Not long ago I had a conversation with a marketing director (one of the greats of this country) that got me thinking. He was telling me that they had launched one of their brands in a new category quite far removed conceptually from the core business, and that despite what he had predicted, sales were off the charts. "I was completely wrong, and thank goodness the team didn't listen to me this time and launched it," he said, half laughing out of sincerity (and humility). As I left his office I thought that I would have taken the same position as him, and I would have been wrong too.
The truth is that many companies miss out on opportunities to grow their business because they are inflexible about their brands. Anything out of the norm, outside of "what we've always done," is a taboo that no one wants or dares to break. Brands are a fundamental intangible, the sum of many small and large moves over the years, and it is important to think very carefully before dragging one into an unknown space. It does help, though, to be bold and a little irreverent, get over your fears and even be willing to make mistakes.
Now that the crisis is behind us, we are finally going to see many brands taking the plunge into innovation and making the leap into new categories. It pays to do your homework before starting a brand extension. Three basic questions will help you decide:
1) Is there major market potential or just a niche?
2) Is my brand relevant to this new category or offering?
3) Am I capable of properly executing the brand extension?
A successful brand extension will most likely meet all three of the above criteria, and an extension that fails will do so because it fails to meet at least one of the three. For example, Donald Trump launched its eponymous vodka brand in 2005, at a time when the premium distilled spirits market was skyrocketing (meeting criterion #1). Although the brand's slogan was "Success Distilled," it appears that the public did not see the relevance of the businessman's brand (who, by the way, does not drink alcohol) versus more established or craft brands with local roots and hipster flair (criterion #2). The brand was a failure and hasn't been sold in the US since 2011.
In widening the brand's scope, it helps if there is a common thread that allows brand equity to be easily transferred in a relevant way to the new category. Obviously, the closer the jump (to another category, target, market, etc.), the easier it will be. One way of doing this is based on brand values and attributes. The Florette salad brand, which seeks to position itself in freshness, convenience and innovation, had little problem in getting the consumer to understand their jump from pre-packaged lettuce to bowls of salad, and then to grain and legume bows, and eventually dressings, toppings, sliced fruit, etc. It would no longer be unreasonable to think of Florette moving into ready meals, ready-to-eat vegetables, juices or smoothies.
Sometimes what allows the brand's perimeter to be extended is a common thread based on a "brand concept." This is the case of the French brand Bonne Maman. Their brand idea, which we can express as "All the pleasure and tradition of your grandma's kitchen," allows them to transcend the jam business to encompass categories such as refrigerated desserts, cookies and selected pastries. The brand and the execution are relevant to these categories; generally their products are well cared for, of great quality and are very tasty.
Another interesting case, which definitely creates divided views, is Spanish clothing brand Scalpers. Since its birth, it has exclusively targeted an upper-mainstream male target with a rebellious and nonconformist touch. Its brand concept,"building a masculine universe," suddenly becomes obsolete when it announces that it is entering the female target under the same brand. It is totally possible that there is significant potential volume in women's clothing (many buyers of Scalper men's fashion were women), but it will be necessary to generate major strategic lift to make the brand relevant and perfectly execute in a way that doesn't alienate the original audience.
If you are searching for maximum brand elasticity, leveraging brand purpose allows for authentic strategic pirouettes. A great case of a brand extension based on purpose is Virgin. Their purpose is "Changing business for good." Staying true to that mantra and challenging the status quo in any industry, this brand, founded by Sir Richard Branson, has evolved from the original record business launched in the 1970's to a portfolio of seemingly unconnected businesses spanning mobile operators, trains airlines, hotels, financial services and more. In the areas where Virgin has entered successfully, the key was always execution. Their value proposition has always had an innovative component based on the needs of the user, surprising pleasantly. Having a great product always helps, but it's essential when moving into categories with more established competitors.
Finally, many companies are missing fantastic opportunities out of fear of launching new brands. It is certainly not easy and often requires a tremendous amount of effort and investment. This is something that is not within the reach of all, and if done it is essential to adopt a startup mentality (and organization) when building the brands of the future, designing groundbreaking value propositions for products and services, patiently building from the ground up and working channels, word-of-mouth and digital. This, however, is a post for another day.
