7 Big Problems Blog Series: The Challenge of Profitable Growth
In the United States, you’ll observe that the condiments aisle of a typical grocery store has over 20 mustard brands. Within these mustard brands, there are often five to eight variations that reflect different tastes (e.g., horseradish, sriracha). In my local market, the mustards take up about six feet of shelf space and run from the very bottom shelf to the top shelf. There are literally hundreds of bottles. As such, the mustard category is an excellent example of a highly contested market.
We have been preoccupied with revenue growth in highly contested markets for the past 20 years. As former senior partners of a global consulting firm, we developed a systematic approach to organic growth that challenges conventional wisdom (it is the focus of our new book published by AMA, The Organic Growth Playbook). We’ll be producing a series of blog posts on ama.org devoted to this topic. We want to stress that we’ll be focusing on organic growth challenges in general – not simply the book content. That said, this being the first blog, herein we will focus on a few of the principles found in the book.
In brief, we have found that the conventional marketing wisdom that permeates all of our textbooks is woefully unreliable. It works sometimes, but more often than not, it does not produce revenue growth. So, what is this conventional wisdom? It typically follows two basic stages: (1) it begins with a focus on refining the product positioning to make it as unique and differentiated as possible, and then (2) effort shifts to activating the target segment with a campaign focused on brand choice (i.e., choose French’s mustard on your next trip to the store). The owners of the major mustard brands (Gulden’s, French’s, Grey Poupon, and relatively new entrants like Heinz) are all following this approach today – with very mixed results. Instead, we would argue that mustard brand owners need to ask themselves three unconventional questions:
- Is positioning the right card to play?
While positioning is often necessary for growth, it is not sufficient for growth. Sure, positioning a product uniquely in the minds of target customers (e.g., Grey Poupon’s exclusive, symbolic position) can be beneficial. But the hard truth is that customers often don’t buy brands they like and think are really different. Even when the brand claims a unique location in mind of target customers, sales don’t automatically follow. Instead, sales are a result of a behavior change. The behavior change may be switching from French’s mustard, bringing new users in the mustard category, purchasing a greater volume of Grey Poupon, or other changes. Our key point is that many brands are positioned “well enough” in the minds of their target customers. As such, the key is to look for specific behaviors to change that can drive brand sales.
- Are we fighting a barroom brawl with our competitors at the brand choice stage of the buying process?
The brand choice stage is a very tough game to play, since everyone is focused on winning share. Instead, Grey Poupon would be better off exploring nonobvious early stages of the buying process to explore where it can influence customer behavior. We call this activity “exploring upstream buyer behavior” to look for high-yield behaviors to change. Over the past 20 years of client work, we have always found that the path-dependent behaviors that occur early in the decision process shape downstream brand choice behavior. It could be a product trial at friend’s home, tasting the mustard at a local restaurant, or simply observing the use of the brand on a cooking show. These are just ideas – the firm would need to map the process in fine detail – to look for the high-yield opportunities.
- Are we practicing “peanut butter marketing” and spreading our marketing communication investment across all stages of the buying process?
When we see brands that spread money across many marketing activities, this typically means that the brand owners have limited knowledge of what marketing tactics work the best. In contrast, a focused marketing spend on one behavior that is upstream can pay enormous dividends. We have seen many winning strategies in which the brand team allocates 70%–80% of its spend on that point of the buying process. Having observed Grey Poupon in the marketplace, we see a whole host of marketing spend across a range of television, internet, and in-store communications. This suggests an “ushering of the consumer throughout the buying process” rather than a focused spend on one customer behavior.
In sum, these three nontraditional questions represent a different way to tackle flat brand sales. This does not mean that we throw away the concept of positioning; rather, it implies that positioning by itself does not necessarily lead to sales increases. Instead, it must be supplemented with a behavior change orientation and targeted spend on key upstream behaviors.