by Adam T. Sutton
All companies are expected to grow, which often means selling a broader array of products to an expanded customer base. This strategy can boost short-term sales, but it can also undermine a brand over time, says Laura Ries, President, Ries and Ries, if the new products don't fit well with your previous brand profile.
"I think launching a new brand is probably the wisest decision in many instances for the long term. It's a safer direction for a product line extension."
Ries has helped more than 100 companies tweak brand strategies and launch new brands. Too many companies, she says, launch new products under their original brand and ultimately dilute its meaning to customers.
Below, we highlight four tactics Ries suggests to determine whether your next product launch needs a new brand, and how to launch a new brand successfully.Tactic #1. Determine if new products belong in new categories
Take a hard look at your new product and determine whether it's in the same category as the others under your brand. If the product is intended to reach an entirely different audience than your existing products, it likely belongs in a different category.
"Consumers do not care about brands," Ries says. "Consumers care about categories."
For example, an email services provider might offer software for small-business owners to manage their newsletters. If the company wants to launch software to help multinational corporations manage their email, it should do so under a different brand.
Another example: A car company that makes economical cars wants to offer a new line of luxury vehicles. The company should launch a new brand for the luxury cars, just as Toyota did with its Lexus brand, Ries says. Economical cars are in an entirely different category. Their brands are associated with completely different emotions than luxury brands.
- Overextending a brand
The now defunct car company Saturn started selling entry-level cars, but eventually sold everything from SUVs to sports cars. This strategy undermined the brand's meaning to consumers, Ries says.
"When you get a raise, you don't want a more expensive Saturn," Ries says. "You want a BMW."
- Trust is not the issue
Many marketers believe that the trust customers have in their brands enables them to offer many different products. However, Ries says, this trust is often wrongly perceived as a license to sell anything -- to create all types of products for all types of people.
Marketers would do better to understand their brands as product categories with set audiences, and to launch new brands to sell new products.Tactic #2. Limit ties to the original brand
Once a new brand is launched, it should have limited ties to the original brand in the minds of consumers. The brand needs to stand on its own and build itself from the ground up.
A new brand's website and packaging can mention the older brand or parent company, but only in minor ways, Ries says, such as with a small logo.
"The [new] brand name should be the largest thing on the package."
Companies that fail to clearly separate new brands risk having customers directly associate them with the original brands. The effect is almost the same as if the company had launched the products under the older brand name.
For example, Ries cites an electronics company that launched a brand of new televisions. The new brand was hard to pronounce, unknown in the market and not clearly separated from the company's originating brand. Customers ended up dropping the new brand name and referring to the televisions using the traditional brand moniker.Tactic #3. Launch new brands with PR outreach
New brands have a credibility deficit. They need to reach consumers through reputable media outlets to build rapport. Capturing the media's attention is so important, Ries says, it should supersede advertising during a brand's launch (more on this below).
"With PR, you give up control, but you gain credibility," she says.
- Connect brand to newsworthy topics
When first launching, your team has to highlight the brand's relevance to hot news topics and pitch its products to trade and consumer publications.
One of the best ways to be newsworthy, Ries says, is to be first in a category, such as Red Bull in the energy drink market. The product launch itself was a newsworthy event.
- Make use of business contacts
Don't fear making a connection between your brands when pitching for press coverage. Be sure to mention your parent company and original brands when making calls, Ries says, to get the attention of reporters and editors. The tactic works especially well if you're in a well-known company.
- Have patience
Relying on PR to launch a brand takes patience, Ries says, but it’s the best way to build credibility.
"Brands don't take off like rocket ships. They takeoff more slowly, like airplanes," she says. "Looking at the history of brands, that's pretty much always the case. It takes time because it takes time to change the minds of consumers."Tactic #4. Avoid advertising during launch
"One of the misperceptions out there is that brands need to spend $50-$100 million in advertising to get established," Ries says. "That's one of the real myths in marketing."
Advertising is far too expensive to invest in new brands, Ries says. Brands do not take off quickly enough in sales to justify the investment.
Also, a new brand's advertising lacks credibility and is unlikely to be trusted by potential customers. Media coverage is much better at building credibility than advertising, she says.
- Save advertising dollars for established brands
However, advertising is very effective at maintaining brands. Companies launching new brands should invest their advertising dollars in their original brands while the new brand is getting established. Too often, Ries says, original brands suffer when ad dollars that could be used to support them are wasted on new brand launches. Useful links related to this article
Members Library -- Creating Effective Brand Statements: 5 Insights to Improve Work from Agency Partners
Members Library -- How to Merge Brands: 8 Easy Steps to Gain Market ShareRies and Ries