Waiting for a Waterloo in marketing

Ngày: 21-11-2013

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In the military science, Flanker Strategy is normally used to support main attack and disturbing the enemy’s structure. In the well-known Battle of Waterloo (the Coalition of United Kingdom and Germany fought with the Imperial French in Waterloo village, Belgium), the Duke of Wellington successfully applied flanker strategy to defeat the powerful forces of brilliant military genius Napoleon.

In marketing & branding, strategists have borrowed lots of military tricks including flanker strategy.

 

This strategy is applied for an established brand which launches a new sub-brand of the same category aiming at consuming market extension. Due to this nature, flanker strategy relates to a very common issue among brands: multi-branding management.

 

The main objective of this strategy is to expand the market and increase sales, especially for sub-brand operating in a more inferior segment compared to the established brand. A recent typical example is Apple’s low price iPhone 5C (in comparison to previous series) which contributes to iPhone’s sales volume. According to Forbes, 5S & 5C sold 9 million products after 3 weeks of launch, which is a record number since Apple’s first iPhone launch in 2007.

 

In military, the ultimate mission of flanker strategy is to break the enemy’s structure. Its success rule comes from the speed and surprise nature to defeat the enemy. When the United Kingdom’s allied forces attacked the French army, Napoleon’s well-trained army quickly became disturbed and lost their concentration (a very rare situation that French army had ever encountered at that time).

 

In brand management, the ultimate mission of sub-brand launch is to directly attack the competitors which have a close segment with its “siblings” brand (a kind of further defence). For example, Honda launched SH Mode to compete with Piaggio in the “fashionable motorbike” segment.

 

Honda is long famous for its “invincible” quality with the core value of durability. Honda’s users don’t have the demand of self-expression. In contrast, Piaggio is not just a motorbike. In many eyes, Piaggio is a “fashion product” symbolised for  Italian romance and elegance. Piaggio users experience an higher “status” than any others. Honda’s new SH Mode has run the same positioning. In the launching event, Honda’s general director even appeared in Italian costume and style in order to promote its positioning strategy. With the aim to “farther attack” Piaggio by SH Made brand, Honda seemed to deliberately apply the flanker strategy. However, the barrier for this strategy comes from its own advantage: quality. Quality is a function while fashion is an emotion. They are not in conflict but hard to simultaneously become TOM associations at the same time. SH’s existence relies on Honda. And it’s difficult for SH to tell the story of “carp becomes dragon” because of Honda. SH Mode, if succeeded, can only be a disturbing games in Piaggio’s arena. It’s difficult for this brand to defeat Piaggio in the fashion motorbike segment. The Battle of Waterloo in Vietnam’s motorbike market; therefore, hardly happens in the near future.

 

The no.1 principal of flanker strategy is that the presence of the sub-brand should not have negative influence on the image and prestige of the established “siblings” brand, which is the trade-off between sales increase (short run) and rand image (long run). A talented “general” (CEO & CMO) must balance (even optimise) both objectives in flanker strategy. It’s not easy at all, even for global famous brands like Apple.

 

At present, the marketers’ debate on the role and influence of iPhone 5C has not come to an end. First, not necessarily keep talking about the “cheap” notion of iPhone 5C. Actually, 5C version is not too cheap in comparison to 5S. It is not cheaper than other smartphones like Samsung or HTC. But, importantly, it’s cheaper than 5S and former iPhone version. And in the customer’s minds, it is the cheap line of iPhone. Media (prestigious publications like Forbes, CNN Money or Bloomberg call 5C lower-price phone while 5S flagship). According to Forbes’ latest statistics, even Apple has not met its objective of sales increase (primary objective of marketing flanker strategy): every 3 sold out, 2 5S and 1 5C. Apple also dropped its capacity from 300,000 products per day to 100,000 products per day (CNN Money). In the view of brand image (at least in developing country), the word “cheap” of iPhone 5C is silently eroding the premium image of Apple in general and iPhone in particular. Tim Cook seems to realize this situation so at the recent launching event of iPad Air he said that “There’s always potentials in the popular segment. However, we’re not in that segment.”

 

The historic Battle of Waterloo put an end to the empire of Napoleon and marked a turning point for the Duke of Wellington. With flanker strategy, brands continue using this powerful tool for market expansion or “initiative attack” competitors. However, we’re still waiting for a once-in-a-lifetime battle of Waterloo in modern marketing world. If that day comes, it must be very sensational. Marketing is the  battle of mind, thought it is going without guns or swords, it is so tense and fierce.

 

Nguyen Duc Son – Brand Strategy Director

Richard Moore Associates

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