‘Extending beyond search an error on Google’s part’

How do you build a brand? “You narrow the focus,” says legendary marketing guru Al Ries. The Starbucks coffee chain narrowed its focus to high-end coffee and became the world’s largest coffee chain. Dell Computer decided to sell personal computers directly to consumers and for a time became the largest PC seller.  “Focus is the essence of marketing and branding,” says Ries.

Ries is the author of best-selling books like The 22 Immutable Laws of Marketing (with Jack Trout), Positioning: The Battle for Your Mind (with Jack Trout), The Origin of Brands (with Laura Ries) and The Fall of Advertising and the Rise of PR (with Laura Ries). He spoke to DNA Money’s Vivek Kaul on various aspects of brands and advertising. Excerpts:

“Focus is the key to successful brand building in today’s ultra-competitive marketplace.” Why do you say that? What would you suggest to a company like Google, which is extending its base search engine brand into a lot of other categories?
I said that because we have studied thousands of companies to find out what works and what doesn’t work. In my opinion, the critical issue is focus. Companies that are focussed are usually successful. Companies that aren’t focussed usually run into trouble.
Google is a very good example. There were other search sites in the market, but these sites also carried a host of other features. Google was the first site totally focussed on search.

Now Google is doing the opposite. There’s Google Talk (competing with MSN Messenger), Google Finance (competing with Yahoo Finance), Gmail (competing with MSN and Yahoo email) and Google Checkout (competing with PayPal). Then there’s Google software for personal computers and cell phones.

Google is also planning to extend its brand to targeted advertising for radio, television and newspapers. ‘Google. So much fanfare, so few hits,’ was the headline of a recent article in the Business Week. “An analysis of some two dozen new ventures launched over the past four years shows that Google is yet to establish a single market leader outside its core search business,” concludes the publication.

In my opinion, this is a serious error on the part of Google and is likely to cause them trouble in the future.

You wrote in Positioning: The Battle for Your Mind, “The single most important marketing decision you can make is what to name the product.” Why do you say that?
The first consideration is not the name, but the strategy. In other words, a company should decide what the strategy is and then pick a name that reflects that strategy. When P R Mallory went into the appliance battery business to compete with market leader
Eveready, it decided to introduce alkaline batteries only. Since alkaline batteries last longer than traditional zinc-carbon batteries, they called their new brand ‘Duracell’. And Duracell rapidly became the market leader.

Eveready responded by introducing Energizer, a line of alkaline batteries only. So today Energizer and Duracell are virtually the same, but Duracell is still the market leader because the brand was “first in the mind”.

That’s typical of many categories. Coca-Cola was the first cola and is still the market leader. Pepsi-Cola is virtually the same product, but it will never become the leader because the Coca-Cola brand has “pre-empted” the cola leadership position.

The first brand is considered to be “authentic”. This concept is best expressed by the old Coca-Cola slogan ‘The real thing’. Everything else is an imitation. Consumers would rather buy “the real thing” than an imitation. 

Hertz was the first car-rental company. Hertz is still the leading car-rental company.
Heinz was the first ketchup in America. Heinz is still the leading ketchup.

McDonald’s was the first hamburger chain. Still the leader.

Pizza Hut was the first pizza chain. Still the leader.

And so it goes. In many, many categories, the products are the same, but the leading brand continues to dominate the category because it got into the mind first.

Most of today’s great brands were built through publicity and not through advertising. You brought out this point in your book, The Fall of Advertising and the Rise of PR. What made you come to that conclusion?
Almost all of the recent brand successes have been public relations (PR) successes, not advertising successes. Only after they were successful did the brands start advertising programmes.

In its first 10 years, Starbucks spent less than $10 million (total) on advertising which is a small amount in a country of 300 million people.

The Body Shop has never advertised. Yet recently, L’Oreal paid $1.1 billion to buy the company.

JK Rowling became the first “billion-dollar” writer with her Harry Potter books which generated an enormous amount of publicity. Very few dollars were spent advertising the books.

Red Bull today is a worldwide brand with $3.3 billion in annual sales, yet the company does little advertising.

Advertising lacks credibility. Why should a viewer or reader believe what he or she reads or sees in an advertisement? But PR has credibility. People tend to believe what they read in magazines or a newspaper or what they see on television.

After a brand has achieved a degree of credibility with PR, then it can shift to advertising. As a matter of fact, to keep it alive for the long term, a brand should be advertised. Sooner or later, a new brand is not new anymore and it becomes exceedingly difficult to generate PR.

In this day and age when product life cycles are getting shorter day by day and products are getting commoditised faster, how can companies differentiate?
It only seems that way. The world’s most valuable brand is Coca-Cola which has been in the market for 122 years. In 1947, De Beers launched a programme to promote diamonds. ‘A diamond is forever’. That programme is still running today and diamonds are still perceived to be the most valuable and most prestigious precious stone.

Marlboro cigarettes were launched in 1953 with cowboy imagery. Twenty-seven years later they became the largest selling cigarette in America. Today Marlboro is the world’s largest-selling cigarette. Yet they have never changed their advertising approach. Cowboys yesterday. Cowboys today. And I’m sure we’ll be selling cowboys tomorrow.

Focus and consistency build brands for the long term.

In your book The Origin of Brands, you say that “Every category will eventually diverge.” Why do you say that? Isn’t this contradictory to the recent phenomenon of companies trying to build more and more features into a single product? 
In spite of a raft of predictions, almost no categories have combined. Everybody thought that the computer would combine with television (The teleputer). But that never happened. Instead, computers diverged and now we have desktops, laptops, notebooks, handheld etc. TV has also diverged and now we have CRT, plasma, LCD etc.

Everybody thought the internet would combine with television (Interactive TV), but that never happened. Currently, everybody thinks the internet will combine with the cell phone. (The smart phone of which the iPhone is the latest example.) Sure, some people buy smart phones, but the vast majority don’t.

Furthermore, the essence of combining two categories is that one category disappears. Will iPhone owners sell or dispose of their personal computers? I think not. At the moment, 37% of iPhone users are still keeping their cell phones to make phone calls. And I think that a vast majority will also keep their iPods to play music. (Go for a jog with an iPhone? That doesn’t make sense.)

Can a brand be marketed in more than one form or model? You seem to suggest that as a category diverges into two or more different categories, a company needs to decide which of its operations to prune. Trying to cover every single diverging branch with a single brand name is the biggest mistake a company can make.

Our suggestion, of course, is to cover the new diverging category with a new brand name as Apple did with the iPod. (Incidentally, the brand name is not Apple. Nobody calls their MP3 players ‘Apples’. They call them iPods.)

The inventor of the high-capacity MP3 player, a Singapore company called Creative Technology, used their company name on the diverging category. That was just one of the mistakes they made.

Today most advertising seems to be about getting the visual right.  However, you recently wrote in a column that advertising agencies are probably getting it wrong. Why is that?
They pick out a great visual first and then they try to figure out how to connect the visual with the product. Mahatma Gandhi is a great visual, but not for Hyundai, an automobile built in Korea.

Start with the verbal. And then try to “visualise” the verbal. Volvo is the “safe” car, so they should show crash tests. BMW is the “driving” car, so the visuals should show consumers driving the cars on winding roads with smiles on their faces.

You wrote in a column sometime back, “Innovation is not a strategy and companies which depend on a constant flow of new, innovative products will someday find themselves in deep trouble.” This is a very interesting thing to say when CEOs like A G Lafley of P&G and a plethora of management consultants and professors have been talking about innovation. Why do you say that innovation is not a strategy?
Innovation is useful in launching a new brand. Red Bull, for example, was an innovative “energy” drink. But how about the 400 or 500 energy drink brands launched since then? How could innovation have helped any of these brands take market share from Red Bull?

The second most successful energy drink in the US market is not an innovative drink at all. Rather it’s a drink that was formulated on the sound marketing principle of “being the opposite”. Red Bull was introduced in an innovative 8.3-oz. can. So Monster did the opposite. The product was introduced in a 16-oz. can and has become a strong No. 2 brand.

Apple is into four different markets: computers, software, consumer electronics and cell phones. In each of these markets, Apple has been successful because of “innovations”.
But Apple only leads in high-capacity MP3 players, the smallest of those four markets. In the long run, every new product category runs out of innovative new ideas and the battle shifts to a battle of brands. If you don’t have the leading brand in a category, you are going to run into problems which I believe will be the fate of Apple.
What do you feel is the essence of marketing and branding?
Focus.

k_vivek@dnaindia.net