Case
CISCO
Cisco Systems is the worldwide leading supplier of networking
equipment for the Internet. The company sells hardware (routers
and switches), software, and services that make most of the
Internet work. Cisco was founded in 1984 by a husband and wife
team who worked in the computer operations department at
Stanford University. They named the company cisco—with a
lowercase c, short for San Francisco, and developed a logo that
resembled the Golden Gate Bridge, which they frequently
traveled. Cisco went public in 1990 and the two founders left the
company shortly thereafter, due to conflicting interests with the
new president and CEO. Over the next decade, the company grew
exponentially, led by new product launches such as patented
routers, switches, platforms, and modems—which significantly
contributed to the backbone of the internet.
Cisco opened its first international offices in London and France in
1991 and has opened a number of new international offices since
then. During the 1990s, Cisco acquired and successfully
integrated 49 companies into its core business. As a result, the
company’s market capitalization grew faster than for any
company in history—from $1 billion to $300 billion between 1991
and 1999. In March 2000, Cisco became the most valuable
company in the world, with market capitalization peaking at $582
billion or $82 per share. By the end of the 20th century, although
the company was extremely successful, brand awareness was low
— Cisco was known to many for its stock price rather than for
what it actually did. Cisco developed partnerships with Sony,
Matsushita, and US West to co-brand its modems with the Cisco
logo in hopes of building its name recognition and brand value.
In addition, the company launched its first television spots as
part of a campaign entitled “Are You Ready?” In the ads, children
and adults from around the world delivered facts about the power
of the Internet and challenged viewers to ponder, “Are You
Ready?” Surviving the Internet bust, the company reorganized in
2001 into 11 new technology groups and a marketing
organization, which planned to communicate the company’s
product line and competitive advantages better than it had in the
past.
In 2003, Cisco introduced a new marketing message, “This Is the
Power of the Network. Now.” The international campaign targeted
corporate executives and highlighted Cisco’s critical role in a
complicated, technological system by using a soft-sell approach.
Television commercials explained how Cisco’s systems change
people’s lives around the world and an eight-page print ad spread
didn’t mention Cisco’s name until the third page. Marilyn
Mersereau, Cisco’s vice president of corporate marketing,
explained, “Clever advertising involves the reader in something
that’s thought-provoking and provocative and doesn’t slam the
brand name into you from the first page.”
The year 2003 brought new opportunities as Cisco entered the
consumer segment with the acquisition of Linksys, a home and
small-office network gear maker. By 2004, Cisco offered several
home entertainment solutions, including wireless capabilities for
music, printing, video, and more. Since previous marketing
strategies had targeted corporate and IT decision makers, the
company launched a rebranding campaign in 2006, to increase
awareness among consumers and help increase the overall value
of Cisco’s brand. “The Human Network” campaign tried to
“humanize” the technology giant by repositioning it as more than
just a supplier of switches and routers and communicating its
critical role in connecting people through technology. The initial
results were positive. Cisco’s revenues increased 41 percent from
2006 to 2008, led by sales increases in both home and business
use. By the end of 2008, Cisco’s revenue topped $39.5 billion and
BusinessWeek ranked it the 18th biggest global brand.
With its entrance into the consumer market, Cisco has had to
develop unique ways to connect with consumers. One recent
development is Cisco Connected Sports, a platform that turns
sports stadiums into digitally connected interactive venues. The
company already has transformed the Dallas Cowboys, New York
Yankees, Kansas City Royals, Toronto Blue Jays, and Miami
Dolphins stadiums into “the ultimate fan experience” and plans to
add more teams to its portfolio. Fans can virtually meet the
players through Telepresence, a videoconferencing system. Digital
displays throughout the stadium allow fans to pull up scores from
other games, order food, and view local traffic. In addition, HD
flat-screen televisions throughout the stadium ensure that fans
never miss a play—even in the restroom.
Today, Cisco continues to acquire companies—including 40
between 2004 and 2009—that help it expand into newer markets
such as consumer electronics, business collaboration software,
and computer servers. These acquisitions align with Cisco’s goal
of increasing overall Internet traffic, which ultimately drives
demand for its networking hardware products. However, by
entering into these new markets, Cisco has gained new
competitors such as Microsoft, IBM, and Hewlett- Packard. To
compete against them, it reaches out to both consumers and
businesses in its advertising efforts, including tapping into social
media such as Facebook, Twitter, and blogs.
Questions
1. How is building a brand in a business-to-business
context different from doing so in the consumer
market?
2. Is Cisco’s plan to reach out to consumers a viable
one? Why or why not?
