Forget About Pleasing Everybody: Why You Don't Want A Mega-Brand

While most companies are focused on building one giant, catch-all brand, Richline's CMO Mark Hanna focused on building smaller brands—and better customer relationships.

It’s almost been a golden rule for some time now among corporations that it’s better to have a few mega-brands than multiple middling ones.

Procter & Gamble (P&G), the maker of many goods you’d find in your home, dropped White Cloud in the late '90s and put all its toilet paper eggs in the Charmin basket. Similarly, Ford ditched its Mercury brand, while GM axed Oldsmobile.

So it was somewhat shocking when Mark Hanna, CMO of the Richline Group, explained how taking the opposite approach dramatically changed its fortune, providing yet another reminder that innovation can take many shapes.

Channel Conflict: Problem or Opportunity?

Richline came into being in 2007 after the merger of various precious metal companies as orchestrated with parent company Berkshire Hathaway. Currently, Richline has four main divisions and is a leading provider of precious metal jewelry around the world, with thousands of employees and over a billion dollars in sales. Hanna came to the company through one of the mergers and started shaking things up in 2009.

“We identified our biggest weakness as not having control of the consumer touch points—we’d present our wares to a buyer and have little influence over how things were packaged, displayed, or advertised,” Hanna said at the time.

Selling essentially the same jewelry line to all the major national retail stores meant Richline had unending channel conflicts—doing something to please one customer only led to unhappiness in another. So Hanna says he made it the company’s priority to gain influence and control.

Surprisingly, gaining control for Hanna meant creating private label brands for each of Richline’s leading retail customers. In karat gold, for example, the company has 14 retailers carrying assortments of products all under different names.

Even though Hanna admits this strategy multiplies the marketing stress, the impact on Richline’s business was both immediate and long lasting. “It absolutely multiplied our sales because we took away channel conflict and allowed each retailer to create their own margins and positioning,” said Hanna. Seven years later, sales continue to grow at Richline, and they now support a goldmine of 42 private label brands.

When multiplying product lines, organizational alignment is key

Hanna says that each retailer has a product development team, an operations team, and a customer service team so everyone is focused on one brand and one customer. Marketing’s role in this case is to be the overall organizer of the teams and “the catalyst for that team to walk in the customer’s shoes,” Hanna says.

The unstated truth thus far is that each of these retailers represents a significant sales opportunity for Richline, so lavishing lots of attention on them one way or another just makes good business sense. To this point, Hanna likes to refer to Ted Rubin’s mantra, “return on relationship,” adding “the growth of our business over time is really about how strong our relationships are and how strong the trust is. Improving that trust every year is my single most important goal as CMO.”

Customer-Centricity: How Far Will You Go To Build Trust?

Even if you’re not prepared to create separate product or service offerings for each of your major customers, it’s hard to argue with Hanna’s commitment to not just building trust, but improving upon it year after year.

One of the ways Richline achieves this is through an idea borrowed from Warren Buffett called “moats.” “Moats are our corporate differentiations, our product differentiations, and our service differentiations, and it's the single most important strategy we emphasize throughout the divisions,” he details.

As it turns out, one of Richline’s strongest “moats” is the ability to manipulate precious metals into pretty much any format, composition, strength, and/or consistency. Having 50 variations of 14-karat gold, for example, means that offering slightly different products to each of its customers is not as hard as it might be for other companies that most likely spend less on R&D. And while having extraordinary product development capabilities is a good foundation for any marketer, it takes a true innovator to think small when the prevailing wisdom is big-time consolidation.

For more details on how Hanna tackled this challenge, see my complete interview on TheDrewBlog.com.

[Image: Flickr user Pedro Kwezi]

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1 Comments

  • Thanks for including me in this great post Drew and for the mention Mark.

    Love that companies like Richline Group and Mary Kay, due to the advocating of their CMO's Mark Hanna and Sheryl Adkins-Green, are adopting a Return on Relationship, #RonR approach to their marketing, communication and PR efforts.