The Lexus and the Olive Garden

When my family moved to Georgia when I was young, we thought we were moving into the country. Our neighborhood was one of the first in a patch of pasture land, forest and red clay, and I remember having to ride the bus a long way to school. There was, however, a gleaming beacon of capitalism in our new town, one that beckoned the weary with promises of fulfillment in the form of a video games and cheap jeans. Long live Gwinnett Place Mall.

My friends and I went to Gwinnett Place every weekend. It had a movie theater across the street and that, combined with walking around in circles, was enough to entertain a horde of 12-year-old boys for hours. One major facilitating factor in us going to the mall was the Ruby Tuesday. My dad would not let us go hang out at the mall ourselves, so he and the other dads would go hang out at the Ruby Tuesday talking smack while we blew our allowance on watching Freddy Krueger or buying snap and pops.

But then something happened. An anomaly in our little ecosystem. A new kind of siren that beckoned our parents from far beyond our refuge at the arcade. The prospect of cheap, mass produced Italian food with all you can eat breadsticks was too much. Friday night’s buying candy cigarettes were replaced with accompanying the parents to the Olive Garden for sensibly priced chicken parmesan.

I cursed the Olive Garden for destroying my youthful bliss, but as the years have ticked by, I have come to appreciate that which held our parents captive like armadillos to headlights. Rewind back a few decades and look at the casual dining scene. There was Chili’s, which originally was an upgraded McDonalds that sold beer. There was Applebee’s that was pretty much like a Chili’s and still kind of is but now they also sell Italian. Weird. There was Ruby Tuesday which was like Chili’s and Applebee’s with the undeniable awesomeness of being in the mall. The casual dining sector was a collection of also-ran burger joints that all sold Shirley temples and soggy fries.

The Olive Garden came and changed all that. Not just the Olive Garden, but also Longhorn’s, Fuddrucker’s and every Happy #1 Super King China Buffet served to fracture the casual dining sector into many parts like what happened in Gremlins when Gizmo got wet.

Once there was one idea of casual dining. The sector was split apart as restaurant holding companies stopped running one type of restaurant and started running a portfolio of restaurants. The theory is simple. Give consumers more options within a category and win yourself a larger slice of the pie.

Procter and Gamble is famous for this. One detergent makes your clothes smell nice. One protects colors. One is all temperature. P&G spit the category into many factions and positioned a product to fit each niche. The result is leading brands in nearly every subcategory and a commanding aggregate share of the category as a whole.

So why didn’t P&G just make Tide all temperature, Tide fresh scent and Tide color safe? Well, they sort of did but not with the same potency that their brands Cheer, Gain and Ivory have. This is where you can find the fundamental mistake that many marketers make. They know that additional lines within a category can result in gain of share through the respect and brand affinity created for individual brands. They don’t know the proven fact that line extension is a risky game. Sometimes you get Ivory laundry detergent and it sells. Sometimes you get the Eagle Talon and it sucks.

Dividing the sector and taking a new position within the sector is tricky but doable. Here are a few tips.

1) Know what you do. Know what you don’t do. Do things based on what you know. Don’t do thing based on what you don’t know.

The point here is to have an accurate self appraisal. Don’t position or attempt to position an effort of impractical or improbable aspects. I once had a client tell me his strategy was to be the best customer service company in the world. Even if that was achievable for his company (it wasn’t), it is not the core of his business. Sure, customer service is a conduit for business, but the idea that you can muscle a meager product onto a customer simply by following every sentence with “it’s my pleasure” is wrong, wrong, wrong.

2) Before you dive in, find out how deep the water is.

If you know yourself, the next knowledge you need to have concerns the market. The funny thing about products that roar to stardom and those who explode on the launch pad is that they often have a similar start. Both saw an opportunity where others did not and while the star saw a real need and niche, the failed brand went after a market and consumer that never existed. Good market intelligence is valuable to every effort no matter how novel or innovative. Go ahead. Talk about all those techies who started in their garage without market research. Well, thanks to the idea that market research is somehow passé, there are plenty of companies still in the garage, and considering the market’s hangover from tech’s empty promises, they better get real comfortable.

3) Don’t serve jalapeno poppers at an Italian restaurant.

So you have a niche. You found a vein of potency and you’ve focused on a particular mindset, customer and value proposition. Congratulations. Now don’t screw it up. Often the collective gut says “we’ve made it, now what?” which is immediately followed by some horrid extension. Remember that O’Charley's promo? You know, the American Restaurant with the Irish name that serves Italian. Way to focus, Charley.

Instead hunker down in your niche. How can you invite more people to your little island? VW started with a cool little small car and invited others to join their club. They resisted the temptation to build cars like everyone else and the exploitation of customer insight is why they still exist today.

The nexus at Lexus.

Lexus is on of my favorite examples. Toyota knew they could not build a luxury Toyota (even though they later tried with the Avalon). Toyota means reliability and value and Toyota knows such. When Toyota detected an opportunity for a performance luxury car, they didn’t just buff a Celica to a high shine. From design, to advertising to a limited distribution base to sharpen demand, Lexus was and is a nearly perfect niche creation.

Toyota listened and they reacted with insight and tact.

The world is Fiat.

As boundaries fall between countries and the collective intellect of our fair country is hopefully rising, opportunities for niche brands will abound. Sectors will open and consumers, armed with more information than ever, will make discerning choices on the brands that they ultimately use to show the world who they are. When the opportunity opens, will you be there with a better smelling t-shirt, a 300 horse power roadster or free bread sticks.

Good marketing plans tell the customer that you care.

Great plans tell the customer of your passionate pursuit of their passions and pursuits.

And the truly great niche positions speak so pointedly to a customer so that all that the customer hears is, “When you’re here, you’re family."