Know-How Exchange : Book Club

Cingular, AT&T, Cingular, AT&T...The saga, I'm sure, will go on and on and on like "The English Patient."

Anyway, with regard to your question... Launching a totally new product under an existing brand name does not and will never work. Take Coca Cola, for instance. Coca Cola is a world-wide brand. Anywhere on the planet you see that white, cursive name emblazened on a bright red background (or black on silver, in case you're a Diet Coke fan like me), you know what you're getting. Now if the Coca Cola Company wanted to launch bottled water using the name Coca Cola or Coke, they would have to spend billions (with a b) to convince people to buy this product. People hear or see Coca Cola, they're not thinking water!

What's more, no one will ever buy Coca Cola water. Makes no sense. Coca Cola is a brown, sweet, carbonated beverage--PERIOD! The brand Coke is so emblazened in consumers minds that when asking for a cola drink, they will invariably ask for a Coke; they could in actuality get a Pepsi, Royal Crown, Stop & Shop brand, whatever, but when they want cola, they'll ask for a Coke. That's the power of consistent branding (and being first on the market doesn't hurt either). Attaching Coca Cola to a different product only weakens the Coca Cola brand.

By the way, when the Coca Cola Company decided to get into the bottled water game, they launched it under its own brand name, Dasani.

For more on the AT&T/Cingular branding disaster, check out my blog entry on brand mortality:
https://ries.typepad.com/ries_blog/2007/03/brand_mortality.html

You are correct, Coke could never launch Coke water. Though while that seems so obvious, so many companies have made similar foolish decisions. Coors Water anyone?

Gatorade (sport drink) and Propel (fitness water) are excellent examples of how a company can expand the market with a new brand in a new category.

I'm struggling with this one. Apple reinvented personal audio with the Apple iPod and with iTunes. Microsoft and Google dominate their increasingly similar markets with line extensions. Playstation is clearly a Sony product and marketed as such, to the point of the PS voice over done with a Japanese accent. In retailing, software, telecom and a host of other industries, we're seeing convergence (gasp) and certainly not divergence. The biggest trend in retailing seems to be Palm/Apple/Sony/Nike/Helio, etc stores popping up -- all examples of line extensions and "convergence".

Are we arguing semantics and defining "name" as "product designation" or are we talking about the identified brand? If it's the latter, who says you can't win with line extensions? It happens every day in technology companies; if it didn't, start ups would line the shelves.

"Why can't marketers trade on the recognition and reputation of an existing brand as they launch something new?"

David, I think the principle is what the brand stands for. If it stands for too much then it can either become too confusing to get into the prospect's mind or just not hold the credibility for being "both" products.

Insofar as ATT Wireless I'm amazed they're killing the Cingular brand; it's so much stronger than ATT in that niche. But, then again, Verizon seems to be balancing both its landline and wireless line products well with its name on both (though it's contending with VoIP on the former).

I think it is completely possible to leverage the strength of an existing brand while still taking a new product to market with a divergent brand.

Apple is the perfect example. They extended their product line with all of the strength of the Apple name behind it and also created an excellent brand with iPod and iTunes.

Strong brands are in the BEST position to launch new divergent brands.

Disruptive products should never be saddled with an existing brand. But the existing brand can be leveraged to launch the new brand.

AT&T made a bad decision.,

I think it can be said that brands that stand for more than a product in the minds of consumers have a better chance of leveraging their brand name on a diverging product.

Take for example two products that have been discussed, Apple and Coke. In my mind Apple stand for the ideas of “less is more” and “think different” while Coke in my mind stand for the actual Coke product. In other words, when you buy an Apple product you are not really buying the actual product, but rather you are buying the idea for which the Apple product stands for.

In my mind Coke cannot successful leverage their brand to stand for two products because their brand already brings to my mind a physical product. Instead, if Coke’s brand were to stand for “fun” or some other idea, then they would have had a much better chance.

Apple on the other hand stands for ideas and not necessarily a product so the mind can have a place for multiple products that fit within these ideas.

I like books that make me think and analyze the subject further and this book certainly did that. Sometimes we need to be hit with an extreme position before we take it seriously and start debating the subject. I don't agree that divergence is always good and has a better chance of succeeding. When a company has good ways to enhance or extend a product based on what customers would like and buy, extension using the brand name makes more sense. When the new product or service fits the brand, again it makes sense. When it is not a fit, a whole new brand is what is needed.

A place where line extension was the right way to go was in computers. As IBM introduced new 'mainframe' computers they wanted to be sure their customers saw the new models as both a step up and an easy transition without having to write or buy all new software. IBM named those products with their brand and a new number.

Digital Equipment Corporation, on the other hand, (I worked for Digital at the time) named their lines of computers each time with a new name. These computer lines were often 'divergent.' Our customer often didn't connect the computer name with the company name, and that was a disadvantage.

Hazel makes the important distinction: will using the brand name be an advantage or a disadvantage? In this case of Apple and Honda, it could be a clear advantage. Apple stands for "thinking different", while I always looked at Honda as selling superior engines with frames built around them, which is why they can sell lawnmowers, ATVs, motorcycles and all that.

While the authors point out many examples of how following a convergent path is a disadvantage, where do they stand on brands like Apple and Honda?

Hence share of mind of a brand depends on language. What does the brand stand for in the first place? Do they own a category?

BTW -- Apple evolved to owning the category of "think different" through its products. It was first putting the statement out there = we are not like the PC. Then fulfilling their own promise with products like the iPod, which are more like delivery systems vs. single product.

Many times the decision as to whether or not you need a new name depends on whether or not there is or might be any focused competition in the future.

With no competition, using the same name on everything makes a lot of sense. It saves money and let's you leverage off the strength of the main brand.

Diet Coke and Bud Light are clear examples of this. I would argue they should have had new names, but it doesn't matter. Because Coke and Budweiser are leading brands and they have no focused competition in the Diet and Light markets.

When it hurts you is when you face a focused competitor and you are line extended all over the place. IBM is an example of this, they failed in personal computers, operating systems and all the categories they expanded into.

Or it can really hurt you if you are a number two brand and you face the line extension of the leader. Miller Lite and Diet Pepsi are not as successful as the leader's line extension.

I think LG and Samsung are great examples of conglomerate electronics companies with a strong brand name across many different categories. When I bought two air conditioners last week, I knew the brands and their quality...so I picked up the Samsung. This btw, is not a usual purchase category. If we as consumers are looking to buy something in a category we aren't familiar with...brand recognition goes a long way. I picked up the Samsung

Are these two brand examples (LG and Samsung) and their strength reflective of the nature of brand power in the electronics industry? I would think so.

In contrast, FMCG is a completely different world where fashion and aesthetics take precedence because of the much lower price points and risk involved. Here, the brand->category connection in the consumer's mind is much more important.

David et al,

What a great post with lots to ponder. All of the discussion and examples have been around consumer products that are tangible.

How do your/our arguments hold water if we're talking B-to-B or service products?

Drew

interesting stuff .....

As with all marketing strategy - it depends on the situation. There is no rule, only the rule of marketplace acceptance.

Keeping with the Coca Cola case study, I have thought for some time that cocoa-based beverages will be the next big thing for reasons of health, taste, women segments, etc. So the "Coca" part can also represents the cocoa bean.

Coca Cola could launch a dark semi-sweet cocoa-based beverage by whatever recipe and still employ "Coca" as an integrated part of a brand name for the new product. No not "Cocoa Cola", but something the high priced Madison Ave guys could come up with. The key would be story and relevancy and not just a lame extension of the brand name - it just depends.

Bitter is Better,

Steve

Well it's not closed yet so here some things for you to think about.

Brands that use their brand in on a range of products, without specifying the products... Well you can think on vegetables. For example the company HAK in the Netherlands has glass jars with beans or corn or carrots or peas etc. Because of the glass you see what product it is, but the name is the same on all products.

I don't know who, but someone once categorized line extensions on two dimensions. Familiarity of the company and familiarity of the existing users. This results in four categories.

One, the company is familiar with the product and the existing consumer sees a positive link between the product and the brand. For example if HAK would go into another type of vegetable.

Two, the company is familiar with the product but the existing user doesn't see the link that clearly. Having the same vegetable in the deep fridge could be such an example. So in this case HAK would aim at a different market.

Third, the company is not used to it but the current user is. For example, the user has quite some experience in shakes, so maybe HAK can go into bottled vegetable shakes. This would mean they can sell to the same market, but they need quite some expertise to make the products quality good enough.

The fourth example is the easiest to think of, for example HAK goes into any non food business. New product in a new market.

Although the fourth category may not be advisable the larger companies have made a name for themselves in that way. See General Electric that is in making plastic to hosting a tv channel.

There isn't a set rule for companies what to do when entering a new market. It is advisable to use a similar positioning for all the different companies though. Look at Mercedes, they introduced a smaller car, they extended their product line downwards, making the car less exclusive, which didn't help their sales at all, regardless of the problems Mercedes had with the quality of the car.