How John Gokongwei peddled a bottled tea

John Gokongwei Jr.

I have been studying the life of taipan John Gokongwei Jr.,  who passed away on Nov. 9. I have been following his companies, decoding a pattern whereby he has courageously launched many industry firsts—lessons many marketers and entrepreneurs can learn from.

Most marketers practice market-driven strategies, i.e., satisfying customers to gain market shares. Gokongwei, on the other hand, practiced market-driving strategies, focusing on tapping noncustomers to gain market penetration, revealing his consistent pioneering spirit in driving new categories.

Market-driving strategists like him are not ordinary marketers. I have observed the following patterns:

Uncanny skills in identifying opportunities in a marketplace with unmet needs.

Determination to take calculated risks to launch a new category.

Ability to understand behaviors and tap new customers instead of relying on existing customers.

Instinct to launch category killers, or one who can dominate in a certain brand, instead of merely switching brands, hence, creating real value.

Single-mindedness in one major advantage, while also offering just enough in other aspects.

A notch higher than traditional market-driven strategy, market-driving requires focusing on a new target market, a new value proposition and even a new business system.

Take the Gokongweis’ Cebu Pacific for example. Launched in 1996, it took over market leadership with more number of passengers than Philippine Airlines beginning 2010. It not only attracted existing air travelers, it also convinced many land and sea transportation users to shift to air travel.

The airline gained market leadership via a market penetration route, instead of the traditional brand-switching market shares route focusing only on customer satisfaction of existing users.

Cebu Pacific was superior in being a value airline by making customers pay only what they need.

But it was not simply lowering prices. Cebu Pacific’s no-frills airline had to create a different business system altogether. They had to: be operationally efficient (online ticketing, higher passenger load, newer crew members, etc.); fly point-to-point (no luggage double handling, no airport transfer, less delay, less fuel wastage while waiting); buy newer and standard fleet (easier and lesser maintenance, safer, volume discount, fuel efficiency); use higher resource velocity, then recover revenue elsewhere (lower seat pitch, ancillary fees like extra baggage and food, commissions from cross selling, in-plane advertising, revenue model pricing based on demand etc.).

Go Hotels is another example. The budget hotel chain was launched as part of the portfolio of the Gokongweis’ Robinsons Land Corp. in 2010, attracting smart travelers looking for both modern facilities and value for money.

To implement a fusion concept of quality at value prices, the business system had to change as well, starting from appointing a cost-conscious purchasing manager as the inaugural hotel general manager to cement the desired culture. Technology such as automatic energy switch, security gate and monitoring cameras had to be used. Bookings had to be made online and early in order to allow manpower to adjust.

Instead of providing oral hygiene kits, a convenience store is located nearby. Instead of operating a restaurant, third-party suppliers are appointed. Floors, furniture and bathroom need to be one-swipe easy clean, and eating inside the room is discouraged. Their upgraded budget hotels can even be more profitable than five-star hotels.

There are more examples. C2 was launched by Universal Robina in 2002 as the first ready-to-drink tea that was brewed and bottled on the same day. It attracted nonbottled tea drinkers as well as Diet Coke and Diet Pepsi drinkers to switch to a healthier drink (it was displayed beside Diet Coke during launch months).

It also attracted other beverage drinkers to C2. C2 was single-minded in positioning itself as a healthy drink, but did not offer the reusable glass bottle format of soda.

It takes a deep understanding of the business model whereby a firm can be different—also in a different way—by proving the existence of a great strategy. With the same concept of market-driving strategy decoded across different industries, it can be concluded that John Gokongwei was the quintessential strategist, capable of looking beyond what was available in the marketplace.

We will miss him, but definitely we will always remember the lessons he left behind.