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.


Food Lover said...

Good luck!

Nothing/Everything said...

Create a new brand to stand for that category in the mind of the customer.

This rule is huge for me. Make your brand synonymous with the market "category" you are trying to corner. Google, Facebook, most of these companies were not the first but they succeeded(in a lot of things actually) but one was becoming synonymous with their category. Search = Google, Social networking = Facebook, online music = iTunes. This is marketing gold.

Sarah Wallace said...

What about the decision on how to move into a new industry? Should a company use their brand which is almost unknown to the new industry or use the brand of a recent acquisition that has a previous reputation (good or bad) in the industry already?

Roger L. Cauvin said...

Thanks for the comment, Sarah.

A brand is a set of associations imprinted in the minds of existing and potential customers. A brand can be an extraordinarily powerful force for selling your products.

The lesson from Al Ries and Laura Ries is that a brand's potential is limited mostly by prior perceptions and biases, not by a company's marketing budget. As a general rule, when introducing new products, companies should choose brand names and images free of historical baggage.

Most companies choose the opposite path. Instead of trying to avoid a brand name with prior associations and biases, they try to leverage whatever positive ones may exist, thinking it will save customers mental effort and the company money. Al Ries, Laura Ries, and other top marketing experts who think outside the box believe this philosophy is a dangerous oversimplification.