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We’re back for another round, bookworms! In this segment we’re discussing branding with the brand masters themselves: none other than the inimitable Al & Laura Ries. Impressive, eh? Yes folks, I take my host duties very seriously. For those of you new to our Book Club, welcome aboard (learn all here). And for those returning for a second round, welcome back....
What will we be doing this segment? We’ll be getting a little Darwinian, debunking some long-held branding “truths”—and likely, spurring some debates. What’s more? You get a (free!) bonus just for reading this article. Hey, I’m just doing what I can to heat things up in an otherwise very cold winter here in the Northeast.
Our feature this segment is “The Origin of Brands,” a book that explains how changing conditions in the marketplace, much like in nature, create endless opportunities to build new brands and accumulate riches.
But here’s where it gets interesting: these opportunities are not found where most people and companies look—that is, in the convergence of existing categories like television, the computer, cellphones and the Internet. Instead, opportunity for new brands lies in the opposite direction (psst: we’ve been overlooking the strategy of “divergence,” which explains the miniscule survival rate of so many new brands).
By following Darwin’s brilliant deduction that new species arise from divergence of existing species, Al and Laura outline an effective strategy for creating and taking an effective brand to market. So, while Darwin gave us “The Origin of Species,” the Ries's give us “The Origin of Brands." I read the book in late 2005 and was astonished at how many marketers had not yet heard of or read it, especially given the provocative subject matter--supported through case study upon case study--illuminating how divergence dramatically lowers risk and increases success rates.
Which begs the question: why is divergence regarded like a dirty little secret? Al and Laura point to convergence hype, a decades’ long theme trumpeted by scores of media outlets. To kick-off this segment I discussed the book’s themes with Al and Laura; here are the highlights:
What are the main points of The Origin of Brands? There are four points: First, endless opportunities are constantly being created to build new brands. Second, the best way to take advantage of these opportunities is to create a new category and then be the first brand in that category. Third, as time goes on, new categories will continue to diverge from existing categories. Companies that try to lock categories together with line-extension names or with convergence products are doomed to failure. And finally, the process of category creation is identical to the process of species creation as documented in Charles Darwin’s classic book, The Origin of Species.
Why do you believe that new, successful brands can only be created through divergence? Our studies of marketing history show that virtually every successful new brand was created by divergence of an existing category and not by convergence. Take the first commercial computer, the mainframe computer, the category that built the IBM brand. Did the mainframe computer converge with another product to create an opportunity to build a new brand? No, it did not. The mainframe computer diverged creating endless opportunities to build brands.
Some computer divergence categories and the brands they spawned include: Minicomputers (Digital Equipment); Workstations (Sun Microsystems); 3-D workstations (Silicon Graphics); Personal computers (Apple); Business personal computers (Compaq); Personal computers sold direct (Dell); Desktop laser printers (Hewlett-Packard); Computer peripherals (Logitech); Hard-drive MP3 players (iPod). Virtually every product or service category goes through the same process. It starts with a single product and then through the process of divergence creates many new categories and many new opportunities to build brands.
What have been some of the worst branding mistakes you have witnessed over the past few years? Without a doubt, line extension. It is new categories that create opportunities to build new brands. A company should encourage the development of a new category by selecting a new name to represent that category. Instead, companies often hang existing brand names on new categories, thereby sacrificing their ability to dominate these categories in the long run.
Invariably the long-term winners in new categories are the brands with new names, not the brands with line-extended names, like: Dell, not IBM personal computers; Ebay, not Yahoo! Auctions; Quicken, not Microsoft Money; PowerBar, not Gatorade energy bars; and Red Bull, not AriZona Extreme Energy. Companies often line extend because they are focused on building brands rather than creating new categories. But brands are worthless unless they stand for something in the mind. The more things you try to hang on a brand name, the less it stands for.
How about telling us some branding success stories? Dietrich Mateschitz was traveling in Thailand when he encountered a popular health tonic called Krating Daeng. When he returned to Austria, he decided to introduce a similar product which he called Red Bull. Even more important than the Red Bull name was his choice of a category name. He called the category an “energy drink.” As it happens, the first energy drink. Today, Red Bull does $2.3 billion in sales worldwide and Dietrich Mateschitz has become the richest man in Austria.
Almost every branding success story follows the same pattern. An entrepreneur notices an empty hole in the marketplace and then introduces a new brand that goes on to exploit that new category. Some examples include: Starbucks, the first high-end coffee house; Silk, the first soymilk; Costco, the first warehouse club; Under Armour, the first athletic underwear; and Glide, the first flat dental floss. The list is endless and they all follow the same pattern. Find an open category and then develop a new brand to dominate that category. As the category takes off, your brand also takes off.
Before I close there are a couple of logistics to cover:
Free Books: While we spread out the 30 free books across time zones last segment we want to be even more fair going forward so recipients of free books will be chosen by way of random selection vs. the first 30 to sign-up. It’s like the lottery—yes technology is involved to ensure fairness—but you get a book instead of cash . I hope you get a free book, but even if you don't, please do still participate: at $16.47 for the hardcover and $10.17 (wow!) for the paperback, the book is a steal for all the knowledge it imparts (an eBook is also available for $10.95). And don't forget there are many future segments to get a free book!
Book Club Membership: If you signed-up for the first segment you’re already in the database (so you need not sign-up again and yes, you're eligible for a free book). But if you unsubscribed at any point during the first segment, you’ll need to sign-up again to be eligible to get a free book. Newcomers should hurry up and sign-up as I’ll be e-mailing the free book recipients early next week, so you have until Friday, February 16th at 5pmEST to sign-up if you've not already (you can sign-on to the Book Club at any time, you’ll just not be eligible for this segment’s free books if you sign-up after Friday, Feb. 16th).
In closing, Group Review for the book will start Tuesday, March 20th, giving you five weeks to get your books read and, uh, wait…did you hear that? Who’s try to cut-in on my post? Oh, its word from our authors--let me hand over the article to them to close:“This is Al and Laura Ries here. We are so excited to be working with the new MarketingProfs Book Club and CK for our book ‘The Origin of Brands’. We look forward to stoking the fire over the convergence vs. divergence debate with all of you. When Al & Laura Ries get involved you know it will be controversial! Talk to you all during Group Review in March.” You heard it from them bookworms, get ready for a great round #2!
P.S.: Did you think I forgot your bonus? Not a chance. Al and Laura have created a 20-page, chapter-by-chapter overview of The Origin of Brands for us to download--absolutely free! While it’s not a replacement for the book it’s a terrific piece for you to enjoy before you dive into the full read. Download your copy here.
Helpful Links:
Have questions? Go here
Want to join the Book Club? Just go right here.
Still have questions not addressed in our FAQs? email me at: bookclub@marketingprofs.com
Lest we not forget our nifty disclaimer: Neither CK nor MarketingProfs is in any way retained by any author or publisher to promote any book or make any profit from the sale thereof. This book club is for the marketing community--we just get to learn alongside you fine folks :-).
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Comments
Count me in, CK. Great choice!
Posted by: Mark Goren | 02.13.07
Yeek! - being first matters to a brand :) This looks to be a good read, CK
Posted by: Bob Glaza | 02.13.07
Sweet! Al and Laura have been 2 of my marketing and branding heroes since I was first exposed to them in college. And The Origins of Brands is about the only one of their books that I haven't read yet, so it works out perfectly! Another home-run CK!
Posted by: Mack Collier | 02.13.07
Great to have the Book Club back for another round, CK!
Thanks so much for all your work putting this together -- your passion is what fuels the Book Club engine, for sure.
Posted by: Ann Handley | 02.13.07
Thanks all--please know this takes A LOT of help from Ann Handley, Val Frazee and Sharon Edwards. Plus the authors get a lot of homework, too :-).
This book is a tremendous read, a real eye-opener--and particularly interesting since it maps branding to Darwin's law of divergence.
Posted by: CK | 02.13.07
This is great -- I'm always interested in brand discussions! :-)
Posted by: Kermitfan | 02.13.07
Can't wait to take part, CK! Another winner.
Posted by: David Berkowitz | 02.13.07
I'm ready to go. Count me in, ck.
Posted by: David Reich | 02.13.07
This is fantastic!! I read three books of these wonderful authors and “Origin of Brands” is my favorite!! I can’t wait for the discussion! Thank you very much!
Posted by: Vanessa Bright | 02.13.07
Bring it on!
Posted by: Paul McEnany | 02.13.07
Interesting choice. Personally, I filtered out Ries after his advice to rename Guatemala to draw more tourists and reporting that BMW had changed their slogan.
Some better selections for today's marketer might be Marketing Champions, Life After The 30 Second Spot, or Moneyball.
Posted by: Pete | 02.14.07
Pete the whole 'rename a country' thing didn't really resonate with me either, but I don't think we can deny the influence both Al and Laura have had and continue to have over the marketing landscape. IMO most of their branding advice is just as timely today as it was in the 80s.
Posted by: Mack Collier | 02.14.07
Thanks for the free book.
Posted by: Carl Crawford | 02.23.07
Great choice, CK!! I read this a little while ago and can't wait to read what others think.
Posted by: John Rathnam | 02.23.07
Thank you for sending me a very nice FREE BOOK especially with the personally autograph :)
Love from Indonesia
Posted by: Cindy Sally | 03.10.07
Alright! Our first point of contention and it isn't even about this book.
I haven't read any works by Al and Laura before, so I can't speak to their renaming of a country issue. I do however know examples of countries that have changed names. Usually the reasons for changing the names were for lesser reasons than trying to increase revenue through tourism (and probably improve the standard of living for the citizens at the same time).
I'm only part way through this book, but am enjoying the read. That only stands to reason though since I am a divergent kind of guy myself.
Greetings from sunny Florida.
Posted by: Loren Smith | 03.12.07