IF YOU TAKE A LOOK at a lot of the leading catalogs in our industry, you’ll see that their growth curves aren’t what they should be. In some cases, growth is a word that’s no longer in their corporate dictionary.
This is not just an industry problem but one that’s challenged a host of companies. Here are some firms that have met the challenge in ways that set an example for all. I’ve added some key factors for keeping the growth curve growing.
When you think of motorcycles, what’s the first name that comes to mind? Honda? Not even close. Yet until last year, Honda was the No. 1 seller of motorcycles; the name you probably thought of – Harley-Davidson – was in second place.
Honda got to No. 1 with an advertising strategy that made motorcycles user-friendly. It opened up the market and made motorcycling seem accessible, as well as acceptable, to everyone. But Honda lost it by not remembering some major elements of continued success.
Add New Products Regularly Over a 10-year period, Honda introduced virtually no new bike styles. If you wanted a cool new Honda, there simply wasn’t one. Harley, on the other hand, went back to designs of the ’40s. Based on input from customers who didn’t want “choppers,” Harley supplied customers with plenty of classic elegance.
Don’t Ignore Changing Times The fact that Honda’s initial strategy made it safe to bike also meant that biking was losing its edge. If anybody could do it, what made those who wanted to stand out from the crowd feel unlike every other motorcycle owner?
“No one tattoos Honda on their arm,” a Honda dealership owner complains. The time was right for Harley’s cult status to expand beyond the cult. If it was good enough for the really tough guys, it became good enough for professionals.
Use Word-of-Mouth Advertising Harley revved up its image by tapping into the customers who already adored the brand and making Harley ownership something special. The Harley Owners Group (HOGs), started in 1983, leveraged the fact that the motorcycles were already informally called hogs and turned its meetings into “in” gatherings of aficionados.
To help overcome past negative stereotypes, the company associated itself with the Muscular Dystrophy Foundation and rode for this charity. Groups of Harley owners today ride for all kinds of charities in various events.
Maintain Quality Standards There’s a reason you hear that it’s really doctors and dentists who ride Harleys today: The bike’s quality is right up there with the best brands in automotive-land. In the late ’80s, the company took the extreme marketing position that its product was worth so much that it would buy the bike back from you at full value if you bought a bigger model the following year. Because production can’t always meet demand, used Harleys have the kind of value usually associated only with premium automobiles. It’s not a wonder that Harleys have come to be called “driveway jewelry.”
Leverage a Great Brand Like Crazy You don’t just buy a Harley – you buy a way of life complete with jackets, caps and a large assortment of bike gear. Controlled licensing means added capital and advertising.
With a plan that began about 20 years ago, has the strategy continued to work for the company? Well, one indication it’s still clicking is that second quarter sales of parts and accessories were up 21.4% from the same quarter a year ago. For another, general merchandise was up 32.3% during the same period.
What if you’re the first in a whole new area, but are totally beaten back by the competition? Prodigy was the early kid on the Internet block, but lost out badly to America Online.
Buy Your Way to the Top Another way to get sales growing is through acquisition. Prodigy has made three such transactions, added new products (such as bilingual service) and teamed with a Baby Bell that will provide a projected 1.2 million new subscribers in three years. The combination of new products, new names and new acquisitions is expected to move Prodigy from No. 4 to No. 3 in the Internet game. If those names come in higher than expected, Prodigy might even overtake No. 2, Earthlink.
The king of the acquisition strategy is Cisco Systems. Having bought 40 companies since 1993, it still has $10 billion more to spend. Sales growth for 1999 was up 43.7%; net income was up 55.2%. At this writing, there were rumblings on Wall Street that this kind of performance wouldn’t hold. Yet I expect most of us would be happy with half the returns Cisco saw in 1999.
Some feel that one of the reasons Prodigy didn’t develop momentum with consumers was because it had a stodgy image. Another company with a similar association was Abercrombie & Fitch. A few years back, if you asked what A&F sold, I suspect eight out of 10 folks wouldn’t have known, and at least one might have guessed it was travel packages – mistaking it for Abercrombie & Kent.
But the name is 100 years old and, even if its identity wasn’t clear, it was one of those names that you thought you should know. The solution?
Dump the Whole Image and Start Anew And in this case, while you’re at it, dump the whole customer base. Beaming straight for the youth market, A&F Quarterly created a magazine-look catalog filled with sexy images and controversy. Sales this year jumped 27.7%. Ask someone if they know A&F now and you might get an answer that includes some of the more negative aspects that the press has focused on (photos which appear to endorse drinking). But the consumer does, indeed, know about – and buy from – this book.
There Is No Bad Publicity Here’s one you probably learned in Marketing 101. While not 100% true, it’s close enough. PR is one of the best ways in the world to get you noticed and help create a loyal following.
Some feel that Abercrombie & Fitch’s story is due for a downturn, believing the advertising image is so strong that the product can’t possibly live up to it. Maybe. But in July a stock market analyst upgraded the stock from “buy” to “strong buy.” And back issues of A&F Quarterly sell for as much as $32 on eBay.
The way to really find out if the goods are up to their hype, of course, is to:
Talk to Your Customers Really listen to what they say. Too many times I’ve been in focus groups and been astonished at how negative input from customers and prospects is filtered out and only the positive comments remain.
In David Garvin’s recent book, “How to Build the Learning Organization,” he talks about “L.L. Bean’s extensive systems for acquiring customer feedback – including specially designed and monitored mountain hikes with selected customers.” Harley’s head of design learned what models customers wanted by literally taking to the road and talking to them. If you’re not using research on a regular basis, you are living on borrowed time.
Diversify, Diversify, Diversify This is a tricky one. Diversification can be a trap that steals from core competencies, distracting the company and making it weak. But done well, it lets you build solidly.
Bear Creek Corp. doesn’t get much press in our industry; it just keeps quietly growing. This mail order specialist’s 1999 sales were up 11%.
While there are many reasons for its continued success, one of them is that it’s much more than just gourmet foods marketer Harry & David. It’s the Harry & David stores and catalog, Jackson & Perkins, Northwest Express and rose wholesaler Bear Creek Gardens. Diversification of titles and selling modes connected with a relatively common consumer base seems to be one of Bear Creek’s strengths.
Joseph Tabeling, president of Delaware Diamond Knives, wisely says: “Diversify in only two ways: building upon your technical strength or uniqueness, or building upon your marketing strength or uniqueness.”
This isn’t a list where you have to do everything on it. Pick and choose what makes sense for you. And create your own ideas. These are just the beginning.
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