Big Brands 'Get Smaller' So They Can Stay Big

by Kelly Shermach, Sep 28, 2007, 5:00 AM

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Behemoth retailer Wal-Mart stocks its store shelves according to the needs and wants of little communities scattered around any one of its superstores. Factiva, the joint venture between Dow Jones & Co. and Reuters, brings 9,000 sources of information to a laser-beam focus of business subscribers. J.Crew has surreptitiously launched a denim boutique for twentysomething hipsters that presses none of the preppiness of the parent brand.

Big brands are getting smaller in smarter segmentation that leverages marketing tools focused on optimizing revenues, niching product mix and masterminding messaging.

"If you're not driving sales or retaining customers, stop what you're doing right now, and do something that will drive sales or retain customers," says Alan Scott, Factiva CMO.

Factiva segments its information by subscriber job function--such as marketing, sales, C-level executive--industry and information need. The company also employs an InfoPro Resource Center, meeting the needs of information professionals as outlined by the Special Libraries Association.

It may well be the Wal-Mart of business information.

"Traditional segmentation doesn't work, so you start to look at different things," says Robert Passikoff, founder and president of Brand Keys Inc., New York. "We understand that it is more difficult, but it is more prevalent," he says of newfangled segmentation.

It is:

segment management within channel management.

community-based stock and sales strategies.

brand evolution driven by product development.

product management per segment.

"It's another way of defining the way people might behave," he says. "It's a kind of learning people are looking for in terms of managing process or product or distribution."

But some marketers take segmentation one step further, assigning an exclusive brand name to the narrowed product or service offering. J.Crew has done this with its Madewell brand, offered in just two brick-and-mortar stores and through a casual Web site that overlays popular culture on its capitalist pursuit. The line's designers are profiled, and share the blogs they read and the things over which they obsess.

Assigning a unique brand name to the product or service offered to a new segment reflects a marketer's understanding of how its new segment is looking at a category and what drives these customers' positive behavior in the market place. "It understands what they expect," Passikoff says.

Young urban professionals expect a style and brand that says they have more important concerns than their personal style. They associate an earlier generation's upper-middle-class social status and khakis embroidered with palm trees or pink polo shirts with J.Crew. Madewell is their own.

Any auto manufacturer has the production facility to build a sports car, Passikoff notes. Mercedes or BMW likely has the brand to market one, too. But Buick does not.

"Mercedes would not need to go out and create a sub-brand, but other brands run into trouble when they do not differentiate their understanding of the product concept and what customer wants it," he says. "The issue is, does the brand mean something to you that has you reach into your pocket and pay for it?"

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