Friday's Wall Street Journal offers two examples of brands trying to stretch outside their traditional boundaries.
First, Wal-Mart plans to launch small-footprint stores in a response to Tesco's entrance into the US market. Two different concepts will be launched next year:
- Urban convenience stores stocked with groceries geared to more affluent tastes
- Stand-alone stores offering a variety of health services and products
Second, Samsonite is striving to play in the luxury-goods market by reinventing itself as a "sexy, high-end label." The brand has launched designer luggage and high-end men's shoes; sunglasses and stationary are in the works. They're looking to compete with the likes of Burberry and Coach.
So how far will a brand stretch? While there are no hard and fast rules, a basic guideline is to determine how closely aligned the extension is from current perceptions. Wal-Mart has built its brand on 'cheap.' The likelihood of successfully extending upwards towards "more affluent tastes" is dubious unless it disconnects the Wal-Mart name using a sub-brand. The Wal-Mart connection with healthcare has a much tighter association -- healthcare costs have spiraled out of control, and Wal-Mart is a very viable brand to bring affordable healthcare to lower-income segments. And by doing so, some (needed) positive brand equity can be generated for the master brand.
Samsonite is another story. By their own admission, "people still think of that hard, plastic suitcase when they think of Samsonite." It's associated with durable, not with style. Last year they acquired Lambertson Truex, a high-end leather-goods maker; IMO, it would have been an easier and less expensive proposition to position Truex as the high-end brand and keep Samsonite as the durable mass brand. That would give the company two distinct brands to appeal to two very distinct target audiences, and it would keep the aperture for revenue opportunities much wider. Repositioning Samsonite can be done if they create a cool enough product, but it will be challenging and I'm not sure it's the smartest move for the company. Time will tell.
Wal-Mart's stretch to prescriptions is a natural if they can keep them cheaper than the rest. But, with cheap comes the perception of inferior quality, and that's not what i ever want to associate with my medicine. I'll guess an eventual flop on that extension.
As for the upper-scale shops, if they can put a new moniker on it and maintain many of their economies of scale through the host brand, I don't see why they should fail.
Samsonite is just plain wrong. It'll never work, or it will take so long to establish itself, it won't be worth it.
BSV
http://rblb.wordpress.com
Posted by: BSV | November 30, 2008 at 09:04 PM
I don’t think that Wal-Mart can ever be linked to an affluent taste. I mean, Wal-Mart to me, means anti-affluent. I think the $4 prescriptions has worked because Wal-Mart has made prescriptions “cheap” – back to their brand of cheapness. I might check out an affluent Wal-Mart store, but I don’t think I would ever buy anything b/c I would think in the back of my mind that it’s all cheap stuff that was just marked up.
Posted by: PrintPlace | November 10, 2008 at 02:53 PM
Hi Jennifer,
You and your article stopped me to ponder. You remind me of Casey, a character in Noble House, a novel by James Clavell.
Thanks. Roy.
Posted by: Roy Hewitt | July 17, 2008 at 08:07 AM
Interesting post. One thing a company can try to do before it experiments with stretching is figuring out exactly what consumers already thing about it. I recently blogged about Brand Tags, a fun little app that allows you to see exactly what people imagine when your company name comes up. The post is Brand Image: What's In A Word, at http://writeimage.ca/blog/2008/05/13/brand-image-whats-in-a-word/. Cheers!
Posted by: Jonathon Narvey | July 03, 2008 at 10:57 PM
In Samsonites case, the crucial question is whether the actual product delivers on the promise.
Take a look at the new Samsonite range of suitcases - they are very designer led & they have certainly done a great job in their new product development.
It would be extremely hard for Samsonite to reposition its brand if they were producing the same old suitcases, but this couldnt be further from the truth.
I'm sure with a sound marketing strategy, they will be able to reposition the brand to appeal top the higher end market, whilst also staying aspirational to the lower end market.
As you say though - time will tell.
Posted by: andrew | May 19, 2008 at 01:49 AM
Hi Jennifer,
Great posting! I must have to agree with you that it is not easy for a famous brand to make a change! People like freshness but hate changing, say nothing to the huge transition. Compared with Wal-Mart and Samsonite, the latter probable has more opportunities to win this war. In the previous, the image of Samsonite in the eyes of consumer is durable. Right now, it adds stylish into the products. There is no conflict between durable and stylish. Thus Samsonite still has chance to win. But for Wal-Mart, the situation is kind of different. “Affluent” and “cheap”, how could it be able to handle both of them? I am very curious about that!
Posted by: Lei Zhang | May 03, 2008 at 10:38 AM
Sampsonite as a high-end brand to compete with Coach??? Now that's a stretch! They'd be a lot better off developing an entirely new brand.
Posted by: John Furgurson | May 02, 2008 at 02:40 PM
i found your article really interesting, thank you very much for your suggestions!
Posted by: servizi cartomanzia | November 18, 2007 at 08:40 AM
I would have to agree that reshaping Wal-Mart as an urban footprint store would be a Sisyphean task, and it would take a large amount of work and effort to do so. I think the best way to go around this is sub-branding. Although, as a previous comment suggested, some people still haven't set foot in a Wal-Mart store, they understand the "cheap" stigma and all other stories surrounding it. Many people also refuse to shop at Wal-Mart, preferring other options instead.
At the end of the day it seems an arduous task to try and shape one's brand around the need of a both high and low end consumer. Would Toyota really consider releasing cars to try and compete with the luxury of BMW or Mercedes Benz? That would be foolish. Then Lexus came along :)
Posted by: Piotr Jakubowski | October 01, 2007 at 09:49 PM
This is a great discussion. There is a heated one going on at www.mootee.typepad.com on a similiar topic. I fully agreed with jennifer's comment.
Posted by: Jimmy Carson | September 13, 2007 at 04:53 PM
A brand accrues value for its owner. Its impact is measured by the "positiveness" of the predisposition it helps form in the target audience's mind, say by how it helps accelerate sales and lower consideration friction.
Both your examples smack of trying to expand the size of the market pie, given that they already own a dominant share of the current pie. But they're looking to do this with choices that also alter their "brand pie".
Starbucks, Virgin and others have done this really well but have stayed within their "brand pie".
Are there examples of companies that have successfuly expanded market presence while at the same time altering the essence of their brand & what it stands for?
Posted by: Shafeen Charania | September 04, 2007 at 02:14 AM
Hi Jennifer,
I agree with the hardships of stretching a cheap brand into the luxury market. The brand already has an established image and perceptions are already firmly set in mind.
I wrote a disstertation on a similar subject. A high class supermarket chain in the UK bought an established cheap grocery store chain in 2003. The high class brand decided to rebrand the cheap grocery store with a combination of both brand names. Therefore the perceptions of both brands, now one new brand were conflicting.
It was sending the wrong message and distorting the established image. From the research I conducted, once loyal consumers of the cheap grocery brand stopped shopping at the stores. With an overall reduction of 23% of consumers. Sorry I am waffling on now. It was an interesting report with unbelievable results.
Chris
www.threerooms.com
Posted by: Threerooms | August 30, 2007 at 02:08 AM
Jennifer, glad to see you still posting!
While I agree with you that Wal-Mart's brand is 'cheap' rather than 'groceries' and it may have difficulty stretching to 'upscale', keep in mind that there are segments of the U.S. population that have never set foot in a Wal-Mart in their lives - Manhattanites, for instance - and might possibly be open to a redefinition of the brand. Not likely, given Wal-Mart's notoriety, but possibly. Witness all the upscale McDonald's restaurants in Europe.
It will depend on how much commitment Wal-Mart is prepared to put into this new direction. If, as Guy suggests, this is just the whim of a here-today-gone-tomorrow brand manager, it will fail. If they stick to it, they might just pull it off.
Posted by: Matthew Healey | August 27, 2007 at 08:29 AM
It always seem like more of a ego exercise when companies swallow the "new" luxury brand rather than keeping it as a stand alone. It's as if someone at Samsonite has an inferiority complex. "I don't like the stuff I make, maybe this will make me feel better."
Posted by: Guy Fish | August 24, 2007 at 07:42 AM
Stretching a brand is like wearing spandex. Just because you can, doesn't mean that you should. Welcome back Jennifer. Nice photo!
Posted by: Tom Asacker | August 24, 2007 at 05:01 AM
And what is a brand? It's a collection of associations that do not necessarily correlate to the industry in which the company operates. IMO, it's easier to create adjacencies to the same target audience than to try to shift your brand to be relevant to a different target audience. Because, as you point out, you can't be everything to all people. I think Wal-Mart's healthcare initiative will strengthen their brand among their existing target audience. They're just creating additional affordable products/services to the same group of people. For more on this subject, here's a longer post: http://brand.blogs.com/mantra/2004/02/positioning_deb.html
Posted by: jennifer rice | August 21, 2007 at 09:12 AM
No matter how you spin it limbs extending past a brands stretch do nothing more than weaken the existing brand.
Like Jack Trout and Al Reis would say,"You can't be all things to all people."
Posted by: Chris Wilson | August 20, 2007 at 10:11 PM