Apple put all the chips on white
It seems they are everywhere, iPods, Razrs, and Howard Stern. Brands with huge momentum and strength. And competing against them seems impossible. How does this happen?
Apple, Motorola and Sirius took three great ideas and then focused on them. They focused their resources, their marketing, their PR and their entire companies on these three ideas. They took products that represented a small percentage of their total sales but a large percentage of their future hopes and made them the essences of their companies.
Creating a big branding winner is not just good for one brand, but it creates a halo effect for the entire company. Success breeds more success.
Look at Apple Computer. The company has struggled for years with 3% of the personal computer market. Long considered to have a cooler and better product that the Wintel machines, they have been unable to make much headway against Hewlett-Packard and Dell.
Then along came the iPod, a new little music player product. So what did they do?
Apple put all of its chips on white. They put the entire company’s might behind the iPod. The majority of its promotion, advertising and PR dollars went to the iPod despite the fact it was initially an insignificant percentage of Apple Computer’s sales.
The result? The iPod is a runaway success and it’s leading a turnaround at the computer company itself. Apple sold 14 million iPods in the last quarter alone.
But despite 2005 being a sensational year, the iPod and iTunes together still only represents 39 percent of the company’s total sales. The other 61 percent of sales continue to come from computers, peripherals, software and services. The rest of Apple had greatly benefited from iPod’s success. Apple’s computer sales were up 26.8% over 2004. And today they have 4% of the PC market. The halo effect.
Yet look at how do most marketing dollars get spent at most companies? A little over here, a little over there, and some there. Most companies allocate resources across all of their brands. Taking all its eggs and putting them in one brand’s basket, strikes most marketing people as risky.
Not only that, putting all your eggs in one basket makes the brand managers with empty baskets a little more than angry. It takes a strong and determined leader like Steve Jobs to pull off such a strategy, but the rewards are clear. Focus delivers. More companies need strong leaders with the conviction to focus.
Look at Motorola. In the third quarter of 2005, the company shipped 38.7 cellphones. But of those 38.7 million phones, only 6.5 million were Razr phones, 16.8 percent of the total. Yet almost everywhere you look you see only see Razr being promoted; you might think it is the only product Motorola sells.
Sirius satellite radio did the same thing. It has come storming back from a slow start against market leader XM. How? Out of the 120 channels offered on the network, Sirius is only promoting only one, Howard Stern, the crass and controversial shock-jock from New York. Stern is not for everybody, half of the Sirius subscribers probably never want to listen to the channel.
Does Sirius offer other exciting programming? Absolutely. But the focus on Stern has generated enormous PR. The focus on Stern has created memorable advertising. And the focus on Stern had boosted subscribers from 660,000 in 2004 to 3.3 million subscribers today. Myself included.
What should your company do? Take a look at the brands in your stable and pick your best bet. Even if it is small, even if it represents 0% of today’s sales, put all your energy and efforts into making this one brand a big success.
Focus. Make your best horse a big winner and the whole barn will share in the glory.