Lessons from big business: driving growth without destroying your margin

One common denominator exists in the nightmares of SMB owners and executives around the world: driving growth without diluting their income statements. Finding a balanced strategy which drives consumption, brand equity and has a positive effect on profit, is not an easy feat. Nevertheless there are three tools that come to the rescue: co-creation, occasion-based models and rituals.

1. Co-creation

Co-creation has become an umbrella for many different concepts, such as crowdsourcing, co-design and open source. The common principle is that people inside the company collaborate and share with external experts, customers and final consumers, to address a specific issue.

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Two recent examples drive home the power of co-creation:

• Diageo, global leader in spirits worked with bartenders in developing new premium brands. Diageo created a competition called Show your Spirit, in which the best European bartenders challenged each other in developing a new category of spirits and a new brand. The winner of the competition is a Gin / Sake hybrid branded Jinzu, which is now part of the Diageo premium reserve portfolio.

• Another well-known example of co-creation is Japanese firm Muji, which for years has been commercializing both consumer co-created and designers product. At Muji, co-created products have better rotation and requiring less promotion, better growth margins and are more likely to survive the 5 year observation period, after which products are included in the permanent catalogue of the firm.

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Beyond the large corporations, many SMB businesses use co-creation workshopS with consumers and experts as a way to generate strong insights and route to market ideas when entering a new market. Ultimately co-creation workshops are a cost effective way of learning about local twists, hurdles and ‘unwritten rules’.

2. Occasion based models

Occasion based models, were initially developed in the food and beverages industry, to help drive growth by tapping into different consumption habits: sharable sizes, multi-packs, on-the-go formats. Nowadays they play a role in consumer electronics and media: for example TV content is available on-the-go through specially optimized formats like HBO-to-go for HBO, or TV series available for download on the iPad or iPhone.

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The occasion framework relies on three major inputs:

• the consumer target e.g., young adults, senior citizens;
• the occasion e.g., winding down after work, gearing up before going out, training;
• the insight platform, e.g., conviviality, show-off, security or safety.

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How do you use the model?

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The first step it to look at your firm’s current product and service offering, by mapping which consumers and occasions are currently served. Then identify white spaces – based on volume, growth and brand fit - where consumers’ needs are unmet. Think of Moet & Chandon Ice Imperial, which was developed to promote younger consumers’ consumption in hot summer days by the sea. By using the occasion model the French luxury firm realized that there was an important drinking occasion for a big group in which they were not present, and developed a product and packaging combination suited to the occasion, while perfectly fitting with the brand values.

3. Rituals

The third and last growth leverage are rituals: a ritual is pre-scripted set of actions, which one or more actors perform for an audience, with a highly symbolic meaning. Rituals are not  habits which are repetitive behaviors (e.g. like brushing teeth, shaving, smoking,..) in which the action is executed in almost a subconscious way. A typical ritual example would be the champagne showers at the end of the Formula 1 Grand Prix.

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There are two aspects which make rituals strategic:

• Rituals are highly repetitive, and therefore can be easily replicated and learned, and they always have a symbolic meaning, which helps the brand connect with the emotions of the consumers.
• Rituals can be used to activate a brand (e.g. lime wedge in Corona beer, the Oreo “Twist, Lick, Dunk” campaign) or to develop new products and services (e.g. NikeID on-line customization services for Nike sneakers).

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In order to drive growth by using rituals, the first step is to focus on a specific target, by using co-creation workshops or ethnographic research to generate insight platforms.  The next step is to analyse rituals relatively to that platform, by focusing on either activation or new product development.

At the crossroads of these three dimensions we can develop concepts focused on promotional activation, or new and innovative packaging or product and service centered innovation. If you’re an business owner with growth nightmares co-creation, occasions and rituals will help you sleep better.  Fueling your growth by developing stronger brands, more customer relevant innovations as well strong economic performances.