Candy and Credit

When I entered the banking industry some years ago (all right many years ago) I made a practice of looking outward rather than inward. This was my way of of understanding the world around me and how it might influence consumer behavior and the credit card industry specifically. In the UK for example, I make a practice to reading the tabloids versus the broadsheets first to see how culture is being reflected with the widest audience. This was supplemented by other means of teasing out how other industries managed their businesses and what cross insights could be gathered and used for my business. One such method was to visit with companies outside of financial services. These included Xerox, a Malcolm Baldrige winner, Disney, Warner Brothers,  a beverage company in Japan, Zenith Corporation in Mexico and other non related industries. They all provided both positive and negative learnings with takeaways that provoked new thinking about financial services. However, none of these experiences was as interesting to me as a candy maker.

In 1991 I visited with Whitman’s Chocolates in Philadelphia. The company was founded in 1842 and by Stephen Whitman. It was famous for the the candy sampler offering variety and rich flavors. Over the decades and century the original recipes were compromised and gave way to pushing variety. Sales slumped and a new President was hired in 1991 with a strong track record of growing package goods brands. He was Bob Pizzuti who cut his teeth at P&G. I met with him at his plant and he took me on a tour. His strategy was simple. And I mean simple. He was to take the company back to its roots and simplify everything. The ever exploding variety of candy flavors complicated the assembly line, increasing costs which was offset by using cheaper ingredients and moving further and further away from original formulations that helped build the company. Bob took the organization back to basics by reducing the number of flavors and invested in quality with more enriched ingredients. His strategy was the forerunner of the ERRC model of Blue Ocean Strategy. The simple explanation of the model is to always ask what you can Eliminate, Reduce, Raise and Create to keep your product suite current. So for me this was a great insight that had direct application for the credit card industry. Cards at the time had so many features that most consumers only recalled what they were when you announced you were taking something away. No frills could be a differentiator.

When it comes to commodity status financial institutions can learn a great deal from package goods companies. The fundamental question is how to help prospects wade through a puzzle of choices and pick your product. While being shepherded through the candy plant we ultimately ended up in his office. I was a fairly young lad at the time and here I was learning from a marketing and business operator veteran (Bob was a bit of an intimidating character). As I pondered a final question before ending my visit I thought of what a tough challenge he had given all of the confectionery choices available to consumers. This prompted me to ask “how do you differentiate your product” ? With that he through a box of Whitman’s Sampler at me which thankfully I caught. He said, “what is that”? in which i replied rather sheepishly – a box of candy”. Next another box came flying my way with the same question. My reply was, ah ha a box of gift wrapped candy. He ended our meeting by saying “THAT IS DIFFERENTIATION“.


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