The law of concentration is still very important, especially for small and medium-sized businesses. But there’s another rule for identity large-scale businesses.
When born in the early 1970s in the city of Settle (USA), Strabucks positioned as a chain of coffee shops for coffee connoisseurs and coffee lovers.
They are extremely elaborate on their philosophy of coffee culture and have achieved great success thanks to this culture. It seems that over time Starbucks has diluted this very original, bold positioning. At least we feel it in their chain stores in Vietnam.
Now, many people come to Starbucks not because of good coffee, nor because they have a love for it like the story “Steeped to the heart” that Howards Schultz passionately described. They come to Satrbucks simply out of habit, for the convenient location, for having tea, having juice, for showing off their sophistication or for meeting and exchanging work. There are many reasons why there are so many different groups of customers.
They are a group of light users – those who are not loyal, do not love Starbucks but can greatly contribute to the sales of the store. Because they are very crowded. Small groups with different needs make up a large group. This group of customers is completely “neutral” with the original Starbucks positioning we already know. They do not care and do not spend money for a romantic coffee space or dark roasted espresso cup.
Put wine and beer into the coffee “church”
With cakes and all kinds of fruit drinks, you step into Starbucks now and find that there is no longer a fragrant aroma of strong coffee, the coffee space “mysteriously richly rich”. Starbucks’ brand heritage has “flown” its product diversification strategy towards mass masses, easygoing and most of them just need a beautiful location, a stylish name to sit, check in and selfie. .
In fact, Starbucks’ change has to do with two rules that the marketers know by heart: the benefits of focus and the trap of brand expansion.
The most powerful weapon in marketing is to attach a word to the mind of the customer. Al Ries – the number one brand expert in America has affirmed so in the book 22 famous marketing rules.
Only focusing on the core business will create a sustainable competitive advantage for the brand. Actually, this law of concentration is extremely effective. Not only in the field of marketing but also in daily life.
Men in this world can hardly resist the seductive beauty of actress Marilyn Monroe. Commenting on her career, many people believe that in fact President John Kennedy’s lover is not enough to be called a star. She is so beautiful every “trick”. Beautiful and beautiful. That was Marilyn Monroe’s monologue.
Even after ‘washing his hands to guard the sword’, former player David Beckham is still the one who makes more money than both contemporary superstars Cristiano Ronaldo and Lionel Messi. It tastes nothing, he is a martial artist that crosses the ball with precision or kicks too well, Crosses the ball and crosses the ball, it is a unique move that makes Becks a unique symbol in the world of football. His rainbow curvature has become legendary.
The most powerful weapon in marketing is to attach a word to the mind of the customer.
Starbucks’ signature trick is coffee, more specifically “a romantic coffee space or a dark roast espresso cup” as Howard Schultz’s emotional description.
So why is Starbucks still giving up the weapons that made their name? Even they go far, far away from what business people always worship as the core value when bringing both wine and beer to their coffee sanctuary.
In mid-2015 Starbucks stores in California, Colorado, Florida and New York began serving beer and wine (after 4pm). Strabucks is expected to have 2,000 out of 12,000 stores nationwide serving alcohol and coffee over the next five years.
“I don’t think this is wrong with a cafe that only sells coffee. Because we have noticed a lot of customers want to drop by at night, to make a beer or a glass of wine and order an extra plate of food. “, said Rhys Iley – Starbucks Vice President Europe, Middle East and Africa.
People formerly familiar with concentration theory may be surprised by this statement. Reality says it all. According to an article in The Econimists magazine in January 2016, while the coffee shops of McDonald’s or Dunkin ‘Donuts were struggling, Starbucks maintained a steady 5% growth and stock prices rose close. 50% compared to 2014. In overseas markets such as China, Starbucks opened the 2,000th store.
The greatest brand value is trust
So does the law of concentration, an expression of brand positioning (which emphasizes the principle of concentration), is problematic? Because it’s not just Starbucks, there are a lot of brands that initially do just one thing, then over time they expand into other industries (under a single name).
Amazon initially only sells books, now they sell all kinds of things, lots of things. How successful Amazon is everyone can see.
Vingroup initially only traded real estate. Now they have retail, schools, hospitals, electronics, clean vegetables. Vingroup is successful.
The law of concentration is no problem. It is still true and true. Only there is not a single rule that is absolutely right.
For small-scale businesses, the law of concentration to exist, concentration to differentiate is essential. For large-scale businesses, it is still possible to remain focused (on industry positioning) or pursue a multi-industry strategy.
In addition to the lifelong businesses that do only one thing, as the law of concentration indicates, there are still many firms that have gone from single industry to multidisciplinary over time. Some businesses fail to shrink after a period of expansion. And there are many successful businesses expanding.
For a successful expanding business, the critically important question is whether its value and identity are strong enough, attractive enough to the market for them to pursue a multi-industry strategy.
How can a coffee shop attract people who want to drink alcohol. Starbucks is not merely selling coffee. They sell a way of life. They don’t serve coffee, they serve people. But in the end, when it comes to industry associations, Starbucks still has to keep two words of coffee. Whether they sell alcohol or something else, the association of the core industry is still important for them to be widely known.
A brand as big as Starbucks isn’t just about heavy users – loyal customers who buy it regularly. Starbucks also attracts light users – neutral customers, occasional buyers, but they are quite crowded.
The greatest value of a brand can achieve is the trust of its customers.
According to neuromarketing industry expert Byron Sharp in his good book How Brand Grow, many buyers are irregular, but if this ratio is large, the sales may be no less than regular customers.
Among Vingroup’s clients are people who like, there are middlemen and there are people who hate them. As a big name, Vingroup has an extremely diverse customer file.
Over time, Vingroup is not only associated with Vincom and Vinpearl. Clearly, Vingroup has built up its own reputation and value so that their name surpasses the limits of the real estate industry. Like how Starbucks crossed the limit on coffee products, Amazon crossed the line of selling books.
The greatest value of a brand can achieve is the trust of its customers. For successful big, multidisciplinary brands, they have an appeal to both groups of customers at the same time: the loyal favorites and the neutral. For both of these groups of customers, trust in the corporate’s own identity values gives them the credibility and strength to move into their non-core industries.
We have found that strong brands activate certain regions of the brain regardless of the brand’s product (Excerpt from The Brain Sell, David Lewis – Neuroscientist).
The law of concentration is still very important, especially for small and medium-sized businesses. But there’s another rule for large-scale businesses that have their own identities: their positioning isn’t necessarily confined to one industry.
* Source: VN Economy