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Build the Brand or the Business? - O2 and BT

When it comes to the real principles of marketing I've always been guided by Al Ries and Jack Trout.  Their books like Positioning, Marketing Warfare, or The 22 Immutable Laws Of Marketing are essential reading.  Even though some of the material is over 20 years old, it's still perfectly valid in today's market.  Jump in with 22 Immutable Laws (from 1993) - just over a fiver well spent on Amazon (and get Seth Godin's Meatball Sundae and Tribes while you are at it, to bring you completely up to date with new media and permission marketing).  Ries and Trout's laws of brand focus and perception are completely relevant in a week when O2 surpassed BT as the largest Telco in the UK.

On TelecomTV One Martyn Warwick reported:

"Yesterday BT reported a 45 per cent decline in pre-tax profits and now, just 24 hours later, comes the news that O2, (the company formerly known as BT Cellnet and currently owned by Telefonica of Spain) has grown to such an extent that it now has more UK subscribers than it's former parent. O2 has 21 million customers in Britain for its mobile service whilst BT has 19.4 million landline subscribers. "

I was immediately reminded of a relatively recent Al Ries post titled "Building a Brand vs. Building a Business" on  Branding Strategy Insider.  This is a great summary of three of his concepts - "The Law of Leadership", "The Law of Perception" and "The Law of Focus".  He says:

"Are you building a business? Or are you building a brand? Silly questions, you might be thinking. Naturally, you are trying to do both.

But that might be a mistake."

Al goes on to talk through how Dell became number 1 in personal computers by focussing on business-to-business and owning the word "direct" in the mind of the market.  But then he says:

"What did Dell do next? It forgot about building the brand and started building the business. First Dell moved into consumer personal computers, undermining its position as the "business" PC specialist. ("Dude, you're getting a Dell.")

Then Dell moved into consumer electronics, undermining its position as the "personal-computer" specialist.

Then Dell moved into retail distribution, undermining its "direct" distribution position."

They ended up losing the number 1 position in personal computers to HP.   Al goes on to show examples of how valuable it is to be the number 1 in a category, compared to the number 2.  He has some great examples of brands that we know well, but don't know what they stand for any more.   BT have been building their business with a lot of diversification in to software products, or initiatives like BT Workspace which they started, but subsequently dropped.  Now they are thinking about getting back in to the mobile phone market.  They should learn from their O2 offspring and focus on the brand (or a collection of brands), not the business.