Thinking about expanding a successful brand? If you’ve done any reading on the subject you know it can end in failure if not handled properly. The good news is that with the correct setup brand expansion can be very successful. The key to success lies in the structure. The new brand should be under the control of the company but have a unique brand identity all to its own. In effect the company is the same but to the consumer it appears as a stand-alone business. The company that owns Red Lobster did managed additional brands very well. As they added more restaurants they targeted each addition to a different culinary niche without trying to leverage the success of the Red Lobster brand name. In fact, most people probably do not know that Olive Garden and Red Lobster are owned by the same company.
An example of a failed brand expansion would be General Motors. At one time all the automobile brands under the General Motors umbrella were relatively unique. They had a distinct target market within the market. Over time however the cars became so similar customers couldn’t distinguish a Pontiac from a Chevy from an Oldsmobile. This caused the market share of all the brands under GM to fall and eventually led to the end of the Pontiac and Oldsmobile lines. A successful example of automobile brand expansion is offered by Toyota and Nissan. Both companies introduced new luxury models and named them Lexus and Infiniti. This simple name change and the fact that they entered into a sub-niche (luxury vs. moderately priced) resulted in success for both automakers.
When introducing a new brand under your main company these steps should be considered mandatory.
- Launch the new brands in the same product category so that you can take advantage of your current market and operational knowledge.
- Select a key product characteristic, theme or attribute as the focus of the new product. When the owners of Red Lobster added Olive Garden all they really changed was the menu and theme of the restaurant. The price range, marketing efforts, and target audience stayed the same.
- Set up the new brand so it can stand on its own two feet and be perceived by the consumer as a new entity.