Zellers could go the way of Kmart, Roots will conquer the States, and Canada’s beer companies couldn’t have done a worse job down south.

So says Al Ries, marketing consultant and co-author of Positioning, one of the best-selling advertising books of all time.

All three conclusions are based on Ries’ theory that most companies would be better off if they stopped extending their brands and concentrated on being number one in a single category.

It’s a concept developed after years working in the field, starting in the advertising and sales promotion department of General Electric back in the early ’50s. From there Ries joined Needham, Louis & Brorby (now DDB Worldwide) in New York, where he eventually made VP, and in 1963, he helped start his own agency, Ries Cappiello Colwell.

In 1980, Ries co-wrote Positioning: The Battle for Your Mind with Jack Trout. It was the first book to really define what positioning is all about. To date, it has sold over one million copies, and is still regarded by many as the marketing bible.

Since then, Ries has written or co-written seven marketing books, including The 22 Immutable Laws of Branding, a guide to building brands by narrowing your focus.

So how do you do that? Recently, the chairman of Atlanta, Ga.-based Ries & Ries explained, and looked at why some Canadian companies are going to fail because they’re doing it all wrong.

What do you mean by ‘narrowing your focus?’

In general, a successful brand is a brand that has narrowed its focus in some respect. I’m not saying that you need to narrow your focus in everything, but to be successful you have to narrow your focus when it comes to some things.

For example, Wal-Mart sells everything, they didn’t narrow the focus in terms of what they sell, but they did narrow the focus in terms of how they sell, which is at a low price. So Wal-Mart has a low-price focus.

If you compare that to Kmart, for example, well what’s a Kmart? I don’t know. Does anyone know what a Kmart is? I don’t think so. Because they haven’t narrowed their focus.

Is narrowing your focus the same as coming up with a unique selling proposition?

I suppose you could call it that, but the problem with just saying unique selling proposition is that it’s too general. I mean Budweiser is the only major beer company that uses frogs in its advertising, but that’s not narrowing its focus.

The trouble is, there’s a feeling that you have to appeal to everybody. And the minute you appeal to everybody, I think you lose the ability to build any sort of a brand.

I mean, what are the powerful brands? Rolex. Does Rolex appeal to everybody? No, they don’t make cheap watches. What about Swatch? Do they appeal to everybody? No, Swatch is a cheap watch, they don’t make expensive watches.

In The 22 Immutable Laws of Branding, you wrote that the best idea is to choose a niche and become number one, even if it’s a fairly narrow category. But couldn’t a company become more profitable by being second or third in many categories rather than by being first in just one?

In theory that’s true, but in practice, that doesn’t happen.

In practice, the only companies that do well in many different categories are companies like General Electric, which are fundamentally focused on old products, not new products. GE doesn’t make computers, doesn’t make cell phones, doesn’t make software. They’re focused on the old stuff.

The most successful new companies are the ones that have a single focus, like Dell. They focused on one product, one market, and one distribution channel: computers direct by phone or Internet.

When a company like Dell, which has a much narrower focus, competes with a company like Compaq, who wins? Dell wins, by a big margin. When Nokia, which just sells mobile phones, competes with Motorola, which has a broad range of products, who wins? Nokia.

Since you wrote the book, there have been a lot of major mergers and acquisitions. The largest companies in the world now have more brands in their portfolios than they ever did. Are these companies going to have problems down the road?

There are really two issues here. Mergers, from a branding point of view, are not necessarily good or bad. A good merger would be between two companies making similar products, to increase your dominance of the category.

Blockbuster was built by mergers: they ran around and bought up all these mom ‘n’ pop video rental operations and built a national chain, and the bigger their market share, the more powerful the brand became.

So a merger per se doesn’t necessarily make a brand weaker – it can make it stronger. Where you get in trouble is when you put two different things together so that the resulting brand name doesn’t mean anything.

The track record of mergers in general – because many have been this mishmash sort of merger – has been terrible. Look at AT&T: They merged with NCR, that was a disaster, they got rid of NCR. Then they bought the cable stuff, that was a disaster, they got rid of the cable stuff. It’s been one bad report after another.

Fundamentally it all comes down to branding. It all comes down to the notion of what are you in the mind of the customer, because sooner or later, the customer’s got to buy something from you.

If a large holding company came to you and said, OK, we’ve just acquired all of these new brands, what should we do to make sure we don’t destroy them, what would your advice be?

You can have a multi-brand company. General Motors used to be a very strong multi-brand company with Chevrolet, Pontiac, Oldsmobile, Buick and Cadillac.

But when they were a strong multi-brand company, it was because they kept their brands separate. As a matter of fact, they had a separate price bracket for each brand, so there was absolutely no overlap. When Alfred Sloan set up General Motors, a Chevrolet was $300 to $600, Pontiac was $600 to $900, Oldsmobile was $900 to $1,200, Buick was $1,200 to $1,800 and Cadillac was $1,800 to $2,500. So when you moved up from Pontiac to Oldsmobile, you were really moving up.

But today they take the same cars and just sell them in the different dealerships under five different names and they’re the same price, and everybody’s confused. You can have cheap Buicks and expensive Chevrolets – they just don’t keep their brands focused.

So if two companies merge, you have to decide which brands should be discontinued and which brands should be emphasized, there are a lot decisions to make. The multi-brand approach will work, but you gotta keep the brands separate. It’s still a matter of focus. What’s a Chevrolet? It’s the large-small-cheap-expensive car. Chevrolet has no focus. It’s even more important to narrow your brand focus in a multi-brand company than in a single brand company.

Next, I want to run a few real Canadian situations by you, so you can tell me how you would apply your brand narrowing approach.

The first example is the arrival of Mitsubishi cars in Canada, slated for this September. We already have Hyundai and Kia, but their brands aren’t yet fully developed in the minds of Canadians. If you were head of marketing at either of those companies, what would you do to defend your brand from the newcomer?

Well in both cases, Kia and Hyundai, I would try to stand for something. Is it performance? Is it safety? Is it a family car? What is it? But over and above that, both of those brands, fundamentally, sell because they’re inexpensive. They’re not really powerful brands because they tend to be price brands and people will pick one or the other depending on whether they like the colour of the car on the floor, or if one’s a bit cheaper than the other.

Could either one of those brands, Kia or Hyundai, carve out its own niche within the lower-priced car category?

Yes, they could. In terms of what cars have done in the past, such as BMW owning ‘driving’ and Volvo with ‘safety.’

But one of the problems here is that when you’re a Kia or a Hyundai, and you’re late in the game, you have to take what’s left. You can’t take driving, because that’s BMW, you can’t take safety, because that’s Volvo. You’re stuck with taking something that presumably, everyone else doesn’t want. Now what do you do with that? Well, in a sense, you have to take that attribute and make it more important.

That’s what Volvo did over the years: they made the attribute of safety more important, as BMW, over the years, made the attribute of driving being fun more important.

That’s a more interesting idea than telling people what a great product you make. There’s more interest in the attribute itself than there is in the brand name of the company. Our point is to make the attribute more important. Once you own an attribute, you live or die based on how many people want that attribute.

I have another situation for you: Here in Canada we have a discount chain called Zellers. It’s been around for a long time, it’s a Canadian company, and right now it’s under attack from Wal-Mart. Is there a niche in the marketplace Zellers can stake out to protect itself?

Well, they obviously have to portray themselves as the Canadian company, and make a strong effort to feature items that are not available in Wal-Mart, because Wal-Mart is basically a global company, with global brands.

This will be very difficult, because in the long run, there’s going to be room for the global brands, like Wal-Mart, and there’s going to be room for the local brands – and it’s the ones in between that are going to get killed.

You could see a Montreal-based store or a Toronto-based store surviving, a store that everybody’s proud of because, hey, it’s local and it’s got the stuff that we want, but a national Canadian discount operation competing with Wal-Mart – it’s probably too much. They’re not global and they’re not local.

With the recent introduction of everyday low pricing and grocery items, what Zellers seems to be doing, in some ways, is trying to emulate Wal-Mart.

That’s the worst mistake you can make. They’ve got to be different from Wal-Mart. It sounds a little bit like Kmart. Kmart tried to do the same thing here in the U.S. They lowered all their prices, and guess what? They went bankrupt.

So Zellers might be wise then to find something that differentiates it from Wal-Mart, and then retreat to that corner?

Yes. And I think it has to be local, it has to be Canadian. The enemy is the global brand that sells everything, so we’re the Canadian brand that’s focused on the stuff that Canadians like and want to buy. That won’t get 100% of the market, some people are still going to say: ‘I don’t give a shit, I want it cheap.’

It might involve a lot of local sponsorships to build up that Canadian identity, so it’s perceived as the Canadian discount company for Canadians, rather than the global discount company for everybody.

If they try to compete on price, they’re just going to get killed. Wal-Mart can sell for cheaper, because they buy more. The worst thing of all is that even if the prices were the same, people would still think that Wal-Mart’s cheaper.

A lot of other car companies say, hey, we’re safer than Volvo, but most people don’t believe that. Other cars might be safer than Volvo, but I’m not an automotive engineer, and I’m not going to wreck a car to find out. I’m just going to assume that Volvos are safer.

Another company in Canada is in the opposite situation: They’re currently expanding into the U.S. And that’s Roots Canada. They seem to have everything that you’re saying Zellers needs to have to protect itself. How successful do you think they’ll be in the U.S.?

I think they’re going to be very successful here. Obviously the Olympics jump-started the brand, and I think they’re going to go from there.

I was very impressed with what they’ve done. They’ve done a number of things that tie in with what I’ve written, such as the fact that you’ve got to start a brand with PR, then once it’s established, you can shift to advertising. Their focus on outdoor clothing is fantastic – Canada should know something about that so it just makes a lot of sense.

In the same way, it should have been terrific for your beer companies here, but they’ve mucked it up terribly with their line extensions – they’re into everything.

A Canadian beer should be the largest-selling imported beer in America, but none of the Canadian brands are singular identities, they’ve all got six or eight different flavours.

Corona is Corona – and it’s become the highest-selling imported beer. After they became the largest-selling imported beer, they introduced Corona light, but they started with one brand.

So Molson should have gone to the U.S. with just its Molson Canadian brand and stuck with that?

That’s right. Nothing else. If it had, I think it could have become the highest-selling imported brand in America. Because Americans are so close to Canada, and Americans like things that are Canadian, but it can’t be too complicated and confusing.

In general, the bigger the market, the more focused you have to become. It’s almost the opposite of what you might think. When a market is smaller, you can be into more different things.

Why is that? Because in a smaller country, with a smaller population, you need a wider range of products to grow your company.

So the average Canadian company moving into America has to narrow the focus. Even though their current focus may be right for Canada, it isn’t right for America, because America is too big. In the U.S., in any given category, there are more choices, so to be successful, you have to have to narrow your focus.