EBay Express a failure, I'm shocked. (just kidding)

In today’s Wall Street Journal the top headline is “EBay’s Bid to Go Beyond Auctions Isn’t Selling Well.”

Really? I’m shocked!

Well, actually I’m not shocked. I could have told you that months ago because the idea of EBay going beyond auctions violates a fundamental law of branding. And when you violate a fundamental law your brand suffers.

The Law of Expansion states that the power of a brand is inversely proportional to its scope. In other words, expansion weakens a brand. When you try to stand for everything and appeal to everybody your brand loses its meaning in the mind.

EBay owns online auctions in the mind, a powerful and profitable position to own. EBay owns it because online auctions created the category by being first in the mind.

EBay selling goods at fixed prices make no sense for the brand or to consumers. EBay Express is totally confusing and contradictory concept.

So why do companies constantly mess with a good thing? A never ending demand for growth on a quarterly, monthly or even daily basis at all costs. Unfortunately, building a brand for long term with a solid focused strategy like Southwest Airlines and no frills is the exception rather than the norm in business today.

To attain growth business leaders constantly try to move beyond the boundaries of their brands for a quick growth fix. Unfortunately the quick fix usually fails and many times even leads to long term losses for the brand.

Some examples:

1. Volvo C70 convertibles & coupes.

A carefree sporty convertible is the complete opposite of what the Volvo brand stands for. Not surprisingly the sporty Volvo C70 models did not sell well and were the biggest automotive sales flops of 2005.

2. Kids “R” Us clothing.

At its peak Toys “R” Us, the former top U.S. toy retailer, expanded its brand into Kids “R” Us and Babies “R” Us. Babies “R” Us has succeeded in spite of its lousy line extension name because it was first in a new category and faces no serious competition. (It might have been a better idea to give the brand its own name.) On the other hand, Kids “R” Us was a total disaster. And the toll it took on management’s time and attention under minded the Toys “R” Us brand. Today, Wal-Mart is the leader.

3. IBM personal computers.

When IBM launched its PC line in 1981, the company was the most powerful, most admired company in the world. The PC line was even first in a new category (the first 16-bit business personal computer.) Yet IBM reportedly lost $15 billion in personal computers over a 23-year period. Finally IBM threw in the towel and sold out to Lenovo, a Chinese company.

Every company wants to increase sales. Fortunately there is a right way and a wrong way to do so. In most situations, line extension is the wrong way.

Launch a second brand.

A better strategy is to launch a second brand. As Toyota did with Lexus. As Sony did the PlayStation. As Apple did with iPod. As MTV did with VH1.

A second brand allows a company to expand while still protecting the integrity of its core brand. Even today, IBM still means mainframe computers. Twenty-three years of marketing personal computers didn’t change its basic perception.

The truth is that nothing in marketing or in life is more difficult than changing a human mind. Go home and try and change the mind of your spouse and you’ll see what I mean.

Comments

[Eliot Frick]

How was the PC an extension of the IBM brand? IBM made computers before the PC. The PC represented a paradigm shift which was going to roll over the major computer manufacturers if they didn't respond to it. According to the theoretics of Clayton Christensen's disruptive innovation, IBM's pursuit of the PC (initially through autonomous business units) is what saved them from the fates of DEC, Wang, et al.

Anyway, when did the majority of that $15b loss come? Was it after the ascendence of Compaq? of Gateway? of HP? of DELL? These brands were competitive with IBM because of their operational posture moreso than any marketing concerns.

[Nick]

Hmmmmmm.....Not much talk about the difference between Ebay stores and Ebay express. BOTH only sell products at a FIXED price. I have heard GREAT things about Ebay stores. Why would one concept be a success and the other not?? I don't believe it has to do with fixed pricing. Below is a link to an interesting study.

http://www.marketingexperiments.com/online-marketplace/ebay-stores-tested.html

[Dan]

I am an eBay Powerseller and have never sold or purchased on eBay Express. eBay is all about “the deals” and the rare finds. NOT easy/quick shopping like Best Buy. And yes eBay Express is confusing: Is it faster auctions? Where do you place your bid? How come there are no listings? You mean I have to pay again to have my auction listed with a shopping cart? Why does my auction or classified have no hits?... forget it, I’m going to Craigslist.

[JohnB]

After reading L Ries and other experts, the rules of branding seem so obvious and simple. Embarrassingly simple.

Ebay stands for online auctions. Walmart equals low prices. Donald Trump equals over the top luxury and opulence.

It's simple association in the mind. Walmart trying to go upscale or Ebay Express trying to compete with Amazon just doesn't make sense.

Actors often fear being typecast. If they do a certain role over and over and over, the role could be permanently etched in the audiences mind. Then you won't take him/her seriously in another role or genre.

Its the same thing here where the message gets pounded over and over and over that ebay is this or starbucks is that, and if you try to do something else, it doesn't work or it's going to be very difficult/almost impossible to change.

My guess is that the recommendation would be to launch a second brand (i.e. half.com).

[Tom Asacker]

A "law" is typically a conclusion based on repeated scientific experiments over many years, which has become accepted universally within the community. I'm not sure that the marketing community universally accepts your branding laws, Laura. If they did, you wouldn't have to keep pointing out their "misunderstandings."

[Paul Dushkind]

Re: Volvos, Acuras and other vehicles.

Sometimes, reality has a way of contradicting everything I think I know about marketing. I'm amazed that the public has learned to say "SUV" or "sport utility vehicle" to describe what used to be called a jeep with a small J.

Maybe Volvo can't sell a convertible, but they still sell SUV's, even though SUV's are associated with rollovers. It seems that almost every automobile make is now doing well with SUV's, including such incongruous brands as Volvo, Acura, Cadillac, Lincoln and Mercedes-Benz.

Meanwhile, Jaguar is doing poorly specializing in stylish sedans. I thought that specialization was supposed to be a good thing. And although I haven't seen sales figures, I get the impression that "no one" drives Jeeps with a capital J any more.

Can you explain Jaguar, Jeep and Mercedes-Benz SUV's to me?

[Jason C]

Hi Laura,

Great article. The part about trying to change your spouses mind is a very effective analogy. I would also like to hear your answer to Patrick's question. I predict you will say that the difference lies in the prominence of the eBay name in eBay Express, as compared to the more prominent PlayStation vs. Sony.

Probably, a PlayStation Express wouldn't be a very good-selling product either, whatever it might be.

[Jim]

Sony is a corporate brand. Playstation is a product brand. eBay Express is just a line-extension of the eBay brand.

Interesting some some brands have a different position in different countries. In Denmark a volvo is a "family car". There is a saying here when you establish a family you buy a house, a dog and a Volvo.

[David Carlson]

That is so true. Stick to your business. In Sweden Volvo is (because it is home market) more that just a "safety" car. However, they will gain also here to stay in their category.

[Patrick McGraw]

I must confess, I am not in the least bit interested in eBay (I hate auctions...give me a good experience including price, availability, service...I don't need mystery and suspense).

I am also not a game player so SONY/Playstation isn't on my radar.

However, in my mind, it has always been the "SONY Playstation". Could you explain how this differs from eBay Express...both appear to be 'branded house' approaches.

Thanks for helping me understand.