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October 19, 2004

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Mark Vane

Hey, Interesting stuff. I recently added a new cool News widget on my blog. check it out http://www.widgetmate.com

outsourced sales

What do you think Coca Cola can do in the years to come to expands it's firm? And what would you do if you were the CEO of Coca Cola?
I am sure He will need a real brand advice about this

sanjeev verma

I want to know the importance of lettering in brand communication (advertsing strategy). What I mean is if your brand name is say 'Industry', should you try make all or some letters in the body to look like 'I'? Will this not dilute the brand name itself?

peggy hall

Where can I get a comparison chart to show the consumption of hamburgers between McDonalds and Burger King over the past five years?

Richard

What do you think Mcdonalds can do in the future to expands it's company? And what would you do if you were a top executive of Mcdonalds?

Bruce McDermott

Re: Amazon

Branding works very well for Brick and Mortar setups. With the Internet it's always been a different kind of ball game. The Internet is about researching information, opinions and *prices*. Where the product is indistinguishable from one seller to the next (a book) pricing and SERPs are all that count.

Yesterday I went to Amazon to find a tech/CD book. It was there "used" for $29.99 + shipping. Then I went to B&N. It was there for $24.99 + shipping. Then I went to Froogle and put the title in the search engine. Froogle listed a store called valorebooks.com pricing my selection at $9.73 including shipping. Branding got me to Amazon first, but how much did Amazon's brand help my buying decision?

This is why Amazon is branching out into so many different areas. It's a matter of survival, not concern over diluting their brand. They have long known like many of us that information is the real commodity on the internet. Companies like Google are doing everything they can to collate, control, and distribute information knowing that it is a commodity that will never lose its value in the eyes of the consumer.

The tools that Google is creating for search can drastically alter the way goods and services are bought, sold and talked about. Corporations realize this which is why you are seeing GM testing the waters with blogging and the chief of P&G stating,"We need to reinvent the way we market to consumers. We need a new model. It does not exist. No one has it yet. But we need to get going now." (AdAge 11/15/04)

afzam.adenan

hye people...

IMHO, being the first alone is not necessary will help you create a brand. Instead, being the first to fulfill unmet needs would create a brand.

In Amazon's case for example, they were the first one to make purchasing a simple, personalised, painless task. and many of its site features reinforce this promise.

Anyway, just another of my 2 cents.

Chris

I do think Amazon's approach is bad for their brand, Yvonne. I trust them to have any book I'm looking for. I don't trust that they will always have exactly what I want in printers, or jackets, or power tools. For those things I go to the brand that I believe has what I want.
Of course, to me Amazon=books, and I still go to them for that, so in a way the brand "online bookstore" is still working.

Robb Hecht

Per Yvonne DiVita, Google is considered the #1-recognized brand worldwide (even above Coke now). I thought that place was held by eBay actually (per Interbrand's 2004 data). I know E*TRADE Financial attempted to move its financial brand offline in 2001-2002, but failed initially. Would you consider eBay opening offline (real world) selling center's as a PR move?

Yvonne DiVita

Hmmm...forgive me for not joining in on the burger controversy but I am less concerned with the comparison between Mickey Ds and In n Out than I am with the comparison between Google and Yahoo! as well as Amazon. You seem to be saying first is best and remaining true to your focus will stand you in good stead in the long run. But, isn't Amazon creating a wider and wider circle of offerings...even more so than Google? Is this bad? To give your customers what they want? Thanks for reminding me that the Internet is a medium...and the need for a good strategy is of primary importance. I seem to remember Laura mentioning, in an interview on my blog, that being second can work well, also. Can you comment on that?

Scott Miller

>>> Nothing, however, beats being first in a new category. <<<

I absolutely agree with this.

What's interesting about In-n-Out is that they weren't first (but they were close). But, the key is that they are the only burger chain to stay with their roots of only providing burgers, fries and drinks. In effect, all of their competitors sailed away from them, leaving them with a huge sea all to themselves. This doesn't happen in two many other categories, I'm guessing!

In-n-Out was probably first in terms of freshness, cutting their own fries, making their own buns, and using un-frozen beef. This was unquestionable a key positioning advantage for them. In effect, it was their divergent strategy. They are the only fast food burger joint that cares about quality. And they strongly reinforce this by not opening stores like they're trying to set building records.

But, I do agree they have gone slower than necessary in this department. But I also think they're brand (not their name, unfortunately) is so powerful that they can expand into any territory and be immediately successful. They are practically like Krispy Kreme in this respect.

Al Ries

Yvonne . . . The best way to build a brand is with a good strategy. Amazon was the first Internet bookseller in the mind. (Powells was first, but they never got into the mind.) Yahoo! was the first Internet search engine, but they lost their leadership to Google by branching out into many different categories (a mistake that Google is currently making.)

Also, the Internet is a medium, as is TV, radio, etc. It can't build a brand for you without a good strategy.

Nothing, however, beats being first in a new category.

Al Ries

Dear John:

I agree. A fast-food chain couldn't go into In-N-Out Burger's territory and take business away from them.

They would first have to build a national reputation as a burger-and-fries-only chain.

Look at the beer business. There were a lot of great
regional beers (Hamm's, Piel's, Stroh, Rheingold, etc.) Most of these beers are gone or have become minor brands. Why? The national brands killed them. And Budweiser being the first national brand eventually went on to dominate the category.

Look at Southwest Airlines. If Southwest had stayed in the Southwest, they would be facing tough competition from JetBlue, AirTran and the other no-frills airlines now going national behind a wave of PR.

Yvonne DiVita

I find Laura and Al Ries far more useful when it comes to branding advice than almost anyone...but could we stop comparing everything to McDonald's? That's an old, tired comparison. Let's talk about Amazon.com, Yahoo! and Google and how they've become branded in such a short time. Can you guestimate how far their brand reaches and how long they will continue to dominate the market in their area? Last year, Google was the #1 recognized brand worldwide...so my research showed... above Coke and McDonald's. I'm a new millennium business; I'd like more information on how to brand using the tools available to me today...and the Internet is a big one. Especially, blogging. Can someone speak to that issue, please? Much thanks! LOVE this book tour.

johnmoore (from Brand Autopsy)

Al ... thanks for the perspective. I've read many of your books and we agree far more than we disagree on marketing/branding matters.

Now, I’m simplifying things here but, one “takeaway” I’ve had from reading your books on marketing strategy is that brands can succeed by doing the opposite of what the market leader does.

Is it possible that In-N-Out succeeds in the face of McDonald’s because they stay steadfastly focused on their strategy which is essentially “opposite” of what McDonald’s strategy?

I’m not sure a national fast food burger chain could go into CA, AZ, and NV and seriously take share from In-N-Out Burger by replicating their concept. Companies can replicate concepts but they can’t replicate a company’s culture.

Wouldn’t customers sniff out the inauthenticity in such a move by a fast food chain much like microbrew consumers snuffed out a phony in Miller’s Plank Road Brewing offerings?

On the other hand, Anheuser-Busch seems to have success with their ZeigenBock micro-like beer because it limits the distribution to Texas … much like In-N-Out limits its distribution to CA, AZ, and NV.

Getting tangential … a take-a-way I had from reading “Origin of Brands” is that all brands are not meant to live forever. Yet as marketers, we seem to put forth, by our rhetoric and tactics, that all brands are meant to live forever. I think you refer to these brands as being “missing links” and specifically mention Tivo and Netflix as being brands that are essentially missing links and will be become extinct.

Which brings me back to In-N-Out Burger … I think they are a business that follows Jim Collins’ “flywheel effect” and might just one day render the likes of McDonald’s as a “missing link” brand.

Thanks for the conversation Al and Laura.

(Okay … I really need a Double Double Animal-style. No, make that Protein-style.)

Al Ries

A Frenchman witnessing the Charge of the Light Brigade at Balaklava said, "Cest magnifique, mais ce n'est pas la guerre." (It's magnificent, but it's not war.)

In-N-Out Burger's practices are magnificent, but they are not marketing. The reason for expanding geographically is primarily to protect your market from competition. (If you don't expand into your competitor's territory, your competitor will expand into yours.)

In-N-Out Burger is lucky that a national brand has not used a similar strategy and expanded into California.

When I lived in Great Neck, New York, there were five independent drug stores in town, all with magnificent employees and labor practices. Today, there is not a single one left. They have all been replaced with chains.

This may not be the American dream, but it is certainly the American reality.

johnmoore (from Brand Autopsy))

For all of In-N-Out Burger’s contrarian practices (ranging from not expanding geographically to following dogmatic core values to paying/treating employees better and to having an unconventional name), it seems to make the company all the more remarkable and all the more financially successful when compared to other QSRs.

Question for everyone ... is it the “American” business dream to be bigger than McDonald’s? And should all businesses dream that “American” dream?

I’ll stop now before I go off on a rant about the compromises that must take place in order to scale a mom and pop shop to become a megalithic enterprise.

(Dang. I sure could use a Double Double Animal Style right now.)

Al Ries

It may not have been a mistake for In-N-Out Burger not to expand geographically, but it sure was a missed opportunity. In our opinion, they could have been bigger than McDonald's, although there is no question they could have used a better name.

johnmoore (from Brand Autopsy)

For Laura ...

Help me to understand why In-N-Out has made a mistake by not expanding? They are financially successful. They dogmatically adhere to core values. They treat employees with respect and dignity and with a bigger paycheck. And, they have cultivated a loyal and evangelical customer base.

Is it a mistake to grow a company slowly and deliberately like In-N-Out does?

McDonald’s began small, grew big, and by growing big … McDonald’s lost what once made them remarkable. Starbucks began small, have grown bigger, and by growing bigger … one can contend Starbucks is losing what once made them special.

Not all companies are meant to expand.

In-N-Out Burger is a classic “JumboShrimp” company. They have gotten big by being small. By no means do I think In-N-Out has made a mistake by not expanding. On the contrary … I think the biggest mistake In-N-Out can make is to wildly expand.

(Laura, please excuse the tone. As a marketer and as a customer, I am a HUGELY PASSIONATE In-N-Out fan.)

Scott Miller

Jennifer, McDonanld's followed a divergent path by first being the original hamburger-only fast-food restaurant. Then, as that category became crowded, they diverged further by focusing on kids.

They've also made convergence mistakes, by expanding their menu too far. But since practically all of their competitors have blundered in the same way (except In-n-Out), they are playing on an even field.

Laura, as for In-n-Out's slow growth, it's hard to fault them because they are so incredibly concerned about maintaining quality standards, and turn down practically every opportunity to franchise. Since they're a private business, this slow growth strategy is fine for their primary owners, who are doing very well, I'm sure. (Still, I'd love to see one open up in Dallas, but I'm not holding my breath.)

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