Notes on “Grow the Core” talk by David Taylor
Written up by Cristina de la Cierva
·
The common belief is that the best way to grow
business is to expand into new markets.
That said, top performing companies achieve superior results through the
more profitable and less risky path of growing their existing position in their
core business (i.e. When Howard Shultz came back to Starbucks and refocused the
company on its heritage and expertise in coffee, the stock grew 400%).
·
Examples of brands that have followed the
“innovate or die” mantra and forgotten about what made them famous in the first
place include Land Rover when they expanded into coffee, Cosmopolitan magazine
when it expanded into yogurt and Bausch & Lomb when it expanded into
toothbrushes. In Bausch’s case,
competition came in and attacked its core when it diverted its attention to new
products and its share position in contacts fell from #1 to #3.
·
Over time, you can refresh your Core to maintain
consumer relevancy but its important to maintain consistent brand
properties. An example is the Bond movie
franchise, which released 25 editions over 50 years. Since the 60’s, the brand properties of cars,
girls, music and 007 Bond have stayed the same but these elements have been
refreshed with new actors, new models of cars, and new singers of the theme
song, etc.
·
Another way to refresh your Core over time is
through premiumization. This can
include new packaging (i.e. Heinz and upside down squeezable bottle) and
Gillette razors (i.e. newer version of the product launched over time with
improvements that demand a price increase)
·
One of the most classic examples of a brand
staying true to its Core is Burberry with its trench coat. This product guides every decision that the
company makes.
·
Thinking about our own clients, CVS has an
opportunity to really own its Core pharmacy business and steal share from
Walgreens as they look to expand their front store services with beauty bars,
sushi bars, etc.
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