16 Jun How to Expand Without Exploding
“Brands Expand Into New Niches With Care, but Not Without Risk,” a recent NYT article, was full compelling brand extension stories. It also contained examples in which I found myself saying, “What were they thinking?”
Here are some examples from the article of both ends of the spectrum.
The tagline of British luxury sports car brand Aston Martin (if you have to ask the price, you cannot afford it) is “The Art of Living.” Its recent extension into exclusive Miami Beach condos makes sense, following the tracks of its luxury speedboats, menswear, and jewelry. Aston Martin is selling exclusivity. Appreciate its designers, and you will enjoy Aston Martin’s world.
Harley Davidson did the same thing, extending into clothing, home furnishings, and experiences, albeit for a different target market.
But as to lighter fluid manufacturer Zippo moving into women’s fragrances, what were they thinking?
So how do successfully expand your brand’s offering? Let’s go where the NYT stopped, by exploring four options for identifying potential directions.
First, build off the expectations of your current fan base. In which category do they place you? What promises do they expect you to fulfill? What do they see as the essence of your differentiation? What do they hope you would do? What would upset them? What problems do they hope you might solve?
Customers do not have all the answers. But they offer potential dig sites. Use them to identify potential category opportunities to explore.
Victorinox made a wise move from its Swiss Army knife into watches and travel gear, taking advantage of customers’ love of how much functionality and durability there is in the company’s Swiss Army Knife.
Would you trust Armani – the high-end Italian clothing designer – to do the same? I don’t think so. The Swiss Army Knife’s functionality and durability are success factors in watches, briefcases, and luggage. Armani’s features would not include rugged, efficient, and useful.
Burt’s Bees, the make-up and skin care company, moved into nutrition that fits its “healthy and pure” attributes. Walmart’s expansion into higher-end clothing failed. Get the picture?
Second, find opportunities consistent with what your brand stands for. And if it stands for nothing beyond profits, find a deeper purpose. Purpose-driven brands have far more opportunities to stretch their scope than others. In particular, they can solve social or environmental problems.
Unilever’s desire for social impact has opened opportunities in nutrition and health. Who Gives a Crap sells environmentally sustainable toilet paper online with half the profits used to fund toilet placements in the developing world. I could see the company moving into sustainable toilet bowl cleaners and brushes.
Third, do a blank-sheet-of-paper envisioning exercise. “If we started again, knowing what we know, with the skills, knowledge, and assets we have, what would be our driving concept? What set of problems would we be solving? How would we leave the world a better place?” Finfrock Industries went through this exercise and moved from pre-stressed, pre-cast concrete components to become a design-build contractor and is now a developer and designer of an entirely new structural building system and software solution.
Fourth, think what your technology or competencies could do that it is not yet doing. MCD, Inc. moved from finishing paper to finishing plastics and escaped dependence on the commoditizing printing market.
A Tricky Balance
The bottom line is that brand extensions are necessary, but you have to do them correctly. If you keep your scope too narrow – as Colgate has done – you may end up offering too many line extensions. Too much choice can frustrate customers and reduce trial.
Similarly, going too wide can dull the brand. Ralph Lauren fell into this trap by putting his name on everything. Coach’s error was trying to serve too many price points with its handbags.
Going too wide can also take you into spaces where you lack competencies. Condé Nast thought running leading fashion magazines (e.g., Vogue, Vanity Fair, and GQ) gave them a competitive advantage in merchandising and on-line commerce. Condé Nast lost $100 million with its failed experiment and will now partner with the leading on-line luxury retailer. “…[T]he skills sets required to create content and those required to run a seamless shopping site were different,” Matt Starket, GM of Digital Strategy at the publisher realized.
Where can you take your brand? Whatever your good ideas, test with the minimally acceptable offering before investing too much. Avoid Condé Nast’s hubris.
Kay Plantes is an MIT-trained economist, business strategy consultant, columnist and author. Business model innovation, strategic leadership and smart economic policies are her professional passions. She resides in San Diego, California but still considers Madison home. She is the author of Beyond Price. This post was originally posted at Kay’s blog ~ Business Model Innovation.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of WTN Media, LLC. WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.