Archive for the ‘Business Strategy’ Category

Selecting the Right Name for Your Brand

Thursday, July 8th, 2010

One of the first challenges entrepreneurs face in building their brand, regardless of the industry, is selecting an appropriate name to identify and distinguish their products or services in the marketplace.

That is the principal function of trademarks – a unique identifier that signals to potential consumers the source of particular goods or services. Entrepreneurs and prospective business owners must be savvy from the start in choosing a name that not only accurately reflects their brand aesthetic but that also serves as a trademark, because all names are not created equal. There are some names that make excellent brand identifiers and work very well as trademarks, and others that do not work as well and may not qualify for trademark protection before the United States Patent and Trademark Office (USPTO).

So how do you select the right name for your brand? Here are a few Dos and Don’ts for choosing a truly distinctive trademark that will stand out among consumers and sail smoothly through the USPTO registration process.

1. Do Select a Fanciful or Arbitrary Mark: These types of trademarks are accorded the highest level of trademark protection by the USPTO because they are the most distinctive. Fanciful marks are picked right from one’s imagination, perhaps derived from another word or language or an amalgam of letters that have never been used before so they are novel in identifying any kind of goods or services. Arbitrary marks make use of known words or phrases to identify completely unrelated goods or services. These marks are highly distinctive and also work well as trademarks. Examples of fanciful and arbitrary marks include CLOROX® and APPLE®, respectively.

2. Don’t Choose a Merely Descriptive Mark: Words or phrases that simply describe your goods or services are not very effective as trademarks and are highly scrutinized before the USPTO. These marks are “merely descriptive” and often do not function as trademarks because they lack sufficient distinctiveness for consumers to associate the mark with one particular source of the goods or services. Consumers generally do not associate descriptive marks as a unique source identifier but rather as a description of what they are purchasing. Avoid marks that directly tell consumers what you’re offering. Don’t brand your highly innovative 360° rotating vacuum cleaner as “Rotating Ball Vacuum”, consider instead something like “DYSON®.”

3. Do Select a Suggestive Mark: One way to avoid a “merely descriptive” issue is to select a mark that is suggestive of what you are offering. These marks do not immediately call to mind what your goods or services are, but require some additional thought or leap of imagination. Suggestive marks are fairly strong trademarks and are generally allowed protection by the USPTO. Examples of suggestive marks include “RAYBAN®“ or “ALEVE®“.

4. Don’t Use Your Name or Names of Places: Proper names and surnames are generally not accepted as trademarks unless they have acquired distinctiveness for particular goods or services in the marketplace. This usually requires years of use and extensive marketing to establish the name as a brand and not merely a surname among consumers. Geographic names are also heavily scrutinized because the USPTO is reluctant to grant applicants exclusive rights in such names. Avoid marks that are geographically descriptive of your products, or, depending on the goods or services offered, marks that are geographically descriptive and likely to cause confusion among consumers as to the place of origin of the goods or services. Geographic marks are permissible when used in an arbitrary manner or otherwise unlikely to impact customer purchasing decisions regarding place of origin. Examples include “VINTAGE HAVANA®“ or “100% CAPRI”. The foregoing should not be confused with regional origin marks, such as “CHAMPAGNE” from France or “PARMA” ham.

Choose your brand name wisely. It is the means by which consumers will recognize and ultimately purchase what you are selling, whether it’s cars or canned fruit. Select a name that is unique, memorable and that stands out in the minds of your target customers. For more trademark insights and examples of fanciful, arbitrary, suggestive, descriptive and generic marks, visit the Frequently Asked Questions section at www.FlatFeeTrademark.com.

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Myths about trademarks and the top 5 reasons to register your brand name and logo.

Monday, June 7th, 2010

trademark

Myth no. 1 – Once you register a trademark you own it forever and for everything

Myth no. 2 – Registering a domain name offers all sorts of legal protection

Myth no. 3 – You can save money if you conduct the search yourselves.

Trademark Tip – Top 5 Reasons to Register Your Brand Name or Logo.

There a myriad reasons to protect your trademark, brand name, logo or slogan through federal trademark registration with the United States Patent and Trademark Office (USPTO). Here are just a few of the top reasons why you should seek federal protection for your mark:

1. Trademarks are a part of your company’s intellectual property portfolio. It could very well be one of your most valuable business assets, albeit an intangible one. Trademarks can be accorded a value separate and distinct from other assets in your company. To illustrate, the Coca-Cola® trademark alone is purportedly valued at $70 billion. This doesn’t include other assets such as trucks, manufacturing and bottling facilities, etc., just the Coke® brand. The value of a registered trademark may be listed as a line item asset for companies seeking to attract potential investors or obtain financing.

2. A federally registered trademark grants you nationwide priority claim of ownership to the mark. A registered trademark provides constructive notice to prospective users and potential infringers of your claim of ownership to the mark. In the event of  a dispute concerning rights to use a particular mark, the registered trademark owner will have the benefit of the doubt vis-à-vis a non-registered user of the same mark for similar or related products.

3. In the event of any unauthorized use or potential infringement of a registered trademark, the trademark owner is entitled to seek redress in federal court. The registered trademark owner can bring suit in federal court for trademark infringement and prohibit the alleged infringing mark from being used in commerce in a manner that causes confusion with the registered trademark. Moreover, trademark owners may seek three times their actual damages suffered as a result of the infringement (triple damages).

4. If you are interested in obtaining international trademark protection for your brand, you will need to first have a registered or pending application filed with the USPTO. A federally registered trademark is the basis for U.S. trademark owners to seek international trademark registration. Upon filing your application, the USPTO assigns your mark a serial number (or a registration number, once registered). This number is used to submit an international trademark application under the Madrid Protocol System for International Trademark Registration.

5. Registered trademarks may be filed with the U.S. Customs Service to prohibit the importation of infringing foreign goods that may bear your mark or something similar (“knock-offs”). Many illegal imports attempt to trade off the established brand value of famous or well-known marks. Trademark registrations may be placed on record with the Customs Service so infringing products entering the country may be flagged, seized and possibly destroyed.

So there you have it, the Top Five reasons to protect your brand name or logo through federal trademark registration. There are other reasons, of course, including protecting your brand value and hard earned marketing dollars. For more information concerning trademark law, the trademark registration process, or for questions concerning your particular mark or brand, please contact one of our FlatFee Trademark attorneys at 1.800.769.7790 or info@flatfeetrademark.com .


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Chilean business incubators in the house…

Monday, May 24th, 2010

The complementary nature of non-profit business incubators and for-profit incubators became quite apparent during our meeting with 5 Chilean government sponsored business incubators.

On May 16-19, 2010 the National Business Incubator Association, NBIA, celebrated its first 25 years by organizing the International Conference on Business Incubation in Orlando, Florida.   Amongst the more than 500 business incubators from all over the globe were 5 Chilean business incubators who all decided to visit Kompani Group to explore synergies between their non-profit incubator outfits and a for-profit business and strategy incubator like Kompani Group. The explorations trip for the 5 Chilean business incubators was funded by the Chilean Development Minister, and included Mr. Eduardo Aranda M from Gerente Incubadora de Negocios in Santiago, Mr. Etienne Choupay Magna from Pontificia Universidad Catolica De Valparaiso, Mr. Diego Gonza’lez Carvallo from Austral Incuba – Universidad Austral de Chile, Mr. Enrique Roma’n Gonza’lez from Penanova Incubadora De Negocios and finally Alvaro Bustos Torrebalance of SantiagoInnova.

For more information about the NBIA and this year’s International Conference on Business Incubation please visit http://www.nbia.org/events/conf2010/index.php , this year’s conference host University of Central Florida’s business incubation program at www.incubator.ucf.edu , or visit this year’s title sponsor Florida high tech Corridor Council www.floridahightech.com

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The BlackBand viral marketing campaign

Saturday, April 17th, 2010

Case study: Blackband project

Owner: Camacho Cigars, Authors: Dylan Austin, Gianni D’Alerta

Background/Introduction:

Before we started this project we planned and built the following two sites for Camacho cigars – www.camachocigars.com and www.socialcigar.com (at first we did not reveal that Camacho was behind this site). Through the two sites we built a subscriber list of 4,500 people in less than one year. Since then we have also built www.room101cigars.com, and we are currently working on a new revolutionary social networking platform and corporate site for Camacho Cigars/Davidorff.

Kickoff of the BlackBand project:

To start off, here is an excerpt from the press release, post project:

“The campaign objectives for Camacho included the creation of an engaging, opt-in viral marketing campaign, a successful permission-marketing opportunity as an outlet to sample yet to be released products. A four-part web-series was created without mention of Camacho until the final “reveal” episode. The viewers followed the satirical Independent Cigar Review Bureau, a fictional agency, whose sole purpose was to educate the world about cigar selection, as they used humorous, guerilla-style tactics to enlighten three characters that represented the most common cigar misconceptions”

Process:

  1. We launched the site with this page: http://www.blackbandproject.com/home-temp/
  2. We blasted Camacho’s mailing list of 1000 and the social network we created while I was at Propeller of 3500 people, not as Camacho but as the fictional company. The amazing thing was that the idea was so interesting that we had a very low spam report.  We also ran rich media banner ads that actually played a trailer of the project on the websites the banners resided.
  3. Once the person signed up they would get one episode a week that would build upon the myths and misconceptions of cigar smoking. The Buzz just keep mounting… people passing the links to their friends… it was huge… in the online cigar world.
  4. After they registered they immediately received their first “mission” http://www.blackbandproject.com/d57s-1/
  5. A week after that http://www.blackbandproject.com/6ku6-2/
  6. A week later http://www.blackbandproject.com/hr4s-3/
  7. And then the conclusion http://www.blackbandproject.com/b7x3-conclusion/

Results:

  1. We gained 15,500 new subscribers! With that permission to market to them anything in the future. They are already expecting more from Camacho, and we won’t disappoint them.
  2. Every cigar website was buzzing about the project, we even got more hits on our Black Band Project site in one month that Cigar Aficionado.
  3. After the last video was sent… a month later people got 3 cigars in the mail. So for a whole month, every week… the conversations where about the black band project. Then when the cigars shipped, another huge buzz.

Another Excerpt:

From day one, the campaign captivated the cigar industry and generated sweeping buzz across the country, with thousands of cigar enthusiasts discussing who was behind “The Black Band Project” on social media outlets, including Twitter, Facebook, and cigar-industry message boards and blogs.

End results:

  1. 15,000 leads
  2. 4,000 people got the cigars (people who watched all the videos)
  3. 15% overall sales increase after the launch of the new product.

Marketing in 2010: How and why Amazon (and everybody else) plans to be your new best friend

Friday, April 9th, 2010

You’re up and running, you have clients returning your calls, customers coming in the door or adding product to their shopping carts on your site, and you look around at the economic landscape and are at least momentarily relieved to be able to say “I am doing OK.”

Where do you go from here?  What more can you learn?  Although your products are ingenious and your marketing efforts stellar, hard as it may be to believe you haven’t already conceived of every Great Idea.  We all need to routinely challenge our thinking so that we continue to leap forward, we need to break out of the borders and assumptions we’ve always held about our company and our industry.  So occasionally this year, Kompani Group is going to talk about things we can learn from the most successful companies in other, completely unrelated industries.  Marketers in online retail have much, much more in common with traditional retailers than the few issues of format that set them apart.  And as for size, your revenues and budgets may have many more (or many fewer) zeros at the end than ours, but the fundamentals are identical:  getting our clearly defined message in front of customers and then delivering satisfaction.

There are brick-and-mortar retailers with broadly acknowledged reputations for superior service – been to Nordstrom or an Apple store lately?  Is there any reason why a retailer serving the online world can’t develop the same kind of reputation?

The question occurred to me this morning because I received another e-mail message from barnesandnoble.com.  “Chris,” it began, “you bought the last book written by so-and-so.  His newest novel will be released next month and we’d be happy to hold a copy for you.”  How cool is that?  (And equally important, how simple for them!) Although we know it’s just data manipulation, it FEELS incredibly personal.  “Somebody” at Barnes and Noble knows and uses my name, remembers what I’ve bought there before, and figures out what my previous purchases can tell them about my tastes and interests.  They’re my friend.

The principle is the same (though not quite as proactively executed) at many of the large, successful sites:  Netflix recommends movies to me based on what I’ve watched and rated before, and the behemoth Amazon suggests both new items that fit my profile and companion products that other customers like me have bought.

Is this difficult?  Absolutely not.  Every one of us has the same data base of customer descriptives and purchase history.  Not very many of us use it to anywhere near its optimal marketing capacity.

Let’s look for a few minutes at a retail success story that has been widely studied:  Starbucks.  In its off-line business, what does Starbucks sell?  And how in the world can they expect us to pay six or eight times as much for a cup of their coffee as we would pay down the street – and be happy about it?  Other coffee retailers have successfully moved coffee from a commodity to a differentiated product; only Starbucks has made coffee an experience.  In fact, Starbucks has made its name synonymous with the coffee experience.  They may have been in the headlines lately as they adapt to changes in the economy and in their marketplace – but isn’t that the point?  In the best of times and in the challenging times, they are the ICON – they define the coffee experience.

Is there any reason why a customer’s interaction with your offer, the process of selecting and buying whatever your product or service is, can’t be an experience?

That was a trick question, I’ll admit, because interacting with you  already is an experience.  There’s nothing you can do about that.  Every customer who buys from you (or chooses not to) is going to have an experience with you whether you like it or not.  The only question is what kind of experience are they going to find.

To explore how we can consistently make each consumer experience with us an excellent one, we’re going to look at some of the things Starbucks has done to become the clear leader in their field – such a dominant figure that there isn’t even a close second.

Before anything else, Starbucks had both a vision and a clear plan, which they’ve executed to perfection. Absolutely everything the company does is designed to give the customer a positive, perhaps uplifting, experience while purchasing a quality product.  Notice that “experience” comes before “product” in the sentence.  Because this is the goal, Starbucks is as much about people as it is about coffee – customers who respond to the experience, employees and managers who live the principles and values of the company.  These values – expressed as five principles and five “ways of being,” are published in The Green Apron Book, which every employee carries in the little front pocket of their apron.

In effect, this is Starbucks’ management marketing its concept to its own employees. None of the simple, common-sense ideas has anything to do with coffee – just as none of them has anything to do with secondary towing or cigars or Caribbean resorts (or whatever your own business may be.)  They have everything to do with how to personalize relationships, how to elevate customer interactions, how to preserve the intimacy of a small company even while working hard to become huge.

Starbucks’ store personnel are trained to remember your name and your favorite beverage (and that’s without a built-in data base.)  They understand the old Dale Carnegie saying that “a person’s name is to that person the sweetest and most important sound in any language.” This not only says you remember them, it says they matter to you.  Starbucks’ customers, exactly like yours, are not looking for new best friends.  They just want a positive human-feeling connection and they want their needs to matter.

Retail is detail.  Starbucks’ Chairman Howard Schultz is fond of saying that.  The truth is that ALL business is detail, and the most successful businesses are intensely focused on the execution of details at every level.  The Starbucks’ training programs teach employees to zero in on the minute details that matter greatly to their customers; every aspect of the business that touches the coffee must reflect the highest standards possible.  The goal – which is really more a compilation of small things than it is one or two big, dramatic things – is a “felt sense” among their customers, a global emotional reaction to myriad tiny details that lurk below our conscious awareness.  The name “Starbucks” automatically triggers in us a feeling that has been created over time by the specific details of our experiences there. Researchers in brain activity have found that as much as 95% of what influences our conscious choices resides below awareness.  This is true about our interactions with anyone selling anything – some we feel happy about returning to, others we stress out about just at the sound of their name.

We have to work hard at getting the details right every time.  What percentage of unhappy customers do you think take the time to bring their complaints to management?  They just go elsewhere with a single click or with their feet.

Here’s a key thing that produces delight in customers, that keeps them feeling warm and fuzzy about you:  predictability.  Since consistency (in quality as well as in the customer experience) is a rare and valued thing, companies that master delivering it will ultimately thrive.  Even when something goes wrong (which happens), if the customer knows the problem will be addressed quickly, efficiently and with good humor – we win. Sometimes this contributes even more to a positive “felt sense” than if it had all gone perfectly in the first place.

The Experience is not the same as the Brand – and we all need to focus on building both.  Using Kompani Group as the example, here’s the critical difference:  if you are considering how you feel about Kompani Group, you are thinking about our brand.  If you are thinking about how you yourself feel as a result of your involvement with Kompani Group, then you are thinking about the Experience.  The latter begins by identifying emotions we want customers to feel as a result of their experience with us, and then working back to what the organization has to do to make that happen.  When our clients prefer the experience of working with Kompani Group, they will become committed to it. They will return to us with new projects, they will recommend us to their friends and colleagues (although probably not to their competitors.)

Finally, it’s important to note that the high visibility of Starbucks has engendered a fair share of criticism through the years.  Howard Schultz says he thinks that his “ability to act positively on any criticism is (his) most crucial leadership skill.”  Given and received in a wholesome spirit, there is much to be learned from criticism and much growth to be inspired.  But the world is full of people who have told Starbucks that they would fail, and why.  It’s still happening on some business pages today, just as there are those who wonder how you and your industry can effectively respond to a challenging economy or a changing competitive environment.  The key – for Starbucks and for smart business operators in every segment – is to choose to engage with the future, to reject the idea that the sky is falling, to believe (to know instead) that the sky is the limit.

Signed/Chris Barr

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Launching a Driver sub-brand

Saturday, February 20th, 2010

The economic strains are causing your end-users to trade down, resulting in that the mid-tier and premium brands are losing share to low-price rivals. You face a classic strategic conundrum: Do you tackle the threat head-on by reducing prices, knowing that will destroy profits in the short term and brand equity in the long term? Or do you hold the line, hope for better times to return, and in the meantime lose customers who might never come back? Given how unpalatable both of those alternatives are, you now must make a decision of how to combat manufacturers and distributors of lower priced and inferior products, to avoid losing additional market share and eroding margins.

There are four ways to battle your competition. 1) Launching a true fighter brand, 2) Launching an endorsed sub-brand, 3) Launching a co-driver sub-brand or, 4) Launching a driver sub-brand

Driver sub-brand

Definition:

  • The parent brand retains its primary influence as a driver, and the sub-brand can act as a descriptor-a word or phrase that tells end-users that the company is offering a slight variation on the same product or service they have come to know.

Note: Of the three types of relationships, a driver brand with a descriptor sub-brand is the most risky. The parent brand is vulnerable to cannibalization because very little distinguishes one brand from the other. The risk of cannibalization is greatest when a descriptor signifies merely a lower-quality offering. The risk is minimized when the descriptor signals a different application.

Examples:

  • Mercedes provides a good illustration of a driver brand that has successfully accessed a downscale market with a descriptor sub-brand. In the early 1980s, Mercedes introduced that is now it’s C Class, a small car to compete with the BMW 3 series, as well as with Acura and Lexus.
  • Now priced around $30,000, the line sells nearly 30,000 cars annually in the United States (around one-third of all Mercedes sales in the United States).
  • How could a brand that has historically been identified with prestige and that offers a car selling for more than $100,000 pull off this kind of downscale move?
  • First, Mercedes delivered a quality product.
  • Second, the C Class introduction was accompanied by an intensive effort to reposition the core brand’s message from prestige to performance.
  • Third, marketing for the C class aggressively targeted young buyers. The C Class name creates a distinction that allows the sub-brand to attract a slightly different consumer, but it does not drive that consumer’s decision to buy the car. The Mercedes brand retains that power.

Celeron – B to B (Intel) 1997

  • To combat AMD’s $260.00 K6 processor chip, and to avoid having to lower prices on its Pentium processor, Intel launched a sub-brand dubbed Celeron.
  • Despite a couple of early pricing mistakes and mishaps in expectations management, Intel succeed in combating and keeping AMD from creating a strong foothold in the low-end market. With a share of 80% of the overall processor market and their ability to roll out new processors frequently, Intel proved to be a testament to both the power of fighter brands to open up lower-tier market opportunities and their unequaled ability to keep competitors at bay.
  • Note: The EU have recently been successful in winning a ruling against Intel regarding antitrust issues and pricing manipulation resulting in a fine of $1.5 billion dollars. We wonder whether the costs of the now 5 year old lawsuit brought by AMD, the fine and the distractions for Intel’s senior management team, would justify the launch of another Celeron value sub-brand when you already have more than 80 percent of the total market share.

Launching a Co-driver sub brand

Sunday, February 14th, 2010

The economic strains are causing your end-users to trade down, resulting in that the mid-tier and premium brands are losing share to low-price rivals. You face a classic strategic conundrum: Do you tackle the threat head-on by reducing prices, knowing that will destroy profits in the short term and brand equity in the long term? Or do you hold the line, hope for better times to return, and in the meantime lose customers who might never come back? Given how unpalatable both of those alternatives are, you now must make a decision of how to combat manufacturers and distributors of lower priced and inferior products, to avoid losing additional market share and eroding margins.

There are four ways to battle your competition. 1) Launching a true fighter brand, 2) Launching an endorsed sub-brand, 3) Launching a co-driver sub-brand or, 4) Launching a driver sub-brand

Co-driver

Definition:

  • The parent brand and the sub-brand act as co-drivers with roughly equal influence on consumers.

Examples:

United Express (United Airlines)

The United Airlines brand provides United Express, a commuter line, with the convenience of connections to United flights and a reputation for safety. There is no cannibalization because the flights do not compete. United Express is differentiated from its parent brand by its lower level of on-board service, its use of smaller planes, and its less formal personality.

Good News (Gillette)

Gillette Good News also illustrates a successful co-driver relationship. Gillette Good News disposable razors are a definite cut below ‘the best a man can get” that is the Gillette legacy in shaving. But disposable razors are qualitatively different from the upscale razors such as Sensor and Atra with which Gillette has long held a technological edge. Gillette could provide a rationale for a disposable brand by being the best in the disposable category. But the Good News user’s personality – younger and more carefree than the traditionally masculine and sophisticated Gillette persona – plays a key role in distinguishing the disposable brand from the rest of the line. Both brand names – Gillette and Good News – influence the customer’s decision to buy the product.

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What provides an unrivaled return on investment, and is safer than investing in Gold?

Friday, January 22nd, 2010

We have always thought that most companies are missing the boat in terms of how much their brands are really worth, because they don’t understand how much a small investment in their brand quickly multiplies the perceived value when going public or when attracting growth capital. In most cases a small investment in their brands immediately translates into a competitive edge for products sold off/on the shelf or on the web.

Since all businesses have a number of case studies that are relevant to their target audience, we suggest that you establish a CSS style web site, with a blog and content management backend where posting a new page or new blog is as easy as writing a word document or an e-mail. If you take a closer look at your competition, you will also realize that they aren’t effectively using the social media and other means of SEO friendly web sites, which in turn will send you scores of inquiries from new prospects.

Building a well designed and professional site, writing content and educating you on how to maintain or update the site is fairly inexpensive, and can be done for about $7,500 – $10,000.

Even though our own site www.KompaniGroup.com and www.ActiveServe.com are more complex than what you may need, they represent the web 2.0 CSS type of web site we are talking about. Both of these sites are receiving new hits and leads every week, mainly because they both are optimized for SEO and because we are active in posting blogs.

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Why Most CEOs Are Bad at Strategy

Saturday, January 16th, 2010

Why most corporations lack a “big idea” for how to effectively communicate their brand and essence to their stakeholders.

This is a great article from Roger Martin from the Harvard Business Review. We think this explains why most corporations don’t have a “big idea” for how to communicate their brand and essence to their stakeholders. Enjoy. Well done Roger!

A good strategy is the product of the creative combination of two disparate logics — rather than a single linear analytical logic flow — but CEOs and “strategists” are seldom conditioned to become skilled at the requisite creative combination.

There is a lot of strategy in the world, produced by all types of CEOs, corporate heads of strategy, and strategy consultants. Yet very little of this strategy is any good. There are undoubtedly many possible explanations for why this is the case, but here is my own pet theory, which I offer up to elicit your reactions and surface alternatives:

A good strategy is the product of the creative combination of two disparate logics — rather than a single linear analytical logic flow — but CEOs and “strategists” are seldom conditioned to become skilled at the requisite creative combination.

The two most fundamental strategic choices are deciding where to play and how to win. These two decisions — in what areas will the company compete, and on what basis will it do so — are the critical one-two punch to generate strategic advantage. However, they can’t be considered independently or sequentially. In a great strategy, your where-to-play and how-to-win choices fit together and reinforce one another.

For example, operating only in your home country market may seem to be a perfectly fine where-to-play choice and winning on the basis of technological superiority a perfectly fine how-to-win choice, but their combination almost always produces a bad strategy — because of global economies of scale in R&D, some competitor will globalize and blow out the geographically narrow national player. These choices don’t fit or reinforce.

In contrast, Apple wins because its where-to-play choice — broad participation across a number of high-involvement consumer electronics categories (computers, music, phones) — is matched wonderfully with its how-to-win choice — competing on user experience design and eco-system orchestration. It leverages the winning capabilities it has built in these two areas across the domains in which it has chosen to play to produce its winning Macs, iPods, and iPhones.

The trouble is, CEOs don’t usually get to the top by integrating different logics in that way. More often they rise by pushing a single logic. They like to analyze a problem and come up with a single, sufficient answer, like how to globalize or get costs under control or introduce a new product, rather than trying to look for answers to two questions that fit together elegantly.

As a consequence, many of them come to think of strategy as either where-to-play or how-to-win. For example, in the global pharma industry today, it appears that most CEOs define their strategies as simply playing in the historically lucrative pharma industry and doing whatever the rest of their competitors do. This is silent on how-to-win and the resultant set of me-too strategies is one reason why performance in the industry is going downhill fast.

Or alternatively, for many high-tech CEOs, the dominant choice is to win with a proprietary technology. This is silent on where-to-play and that has led many technology companies astray because it really matters where exactly that technology is used — as we see with Nortel Networks, which is now in the bankruptcy court despite its treasure trove of technology patents.

Meanwhile, corporate strategists and strategy consultants get ahead by demonstrating mastery of all sorts of conceptual tools for analyzing where-to-play (five forces, profit maps, etc.) or how-to-win (experience curve, value chain, VIRO, etc.). However, there as yet is no analytical tool for combining a given where-to-play choice with a congenial how-to-win choice or vice versa. That takes creative insight. But the majority of people who seek to become corporate strategists or strategy consultants do so because they are much more comfortable with analysis than what they perceive as guesswork. So they tend to become expert at strategic analyses, not strategy.

That, I submit, is why CEOs and “strategists” so seldom produce good strategies. Strategy is a creative act and the way to produce good strategy is go beyond basic analysis to creatively integrate your choices concerning where you play and how you propose to win.

Roger Martin is the Dean of the Rotman School of Management at the University of Toronto in Canada and the author of The Design of Business: Why Design Thinking is the Next Competitive Advantage (Harvard Business Press, 2009).

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Launching an endorsed sub-brand 2/4

Saturday, January 9th, 2010

This is the second of 4 posts about how to combat manufactures and distributors of inferior products that are being reverse engineered and produced in China and sold at much lower prices to your existing clients. You are losing market share fast, and it is time to do something about it.

The economic strains are causing your end-users to trade down, resulting in that the mid-tier and premium brands are losing share to low-price rivals. You face a classic strategic conundrum: Do you tackle the threat head-on by reducing prices, knowing that will destroy profits in the short term and brand equity in the long term? Or do you hold the line, hope for better times to return, and in the meantime lose customers who might never come back? Given how unpalatable both of those alternatives are, you now must make a decision of how to combat manufacturers and distributors of lower priced and inferior products, to avoid losing additional market share and eroding margins.

There are four ways to battle your competition. 1) Launching a true fighter brand, 2) Launching an endorsed sub-brand, 3) Launching a co-driver sub-brand or, 4) Launching a driver sub-brand

Option Two – Endorsed Sub-Brand

Definition:

  • A sub-brand is a brand with its own name that uses the name of its parent brand in some capacity to bolster equity.
  • In the case of downscale offerings, the role of sub-brands is to help managers differentiate new offerings from the parent brand while using the parent’s equity to influence consumers.
  • The idea is both to maintain the parent’s credibility and prestige regardless of how the sub-brand performs and to protect the original brand from cannibalization.

Endorser

  • Definition: The parent brand acts as the endorser of the sub-brand. In this case, the sub-brand is the more dominant of the two, and drives end-users’ decisions to purchase the product as well as their perceptions of the experience of using the product.
  • When a company offers an endorsed sub-brand, there are three brands at work. The parent brand itself is split into two: a product brand and an organizational brand. The product brand remains as it was, a premium brand delivering a certain image and associated benefits.
  • The endorser strategy provides an excellent chance to minimize damage and reduce the threat of cannibalization to the parent brand. Keep in mind that all three brands need to be managed actively.

Examples:

Sabre B to C (John Deere)

  • John Deere’s foray into value lawn tractors provides a good illustration of an endorser relationship. John Deere was well known for making a lawn tractor that sold for approximately $2,000 through full-service specialty dealers.
  • Although the manufacturer was still able to command that price in the specialty market, volume retailers such as Sears and Home Depot had begun to serve a growing portion (around 30%) of that market, selling products at half John Deere’s prices.
  • So the company introduced an endorsed sub-brand for the value retailers: a low-cost tractor, Sabre from John Deere, that featured an inexpensive design and a different color and feel that John Deere’s other products

Medalist B to B (Hobart)

  • The Hobart Company, which makes an industrial-grade mixer for use in bakeries and restaurants.
  • Managers decided to create an inexpensive mixer for us in commercial and industrial kitchens to compete with offshore entries without damaging its flagship “gold standard” Hobart mixer line.
  • In 1996 the company introduced Medalist from the Hobart Company. Medalist mixers were lighter than Hobart mixers.
  • In addition, they were made with less costly materials and construction processes; and they had a color and logo distinct from those of the flagship Hobart.
  • In this example, The Hobart Company, has become an organizational brand that endorses the sub-brand, Medalist. Medalist itself is a new product brand. Thus the parent brand, Hobart, is separated from the sub-brand, Medalist, by the organizational brand, The Hobart Company.