The brand that broke the first rule of economics – Warby Parker

The brand that broke the first rule of economics – Warby Parker

I studied economics at University and was taught that the first rule was ‘When price increases, demand decreases, all other things being equal”. However as with every rule, there was an exception and in economics it is called a ‘Giffen good’. For a Giffen good demand actually increases when the price increases, however we were told that it doesn’t happen very often, if ever

The early days of Warby Parker and the price of their first spectacles show this can and did happen.

WP1

Warby Parker traces its origins back to 2008 and a discussion between four graduate students attending business school at the Wharton School of the University of Pennsylvania.

David Gilboa had lost his glasses on a backpacking trip and the cost of replacing them was so high that instead of buying them he spent the first semester of grad school without them, squinting and complaining. Another of the four, Jeffrey Raider, had broken his glasses and had to pay $500 to replace them. It dawned on them and the other two, Neil Blumenthal and Andrew Hunt, just how hard it was to find a pair of great frames that didn’t leave your wallets severely depleted.

Blumenthal had previously been involved with a not-for-profit organization called Vision Spring that provided eye tests and low-cost prescription glasses for developing (countries?). He had been to the factories and seen companies “producing glasses for people living on less than four dollars a day, and literally ten feet away on that same production line were some of the biggest names in fashion that you would find on Fifth Avenue”. He knew producing glasses was dominated by a few firms who clearly were earning significant mark-ups.

They decided there was something in the idea and started doing more research and agreed that they would each put $25,000 into the venture. They also enrolled in a class where the requirement was to develop a business plan. Doing this allowed them to get a credit towards their degrees but also have access to the teaching staff to get their opinions and advice.

They took an early draft of their plan to one professor but when he saw their planned price, he baulked. “He looked at us and slid our PowerPoint back at us and said ‘That’s not going to work. Listen guys, one-tenth the price is just outside the realms of believability’” recalled Blumenthal.

They decided they needed to check this out and arranged an on-line survey looking at how willing people would be to buy glasses on-line at a range of prices starting at $50 and ending at $500. The results showed that at least in part their offer was that exception to the first law of economics. Demand went up as prices rose from $50 it was only after $100 that the ‘normal’ results came into play and demand started to drop off as prices rose.

They decided that they would pitch their glasses at $95 a pair. “If we had priced at $45, first nobody would have believed the quality would be good. And [as they learnt] we would have had no gross margin to run the business and market to people” explains Blumenthal. In all the interviews and reports I have seen there is no mention as to whether they knew they had a Giffen good.

That extra margin became vital pretty quickly, as the team did more research. People said they liked the idea but were not sure they would actually buy them unless they could see them in advance. The team’s first solution was a virtual try on feature on the website. The idea was that people could upload a photo of themselves and virtually try-on the different frames. However, what sounded like a good idea didn’t work, the technology at the time wasn’t sophisticated enough, scaling was difficult, and the glasses often looked distorted.

WP2

It was only then that they struck upon the idea of a free home try-on service, whereby the customer would get five pairs to try on at home. They could order or not at that point and return/mail-back the rejected frames once they had decided.

The whole home try-on service cut into the profit margins and every gram counted; as the lighter the packages were, the less they costed to ship. The team had what they call their “Apollo Thirteen moment”. A reference to the famous situation where the team trying to save the astronauts in the malfunctioning spacecraft had to identify every piece of non-essential ‘weight’ so it could be dumped. They used lighter cardboard, cut out metal straps and used lighter weight packing materials.

By mid-February 2010 they were ready to launch, under the brand name “Warby Parker” a name which had been agreed only after a long process: “It is a combination of the names of two characters  that appear in a journal by author Jack Kerouac. They liked Kerouac, most famous for writing, ‘On the Road’ as they associated with his rebellious spirit, his aim to break free from the shackles of social pressure and embark on an adventure.

WP3

With limited funds, they couldn’t afford advertising, but they hired a PR agency who managed to get them coverage in GQ and Vogue. The launch was a success and they quickly sold out of their limited inventory.

From there, via additional funding and lots of hard-work the brand took-off and one example of the brand’s success is that investors’ nowadays regularly see pitches where budding entrepreneurs pitch their idea as “The Warby Parker of…”

Morals

I normally like to draw a moral from the brand stories I write but there are lots in the Warby Parker tale:

  • If you can identify an industry which is dominated by a few players and consumers are paying higher than necessary prices, it is a new business opportunity (Just ask Richard Branson who built his Virgin brand on the premise)
  • Most brands aren’t built on a single good idea and will probably need a number to overcome challenges along the way
  • There is such a thing as a Giffen good, sometimes an extremely low price means people will assume what’s on offer is low quality, whether that’s true or not

 

Actions speak louder than words

Actions speak louder than words

Dr-Martens-History-6

I read the story about Doc Martens repaying the money that the UK Government had given it for furloughing some of its employees, something that it was under no obligation to do and thought again how it is actions rather than words that demonstrate whether a brand has real principles.

However it was only when a friend re-posted the story on Facebook (thanks Kate), that I remembered that I had written the story of the birth of the brand in my latest book “Inspiring Innovation”. I decided my little action could be to share it publicize the boots and the brand.

https://www.theguardian.com/uk-news/2020/aug/12/dr-martens-repays-uk-furlough-cash-after-strong-lockdown-sales?fbclid=IwAR1n813RYjtIeL9wVezZH40jTTe7ihmjJfYEqSTDyHO04sFR3CEToFjnrWA

Enjoy:

Accidents will happen but then so can innovations

One measure of success for a brand is for it to acquire a nickname.

Dr. Martens doesn’t have one. It has at least four – Doc martens, Docs, DMs and Bovver boots and even the soles which are trademarked as Airwair are known colloquially as Bouncing Soles.

It is a British brand but the original inspiration came from a German orthopaedic surgeon.

Klaus Märtens was a doctor in the German army during World War II.  While on leave in 1945, he went skiing in the Alps but unfortunately had an accident in which he injured his ankle. It caused a lot of pain and he found that his standard-issue army boots and even ordinary shoes were just too uncomfortable.

He had to find a solution and so started work on ways to improve the comfort provided by his boots. Inspiration came from seeing some tyres and he landed on the idea of air-padded soles.

After the war he started making and selling the boots but without much success. Luckily for him about this time he met up with an old university friend, Herbert Funck who had become an engineer.

Funck was intrigued by the new shoe design, and the two decided to go into business together. In 1947, in Seeshaupt, Germany, they started producing a revised and improved boot, using discarded rubber from old Luftwaffe planes and airfields.

The comfortable soles were a big hit with German housewives, and about 80% of sales in the first decade were to women over the age of 40.

In 1952 they opened a factory in Munich and by the end of the 50s the pair were looking for new sources of growth and started exploring opportunities to market the footwear internationally.

British shoe manufacturer R. Griggs Group Ltd. were immediately interested and quickly agreed to buy patent rights to manufacture the shoes in the United Kingdom.

Griggs decided to anglicise the name to Dr. Martens. They slightly re-shaped the heel to make them fit better and showing their flair for branding added what would be the trademark yellow stitching. They took out the British trademark on the soles as AirWair.

martens griggs

Launched on April Fool’s day 1960 the first Dr. Martens boots in the UK were the 1460s, a style which is still in production today. It was an eight-eyelet, oxblood-coloured, smooth leather design.

Sales quickly proved that it hadn’t been a foolish decision to buy the patent rights. The immediate appeal was amongst people who were on their feet a lot and wanted the extra comfort – people like postmen, policemen and factory workers.

However as time passed the brand started to appeal to other groups of people. In the 1960s, skinheads started to wear what they called “dms”. In the late 1970s, they became popular amongst punks, new wave musicians and a number of other youth subcultures.

In 2006, Griggs’ 1960 Dr. Martens AirWair boot was named in the list of British design icons which included Concorde, Mini, Jaguar E-Type, Aston Martin DB5, Supermarine Spitfire, Tube map, World Wide Web and the AEC Routemaster bus

SPARKPOINT: Surprisingly personal misfortune can be a source of inspiration.

A story about a story-telling brand

A story about a story-telling brand

They say that branding is about differentiation but if you think about luxury watches and you’re thinking of Rolex, Breitling, IWC, Zenith, Tag Heuer or Longines, you are thinking about a brand based in Switzerland and which was established over 100 years ago. Not so very different from one another then.

There is however a smaller but highly respected brand. It is based in England but named after a French Farmer. It was founded less than 20 years ago, in 2002.

What differentiates it, is not that their watches are more accurate and reliable, though they are both accurate and reliable. No, what differentiates them, is their story and the stories behind their watches.

In homage to that, this is my take of the story of the birth of the brand and the roles two former pilots played in its creation…

Euan English

Euan English was an ex-RAF pilot with a PhD in Aeronautical Engineering. He had a passion for restoring and flying old aircraft and a love of mechanical timepieces. He would often buy old clocks at auctions and try and get them going again.

He had two sons, Nick and Giles, and as they grew up, they spent much of their childhood helping him make and restore things in his workshop.

The three of them even built an aircraft that the Nick and Giles still fly.

english brothers

Then, in March 1995 tragedy struck. Nick and Euan were practicing for an air display in a 1942 WWII Harvard aircraft. it was involved in a dreadful accident; Euan was killed, and Nick was seriously injured. He had broken over 30 bones and the doctors were worried that he might die too.

Giles had been waiting to take off for the next sortie when was told about the accident and the death of his father.

Six months later, things looking were looking a bit better. Nick was recovering and back in the air, being flown by Giles.

Together they agreed that life was too short to waste and they should find something they could do together and which they both loved. They decided they wanted a life dedicated to crafting beautifully engineered mechanical devices.

A few years later Nick & Giles were flying again, this time across France in their 1930’s biplane. However, on this day, another fateful series of events was conspiring to come together; with the weather closing in and a rough-running engine, they decided they would have to make an emergency landing.

They landed in a field and were met by a friendly farmer. It turned out that the farmer, like their father, had also flown aircraft during the war and was a gifted engineer. The brothers stayed in his home and their aircraft was wheeled into a barn.

The boys soon noticed another similarity with their father, as, along with numerous engine parts there were half-restored clocks on the walls and tables all around the farm. The farmer wore his father’s old wristwatch.

The brothers couldn’t believe their luck and enjoyed his warm hospitality. When they left, they promised him that he wouldn’t be forgotten.

His name? Antoine Bremont

True to their word, when the brothers launched their own brand of luxury pilot’s watches, there was never any doubt that the brand would be called Bremont.

bremont watches

The brand has carved a successful niche amongst those much older and mostly Swiss brands by making what their website describes as “beautifully crafted pilot’s watches of exceptional quality”… that are all “tested beyond the normal call of duty”.

All their watches are hand built in limited numbers only and of course they come complete with a story.

Stealth pilot

There is a range inspired by a B-2 Stealth bomber pilot who wanted a completely black watch to match his completely black aircraft.

They tell a story about how they are the only company to test their watches for supersonic ejector seat deployment from a fighter plane. They will also fit your watch with a special red bezel if you are a pilot who has successfully ejected from a plane, though they hope they don’t have to fit too many of those!

And the moral is we all love a good story and telling one can help lift and differentiate your brand. What’s your story?

Making healthcare better

Making healthcare better

 The tale behind the NHS and how storytelling played a role (along with many other things)

Anenurin_Bevan,_Minister_of_Health,_on_the_first_day_of_the_National_Health_Service,_5_July_1948_at_Park_Hospital,_Davyhulme,_near_Manchester_(14465908720)

I have long thought that the NHS is an amazing brand and, as someone who is fascinated by the stories behind brands, I’ve been doing a little digging and was fascinated to see how storytelling, a hot marketing topic, played a part in the brand’s birth.

Like so many innovations much of the credit is given to one founding father and the rest of the ‘family’ are forgotten. While Aneurin or ‘Nye’ Bevan does deserve much praise for the birth of the UK’s National Health Service (the NHS) it is worth telling the full story and celebrating some of the other characters along the way.

The story begins nearly 40 years before that momentous day, the 5th July 1948; the day when The National Health Service, was launched by the then Minister of Health in Attlee’s post-war government, Aneurin Bevan, at the Park Hospital in Manchester.

In those days at the turn of the century, if someone found themselves needing a doctor or to use medical facilities, they were generally expected to pay for those treatments themselves. In some cases, local authorities ran hospitals for the local ratepayers especially the less well off, an approach originating with the Poor Law.

The specific ‘germ’ of the idea for the NHS is generally traced back to 1909 and the publication of the Minority Report of the Royal Commission on the Poor Law. The committee was headed by the socialist Beatrice Webb.  She and her fellow committee members argued that a new system was needed to replace the ideas of the Poor Law as those ideas were now antiquated as they had been around since the times of the workhouses of the Victorian era. The report said that it was narrow-minded and unfair to expect those in poverty to be entirely accountable for themselves and their health. The ideas were however ignored by the then new Liberal government.

However, beyond parliament, the report did prompt others to start advocating changes. These included Dr Benjamin Moore, a Liverpool physician who wrote about the need for “The Dawn of the Health Age”. Moore was probably the first to use the phrase ‘National health service’. He went on to set up State Medical Service Association which held its first meeting in 1912.

The next landmark came in 1929 when the Local Government Act of that year pushed local authorities to run services which provided medical treatment for ‘everyone’. On 1st April 1930, the London County Council took over responsibility for around 140 hospitals, medical schools, and other institutions. Adoption elsewhere was piecemeal.

Citadel

The next character to join the fray was Dr. A.J Cronin and his contribution was a work of fiction. He wrote a novel “The Citadel” which was published in 1937. It was both controversial and provocative. It strongly criticised the inadequacies and failures of the prevailing healthcare system. The book told the story of a doctor from a small Welsh mining village who climbed the ranks to become a leading doctor in London. Seduced by the thought of easy money from wealthy clients rather than the principles he started out with, the doctor becomes involved with pampered private patients and fashionable surgeons. But when a patient dies because of a surgeon’s ineptitude, the doctor sees the error of his ways returns to his principles.

Cronin said of his book “I have written in The Citadel all I feel about the medical profession, its injustices, its hide-bound unscientific stubbornness, its humbug … The horrors and inequities detailed in the story I have personally witnessed. This is not an attack against individuals, but against a system.”

The novel was made into a 1938 film which features some of the biggest stars of the day including Robert Donat, Rosalind Russell, Ralph Richardson and Rex Harrison. (In later years it inspired a number of re-makes, and a television series)

All the interest helped provoke more discussion and debate about the notion of a national health service and it was increasingly apparent that there was a growing consensus that the current system of health insurance should be extended to include dependents of wage-earners and that voluntary hospitals should be integrated into a broader service.

However, discussions were to a degree put on hold by the outbreak of the Second World War but, with the importance of health, they were picked up again.

By 1941, the Ministry of Health started to draw up a post-war health policy reflecting a vision that services would be available to the entire general public. A year later the Beveridge Report put forward a recommendation for “comprehensive health and rehabilitation services”, a proposal that was supported right across the House of Commons by all parties.

In 1944 the Minister of Health, Henry Willink, put forward a White Paper, which set out the guidelines for the NHS. The principles included how it would be funded from general taxation and not national insurance, that everyone would be entitled to treatment including visitors to the country and that it would be provided free at the point of delivery.

It was endorsed by the cabinet.

In 1945 Clement Attlee was elected Prime Minister and Aneurin Bevan became Health Minister. He was charged with taking the ideas from Willink’s white paper and turning them into a reality.

Aneurin_Bevan_(1943)

Making it happen was a mammoth task. It took three years but ultimately brings the story back to 5th July 1948 and the hospital in Manchester.

So while Bevan took, and still takes most of the headlines, he wouldn’t be remembered if it wasn’t for Beatrice Webb, Dr Benjamin Moore, Dr. A.J Cronin, Henry Willink and many others.

371px-NHS-Logo.svg

 

MORAL:  Storytelling is a powerful tool for persuading people. Can you use storytelling more in your organization?

How a Welsh harpist helped create one of the world’s most famous marketing icons

How a Welsh harpist helped create one of the world’s most famous marketing icons

Nansi record

Mary Ann “Nansi Richards” (nee Jones) was a Welsh harpist, sometimes known as the “Queen of the Harp”. She was an expert on both the triple and pedal harps.

Her interest began at the age of 10 and at 12 she owned her first harp. She won the National Eisteddfod harp competition three times in succession and went on to enrol at the Guildhall School of Music but left after a year. She teamed up with American comedian “Happy” Fanny Fields on the Music hall circuit.

Fanny Fields was famous for her Laughing Songs and for the Frog Dance, and the two young women devised tricks for Nansi to do while playing the harp, such as playing with her back turned, or playing two harps simultaneously.

They were very successful and went on to tour America. As well as many theatres the pair played for the Kellogg family and Nansi became friends with W.K. Kellogg.

It was during this time that Nansi pointed out that Kellogg sounded very similar to the Welsh word ‘ceiliog’ which means rooster or cockerel.

sweetheart 2

Kellogg’s Corn Flakes had been promoted using various concepts including ‘the sweetheart of the corn’ but the connection with a cockerel and the start of the day was clear.

The idea was given life by advertising agency Leo Burnett and Cornelius was ‘born’. The name is, depending on your point of view, inspired or – sorry – very corny. In some accounts the colouring of Cornelius reflects the Welsh flag with its green, red and white but that focuses on a more modern version of the character. In his original guise Cornelius had a green body, red comb, yellow beak, and multi-coloured (red, green, and yellow) tail and yellow legs and feet.

Kelloggs_Cornelius_Rooster

In early television commercials, Cornelius can’t crow until he eats a bowl of Corn Flakes because “Nothing gets you crowing in the morning like Kellogg’s Corn Flakes.”

A later, longer-running series was the Tall up campaign. These featured a little boy who we see eating his Corn Flakes for breakfast  suddenly the image of Cornelius on the box comes to life and takes the boy on a mini adventure. There is always an obstacle or danger and Cornelius produces a box of Kellogg’s Corn Flakes and sings, “Tall up and up and up and up and up with the tall corn taste of Kellogg’s!”  The little boy grows duly very tall allowing him to save the day.

https://www.youtube.com/watch?v=RBBy7uRPNOE

Dino

 

Cornelius still features prominently and proudly on the pack some 63 years after he first appeared

Corn flakes

And what happened to Nansi?

Well, she continued to play and tour and frequently appeared on radio and television.  She was the official harpist for the Welsh Eisteddfod for a number of years. In 1967 she was awarded the MBE for her services to music in Wales and received in 1977 received an honorary Doctor of Music from the University of Wales. She published a volume of her reminiscences, entitled CRWPWRDD NANSI, in 1972.

nansi_richards

However, as far as I know the marketing industry hasn’t honoured her contribution to marketing iconography in any particular way .

The Clever Widow

The Clever Widow

220px-Veuve-Clicquot-Boursault

This tale works for me on many levels. I love champagne, I love brand stories and I want to find more brand stories where the lead character is a woman.

So, when I heard about Barbe-Nicole Ponsardin and her role in creating and building the Veuve Cliquot brand I decided I would have to write my version of the inspiring tale.

Barbe-Nicole Ponsardin was the daughter of an affluent textile industrialist in Reims, France. Next door lived Philippe Clicquot who also ran a successful textile business. They decided that coming together would be better than competing and following a custom prevalent in the 18th century they agreed the best way to seal the alliance was to arrange a marriage between their children.

So, in 1798, when she was 21 years old, Barbe-Nicole married Francois Clicquot, Philippe Clicquot’s only son. Happily, it seemed to work out well.

While the Cliquots’ focus was textiles, they also ran a small wine business. Reims, where the family lived, is in the Champagne region and though sparkling wine had been invented, the Champagne region was at that time more famous for its still white wines. Philippe Cliquot would buy from wine producers and export on; he had no real intention of expanding or moving into production. He used the wine to help fill out the boat loads of textiles he exported.

Francois and Barbe-Nicole had a different plan, and despite Philippe’s reservations  they set about learning the wine trade. Despite their passion for the industry, with the Napoleonic wars raging, their champagne business stalled and looked ready to collapse.

In 1805, Francois fell ill and died soon after, amongst rumours that it wasn’t a fever but suicide. Both Barbe-Nicole and her father-in-law, Philippe, were devastated by Francois’ death. Philippe announced that he would exit the wine business.

Barbe-Nicole however had other plans and approached her father-in-law with her ideas. Though he knew she was highly intelligent it is still somewhat surprising that he agreed. He however stipulated that she must first go through a period of apprenticeship. For four years she worked with the well-known winemaker Alexandre Fourneaux trying to make the business profitable.

It wasn’t really working and so Barbe-Nicole went to her father-in-law again, asking for more money, and again he agreed.

This time things aligned better for her. The Napoleonic Wars were ending, and she had plenty of wine in her cellars wine that would become the legendary vintage of 1811, but her success still depended on her taking a huge risk. She knew that there was huge potential in the Russian market for the kind of champagne she had been making – an extremely sweet champagne (it had  about twice as much sugar as there is in today’s sweet dessert wines). She wanted to get in early and corner that market.

The problem was that there were still naval blockades. She wanted to get ahead of potential competitors so smuggled much of her best wine to Amsterdam, which would mean a faster route to Russia. When peace was declared the shipment left immediately and her champagne beat that of her competitors by weeks.

alexander

Not long afterwards Tsar Alexander I announced that it was the only kind of champagne that he would drink. With this royal endorsement, her wine was a huge success.

Her next problem was that demand was potentially going to outstrip supply. Champagne making, at that time, was a tedious and wasteful business. Champagne is made by adding sugar and live yeast to bottles of white wine, creating a secondary fermentation. As the yeast digests the sugar, the by-products are alcohol and carbon dioxide, which give the wine its bubbles. The problem however is that once the yeast has consumed all the sugar, it dies leaving a winemaker with a sparkling bottle of wine but dead yeast in the bottom of the bottle. The traditional solution was to pour the champagne with the dead yeast from one bottle to another. It was this process that made production so time-consuming and wasteful. It also could ‘damage’ the wine by constantly agitating the bubbles.

To overcome the problem Barbe-Nicole introduced a revolutionary new method, known as riddling. Instead of transferring the wine from bottle to bottle to rid it of its yeast, she kept the wine in the same bottle but consolidated the yeast by gently agitating the wine. The bottles were turned upside down and twisted, causing the yeast to gather in the neck of the bottle.

Champagne-Riddling-Rack-Veuve-Clicquot-Pupitre

Not only was this a quicker method, it produced better quality champagnes. Luckily riddling remained a house secret, testimony to the loyalty of her employees. It would be decades before competitors like Jean-Rémy Moët would find out how to replicate her method.

Barbe-Nicole, the clever ‘veuve’ (French for ‘widow’) went on to expand the business and the Veuve Cliquot brand globally before she died in in 1866. She never remarried and some historians believe that was because it would most likely have meant she would have had to relinquish control of her business.

VC

In the later years of her life she wrote the following advice for a grandchild: “The world is in perpetual motion, and we must invent the things of tomorrow. One must go before others, be determined and exacting, and let your intelligence direct your life. Act with audacity.”

The advice rings true for marketers today.

And the moral is if at first you don’t succeed, but you truly believe in what you are doing, try and try again. Is there something you truly believe in that deserves another chance?

 

Footnote: thanks to Paul Graham, Marketing & Communications Director, UK, Moet Hennessy portfolio who mentioned the story during a webinar hosted by the Marketing Society Scotland

The janitor who helped put a man on the moon – Purpose in action

The janitor who helped put a man on the moon – Purpose in action

janitor

In the last couple of years, much has been written about brands having a ‘purpose’ – a reason to be above and beyond making a profit. Much more is being written about it now. Many commentators are hoping that the “new normal” will present an opportunity for a more purposeful and better future.

If this is going to materialize, one thing that needs to happen is that everyone in those purpose-led organizations needs to be truly engaged and inspired by their respective purposes.

I recently read Alex Goryachev’s Fearless Innovation which reminded me of perhaps the most famous example of a purpose that united and inspired an organization.

Interestingly that purpose was ‘given’ to the organization in question.

Speaking to Congrss and The Nation, President Kennedy said on May 25, 1961; "I Believe th at this Nation should commit Itself to Achieving the Goal, Before This Decade Is Out, Of Landing a man on tne Moon and returning him Safely to Earth,"(MIX FILE)

With that short and now famous sentence Kennedy’s had effectively given NASA’s Apollo program its mission, its purpose.

It would be later that year that something would happen to demonstrate how that purpose had already permeated throughout the whole organization.

Wanting to show his continued support for the moon-shot and to try and further win over the broader American public who were still sceptical about the endeavour, Kennedy visited the NASA headquarters.

Like many presidential visits to different organization he held meeting and had presentations from the senior management, but he also took time to take a tour of the facility.

Along the way he stopped and talked to a number of employees.

He noticed a janitor who was mopping the floor and stopped to talk to him.

He asked him what he did at NASA. He might well have been expecting the man to reply that he mopped the floors, took out the trash, did odd jobs and helped fix the heating but he didn’t.

Instead he simply said, “I’m helping put a man on the moon.”

 

apollo_11wiki

 

From Duck to Duct – Lessons from past crises

From Duck to Duct – Lessons from past crises

AP19291195986705

 

Like all mothers in World War II, Vesta Stoudt worried about the safety of her children. She had two sons in the US Navy

Unlike other mothers though, she had a very particular concern based on her experience working in an ordnance factory. She was concerned that the seals on ammunition boxes were difficult to open and could lose soldiers, and her sons, vital seconds in the heat of battle.

Vesta duct

She worried away at it and came up with an idea which she then had tested at the factory. It seemed to work well, so she wrote a letter to President Franklin D. Roosevelt and suggested that the boxes were sealed with a waterproof fabric tape.

The letter was forwarded to the War Production Board who immediately saw the potential benefits and asked Johnson & Johnson to see what they could do. Since 1927, the Revolite division of Johnson & Johnson had made medical adhesive tapes from duck cloth and a team headed by Revolite’s Johnny Denoye and Johnson & Johnson’s Bill Gross built on this existing product and developed a new adhesive tape which could be ripped by hand, and didn’t need to be cut with scissors. It came in one colour : army green.

Their new product was made of thin cotton duck, coated in waterproof polyethylene with a layer of rubber-based adhesive bonded to one side.

waterproof-ammo-boxes-during-World-War-II-1

It became known as ‘Duck’ tape though whether this was because it was made with cotton duck or because it was green and water resistant like a duck’s back no-one knows.

Sailors, soldiers and airmen soon released that it wasn’t just good for sealing and waterproofing ammunition casings but could be used in all sorts of other ways.  They began using it for repairing their jeeps, guns, and aircraft.  In some emergencies it was even used as a temporary means of closing wounds in field hospitals.

When the WWII ended and the soldiers came home, they brought “Duck” tape back with them, using for a variety of jobs.

Duct-tape-wrapping-on-ducts

The immediate post-war period saw a housing market boom and another use was identified. Builders and handy men started using it as a means to connect heating and air conditioning ducts and building merchants started stocking it. It was used it in many of the new homes that were being built.  However a choice that had been “any colour you like as long as it’s army green” wasn’t really going to work with ducts which were mainly silver and the tape’s primary colour quickly became silver, so that it would match the ducts.

Silver tape

This colour change also prompted a change of name and ‘Duck’ tape became ‘Duct’ tape.

It continues to be a sample for builders and handy-men as summed up in a quote from G. Weilarcher “One only needs two tools in life: WD-40 to make things go, and duct tape to make them stop.”

What are the implications, if any for brands?

In a world (in a recession) where things will change are there new uses for your existing products?

And what if any adaptations could you consider to make them fit for their new purpose?

 

Footnote: Duct tape was famously used to create a fix for the failing Apollo 13’s carbon dioxide filters.  Ed Smylie, who designed the scrubber modification, said later that he knew the problem was solvable when it was confirmed that duct tape was on board: “I felt like we were home free.  One thing a Southern boy will never say is, ‘I don’t think duct tape will fix it.’”

Lessons from past crises – putting the soap into soap operas

Lessons from past crises – putting the soap into soap operas

oxydol

When the world zigs, zag is an interesting and sometime controversial strategy, but it worked for Proctor & Gamble during the depression.

Following the stock market crash of 1929, the Great Depression started, and many advertisers reduced or completely cut their budgets.

At which point Proctor & Gamble zagged, not only did they not cut their budgets they actually increased them. They reasoned that while many people would have to cut back their spending, there were some essentials that would always be needed, essentials like soap.

The increased budgets were spent not just on advertising but on sponsoring radio dramas. The brands sponsoring these dramas included Oxydol, Duz and Ivory, and as a consequence the serials they backed became known as ‘soap operas’.

P&G’s first foray into sponsorship actually pre-dates the Great Depression. Research had suggested that women liked to be entertained while they did housework. So, in 1927, Camay sponsored NBC’s “Radio Beauty School”.

Other soap operas followed, like “Painted Dreams” and “Ma Perkins”.

ma perkins 2

“Ma Perkins,” was sponsored by Oxydol laundry soap. It starred Virginia Payne as a widow who ran a lumberyard in the small Southern town Rushville Center while also raising her three children. The association with Oxydol became so strong that the show was often called “Oxydol’s Own Ma Perkins.”

Oxydol finally dropped its sponsorship in 1956 but “Ma Perkins” continued until Nov. 25, 1960. Payne played Ma Perkins in all 7,065 episodes over the 27 years it ran.

The increased spend worked well for P&G then and it’s one they believe will work for them now.

jon moeller

Marketing Week recently reported that CFO Jon Moeller had said that while companies in some sectors are talking about cutting media support, P&G was “doubling down”. It has increased marketing spend in categories including beauty, healthcare and baby.

“There is a big upside here in terms of reminding consumers of the benefits they have experienced on our brands and how they have served them and their families’ needs. That is why this is not the time to off air,” he said.

Nowadays maintaining or increasing marketing expenditure isn’t quite the exception to the rule it once was as various studies have shown its potential (though not guaranteed) benefits.

For example, the HBR reported that “This is not the time to cut advertising. It is well documented that brands that increase advertising during a recession, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic times.”

Implications for brands:

Rather than just immediately cut as much marketing expenditure as possible, review your situation carefully and consider whether continued advertising might be beneficial in the longer run, whether research and development and/or investment in innovation might help you adapt or adjust for the new world.

Lessons from past crises – looking for opportunities, I’ll drink to that

Lessons from past crises – looking for opportunities, I’ll drink to that

E &J

This week’s story is about a family owned business that is now the leading provider of Californian wines – E & J Gallo. The story is about how the brand followed a simple but effective strategy at the end of the Great Depression (and the end of Prohibition) and then drove further growth after WWII.

While Californian wines really rose to international prominence in the 1970s and 80s, the history of wine in the region goes back much further. Californian wines had been successful in international competitions as far back as the early 1900s. The double whammy of Prohibition, which was introduced in January 1920, coupled with the Great Depression (which also started in 1929), meant the once thriving industry went into a steep, almost terminal decline. Vines were uprooted across thousands of acres and cash crops such as apples and walnuts were planted in their stead.

When Prohibition was repealed on December 5, 1933, only 160 of California’s original 700 wineries were intact, and taxation and legislation had decimated domestic wine consumption.

It is at this point that Ernest and Julio Gallo, then aged 24 and 23 years enter our story. Both their parents had recently died, and they needed a plan. They decided to enter the wine business.

They applied for and obtained a winery license. They bought winemaking equipment on credit and leased a small Modesto warehouse for $60 a month. Some sources say that despite having worked in their father’s small vineyard when younger, they got their technical education from two pre-Prohibition wine pamphlets from the Modesto Public Library.

Perhaps even more important was that the brothers recognized that while the Great Depression was ending, money was still tight for most people. They agreed on a marketing strategy that not only reflected this but aimed to take advantage of it. They decided that they would made acceptable wine and sell it at a low price. Their aim was to build volume and gain share.

They then visited local growers, offering them a share of the profits in return for the use of their grapes.

In December 1933, Ernest had made his first sale of 6,000 gallons of wine to Pacific Wine Company, a Chicago distributor. Profit in the first year was $34,000, a sum that was immediately plowed back into the business.

E Gallo

The business grew, but it wasn’t until WWII that Ernest identified an opportunity to drive the business further faster. It was an insight that would make him renowned throughout the industry.

At the time wine was relegated to a position behind beer and hard liquor. It wasn’t the focus and priority for the people in the liquor salesforces.

At a time of uncertainty, Ernst followed his intuition and introduced the novel concept of salespeople who exclusively sold wine. He recruited a team of zealous salespeople to push Gallo products and get them high visibility on the liquor store shelves. It would prove to be a highly successful idea which was soon widely imitated by the other wine makers.

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Gallo had always followed a strategy of expanding into new markets only when existing markets were ‘conquered’. The new salesforce accelerated the growth and the brand was soon available nationwide. Nowadays Gallo wine and its numerous brands are available all around the world. Its portfolio runs from more economical brands to super-premium.

 

What are the implications, if any, for brands now?

Today our economy has fallen in recession, a depression that many analysts are saying could be deeper than the Great Depression. It seems highly likely that value-for-money, economic offerings will do well. (The earlier lesson of the original Mini is another example of tailoring your offer down). What can you do in this sector of the market by broadening your portfolio and changing the focus of your marketing efforts?

The second implication is to try and use the time now to look for opportunities, to try and take a fresh look at your market and address some of the issues and barriers to growth – and if and when you do find new ideas, I’ll raise a glass of Gallo wine to you.