These funds that buy up brands and
companies that are in the declining phases.
And what do they do?
They take them and they just maximize their returns.
They make as much money as they can with them today,
really until they go out of business.
You can then use the resulting income to fund new products in new markets.
You're not going to grow that market, but you may be able to grow other markets.
Think about mayonnaise.
I mean, are you really going to grow the mayonnaise market?
No, what you should do in the mayonnaise market is make as much money as you
can in the mayonnaise market.
Then Unilever, who owns Hellmann's,
can take the capital out of Hellman's, not reinvest in a lot of branding,
take that capital out and develop new products, new ideas to bring to market.
Finally, you can find new uses.
Sometimes this is hard but you should try.
A famous example of this is Arm & Hammer baking soda.
This is a very old brand in a very old market.
And you know what happened with them?
People weren't just baking as much anymore.
So it's bad to be in the baking soda business
when people aren't baking very much anymore.
What did they do?
They found a new use, an important new use.
They started running commercials saying if you put Arm & Hammer baking soda
in your refrigerator, it will absorb the moisture and
the scent, kind of the stench of the refrigerator.
That really appealed to people.
They found a brand new market.
So, instead of being in a declining market, they were really in
the development stage of a new market that they themselves had created.
So what do we think about here?
What are the key takeaways?
Think carefully about where your product is in the lifecycle.
Be honest and realistic about it.
And then use the tactics we presented here to price accordingly.