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Al Ries On Marketing

DARWIN'S THEORIES APPLIED TO MARKETING

Understanding the Brand Building Power of Divergence

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Why are General Motors and Ford in trouble? Why did Delta, Northwest, US Airways and United Airlines go bankrupt? Why were C2 and Pepsi Edge such notable failures?

One answer might be "divergence." Over time, every category breaks up into multiple categories, creating chaos for companies that try to keep their brands in the mainstream of the market.

Charles Darwin called divergence the driving force that creates hardy new species. His theory can as easily be applied to marketing as biology.

Charles Darwin
Divergence is the least understood, most powerful force in the universe. In his book The Origin of Species, Charles Darwin called divergence the driving force that creates a new species.

In our book The Origin of Brands, we use Darwin's concept to describe the process that takes place to create a new category. What starts off as a single category (the mainframe computer, for example) winds up as multiple categories -- mainframes, mid-range, desktops, laptops, handhelds, servers, etc.

Each of these developing categories represents an opportunity to build a new brand. Digital, Compaq, Dell and Palm, for example.

There are two forces at work in nature, according to Darwin. One is a gradual change from an ancestral to a current condition. (A process biologists call "anagenesis.")

Divergence
The other is divergence, a splitting of the ancestral tree to create new branches. (Biologists call this "cladogenesis.")

Anagenesis produces strawberries the size of plums. It just won't turn a strawberry into a plum. It takes cladogenesis or divergence to do that.

Darwin called the first force "natural selection," or the survival of the fittest. The competition between individuals improves the species.

Two hundred years ago, the average American adult male was 5 feet 7 inches tall. Today the average American adult male is 5 feet 9 inches tall. That's evolution at work.

The second force of nature is the principle of "divergence." Random changes or

Compaq's first 1982 portable computer has a lot in common with early primates.
mutations create an incipient new species and then the competition between species drives them apart.

First portable computer
The first portable computer, introduced in 1982 by Compaq Computer, weighed 18 pounds. Essentially a slimmed-down desktop with a handle, the product was called a "luggable" computer by many users.

Compare today's desktop with today's portable computer (now called a laptop.) On my desk is a Dell computer (29 pounds), a Sony monitor (17 pounds) and a Microsoft keyboard and mouse (3.5 pounds). Total weight: 49.5 pounds.

On the road, however, I carry a Toshiba Protege, which weighs just 4.5 pounds. No longer can you put a handle on a desktop computer and call it a "portable." The portable or laptop computer has diverged from the desktop computer. The process never stops. Today the laptop category is in the process of dividing into full-featured machines that weigh 6 pounds to 8 pounds and ultralight machines that weigh 3 pounds to 4 pounds.

If you're in the laptop computer business, your instincts might lead you in the opposite direction. If you think of "the" customer as a single identity, you might try to satisfy the customer's every wish.

Compromise brands
As a result, you might decide that your laptop computer needs to be a compromise. As full featured as possible and as light as possible. In other words, you would put your product right in the middle of the market where there is no market.

In Darwin's words, "nature favors the extremes." The "sweet spot" of a market is an illusion that soon gives way to multiple sweet spots. So which spot do you want your brand to occupy?

Darwin writes about a human example of the pressure that nature exerts on species to diverge. "As with mariners shipwrecked near a coast, it would have been better for the good swimmers if they had been able to swim still further, whereas it would have been better for the bad swimmers if they had not been able to swim at all and had stuck to the wreck."

If sailors were a species, given enough time and enough shipwrecks, there

Unlike the Galapagos iguana, Coke's C2 was a species unsuited to its environment and won't survive.
would eventually be two species of sailors: swimmers and non-swimmers. Again, the mushy middle is the place to avoid.

Wal-Mart vs. Saks
Look at department stores. Wal-Mart and Target are doing well at the low end and Saks Fifth Avenue, Neiman Marcus and Nordstrom are doing well at the high end. It's Sears and JC Penney that are caught in the mushy middle.

In groceries, Wal-Mart has become the leading chain at the low end while Whole Foods is rolling along at the high end. It's the supermarket chains in the middle that are having problems. Kroger, the largest pure grocery chain, lost $100 million last year while Whole Foods made $137 million.

In automobiles, low-priced brands like Hyundai, Mazda and Kia are doing great and so are high-priced brands like Lexus, Mercedes-Benz and BMW. General Motors and Ford with their mid-priced brands are slowly getting crushed. (Hyundai, Mazda and Kia sold 838,405 vehicles in the U.S. last year.)

In air travel, no-frills airlines like Southwest, Airtran and JetBlue are flying high along with NetJets and the corporate jet market at the high end. It's the traditional airlines like American, United and Delta that are suffering in the mushy middle.

Coke's C2 disaster
In carbonated beverages, Coca-Cola (150 calories) and Diet Coke (0 calories) are big successes while its half-and-half brand, C2 (75 calories), has gone nowhere. If you want your company to live a long and happy life, it's not enough to "evolve" your brands to keep up with competition. You also need to look for opportunities to launch new brands to take advantage of diverging categories.

Toyota responded to the pressure to diverge by introducing Lexus, a high-end brand which has become the biggest-selling luxury car in America. Dell is doing the same thing. An enormous success at the low end of the computer market, Dell just announced its XPS brand, a line of desktop and laptop computers to be marketed as luxury models.

In the world of business, you need to practice divergence as well as evolution.

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Al Ries is the author or co-author of 11 books on marketing, including his latest, The Origin of Brands. He and his daughter Laura, who co-authored the book, run the Atlanta-based marketing strategy firm Ries & Ries. Their Web site is www.ries.com.

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