My Grandfather Was Originally A Carriage Maker

By Amy Wise

products. The new name is: Folgers Gourmet Selections.

Years ago, if the company had tested the name Folgers Gourmet against a unique brand name like Starbucks, in our opinion, Folgers would have definitely won big.

Before Dietrich Mateschitz introduced Red Bull, he tested the name and concept. "People don't trust flavors, logos and

• Language: English
• Publisher: Amy Wise
• Release date: Feb 1, 2024
• ISBN: 9798869208873

Book preview

My Grandfather Was Originally A Carriage Maker

My Grandfather Was Originally A Carriage Maker

Copyright © 2023 by Amy Wise

All rights reserved

TABLE OF CONTENTS

CHAPTER 1 : THE BIGGEST KILLER OF NEW PREMIUM

CHAPTER 2 : THE AUDITING FIRM

CHAPTER 3 : STRUGGLE TO OVERCOMING HARDNESS

CHAPTER 4 : HOUSEHOLD INVASION TAPES

CHAPTER 5 : MANY HIGH SCHOOL STUDENTS

CHAPTER 1 : THE BIGGEST KILLER OF NEW PREMIUM

Recently, Procter & Gamble introduced a new line of premium coffee products. The new name is: Folgers Gourmet Selections.

Years ago, if the company had tested the name Folgers Gourmet against a unique brand name like Starbucks, in our opinion, Folgers would have definitely won big.

Before Dietrich Mateschitz introduced Red Bull, he tested the name and concept. People don't trust flavors, logos and brand names. I have never experienced such a disaster.

Still, Mateschitz recommended Red Bull, which is something a right-brain entrepreneur would do but most large companies would never do.

Rarely do large companies use unique, distinctive, and unique brand names such as Yahoo!, Amazon, Yellow Tail, Crocs, Gray Goose, Apple, and BlackBerry. Unique, distinctive, and unique brand names never perform well in tests.

This is not an indictment of the left-brain people at P&G. Most large companies act similarly. As a result, these companies have to buy back brands instead of launching their own brands.

For example, PepsiCo acquired Mountain Dew and Gatorade instead of launching its own brand of decaffeinated orange juice and sports drinks.

(In fact, PepsiCo launched a sports drink brand called All Sport that went nowhere. The problem is that the company waited 27 years to enter the market. Gatorade launched in in 1967, and Coca-Cola's All Sport and Powerade did not launch on the market until 1994.)

You can't compete with a competitor that's 27 years ahead of you and expect to build a dominant brand. So PepsiCo used $13 billion to buy something more practical: Gatorade and parent company Quaker Oats.

Procter & Gamble of the non-alcoholic beverage industry

That is Coca-Cola. However, this company is no better than P&G in launching new brands.

Coca-Cola missed out on caffeine-free orange juice (the pioneer was Mountain Dew), so the company tried to enter the category with the Mello Yello brand. But it's not effective. So the company tried again with Surge, but it still didn't work any better.

Coca-Cola missed out on the spicy cola product line (the pioneer was Dr Pepper), so the company tried to enter this category with the Mr. Pibb brand. But it's not effective.

Coca-Cola missed out on natural beverage products (the pioneer was Snapple), so the company tried to enter this category with the Fruitopia brand. But it's not effective.

And of course, Coca-Cola also missed out on sports drinks (the pioneer was Gatorade) as well as energy drinks (the pioneer was Red Bull).

Coca-Cola's last leading brand, Sprite, was launched in 1961. But it wasn't until 1989 that Sprite overtook 7Up to become the number one brand in carbonated lemonade.

One reason for Sprite's marketing victory: Coke relied on bottlers to oust 7Up and replace it with Sprite.

When should you launch a new brand?

Every time tastes or technology change, existing brands in the market, no matter how dominant, are faced with the same choice.

Should the company expand its old brand to keep up with new tastes and technologies? Or should the company launch a new brand?

If the change is making a big impact, the correct answer is almost always launch a new brand.

•      The rise of office wear made Levi Strauss(eighty six)launched the Dockers and Dockers brands and became a multi-billion dollar brand worldwide.

•      The success of Mercedes-Benz and BMW led Toyota to launch Lexus, and Lexus has become the best-selling luxury car brand in America.

•      The success of Makita, the Japanese professional tools brand, has led Blacker & Decker(eighty seven)launched DeWalt and DeWalt became the dominant brand in the professional tool product category in the US.

•      Costco's success(88)prompted Wal-Mart to launch Sam's Club, and Sam's Club is now closely following the category leader.

When it comes to launching your second successful brand, you need to quickly relearn your history. Until now, most companies have tried to expand their core brands to cover emerging product categories – and often without success.

Such as:

•      IBM's failure to extend its dominant brand in the mainframe product category to the personal computer sector.

•      Xerox's failure to extend its dominant brand in the photocopier product category to the computer industry.

•      Polaroid's failure to expand its brand beyond instant cameras.

•      Kodak's failure to apply the success of traditional film cameras to digital cameras.

In our opinion, all of these cases require a new brand. However, all four of the above companies tried to expand their old brands into new product categories. The paradox is that the stronger the brand, the more difficult it is to expand.

Why are strong brands more difficult to expand than weak brands? It's in the consumer's mind. Strong brand names stick in the mind while weak brands do not.

(However, extending a weak brand is often a futile exercise.)

Paying a high price for expanding product lines

Companies that try to avoid opening new brands often pay a very high price. The most recent victim is Visa Inc. and MasterCard Incorporated. To date, the two credit card companies have lost up to $3 billion and may be in for more bad financial news.

Many years ago, two giants of the credit card business decided to jump into the debit card market. It's hard to find two product lines that are more competitive. Credit cards are the enemy of debit cards and vice versa.

So what did Visa and MasterCard do? The two companies gave the same name to both cards − Visa and MasterCard for both credit and debit cards.

The two companies even force their retailers to accept payments of all types of cards. In other words, if a retailer accepts Visa credit cards, it must also accept Visa debit cards.

Next, the two companies collect fees for using debit cards using a signature system similar to when collecting fees for using credit cards. This costs the retailer five to ten times more in fees than if the customer just used one of the other debit card networks like Star, Pulse or NYCE. These debit cards use a personal identification number system, or PIN for short.

In the largest antitrust settlement in history, Visa agreed to pay $2 billion and MasterCard agreed to pay $1 billion to a group of retailers led by Wal-Mart. Their accept payments on all types of cards clause is illegal.

Why don't the two credit card giants launch a new debit card brand?

A Visa executive explained, it's a chicken-egg problem. Visa could have started a completely new brand, one that no bank had issued and no retailer had yet accepted payment for. But why would you do that?

Of course, that is very logical thinking. But the marketer's intuition says that the second product category needs a second brand.

MasterCard's second brand strategy

In fact, MasterCard has launched a PIN card product called Maestro (not exactly a world-class name). However, Maestro lost out to Visa's signature debit card, so MasterCard changed its strategy and expanded its product line.

Unfortunately. If MasterCard had a little more confidence in its strategy, today the company's profits would be up by a billion dollars and it would surpass Visa in PIN-based debit cards.

Like many other marketing issues, the debit card situation is complex. How to design a product that benefits all players? Consumers, retailers, banks and the card networks themselves? It's not simple.

This is the time that requires the conceptual thinking of the right hemisphere. Product categories tend to diverge rather than converge. You may not know when, where, or how the divergence will happen, but you can be sure that it will eventually happen.

The two product categories, debit cards and credit cards, are becoming increasingly different, and there's nothing a company can do to change that. Trying to put two cards under the same brand name is an exercise in futility.

Don't try to go against the trend. Time passes and there is always room for new brands. If you don't launch a second brand, one of your competitors will certainly do so.

So why do left-brain thinkers at big companies miss the opportunity to launch new brands? There are three reasons:

1. The brand is introduced to the market through advertising

Typically, managers at large companies will not launch a new brand if that brand is not supported by a significant advertising budget. However, a successful new brand often has to be built in a new product category that takes many years to develop.

That's why many successful new brands have to start slowly and mainly use PR methods. These include Starbucks, Google, eBay, Airborne and Zagat's(89).

The above brands and many others were introduced by entrepreneurs who had the patience to hang on until the market developed.

Any big company looking at Red Bull in its early days would have said, There's no market there. We don't have the necessary advertising budget to launch an energy drink brand.

By the time the market develops, it is too late for brands to follow suit.

2. Brand name due to research

You cannot create a new product category with an extended brand name. New product categories must use a new brand name specific to this category. It has to be Red Bull, not Arizona Extreme Energy. Must be a PowerBar, not a Gatorade Energy Bar. Must be Amazon.com, not BarnesandNoble.com. Must be a Xeros, not an IBM copier. Must be a Dell, not an IBM personal computer.

Marketing history favors new brand names over extended brand names. So why do many companies continue on the path of expanding their product lines?

It's because of research.

When asked which brand name you like, a typical consumer always chooses a familiar name.

Toyota Super or Lexus? Surely the answer will be Toyota Super. Has anyone ever heard of Lexus?

(Either Toyota forgot or the company intentionally neglected to research the name Lexus.)

3. Wide distribution plan

With a grand opening that spends a lot on advertising, the new product needs a widespread distribution plan to achieve higher economic efficiency. Therefore, many companies put pressure on the distribution stage with discount programs, buy two for the price of one, give free gifts and pay advertising fees.

However, this plan often has little chance of success. New brands start very slowly and sell few products, most newly opened brands are bound to fail.

(A recent study by Nielsen BASES(90)and Ernst & Young(91)have shown that the failure rate of new consumer products in the US is 95% and in Europe it is 90%.)

Distribution plans are better for starting small, often with a single store. Charles Shaw(92)(Two-Buck Chuck) started out with a single store (Trader Joe's(93)) in a single state (California) and became the fastest growing regular wine store ever.

Newman's Own Salad Dressing(ninety four)launched at a single supermarket (Stew Leonard's in Norwalk, Connecticut). In just the first two weeks, the store sold 10,000 bottles of sauce.

With a narrow distribution network, you can design special displays and promotions to increase your brand's long-term success.

Multi-branding is not for everyone

In our consulting work, we realized that most large companies strongly oppose the idea of launching a new brand.

On the other hand, most small companies are eager to launch their second and third brands. It seems these companies feel that they are more likely to succeed if there is more than one horse on the track.

Incorrect. Small companies need to focus all of their resources (especially managers' time) on a single product or service, even if that means the company has to let go of a good idea.

Small companies are especially sensitive to competition. The only defense is to make your brand stronger so you can dominate your product category.

Then you can launch a second brand.

Barilla case(95)used to print a very large yellow number one position certification label, nearly