Knowledge Base

An Arrow In Our Quiver

I was talking with a Brand Establishment member principal a few weeks ago and he told me that his agency had just won the Arrow Distributors business. "Wow," I said, "Arrow is like the largest electronic components distributor in the world!" And, I told him how back in the day, I lost a great account because of Arrow.

It was 1995 when a little component broker named Bally Micro contacted us and asked if we could handle their account. As usual, we began the relationship with our brand development process including a brand discovery session we still call today, “Turning the Telescope.”

During the session, we learned that this non-franchise type of distribution was really a “Gray Market” industry that was looked upon as mostly illegitimate brokers working out of the trunks of their cars or vans. And, manufacturers really did not want to do business with them unless it was absolutely necessary. We asked: Why? The reply was astonishing. Many of the parts these brokers sell are counterfeit or stolen property. So do you guys operate like this, I asked? No, they promised.

Bally really wanted to be the professional broker, the legitimate operators; the respected business to turn to with confidence.

As we continued the discovery process, we learned that Bally was in the process of receiving an ISO 9000 quality assurance certification and that they really tried to hire the right people and give them plenty of training in product knowledge and customer care.

As well, to assure the highest level of professionalism, Bally had, earlier that year, entered the Malcom Baldridge Awards competition. Their motive was less about winning and much more in going through the process to really improve the professional standards of the company from top to bottom.

At one point in the session, someone brought up the fact that Bally had just started using a new technology called Bar Coding to identify all of the parts for accounting and inventory control purposes. A light went off. Doesn’t Bar Coding provide assurance that the parts are traceable? Yes, they said. And if they were stolen or counterfeit you’d know it? Yes and yes. Wow, Bally could prove that it was the broker to turn to with confidence. Wow, again.

At the session’s end, we had four absolutely deliverable unique selling points: Traceable parts, highest quality standards, most professional company in the category, and the most inventory of any brokerage their size.

When we returned with the discovery outcomes a few weeks later, we suggested that there were two ways we could brand Bally. One: we could make Bally the least sleazy broker in the category, or two, we could move Bally into a new category all together – create one in which they had no competitors. (Ries & Trout – 22 immutable laws of Marketing - #2: If you can't be first in a category, set up a new category you can be first in) They got real interested in two.

We suggested they stop being a broker and become an electronic components clearinghouse. We also proposed changing their name because not only was there little to no equity in Bally, (name association with shoes and casino’s) it also had the associated baggage of being a brokerage outfit.

Together we created a new company name: American IC Exchange. And we wrote a positioning statement: Technologies Clearinghouse.

Within months, AICE had set up what was then the industry’s first e-commerce site and listed all parts in inventory and provided the current prices. Orders could be made on line for the first time ever. It grew to become the first market-making exchange site for commodity semiconductors and parts called Ramdex. It is the only pricing index used today.

So, what was the outcome of all this high-flying brand development stuff? Bally finished 1995 with sales of $65Mil. 1996, the first year with the new brand positioning – $113 Mil. We’d love to attribute all this increase to brilliant brand building, but at least some credit goes to an industry starving for a legitimate alternative resource.

Now it is important to point out that had Bally gone through the traditional, old-school brand development process, the bar coding discovery would have never occurred. Looking, through research channels, to the outside for perceptual guidance rather than inside for the truth, that fact would have been hidden. And the best brand position achievable would have been: Bally is the least sleazy broker in the category.

A few years later, AICE had grown famous and enormous, and was acquired by a huge distributor. If memory serves me, it was Arrow.
 

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• Jim Hughes is the Founding Partner of the Brand Establishment and has developed hundreds of brands in almost every business category during his career. He personally created and developed the BE’s proven Turning the Telescope™ Discovery process as well as the 21st century small agency business model: Small+Smart™.