Several years ago I wrote a blog about what happens when a brand goes south. The exact title was “Branding goes South (or How making silly decisions can hurt you),” and was about my high school’s decision to change their name. I had been in the advertising world a while, and knew something about branding and why because enrollment was off, changing your name isn’t going to do squat.
In fact, in another article called “Your Very Own Brand” I wrote in Electrical Wholesaling magazine, I pointed out that if you take apart the entire organization of Coca-Cola Co. and left only its brand name, management could rebuild the company within five years because they have such a powerful “brand.” However, if you remove that brand name, the company would probably die within five years. This is because over the course of the years, “Coca-Cola” has come to stand for everything about the company — the way the soft drink tastes, the way it’s delivered, the way it shows up on the retail shelf. It has become something more than caramel water, and the mark placed on the soda contents is the consumers’ assurance that what’s inside is quality.
So it was utter dismay that I saw the recent article on Coke’s victory over Pepsi in KFC soda fountains. Heather Haddon and Laura Cooper wrote the piece in WSJ and did a terrific job of explaining the way Coke out-flanked Pepsi to gain entry in the KFC franchises.
The problem is, KFC sells chicken, not soda.
Who in their right minds would consider this good strategy?
It was another clear case of branding going south once again. Someone convinced someone that doing this was a good thing for sales. Recently, (i.e., Cracker Barrel), there’s been more and more of this kind of thing going on. It will, in my humble opinion, be a disaster for KFC. And as my father used to tell me, “Mark my words.” Here are the tells.
Market Share
The first clue is the market share of these companies. People who measure these things tell us that the leader of this category with a 45.5% share is Chick-fil-A, followed by Popeyes, Raising Cane’s, etc. KFC is on the bottom of the lists that are produced around the category.
The real tell, however, are the sales figures themselves. Chick-fil-A is at $23.92B. Next up is Popeyes at $5.69B. That’s an $18B drop between the #1 and #2 brand! KFC, at $4.9B and down from $16B, is why there is panic in the board room. They look around and see the sky is falling and frankly, don’t know what to do about it. I’m sure consultants were brought in, a lot of them. Many perhaps giving sound advice.
But switch to Coke from Pepsi as the solution when you are selling chicken?
Differentiation
The second tell is differentiation. Most brands try to differentiate themselves to achieve success and from becoming a commodity.
What if I told you that all of these companies in the category were already offering Coke? Because if that were true – and it is – why would you change to what all your competitors are doing?
Because KFC by doing that just eliminated its clear differentiation. In the study of branding, it’s always about differentiation, not looking like everyone else. Didn’t they read Red Ocean, Blue Ocean?
Perhaps more important, according to WSJ, “Pepsi owns the thousands of fountains featured in KFC’s kitchens and dining rooms, and they would need to be removed and replaced with Coke’s equipment.”
Huh? Did anyone factor that into the bottom line?
Research
Everyone knows research helps. It’s not the end all, but it should play a factor.
The question in any research is who you are asking questions of.
The soft drink combatants provided samples of “innovative beverages for franchisees to sip.” What do franchisees have to do with what customers want? Where is the proof from real people they will want these “innovations?”
The WSJ piece noted: “In an internal message, KFC U.S. President Catherine Tan-Gillespie said that beverages are a critical part of the decades-old chain’s work to make its menu more contemporary and boost franchisees’ businesses.”
How absurd is that statement? They make chicken. Tan-Gillespie also said that Coke gives them “a platform to innovate, meet changing tastes and give customers more reasons to choose us.”
News Flash
It’s not about changing tastes: it’s about availability first, and then what customers want. If you want to know how to make a dent in the leader, simply look for the gap: Sunday. Chick-fil-A locations are closed on Sundays. That’s a gap. KFC, instead of being like everyone else with soda, should offer a Sunday Picnic with KFC and supply people with a nice basket, tablecloth, the works. I assure you whatever soda they were selling would be irrelevant.
What do you think? More important, what is wrong with companies these days that consultants can come in and sway them from their core competency?
Please, someone out there, tell me.
Thanks for reading.
p.s. I wrote a blog called Snap! Crackle! Poof! about Kellogg is taking the wrong turn in its strategy to deal with a perceived cereal declining market by splitting up the company. How did that work out?