Earlier this month, Subway announced that it had become the world's largest fast food chain, overtaking McDonald's in the total number of outlets worldwide. My initial reaction was one of surprise, because I had always thought that the ubiquitous McDonald's was far larger than any of its competitors. On closer reflection, however, it now appears to me that Subway getting ahead of McDonald's is a sign of our times ? a fundamental consumer shift towards wellness and health, and therefore a hunger for relatively healthy food, even if it be fast food.
Subway and McDonald's
Consumers today are becoming increasingly health-conscious, and Subway is ideally positioned to leverage this insight as a ?healthy sandwich made from fresh ingredients?. Contrast this with McDonald's, which in essence continues to remain a processed burger restaurant for the family, with lots of delicious but immensely fattening cheese and fries thrown in ? despite its consistent efforts to introduce low-calorie and grilled foods on the menu. No wonder Subway has forged ahead with 33,749 outlets globally, compared to McDonald's count of 32,737 outlets.
Clearly, this surprising change in the pecking order of fast-food brands indicates a deep-seated change in consumer preferences. This fundamental change has also been leveraged by many other foods and beverages brands in the recent past. Witness, for instance, the dramatic growth of Coke Zero, Diet Pepsi and Bud Light, the introduction of whole-wheat and high-fibre biscuits by Britannia, the increasing presence of calorie counts on restaurant menus. But when a big new brand leader such as Subway emerges, it signals a fundamental shift which is here to stay for a long time.
Students of marketing will find it interesting to study similar big brand shifts in several other categories, particularly as they also hold a mirror to the evolution of consumer tastes and needs. Here are a few more striking examples.
Microsoft and IBM
Until around two decades ago, IBM was the Big Blue, a monolith straddling the world of computers and technology. The big brand shift occurred when Microsoft overtook IBM, both in terms of impact and market capitalisation. In essence, this happened because the primary hunting ground of IBM at that time - mainframe computers and the like - was replaced with personal computers for most common applications. This was a territory which Microsoft dominated with its ubiquitous operating system, and which, therefore, provided it virtually instant leadership of the huge computers and technology world.
With MS-DOS and thereafter with several versions of Windows which have brilliantly leveraged the progress in microprocessor technology, Microsoft constantly fed the consumer need for easier and richer versions of personal computer systems. Of course, IBM has successfully reinvented its business since then, and has regained its place of honour in the technology world. But the big shift of the 1980s, which catapulted Microsoft into the numero uno position, continues to be a lesson in how brands can leverage a fundamental consumer shift, in this case triggered by rapidly evolving technology.
Apple and Microsoft
If Microsoft overtook IBM several years ago, this year has seen yet another equally emphatic brand shift in the same technology industry. This time around, Microsoft is at the losers' end of the shift. In February 2011, Apple overtook Microsoft as the world's most valuable technology company, with a market capitalisation of $330 billion, ahead of Microsoft's $228 billion. With a range of iconic devices extending from the iPod to the iPhone to the iPad, Apple has appealed to a new-age consumer desire to own and use cool lifestyle devices, which blend the latest technology with sleek style and fashion.
Clearly, this is a deep-seated modern consumer need, also reflected in the rapid growth of the lifestyle and fashion industry across the world. Apple correctly foresaw this new need, and focused its attention on developing fantastic new technology products which became the aspirational symbols of such consumer desire. On the other hand, Microsoft fell behind because it remained a largely one-trick pony, with an overwhelming proportion of its profit stream still emanating from its Windows operating system.
Toyota and General Motors
In the automobile industry, General Motors held top spot globally for 76 long years, perhaps the longest domination of a large industry by a single player. Its brands ? Chevrolet, Opel, Cadillac, Buick - were synonymous with cars, in virtually every consumer segment. Until the first quarter of 2007, when the world finally changed. Toyota toppled General Motors to occupy top ranking, with sales of 2.35 million cars, ahead of GM's 2.26 million vehicles during that quarter. Toyota had, of course, beaten General Motors hands down in profitability several years ago, on the back of its breakthrough technology and lean manufacturing principles. Now, for the first time, it also occupied top spot in sales, signalling the big shift. From the far reaches of Japan, it had become the most influential automobile player in the world.
Here, the essential consumer need that Toyota had successfully anticipated and fed was a move towards fuel-efficient, reliable cars that offered excellent value to consumers. The fuel guzzlers of the previous era no longer found large franchise, particularly with prices of oil and gas shooting up, and with growing environmental consciousness in developed nations. Once again, a brand shift which signalled a basic change in preferences.
Brand Shifts of the future
Just like the case-studies highlighted above, there are many interesting future brand shifts in the making. Here are some possibilities worth thinking about.
In the retail industry, the online retailer Amazon.com has grown amazingly in the past two years. Amazon's brand value in this sector is now ranked second only to Walmart, and well ahead of large retailers such as Tesco and Carrefour (Source: Millward Brown Brandz Ranking, 2010). As consumers shop on the Net, and also begin using mobile phones for online price comparison and shopping, we should expect that Amazon will grow much faster than most brick-and-mortar retailers. Will Amazon eventually trigger the big shift, and attain the No. 1 spot amongst global retailers, toppling the giant Wal-Mart itself? This would be a huge and unmistakable signal that online shopping is the future of the retail industry.
Similarly, will ICICI Bank trigger a big brand shift in the Indian banking sector by offering crisp, modern and consumer-friendly private banking solutions, or will public sector behemoth State Bank of India continue to hold its top spot? With the advent of smartphones and 3G telephony, will technology-savvy Samsung pip Nokia to the leadership spot in mobile phones, as consumers increasingly opt for these feature-rich devices in the future? And finally, just like Microsoft toppled IBM many years ago, and Apple in turn toppled Microsoft two decades later, will Google soon overtake Apple to become the most valued technology company in the world, and herald the ultimate victory of the Internet in all our lives? Watch out for these brand shifts and many more!