Wednesday, May 25, 2005
Focus: The Future of Your Company Depends On It
Focus: The Future of Your Company Depends On It
© 1997 by Al Ries
When you focus a company you create a powerful, laser like ability to dominate a market. When a company becomes unfocussed, it loses its power.
A problem company offers too many products and services for too many markets at too many different price levels. It loses its sense of direction. It doesn’t know where it’s going or why.
Companies seem to flow like a river into new directions or to fill holes in their existing line.
Six different areas seem to generate these line extensions: Distribution - the more products a sales force handles the more likely it is to lose focus; Manufacturing; Marketing; Customer Life Cycles; Geography; Pricing “Some customers can’t afford our price. What do we do about that?” No problem, just introduce inexpensive versions of our brands; Brand inflation. What does our brand stand for?
Confucius say man who chases two rabbits catches neither.
Line extensions do not work!
Most new products are line extensions. Most new products fail. These are two immutable facts that management should keep in mind the next time someone recommends the umpteenth line extension of the product.
Power lies with the specialist, not the generalist.
When convergence products are introduced, they usually attract only a small market.
Leaders are almost always toppled from within as the category divides beneath them.
Do categories divide or do they converge? Do categories divide or do they converge? Focusing a corporation requires courage.
Economic results require that managers concentrate their efforts on the smallest number of activities that will produce the largest amount of revenue.
The good mergers are the ones that emphasize market dominance. In theory, the ideal merger would combine two competitors, each with 50 percent of a market. Companies achieve a degree of market dominance by merging with competitors that match their own product or service offerings.
If you want faster growth, you must first narrow the range of products and services you offer.
A good rule of thumb for the dominant chain is to shoot for 50 percent of the market. Federal Express has 45%, Coca Cola has 45%. For market shares of more than 50% you usually need multiple brands. It’s much better to have 50 percent of one market than 10 percent of 5 markets.
The organization which is focused also develops managers who share the company’s focus.
Perception is reality. The real driving force in the business world is not quality but perception of quality. The objective of your business should be to improve the quality perceptions of the products or services you sell.
Most products are bought verbally, not visually.
The leading brand in any category OWNS that category. What matters is to own the word in the prospect’s mind that defines the category. This is the residual effect of leadership and it’s your most powerful way to dominate a category.
Owning a word in the mind is a powerful driving force both inside and outside the company. A single, simple word is so much more powerful than the typical mission statements that companies spend endless hours dreaming up.
When you have a narrow, focused line, you stand for something. Your salespeople stand for something. Your service people stand for something. They get enthusiastic about the product. They believe in something. It may not be totally logical, but focus works. The road to success, the road to increased sales, lies in narrowing the focus. If you make this concept an inherent aspect of your management approach then you can become fabulously successful.
Virtually every major corporation sees success in one area as an opportunity to broaden the base, to get into other areas aligned to the initial product or service. They seldom look for opportunities to deepen the ditch, to turn their initial successes into a company that dominates an industry for decades.
The biggest single barrier to the development of an effective corporate strategy is the strongly held belief that a company has to appeal to the entire market. More money has been wasted reaching out to a company’s noncustomers than any other single endeavor.
Some customers want to buy the same brand as everyone else. Some customers want to buy a different brand than everyone else.
What kind of a niche do you want to own?
Define your position.
In the long run, the prospect turns to the specialist.
The more products and services you hang on a name, the less focused and less powerful it becomes.
Focus on a common product area. Select a single attribute to segment - price is the most common. Set up rigid distinctions between brands. Create different, not similar, brand names.
You can launch a new brand without considering its effect on your existing brand. Should the new brand fail, the fallout will not affect the reputation of your existing brand.
A focus is simple, memorable, powerful, revolutionary, needs an enemy.
If you’re not willing to walk away from a segment of your business, then you don’t have a focus.
The attempt to appeal to everybody is the biggest single mistake a business can make. Better to stake out your own ground and write off everyone else.
Amazon: http://www.amazon.com/exec/obidos/ASIN/0887308635
© 1997 by Al Ries
When you focus a company you create a powerful, laser like ability to dominate a market. When a company becomes unfocussed, it loses its power.
A problem company offers too many products and services for too many markets at too many different price levels. It loses its sense of direction. It doesn’t know where it’s going or why.
Companies seem to flow like a river into new directions or to fill holes in their existing line.
Six different areas seem to generate these line extensions: Distribution - the more products a sales force handles the more likely it is to lose focus; Manufacturing; Marketing; Customer Life Cycles; Geography; Pricing “Some customers can’t afford our price. What do we do about that?” No problem, just introduce inexpensive versions of our brands; Brand inflation. What does our brand stand for?
Confucius say man who chases two rabbits catches neither.
Line extensions do not work!
Most new products are line extensions. Most new products fail. These are two immutable facts that management should keep in mind the next time someone recommends the umpteenth line extension of the product.
Power lies with the specialist, not the generalist.
When convergence products are introduced, they usually attract only a small market.
Leaders are almost always toppled from within as the category divides beneath them.
Do categories divide or do they converge? Do categories divide or do they converge? Focusing a corporation requires courage.
Economic results require that managers concentrate their efforts on the smallest number of activities that will produce the largest amount of revenue.
The good mergers are the ones that emphasize market dominance. In theory, the ideal merger would combine two competitors, each with 50 percent of a market. Companies achieve a degree of market dominance by merging with competitors that match their own product or service offerings.
If you want faster growth, you must first narrow the range of products and services you offer.
A good rule of thumb for the dominant chain is to shoot for 50 percent of the market. Federal Express has 45%, Coca Cola has 45%. For market shares of more than 50% you usually need multiple brands. It’s much better to have 50 percent of one market than 10 percent of 5 markets.
The organization which is focused also develops managers who share the company’s focus.
Perception is reality. The real driving force in the business world is not quality but perception of quality. The objective of your business should be to improve the quality perceptions of the products or services you sell.
Most products are bought verbally, not visually.
The leading brand in any category OWNS that category. What matters is to own the word in the prospect’s mind that defines the category. This is the residual effect of leadership and it’s your most powerful way to dominate a category.
Owning a word in the mind is a powerful driving force both inside and outside the company. A single, simple word is so much more powerful than the typical mission statements that companies spend endless hours dreaming up.
When you have a narrow, focused line, you stand for something. Your salespeople stand for something. Your service people stand for something. They get enthusiastic about the product. They believe in something. It may not be totally logical, but focus works. The road to success, the road to increased sales, lies in narrowing the focus. If you make this concept an inherent aspect of your management approach then you can become fabulously successful.
Virtually every major corporation sees success in one area as an opportunity to broaden the base, to get into other areas aligned to the initial product or service. They seldom look for opportunities to deepen the ditch, to turn their initial successes into a company that dominates an industry for decades.
The biggest single barrier to the development of an effective corporate strategy is the strongly held belief that a company has to appeal to the entire market. More money has been wasted reaching out to a company’s noncustomers than any other single endeavor.
Some customers want to buy the same brand as everyone else. Some customers want to buy a different brand than everyone else.
What kind of a niche do you want to own?
Define your position.
In the long run, the prospect turns to the specialist.
The more products and services you hang on a name, the less focused and less powerful it becomes.
Focus on a common product area. Select a single attribute to segment - price is the most common. Set up rigid distinctions between brands. Create different, not similar, brand names.
You can launch a new brand without considering its effect on your existing brand. Should the new brand fail, the fallout will not affect the reputation of your existing brand.
A focus is simple, memorable, powerful, revolutionary, needs an enemy.
If you’re not willing to walk away from a segment of your business, then you don’t have a focus.
The attempt to appeal to everybody is the biggest single mistake a business can make. Better to stake out your own ground and write off everyone else.
Amazon: http://www.amazon.com/exec/obidos/ASIN/0887308635
