New ideas are not always the best ones
First published in the Financial Times on 23rd October 2012.
Far better to spend money reviving an old favourite
Last week, I attended the reunion for an advertising agency I worked for 28 years ago. Remarkably the business, BMP, still exists and occupies the same building in Paddington it did then.
The occasion was a reminder of how unusual such corporate longevity is in the business world, especially in a field as transient as marketing services. Most companies do not last – even successful ones rarely survive for long after their founders depart. Their assets are scattered, their staff move on, their products are supplanted by new competitors.
I keep a poster in my study of the history of the Dow Jones Industrial Average. It shows graphically the rise and fall of companies and industries. Almost nothing endures – they either go bankrupt or merge. From Wright Aeronautical, Studebaker and Remington Typewriter to Eastman Kodak and Woolworth, the list of old component stocks attests to the restless nature of capitalism. Such benchmarks demonstrate how technology, economics, laws and tastes shift over the decades.
Entrepreneurs are usually the source of fresh ideas that overthrow the establishment. Youthful vigour and radical ways of doing things are essential for progress. Any start-up might embody an invention or concept that could undermine the market leaders. Many founders believe they can do something better, cheaper or with more flair than the incumbents – that is partly what drives them.
But do most consumers want the newest product? We live in an era in which older people are becoming a larger percentage of the population. Within two decades, the average European will be aged almost 50, and the largest single cohort will be the over 65-year-olds. Not only will these groups be numerically dominant – they have all the money.
Britons under the age of 45 have so much debt that it just about equals their assets. They have much less buying power than older consumers. Their preferences might appear to drive fashions, but perhaps copywriters at places such as BMP are wrong – maybe an increasing proportion of customers don’t want radical or innovative. Perhaps they want familiarity, with names, brands and products they can trust.
I have sold to the 50-plus age group and it isn’t easy. They are inherently conservative in their loyalties and are generally not early adopters. They have far less promiscuous shopping habits than twentysomethings. One way to reach this grey market is through the revival of classics: capitalising on a brand’s heritage while updating it for the 21st century.
Revived brands such as Old Spice aftershave and Brylcreem hair gel are examples of almost dormant products that were restored by thoughtful marketing. Each benefited from a huge legacy of advertising spend and product recognition stretching over decades.
I am convinced there are hundreds of similar, unloved products that have been discontinued or neglected – but that could be brought back to life with the right sort of attention. In some cases, part of the appeal is nostalgia in a time of uncertainty.
Patisserie Valerie has been a Soho fixture since 1926, but had grown to just six sites when we bought it about seven years ago. Now we have over 50 branches. The business was well known but underexploited – it had history and provenance but only existed in central London.
Organisations such as The Himmel Group in the US and Brand Cellar in the UK have specialised in revitalising “ghost” brands such as Ovaltine and Dewhurst meats respectively. Inevitably they target much of the relaunch at mature consumers who know the product – despite an absence for many years.
Commercial empires may rise and fall, but the consumer brands they own have residual awareness among the public. It can be far more cost effective to resurrect an old name than experiment with a new one. The business world tends to forget the past swiftly, but demographics mean that more and more buying power is in the hands of those who might seek comfort in reassuring brands from the past – witness Nissan’s plans to bring back Datsun.
Inevitably entrepreneurs want to create something original. But giving a vintage brand a second act can be a more profitable exercise – especially if it appeals to the baby boomers.