Extensions, Part 2

In the short term, extensions and merchandise make money, build hype, and give customers a way to “live the brand.” Longer term, they may be detrimental, leading to overexposure and loss of focus, hurting sales and market share. One solution is to offer limited-edition or seasonal extensions. The other is to simply refrain from extending the brand, no matter how tempting the short-term gains, if the long-term perspective is questionable.One of the most effective strategies for a new or growing brand is to associate itself with another, established brand that already has credibility with the audience the new brand is seeking. Such co-branding associations are often analogous to the “four Ps” of marketing. Usually, they don’t fit squarely into a single category, but straddle two or more.A product partnership works when both brands’ offerings have complementary benefits. By joining up, the two can give the customer a package that neither could deliver separately—and, hopefully, that no competitor can offer. The benefit to each is that the audience perception of it is improved through its association with the other. For example, the branding partnerships Intel forged with many computer makers for the “Intel Inside” campaign demonstrate this so-called virtuous circle: Dell, IBM, Gateway, and others were able to show they used the leading microprocessors, while Intel was able to increase the perception of itself as the leader. Likewise, the inclusion of Google’s search and advertising features on many other websites allows those sites to offer powerful, integrated features with a mark of familiarity, and also allows Google (in addition to giving it omnipresence) to gather yet more useful data about web users’ patterns of behavior.A place partnership allows one brand to piggyback on the distribution of another in order to reach vast numbers of potential new customers. At the same time, the presence of the new brand in the distribution network brings in fresh, enthusiastic customers for the distributor brand. One example of this was the partnership between Starbucks coffee and United Airlines, which came at a time when Starbucks was still expanding and United had a sorry reputation for serving the worst coffee of any airline. Another example would be the link-up between parcel shippers FedEx and the Kinko’s chain of copier stores. Copying documents and shipping them was a natural combination for customers; FedEx acquired a large network of storefront locations, while Kinko’s acquired new business from firms that were accustomed to using FedEx.A price promotion or partnership will “bundle” two brands into one package, usually at a discount. The idea is that a customer probably wants one or other of the items, and will enthusiastically take both at the combined price. This tactic is usually used when one company owns both brands, for example when Procter & Gamble offer their Crest toothpaste together with their Oral-B toothbrushes. Alternatively, a sample or gift of one product is included free with the purchase of another.People partnerships are extremely hard to pull off. “People brands” are, by definition, service brands whose key assets—people— have been trained to represent Brand A, not Brand B. The company culture of Brand A is often incompatible with that of Brand B. Such partnerships tend to happen only by necessity, such as after a corporate merger. When Compaq, the personal computer maker, and Digital Equipment Corp., a maker of mainframes, became one, the sales teams of both firms tried to work together under the Compaq brand. It proved to be something of a disaster. The Compaq brand meant little to mainframe customers, while the Digital sales and service people felt like fish out of water in the personal computer business. Both brands, which had been leaders to begin with, lost out.Co-branding is sometimes used in a quixotic effort to switch customers from an old to a new brand. Cell-phone giants likeVodafone, Orange, and T-Mobile have repeatedly acquired local networks in other countries and rebranded them with their global brand. A transitional period, when the old and new brands are used side by side, allows customers to become aware of the switch. However, since the brand change is most often motivated by corporate acquisitions rather than any fundamental marketing strategy, it is unclear how much goodwill is really transferred from the old brand to the new—or whether such a transfer is even a priority of the new brand owner.