Category Archives: Marketing

There’s not a single marketing magazine or blog out there which has not sung praises of the Virgin brand. And the more I read about Virgin and Richard Branson, the bigger fan I become of both – the brand and its chief. While all the big airlines are going down, Virgin is still thriving. And it’s not only in the airline business, the Virgin Active – its European health-club chain, the Virgin Mobile USA – brand’s extension in cell phone business and many other ventures by Branson are doing great globally. So what’s the secret recipe? Well taking a close look at the brand activities make it very clear…for Virgin, customers come first and there’s no compromising there. Virgin doesn’t give a crap to what the industry trends are, if the customer wants it, Virgin will have it.

Sir Richard Branson is a true visionary. What he thought and implemented two decades ago is now slowly getting followers – people should be having fun when spending their money. He gives great importance to customer satisfaction. And how does he do that? A real simple concept – “put yourself in the customer’s shoes and think is this the way I want to be treated if I were the customer?” Most of the innovations which he brought in his business were based on his own experiences as a customer. Flying in any major airplane was, and is, a really lack-lustrous affair. You are tied to your seat for the whole time, everyone around doing their own stuff and feel really relieved when the flight is over. The same was the experience with Branson. So when he came up with Virgin airlines, he made it a real party airlines…Virgin has fun-loving attendants, stand-up bars and massages and nail treatment onboard! When all the airlines are showing movies to the customers as per their (Airline’s) choice and schedule in the seatback video screens, Virgin went a step further and gave the customer right to choose from the library of on-demand videos. Any market research would have negated the expensive services Virgin provides onboard, but just because customers want them, Virgin provides them, and they thrive.

If you think Virgin just got lucky in the airline business, look elsewhere. Virgin had the same customer focus in its brand extensions and that helped them blossom in those industries as well. It provided customers pay as you use plans for its health clubs in Europe, Virgin Active, instead of locking them in contracts. The customers loved it and Virgin Active became successful. Virgin Mobile USA provided its customers with prepaid cards with no service agreements and contracts. Result – more than 4 million customer base. Both are great examples of customer focus. We can derive a pattern of Virgin’s way of doing business – enter an industry where customers are not satisfied by the existing services, think yourself as the customer and look for pain-points, keep the focus deep on customer needs and strive to provide them with satisfaction.

Moral of the story – take a look at whatever business you are in and ask yourself, if I were the customer, would I be happy and satisfied? If the answer is no, plan and implement changes. If the honest answer is yes, you are set to succeed the Virgin way!

Lot of times we see a company with a strong brand equity in one product grow exponentially when it takes that brand name and extend to other products. Examples that stand out are Apple and GE among others. At the same time, I can point out companies with a strong brand in one field and start going down as soon as they enter another fields. One that comes to mind right away is Amazon. I don’t know how much of their bad days are due to the extension of their product line to everything, but I (and lot of people will agree) that the pleasure of buying books at Amazon is not the same after all the remodeling they have been through. There is a third set of companies, which don’t fall in either one of these sets. They are the ones which use their brand to extend on to other product areas, the new products don’t catch up well, but at the same time the original product that built the brand remains solid and enjoy the brand loyalty. One example I would point is that of Dell. Dell is still the largest PC maker in the World but the numbers of their television and mp3 players are not that impressive.

Here’s my take on the rights and wrongs of brand extension (yeah I know there are a zillion case studies out there, but lets add one more). I think the companies succeed in brand extension if they apply creativity, innovation and link with existing product line during and after brand extension. Lets talk about Apple. Apple Macs and notebooks were always known for their cool factor. Though not adopted widely in the main stream (thanks to the tight hardware-software company and to certain extent Microsoft), the Apple computers were always liked by the people more involved in right brain activities – the artists, musicians, film makers etc. Apple took that same cool brand image and applied it to ipods, itunes and a lot more i…s to see the reemergence of the company with a bigger bang than ever before.

Creativity – same look and feel. The white color scheme and the sleek design.
Innovation – Arguably the best music player and music downloads site out there.
Link – Same hardware-software combination that Apple is known for, but this time it’s a bit loose coupling (they applied this loose link to Mac as well now, which is really the step in right direction).

Now lets switch to “the long tail” store on web. Amazon has been the model book store, or to generalize, the e-commerce site on the web. They are known to find the customer what book they are looking for as well as recommendation based on data-mining the information they have through the pool of customers visiting their site daily. There’s no denying that they are one of the best-managed content store on web. But the Wall Street view of the company and customer satisfaction numbers have been down stream since they started their brand extension to be a general store of everything, not just books. So what went wrong? I would attribute it to a couple of things. One, Amazon just turned out to be another humongous Internet store which sells everything. The uniqueness which Amazon had, to be a store for book lovers is lost. So by trying to be everything to everyone, they are turning out to be nothing to anyone. Another reason, the innovative idea of recommendations is all lost when it comes to the new areas like kitchen supplies and groceries. That was what Amazon was known for, and they lost, or at least misplaced that entire concept.

Creativity – Same “the long tail” concept of finding things you cannot find in physical stores.
Innovation – Pretty much nothing…hard to distinguish from other Internet stores when it comes to more general shopping.
Link – The recommendation link is all broken when it comes to the new marketplaces.

The third set of companies are the most interesting ones. This happens when a company has solid marketing plan for the existing product market, and then tries to go in for extensions. So the original brand product is not disturbed but the new ones don’t fly for some reason. My favorite example in this case is the Direct marketing place – Dell. As much as I love shopping (or at least configuring) a computer at Dell, I am indifferent to the entire new store they have to sell all sorts of electronics. But what Dell managed to do, that Amazon missed, was to keep the experience on the computer store intact. Still Dell is primary known as a computer store that also sells some electronics (to draw contrast with Amazon which is now a store that sells everything, that includes books as well). So what went wrong with the brand extension to Electronics? What I think happened is that people didn’t find what they were looking for in electronics at Dell. When someone goes to Dell, they expect to get a personalized shopping experience. Dell created this amazing build your own computer scene, so when it came to electronics, and they tried to a certain extent one size fits all, people didn’t buy that, or at least didn’t buy that from Dell. Again…

Creativity and innovation – Nothing can be pointed out as far as selling electronics.
Link – Well “Direct from Dell” is still there. But the link of configure your own is gone, or at least diminished a lot in the new space.

So as to sum it all, brand extension goes right if Creativity and Innovation are properly used in the process and the basic link to the original product of the company, or what the company is known for, is maintained intact.

Sales…not Marketing! Many companies focus on sales more as compared to marketing. Marketing and Sales are two entirely different concepts. Sales focuses on the needs of the seller while marketing focuses on the needs of the buyer. Sales is preoccupied in converting the products into cash, marketing is done with the idea of satisfying the needs of the customer by the means of products and a host of services attached with it. Any company that focuses on getting rid of the products through various sales techniques are sooner or later going to be in real trouble. In computer science equation, we can summarize that as –

IF (EXISTS (Sales Focus))
POISED TO BE DOOMED

Well you will argue with me that’s not the case. Many companies just focus on selling their products and succeed. Yes they may in the short run, or even in the long run if they get lucky. One example that stands out is that of the oil companies. When was the last time you saw one of them aggressively marketing their products? Well may be in the days of Rockefeller when he marketed the kerosene to light lamps. Oil is one unique industry where sales overtake marketing. They really just focus on the product. So the equation changes a bit. It looks like –

IF (EXISTS (Sales Focus) AND NOT (LUCKY AS OIL COMPANIES))
POISED TO BE DOOMED

Why is it so? How come there are few industries that stand out to be so product focused but still are so successful? I am very sure that the customers are not dumb enough to just buy products from companies who focus less on them and more on their products. Let’s shed light back on our oil industry example. What I believe is happening here is someone else is doing all the marketing for them. Yes, it’s the automobile industry, the airline industry, the tourism industry and so on. All these industries are incredibly customer focused. To survive in any of these industries, the companies need to place the customer first. These industries are highly marketing based. And they are in-turn directly or indirectly dependent on oil. Oil, luckily again, is placed in a unique position with no alternate source of energy that can be used for transportation. So how long will oil enjoy this luxury? Well till we do not find an alternate source to run our automobiles, fly our planes and run our cruises…or in other words, not anytime soon.

Bottomline – Marketing is the backbone of any company’s success, and if you are lucky enough to get favors from someone else to do all your marketing, you can survive just by sales.

IF (EXISTS (Sales Focus) AND NOT (Someone else doing the Marketing for you))
POISED TO BE DOOMED