Waking the Giant

Revitalising the Mature Brand

Peter Steidl

• Publisher: Wiley
• Year: 2012
• Print ISBN:
  9781742169521
• Edition: 1
• eBook ISBN:
  9781118319567
• Topic: Business
• Subtopic: Marketing
• Index: Business

Brand maturity is not inevitable.

Waking the Giant challenges current thinking and practice when it comes to achieving growth with mature brands.

This book convincingly demonstrates that the challenge of revitalising a mature brand is just as exciting -- and requires just as much ingenuity and innovation -- as launching a new brand.

While major mature brands still dominate many categories, margins and growth opportunities are often less than exciting. The critical question is: milk the brand, or revitalise? And, just as important: is your organisation fully committed to, and able to deliver on, your chosen strategy?

Inside you'll discover:

• the merits of revitalisation and milking strategies, and how to choose between them
• how to renew positive differentiation for a mature brand
• how to implement a revitalisation strategy and eliminate outdated work practices that could ruin your plan
• how to align your revitalisation strategy with the consumers' and industry sector's evolutionary trends.

Part I

Making the commitment

AG Lafley, Procter & Gamble’s CEO, famously said: ‘Products have life cycles; brands don’t’.

Of course, brands do follow a natural life cycle. However, unlike a product, a brand can be revitalised. A poorly managed brand will reach maturity and decline, but a well-managed brand won’t, unless the company cannot muster the ingenuity, resources or commitment needed to revitalise it. Lafley’s statement can be looked at as a challenge to the marketing community from the CEO of the world’s most successful diversified FMCG (fast-moving consumer goods) company, rather than a statement of fact.

At the same time, Lafley would have been the first to demand that the revitalisation of mature products should not be automatic, but should be considered against the alternative strategy of milking the mature brand. Both strategies are often feasible and it cannot be assumed that revitalisation is always the better option. Clearly, the ultimate decision between ‘revitalise’ or ‘milk’ will be made in the context of the brand portfolio and alternative investment opportunities open to the corporation. However, this higher level corporate decision can only be made on the basis of an exploration of these alternative brand strategies.

For this reason we will start our revitalisation journey with the all-important question: revitalise or milk?

Regardless of which strategic path it is to be, commitment to the adopted strategy is imperative. A mix between revitalisation and milking is not likely to succeed. It will not deliver the financial returns a milking strategy should generate, and it will be too watered down to be effective in revitalising the brand.

While commitment to a revitalisation strategy is essential, however, it is not sufficient to succeed. Too many companies commit to a revitalisation strategy, but then fail to implement it as intended. Instead, as the implementation process unfolds, the strategy is adapted again and again by various parties who need to contribute to the effort. This is not a case of executives or staff deliberately undermining the strategy. Rather, it tends to be the result of applying outdated criteria, processes and procedures that invariably weaken the strategy until it is hardly distinguishable from the company’s typical run-of-the-mill approach.

Work on the concept of ingenuity suggests that hiring ingenious employees does not necessarily lead to an ingenious organisation. In fact, these employees may be totally ineffective if they are straight-jacketed by traditional processes and procedures that don’t accommodate change and that kill innovation. The same applies to the revitalisation of mature brands: a highly effective strategy won’t help if you are not prepared to also ensure that it will be implemented as intended.

The most surprising aspect is that despite the many adaptations made during the implementation phase, executives may still expect the strategy to deliver the hoped-for results. Naturally, it will fail to deliver these.

While outdated work practices are invariably at the root of the implementation problem, it is often worse than that; many corporations employ work practices that accelerate, if not cause, the brand’s maturity in the first place. In the surreal world of these corporations we find resources allocated to a revitalisation strategy while conventional work practices continue to accelerate the brand’s maturity. Needless to say, this is utterly counterproductive.

Abolishing outdated work practices is arguably one of the most difficult challenges faced by organisations. While executives typically agree that the operating environment has changed dramatically, they seem to fail to make a connection between their work practices and these external changes.

Marketing is, in particular, guilty of resisting a change in work practices. Consider the massive changes in manufacturing that have taken place over the last 20 years — not just manufacturing technology, but the integration of the total supply chain, changes in the organisational structure, the multitude of new processes that are often self-organising in nature, the skill mix of those working in this functional area. We don’t see changes in marketing anywhere near those we can observe in manufacturing.

Sometimes it appears that marketing has been caught in some sort of time warp. We all know that some 80 per cent of new products fail and that the vast majority of these have been researched prior to launch. Yet we continue to use the same outdated research methodologies. Can we really expect different results? As Albert Einstein said, ‘insanity is doing the same thing again and expecting different results’.

Why do marketers adhere to lengthy planning cycles while agreeing that the rate of change is accelerating and even the short-term future is becoming less predictable? Why are they using conventional research methods that have failed over the last 30 years to deliver the deeper insights required to develop effective strategies? Why are analytical methods such as brand pyramids and brand wheels still being used when it is widely acknowledged that we need to create and manage an integrated experience? Why is the effectiveness of marketing communications measured on the basis of recall when we know today that exposure to an ad can change brand perceptions without the consumer being able to recall the ad? Why is the use of digital media opportunities often limited to simply transferring traditional exposure methods into the digital space rather than generating true engagement with the consumer?

This is not a book about work practices. But we need to at least highlight some of the work practices that represent barriers when it comes to successfully implementing a revitalisation strategy.

But there is light at the end of the tunnel. Let’s return to Procter & Gamble (P&G). As AG Lafley reports, under his leadership P&G has adopted new market research practices, and changed external and internal relationships, structures, processes and the company’s strategic focus. P&G’s focus shifted from attempting to generate growth from new brands and acquisitions to the revitalisation of the big, mature brands in P&G’s stable. And Lafley succeeded beyond all expectations.1 So can you. But, as I said earlier, an effective revitalisation strategy is essential to but not sufficient for success. There must be commitment to making it happen. With this in mind, I hope you will find the following section of interest.

1 AG Lafley & R Charan, The Game-Changer: how you can drive revenue and profit growth with innovation, Crown/Random House, 2008.

Chapter 1

Before we start, is it really worth the effort?

By definition, major mature brands lack growth but they nevertheless may still enjoy strong market positions. While margins and growth opportunities are typically less than exciting, it is possible that a significant return can be extracted over time by managing the brand’s decline effectively.

A milking strategy that focuses on margins rather than volume, by investing just enough to extend the profitable life of the brand, is often a viable alternative to a revitalisation strategy. However, while both alternative strategies — milking and revitalisation — should be considered, once a choice has been made it is vital to stick to the chosen strategy and adjust short-term as well as long-term expectations to ensure these are aligned with the strategic choice.

Occupier brands

By definition, major mature brands occupy quite strong positions in their established markets. In fact, we could call these brands occupier brands, because their strength is typically not based on differentiation and brand loyalty but on the territory they have occupied in the past and the well-established habitual buying patterns of consumers.

This position is typical for the leading brands in many categories and markets. Major banks, retailers, petrol companies, FMCG brands and many others derive much of their strength from a past where differentiation and astute marketing have allowed them to occupy significant market territory.

For brands like these, the question ‘Why bother with a risky revitalisation strategy when we can milk the strong market position of our mature brands?’ is not an idle one.

A commoditised market, that is, a market where brands lack differentiation, typically benefits the major players. When there is no meaningful differentiation from the market’s perspective, consumers tend to buy major, well-known brands rather than brands with a low profile. They also tend to stick with their purchasing habits, rather than spend energy and time going through a decision-making process. After all, there is little apparent gain in evaluating their purchases when they see little difference between the options on offer.

Why bother with a risky revitalisation strategy when we can milk the strong market position of our mature brands?

The only problem is that while major, mature brands tend to enjoy a significant market share in a commoditised market, unfortunately commoditisation destroys value. Margins get thinner as the market increasingly buys on the basis of price and convenience, reducing revenue and increasing costs. Fortunately for many mature brands, there have been significant developments in many areas — from manufacturing to communications, from service to logistics — that have allowed companies to reduce their costs. Think internet banking, the relocation of call centres and manufacturing to low-cost countries, advances in manufacturing technologies, efficiency gains in transport (in particular air and sea) and warehousing, productivity gains due to software and the associated improved information and transaction flows.

Importantly, these benefits tend to be far more significant for large-scale organisations than for their smaller competitors, thus typically benefiting the ‘major mature brand’ organisation.

This is, of course, the trap: major mature organisations tend to be quite profitable and they appear to make significant progress in terms of efficiency and associated profit gains. In fact, they have most likely refined their internal processes, systems and procedures to be highly efficient, so they can extract the maximum competitive cost advantage from their large scale of operation. On the downside, they have limited their flexibility by aligning the operation totally with their existing strategy, thus building barriers to any significant change in strategy.

In favour of a milking strategy

Returning our focus from the broader organisational perspective to the brand itself, we need to explore the concept of ‘occupied territory’ further.

I have already mentioned that major mature brands tend to maintain their market share rather well, despite their lack of growth. But, while we can use market share as an indicator of the size of the brand’s territory, we are primarily interested in the factors underlying market share, that is, the reasons for the brand’s ability to hold on to its strong market position despite its maturity.

. . . we are primarily interested in . . . the reasons for the brand’s ability to hold on to its strong market position despite its maturity.

Some of the factors that may allow a major mature brand to maintain a strong market position are:

• Familiarity — the mature brand typically enjoys a high degree of familiarity, which is important in commoditised markets. After all, familiarity is the basis of forming habits. An extreme case of familiarity is a situation where the brand name starts to be synonymous with the category. For example, many consumers ask for ‘Kleenex’ when they want a facial tissue or for ‘Coke’ when they want a cola drink.
• Share of relationships — in many industry sectors major mature brands have built a wide range of customer relationships that constitute barriers to exit. One of the most widely used strategies is the implementation of a loyalty scheme, including the ubiquitous loyalty card. These schemes work particularly well when purchase or usage determine a particular membership status. For example, would a member of a frequent flyer program risk their Gold or Platinum status by flying more often with another airline?
  But even an increase in relationships based on multiple product use, such as a customer using multiple banking products, reduces the likelihood of change, as a change becomes a more significant and potentially messier step to take.
• Power over distribution channels or proprietary distribution channels — A ...

Table of contents

• Cover
• Contents
• Title
• Copyright
• Acknowledgements
• Introduction
• Part I: Making the Commitment
• Part II: Revitalisation Strategies
• Part III: Selecting the Strategy that’s Right for you
• Epilogue: Just do it!
• Recommended Reading
• Index