Branding boundaries

Understanding the boundaries of your brand. What you can or cannot do and what you should or should not do with your brand when it comes to launching second brands.

In our consulting practice, we work with big companies, small companies, old companies and new companies. And while the actual laws of branding never change, what laws are most relevant for a particular client often do. What might work for one brand is not necessarily going to work for another.

The most frequent troubles occur with the law of the second brand. Launching a second brand is a powerful tool in expanding the power, success and growth of a company.

But companies often misunderstand when a second brand is necessary. Companies that should launch second brands often don’t and companies that shouldn’t launch second brands often do.

A company should launch a second brand when its initial brand is so strongly positioned in the mind that the new idea will undermine its meaning. But sometimes launching a second brand while strategically sound would undermine the focus of a company and overtax management’s time and attention.

Here are five brand attributes to analyze before your company launches a second brand:

1. Size
Bigger companies have more to gain from second brands. Smaller companies have more to lose from second brands.

2. Age
Older companies need to launch second brands to enter new markets. Newer companies need to dominate an existing market before moving on to a new market.

3. Competition
Companies with many focused competitors need second brands more than do companies with fewer line-extended competitors.

4. Opportunity
The bigger the opportunity, the more important it is to use a second brand. The less significant the opportunity, the more confusion a second brand will cause.

5. Resources
The man who chases two rabbits catches neither. Unless he hires another man. Can your company afford the resources required to launch a second brand? And resources don’t just mean the money for a second marketing budget, but also the additional drain on management’s time and attention.

Coca-Cola would have been wise to make Diet Coke a new brand instead of a line-extension. While Snapple would have been foolish to give Diet Snapple a new brand name. (Big companies should generally launch second brands. Small companies should not.)

General Electric, a company over a century old, can survive with one brand because in most categories it does not faced focused competition. But GE got slaughtered in mainframe computers because it faced IBM and other focused competition. (Companies with focused competitors need second brands.)

Toyota needed a second brand to move up-market into luxury automobiles (Lexus) and a third brand to move down-market into cool, hip machines for the younger crowd (Scion.) But Lexus smartly keeps its brand focused by using model numbers instead of new brand names for its sedans, SUVs and sports cars. (Both luxury cars and cool cars are big opportunities that deserved new brands.)

Understanding the world of branding is important but knowing where your brand can go is even more important.

Comments

[Laura Ries]

OK Sam, actually history doesn't prove me wrong and let me explain why.

TAB out sold Diet Pepsi by 32% the day Coca-Cola introduced Diet Coke. TAB was a lousy name, just the internal code name The Alternative Beverage, but it was a very strong brand. What eventually killed it is that they kept using saccharine and didn't change the sweetner. Diet Coke got the new NurtraSweet. In addition, the whole diet industry exploded in the 1980's. Of course Diet Coke would succeed. When a line extension from the leader only faces competition from other line extensions then its line extension will win.

The lesson to be learned is that Diet Pepsi had no chance with its line extension brand. The number two guy is really trouble with an extension. Pepsi should have launched a diet product with great name. Preferably without the word "diet" in it.

As for GE, yes they 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.

This is a complex issue. Some line extensions succeed not because they are a good idea, but because the competition is weak or non-existent.

Marketers need to be on the lookout for opportunities to launch new brands. But too many marketers only look for ways to stretch exsisting brands and as a result miss out.

[Sam]

This is the “Origin” of Brands blog right? Coca-Cola (and Pepsi) started a new brand in the diet category like you suggested. In the early 60s Coca-Cola launched their first diet cola called Tab. That same year Pepsi launched Patio Diet Cola, which, after realizing its branding mistake, rebranded it the following year as Diet Pepsi. Coke, however, followed your advice of launching new brands not “line extensions” until 1982, when it launched Diet Coke, the first new product to use the Coca-Cola trade mark since 1886. What you label as a “branding mistake”, quickly surpassed Tab in volume and became Coca-Cola’s 2nd largest selling product. It is now the number 1 selling diet soft drink in the US, and number 3 in the total soft drink category. Would Coca-Cola have been smarter to do otherwise? No. Sorry, Laura, history proves you wrong again.

And GE not facing focused competition in other categories besides mainframe computers??? You’re kidding us right? We won’t go into depth about the reason’s behind GE’s entry into the mainframe business, but to say that they were the largest buyer of mainframes at the time and thought they might save some money building them for themselves and perhaps trying to sell some on the side. Their reasoning was wrong, and the core problem with the attempt was not a brand/marketing issue. Finally, GE not having any other brand ??? Heard of the NBC?

[Scott Miller]

Laura, I'm really super interested in your latest thoughts on the iPhone. I wasn't going to buy one because I'm never an early adopter on new, unproven tech. But, many of my co-workers got one, and I was able to see first-hand how cool and simple this device is versus other smart phones. I went out and bought two (one for the wife). This phone is nothing short of revolutionary. It's simplicity is miraculous. I could never get my Blackberry or Blackjack to work with my mail properly, or surf the web, and the iPhone handles this flawlessly, and with the ease any child could handle it. I've yet to look at the phone's manual, and with my previous phone's I had to carry the manuals with me as a back-up all the time.

I predict within 2-3 years all cell phones will copy much that the iPhone has pioneered with its graphical touch screen interface, and the way the phone ties together contacts, the phone function, google mapping, and email all in a super tightly, simple integrated way that is supremely helpful and efficient. This thing is like Tivo--once you have it this good, you will never go back.

Nokia, Motorola and everyone else must be rushing to copy the iPhone. The paradigm shift has happened. This is my first Apple product ever -- it won't be my last.

[Freddie Sirmans]

Just browsing the internet, very interesting blog.

[Ben Bacon]

Somehow, I totally missed that. Today, I got it. Thanks, Bill. (Why, on a Thursday could I not understand something, yet on a Friday I could? Oy vey.)

[Bill Gammell]

@Laura - You should head on over to my blog and proofread (or better yet, don’t). I am actually not the best at it but I’m glad I could be of help.

@Ben – If I could take a moment and put words in Laura’s mouth. I think what Laura is saying is: "A company should launch a second brand when its initial brand is so strongly positioned in the mind that the new idea will undermine [the initial brand’s] meaning” (The word addition is mine).

In other words, since the Mini Cooper represents a “small, stylish car for the younger generation” in the mind, Mini Cooper could not launch a large SUV using the Mini Cooper brand because that would only confuse and hollow the meaning of “Mini Cooper”. Instead it would have to launch a second brand.

[greg gillispie]

Many radio stations are already confused as to how it positions new HD radio channels.

Currently, most stations that actually have HD only promote the channel's sound quality and how to get a new radio. Sales are slow...who needs a new "radio?"

But most stations with an HD channel have extended their brand - "WZYX HD2 - playing deeper tracks."

It would be so much better to brand it as a new channel - "Deep Album Tracks now on HD channel 96.2."

Of course, we have to buy one of those new contraptions to figure what HD is.

[Ben Bacon]

"A company should launch a second brand when its initial brand is so strongly positioned in the mind that the new idea will undermine its meaning."

This quote confused me. Do you mean that the new idea will NOT undermine its meaning?

Fantastic post, as always. You are an inspiration.

[Laura]

Thanks Bill. I thought about having 6 but then I didn't think the last one was totally a separate attribute. The ability to get PR really reflects the size of the opportunity and affects resources in terms of mangement's time. So PR is part of the other 5. I appreciate the proof-reading!

[Bill Gammell]

Laura,

Excellent post. However, I only see 5 brand attributes. Did you intend there to be 6 or is that the misprint and there are only 5?