Extend your brand to accelerate growth

Peter Shaw of brand consultancy Brand Catalyst on how extending your brand can work for you


A brand is a precious equity. It delivers you customer loyalty and greater returns than a generic offer.

Meddle with it at your peril. However, if done in the right way, extending into new areas is potentially the most resource-efficient way of growing your business.

You already know that people like your current offer, why not give them the opportunity to buy more from the brand they already trust? Think Sainsbury’s introducing Sainsbury’s Bank – now one of the biggest life insurance providers in the UK. Look at the UK’s second largest airline BMI launching no frills alternative BMI Baby, ‘The airline with tiny fares’. Or perhaps you have bought into the Aga brand via a set of kitchen knives rather than a one-and-ahalf- ton cooker.

 

Pioneered by the likes of Diet Coke and Marlboro Lights it is indisputable that brand extension can work wonders on your sales curve. And some extensions do become more popular than the original. In theory, it’s a lower-risk growth strategy as the customer interest and brand values are already established. But can it work for you? Do readily purchasable consumer focused goods have a monopoly on brand extensions or can you do it with more obscure B2B products?

First though, let’s take a step back and consider growth options through branding. A business that wants to grow has three options: build share in their current market; venture into new geographic markets; or enter a different market sector with new offers.

1. Building share in your current market

There are two approaches to building market share. The first is to out-market your competition by ensuring your offers are better, well priced (not necessarily cheaper), more available and more prominent.

Foxtons estate agency is a great example of a business that has out-marketed its competition by developing and communicating its offer. All Foxtons negotiators drive a Mini Cooper liveried in the brand’s colour green, each with an individual number and individual graphic design on the door. The branches are designed like cafes with brightly coloured designer furniture and the website has won awards for design and comprehensiveness.

The second approach to building market share is to acquire your competitors’ offers, which might require you to merge or acquire that business. While such a solution can dramatically grow share it brings with it all the complications inherent in merging businesses.

2. Venture into new geographic markets

Geographic expansion can bring rapid growth as long as there is a thorough understanding of the differences inherent in the new market and the pressures that such an expansion will bring on the existing business.

The growth of the high street coffee chains is a major example of geographic expansion radically changing the face of a market. The pioneer in the UK was the Seattle Coffee Company, established by two Brits who saw the opportunity and rather cheekily took the home town of Starbucks as its moniker. Seattle Coffee Company was the first to be snapped up by Starbucks as it moved across the pond.

3. Enter a different market sector with new offers

The third avenue for growth is to identify markets that your current offers are not competing in but where you believe you could deliver a different offer that would give the incumbents a tougher run for their money.

‘Different’ might be any combination of quality, price, availability, emotional promise or, most excitingly, a step change in what the market has been used to. When Pret a Manger launched, it changed the way most of us buy our lunch. Before Pret, Marks & Spencer was the pinnacle of the sandwich experience. Pret introduced more exciting lunch options than M&S in more accessible locations with a far superior and more stylish environment. The true mark of such a step change is a delighted customer who is happy to pay far more than was thought possible against the previous market norms.

If you are looking for professional and affordable logo design specifically for small businesses, visit Small Business Logos. Based in London, the Small Business Logos design service makes great logo design accessible for small businesses of all sizes and industry types.
 

 

‘Different’ might be any combination of quality, price, availability, emotional promise or, most excitingly, a step change in what the market has been used to. When Pret a Manger launched, it changed the way most of us buy our lunch. Before Pret, Marks & Spencer was the pinnacle of the sandwich experience. Pret introduced more exciting lunch options than M&S in more accessible locations with a far superior and more stylish environment. The true mark of such a step change is a delighted customer who is happy to pay far more than was thought possible against the previous market norms.

HOW TO DECIDE WHETHER TO EXTEND OR NOT

Brand relevance One of the key questions to ask yourself when entering a new market sector is whether your current brand promise has relevance there or not. easyJet extending into hotels and cruises makes a lot of sense as the brand promises of modernity and value work across most leisure categories.

The company’s recent extension into men’s toiletries would seem to make less sense. Where is the brand relevance? Virgin has also made forays into markets where the Virgin brand had little relevance, such as its associated failures Virgin Bride and Virgin Vodka. Virgin Cola is only available on Virgin trains – a cornered market, where the consumer is forcibly denied the choice of the real thing.

Understanding your brand leverage

Brand-centric expansion requires a very clear understanding of why your current customers are buying your offer and returning to buy more. As well as availability and price your customers’ motivations will be driven by a combination of the perceived functional and emotional benefits your brand provides. If these benefits are relevant to other market sectors it is worth considering brand extension.

A brand extension should be viewed as more than just an additional revenue stream. New offers are a key means of building relevance and modernity into your overall brand equity. When Apple developed the iPod it realised that the design and ‘plug and play’ aspects of the Apple brand equity could be applied to maximise its chances of capitalising on a step change in technology in the music player market.

Many other companies could have and have since launched the ‘solid state’ portable music player but the Apple brand added its core strengths of simplicity of use and aesthetic appeal. This brand extension has transformed the fortunes of Apple, which was increasingly looking like a brand forced into a niche for fashion conscious PC users. iPod has made the Apple brand more broadly relevant to a much bigger audience than those of its personal computers.

TESTING THE WATER
Firing the imagination

A simple but highly effective technique you can use is to imagine your brand identity on other offers. Play the game by cutting out your logo and sticking it on actual product or literature for products or services in the market that you are considering.

It will help you change your mindset and start to ask the questions that will challenge your current portfolio of offers. You can use this technique in customer research where you ask them to imagine how they would feel if your brand entered a new market.

If you’re in the appliance market, put your logo on other appliances that you think you might be able to deliver. Equally, if you are in services apply your logo to others’ marketing literature or websites.

And if your company is in fast-moving consumer goods buy a basket of products and stick your logo on them. This is of course only to be undertaken as a research exercise where the respondents are fully aware that they are playing a scenario game, rather than trying to pass off another’s goods as your own.

 

If you are looking for professional and affordable logo design specifically for small businesses, visit Small Business Logos. Based in London, the Small Business Logos design service makes great logo design accessible for small businesses of all sizes and industry types.

 

 

Conducting one-on-one research or small group discussions using this approach will help you understand how your current customers perceive the relevance of your brand to other offers.

Of course you will need to explain how your offer would be functionally different and if there would be other differences in price or distribution but it will help you see what you can leverage. This may sound simplistic but could turn out to be a valuable starting point.

In other words, use the customer research to aid your judgement by calling your bluff on your assumptions of what customers want, don’t use it to make decisions for you. Don’t expect customers to bite your hand off for something new but through skilled research techniques you should be able to clarify your thinking on the potential ways your brand might be deployed to beat the competition.

Deconstruction reconstruction

Another useful technique is to analyse your brand by deconstructing its constituent elements and then reconstructing them as appropriate for a different type of offer. The constituent elements should include:

Target audience and their motivations for purchasing your offer

… How your offer fits into their repertoire of purchases

… What their frustrations are with your offer and others

… Where your offer really scores over competitors’

Positioning versus competitive offers

… Work out what the two most important dimensions that describe this market are and create a matrix with four quandrants bisected by these dimensions. This will highlight how closely bunched or spread out the competition are

Perceptions of the B2B building materials market

Defining your positioning is critical, particularly if you are up against bigger players. Brett is a highly successful family owned business located in the South East, providing aggregates, liquid, manufactured concrete and waste management products. Brett relaunched its brand earlier this year to set the future direction of its core business including possibly extending into new areas. The matrix below right is an example of how Brett’s market might be defined:

Functionality: understanding what aspects of your brand’s functionality are key to the brand or just specific to a particular offer. What functionality should the brand always have, irrespective of the market it is operating in? For example, it can be argued that Virgin should always have young and lively service delivery in all of its offers, which points to why its extension into non-service led products have been less than successful.

Course of action

Conduct qualitative research, which is designed to look in detail at the functional and emotional aspects of how your brand and its competitors are perceived and requires an experienced moderator. Leave the quantitative research for when you need firmer numbers and detailed feedback on an offer that is close to launch. Ignoring specific functionality, consider which markets would benefit from the qualities inherent in your brand i.e. if your brand is about extreme responsiveness, where and how else might this be leveraged?

Once you have identified a potential market create a concept that your customers would grasp and bring it to life in the form of a mock-up advertisement or brochure. You might also apply your logo to existing offerings in the new market and consider how your brand would evolve that offering to make it yours.

Assess the concept and example brand extensions through qualitative research with potential customers, including your current market customers. Remember you are not asking their permission but assessing their reactions – is your brand’s entry into this market plausible?

If the customer reaction is encouraging enough to give you hope that you are on to something go to prototype stage and back into research with an offer pretty close to a marketplace launch. Use this research to refine the proposition further. You might also decide to conduct some quantified research to assess the potential uptake and long-term attractiveness of the offer as well as giving you a firm feel on where to tweak.

If you can do so cost effectively, launch on a small scale to test the water, there is nothing like a real offer to see how a fuller launch might succeed. If you are in a B2B market you might involve some friendly customers in a limited test – they will be interested and often flattered to have an input. There are specialist consultancies that can help you through all or parts of this process.

CONCLUSION

Brands are about trusted relationships. Where you have trust you have the potential to bring brand-loyal customers with you into new markets. You can also attract new customers with offers relevant to their needs. If you are considering extending your brand make sure you understand why your customers buy your current brand and identify a new offer that will not only be competitive in its market but will build value back into the brand itself. Even if you decide not to take the plunge, going through the process will give you a deeper understanding of your brand’s strengths and further ideas on how to strengthen your existing customer franchise.

 

If you are looking for professional and affordable logo design specifically for small businesses, visit Small Business Logos. Based in London, the Small Business Logos design service makes great logo design accessible for small businesses of all sizes and industry types.

 

BRAND AGENCIES TO CONSIDER

These are some of the better known consultancies, each of which have starting points and styles. A look at their websites will give a sense of their experience and working style:

Added Value www.added-value.com

Brand Catalyst www.brandcatalyst.co.uk

Clear www.clear-ideas.com

Corporate Edge www.corporateedge.com

Dragon www.dragonbrands.com

Edengene www.edengene.com

Interbrand www.interbrand.com

?What If! www.whatif.co.uk

Wolff Olins www.wolff-olins.com

 

CHOOSING A CONSULTANCY

Over the last 10 years there has been an explosion of consultancies that specialise in brand extension and innovation. Consultancies tend to have grown out of a particular competency, be that market research, design, ideation or marketing and business strategy. The key differences lie in style and language! The things to consider when choosing a consultancy are:

Their starting point: Do you put most value on understanding the customer, the design input, idea creation techniques, strategic skills or specific experience?

Working style of the consultancy: They will need to get close to you and your organisation, so cultural fit is key. ?Do they speak your language?? is a key question.

The specific experience of individual consultants: Important but not necessarily experience of the markets you are looking at. Most consultancies work across many different sectors and this is very valuable when looking to apply new thinking. What is more important is the breadth of their experience and how they apply the insights they have gained to your project.

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