The debate continues on whether brands must limit themselves to a single product. In my last post, Roger asks, "Amazon is doing very poorly of late. To what extent is performance due to brand extension?"
I would agree with Scott's answer: Amazon has definitely overextended itself to a generic "online shopping destination." It no longer stands for anything meaningful or memorable. And I'm glad Scott brought up Virgin, which is the brand for an airline, a record label and a music chain. What makes Virgin successful doing this where others would definitely fail? I believe it comes down to a reputation for innovation.
Virgin = rebel = Richard Branson. Richard sets out to do something rebellious in whatever industry he chooses to enter. The Virgin brand is based not around what Richard does, but how he does it. Consumers understand that anything with the Virgin label will likely have a unique experience attached to it. Therefore, the only way Virgin can be successful with new ventures is to make each one rebellious and new for its respective industry. If the new venture is innovative, it's consistent with the brand. Unfortunately, the Virgin brand is so closely tied to Richard that it will likely flounder when he leaves (ditto for Steve Jobs.)
And speaking of Apple, the Apple brand can expand from computers to music players and perhaps phones because they are known for "thinking different" and therefore setting an expectation of originality. We don't buy an Apple product, we buy the idea of what Apple stands for. The same goes for 3M, which makes a wide variety of products. Perhaps not so coincidentally, the 3M tag line and mission has always been "Innovation." Google is an innovation machine, generating a lot of new ideas that may or may not fly, but they all hang under its mission of organizing the world's information and making it universally accessible and usable.
An upward spiral is created when the brand drives focused innovation, and innovation reinforces the brand.
Company brands are like people brands. The only individuals whose reputations don't suffer when they switch from one area of focus to another (to another to another) are entrepreneurs who are known for breaking new ground. It is not out of character for Mark Cuban to go from software to basketball and HDTV.
Company brands, like people brands, are most successful when they don't try to pander to everyone's tastes. They have a definite vision that's different from the alternatives. Consumers buy into their vision or not. if it's a clear vision, it's easily recognizable regardless of the product to which it's attached. This is perhaps why some of the most successful companies are associated with a figurehead who has a strong personality. You either love them or hate them, but they probably don't care too much about what you think.
So pick one thing and do it really well. Make it ground-breaking. Earn a reputation for innovation. This gives you the credibility to extend your brand within a reasonable scope and reinforce your groundbreaking image. This isn't easy to do. It's not for everyone. But it's the best way to build flexibility into a brand.
So coming back to the original question about Amazon...although it was initially groundbreaking, its focus has become highly diluted; it's moved from innovative ideas to selling groceries. Big mistake; that's like Mark Cuban becoming a bag boy. By trying to be all things to all people, a brand becomes nothing to anyone.