Divergence, Convergence, and Other Marketing Strategies

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The world’s first recognizable brand debuted in Venice in 1495. It was the premier volume of the printer Aldus Manutius’ celebrated library of classic Greek texts, beginning with Aristotle. A small book measuring 5”x6”, it was printed in easy-to-read italic font, edited by the most talented scholars of the day and marked with the distinctive dolphin-anchor logo of the Aldine Press. Yet it and the other volumes were a revolutionary innovation: They made literature of the highest quality available to a wide readership for the first time in history.

 

What is so remarkable about Aldus Manutius is that his small books embody virtually every element of product design and marketing strategy necessary for the successful introduction of new brand products. What worked in 1495 continues to work today. Yet in the five centuries since his printing press clanked into operation, many quality brands have tried – and failed – to achieve the same balance of innovation and recognition as these books from the Renaissance. Was Aldus Manutius’ success a triumph of business savvy or merely a case of beginner’s luck?

 

After reading the provocative new book, The Origin of Brands: Discover the Natural Laws of Product Innovation and Business Survival, by Al and Laura Ries, it is evident that the classic laws of marketing need to be interpreted before being used. Trying to adapt the strategies of notable brand success stories can lead to frustration or failure, even for promising new products. Branding, according to the authors, is a complex process based on a thorough understanding of the category in which the new brand must compete. And the best way to succeed with a new product is by developing it into the dominant brand of a category of its own, as Aldus Manutius did with his pocket-sized books.

 

Al and Laura Ries are a father-daughter team who have a successful marketing firm in Atlanta. They did not include the saga of the Aldine Press in their book, which may seem a surprising omission in an examination of the development of brand strategy. The Origin of Brands, however, is not a history lesson as much as a reflection on natural history and its implications for the world of business. Instead of a Renaissance scholar to guide their inquiry, the authors chose Charles Darwin.

 

In their critique of The Origin of Species, the authors note the importance which Darwin attached to the theory of divergence, “the evolutionary principle responsible for the creation of new species.” Human beings did not evolve from monkeys, according to Darwin, but “diverged or branched off from the same tree that also produced apes, gorillas, chimpanzees, orangutans, gibbons and monkeys.”

 

The Rieses contend that Darwin’s concept of divergence can be applied to the process of introducing new brands and to maintaining the continued profitability of existing companies.

 

McDonald’s and Starbucks are classic examples of new brand divergence. Diners and coffee shops were a fixture of the American scene, but McDonald’s, with its limited menu based on the hamburger, and Starbucks, with its emphasis on European-style gourmet coffees, separated their brands from the competition and created a category for themselves which they could dominate. McDonald’s and Starbucks defined their merchandising categories, and their brands are now virtual synonyms in the popular mind for hamburgers and upscale coffee.

 

The authors likewise believe that long-established companies can utilize divergence as well.

 

The Rieses make a strong case that such companies must rely on innovation and novelty rather than trying to capitalize on name recognition from their already successful brands. There is a temptation for companies to innovate through line-extension, building on previous triumphs. In these situations, the authors advise a company to introduce a new brand and create a distinctive identity for it, much as Hanes did with its L’eggs pantyhose. Hanes entered the supermarket scene as revenues from its sales in department stores were declining. Rather than use its pre-existing brand, the company unveiled an old product in clever new packaging, using an unorthodox name which stuck in the customers’ minds. L’eggs achieved spectacular sales and domination of its category. Had Hanes relied on a more conventional approach, it is unlikely the company would have achieved the same degree of success.

 

Companies which opt for the more gradual, evolutionary approach rather than a strategy of divergence often lose the opportunity to dominate their category. The Rieses offer numerous examples of brand failures due to line-extension tactics. Motorola, for instance, introduced the cell phone but lost out to Nokia, a single-product company, while the Dell personal computer far outsold the IBM PC year after year. “A vigorously growing, dynamic product…,” the authors write, “needs to break away from the confining environment of a conglomerate if it is ever going to reach its full potential.”

 

The emphatic importance which Al and Laura Ries give to divergence is based on more than a desire to adapt Darwin’s ideas to the business world. There is a profound philosophical premise sustaining their beliefs. “Divergence,” they write, is “the least understood, most powerful force in the world.” Convergence, on the other hand, the widely-held theory based upon combining products to create new brands, is anathema to them, a form of “Swiss army knife thinking” which has very limited application at best and has often blighted hopes and consumed untold billions of investment dollars.

 

“The clock radio has done more damage than all the government agencies and Wall Street investment bankers combined,” the authors declare, pointing to one of the few usable convergence products. The information revolution has excited utopian visions that a similar convergence of technologies could lead to new products like Interactive TV. Despite prodigal levels of spending by Microsoft, Time Warner and others, American consumers have demonstrated only a lukewarm receptivity to watching television and logging into the Internet at the same time. Other hybrid applications, ranging from videophones to the Bell-Boeing V-22 Osprey helicopter/airplane, are dismissed by the authors as a waste of money and, in the case of the Osprey, the cause of 30 deaths during test flights.

 

The Rieses give special attention to the divergence/convergence face-off in the realm of information technology. Companies like Lotus that are the first to introduce high quality computer or software brands usually reap the rewards of skyrocketing profits and popular recognition. Yet the effort to “bundle” successful products with other technologies or new software applications is a temptation which is difficult to resist and even harder to realize. When the successful Lotus 1-2-3 spreadsheet was repackaged to deal with Microsoft Office, the attempt failed dismally.

 

“How do you compete with a software powerhouse like Microsoft?” the authors ask. “You don’t do it by emulating Microsoft, by packaging your products in a bundle, as Lotus tried to do with SmartSuite. Bundling only works for a leader with monopolistic powers. Rather you look for ways to branch off from the mainstream.”

 

This was the policy of Intuit Inc. with its three separate software brands, Quicken, Quick-Books and TurboTax. Intuit “does $1.4 billion in annual sales with net profit margins in excess of 10 percent.” As further proof of this divergence success, the authors underscore the fact that Intuit brands have held their rival, Microsoft Money, to “a minuscule market share.”

 

The authors are resolute, even occasionally strident, in their advocacy of divergence strategy. In some respects, their new book is a continuation of their arguments in a previous work, The Fall of Advertising and the Rise of PR, published in 2002. There is certainly a note of irony in this, since the approach they recommend in advertising a brand is radically different from the strategies they propose for creating one. Where the Rieses believe that a new brand should branch out, as a new species does in Darwinian divergence, they maintain that a slow process of evolving brand publicity is the best course. Big advertising budgets fail to gain or hold customer loyalty and they point to companies like Starbucks and Microsoft which gained dominance of their brand categories without splashy ad campaigns. But no amount of advertising dollars could turn Zima, a malt alcohol beverage which fizzled for Coors, into a success. When a brand is hard to define, it is hard to sell.

 

The Origin of Brands is a book which deliberately advances its thesis in the face of much of the accepted wisdom of the business world and it will no doubt antagonize quite a few corporate directors and marketing gurus. There is no secret formula for achieving success with a new brand. And the Rieses, to their credit, never claim to possess one. But

it is hard to disagree with their use of Darwin’s theories as a conceptual framework for understanding branding. It’s also hard to rebut the theory that new ideas, the courage to diverge from the pack and the resolve to base a species or brand on what it does best are behind the success and survival of people and the products they use.

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"Divergence, Convergence, and Other Marketing Strategies." Knowledge@Wharton. The Wharton School, University of Pennsylvania, [25 August, 2004]. Web. [28 August, 2014] <http://knowledge.wharton.upenn.edu/article/divergence-convergence-and-other-marketing-strategies/>

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Divergence, Convergence, and Other Marketing Strategies. Knowledge@Wharton (2004, August 25). Retrieved from http://knowledge.wharton.upenn.edu/article/divergence-convergence-and-other-marketing-strategies/

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"Divergence, Convergence, and Other Marketing Strategies" Knowledge@Wharton, [August 25, 2004].
Accessed [August 28, 2014]. [http://knowledge.wharton.upenn.edu/article/divergence-convergence-and-other-marketing-strategies/]


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