Death Sentence
During my career interlude in advertising, I consulted for a major tobacco company. I was initially reluctant because I didn't want to support that industry, but I couldn't say no (aka, I needed the client). The experience ended up being unexpectedly challenging and exciting. I met a youthful, bright team of MBAs from the top schools (hint: you pay more for top talent if you're in an unsavory industry), and the strategic brief was clear - with a definitive end in sight, how the brand should pivot. Here's what I learned.
When faced with the certainty of decline, whether it's through a terminal illness diagnosis or a shrinking market, wasting time becomes a luxury we can no longer afford. Recognizing the inevitable decline of cigarette sales, the company decided to diversify its business portfolio, understanding that time spent clinging to outdated practices would only hasten its demise.
A deep dive into identifying the core customer benefit of cigarettes (putting aside the apparent health issues), the strategy hinged on the company's business proposition of providing pleasure to its customers. Researchers then set out to identify all industries related to the delivery of pleasure, and wine and chocolate floated to the top. The company quickly expanded into these sectors, explicitly acknowledging the changing landscape of consumer preferences and regulatory pressures. By diversifying into these seemingly unrelated but fundamentally connected industries, the company sought to leverage its strengths in distribution and marketing while reducing its dependence on tobacco revenue.
Survive
The success of the company's diversification efforts varied—fresh investments proved fruitful, providing a new revenue stream for the company. However, the transition was not without its challenges, and the company faced limitations in entirely replacing the revenue lost from declining cigarette sales.
Many years later, I look back at that time with the client. Rather than wasting time lamenting the decline of their core business, they recognized the need to adapt and innovate to secure their future. This proactive approach allowed them to explore new opportunities and position themselves for long-term success in an evolving market landscape.
The company continues to evolve today, exploring new avenues for growth beyond traditional tobacco products. From investments in alternative nicotine products to exploring opportunities in cannabis, the company remains committed to staying ahead of the curve. By embracing change and refusing to dwell on the inevitable, the company exemplifies the will and adaptability necessary for navigating uncertain terrain.
Identifying pleasure as their core customer proposition was vital to their pivot strategy away from tobacco. I left out the part about creating addiction because that part was scary, but honestly speaking, all brands want their customers to keep coming back for more.
What would be your brand's proposition?