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July 26, 2006

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Jon

"1) How new is the brand? Here's where I completely agree with Laura: new brands should tightly focus. Pick one problem that needs solving and build a reputation for solving it. Netflix solved convenient movie rental. Google solved fast, accurate search. Apple offered a cool new way to compute."....and Neomedia's 'qode' is THE 'mobile find' solution...check out qode.com

Scott Miller

Yes, Roger, this was inevitable for Amazon. The grocery division is a ridiculous stretch for Amazon, but then so are most of the other categories Amazon has entered that lose money for them.

The Amazon apologists will of course suggest that Amazon means more than books, it means superb customer service, or ease-of-use, or some other umbrella concept. Most companies leaders, too, like to paint themselves with a broad brush of vague meanings, like "Our brand stands for quality," or "Our brand stands for service," or "Our brand stands for convenience." But that's not how our consumer minds think -- we prefer to pigeon hole brands in very small boxes, because it makes it easier for us to remember them. The smaller the category, the better we remember (and the stronger the band for the company). Thus, it's a blazing wonder why companies do everything they can to broaden and stretch the meaning of their brand, foolishly making it significantly weaker in our minds. And that's the story of Amazon. You can't be all things to all people. Otherwise, eventually, a single company (Virgin, anyone!) would rule the world.

Roger L. Cauvin

Wow, a spirited debate among some of the brightest folks in the branding business. I don't have much to add, but the case of Amazon might be interesting to examine:

http://cauvin.blogspot.com/2006/08/amazons-lack-of-focus-revisited.html

Amazon is doing very poorly of late. To what extent is performance due to brand extension?

Scott Miller

Mike, the key thing to remember about Microsoft is that they own a monopoly, and therefore they can get away with the breaking of many positioning principles and still survive as a profitable company overall.

However, in many, many categories they've entered -- those that fall outside their core focus -- they have failed miserably, including the Xbox, which has lost them several billion dollars over the last five years, enough to sink most Fortune 500 companies.

Likewise, Microsoft can't win the search engine war against more focused competition. They can't win the money software category against more focused competition (Quicken). They can't win the set-top PVR war against more focused competition (Tivo and others). And there are many others -- I used to have a list of about 20 areas where MS lost to more focused competition. Luckily for them, though, their monopoly on PC operating systems keeps them alive -- even though most knowledgeable computer users will agree Windows pretty much sucks.

Mike

Great post. I really liked the ideas that you outlined, especially with respect to the middle ground. Brand strategy has to evolve over time.

Something else not mentioned: line extensions often reduce a product to commodity status because, of course, scarcity often implies value. When I see hundreds of boxes of toothpaste in the store, it's hard to imagine that any of them are special. Yet when I see the "lone tube" from a single brand manufacturer, it's much easier to think of it as inferior or somehow suspect. Just like grocers have to keep their produce section full because no one likes to buy the last apple!

Sometimes people are motivated to purchase a product very few can afford. Other times people won't touch a product unless others have tried it. It's good illustration of why a black and white approach doesn't work.

For Scott Miller, who has domain specific expertise in this matter:

World of Warcraft is a runaway success and then some. Yet I don't know that it's a very focused brand, i.e., World of Warcraft is a very diffuse, multi-faceted, layered experience. This seems to be an example of how expansive focus can help a brand succeed.

Microsoft is similar. The brand means many things to many people. The concept of meaning many things to many people is something that seems to contradict the principles of branding. Yet Microsoft is successful.

I think it makes real sense to consider the right, middle, and left side of the branding debate.

jennifer rice

Scott, I don't disagree with you. But the reality is, very few execs recognize when their product or category is going to be disrupted until it's too late. And among the few who perhaps have read all Clayton Christensen's books (Innovator's Dilemma, Innovator's Solution, and Seeing What's Next) and can see the writing on the wall, they can't always convince their boards and shareholders that the answer is to disrupt themselves during a time of apparent prosperity. You are in the luxurious state of running your own private company, you have the guts to do what needs to be done, and you don't need to ask permission. Admit it, you are in the minority.

What I'm suggesting is that the majority of companies need to figure out their evolution strategy in case they can't (or won't) pull off a disruption strategy. And the evolution strategy doesn't contradict the disruption strategy... because ideally the company will continue to leverage its core brand strength regardless of the name (assuming they actually had a brand strength.)

Scott Miller

Jennifer, in the case of brands that face obsolescence, like Polaroid, you do what I did with my company, you drop your obsolete brand and you create a new brand positioned for the new market. In Polaroid's case, you ditch that brand and kiss it good-bye. You then create a new brand that fits the new focus of your company, whatever that might be (a whole other topic). Maybe it's digital cameras, maybe it's something else related to cameras. Who knows -- that's Polaroid's problem to solve, but that's how a company must continue. Kodak has and is facing the same problem, and they are doing their best to adapt. They may have done better with a new brand name, though, as people think of film when they think of Kodak, and film is now nearly obsolete in the consumer market. The Kodak name carries weight as high-quality paper stock, though, for printing out your digital pictures -- that might have been the best use of the Kodak name going forward. Then, Kodak could have created a new brand for their camera division. Buying a Kodak camera makes me think they want me to buy a film camera, so it's the wrong name to carry over to digital cameras.

As for the Fortune 500 challenge, it doesn't make sense because a great many of those companies do not use their company name as a brand name, or they are unknown to general consumers...just take a look at a F500 list and you'll agree. But, for most the well known companies you could very accurate pin down the overall brand perception. For example, Microsoft = Windows. Amazon = books. eBay = auctions. Exxon = oil (or gas). Xerox = copiers. Apple = computers (not iPods, because Apple doesn't connect its name strongly to the iPod, so the iPod has an independent identity).

jennifer rice

Eric, that is EXACTLY my point. Thanks for clarifying. If a brand doesn't want to die, it needs to find the higher ground beyond the actual product. The high ground (usually an attribute or emotion) represents the potential evolutionary path for the brand. Polaroid was the original "instant picture." And what is digital photography but instant pictures? The higher ground is "instant gratification" and it's the logical evolutionary brand path from an extinct product to a new one. Now, I buy that a new brand makes sense in this instance, but I'd also argue that Polaroid could have been the first to jump on this bus and claim ownership... it would have been revolutionary enough at the time. Instead, they dragged their feet and they're now in the same unfortunate position as Oldsmobile was. It's time to kill the brand; they've lost their chances for evolution.

Tom Asacker

Wow! Fun stuff. Thanks Jennifer. Okay, I've got $100 for anyone who can take the Fortnue 500, list each company's brand "position," and get 51% of consumers (the folks who choose brands afterall) to articulate that same (or even close) position. And if you don't like the Fortune 500, you pick a business ranking and the offer still stands.

I'm with you David Foster. Well said!

Eric v.

Features are a positioning element until everyone else adopts them and then they no longer become a differentiating factor. You still have the "We were here first." -- But that doesn't always last forever, or hold as much weight as marketers like to think. It only takes a few bad experiences with a product for somebody to switch, and so at that point you're banking 100% on execution rather than the strength/difference of the brand features.

I think if a brand finds itself in this territory, it needs to adapt, do something revolutionary, or die. Not all brands can outrun becoming obsolete.

If you're a typewriter company, what do you do when word processors come along? How does positioning theory deal with disruptive technology advances or innovation? It's no good being the original brand if the entire market has evolved beyond that technology or category.

In the age of digital cameras, what should Polaroid do? Make digital Polaroid cameras? Photo printers are cheap now... who cares about Polaroid anymore? Polaroid is just dead. Worthless. Staying the same won't help them, and there's not any obvious territory into which they can adapt. They're screwed!

How do you think ice-box makers and ice suppliers felt when the refridgerator came along? What could they have done? Should they have jumped into the refridgerator market, or stuck to their guns?

Scott Miller

Just for clarity, Eric works in my company. We talk a LOT about marketing, IP development, on and on.

Flavors are an example that doesn't fall into the line extension bucket -- at least as long as the flavor isn't fundamental to the brand. In Coke's case, flavor IS fundamental to the brand, so any flavor variation is a line extension mistake. Flavors of Scope or Crest or Ben & Jerry's ice cream, though, are fine, IMO.

You CAN make flavor essential to the brand, though, in places where it's never been consider as such. For example, I've said for years that someone could create an ice cream brand that only specializes in chocolate flavors. Chocolate is a huge ice cream category on its own, and could easily support a chocolate-only brand. And people would likely buy this brand if they bought chocolate because it's easy for them to reason that a chocolate-only brand would make the best chocolate ice cream -- it's all they make after all, so they're given the benefit of the doubt as the chocolate specialist.

When you only do one thing, this is what happens automatically: consumers perceived you as an expert, and people prefer to by from specialists over generalists. Simple psychology is at play here.

You wouldn't want to see a Godiva chocolate brand of ice cream -- this is your typical cop-out marketing thinking that misses the boat (trying to capitalize on an existing brand because we're too lame to create a new one.) Nope, the way to do this right is to create an entirely new brand just for the chocolate ice cream market. And then, in hindsight, all of America's marketing gurus would agree that this move was pure genius. (And remember never to hire one of them to help your business -- instead, let them write their books about your success!)

Eric v.

I think this entire argument rests on the idea of 'flavors' within a brand. Is gas just another 'flavor' of charcoal? Or is it something else entirely?

If gas were just another flavor, then Jennifer would be right. But if serious BBQ-ers take the difference as seriously as Laura suggests, then we're probably looking at a perceptual distinction which demands a seperarate brand.

In a way, I feel like we're all in violent agreement, at least in terms of branding.

The point of contention is defining what is a new brand, and what isn't--what falls under the old brand.

When should a brand evolve or expand? Never?

If a brand can have flavors, like flavors of Colgate toothpaste (Scott's example, actually) then how do you define a 'feature' or a 'flavor' by degree from something major which demands an entire new brand?

This is where it gets tricky. It's a lot like evolution. How much of the DNA has to change before a strain is considered a separate species?

You could almost get downright scientific about this.

Scott Miller

"By your logic, the IBM name should not exist; it should have died out with the mainframe."

No. This is where the in's and out's can get tricky, and I do not know if even Laura and I will agree.

But, brands CAN change their stripes. Not overnight, but they can change. Heinz, for example, used to be a pickle brand (hence, "57 varieties" that's still on their ketchup bottles). But, when they jumped into the ketchup market their brand lost its focus and lost the pickle market to better positioned/focused competitors.

The IBM brand is more of a total computing solutions brand now, a slow change that took over a decade. Still, if IBM came out with a TV, let's say, they'd be fools to call it an IBM TV. Likewise, Microsoft was smart not to call their gaming console a "Microsoft Xbox."

The problem is that companies have the wrong mindset. They fall in love with their brands rather than look for opportunities to create new brands. Creating new brands is one of the easiest things you can do (though, most everyone seems to think the opposite), because if you position a new brand correctly, it generates tons of free PR. This is how my company gets tons and tons of free press: We create new brands that are the first in their category and therefore they are innately newsworthy. We don't ever use a PR agency because the PR is built into the product's positioning, and the press trip over themselves lining up stories about us and our products. Our just released game is currently #1 worldwide. Our past games have been equally successfully.

In 1994 we re-branded our company from the world renowned Apogee name, to the unknown name, 3D Realms. We did this solely as a positioning move to position ourselves as the first game company focused on 3D real-time games, now the biggest category in the industry. Most marketing people would have said, "You're crazy, Scott, Apogee is known world over! Stick with that name you crazy fool." But then, most marketing people have no backbone, and don't know how to successful create and position a new brand. The evidence for this is everywhere. I walk through grocery stores every week, for example, and think to myself, "What were these guys thinking?!" I've read that some 80% of new products introduced each year are gone within 18 months. This happens because most marketing people are clueless. (Not unlike most CEOs, but that's another story.)

As someone who's learned the in's and out's of positioning for 20 years, I have never seen a case where it fails. Anytime someone points out what they perceive as a failure in positioning, it really turns out to be a failure in their understanding of the topic.

BTW, Jennifer, we've worked together and I have endless respect for you. My vicious nature here is directed at marketers as a whole, not at any particular person.

jennifer rice

Scott, with all due respect, I'll buy into that when hell freezes over... which will happen well before the day when CEOs and shareholders are willing to accept the complete death of a brand when its associated product matures and dies. By your logic, the IBM name should not exist; it should have died out with the mainframe. Your theory only works in the complete absence of a survival instinct. Does the focused brand philosophy have merit? absolutely. Is it ever going to happen in all cases? never.

If people stop using charcoal grills because something more convenient comes along, do you really think Weber execs will let a 50+ year old brand name die? Of course not. How do they explain that to their shareholders? When products mature, execs start looking for ways to keep the brand alive. No theory on earth is going to stop them from doing so.

In the face of reality, we need to find a way that balances the need for differentiation with the mandate for brand survival over time. And (to your point) if it doesn't impact the corporate brand, remind companies that it's actually advantageous to let a brand die when it's past its prime (thinking of Oldsmobile here).

Scott Miller

Jennifer, here's the Rule of New Brands: You should ALWAYS create a new separate brand when there's a market big enough to support the specific focus of that brand. Therefore, if there's a market big enough to support gas grills, Weber should create a new brand specifically targeted at that market, and position that brand as the category specialist. This is EXACTLY how Weber became the leader of the coal burning grill, so why wouldn't the SAME tactic work with gas grills?

Likewise, there's a market big enough to support diet cola, so Coke should have created a new brand for this market. (Actually, they had Tab, the leader in this category until they stopped promoting it.)

You could easily argue that Black&Decker stands for power tools, and DeWalt does too. DeWalt is for professions, but still, they're all power tools, right? I bet in the board room, before they created DeWalt, there were marketing dweebs insisting that they should stick with the known B&D name and go with a name like Black&Decker Elite, or B&D Pro.

Again, this is hardly any different than the Weber situation, and it boggles my mind that for many people this is not painfully obvious. Most marketing people, I have noticed over the last 20 years, are only good in hindsight -- they cannot be relied upon to properly direct brands going forward. The correct move for Weber is to make a new brand for gas grills. That is their long-term best strategy, and keep the Weber brand focused on coal grills, as that category specialist and leader.

jennifer rice

Caveat to that last comment: That doesn't mean that I think Weber should have a different brand for gas grills. Weber's developed a very strong reputation for grills over several decades, and gas grills logically fall under that umbrella. Perhaps if charcoal users passionately hate/scorn gas grills, then Weber's gas grill offering could alienate them. In this instance, some type of naming alternative could help maintain the purity of the Weber brand in the minds of its core users. Companies need to understand the perceptions of its customer base in order to make these kinds of decisions. Unfortunately, theory often runs aground in the face of reality. As David pointed out, a one-product company does not often have the budget luxury of building a separate brand for a new product. If there's not enough evidence that a separate brand is necessary, plan B is to take the higher ground (like 'grilling') and use marketing communications to position each product against the other.

jennifer rice

Great clarification, Laura... thanks. I see two trends here with these names:

1) complementary product brands are more closely associated with the parent company (Gmail complements, not competes. iPod complements, not competes. MSN complements, not competes.) Conversely, almost all of P&G's products compete against each other... hence they (rightly) have completely separate brands.

2) if the product doesn't fit the parent company reputation, it should have a separate brand. Thus DeWalt rightly has a separate brand than B&D. Lexus has a separate brand from Toyota. A good rule of thumb is whether you're selling a new product to a different target audience than your current customer base. Separate audiences call for separate brands. Don't try to be all things to all people.

laura ries

There definitely is a difference between a new brand and a sub-brand. That difference exists in the mind of the consumer. If the consumer thinks of the product as a separate brand it is a new brand. If not, the brand is more line-extension than separate brand.

Think of it as a teeter-totter in the mind. Does the main brand go up or the new brand name go up when you mention the product.

So for iPod. Consumer thinks iPod. Not Apple. (Yes, they know Apple makes it. Yes, they know Apple sells it. Yes, it has Apple’s brand qualities. But it is it’s own thing. Not Apple music man.)

So for gmail. Consumer thinks Google Mail. The name reinforces that reference. It is a line-extension. Not a separate brand.

So for MSN. Consumer thinks Microsoft. The name also reinforces the reference. It is a line-extension. Not a separate brand.

So for DeWalt. Consumer thinks DeWalt, the professional tool maker. Many don’t even know they are owned by Black & Decker the leading home tool maker. Totally separate brand.

So for Fusion. Consumer thinks Fusion, not Gillette. But they know the best razor company Gillette (now P&G) makes the razor.

You can see how the brand name is the best way to give a brand its own identity. And along with the name goes the logo and visual. Too close and it is more line-extension.

Most brands are in the mushy middle. With names that are too generic, brands that don’t stand for anything and positions that try to appeal to everybody.

jennifer rice

Laura has a point about positioning yourself against an enemy. What is the consumer giving up in favor of your product? There is always an "instead-of"... which could be a competing product, but sometimes it's not. When I do consumer research, I find that the "instead-of" can be non-consumption or using something completely different (like a pencil instead of competing design software.) It's important to know the main alternative that the consumer could choose, and understand why they might choose it. That is the enemy against which you are positioned.

That said, if there is no clear alternative for the new product (and therefore no clear point of difference,) have you really created something compelling in the first place? Or are you just adding products for the sake of adding products, and therefore diluting your brand? Ad agencies are often (unfairly) the ones who have to invent a point of difference on your behalf in order to come up with halfway decent advertising. The difference must start with the product.

So yes, make it distinctive and execute well. These guidelines apply in all cases. The challenge comes in figuring out what name to put on it, which depends on a lot of factors. If the new product complements your current product (instead of competing with it) then it makes complete sense to keep it under the same brand name. If the new is a competitor to the current, that's when Laura's comments become particularly relevant.

David Taylor

The consumer often sees things much simpler than consultants: all they care about is what I call in my book Brand Stretch "brand added value". If the brand's equity is used to create a superior product or service, they'll buy it. Most failed extensions flop
not because of being "off-brand", but simply because they were mediocre.

With a differentiated, fantastic product/service consumers will give you permission to stretch pretty far. So, Bertolli has a new $100 million business from its Italian Dinner for 2 frozen meals, quite a stretch from olive oil and pasta sauce, but succesful thanks to superior patented products. And Apple can go from PC's to music with iTunes and iPod (and of course these are APPLE sub-brands, clearly linked via the "i-" naming, design, co-promotion on the Apple site and in the Apple store).

Most brand teams (and consultants!) would benefit from worrying less about navel gazing at their brands, and more about creating brilliant, business-building products.

Finally, the business pressure today means a new brand should be a last ressort, not a first port of call. If you owned Weber, and it was your own money you were spending, would you really create 2 brands, one each for gas and charcoal?!

Laura Ries

I would like to make one thing clear, I was basically praising Weber's marketing, the post is called "Well-Done Weber." I think they have executed a strategy based on grilling very well. But my one criticism stems from the fact that since Weber is now both gas and charcoal, they cannot clearly identify the enemy. Charcoal guys and gas guys are two very different consumers. I know from experience.

Strong marketing campaigns are build by first establishing the enemy and then positioning yourself against it. When you line-extend it makes it difficult to do that. Bud Light should say, hey why drink full calorie beer? And Budweiser should say, hey don't drink that watered down sissy stuff? But it is hard when the same name is on both brands.

jennifer rice

Whoa, I think we need to clarify the difference between a new brand and a sub-brand. The iPod is a sub-brand of Apple computer; it doesn't matter if it's actually called "Apple iPod" or not. Its design is recognizably from Apple, you buy it from the Apple store, you find it on the Apple web site... and it's helped drive Apple computer sales. Gmail is a sub-brand of Google. MSN is a sub-brand of Microsoft.

It would be ridiculous to suggest that all companies create spin-off brands for every product... or even to have separate management teams. Sub-brands usually work together to support the goals and revenue objectives of the primary brand, and they leverage the equity of the parent company while still maintaining a separate identity.

There is a spectrum from a totally separate brand (like Lexus), a sub-brand (like iPod), an almost-sub-brand (like GE Capital) and a duplicate name (like Weber for gas & charcoal). Each case is unique.

Weber has an established reputation for grills. When you go to the web site, it's all about grills, and they help you "find the grill that's right for you" which may be charcoal or gas. What if I haven't figured out if I'm a charcoal fan or a gas fan? Which brand do I go with? How can I compare? Do I need to surf around to figure it out? If I know that Weber = grills, I go to one destination. I have a friend who's big into grilling and has one of each.

Scott Miller

"Sometimes a company can get away with line extension because the competition is weak."

Another key with the iPod is that it's not called the "Apple iPod." This is the mistake that IBM made when it introduced the IBM PC, creating a brand extension that serious fought against consumers' perceptions of IBM (a mainframe company).

Companies have far, far better success when they introduce new products that are NOT brand extensions, but have their own independent brand name and identity. P&G is well known for this.

Upon Sprite's introduction, would it have sold better as "Coke Clear" or some other Coke extension? This sort of question is obvious to everyone now, but it's amazing to me how many people cannot agree at all of the self destruction Coke is currently doing with their brand with dumbass extensions like Coke Zero, Coke Blak, and Coke CS -- all of which would have done better as a separate brand. Diet Coke, too, would have done better as a separate brand, though finding marketing people who agree with this is like trying to find like on Mars. The bottom-line is that when you create a significant new category, like diet cola, you WANT to enter that category not with a brand extension, but with a whole new brand that can fully absorb all of the unique attributes of that category. A brand like Diet Coke cannot do this because the Coke message is pushed in other categories, causing confusion across the entire Coke brand.

Brands are strongest when they stand for one clear, focused message. What clear, focused message does Coke stand for nowadays? It's not a flavor, because Coke comes in about any flavor you want, including coffee! Coke is no longer a specific soda, it's now a general soda brand like Fanta or Shasta. Is this what the suited monkeys at CokeCo wanted for their brand? I seriously doubt it.

david foster

"GE has not been successful in tomorrow type businesses like computers"...huh? You don't think Plastics/Engineered Materials and GE Healthcare,to pick two examples, are "tomorrow type businesses?" What is your defintion of a "tomorrow type business?"

It's true that GE wasn't successful in computer manufacturing (divested over 30 years ago) but I don't think this had anything to do with branding, rather with management timidity at the top and too many executives at the business unit who didn't understand the industry. Also note that GE *was* reasonably successful in computer network services (including pre-Internet forms of electronic commerce.)

Laura Ries

The principles of branding are simple. Applying the right law at the right time is complex. What will work for one brand can be disastrous for another.

What GE, a dominant 100+ year old brand can do is vastly different than what a new brand can do. But you should note, GE got out of all businesses it wasn’t #1 or #2, GE does use other brand names NBC (not GE TV), GE’s main competition are also line-extended conglomerates and GE has not been successful in tomorrow type businesses like computers.

I would argue iPod is a new brand. It is not an Apple music player. It is owned by Apple but in the mind it is a new brand.

Sometimes a company can get away with line extension because the competition is weak. That is the case with Weber. There is no tough competition so they can succeed by being both a gas and charcoal grill. But the better strategy in my opinion would be to have launched a new brand.

You leave yourself vulnerable to competition when you are spread too thin. Just look at what has happened to Dell. Check out today’s post on my blog. www.originofbrands.com for more info.

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