One of the enduring marketing myths is that for a new brand to eventually become a big brand it has to take off in a hurry. And that a
|It took 14 years for Wal-Mart to become a $100 million brand. What can this tell us about brand-building stategies?
The hottest food category today is "low carb." In the last two years, 1,558 new low-carb products were introduced. Expected sales of low-carb products this year: $30 billion.
And when did the low-carb revolution start? Thirty-four years ago with the publication of Dr. Atkins' New Diet Revolution.
More than three decades had to pass before low carb became a high-visibility category.
Not all categories are alike. Some grow faster than others. High-tech, for example, is one of the fastest growing.
Perhaps no product grew as fast as the personal computer. The first PC was introduced in 1975, the same year Bill Gates dropped out of Harvard to go to Albuquerque, N.M., to write a basic software program for the MITS Altair 8800 computer.
Microsoft, the company Gates founded, is today one of most valuable companies in the world, worth $307 billion on the stock market.
Things weren't always so rosy. On Feb. 3, 1976, Bill Gates wrote an open letter to Altair users, complaining about software piracy. Published in the Homebrew Computer Club newsletter, Gates stated, "The amount of royalties we have received from sales to hobbyists makes the time spent on Altair BASIC worth less than $2 an hour."
Most people who found themselves working for less than $2 an hour would have looked for some other line of work. Not Bill Gates. His faith in the future of his software paid off in a big way.
Create a new category
The way to build a new brand is by creating a new category. And creating a new category takes time. It even takes awhile for a new category to be recognized as a new category. One of Bill Gates' early problems was the perception that computer software wasn't worth anything. So owners just copied the software needed to operate their computers from friends. (Less than 10% of Altair owners bought Microsoft's software.)
There are two theories for launching a new brand.
Theory A (for airplane) is the airplane launch. Your new brand rolls slowly down the runway for thousands of feet and then after a massive effort your brand slowly lifts off the concrete. After your brand is airborne for awhile, it starts to accelerate into its cruising altitude.
Theory B (for big bang) is the rocket-ship launch. Your new brand takes off like a rocket and then coasts into orbit.
Should you use massive advertising to launch a new brand? Or should you just use PR?
Big bang for advertising
Advertising favors the big bang launch because ad programs are traditionally launched with a big bang. That's the only way to create enough attention to get above the noise level.
PR has no choice. It has to use an airplane launch. PR programs are invariably rolled out over an extended period of time. That's the only way PR can deal with the needs of media focused on scoops and exclusives. (You can't call up the media and say: "Everybody run my story on Monday. I'm launching my new brand with a big bang." That's not the way the media works.)
What about the real world? Do new brands take off like a rocket ship? Or do they take off like an airplane?
Take a typical new brand in the beverage industry. This brand took four years to break $10 million in annual sales and another five years to reach $100 million.
Red Bull's airplane liftoff
The brand is Red Bull, a brand built primarily by PR and a brand that took off like an airplane, not like a rocket ship. (Today, Red Bull does $1.5 billion in annual worldwide sales.)
Take Microsoft, for example. It might be hard to believe, but the brand took even longer to get off the runway than Red Bull. Microsoft took 10 years to exceed $100 million in annual sales.
Take a third example. This retail brand took 14 years to break $100 million in annual sales. Today the brand does $198 billion in annual sales and has become the world’s largest retailer.
The brand, of course, is Wal-Mart, a brand that took off like an airplane, not like a rocket ship.
The turning point
The turning point for a new brand comes when slow initial sales suddenly accelerate toward the mass market. According to a recent research report, the turning point in America averages six years after launch.
The largest, most powerful brands, the brands that have stood the test of time, are the brands that have taken off slowly like an airplane. The brands that take off rapidly like a rocket ship usually turn out to be fads.
Here today, gone tomorrow. The hula hoop, Bartles & James wine cooler, Cabbage Patch Dolls, Crystal Pepsi and many, many others.
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Al Ries is the author or co-author of 11 books on marketing, including The 22 Immutable Laws of Marketing. He and his daughter Laura run the Atlanta-based marketing strategy firm Ries & Ries.