I actually did this once, during my tenure working part-time at a restaurant in the 90s. I wanted to see if the customer who’d just complained was right (I was in high school, and sometimes lacked maturity).
As it turns out, some of the spaghetti stuck… and some of it slid down the wall, canoodling up together in a bundle on the floor. Pun intended. Having been extremely irritated only seconds before, the complaining customer began to howl with laughter. I coyly told him that I’d have the cook whip up the best off-menu philly-style cheesesteak that he’d ever had (on the house). And with a wink, I was off.
Wait staff- this was a pretty risky move on my part (fuelled by the naivete and immaturity of a male sixteen year old, no less). Though it ended with a successful customer recovery (and a healthy tip for me), don’t start throwing food items at the wall. It’ll most likely end in you getting reamed by a very, very angry boss. Or cook. Or customer. Or all three, simultaneously (as unpleasant a hospitality furpile as I can imagine).
Having a laugh over this distant memory the other day prompted some thinking on hyper-segmentation in marketing (read on, it’ll make sense shortly- I promise).
Over the past century, both financial markets and successful organizations have grown markedly more complex. In today’s commercial landscape, we have banks offering insurance (all of the big 5)… grocery stores offering banking services (Loblaw’s/PC Financial)… insurance companies selling mutual funds (State Farm)… you get the idea. The bigger that business-to-consumer retailing organizations get, the more pies that they tend to stick their thumbs in (which perhaps makes Walmart an octopus- you can’t have that many thumbs on two hands). This is perfectly normal for the most part, just another evolution of capitalism in the ongoing hunt for the almighty dollar. Unless you’re of the mindset that these peripheral services distract from the core competencies of the organization, as I am. One of the reasons why I don’t buy mutual funds from my car insurance company.
Enter brand segmentation.
With the segmentation of brands, companies can offer a hodgepodge of services without the consumer becoming confused or questioning the organization’s ability to competently execute the non-core services. The wireless telcos tend to segment their brands extremely well- and good on ’em for it. Bell sells discount wireless services through its Solo brand, while Telus does the same through Koodo, and Rogers with Fido and Chatr Wireless (though Rogers acquired the once-independent Fido, and I’m not convinced that they’ve completely figured out what to do with it yet).
Enter hyper-segmentation, or the segmentation of brands to a high degree. This isn’t for the faint of heart; as hyper-segmentation is typically much more intensive on your marketing resources than normal brand segmentation. The return on investment thus may be lower for large companies with big marketing budgets. But the return to your organization’s brand equity is well worth it in the long run, in the form of increased customer recognition for your products, and the perception of value (admittedly, coming up with metrics to measure brand equity is more art form than science- we’ll chat about that another day).
Let’s use IBM as an example:
What does IBM actually do these days? (they’re not as active in the consumer device market as they once were). IBM sells… productivity software (Lotus, System z)… business analytics packages (Cognos, SPSS)… content management systems for enterprise… integration packages… software management packages… service management packages… and that’s just on the software side of their business. They also sell enterprise-level server hardware, networking hardware, personal computers, retail point of sale systems (cash registers), security systems (for computer networks, not home alarms). AND… they’re in the services business- offering IT outsourcing, leasing of server space in data centres, application development, business consulting, and training. And it’s all branded IBM.
As far as the numbers are concerned, it’s a positive that IBM is involved in as many areas as it is- their revenue stream is diversified, and highly stable. Now close your eyes and recite the fraction of IBM’s products and services that I listed above. Unless you have a photographic memory, it’s pretty much impossible.
Now think about Hertz (you can open your eyes again). What does Hertz do?
They rent cars.
People identify with brands that are simple, pure, and have strong messaging. Those are the brands that drift to the top of the memory-recall pile when a consumer has a need to be filled. Am I suggesting that IBM shouldn’t be in the business of doing… well… everything under the sun? Of course not. But, their brand strategy would be far more effective if they grouped distinct operations together under co-related brands (IBMsoftware, IBMhardware, IBMservice, et cetera- with more creative ‘oomph’, of course).
How does this connect with spaghetti and the westerly wall of that dive diner all those years ago?
Imagine that the entirety of the consumer marketplace is a well-worn Spanish-style mosaic tile wall. Each tile has slightly differing textures and characteristics, not to mention a veritable cornucopia of colours. All of the different brands in the marketplace are represented by cooked, buttery spaghetti strands; and if you toss a pot of that against your imaginary wall, some strands will stick to some tiles because of the tile’s characteristics- while others will slide off the other tiles and come to rest on the floor. Brands are much the same, in the sense that some brands ‘stick’ with a person because of the characteristics of that person, while the same brand may not stick to another person who has different characteristics.
Disclosure: at time of writing, I did not own an equity position in any of the companies mentioned in this article.