The most successful firms of the last few decades, like Apple, Tesla, and fast-fashion retailers, achieved such success with extreme vertical integration strategies. These strategies were driven by two assumptions which don’t fit the classical rationale for vertical integration. First, hand-off firms simply weren’t up to the task of achieving the “going beyond” innovation that was needed and created onerous coordination problems. Second, owning innovation and its subsequent refinement and enhancement helps to foster future innovation that’s faster and more impactful and provides protection against competitive followers. There are three brands that serve as good examples of this:
Apple is one of the most vertically integrated firms. They control the software, customer interface, product design, retailing, and have close watch on manufacturing.
May 5, 2016 • Permalink
There are six reasons that I’m impressed with the Sephora brand – and all are tied to the cosmetic supplier’s integrated strategy and ability to draw a customer into its brand experience.
- The Store Atmosphere Offers a Sensory Experience
When you walk into a Sephora store, you feel so much energy and involvement. The staff, dressed in distinctive uniforms, are welcoming and ready help you, you hear upbeat and lively music, and see busy customers trying products for themselves in an easy, efficient way. There are stations all over the clearly laid-out store that allow hands-on access to the products. It is the ultimate in customer involvement. The hands-on elements offered in Sephora stores include the fragrance identifier, InstaScent (once called Poof), that spritzes raw notes of a perfume to help customers determine which…
April 26, 2016 • Permalink
Two insightful articles about Trump have recently caught my eye. The first in Politico, Michael Hirsh wrote about how Trump rebranded the GOP in his own image. The second in Fortune, Jeffery Pfeffer wrote about the role of strength and success in leadership.
Hirsh argues that Trump’s campaign success is only plausible because the Republican party has lost its way. The party has been unable to put forward convincing programs for the issues it supports, but has been clear about what the party is against: taxes on the rich, terrorism, Obama-initiatives, and keeping the government running. According to Hirsh, there isn’t a clear, consistent message on what they are for and why their opposition will lead to problem solution.…
April 12, 2016 • Permalink
Martin Lindstrom just published a new book, Small Data: The Tiny Clues that Uncover Huge Trends. It’s a passionate description and defense of anthropological research by one of its most gifted practitioners. It’s also a not-so-subtle dig at the tendency to overpromise the power and underestimate the limitations of big data.
Martin has an amazing lifestyle. He’s spent much of the past fifteen years traveling to 77 countries, where he has interviewed thousands of people in their homes (I get tired just talking to him). His book talks about his commercial successes and also about his observations about the cultures he has experienced.
A favorite of his stories is about Lego, which in the early 2000s were…
April 7, 2016 • Permalink
Seven provocative and suggestive learnings emerged from a major study of patient satisfaction that was just released by Prophet and GE Healthcare Camden Group. The following learnings provide a profile of the surprisingly dismal picture of the patient experience in healthcare today; but also provide insights that will hopefully lead to massive improvements.
Prophet, the branding and marketing consultancy, and GE Healthcare Camden Group, interviewed 3,000 consumers and 300 healthcare executives about the holistic patient experience. The focus was on the total experience, rather than silos such as hospitals, doctor specialties or insurance companies, because all aspects of the experience are intertwined in the minds of patients. Input from providers provided a more…
March 10, 2016 • Permalink
After struggling for several years, Old Navy has in the last year become the star of the Gap portfolio with sales of $6.5 billion – almost double that of Gap. CEO Stefan Larsson, who came from H&M in October 2012 (and left to be CEO of Ralph Lauren in October 2015) and CMO Ivan Wicksteed get a lot of the credit. How did they do it? Building on the Old Navy funky personality and value pricing, they made some tactical home runs, orchestrated organizational changes, and elevated in-store execution of some of the basics. Three elements of the strategy stand out.
Upgrading Product Relevance and Interest
A challenge for Old Navy has been to create product relevance and interest, to be more than a value store. Toward that end, their merchant staff was upgraded by drawing talent from brands like Coach, Reebok and North Face. The resulting team collectively improved design instincts around…
February 23, 2016 • Permalink
You’re losing valuable growth opportunities and have extreme difficulty building and effectively marketing the brands in your portfolio. If this sounds like a problem you’re facing, it could be the result of organizational silos sabotaging your brand and business strategy. What do you do? My study containing interviews with some 50 CMOs (as reported in the book Spanning Silos) provides some answers. But first, allow me to set the stage.
Autonomous organizational silos organized around products, countries or functions have been for a century the answer to managing complexity, keeping close to customers and products and holding managers accountable. However, silos no longer work because they:
• Create a branding mess.
February 9, 2016 • Permalink
Chrysler is at it again. The brand, which created the minivan subcategory and has led its evolution, is coming out with a new generation of the minivan, the 2017 Chrysler Pacifica minivan. It is designed to take the minivan to a new level and allow it to take sales away from the SUV subcategory.
Chrysler is a great representation of my theory that growth happens (with some exceptions) when you develop must haves that define subcategories instead of relying on “my brand is better than your brand” marketing. The firm illustrates not only how to create a category and manage it over time, but how to stimulate new growth and protect its position as a subcategory leader by evolving its defining must haves.
The 2017 Pacifica will open…
February 4, 2016 • Permalink
In these dynamic times, customers change, trends disrupt strategies, technologies transform the competitive context, and new subcategories emerge. As a result, there is a pressing need to be agile; to have the ability to adjust the offering, the core brand position, the value proposition, and customer relationship.
Strategic brand agility does not mean to change the brand or its presentation to satisfy a manager who is bored with the current brand strategy and wants to put his or her mark on the brand. Nor does it mean a misguided effort based on the assumption that a brand deficiency is holding back growth when actually the brand is not the problem in the first place. What then is strategic brand agility?
A strategically brand agile firm is one that can detect and respond quickly and strategically to significant changes in the marketplace. Such firms need to have four assets…
January 19, 2016 • Permalink
Earlier this week Forbes ran an article announcing the release of a Prophet study which ranks the “relentless relevance” of 400 top brands from 27 categories. The respondents were U.S. consumers, active in the category and familiar with the brand, so the results go beyond visibility and reach to understand attachment to the brand.
Relentless relevance was measured by four dimensions:
- Customer Obsessed: Being important to a person’s life, connecting emotionally, and creating happiness.
January 12, 2016 • Permalink