Brand Flexibility

Do you know how flexible your brand is?

Many marketers face, at one time or another, a decision involving brand flexibility: Should a new product be placed under an existing brand's umbrella, or should it develop its own stand-alone brand? For example, should Coca-Cola be used to brand a pair of jeans? Would Nike be a good brand name for a sports drink? In fact, I can't think of another kind of branding issue that arises as frequently as that one.

A few weeks ago, I visited a medium-sized food company. I'll call it "Company X" to preserve its anonymity. Company X's sales are centered around one product line and include several preparations of the same ingredient. It uses the company name as its brand name. The Company is successful and appears very profitable and has ambitious growth plans based on the introduction of several new products. It has even hired smart and experienced marketing people to formulate and position those products. So far, so good.

But Company X isn't sure about whether it should market its new products under its current brand name or a new one, yet to be created.

Using the current brand name has some advantages. The brand enjoys a good level of awareness and a positive image. Its product distribution is good. Using the existing brand name would reinforce shelf impact for the entire line, etc. On the other hand, the current brand's equity may not translate to new products not based on the ingredient for which the brand is known. Some fear that using the brand name as an umbrella covering an expanded product line could "dilute the brand."

Both sides have a well-rationalized set of arguments. Those with a restrictive interpretation say that because the brand's equity has been built over 50 years around products based on the one ingredient, using the same brand name for products made without the ingredient would only confuse the consumer about what the brand stands for. This confusion could weaken the established brand. Furthermore, the brand equity may not translate well to products without the ingredient so that there could be little benefit to using it. An illustration of the new product strategy that they promote is the Arm & Hammer product line. The company is known as a brand of baking soda. It now markets a great variety of products in many categories, from laundry detergent and toothpaste, to pet deodorant and air freshener. All of its entries contain baking soda as key ingredient.

Those with a flexible view of brand equity find comfort in consumer research where they see proof of their brand's flexibility. They point out that consumers, when presented with new product concepts and told the brand name, readily accept their more liberal interpretation of the brand. They see this as permission to explore new product development in a broad range of categories, with and without the ingredient. The kind of strategy they promote resembles that of Green Giant. That brand, originally named after a green pea hybrid, is now used for products that are neither peas nor green...

The issue isn't new. It is faced by all those who have to introduce new products and by those who have acquired a company with branded products. Does the new product need a new brand name or should it be placed under the umbrella of an existing product? Should the acquired product line stand on its own brand or should it be using an endorsement from the new corporate parent? One of the many complications is that the issue should not be viewed in the sole context of the new brand or new product but also in the context of the existing brand. How will it be affected? Will it suffer "dilution"?

When faced with this situation it may help to keep in mind the following:

1. Brands are associated with a set of values, seldom with a specific ingredient. There are a few exceptions like Arm & Hammer and NutraSweet. But, generally, values is what defines a brand. A brand like Starbucks for instance is associated with coffee. But, more than just the ingredient, it stands for expertise in bean selection and roasting, high quality, competent staff, young professional crowd, a pause during a busy day, etc. If there was another product that could benefit from the same values, it could fit right in. Cigars or cognac could come close but have their own set of problems.

2. Umbrella branding is a very efficient brand scheme. A paper published in McKinsey Quarterly (1999 #2) under the title "Brand Leverage" concludes that strong brands that are used across product categories produce shareholder return on equity that is 5% above the average for their industry (vs. only 1% above for un-leveraged strong brands). A strong umbrella brand can help a new product generate faster distribution and trial. On the other hand, umbrella brands are weakened when they are used for sub-par products or products that fail - an unavoidable risk with new product introductions. They also make consumer research more difficult, in part because of the high level of false awareness they generate. The effect of advertising copy on consumer behavior is thus more difficult to evaluate because it tends to benefit the entire brand as opposed to the one new product that is advertised. In our experience, these are but minor inconveniences well made up for by the higher trial and advertising efficiencies that result from a well-conceived umbrella brand.

The best and possibly the only tool you need is a very clear idea of what values the brands involved stand for. In fact, if this is the only thing you do, you should write a brand strategy for your own brands and for the brands you wish to acquire before you make any branding decision and preferably before an acquisition takes place. Why?

Just imagine you are a manager at Unilever, in charge of managing the recently acquired line of Ben & Jerry premium ice cream. You notice that the B&J product line doesn't include plain chocolate or strawberry ice cream even though these flavors rank two and three in the ice cream market! Quick, reach for your Ben & Jerry Brand Strategy! Up until a few months ago, the B&J brand strategy seemed to mandate that all its products must "contain something unexpected and original." The brand opted for the creative product formulations that this edict imposed and it did quite well. In that context, your plan to introduce plain chocolate or strawberry flavors, a plan which may make marketing sense, doesn't make branding sense.

But, as is the case with many other marketers, the B&J brand strategy was never formalized and existed mostly in the minds of its founders. As they became less involved with day-to-day management of their brand, the informal edict faded.

The company has already introduced a vanilla flavor (vanilla ice cream accounts for 30% of the market) and began to abandon the brand strategy that made them so successful.

It is very possible that the Unilever managers will decide to launch new chocolate and strawberry flavors to address the bulk of the market. But, in doing so, they will change the brand's unique character forever.

A brand strategy would have made that clear. No amount of plain vanilla consumer research could have told them that.

Brand Flexibility - To learn more about this author, visit Jacques Chevron's Website.

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