Recently, my colleagues and I had a conversation regarding a restaurant. It had started when we got to know that one of the restaurants in Bangalore served only non-vegetarian food. If someone orders a vegetarian food, they would politely reply that they only serve non-vegetarian. To this, one of my colleagues responded that the restaurant is being idiotic and that they are losing out on a huge chunk of customers - the vegetarians.
A lot of people think in this way, but an organization's decision to focus on certain core priorities requires a lot of contemplation. To my colleague's point, these are the responses that I gave:
- From an operations perspective, the restaurant is reducing their costs and improving their efficiency by not having separate cooks, utensils etc. for the vegetarian dishes. Their assembly line is easier to manage and super efficient.
- From a branding perspective, the narrow focus will make them the best in what they do. This means that their brand will be strong in the eyes of its hard-core fans, who in turn become the proponents and promoters of the brand. It's okay if they don't cater to the vegetarians, but they cater to all those non-vegetarians who are passionate about food. This is a more loyal group to cater to, than just taking care of everyone.
- Think about it - When you have a heart attack, would you go to a general physician or a cardiologist even though both of them are doctors? The specialist always has a stronger value proposition than a generalist when it comes to their areas of expertise. This would in turn translate into better margins on a relatively narrow segment. The generalist caters to the entire population, but the margins are less (high volume, low margins) where as the generalist is in a low volume high margin segment (in this case, catering only to heart patients). The decision is all yours to take!
So basically, the restaurant is not losing out on anything by focusing only on the non-vegetarian segment. With a little bit of perspective, what would initially have seemed like an idiotic idea would now seem like a brilliant idea! But ultimately, the decision has to be a strategic one rather than a tactical one.
In his book, 'The 22 Immutable laws of Branding' (http://www.amazon.com/The-22-Immutable-Laws-Branding/dp/0060007737), Al Ries, the world renowned marketing guru, talks about 'The law of Contraction'. He points out that narrowing the focus has lead to a lot of success stories. Once narrowed, you can dominate the category.He says,
In a few short years, Starbucks has become one of America's best known and most popular brands. Narrowing one's focus is not the same as carrying a limited line. Starbucks offers over 30 different types of coffees.
Another example Al Ries and his daughter Laura Ries give is this:
Charles Lazarus owned one store, called Children's Supermart, which sold 2 things - children's furniture and toys. But he wanted to grow. Lazarus actually threw out the furniture and focussed on the toys. They say, good things happen when you contract your brand, rather than expand it. First he filled the empty half of the store with more toys, giving the buyer a greater selection and more reasons to visit the store. Then, instead of calling it Children's Supermart, Lazarus called his place Toys "R" Us.
Today, Toys "R" Us has become the model for specialty stores or category killers on the retail scene.
The authors point out that most retail category killers follow the same 5 step pattern:
- Narrow the focus. A powerful branding program always starts by contracting the category, not expanding it.
- Stock in depth. A typical Toys "R" Us carries 10,000 toys versus 3,000 toys for even a large department store.
- Buy cheap. Toys "R" Us makes its money buying toys, not selling toys.
- Sell cheap. When you can buy cheap, you can sell cheap and still maintain good margins.
- Dominate the category. The ultimate objective of branding program is to dominate a category.
I couldn't have put my thoughts in better terms! Basically, good things happen when you narrow the focus. I will let you think about it.
If you want to know more about the other 21 rules of branding, please go through this link: http://www.how-to-branding.com/22-Immutable-Laws.html