When I'm not modelling the very latest sartorial gentlemen's fashion for you among the posts of Branding Strategy Insider, my day job involves teaching MBAs about branding.
One of the great things about a classroom full of 30-something MBA students, as opposed to undergraduates, is that the professor often learns just as much from the students as they learn from him, which is a polite way of saying that, occasionally, a student will pick a fight with you in class and make you look like a twit.
That is exactly what happened to me last week. I kicked off my class on brand extensions by defining the topic, 'what happens when an organisation spots a rare opportunity to leverage their brand equity in a new category?'
Despite this apparently innocuous definition, I was instantly aware of an arm flailing vigorously in the back row. Professors develop an almost preternatural ability to sense classroom danger and I turned to acknowledge the question with a growing feeling of doom.
My questioner was as polite as she was concise. 'Is brand extension really such an occasional move?' she asked. 'Surely, these days it's a given that if you have a strong brand, you will extend it?'
I gulped. She had a point. Traditionally, most part-brands were built in one category and any expansion of their brand architecture was limited to sub-brands within that same category. Therefore, car firms simply made cars and pen companies stuck to pens.
Occasionally, a brand might use its strong brand associations to bridge the gap into another category, but these forays were the exception, rather than the rule. However, my MBA student wasn't living in the past and she was absolutely correct. Brand extension in the 21st century is the default strategy and I can prove it. Name a single specialist brand.
Name a brand with revenues of more than $5m (£2.82m) that has never extended beyond its category. They simply don't exist.
Nowadays, brand extension is as unavoidable for managers as it is for consumers. Even the most protected brands, once bastions of specialism and focus, dance across multiple categories with gay abandon.
Mont Blanc has made luxury writing equipment for a century, but today you're just as likely to spot its distinctive white insignia on leather goods, perfume and jewellery as you are on a pen. Ferrari has sped out of the automotive category and its distinctive stallion now rears its hooves on everything from laptops to cameras and T-shirts.
The age of specialism is over. For this, we can partly blame the City.
Capitalism is a brutally relentless philosophy - no matter how finite a brand's potential, if it is owned by a publicly listed company, it must continue to demonstrate quarterly growth. Brand extension is a godsend for those executives who manage established brands in established categories with horizontal sales.
But we should also blame the brand consultants who are increasingly advising their clients toward pluralism and gen-erality. Earlier this year, I worked on a client rebranding project. I emphasised the need to create a new name for the client that was devoid of any specific category associations.
Even though the client had no immediate plans for brand extensions, at some point that day would come and the name would need to stretch.
Lastly, we can blame the academics. There has been a recent surge of remarkable research - real stuff, not the superficial guff sold by market researchers - that demonstrates scientifically that even failed brand extensions will not do the kind of damage to the parent brand that common sense predicts.
So there you have it. My MBA student was correct: brand extensions are a default strategy, and I, dear reader, am indeed a twit.
30 SECONDS ON... THE FERRARI BADGE
- The car marque's founder Enzo Ferrari was born on the outskirts of Modena in Italy in 1898. He died in 1990.
- The famous prancing-horse logo was originally painted on the side of the First World War fighter plane of flying ace Francesco Baracca.
- Ferrari's link with it came about when he met Baracca's parents after winning a motor race in Ravenna in 1923. They asked Ferrari whether he would like to adopt the emblem for good luck. The yellow background was added later to represent the regional colour of Modena, where Ferrari's factory is based.
- Today, the rectangular emblem is the badge of the manufacturer, and is featured on all road vehicles and sports cars. The shield is reserved for the racing team and some custom-made cars.
- The emblem was last updated in 2002, with the horse altered to a more upright stance.
Sponsored By: Brand Aid
You do not even have to be an MBA student to see the sometimes reckless way brands extend. It may actually be because of the huge funds involved in launching a new brand, but they (brand managers) should also know that such extensions shrink the brand equity for what they originally meant to the market. Maybe Al and Laura Ries should send free copies of their book 'Positioning' to all CMOs and brand managers in the top corporations.
Lagos, Nigeria.
Posted by: Obinna Igwebuike | April 30, 2008 at 09:18 AM