Brand Expansion: Pie or Trap?

Brand expansion is a strategy for enterprises to pursue maximum benefits, and as an important link in promoting brand strategy, it plays an irreplaceable role. In recent years, with the increasingly fierce competition in the economic market, many enterprises have carried out brand expansion in order to gain greater market share and improve profits.

The so-called brand expansion can be divided into broad sense and narrow sense. Broadly speaking, with the help of the established quality and image reputation of the original brand, the original brand name is used to extend the product line or introduce new product categories. The narrow interpretation excludes the extension of product line, which only refers to the use of a well-known brand or a successful brand with certain market influence on a product completely different from the well-known product. This book gives a broad explanation of brand expansion, including the extension of product line.

Some people say that brand expansion is the touchstone of an enterprise, while others say that brand expansion is inherently a combination of positive and negative attributes, like a double-edged sword. Is brand expansion a pie or a trap for enterprises? Standing at the crossroads of brand expansion, what would you do?

Next, let's look at two failed brand expansion cases. Wang's honey garden is the most famous honey producing area in China. On March 12, 2006, the mold in its honey jelly enterprise exceeded the standard. For a time, the public talked about the color change of bacteria, which caused great harm to Wang's brand! Ningbo Oaks Group, a traditional home appliance manufacturer, entered the automobile industry. However, it has no sales service ability at all, and not providing after-sales service means that it is impossible to obtain the qualification to sell cars. The previous promises filled consumers with expectations, but now the indifference to consumers makes buyers feel very disappointed with them. This brand expansion of Oaks Group is undoubtedly a failure, which not only failed to gain profits from marketing cars, but also greatly damaged the brand value of Oaks. As can be seen from the above cases, brand expansion is very risky, which not only causes direct economic losses, but also greatly damages brand value.

Brand expansion is understandable, but many domestic enterprises have no long-term planning and fall into the trap of brand expansion, which not only fails to obtain the expected profits, but also greatly hurts the brand value.

Brand expansion, as an effective commercial means in actual combat, has been repeatedly proved to be a trap in other cases. However, it is one-sided to simply define brand expansion as good or bad. Brand expansion is naturally a complex with dual attributes. Its success or failure can not explain the quality of brand expansion itself, but only the success or failure of brand expansion. Therefore, enterprises must have a comprehensive understanding of brand expansion before implementing brand expansion, and then it is possible to make correct decisions. 1. Advantages of brand expansion

(1) Help enterprises to achieve diversified growth, make full use of intangible assets of enterprises, carry out in-depth development and take the road of sustainable development. (2) It is beneficial for enterprises to spread risks and pursue the stability of enterprise survival. In order to spread business risks, the ideal choice for enterprises is to diversify their operations, cultivate a variety of main businesses and adopt diversified growth methods. (3) The popularity of the original brand helps to improve the market awareness rate of new products and reduce the cost of new products entering the market. (4) The good reputation and influence of the original brand may have a chain reaction on the extended products, thus helping consumers to form a good impression on the extended products. (5) It is beneficial for consumers to broaden their consumption horizons and enhance their desire to buy. (6) Brand expansion strategy is adopted to launch new products with the help of well-known brands, which makes the positioning of the latter more convenient and easy. (7) It is conducive to building a strong brand and forming economies of scale, thus improving the economic benefits of brand families. 2. The disadvantages of brand expansion

(1) causes the original brand to be diluted.

Successful brands have gained a favorable position in consumers' minds, but brand expansion may destroy this favorable position. If the brand is used in another kind of products, it will be difficult for the brand to become a substitute for the original category in the eyes of consumers. In this case, other brands will seize the opportunity to usurp the position of the original brand in the eyes of consumers. Similarly, brand expansion also makes the original brand unable to "hook" with the characteristics of a product, which makes the original clear focus of the product in consumers' minds blurred and gradually forgotten by consumers, leaving a psychological gap that will be filled by other brands. (2) The brand is defiled. If an enterprise adopts brand expansion strategy, it can't guarantee that its extended products have the same good quality, good reputation and good image as the original successful brands. Once the quality of this product can't meet the requirements of consumers or the image is disgusting, the consequences are unimaginable. The first reflection in consumers' minds is that this brand can no longer represent high quality, and then they think that other products attached to this brand are equally unreliable in quality. Once this psychological stereotype is formed in the minds of consumers, it is difficult to reverse it. (3) It is easy to produce seesaw effect. The foundation of brand effect is the brand loyalty of consumers. If brand expansion is at the expense of reducing the customer loyalty of the original brand, then the sales obtained by extending the brand are at the expense of the decline of the original brand; Then, this brand expansion is not worth the loss. Due to the limited energy of enterprises, it is often impossible to take care of the marketing of multiple products. At the same time, brand expansion will cause the problem of enterprise management and promotion budget being evenly distributed according to the original products and new product lines. Managers and promoters are no longer completely focused on parent brand as before. Due to the limitation of shelf space, retailers are unwilling to accept all the extended products, or only draw a part from the original product shelves to these extended products, thus reducing the shelf space of the original brand. This fact has caused the extended products to occupy the dominant position in the market, while the original products have lost their dominant position.

Therefore, in order not to step into the trap of brand expansion and seize the "delicious pie" of brand expansion, brand expansion must adhere to five principles.

1. New and old products are highly correlated.

High correlation leads consumers to recognize and buy a brand for the same or similar reasons, preferably in the industry related to the main business, or extending to the upstream and downstream of the industrial chain. As the saying goes, "Interlacing is like a mountain". If you are unfamiliar with this industry, don't "test the water" easily, or you will capsize.

Look at the successful enterprises, all of them abide by this law: although Haier can cover all black and white household appliances, its strategy is always inclined to household appliances, even if it occasionally derails, it can be broken, and it will only be muddy; Wuliangye is obviously a "wine overlord", but it did not enter the wine market and threatened to "transport Europe back to China", but it never got out of the circle of "wine".

TCL, which produces color TV sets, began to set foot in the small household appliances industry in 2005. Shortly after the launch of the market, sales continued to increase, and consumers' industry associations were strong and their acceptance was high. However, when making cars, Oaks Group can't give consumers a good association. There is a big difference between the home appliance industry and the automobile industry, with little correlation and lack of management ability, so failure is inevitable.

2. Industrial expansion with strong brand association.

The industrial expansion with strong brand association means that brand expansion must ensure that the original core value and personality of the brand cannot be changed.

Sanjiu Group started with 999 Vita, and later extended to beer and launched "999 Cold Beer". Consumers will feel stomach medicine when drinking this beer, which is the performance of brand association. Moreover, stomach medicine protects the stomach, and drinking too much will hurt the stomach. This is common sense. 999 Weitai is reminding consumers to drink less, while 999 iced beer is obviously persuading people to drink more, isn't it contradictory? Fortunately, 999 cold beer is only sold in a few areas, which reduces the negative to the lowest point. 3. Brand expansion cannot be ambitious.

Brand expansion can't be "eating in a bowl and watching in a pot". Brand expansion can reduce the dependence of enterprises on an industry and increase the source of profits, but it can't aim too high. After all, corporate resources are limited. Excessive extension will dilute the financial and material resources spent by enterprises on the main brand, and ultimately make resources unable to concentrate on the construction of the main brand. Sanjiu Group is the best example. 4. Brand expansion is best not to extend to highly competitive industries.

If the market competition of extended products is not fierce and there is no strong professional brand, then brand expansion can be boldly carried out. On the contrary, it is not appropriate. For example, Midea entered the kitchen appliances and cooking stoves industries, such as range hoods, gas stoves and water heaters, with few advertisements, but it was very successful. The main reason is that cooking appliances and other brands in the cooker industry are relatively small brands, and their popularity and prestige are not the same as those of the United States. 5. Brand expansion should be supported by manpower and management.

Brand expansion is a means for enterprises to gain profits, but without the support of talents and management, everything is a pipe dream. 2 1 the most important thing in the century is talents, and recruiting the best management talents is the guarantee for the success of brand expansion. Wangmiyuan failed to extend to the jelly industry because of negligence in management, which sounded the alarm for many enterprises. 90% of domestic enterprises are small and medium-sized enterprises, so it is normal to get more profits through brand expansion. But many good projects are aborted because of the lack of talents and management. There are many factors to be considered in brand expansion, and enterprises should think twice before using this strategy. Because successful brand expansion can bring more market share and profits to enterprises and add points to brands; And unsuccessful brand expansion can not only bring no profit, but even destroy the brand.

Brand expansion is a double-edged sword. Faced with huge market opportunities and equally huge market risks, any simple conclusion is fatal to enterprises. Enterprises must be good at avoiding risks in opportunities and looking for opportunities from risks in order to win in the fierce competition. This is especially true for enterprises to treat brand expansion.

A marketing expert once made a very simple metaphor: the brand of an enterprise is actually like a rubber band, which can be stretched, but it cannot exceed a certain limit. That boundary may be a product range with high correlation and an industry with strong brand correlation.

Standing at the crossroads of brand expansion, do you know how to go now?