Friday, February 19, 2010

Costs of Launching a New Brand

Reading Al Ries and Laura Ries' War in the Boardroom, I took particular note of the following excerpt (page 36):
[A] left brainer at a smaller company thinks, "We can't afford the costs of launching a new brand. So let's use our existing name. Furthermore, we already have some good consumer recognition. With a new brand, we'd have to start all over again. We don't have the resources to launch a new product and a new brand at the same time, nor is it necessary to launch a new brand."
The authors ridicule this line of reasoning, which is unfortunately common even among marketing professionals. The authors counter that successful product strategists:
  1. Strive to create a new product category.
  2. Create a new brand to stand for that category in the mind of the customer.
  3. Keep the brand focused on that one category.
In the short run, creating a new brand may be more expensive. But in the long run, trying to "stretch" a brand name to stand for more than one category is even more expensive.