The consolidation in the pharmaceutical industry continues. It is interesting that last year at this time I was teaching a Pharmaceutical Marketing MBA class and said that consolidation was predictable. Most of the students, all mid-level at pharma companies in various disciplines outside of marketing, pushed back that this would not happen. I think it was more of a wish on their part rather than good market observation.
Anyway, the consolidation has been going on and will continue. We likely are moving to what the Boston Consulting Group called the "Market of Three". That is, as an industry matures, consolidation occurs until there are three major broad players, with a group of niche players.
There are huge opportunities awaiting these newly formed companies to enhanced their perceived value with stakeholders. When a company says they will be the "new ..., they are in fact framing expectations for stakeholders that something will be different. That is, there will be new attributes, associations and experiences that were there previously. From a brand and reputation perspective, this is a double-edged sword. On the one-hand, these companies can get out of the starting gate with new positioning, brand and reputation initiatives designed to prove that they are in-fact new. Or, they can simply hope that new means that they will be accretive at some point in their financial performance, which I would argue is insufficient to prove their newness.
I would hope that these companies are looking at how they created value before, individually, and how they will be creating value going forward; that they reidentify for themselves and for others their strategic group with which they compete; that they engage in organizational change efforts to bring the new cultures into alignment (60-70% of mergers fail due to culture clashes); and that they look for ways to enhance their reputation with there key stakeholders.
It will be interesting to see how many of these companies do anything more than simply try to tell people that they are new.
Tuesday, September 29, 2009
Thursday, September 3, 2009
Position Your Brand for Where the Puck will Be, Not Where It Is
I am looking forward to a trip in a few weeks to Toronto, one of my favorite (favourite, if you're Canadian or British) cities. I lived in Toronto for about 10 1/2 years. Great city! Vibrant, multi-cultural, young, wealthy, clean.... Somehow, though, this great city north of the border did a lousy job marketing itself.
When the Canadian dollar was cheap compared to the U.S. dollar (as low as $.59 at one time), Toronto had the brilliant idea to market itself as a cheap place for Americans to visit. "Come see us. We're cheap, have great theatre and restaurants, and you can buy all you want at basically half the price". Things worked well. Americans flocked to Toronto and shopped and went to theatre and had a great time.
Then, the Canadian dollar (called the Loonie in Canada) began to strengthen compared to the U.S. dollar. Up it climbed until it was nearly at par. As of today it is about $.93, or about equal to the U.S. dollar. What happened? You guessed it, Americans stopped visiting. Toronto was no longer cheap.
So, here sits a great city--the equal or better than any city we have in the U.S., and Americans don't visit because they do not know about all of the attributes that could have been part of the positioning of the city. So, off they go to Chicago, San Francisco and New York--cities as or more expensive than Toronto, but cities that have billed themselves all along as places you need to see.
Too bad the marketing geniuses in Toronto didn't follow their Canadian son Wayne Gretzky. When the "Great One" was asked what made him so great, he answered: "I skate to where the puck will be, not to where it is".
I use the Gretzky quote with every company I work with. It is a great marketing strategy. The Toronto dilemma is repeated in way too many companies that develop a positioning with brand attributes and associations that are wonderful for a time, only to find themselves in the wrong place when the market forces change.
It is important to think forward and to make market force analysis a part of the brand process. Will the attributes and associations hold up and be differentiating and desirable if things change? Don't just position against the market as it is; position against the market as it might be.
When the Canadian dollar was cheap compared to the U.S. dollar (as low as $.59 at one time), Toronto had the brilliant idea to market itself as a cheap place for Americans to visit. "Come see us. We're cheap, have great theatre and restaurants, and you can buy all you want at basically half the price". Things worked well. Americans flocked to Toronto and shopped and went to theatre and had a great time.
Then, the Canadian dollar (called the Loonie in Canada) began to strengthen compared to the U.S. dollar. Up it climbed until it was nearly at par. As of today it is about $.93, or about equal to the U.S. dollar. What happened? You guessed it, Americans stopped visiting. Toronto was no longer cheap.
So, here sits a great city--the equal or better than any city we have in the U.S., and Americans don't visit because they do not know about all of the attributes that could have been part of the positioning of the city. So, off they go to Chicago, San Francisco and New York--cities as or more expensive than Toronto, but cities that have billed themselves all along as places you need to see.
Too bad the marketing geniuses in Toronto didn't follow their Canadian son Wayne Gretzky. When the "Great One" was asked what made him so great, he answered: "I skate to where the puck will be, not to where it is".
I use the Gretzky quote with every company I work with. It is a great marketing strategy. The Toronto dilemma is repeated in way too many companies that develop a positioning with brand attributes and associations that are wonderful for a time, only to find themselves in the wrong place when the market forces change.
It is important to think forward and to make market force analysis a part of the brand process. Will the attributes and associations hold up and be differentiating and desirable if things change? Don't just position against the market as it is; position against the market as it might be.
Tuesday, September 1, 2009
Companies Need to Get Customers Involved in Brand Redesign
IKEA recently made changes for the first time to its catalog. It changed the typeface it typically uses. Not a major revolutionary change to be sure. However, the reaction from customers was not what IKEA expected. It was negative and loud.
This comes not that long after Gatorade and Tropicana felt the wrath of its customers over packaging changes designed to update the brands. Gatorade, which I wrote about in a previous blog, redesigned itself and relaunched its brand as "G". Tropicana, which I talked about before, had to back down and reissue its old packaging when customers expressed anger over its new package design.
What is happening? I think what we are seeing is evidence that customers, not the company, own the brand. At one time, companies felt in total control over their brands. They changed things when the wanted and the public was expected to be soooooooo excited about the new brand name, logo and design. The problem was that with few alternative choices and few ways for customers to express themselves publicly, companies were often fooled into thinking that everything was fine. The Internet changed this. It moved power into the hands of the consumer who is free to express their opinions about brands and changes. With more alternatives to every brand on the market, changes that are not liked can easily lead to defections. The switching costs for almost every product--with few exceptions, like banking--are coming down rapidly.
Many companies are embracing this consumer ownership of their brands. Others are reacting with horror. At Hasbro, the company faced off against some of its most devoted customers who created an on-line version of Scrabble called Scrabbulous. Instead of finding a way to work with these brand-lovers, Hasbro sued them, turning many of them into brand-haters who are blasting Hasbro on-line.
Companies need to recognize that the brand is owned by the customer. That's where we always wanted it to reside--in the emotional connection with the individual purchaser. It is time that companies start to treat customers are partners rather than as passive purchasers. If changes to the brand are to be made, companies should get their best customers involved in the redesign. Then, they can use these customers to sell others who are less passionate. Times have changed and companies need to adapt.
This comes not that long after Gatorade and Tropicana felt the wrath of its customers over packaging changes designed to update the brands. Gatorade, which I wrote about in a previous blog, redesigned itself and relaunched its brand as "G". Tropicana, which I talked about before, had to back down and reissue its old packaging when customers expressed anger over its new package design.
What is happening? I think what we are seeing is evidence that customers, not the company, own the brand. At one time, companies felt in total control over their brands. They changed things when the wanted and the public was expected to be soooooooo excited about the new brand name, logo and design. The problem was that with few alternative choices and few ways for customers to express themselves publicly, companies were often fooled into thinking that everything was fine. The Internet changed this. It moved power into the hands of the consumer who is free to express their opinions about brands and changes. With more alternatives to every brand on the market, changes that are not liked can easily lead to defections. The switching costs for almost every product--with few exceptions, like banking--are coming down rapidly.
Many companies are embracing this consumer ownership of their brands. Others are reacting with horror. At Hasbro, the company faced off against some of its most devoted customers who created an on-line version of Scrabble called Scrabbulous. Instead of finding a way to work with these brand-lovers, Hasbro sued them, turning many of them into brand-haters who are blasting Hasbro on-line.
Companies need to recognize that the brand is owned by the customer. That's where we always wanted it to reside--in the emotional connection with the individual purchaser. It is time that companies start to treat customers are partners rather than as passive purchasers. If changes to the brand are to be made, companies should get their best customers involved in the redesign. Then, they can use these customers to sell others who are less passionate. Times have changed and companies need to adapt.
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