We are happy to answer marketing questions of all types here on Branding Strategy Insider. Today, Sanaya, a Reporter in Dubai, United Arab Emirates asks…
"Hi Brad and Derrick, I would appreciate your input for an article that I’m working on for a Gulf News publication (largest English daily in the Middle East). The fashion and lifestyle article takes a look at how noted fashion designers, such as Giorgio Armani, Tom Ford, Chanel, and most recently Burberry have extended their brands by launching their own cosmetic, skincare and beauty lines.
It would be great if you could share your expertise and help by answering the questions below."
- What are the primary drivers that propel fashion houses to move from apparel to cosmetics? The same thing that drives most companies to extend their brands from their core categories to additional categories – the potential for additional revenues. Whether they achieve this via new product development or brand licensing, this is a way to leverage the brand for increased revenues. Cosmetics and apparel are highly related under the broader umbrella of “fashion,” so the brand extension is more likely to succeed as long as the apparel and cosmetics are positioned similarly.
- How does stretching a brand affect its DNA? The trick with brand extension is to make sure the brand’s associations and the associations within the new product category are not in conflict. Better yet, those associations should complement and reinforce one another. The brand extensions with the highest failure rates are those that attempt to stretch a premium or luxury brand down into a value segment.
- What value-additions do such brand extensions bring to the brand itself?
It is no surprise that academics and professionals alike are calling for new approaches to marketing, because the old approaches are inadequate to the challenges. New forms of media are showing up all the time. Consumers are faced with a turbo-charged range of choices, and an array of new technology is available to support marketing decisions and programs. According to Phillip Kotler, new marketing requires new financial IT mindsets as well as some additional skills so that systems will better support marketing decisions.
As we continue the drive toward making marketing more accountable and scientific, it is important to look at what has changed and what remains of the old model. While marketers enjoy new media and technology enabled tools, the fundamental marketing model itself has not changed. People and businesses still want useful products and services and relevant and entertaining messages. Marketing is still about identifying needs so that people line up to buy. The change is in how consumers learn about products and services and receive the messages. We are entering a ‘post-mass media’ marketing world.
Consumers have new tools, too.
Consumers have always wanted to avoid poor or overpriced products and intrusive messages, but now they are empowered to act on those feelings in unprecedented ways. These consumer-empowering technologies promise to eliminate the concept of ‘mass markets’ once and for all. Proof is everywhere, from declining audiences across most media, to the penetration of TIVO and the explosion of DVD sales – of TV shows no less!
During long and deep recessions like this one, companies look to shift resources away from poor performing brands to more profitable ones. With cash from operations declining and borrowing at a premium, it makes sense to sacrifice cash- consuming brands. While difficult and unpleasant to do, this portfolio reshuffling is a rather straightforward recessionary response. However, a ‘refocus on core brands’ has hidden dangers. One risk is under investing in innovation to keep core brands vital.
The Tension between Innovation and Branding
Even in the best of times, the relationship between branding and innovation can be tricky. In theory they work together, with the brand strategy providing the ‘face’ of the business’s growth strategy. Brand strategy helps companies bring innovation to the market. Innovation returns the favor by enhancing brand reputation. It sounds simple, but the partnership can be an uneasy one and it is particularly uneasy during a market downturn when investing in new brands or sub-brands can be perceived as ‘too risky’. The difficult choices imposed by hard times forces managers to confront the challenge of ‘brand stretch’ more acutely.
Balancing the need for brand focus with the need for innovation is the essence of the dilemma. Staying inside the confines of existing brand boundaries risks missing opportunities to meet emerging market needs. At the other extreme, stepping too far outside the brand’s comfort zone risks dilution of brand meaning — the dreaded “everything-to-everyone syndrome”. Every company aspires to a brand extension success, but at the same time they also fear the warning provided by brands that expanded too aggressively. Who can forget Hooters move into the airline business or Maxim’s into men’s hair color?
Among the many reasons for conflict between innovation and branding, two stand out:
When should you seek the counsel of a brand consultant? There are several situations.
In an era of crowd sourcing and online $100 logo design, the specialized skills and talents involved in identity design are seemingly being marginalized even further. Are big iconic brands moving in that direction?
“If, in the business of communication, image is king, the essence of this image, the logo, is the jewel in its crown”. – Paul Rand
Throughout the brand strategy and marketing blogosphere, there’s been a lot of buzz and chatter about the recent logo / identity changes Starbuck’s has implemented to help it move closer to its next incarnation. A few months back, the Gap made a similar move with less favorable reviews.
In both these instances, it’s pretty clear people in our business continue to care about these changes. The question is–do customers care? Do they really care what your logo looks like? Does it matter that much to your marketing success?
In my view big brand identity changes of any kind illustrates a couple of interesting points. Mainly that people pay attention to the marketing shifts brands they care about undertake. Secondly, there appears to be a huge gap in people’s understanding of the difference between a trademark and a brand. They are not one and the same. And finally, the critical importance of brand management to align all customer facing communication (of which trademarks are a primary component) to evolving strategic imperatives that effect business performance in the future. The stylistic aspects of these types of changes are less important than the potential to diminish brand meaning in the process.