A new breed of entrepreneur is on the prowl to acquire and revive once famous products that have long lost their pizzazz.
Product resurrection was the topic of a panel discussion at the HBS Turnaround Symposium on March 11. Panelists represented different approaches to the process of seeking, buying, and repositioning these products in the marketplace.
David Shorrock (HBS MBA '96), Director of DB Capital Partners, North America, said his company prefers to search out the kind of product that big companies like Procter & Gamble tend to ignore, minimizing competitive risk. He also looks for products that can be turned around within two to three years and then sold at a profit.
But some products are harder to work with than others, Shorrock said. Take Prell shampoo, for example.
Although Prell was a well-recognized brand when DB Capital acquired it, the product had to compete against many other shampoos saturating the market, Shorrock said. In the end, market share percentage increases remained insignificant and Prell had to be sold off at no profit.
By contrast, the company scored a success in turning around Comet cleanser. With relatively few competitors, DB Capital was able to reinvigorate the brand and take a large share of the market for less cost.
The revival checklist
Jeff Himmel, chairman of the Himmel Group, which has rebuilt such brands as Ovaltine and Lavoris, outlined the "Twelve Musts" in product turnarounds:
1. Point of difference. Will consumers buy this product instead of another brand?
2. Unique selling proposition. Does the product tell a unique story?
3. Make the brand stand out.
4. Dominant share of advertising.
5. Frequency of advertising. Make sure the message about your product is repeated over and over to the public.
6. Listen to the consumer, and then listen again more carefully.
7. Produce creative advertising that strikes a chord with the consumer.
8. Control commercial production costs. (He tends to only spend about $2,000 producing a commercial.)
9. Use your money to place ads, not make ads, and get a dominant share of advertising.
10. Live in a state of perpetual paranoia and always know what your competitors are doing.
11. Consider the X factors about your product. For example, does it have an existing distribution, or will it have to be created from scratch?
12. Have discipline to follow all the points on this list.
Himmel underscored that his approach to advertising is to keep production costs low. For example, he often writes the commercials in order to afford more airtime.
His company's focus is to own all aspects of that product from advertising to selling, Himmel continued. He described himself more as an operator than an investor. Once a brand has been revived, he said, he tends to hold on to it for a longer run in the market and not try to turn a quick profit.
|Live in a state of perpetual paranoia and always know what your competitors are up to.|
|— Jeff Himmel, Himmel Group|
Good distribution is key to a turnaround, panelists agreed—and poor distribution is a potential quagmire. Himmel acquired Breck shampoo, an excellent product that lacked distribution. The Breck revival foundered after difficulties trying to build a product distribution from scratch.
Panelists said the increasing popularity of generic brands was not particularly threatening to their name products. Consumers will opt for the name brand if it is a good product and offers a unique value position, they said. Shorrock cited his company's experience in reviving the Clear Eyes/Murine brands. With something that goes in their eyes, many consumers feel safer with a name brand, he said.
Michelle Dong (HBS MBA '02), from Colgate-Palmolive, offered a big-company perspective on brand revival. She recounted her successful work turning around a flagging shampoo brand for her company in Malaysia. The key to success is thorough research, she said. Become familiar with all aspects of distributing the product as well the people involved in the respective countries.
"You need to know your critical partners internally and externally," Dong said.