Kill or be killed

In a business obsessed with looking ahead, sometimes it pays to look back. Way back. In the final part of this brand-history-mining mini-series, marketing vet John Bradley sheds light on how the industry got to where it is now, and how things are changing in ways you may not yet realize. The following cautionary tale is adapted from Bradley's new book, Cadbury's Purple Reign.

In a business obsessed with looking ahead, sometimes it pays to look back. Way back. In the final part of this brand-history-mining mini-series, marketing vet John Bradley sheds light on how the industry got to where it is now, and how things are changing in ways you may not yet realize. The following cautionary tale is adapted from Bradley’s new book, Cadbury’s Purple Reign.

It is a common conceit today among advertisers and marketers that the challenges currently being faced are unique. Nothing could be further from the truth. Today’s long-lived brands have weathered far worse storms, and much can be learned from examining the challenges they faced.

In becoming Britain’s largest cocoa manufacturer in the latter part of the 19th century, Cadbury demonstrates the value that can flow from turning one’s own particular brand benefit into the unit of currency of the entire category. The superior product quality of the Cadbury Cocoa Essence brand, forcefully expressed for over 40 years via the advertising punchline of ‘Absolutely Pure, Therefore Best,’ lay at the heart of their success.

Even though both Fry and Rowntree were to follow Cadbury in launching high-quality cocoas, it did not give either of them a stake in owning the benefit of purity. Cadbury could not be trumped. While the expansion of the market meant both Cadbury’s key competitors were still growing in volume, they were in fact becoming progressively weaker as brands in relation to Cadbury. The more Cadbury stood for product purity and made it important in people’s minds, the more Fry and Rowntree seemed insipid. With a single-minded focus, brands can parlay their particular USP into significance across the industry, as Volvo demonstrated with the concept of safety.

Nothing lasts forever. It took 40 years, but a new category-leading benefit emerged, that of superior taste and texture. Sales of Cocoa Essence began to lose out to the superior-tasting Van Houten brand in the early 20th century. While two years of 5% declines had hardly been calamitous, Cadbury saw a turning point when many would have seen just a blip.

It is to Cadbury’s credit and benefit that they responded so quickly to this new turn of events by sidelining their biggest brand with the launch of Bournville Cocoa. Van Houten was not matching its success in sales terms by its grasping ownership of the taste benefit. They hardly advertised and retailers resented having to stock them. So the opportunity was there for Cadbury to follow Van Houten in product terms but to take the lead in claiming ownership of taste, which it did. Five years later, Bournville was Cadbury’s biggest brand and sales of Cocoa Essence had declined by half.

But it had seemed a hugely risky move. Van Houten’s secret was the addition of an alkali to the cocoa. This went against everything Cadbury had stood for with product purity – Bournville Cocoa could not claim to be 100% pure. But the market definition of quality had changed from purity to taste, so to keep the Cadbury name anchored to Cocoa Essence would have almost certainly seen the company slip into obscurity. The current demise of the American car industry shows what can happen when companies stay wedded to market drivers that have been overtaken in the consumers’ minds.

This shift of a category’s key benefit is arguably more common today, but how many marketing VPs would be bold enough to jettison their biggest brand, on which rested not just the profits but the entire reputation of the company?

Cadbury triumphed during this seismic category change through the convergence of several key management attributes:

• strong external radar

• willingness to change direction, even at the expense of existing products

• speed of decision-making

• commitment to produce better products, backed by appropriate resources

• strong promotional and advertising skills

With these, Cadbury had the flexibility to keep abreast of the changing trends.

It is also significant that Cadbury’s triumph did not rest on a highly productive innovation pipeline. For the first 80 years of its existence, Cadbury contributed little to the innovations driving the industry, demonstrating that product innovation is not a necessary component for success.

Microsoft invented very little of its product range, yet became the dominant force in the industry. The product that made the company, the operating system MS-DOS, was acquired for the princely sum of $50,000 from its original author, Tim Paterson, who understood that invention and exploitation are two distinct skill sets.

Today, as many business plans rely on unspecified ‘breakthrough’ innovations to achieve growth targets, it can be argued that having the right management attributes is far more important.

John Bradley is a career marketer (much of it spent at Cadbury) turned consultant and author whose tome Cadbury’s Purple Reign will be out next month. Reach him at johnbradley@Yknotsolutions.com.