|
Managing Brand Equity in Rapidly Changing Markets:
A Cisco Systems Case Study
From a Harvard Business School Association of Northern California
address by Carol Holding and Pamela George, September 7, 1995
Cisco Systems built its brand in a market changing at lightning
speed, first, in a time of continuous change, when Cisco dominated
the market for routers among "innovators" but needed to move into
more mainstream markets to sustain its growth, and secondly, in
a time of disruptive change, when its core routing technology
was threatened by a new one.
Cisco was founded 11 years ago by Stanford academics trying to
hook individual department networks together into a single seamless
network, or an Internet. Though demand has driven the growth of
this market, Cisco's success was no cakewalk. Their initial technology
was not the best; other competitors were actually out front in
the beginning; and the explosive growth of the market meant a
constant stream of new entrants including powerhouses like IBM
and DEC.
I want to talk about two issues that Cisco resolved by looking
for solutions in the principles of branding in rapidly changing
markets.
The first issue was how to expand our customer base to mainstream
markets when the Cisco brand stood for a breakthrough, non-mainstream
technology called routing. The second issue was how to maintain
market dominance while routing, now the mainstream technology,
is threatened by a disruptive technology, switching.
Cisco had built its business on a core of bleeding edge techies
who spent 23 hours on the Internet talking about the latest, hottest
technologies and the other hour beating up their bosses to spend
the money to try it out. These early customers were building the
Internet themselves and not only understood what Cisco was doing
- they were living and breathing it. This strategy worked really
well in the early days - but would never work with more mainstream
customers. The fact is, people respond to companies they understand.
And very few members of mainstream corporate cultures understood
what we were doing.
Cisco had captured the "innovator market" by reinforcing its status
as technology junkies, selling product sight unseen over the Internet,
and creating a cult-like status for members of the Cisco owners
club. The Cisco logo meant routers to these people, and Cisco
owned the market.
The next move was to attract a broader market in early adopter
companies - companies where time really was money, that had to
stay on the cutting edge of technology to survive, but who had
relied on mainstream IBM technology to make their businesses run.
MIS managers in these "early adopter" companies were much more
technically advanced than most of us, and nearly all of them knew
that internetworking was the inevitable next step - but few understood
how to make it happen. The words "emerging technology" we heard
in research conducted in 1992 were not meant as a compliment.
Furthermore, everyone in MIS could see that the internetworking
experts, the "router gurus," were the ones who were always involved
in some nightmare, never got any sleep, in fact, rarely went home.
The more mainstream buyers wanted technical leadership from their
vendor if they were going to plunge into this new world, but they
also wanted safety.
Cisco had to do something to make it more accessible - more understandable,
more safe - to a broader audience without sacrificing its brand
equity among technology experts. So we expanded the brand promise
to mean routers that solve the toughest internetworking problems.
We used humor to inject humanity into this brand building ad campaign
and likened the complexity of internetworking to getting through
to a rebellious teen-ager. All of Cisco's messages supported our
new single-minded brand promise, that Cisco was the one company
that could tackle the toughest internetworking problems. The emotional
benefit of the Cisco brand was morphing from having the coolest
technology to the one solution that actually works for internetworking.
As a result, Cisco's awareness among networking professionals
increased dramatically while competitors stayed the same. The
result: Cisco virtually owns the market for what's referred to
as "mission-critical applications" -- trading networks in investment
banks, operations of telecommunications companies and computer
companies - in short, the early adopter market for whom internetworking
translated into immediate increases in revenue. And who were building
huge, incredibly complex networks. And buying their equipment
from Cisco.
next page
top of page |
