| If you want to win by growing your market share -- | | | | What is a Branded House? |
| there is a better way, a smarter way, than the | | | | A branded house, when done properly, has an |
| traditional advertising and marketing strategy and | | | | overarching reassurance to the customer that those |
| tactics. However, it requires looking at your business | | | | that choose this BRAND share an attribute. Not a |
| and brand from a very different point of view. This | | | | product attribute but an identifiable personal attribute |
| different point of view is hard to grasp because old | | | | that not only sets them apart but is integral to their |
| myths die-hard and old expensive myths seem to die | | | | own personal identification. Choosing such a brand is |
| hardest of all. | | | | not necessarily a matter of showing off or display. |
| If you need to steal share, it does not require | | | | Rather it is absolutely a means of self-discovery and |
| underhandedness (as the name might suggest) it | | | | personal fulfillment instead of having to rely solely on |
| requires smarts. If you think that "stealing," as it | | | | product attributes like in the house of brands model. |
| relates to taking market share, is a short cut to | | | | So, when a branded house launches a new product |
| success -- a means to cheat your way to success -- | | | | or sub-brand, the new addition to their stable |
| you are dead wrong. Winning requires great effort | | | | automatically gains a level of acceptance and |
| and hard work because it means you must outsmart | | | | importance because of the previous identification |
| your competition in order to achieve success. In our | | | | with the parent brand. Most branded houses make |
| book, you must learn how to be different and | | | | the mistake of believing (in this case a form of |
| smarter. You must stop seeing the "marketing game" | | | | self-deception) that the parent brand equity is also |
| as you learned it in college, even if college was just | | | | about efficacy or category. We reiterate: this idea is |
| last year. Things are changing and the future belongs | | | | corporate identity at best. More often, is it simply an |
| to those that recognize and use change to their | | | | acknowledgment of the commodity benefits -- |
| advantage. | | | | benefits of the category that comprises your |
| It is All about Scarcity | | | | business's sandbox. Parent brands differentiate |
| Start with the idea of scarcity. Encapsulated within | | | | themselves not by their category or offering but by |
| scarcity is the entire concept of value. We only value | | | | identifying the type of customer who chooses it. We |
| scarcity. If we discovered a heretofore hidden | | | | use the word type very loosely because we are not |
| mountain range made entirely of gold, the owner | | | | talking about segmentation based solely on race, |
| would not be rich because the abundance of gold in | | | | religion, ethnicity, nationality, gender, age, or |
| the market would make the metal a commodity, with | | | | education. These may all play a part in identification |
| all of the inherent value of tin. Everything has a value | | | | of the target market but the real key is in |
| measured by its scarcity -- the greater the scarcity, | | | | understanding the belief systems that are shared as |
| the greater the value. | | | | germinal, by your most coveted customers. The |
| The pharmaceutical industry today is a case study in | | | | parent brand is how the customer knows that the |
| scarcity because the profits they glean are in direct | | | | brand is for them. |
| proportion to the uniqueness of the patent. They | | | | Efficiency is What Matters Most |
| protect scarcity by patenting their concoction and | | | | Generally speaking, creating a branded house is a |
| then defending that patent as if their very lives | | | | more efficient model than being a house-of-brands |
| depended on it. And they are right; their livelihood | | | | because it allows for a more cost effective means |
| does depend upon it. Wall Street analysts will talk | | | | for new product launches and brand extensions. |
| about these pharmaceutical companies in terms of | | | | However, executing the house of brands strategy |
| product pipelines, FDA approvals, and waning patent | | | | successfully requires uncommon diligence and hard |
| rights. The mix of the three is the difference | | | | work. Both of these are scarce -- and therefore very |
| between a BUY, SELL or HOLD stock | | | | valuable. It is just plain easier to launch individual |
| recommendation. | | | | brands or to try to differentiate your "branded |
| In the absence of any other reason for the physician | | | | house" by the table stakes of your category |
| or patient to choose which pharmacological | | | | because all these require is an understanding of |
| compound to prescribe and use besides drug | | | | yourself -- not an anthropological understanding of |
| efficacy, these companies had better keep the | | | | your most coveted prospects. |
| pipeline filled with new drugs and new patents. Only | | | | You would think that REAL "branded houses" would |
| when a product like VIOXX is pulled from the market | | | | be common. They are not. Automobile companies like |
| because of troubling side effects, does the physician | | | | Ford, Chevy, Chrysler, Dodge, and the like are not |
| council the patient that the OTC available product, | | | | Branded Houses in any real sense, rather, they are |
| ibuprofen, has nearly the same efficacy. | | | | old vestiges of a business that has become more |
| The REAL problem here is a fundamental idea that it | | | | known for individual "brand models" and even more |
| is a smart strategy to build your "business home" as | | | | so by category descriptors of vehicle type like SUV, |
| a house of brands rather than as a branded house. If | | | | pick-up, and mini-van. These categories are identified |
| you don't mind chancing your fortune by putting all of | | | | as "integral" and then the shopper chooses from |
| your eggs in the "R&D" basket then being a | | | | among the many offerings within that category. It is |
| house-of-brands is not a bad idea. | | | | no wonder that the torch of automotive dominance |
| Things are Not as They Once Were | | | | is being passed from "the big three" to a multitude of |
| Often, in the beginning of a company's life cycle, | | | | others. |
| companies differentiated themselves with one or two | | | | Want to Win |
| break through products. It was simply easier to | | | | If you want to win in the market today, you must |
| market product efficacy than it was to dig deeper | | | | find the courage and wisdom to get out of your own |
| and understand just what the customer is buying | | | | way. The obstacle to success is often the company's |
| (who the customer is buying is closer to the truth) | | | | identification with what it believes is its importance |
| and why. It was, and still is, the conventional | | | | and identification instead of what the target market |
| marketing wisdom. In addition to requiring greater | | | | believes is its importance and ID. Once we can |
| smarts and dispassionate intellectual vigor, being a | | | | bypass all the old ideas and beliefs, you can start |
| successful branded house requires as a prerequisite | | | | your branded house on the road to steal share. Doing |
| the ability to see your customer, not as an asset to | | | | so is so rare, "scarce" if you will, and its value is |
| exploit, but as a partner to understand, and with | | | | almost immeasurable. |
| whom one must empathize. | | | | |