Part II
Hobart
Dove
Competing Against Wal-Mart
Sony vs. iPod
Contemporary Art
Instructor Note—Hobart (Strategic Repositioning)
The strategy of Hobart’s lasted for many years. However, Hobart is now owned by ITW (Illinois
Tool Works) and has become more of product brand rather than an organization brand. ITW
went away from this strategy, possibly a mistake.
1. Why do chefs buy Hobart for their kitchens?
For those that say it was rational ask them to describe the like process—did they examine specs?
2. What is the strategic position before the “Solid Equipment, Sound Advice”
program? How did it change?
a. Hobart was a 100 year firm that made products that lasted decades—it was the Mercedes of
the industry. Customers were paying Hobart prices because of the quality but also because of the
prestige. But the position was based primarily on functional attributes and the total marketing
program including the advertising and the trade shows was designed to communicate the latest
features and product improvements.
3. What strategic options did Hobart pursue?
It is interesting that this is not just an advertising and trade show programs. There is a lot
4. The new program soaked up resources that meant that the effort to communicate
new product innovations was reduced. Was that likely to be wise? Which approach
is likely to create better support toward a quality image?
This is a bit like the Intel Inside decision. Logically, there is no reason to spend all that money
on customer problems and thus reduce radically the effort behind new products and new features.
5. How could competitors position themselves against Hobart’s value proposition?
Instructor’s Note—Dove (Leveraging a Brand Asset)
1. Why was Dove so dormant for so long?
There are probably an accumulation of reasons. First, Unilever (and P&G) was not focused on
leveraged existing brands as much as other strategic initiatives like, for example, buying brands
2. What are the keys to the success that Dove achieved in building the brand into a
$4 billion business? What was the roles of success momentum and branded
differentiators?
Again there is a combination of factors. First, the breakthrough product that had patent
protection and the endorsement of dermatologists were the basis of everything. Second the
incredible positioning of the brand—moisturizing—that was developed through great advertising
3. What was the role of a vigorous competitor? Would they have done so without
P&G pushing (or more accurately pulling) the brand?
The question as to why Dove woke up is provocative and could merit a discussion. A case could
be made that without P&G noting much would have happened to Dove. Then ask why that is.
How can organizations be so clueless? One possibility is that they are distracted by other
4. Why were Dove soap sales affected by the other Dove successes?
Dove soap got affected in because the brand got visibility, energy and credibility. The success in
5. What does this case tell you about first mover advantage?
First mover advantage is real but can be overcome. Being first to market can be an advantage as
6. What is your opinion of the “Real Beauty” campaign? Does the existence of the Axe brand
affect your views?
On one hand it has created PR, interest, and a basis for a relationship with women who
Instructor Note — Competing Against Wal-Mart (Competing
Against the Industry Giant)
It is useful to begin by looking at the Wal-Mart strategy. Why was Wal-Mart successful
at building a firm early? The selection of the relatively small town discount store was a key—it
meant little competition and access to low cost, non-union labor. Then there was the culture of
associate empowerment and customer service fostered by Sam Walton. Finally, there is the
relentless focus on delivering low prices.
In the past few years, Wal-Mart has been aggressively adopting policies and programs
aimed at sustainability and energy conservation. Has that helped their image? Their employee
policy has changed a bit sometimes because of the threat of lawsuits and they have promoted
their hiring of large numbers of people? Has that helped their image?
Wegmans
Wegmans has been thriving in a Wal-Mart world and is aggressively expanding. Their
strategy is documented on their website and in an article in Forbes by Matthew Swibel on
November 24th, 2003 entitled “Nobody’s Meal.”
1. Wal-Mart’s key strengths are:
• Its sustainable cost advantage which puts enormous pressure on prices and margins.
• Its presence and visibility due to the exposure of its stores.
• The wide assortment that draws people in—especially at the supercenters.
2. Wegmans should attempt to reduce the cost disadvantage but never attempt to compete on
price. In fact they should do whatever possible to shift the focus away from price. As a result
they were picked by the 2003 edition of Consumer Reports as the number 2 supermarket chain in
America (Raley’s was number one and Wal-Mart was number 25).
• Created a great shopping experience for children and families. In 2003 Wegmans was
named the “Most Family-Friendly Supermarket in America in Child magazine.
• Has an informative web site where you can order gifts of all types and find out about
specials and a wide variety of information. Included are Healthy ideas around allergies,
arthritics, diabetes, healthy eating for kids, weight management, etc. In each, it gives
straight, unhyped advice and information.
demonstrations by celebrity chefs and wine tasting.
• Parisian brand is a presented line in Parisian open air market.
• Checkout lanes are fully staffed (while Wal-Mart is moving toward self-checkouts).
• Have gourmet items and prepared foods to respond to needs for upscale tastes and
takeout food.
• Works with 600 farmers to stock its produce section (when Wal-Mart is consolidating
suppliers).
Costco
Costco is also thriving. Sam’s Club aims at the tradition mass middle market that is
purely looking for functional goods at bargain prices. Costco, in contrast, looks toward the urban
sophisticate who wants aspirational items at less than full prices. It is said that Chef Julia Child
bought meat at Costco. They will trade down to private label for paper towels and vitamins but
want the Callaway golf clubs and Starbuck’s coffee. So they are a bit isolated from Sam’s Club
in terms of clientele and promise. Costco also is energy created by having unexpected items that
people look toward.
introduce a premium private-bale line called Kirkland Signature, in 1995, three years before
Sam’s versions, Members Mark, came along. Information on Costco is documented in a
November 10, 2003 Fortune article “Costco: The only Company Wal–Mart Fears” by John
Helyer.
Instructor’s Note—Contemporary Art (Creating a New Brand for a
New Business)
1. Why might the demand for contemporary art increase?
There are more and more museums opening and also more serious collectors. At the same time,
2. Why do people buy contemporary art?
The investment motivation is one. Although if you compare to alternative investments,
art pieces that have had a dramatic increase over a long time period may still not match that of
stocks. It is true, however, that there is a lot of variability of art and artists and if you would get
lucky and pick a future star, the returns could be high. There is the attraction of the gamble;
however, most don’t really buy for investment.
A main reason is for social and self-expressive benefits. A purchase means that you:
3. How does an artist develop a brand? What about an art dealer in brand
development?
The artist develops a brand through associations. Surprisingly, art critics are not very
influential. What is important is the implied approval of dealers, auction houses, art fairs (there
are four major international fairs), and museums. So the first step is to get exposure into a
dealer. The dealers have variable prestige from at least three levels. So you would try to start
But how do you get started and start the march up the ladder? There are several
approaches that are relevant. You can be an outrageous personality in the news like Andy
Warhol and Tracy Emim. Second, you can put out pieces that have shock value because they are
so outrageous; anything to get into the news. Third, your work can be distinctive. It helps to
have a style so that when someone sees a piece they can say that is a Pollack or Warhol or Hirst.
You don’t want to be an artist whose work is hard to identify.
4. Is Damien Hirst famous because of his work and it shock value, because of
Charles Saatchi, or because he is famous?
All of the above.
5. How would to develop a brand if you were a new investment advisory service?
Can you use any of the techniques that artists use?
Could start out by asking how it is similar to an artist brand. It may be hard to evaluate,
etc.
Instructor’s Note—Sony vs. iPod (Barriers to Innovation)
1. Advantages of proprietary products:
This is a classic strategic issue. On one hand “open source” involves that sharing of all
your IP and points of advantage with competitors. As a result they can copy you easily. So you
need to somehow capture the advantage by:
a. Being dominant so that you have more visibility and thus access to customers and so you have
2. Sony went slow at digital.
It is the curse of success. Sony had a great TV product developed at great cost. And it
was protected by patents. It was painful to make it obsolete with a technology that would be
hard to differentiate from competitors’. Jim Collins has a book out that talks about how a
company on the top of its game detects signs of trouble that could require a change of course.
3. Digital convergence?
Think checkless society that was proclaimed in 1960 or the one stop financial shopping
of 1980. Neither came close to coming to life in the time horizon that was expected. There may
4. How did two products come out at the same time?
Understand the silos are very independent and are incented to be successful as silos. It is
logical for the computer to look in this direction because content can come through the
5. Correcting the silo problem.
Some ideas for correcting the problem follow. It starts with communication. It might be