Origin of Brands tour

Welcome to Day 7 of the Origin of Brands book tour! We've been talking with Laura Ries about this book that she co-authored with her father, Al Ries. On the first stop of the tour at 800-CEO-READ, Laura outlines the premise of the book:

Over the years, one of our key branding concepts has been “Create a new category you can be first in.” For example, Red Bull was the first energy drink. Starbucks, the first high-end coffee shop. BlackBerry, the first wireless email.

For at least a dozen years, however, the business media have been filled with stories about “convergence.” Categories would be coming together. Television with computers, for example. Companies, especially in the high-tech industries were spending billions of dollars trying to accomplish this with very little success.

In studying history, we found that the opposite was true. Categories did not converge; they diverged. The mainframe computer, for example did not converge with any other category. It diverged, creating endless opportunities to build new brands. Apple, Dell, Compaq, Microsoft, Intel, etc.

Jennifer asks: Although John Porcaro already asked questions about Microsoft during his stop on the book tour, I do have a related question: You say that you see Microsoft becoming the world's most valuable brand, and yet they are violating every principle of divergence. By fighting the divergence trend and keeping a death grip on a converged bundle of products, they are trying to win a many-front battle with a single overstretched brand. I wrote a blog post on this (here and here) and would love your comments.

Laura says: Not only did I find your blog astute and very interesting, I also agree with everything you said.

In general, any company that has 95 percent of a market should be asking themselves, did we accomplish this because our product is better or did we accomplish this because of the advantages conferred to a monopoly.

My feeling is that much of Microsoft’s success is due to their monopoly position. Everybody uses Windows because everybody uses Windows.

I think Microsoft would be better off if they introduced a second brand of operating system that would be the opposite of Windows. In other words, a much simpler system for users who find the current Microsoft products far too complicated.

Jennifer asks: What was your rationale for them becoming the world’s most valuable brand, despite their violation of divergence principles? Just monopoly status?

Laura responds: Microsoft is two companies. One is a very powerful personal computer software company, a company built on divergence, a company that has the lion’s share of the market.

(Nothing in marketing works better than dominating a market.)

The other Microsoft is built on convergence. The other Microsoft, by the way, loses money.

Microsoft would be a stronger, more powerful, more profitable company if it concentrated its resources on personal computer software. As a start, they should introduce a second brand of personal computer software. Cheaper, simpler, easier to use.

What do you think? Comments and questions for Laura are welcome!

Comments

[Mark DiMassimo]

Positioning is one of the most useful concepts in marketing, but it tends to take on a religious, dogmatic tone that obsures it's limitations.

The game begins with looking backward, stripping the past of its complexity, and then explaining the results in tautologies. For example, "Nothing in marketing works better than dominating a market." Thanks, we'll try that.

"Red Bull was the first energy drink. Starbucks, the first high-end coffee shop. BlackBerry, the first wireless email." If they mean first in the marketplace, then these statements are false. Of course, they don't mean that. They mean first in "the mind of the consumer." But, which consumer? Again, I find the concept very helpful, but it has it's limitations. Most top marketers, including all of those listed above, did not dominate their category starting from a position of category dominance. Nor did they have unlimited funding. Nor a lack of competition. I would argue that none of these brands were first into the minds of most consumers with their new category concept, but rather earned their dominant position by out-executing their competitors -- yes, their competitors for a position in the mind, as well as for a footprint in the marketplace. I know how many companies were out there trying to own the positioning "energy drink" for example. Positioning isn't sufficient to explain how Red Bull, Starbucks or Blackberry out-marketed all those rivals and came to own their position as leader of their respective categories.

The world of brand marketing is not nearly so neat as the Positionistas paint it. On the other hand it could be a lot neater than the mess too many marketers make of it.