boards?
Did that cause the problem?
Al Ries: I don’t know but just psychologically the more you try to do the more likely it is that you are gotta screw up on something. I can’t believe that a company can handle thirty six as well as a company that could handle eight models or six or two. From a marketing point of view the proliferation of models was not helpful. The more models you make the more confusing your product line is. We find a lot of times in many categories whether it is breakfast food or coffee, the more the different kind of variations you make, the consumers get confused and possibly turn away and buy something else at some point.
So who does it benefit then?
Al Ries: There is a philosophy in business today that the more models you have the more you sell. That isn’t right, isn’t true. Saturn, a car brand, introduced by General Motors came out only in one model. That’s it. It was the actually the only automobile brand in the market that was available only in one model. Four years after the launch the average Saturn dealer sold more cars than any other dealer. Then Saturn went on to introduce five additional models. They never achieved the peak that they achieved with one model. And they had expanded their dealer network. By the last year they were in business, the average Saturn dealer did less than half than they were doing when they had one model. That’s progress? Not to me at least.
Can you give us any other example?
Al Ries: The world’s largest seller of espresso coffee is Illy. Illy buys coffee from 18-19 countries. But they have one blend. The coffee tasters sit around for weeks trying to mix around this one with that one and so on, to have one blend that they figure is the best. When they roast it, they will dark-roast it, medium-roast it, light-roast it and decaffeinate it, but it’s the same blend. And they are the largest espresso. That, to me, is the direction that most marketing programmes should take. Make it easy for the consumer.
Why does this happen, if it is not good for the consumer, if it is not good for the company, why do they do it?
Laura Ries: There is a feeling within companies that they got to be doing something. They can’t just stick with what they are doing. They have enormous pressure to increase sales. As a way to do that quickly, they feel if we sell more stuff, we will have more sales, and then it looks like they are doing something. Like they are launching new models, they are launching new products. And with all of that work, is their any benefit? The answer is there isn’t any and that’s the problem.
Big companies need to learn from entrepreneurs and companies that are building great brands today. Google is an excellent example. When everyone was adding stuff to their portals, Google white-paged it, and wiped it all out. It had one box. And today it is one of the most powerful companies on the planet. And it says a lot for not always doing to do more but sometimes doing less is best.
What about a brand like Toyota, it has got so much of negative PR. What do they do now?
Al Ries: In the first place, the Toyota brand was very strong and had a reputation for reliability. And that is one of the reasons why the PR has been so negative...
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