One way that companies expand is by extending their brands into new areas. And often this makes sense. Bose makes great speakers, so it was not a leap for me to believe they make great headphones. A little more of a leap…..Caterpiller makes wonderful heavy equipment, so I might be convinced they would make good heavy duty work boots. Some things would make absolutely no sense. Pfizer is a world-class pharmaceutical company, but I would not want to eat a Pfizer-burger.
Many corporations simply license their brands, and while this might seem like easy money, it presents significant risk to the core brand. If I buy a pair of $75 Armani Jeans made by a Chinese manufacturer under a licensing agreement with Armani, and they fall apart the first time I wash them, I would be hesitant to buy a $2000 suit from the real Armani.
So whether you are expanding or licensing your brand, you need to be sure you are protecting the core brand by assuring that consumers have a consistent experience between brands and expanded brands. But we are in a brand expansion world, and unfortunately many companies want to reap the benefits of their brand without taking the responsibility. Case in point…
I used to do a lot of business with US Bank. Like most banks, they expanded over the years to be much more than a bank, offering a full slate of investment services. Since working with one institution was easier for me, I tried out these services, but ultimately decided to just work with them on their core banking capabilities. During this process I had a big problem with their investment division. They essentially broke a contract with me, and have yet to pay me as the contract specified. When I complained to my business banker, I was told that “he had absolutely no control”. “Different division and we don’t communicate” he said. The problem with this is that they sold me the investment services based on their core brand and the convenience of working with one institution. And the result? As the consumer I just see one US Bank logo. Since I am unhappy with one division, I certainly won’t work with another unless they all get together to protect their core brand and do the right thing, and ultimately they lose all my business.
With the benefit of brand expansion comes the responsibility of brand management, and companies are foolish to expand without a plan to keep the consumer experience consistent.