December 01, 2016 under
HOW TO TEACH AN OLD BRAND NEW TRICKS
Is it possible to teach an old brand new tricks?
Fixing up old brands with new extensions has become standard practice. You’ve already got a good deal of equity in your name, so why not exploit it with a unique offering?
Apple successfully branched out into new territory with the Apple Watch — now in its second iteration — bringing the tech juggernaut into the bestsellers list for watches in 2015. Now, would we see the same level of enthusiasm behind a wearable for any tech brand? No offense to HP, but probably not.
Apple has a deep understanding of its brand equity. The company knows what customers expect it to deliver and how far those expectations can be stretched. It knows where to venture, what feels authentic, and what will inevitably resonate with customers — and that’s true of any successful extension.
But what about brands that don’t quite have Apple’s reach? How can they define the scope of their brand equity? It’s all about the initial mindset that brings customers to the door.
Perception’s Impact on Elasticity
Before a brand can expand its reach into new domains, it needs a solid foundation. Extensions often work best when the brand is well known. It’s already established a reputation — and a good one, at that — among its new target audience.
Take Honda, for instance. At a recent automotive roundtable, four car companies presented their latest branded content. Honda’s content piece was for its music concert series, which is nothing new for a brand. Everyone seems to be getting into that game.
But Honda’s approach was different. It wasn’t about a music concert series; it was about a true understanding of the brand. Honda wasn’t trying to sell cars by association with music — it was selling the power of dreams.
By sticking to what was fundamental about its brand experience, Honda found relevance. Honda recognizes that its brand is based on functionality. As such, it has to work harder to be elastic — unlike Mercedes Benz, which is perceived as more prestigious and, therefore, more abstract.
Your brand’s elasticity is governed by perception. And the more abstract the brand identity is, the easier it is to stretch into other product categories. People find it more plausible for prestigious brands to expand their offerings beyond their normal area of expertise.
Let’s say Mercedes wanted to expand into fashion. Consumers would be more willing to accept this extension than if Honda were to tackle such a venture. Being a functional brand, Honda would see greater success stretching into anything with a motor in it, such as boats, tractors, or lawnmowers.
Function vs. Prestige
The path to extension starts with understanding your brand. You need to reflect on its DNA. What are the simple and tangible things people associate with your company’s name?
Is your brand prestigious? Or is it functional? The answer will serve as the bedrock for how your brand can create and benefit from elasticity. It also demonstrates how to shape the extensions and communications — and whether these messages are accepted or dismissed by your audience.
You also need to understand your ideal customer’s style of thinking. Is he or she holistic or analytical?
Holistic thinkers see products not only for their basic specs, but also for how they exist in the wider context. It’s about more than just the product — they think of the product’s place in the world. Does it affect the environment? Will my friend approve if I buy it? Does this product match my values?
Analytical thinkers, on the other hand, ask questions about features and benefits. They take side-by-side product comparisons. What’s the MPG? Which has the best APR?
Of course, no brand can say its customers fall into a single type. It can, however, target them — and even change how customers think, making them more analytical or holistic.
Creating Brand Elasticity
To create successful elastic extensions to your product, marketing, and communications, you must define the true core of your brand. The following can help get you there:
1. Recognize the mindset behind the purchase. When considering a particular brand, consumers notice more than just price or value. Many “intangibles” go into purchasing decisions, and you must understand your purpose, values, and philosophy to establish a bond with consumers.
That’s where brand essence comes in. It sums up how your brand connects with your target audience on an emotional level. Nike is inspirational, FedEx is dependable, and Volvo is safe. What is your brand’s purpose? What does it stand for?
Think about what makes your brand unique. How is it different from the competition? When consumers encounter your product or service, how should they feel? Is this feeling consistent across the buyer’s journey? Is it authentic?
It’s all about making an emotional connection between brand and consumer. Try to sum up the essence of your brand in one or two words, focusing on the connection to deliver a unique, consistent experience.
2. Meet your customers where they live. Your greatest resources are your clients, so get to know them. Once you know what matters most to them, you can work to align that with what matters to your brand.
Understanding what’s meaningful to customers allows you to provide a greater customer experience. And with 95 percent of businesses already making experience a priority, you need to establish a set of standard practices for dealing with customers.
But remember that not all customers are the same. What resonates with Jack won’t always resonate with Jill — or Tom, Dick, and Harry, for that matter. Don’t try to engage with each customer in the same way.
Use your insights into customer desires to develop actionable practices for connection. It’ll personalize the experience, helping to create more loyal advocates for your brand.
3. Test your limits before you stretch them. Many companies toy with the idea of brand extensions after killing a category. It seems to make good business sense, as extensions experience 2.5 times faster growth in distribution than new launches.
But the failure rate for brand extensions is roughly 84 percent in some categories, with only 50 percent of those survivors lasting even three years. What’s more, some argue that brand extensions dilute the parent brand, so stretching can be a gamble.
Consider a variety of factors before extending your brand. Is the market ready for this change, and will the extension cannibalize your existing service? Weigh the level of engagement between your current customers and your brand and whether that engagement is solid enough to survive a shakeup.
With the information you’ve gathered, work to pinpoint the areas in which your brand story will resonate best. Is it in an unrelated category for a new audience? Or is a better option to branch off into a category that adds value for your customer base?
After all, it’s more strategic to cross-sell. Consumers aren’t left wondering about the connection. Nike extending its brand into different sports categories makes much more sense than if it were to branch off into office furniture, for example.
A car company selling wallets, a clothing company selling paint, or a computer company selling watches. How have successful companies done it without diluting their brand? It’s all in the approach.
You need to understand your brand and your customers to create any sort of elasticity; otherwise, all you’re left with is a paperweight gathering dust on store shelves.