Managing Brand Equity in Rapidly Changing Markets: A Cisco Systems Case Study From a Harvard Business School Association of Northern California address by Carol Holding and Pamela George, September 7, 1995 Cisco Systems built its brand in a market changing at lightning speed, first, in a time of continuous change, when Cisco dominated the market for routers among "innovators" but needed to move into more mainstream markets to sustain its growth, and secondly, in a time of disruptive change, when its core routing technology was threatened by a new one. Cisco was founded 11 years ago by Stanford academics trying to hook individual department networks together into a single seamless network, or an Internet. Though demand has driven the growth of this market, Cisco's success was no cakewalk. Their initial technology was not the best; other competitors were actually out front in the beginning; and the explosive growth of the market meant a constant stream of new entrants including powerhouses like IBM and DEC. I want to talk about two issues that Cisco resolved by looking for solutions in the principles of branding in rapidly changing markets. The first issue was how to expand our customer base to mainstream markets when the Cisco brand stood for a breakthrough, non-mainstream technology called routing. The second issue was how to maintain market dominance while routing, now the mainstream technology, is threatened by a disruptive technology, switching. Cisco had built its business on a core of bleeding edge techies who spent 23 hours on the Internet talking about the latest, hottest technologies and the other hour beating up their bosses to spend the money to try it out. These early customers were building the Internet themselves and not only understood what Cisco was doing - they were living and breathing it. This strategy worked really well in the early days - but would never work with more mainstream customers. The fact is, people respond to companies they understand. And very few members of mainstream corporate cultures understood what we were doing. Cisco had captured the "innovator market" by reinforcing its status as technology junkies, selling product sight unseen over the Internet, and creating a cult-like status for members of the Cisco owners club. The Cisco logo meant routers to these people, and Cisco owned the market. The next move was to attract a broader market in early adopter companies - companies where time really was money, that had to stay on the cutting edge of technology to survive, but who had relied on mainstream IBM technology to make their businesses run. MIS managers in these "early adopter" companies were much more technically advanced than most of us, and nearly all of them knew that internetworking was the inevitable next step - but few understood how to make it happen. The words "emerging technology" we heard in research conducted in 1992 were not meant as a compliment. Furthermore, everyone in MIS could see that the internetworking experts, the "router gurus," were the ones who were always involved in some nightmare, never got any sleep, in fact, rarely went home. The more mainstream buyers wanted technical leadership from their vendor if they were going to plunge into this new world, but they also wanted safety. Cisco had to do something to make it more accessible - more understandable, more safe - to a broader audience without sacrificing its brand equity among technology experts. So we expanded the brand promise to mean routers that solve the toughest internetworking problems. We used humor to inject humanity into this brand building ad campaign and likened the complexity of internetworking to getting through to a rebellious teen-ager. All of Cisco's messages supported our new single-minded brand promise, that Cisco was the one company that could tackle the toughest internetworking problems. The emotional benefit of the Cisco brand was morphing from having the coolest technology to the one solution that actually works for internetworking. As a result, Cisco's awareness among networking professionals increased dramatically while competitors stayed the same. The result: Cisco virtually owns the market for what's referred to as "mission-critical applications" -- trading networks in investment banks, operations of telecommunications companies and computer companies - in short, the early adopter market for whom internetworking translated into immediate increases in revenue. And who were building huge, incredibly complex networks. And buying their equipment from Cisco.   next page top of page