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.
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