Driven by the success you established with your business, you may want to introduce a new service or an extension of the existing one and leverage the value your brand name has in order to lift off that new service.
This may sound like a reasonable strategy but if that value cannot be transferred from one product to another, in many cases it can result with the new service failing and even damaging the existing one. The value of a brand, as elusive as it may sound, is not an infinite resource and needs to be considered as an asset to the business and managed appropriately.
If you operate a business that identifies itself by a single service or product, you are in a fantastic position to quickly build your brand. Because people naturally associate your service with your company, brand management comes easy and saves a lot of marketing dollars. The value of your company’s brand is reflected in the service. A good example is LiveChat Inc, a company that provides, well, live chat software solutions. This association gives LiveChat an excellent competitive advantage over other, non-descriptive, brands. But there are pitfalls. If you try to add new product line, it becomes difficult if not impossible to maintain the positioning you have built before. Even if the new service comes from the same category of software development, LiveChat could never provide, let’s say a ticketing system under the same brand name because the value of the brand can’t be transferred to a new product line.
If you have a single product company, all under the same brand name, the best strategy when developing a new product line or service offering is to build a separate brand.
For a company brand to become a synonym for a product or service, it has to be either a pioneer in a particular category or ultimately better than any other competitor providing the same or similar service. Remember Polaroid? Me neither! Although Polaroid wasn’t the sole producer of instant photography products, it was the most popular one and over time become the synonym for every instant camera on the market. But in the high-rise of digital photography this antiquated technology lost its appeal and company ultimately went down. The peculiar thing is that Polaroid was one of the first manufacturers to develop and productise digital photo camera! But the management made a serious mistake of sticking a Polaroid badge on it. The problem was that consumers could have never associated the company with anything other than “instant”. Its positioning, that wasn’t in this case tied to a specific product but a technology, couldn’t support new developments and changes in the market. Given how quickly market moves and changes, it is technology companies that are mostly affected by this syndrome of obsolete positioning.
If you operate a company that identifies itself through the technology your products are built upon and you want to introduce a new product or service that’s based on a different technology, the best strategy is to develop a separate brand or reposition your company first.
This is an ideal position for extending service offering and adding new product lines into the portfolio, but requires the most dedication, planning and effort in order to succeed. As a result, it gives the ultimate flexibility when it comes to company’s growth and new service developments, both vertical and horizontal.
If you operate an umbrella brand, the only thing to consider when introducing new product lines into company’s portfolio is whether to go with branded house or house of brand approach, as explained in one of our previous articles.♦ End