The consumer based “definition of the business” provides the roadmap of what the brand owns and where it can be extended.
Many brands have alternative ways of defining the business of the brand which could lead to different brand extension possibilities and therefore requires management to choose which direction to follow.
This consumer-based definition can change over time as successful brand extensions are launched because they change consumer perceptions.
In any organization, the opportunities for growth depend on how you define what business you are in. This principle goes way back in the marketing literature. In 1960, Theodore Levitt wrote an article in the Harvard Business Review titled “Marketing Myopia.” The premise was that companies should not define themselves by what they produced but instead define their business by customer needs. Every major industry was once a growth industry. But over time, they began to slow or even decline. In every case, the reason growth is threatened, slowed, or stopped is not because the market is saturated. It is because there has been a failure of management to define the business by what consumers wanted. Railroads declined because they “were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.” They declined not because of competitors such as cars, trucks, airplanes, and even telephones, but because of their own myopia. They defined their business as being in the railroad business instead of the business of moving people and goods.
Brand extension is based on this same premise. The needs of the consumer met by our branded product should determine what business we are in and thereby provide a way to innovate (brand extend) continuing to meet those consumer needs.
Studying brands with consumer research offers a method to identify the way consumers see the brand with all its rich meanings and associations.
Nestle’
In a study I conducted of the Nestle’ brand, consumers said they were a chocolate company. The associations consumers mentioned were chocolate bars, candy, baking and other chocolate words. Some remembered the jingle “Nestle’ makes the very best chocolate”. Yet management knew that Nestle’ is the world’s largest food company. The Nestle’ brand name is found on countless products in the USA and around the world. This illustrates an important point: The way consumers define what business you are in and the way management defines the business are usually totally different. This is because consumers have one database of experience with the product/brand and management has a very different one. When attempting to determine fit and leverage, it is what consumers think that counts. Management might wish that consumers saw the “truth” about the company and brand name, but they rarely do. So, the starting point in developing brand extension concepts is to thoroughly understand how the consumer sees the brand to determine what business we are in from a consumer perspective.
As mentioned previously, simply because there are opportunities that are logical brand extensions does not mean these are good brand extension ideas. They have to be strategic for the company and make good business sense relative to a number of factors such as competitors, the cost of entry into the new category, likely profitability and so on. Still, the mission of research is to define the business of the brand from the consumers’ perspective.
BIC
BIC pens and razors is a classic example of having alternative ways of defining the business. Management decided to define the business as plastic disposables selling disposable pens, razors, lighters and similar low-priced plastic items. Note that there were other alternatives. When BIC pens were introduced, management could have defined their business as office supplies and launched a line of office products. Alternatively, they could have defined their business more narrowly as writing instruments and introduced a range of pens, pencils, markers and the like. With BIC lighters, management could have made many different quality lighters competing with Zippo. No market research could answer the question of which way is best to define the business. It could only illuminate some options. BIC management would have to decide how to define their business and the relevant brand extensions follow that decision. At a later point, BIC introduced disposable women’s underwear (pantyhose). This product was not a success illustrating that while the brand extension might have been logical, that in itself did not make it a good idea. Brand extensions like any other new product can fail for a variety of reasons reflecting lack of demand all the way to execution mistakes.
Clorox
The next examples are a number of brand extensions that I created for Clorox. At the time, Clorox was bleach. This was a branded commodity sold at a slight premium vs. store brand. The way management defined the business and the way the consumer defined the business were totally different. It was that insight that led to the expansion of Clorox into many new products that line the shelves today.
I was commissioned to develop brand extensions for Clorox. At the time, Clorox Laundry Detergent had recently been launched and was an immediate failure. Management relayed that they were surprised and unsure why. As in all such studies, the process began by asking management how they defined the business of the Clorox brand. Clorox management viewed their business as laundry and household cleaning products, hence the launch of detergent. It became obvious that was not the way consumers saw it.
Even though Clorox hired my company to analyze and report what they recommended as the best brand extension possibilities, Clorox company employees had already decided that certain categories were ideal for Clorox brand extensions. The company asked that their concepts be included in the research. They suggested Clorox automatic dishwasher detergent, carpet cleaner, oven cleaner and liquid dishwashing detergent.
In the market research study, it was found, not surprisingly, that the Clorox brand was synonymous with bleach – the only product sold with the brand at the time. The brand’s fit and leverage evolved from this perception. People have a love/hate relationship with bleach. It cleans, brightens, deodorizes, disinfects, kills germs, kills mold or mildew, removes stains, etc. but it is difficult to handle, caustic, toxic and can damage some surfaces. It is powerful, effective, and for tough jobs. After careful study with consumers, the client was provided with a definition of the business derived from these consumer perceptions.
Clorox Definition of What Business They Are In:
“Chemical products that are bleach, contain bleach or provide the benefits of bleach for the tough jobs of cleaning, disinfecting (and sometimes killing mold, brightening or removing stains) on surfaces which consumers perceive would not be harmed by bleach.”
Using this definition of the business helped management to better understand why Clorox Laundry Detergent had failed.
In the research this is what consumers said about the concepts management had suggested:
Clorox Laundry Detergent had failed because of the negatives inherent in bleach. People use bleach with white garments and only occasionally. So, this new product would not be able to be used in every wash load as was true of the current leading detergent brands. Women in the study also mentioned that they felt more comfortable adding bleach because then they could control the amount added. Even if Clorox Laundry Detergent did not contain any bleach, the brand name suggested otherwise and perception is reality.
The definition of the Clorox brand’s business stated above provides the roadmap to what categories a Clorox brand extension would fit and have leverage. The fit in this case is the belief by consumers that these products would be logical extensions from Clorox. The leverage elements were the stated benefits – cleaning, disinfecting, killing mold, brightening and stain removal on hard surfaces. The probability of success and the likelihood of not diluting the brand existed for brand extensions that fit this definition.
These products were recommended to Clorox:
A brand plan recommended that the household sanitizer/cleaner product be introduced first (Clorox Clean-Up). It had the broadest appeal and helped customers adjust to Clorox moving out of the laundry room. Then the other products like toilet bowl cleaner would be more acceptable and expected by consumers.
One of the surprises for the company was that their main competitor was not going to be other laundry products companies, but Lysol. While Lysol then “owned” the benefit of disinfecting in consumers’ minds, it was not thought of as a strong cleaner. Also, consumers didn’t know how Lysol disinfects. This offered the opportunity for a Clorox sanitizer cleaner to position itself as a more effective version because of the ingredient of bleach.
Once firmly established in the disinfecting/cleaning business, Clorox began marketing cleaning tools: mops, towels, rubber gloves and sponges. This again illustrates brand extensions change consumer perceptions and as a result, new opportunities arise.
This is the premise discussed earlier that the opportunities for growth depend on how you define what business you are in. Understanding the way consumers saw Clorox opened the eyes of management to a different way of thinking about what business they were in. They continue to explore new brand extensions that fit and leverage the properties described in the definition of the brand’s business the research uncovered.
What are the properties of a good definition of the business for a brand?
It should not be so broad that it fails to direct brand extension search and limits almost nothing. A candy company client said they were in the “fun business.” While candy is fun, it does not own it in the sense that many products are fun. This definition allows the brand to be used for theme parks, video games and other nonsense where the brand has no fit or competitive advantage.
It should not be so narrow that extensions into other categories are impossible. Defining the business of Dole as being in “the pineapple business” limited its ability to move beyond that original consumer perception. This is Levitt’s example of “Are we in the railroad or transportation business?”
It should provide the properties that a brand “owns” that allow it to gain consumer acceptance (fit) and give it a competitive advantage (leverage) in any new category. The Clorox definition clearly says what types of brand extensions would have fit and leverage.
It should detail any limitations consumers put on a brand. For example, in my study of Duracell, it was discovered that consumers would not allow complex electronic devices branded Duracell. The reason was that batteries are perceived to be simple electrical products. Duracell computers, cameras and the like were not acceptable to people because they thought they would be inferior to existing competition. They believed Duracell did not have the expertise to launch more complex electronic products. It is irrelevant whether the company that owned Duracell had the expertise or not. Again, perception is reality and if these were introduced, they would likely not find acceptance in the marketplace. Flashlights, on the other hand, were acceptable and were launched.
It should specify alternative ways that a brand can be extended. Like the BIC example where the company could go in different directions, Clorox could do that as well. The definition allows the brand to be a cleaning product, a pure disinfectant, a mold killer, and a stain remover on many surfaces. Besides household cleaning products and disinfectants, Clorox expanded into driveway cleaners, washing machine cleaners, odor fighters and urine remover products. Then they launched an electrostatic disinfecting commercial sprayer sold to used car dealers and others who wanted to disinfect. This is a long way from the commodity bleach product that started it all.
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