One day a company is tightly focused on a single product that is highly profitable. The next day the same company is spread thin over many products and is losing money.
"When a company becomes incredibly successful, it invariably plants the seeds for its future problems." Al Ries and Jack Trout, The 22 Immutable Laws of Marketing
When you try to be all things to all people, you inevitably wind up in trouble. “I’d rather be strong somewhere,” said one manager, “than weak everywhere.” In a narrow sense, Brand extension involves taking the brand name of a successful product (e.g., A-1 steak sauce) and putting it on a new product you plan to introduce (e.g., A-1 poultry sauce).
It sounds so logical. “We make A-1, a great sauce that gets the dominant share of the steak business. But people are switching from beef to chicken, so let’s introduce a poultry product. And what better name to use than A-1. That way people will know the poultry sauce comes from the makers of that great steak sauce, A-1.”
But marketing is a battle of perception, not product. In the mind, A-1 is not the brand name, but the steak sauce itself. “Would you pass me the A-1?” asks the diner. Nobody replies: “A-1 what?”
Less is more. If you want to be successful today, you have to narrow the focus in order to build a position in the prospect’s mind. What does IBM stand for? It used to stand for “mainframe computers.” Today it stands for everything, which means it stands for nothing.
For many companies, Brand extension is the easy way out. Launching a new brand requires not only money, but also an idea or concept. For a new brand to succeed, it ought to be first in a new category. Or the new brand ought to be positioned as an alternative to the leader. Companies that wait until a new market has developed often find these two leadership positions already preempted. So they fall back on the old reliable Brand extension approach. The antidote for Brand extension is corporate courage, a commodity in short supply.
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