A brand becomes stronger when it narrows its focus.
There is a coffee shop in every town in America. In cities, coffee shops can be found in every building. So what can you find to eat in a coffee shop? Everything: breakfast, lunch, dinner, sandwiches, muffins, hot dogs, hamburgers, sandwiches, cakes, ice cream, and of course, coffee. What did Howard Schultz do? In a series of business moves, he opened a coffee shop that focused on selling coffee, all kinds of coffee. In other words, he narrowed the focus. Today, Schultz’s baby, Starbucks, is a rapidly expanding chain that brings in millions of dollars in annual revenue.
His company, Starbucks Corp., is worth $8.7 billion on the stock market. And Howard Schultz owns a majority of the company's stock. There are stores selling ready-to-eat meals in every town in America.
In big cities, you can find such places around the residential area. So what can you eat in a deli? Everything. Soups, salads, hot and cold sandwiches, three kinds of steaks, four kinds of hamburgers, five kinds of cheese, hard rolls, soft rolls, special rolls, three kinds of pickles, four kinds of bread, five kinds of bagels, potato chips, pretzels, cornflakes, muffins, doughnuts, cookies, cakes, candy bars, ice cream, frozen yogurt. Beer, soda, water, coffee, tea, soft drinks of all kinds. Newspapers, cigarettes, lottery tickets. Deli stores pride themselves on selling everything.
What did Fred DeLuca do? He narrowed his focus and sold just one sandwich, the submarine sandwich. There are many good things about shrinking a brand rather than expanding it. That was a stroke of genius in DeLuca’s case.
Fred DeLuca named his chain Subway, a great name for a store that only sold submarine sandwiches. It was a name that no customer would forget. The second smart move was the management. When you specialize in making submarine sandwiches, you become good at making them.
The average McDonald's has 60 or 70 items on its menu, yet half of its employees are ill-equipped to handle the complexities of today's business.
And people wonder why the food and service here are no longer as good as when McDonald's only had hamburgers, fries and soft drinks. (McDonald's original menu had only 11 different items).
Subway has become the eighth largest fast-food chain in the United States. The company has more than 15,000 stores in 75 countries around the world. Since Subway is still a private company, it's hard to know exactly how much profit they make, but we do know how much Fred DeLuca paid himself (he was forced to disclose his salary in a court hearing). In 1990, Fred DeLuca paid himself $27 million. In 1991: $32 million. In 1992: $42 million. In 1993: $54 million. In 1994: $60 million.
Those are impressive numbers! Charles Lazarus owns a store called Children's Supermart, which sells just two things: furniture and toys for children. But he wants to expand. The most common way to expand? Add more items.
Yes. He would have added bicycles, baby food, diapers, and baby clothes. But Lazarus didn’t. He dropped the furniture line and stuck to toys. There are benefits to shrinking the brand rather than expanding it.
First, Lazarus filled the empty half of the store with toys, giving customers more options and more reasons to visit. Then he changed the name of the store from Children's Supermart to Toys “R” Us.
Today, Toys “R” Us sells 201T3T of all toys sold in the United States. And Lazarus stores have become the model for category killers in retail.
For example, Home Depot specializes in home goods. The Gap specializes in casual wear. The Limited specializes in women's lingerie. PetsMart specializes in pet supplies. Blockbuster Video specializes in video rentals. CompUSA specializes in computers. Foot Locker specializes in athletic shoes. Most single-line specialty stores follow the same five-step model:
1. Narrow your focus.
A strong branding program always starts with narrowing the product line.
2. Large quantity of goods.
A Toys “R” Us store typically carries 10,000 toys while a large department store carries only about 3,000.
3. Buy cheap.
Toys “R” Us makes money by buying cheap toys, not by selling toys.
4. Cheap sale.
When you buy cheap goods, you can sell them cheaply and still make a profit.
5. Dominate a product line.
The ultimate goal of any branding program is to dominate a product line. When you dominate a product line, you are very powerful. Microsoft has 95% of the worldwide desktop operating system market. Intel has 80% of the global microprocessor market share. Coca Cola has 70% of the world cola beverage market share.
And to dominate a category, you need to narrow your brand focus. Why do so few marketers narrow their brands? Why do most marketers want to extend their brands? It’s because people look at successful companies and get sidetracked. They assume that those companies are successful because they’ve extended their brands. (For example, Starbucks is now busy selling everything from ice cream to bottled drinks to tea.)
But let’s focus on one important point. Do you want to be rich? Ask yourself: is it possible to be rich just by doing what rich people do? What rich people do: They buy expensive houses and eat in fancy restaurants. They drive Rolls-Royces and wear Rolex watches. They vacation on the Riviera. Will buying a house, a Rolls-Royce and a Rolex make you rich? Obviously not.
On the contrary. You will most likely run out of money or even go bankrupt. Most people look for success in the wrong places. They try to figure out what successful companies are doing and then do exactly the same thing. What do those companies do? They buy Gulfstream jets.
They implement programs like management empowerment, leadership training, financial disclosure management, and quality management. And they expand their brands. Does buying a $42 million Gulfstream V or expanding your brand seem to make your company successful? No.
If you want to be rich, you have to do what rich people did BEFORE they were rich. If you want to have a successful company, do what successful companies did BEFORE they were successful. What they did is what you need to learn. And as you can see, they all did the same thing. They narrowed their focus.
When it first started, Domino's Pizza sold pizza and submarine sandwiches; Little Caesars sold pizza, grilled shrimp, fish and chips, and rotisserie chicken; Papa John's sold pizza, cheese sandwiches, submarine sandwiches, sauteed mushrooms, sauteed zucchini, salads, and onion rings.
How do you think Tom Monaghan, Michael and Marian Ilitch, and John Schnatter7 turned Domino's Pizza, Little Caesars, and Papa John's into powerful brands? By expanding their menus or narrowing them? There's a lot of good in narrowing the focus.
According to Unicom
