The Brand's the Thing

by George Bickerstaffe

We all think we know what a brand is a collection of somewhat fuzzy attributes surrounding a product or service that give it a "personality" and, it is hoped, allow the consumer to react with it and continue to buy it.

But how far does a brand go? What are we to make of Coca-Cola, a soft drink maker, starting to sell a range of branded clothes? Or Nike, a sports shoe manufacturer, moving into watches and consumer electronics? Or Virgin, a brand that appears on just about everything from planes, trains and soft drinks to personal finance products? What's going on?

What seems to be happening is that many companies are waking up to the potential they can realize through "leveraging" their brands moving them into new product categories. There are a number of reasons for this, not least the increasing importance of relationship marketing in brand building.

One of the earliest exponents was motor bike manufacturer Harley-Davidson, which came close to collapse in the early 1980s. It resurrected itself through the formation of strongly supported owners" clubs and then a move into a widely diversified range of licensed products.

Coca-Cola's new venture into non-soft drinks combines this approach with the newest of new technologies. Its marketing of clothing, jewelry and all sorts of heavily logo-ed bric-a-brac is spearheaded through a new online selling site.

"Coca-Cola enthusiasts around the world are increasingly demanding Coca-Cola brand apparel, collectibles, and other merchandise," says Andrew Lelchuk, Coke's manager of business development and e-commerce. "With an extensive selection and around-the-clock convenience, coca-colastore.com is an ideal answer to their needs. In addition, the store significantly extends The Coca-Cola Company's merchandising strategy into this exciting distribution channel and expands the Coca-Cola experience."

But Coke has been cautious. Remember the company is over 100 years old and few in Atlanta probably can forget the outcry over the introduction of Diet Coke or attempts in the 1980s to fiddle with the original recipe. The same is true of another old-established US company, Gillette. It took an age to move into obvious adjacent categories such as shaving gel, after-shave, and ladies" razors.

Some companies, on the other hand, have been diversifying their brand from the beginning. Perhaps the most obvious is Virgin, which has managed to maintain its brand image of bearded rebellion across a huge range of product and service categories.

So, can any brand be leveraged into new categories? Given the budget, probably yes. But there needs to be prudence. In a study in 1999 consultants McKinsey & Co. found that both "focused" and "diversified" brands could succeed but that each needed to follow very distinct strategies.

Focused brands, for example, need to "own and broaden" their categories (in effect, this is what Gillette has done) and to "swarm" the market (Coca-Cola's old second-world-war strategy of making a Coke available to every GI and still apparent in its ubiquitous vending machines).

Diversified brands, on the other hand, need to find a "golden thread" that links all their categories (Disney's concept of wholesome fun is an example) and build up a strong overall personality (like Virgin's Richard Branson). They must then leverage these into new category areas where brand awareness is low (Disney, again, with its move into cruise lines, is a good example).

The potential that this new elasticity of brands (and there seems no limit to people's preparedness to walk around dressed as advertising billboards) offers to companies is obvious. It does, however, offer some threats to other companies. If Coca-Cola can offer a range of up-market work-out clothes, what is the future for dedicated sports apparel companies? Perhaps a move into soft drinks?

George Bickerstaffe is a business writer and author of the annual publication Which MBA?