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.