Branding is both an art and a science. The laws of branding are not like the law of gravity. The laws of branding work most of the time, but not every time. On the other hand, the law of gravity works every time.
In branding, exceptions and special circumstances sometimes apply. What is troubling to me is that so many people only want to look for the exceptions.
It’s like playing the lottery. Sure you can beat the odds, but your chances are very small. Sure you can beat the odds in branding, too, but your chances are very small.
Basing your brand strategy on the exceptions is a risky way to build a brand. The best, safest and most successful way to build a brand is by doing what is most likely to work. And what is most likely to work? Following the laws of branding which are based on a close study of marketing history.
Just because the line extension Diet Coke was successful, even though it was not first in its category, doesn’t mean you can do the same thing in your market.
Just because one smoker lived to be more than 100 years old, doesn’t mean you can smoke and not suffer an early death from cancer or other health problems. Once in a while somebody just gets lucky.
My last post was all about understanding your brand better so you could make an informed decision about when it is best to launch or not launch a new brand. As I said, the biggest problem we have in consulting sessions is that small companies want to launch new brands and shouldn’t and large companies don’t want to launch new brands and should.
Let me debunk some of the biggest exceptions to the laws of branding. Ones that most critics seem to cite.
The day that Coca-Cola introduced Diet Coke, TAB was outselling Diet Pepsi by 32%. TAB was a lousy name, just the internal code name (The Alternative Beverage,) but it became a strong brand. What eventually undermined the TAB brand is that Coca-Cola keep using saccharine as the TAB sweetener and didn’t change it to the new NutraSweet.
It was Diet Coke that got the benefit of NutraSweet. In addition, the whole diet industry exploded in the 1980s. Of course, Diet Coke was successful. When a line extension from a leader faces only competition from other line extensions, then its line extension will win.
The real lesson to be learned is that Diet Pepsi had no chance to become the leading diet cola, even though the line-extension brand was launched years ahead of Diet Coke. The number-two guy is in trouble with an extension. Pepsi should have launched a diet product with a new name. Preferably without the word "diet" in the name.
GE does have one business without the GE name, NBC. If they didn't buy it with the name already established, they probably would have called it General Electric television. I have little doubt about that.
General Electric is a weak generic name. But the company was founded over 100 years ago. GE invented the light bulb and many other important technologies of the last century. Furthermore, they have gotten out of businesses where they weren’t number one or number two.
For 20 years Jack Welch was a strong leader, PR master and a household name in the media. GE competes mostly against other conglomerates. And GE has been not been successful entering into competitive new technology markets like computers.
Japan is a line-extension society. With a number of exceptions (the automobile companies, for example) the big Japanese companies tend to make everything. Everything except money, that is.
Line extension has been a tragedy for the Japanese economy. While Japanese products have a reputation for high quality, most Japanese products are sold on price. Why is that? Because when you sell everything under a single brand name, it’s difficult to build a brand.
And when you sell on price, you don’t make money. The profit margin for the average Japanese company is in the neighborhood of one percent. Even Dell in the cut-throat PC market manages about 6 percent net profit after taxes, and the average U.S. company does even better than that.
The two stock markets reflect the superiority of the American approach to the Japanese approach. In the last 17 years, the U.S. stock market (Dow Jones Industrial Average) is up 406 percent and the Japanese stock market (Nikkei 225) is down 54 percent.
Why? The average U.S. company is much more focused and brand oriented than the average Japanese company which puts its name on everything. And when your name is on everything, it ends up standing for nothing.
My best advice is to plan your company’s branding strategy based on principles that work most of the time. Only pointing out and thinking about the exceptions is unlikely to help you succeed.
Focus your brand, understand your brand and stay true to your brand. That is the closest thing to a sure thing in branding.