Advice for Business Failure -- Part II
In The Ten Commandments for Business Failure the third commandment is: Isolate Yourself. (See Part I) Isolate yourself from your clients and/or your customers. One of the most important suggestions from Francis McInerney of North River Ventures is for a business or enterprise to create and maintain a “Thin” Proprietary Fabric with regards to your business decision makers, and your customers in order to stay in close communication and then be flexible in order to respond to changes in the marketplace. In this way you are in close contact or as people say today “wired”. The greater the number of layers between the customers and the decision makers, the greater the isolation the longer the response time to market dynamics. And of course, the only way to accomplish this is by using the Internet.
Coke’s formula change occurred when in fact the product and the brand, just like the bottle and the product-became one and the same. The brand loyalty was far superior to the product.
Coke, who did not control the POS, needed to be closer to the customer in order to have known the incredible brand loyalty they had created. That means there was too much distance-Isolation-and too many organizational layers between the people making the decisions and the consumers who were buying the soft drink. When a business builds brand superiority like Coke had done before they changed their formula, changing becomes undesirable and in Coca Cola’s case, almost impossible, even though people had not had a Coke in twenty years. Because the product and the brand had become indistinguishable, tampering with either one was sure to spell-“trouble”. The brand identification was embedded in the customer’s head not in the product.
Unlike the actual bottle or the formula-a value which is tangible, the Coca-Cola brand has an intangible value. How does anyone assess that value exchange? As anyone in business today knows, even though they may not admit it, determining book value let alone market value of intangibles is the biggest challenge to GAP and financial analysis.
If you really want to see one of the best examples of brand superiority in action today, walk into an Apple Store-opening somewhere near you while other retail outlets are closing-and witness with your own eyes the relationship/loyalty between the customer and the brand. Another brand that has such a loyal following is Harley-Davidson! No isolation here between decision makers and consumers loyal to the brand.
Posted by Anastacio Bueno on 4th October, 2008 | Comments | Trackbacks
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