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19 Jun ' 01:14
Fighting for growth: growing the core of UFC
[Guest post from Diego Kerner, Managing Partner for Latin America]
As a martial arts practitioner, I love watching the mixed martial arts (MMA) in UFC (Ultimate Fighting Championship). And I'm not alone, with 500 Million homes in 175 countries also tuning in, according to Fast Company.
MMA is a sport where two warriors fight in a cage for 3-5 rounds of 5mins each, until one of them is knocked out, taps out (surrenders) or win by points (like in boxing). The sport has been around for approximately 20 years. Fighters are usually specialists in one style, but also develop others like Brazilian Jiu-Jitsu, Muay Thai, Boxing or Wrestling.
The UFC brand was created in 1993 by a bunch of businessmen and martial artists. After not much success it was then bought by its current owners, Lorenzo Fertitta and Dana White, for u$s 2 million in the early 2000s. It has since grown into a $600million business. For perspective, that's bigger than Real Madrid or The New York Yankees!
So, what are the growth drivers behind this bloody successful brand? They are very much in line with our Grow the Core principles:1) GET THE PRODUCT RIGHT
Immediately after buying the franchise, Fertitta and White began a process to rehabilitate UFC´s image by increasing safety measures (more rules during the fights) and working with states to lift bans on the sport.
They also borrowed inspiration and excitement from WWE (World Wrestling Entertainment). “WWE had mastered the ability to use televisión to suck people into a story line” Fertitta said. That means adding drama and real stories for each of the fighters.
2) DRIVE REACH for PENETRATION
UFC have focused on driving distribution, to increase the brand's reach. As Marshall Zelaznik, the UFC´s director of international development says “if you are selling a can of Coke, you want it in every shelf. In our world, every shelf means a free-to-air broadcaster.” The UFC market development model includes assessing regions that look promising in terms of where fighting is already being produced. Then, they start educating government and agencies about safety rules. After that, UFC makes deals with local broadcasters by providing free content.
3) PREMIUMIZATION
Their strategy is to use free-content to hook viewers, as done with the partnership with Fox. Then, when fans are educated, they are turned into paying viewers through charging to view top fights, playing on the storylines of star UFC fighters to fuel pay-per-view revenue. The result is a solid pay-per-view system, where a successful event can reach 700,000 buys at around $50 each.
4) CORE EXTENSION
By mid 2000´s, UFC developed “The Ultimate Fighter” reality-TV program, where a group of fighters lived together and fight in teams against each other…and for a contract. The program not only became a top rated show, but also helped increase awareness about the franchise.They kept renovating it, by smartly including top rival UFC fighters as trainers/mentors.
The future offers some tough challenges to UFC, like how to renew their current biggest stars and to stop slipping pay per view decline due to pirate live-streaming. But as Dana White says, “fighting is in our DNA”, so I´m sure they will keep fighting to keep the core growing.In conclusion, the UFC story shows how the principles of growing the core can be applied to any business, whether it be a consumer product or a sporting franchise.
June 19, 2013 Comments (0)
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17 Jun ' 05:26
on the impact a Brand CEO can have on a business, using P&G, Unilever and Starbucks as examples. Here, I look at some of the possible leadership lessons from AJ Lafley, who has just returned to P&G as CEO.
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13 Jun ' 03:04
Lafley's Leadership lessons
Last week I posted on the impact a Brand CEO can have on a business, using P&G, Unilever and Starbucks as examples. Here, I look at some of the possible leadership lessons from AG Lafley, who has just returned to P&G as CEO.
1. FOCUS
Again and again focus comes out as a key role for leaders to play. One example of this focus is the bold move to divest of $7billion+ of food and beverage brands. And these weren't crappy little brands. The list included Folgers, the number 1 US brand of coffee, and Pringles. But as Lafley commented here,
"We chose for good strategic reasons to abandon and get out of those businesses so we could invest our people but also our cash in businesses like home care, personal care, beauty care and health care, all of which looked strategically more attractive."
2. ALIGNMENTFocus from the top is one thing. But the power of P&G is to then to organise around the focus areas and ruthlessly prioritise. From an interveiw with Bloomberg here gives his four key questions to ask, to drive focus into the business.
1. where am I going to play to win?
2. how am I going to win where I play?
3. where are my core competencies that are going to enable me to win where I play?
4. what management systems and measures are going to help me execute my strategies?
When I started my career at P&G all the above were crystal clear. Also, I understood them quickly with no need for training as they were so visible and tangible in the day-to-day workings of the business.
3. CONSUMER IMMERSION
Every company echoes the Lafley's mantra that “The customer is the boss.” But few companies live this out be immersing themselves into the consumer world. Quoting again from Mark Ritson's article, you see how Lafley spends real time out face-to-face with consumers in their real lives:
The Wall Street Journal once got permission to shadow him on a trip to South America but was surprised to find him not in P&G’s local offices but spending the morning in a small kitchen of a young mother from Caracas as she explained which beauty products she used. Imagine the CEO of one of the world’s biggest companies spending 20 days a year in the bathrooms and kitchens of the customers that pay for his and everyone else’s salaries.
4. OPEN INNOVATION
During Lafley's first period in charge, P&G instigated a program called "Connect & Develop". The idea was to open up the business to multiple sources of innovation. This addressed head on a criticism of P&G about the company being too closed and internally focused. Back in 2001 less than 10% of new initiatives involved external innovation partnerships. The ambitious goal of 50% by 2008 was surpassed. This approach played a key role in helping develop the Olay Regenerist line, for example.
In conclusion, the leadership lessons of AG Lafley aint rocket science. But they are super hard to practice from the top to the bottom of the organisation.
See AG on video here, talking about his
June 13, 2013 Comments (0)
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13 Jun ' 03:03
Lafley's Leadership lessons
Last week I posted on the impact a Brand CEO can have on a business, using P&G, Unilever and Starbucks as examples. Here, I look at some of the possible leadership lessons from AG Lafley, who has just returned to P&G as CEO.
Again and again focus comes out as a key role for leaders to play. One example of this focus is the bold move to divest of $7billion+ of food and beverage brands. And these weren't crappy little brands. The list included Folgers, the number 1 US brand of coffee, and Pringles. But as Lafley commented here,
"We chose for good strategic reasons to abandon and get out of those businesses so we could invest our people but also our cash in businesses like home care, personal care, beauty care and health care, all of which looked strategically more attractive."
2. ALIGNMENTFocus from the top is one thing. But the power of P&G is to then to organise around the focus areas and ruthlessly prioritise. From an interveiw with Bloomberg here gives his four key questions to ask, to drive focus into the business.
1. where am I going to play to win?
2. how am I going to win where I play?
3. where are my core competencies that are going to enable me to win where I play?
4. what management systems and measures are going to help me execute my strategies?
When I started my career at P&G all the above were crystal clear. Also, I understood them quickly with no need for training as they were so visible and tangible in the day-to-day workings of the business.
3. CONSUMER IMMERSION
Every company echoes the Lafley's mantra that “The customer is the boss.” But few companies live this out be immersing themselves into the consumer world. Quoting again from Mark Ritson's article, you see how Lafley spends real time out face-to-face with consumers in their real lives:
The Wall Street Journal once got permission to shadow him on a trip to South America but was surprised to find him not in P&G’s local offices but spending the morning in a small kitchen of a young mother from Caracas as she explained which beauty products she used. Imagine the CEO of one of the world’s biggest companies spending 20 days a year in the bathrooms and kitchens of the customers that pay for his and everyone else’s salaries.
4. OPEN INNOVATION
During Lafley's first period in charge, P&G instigated a program called "Connect & Develop". The idea was to open up the business to multiple sources of innovation. This addressed head on a criticism of P&G about the company being too closed and internally focused. Back in 2001 less than 10% of new initiatives involved external innovation partnerships. The ambitious goal of 50% by 2008 was surpassed. This approach played a key role in helping develop the Olay Regenerist line, for example.
In conclusion, the leadership lessons of AG Lafley aint rocket science. But they are super hard to practice from the top to the bottom of the organisation.
See AG on video here, talking about his
June 13, 2013 Comments (0)
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10 Jun ' 08:55
Grow the Core Marketing Director Survey: what do you think?
Every year we do a marketing director survey on an important topic. In past years we've covered brand leadership, turbo charging marketing plans and recession-proof branding.This year it may be no surprise to regular readers that the topic we are researching is growing the core. We want to better udnerstand the importance, benefits and challenges of growing the core, relative to innovation that stretches brands into new markets.So, please do take 5" to complete the survey by clicking here: http://www.surveymonkey.com/s/H8CWGN5June 10, 2013
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08 Jun ' 23:10
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07 Jun ' 06:49
Will Lafley's return have P&G laughing again?
I'm a big believer in the power of leadership, especially from what I call a "Brand CEO". This is a leader who doesn't just talk about the brand, they ARE the brand. One such CEO was AG Lafley, who led P&G during a highly successful period during most of the 00's.
But can one guy really influence the fortunes of a whole corporation? We'll look at that in this post. We'll look in next week's post at why a Brand CEO like AG Lafley can have such an impact.
Well, here are a couple of examples from earlier posts. First, back in 2008 I suggested that the return of Howard Shultz to lead Starbucks would lead to a turn-around. The stock price chart is below, with the red box pre Shultz's return, and the blue box after. I backed my post by buying shares at $15 :-) If only I'd added a few zeros on the end of the cheque I wrote :-(
And here's another. Back in 2008 again I posted here on the arrival of ex P&G-er Paul Poleman and Unilever. I thought this could create a potent combination of P&G focus and efficiency plus Unilever's intuition and creativity. The stock price chart is below, with the red box Patrick Cescau, and the blue box Poleman. Again, the results speak for themselves. Again, I backed the prediction by buying shares at £1500 (but again, not enough of them).
Back to P&G, you can see below the CEO effect in action at P&G. It appointed Dutch Maverick Durk Jaeger as CEO in the late 90's, first non-US CEO. He pushed the company to both accelerate innovation, and make it more radical. Core products were neglected, market shares suffered. According to the book Pay Without Performance during his 17 months in the job the share price of P&G dropped 50%, wiping $70billion off the value of the company (see this blip in the share price on the chart below in red).
Then came the AG years in blue, a period of stellar growth for P&G. This is followed by three years of relative stagnation under Bob McDonald in green.
In conclusion, a Brand CEO CAN have a real imapct on a business. We'll look in more detail at why AG Lafley is a strong leader in next week's post.
Until then, who's off to buy shares in P&G?
June 07, 2013
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06 Jun ' 01:42
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05 Jun ' 07:24
Red Bull loses its wings with Red Bull Editions
Guest post by David Nichols, Managing Partner of the brandgym, and Head of Invention
In a blog not too long ago here, I enthused about how far ahead in marketing activation Red Bull were with their audacious sponsorship of Felix Baumgartner’s extraordinary space jump. However, with the global roll-out of their ‘Editions’ cranberry, lime and blueberry flavours, it seems they've lost their ability to fly. The launch appears to be a rather pedestrian affair, devoid of any brand icons, tone, style or even any red bulls!
Extend the Red Bull core range is potentially a good way to grow the core: a) recruit people who don’t like the taste of classic Red Bull; b) Increase consumption occasions for people who love it but also drink other flavoured soft drinks c) Increase shelf presence/fridge space. But their execution begs some pretty fundamental questions…
Straight off, ‘where is the brand?’ The iconic Red Bulls are not on pack. The Editions packs look, in fact, a bit like private label low-cost copies of Red Bull. The strapline of ‘Wings for all tastes’ is OK, but ‘The taste of Cranberry, Lime & Blueberry with the effect of Red Bull’ is a bit long-winded.
Go onto Redbull’s Facebook page where all its amazing activation is proudly presented, in a dizzying array of digital savvy sports coolness and where are Editions? Nowhere to be seen. It’s as if they are embarrassed to show them.
Red Bull has led the world in creating ownable activation properties that evolve and build a fanbase, creating unique content along the way. Why not for Editions? Could they not have created Editions specific activations? What activations have they done so far? Dispenser girls and choose your favourite on Instagram. It feels like it’s being marketed by someone else.How could Red Bull give Editions the wings to fly?
- Put the brand on pack: Editions are a new part of the brand and so should have the core brand icons on pack. The classic Red Bulls (in their flying colours) should continue to be the strongly visual shorthand for the brand’s offer.
- Build unique activation properties around Editions. Build Editions into existing activation properties: e.g. 3 X-Fighter acrobatic flying teams in flavour colours battling it out. Or each sponsored sports star shown drinking their fave flavour… Bring Editions into the heart of the awesome Red Bull marketing machine to drive awareness, trial and repurchase.
- Give Editions Wiiiiings: The heart of their brand idea is the uplifting idea of being given wings, not the dull function of the ‘Red Bull effect’. They have shown us this again and again in wingsuit flights, space leaps, motorcross jumps, air races and so much more. Give Editions some of this magic. We want you to divert, dazzle & daunt us with Editions.
Summary
Red Bull have built one of the world’s best brands through audacious and code breaking marketing. It seems that in launching a core range extension, they have overlooked the basics and risk confusing consumers, undermining their relationships with retailers and diluting their brand. It’s still early days, so if it is beginning to sell in volume, they can fix it, and give it wings after all. Editions is on the Launchpad, but still awaiting fuel.
June 05, 2013
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03 Jun ' 10:05
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