Does "New" Mean Improved?

As companies seek to recover the enormous costs they've invested in building brands, they typically look to new products and new markets. That's called "leveraging the investment," and it's a time-honored tradition among marketers around the world.

Step one: Build a strong brand. Step two: As soon as possible, introduce new products and services under that same brand name. Cross-sell current customers into new products or services. Enter new markets. Attract new customers. Extend the brand.

A strong brand can smooth the rocky path to a new product launch. Strong brand names represent trusted icons. They establish instant credibility with consumers as well as retailers and distributors.

In Hollywood, this is known as "marketability" (or what Dr. George Gallup once called "marquee value"). The power of a "star" -- whether it's Julia Roberts, Tom Cruise, or Steven Spielberg -- can attract the attention and interest of the potential movie-going public. In product and service marketing, the "star" may be Sony or Starbucks, Mercedes or McDonald's, Kraft or Kmart. The concept remains the same. An established brand name is counted upon to do the hard work of building consumer familiarity and establishing trust. The next step is easy. Just make sure the product is available. And, of course, be prepared to count all the cash that will soon come rolling in.

Is it that simple? No. But it often seems so. While many marketers (and, importantly, investors and stock analysts) praise the launch of new products that can extend the brand to new categories and new customers, few call attention to the real dangers that should seem obvious -- but apparently are not.

While the brand is out chasing after new customers, what's happening to the old ones? While the brand is spending money to develop new products, new services, new processes and new distribution outlets, what is it spending to improve the old ones? What is the impact of a new company effort on the company's existing customer base?

Marketing isn't just about attracting new customers. It is -- importantly and most profitably -- also about keeping old ones. Unfortunately, that reality is often forgotten in the headlong rush to pursue new opportunities.

Marketers often assume that the old customers and markets will remain, while they're out pursuing new markets and new opportunities. Bad idea. Never assume.

Building the addition while eroding the foundation
The key question that any marketer must first address is, what is the "fit" between a proposed new effort and the core brand promise? How well does a proposed addition blend with the established foundation?

Too often, the answer is -- not very well.

That's because companies often look at "fit" from their perspective, rather than looking at it through the all-important lens of the customer. The company assesses operational fit. Can we handle it? Can we produce enough product, and do we have the systems in place to deliver it? Can we source the materials and schedule the production lines?

These are all good questions. But these are not the first ones that company executives should be asking. The real test of fit -- and the very first consideration -- should be, will the new initiative enhance the company's existing customer relationships? Or will the proposed new effort jeopardize or endanger the bonds that have been forged between company and customer? As Jack Trout put it, "never forget what made you famous." Or, as the equally sage old saw has it, "Don't forget to dance with the one that brung ya."

Customer bonds are the company's real equity. Anything that might affect these bonds must thus be approached with due caution.

There are two aspects to the issue of fit, and both of these will affect the bond between company and customer. One has to do with the brand promise itself. How well does the new product or service offering fit with the core promise that the company has been making to its customers? Is it consistent? Does it reinforce the existing brand promise?

A second, and equally important, "fit" consideration is how well the company will deliver on any proposed new offerings. Companies that attempt to refine or reposition their brand promise discover that failure to deliver on any promise runs the risk of destroying the customer relationship. Establishing new customer touchpoints (new product and/or service offerings or new channels of customer contact, for example) means that the company must deliver on its brand promise at each and every touchpoint. Failure at any touchpoint may lead to a perception of failure in all. Failure in one may destroy the relationship.

Customers look at their brand relationships holistically; they view brand experiences as a totality, regardless of where, how, or when they take place. Customers don't focus individually on each contact they may have through separate product or service touchpoints or separate functional "silos." They don't separate the retailer from the branded products the retailer chooses to carry or the sales associates who represent and support these products. They don't separate the auto manufacturer from its dealers, who are called upon to provide regular customer contact throughout the ownership cycle. They don't separate the brand of apparel from the cologne and tote bags and umbrellas that may also carry the same brand name.

To the customer, the brand is not a holding company, offering parental support to an extensive and disconnected range of offspring. A strong brand has core meaning in its brand promise. The wider that brand promise is stretched through aggressive extension, the more muddled that meaning may become.

Stretching exercises
Two recent marketing announcements serve to illustrate these points, and they highlight some of the dangers and challenges that may derive from a company's brand extension activities.

Swiss Army Brands has launched a new line of Swiss Army luggage. This follows a line of clothing items introduced by Swiss Army and precedes the reported 2002 introduction of a line of Swiss Army footwear. Swiss Army also plans to open its first apparel store.

Swiss Army has had great success moving from its established pocketknife business into watches. Where is the "fit?" What is the brand promise? Rugged, no-nonsense products made for active, outdoor lifestyles. Can clothing fit with that? Yes. Can footwear? Luggage? Yes -- depending, of course, on how each of these extensions is executed, styled and constructed.

Can Swiss Army maintain this same tonality and appeal as it opens apparel stores? Can Swiss Army continue to keep its brand promise? Perhaps, although the need to control brand contact and maintain consistent delivery becomes a clear management challenge, as the number of Swiss Army touchpoints explodes to include not just additional products and additional product categories, but also store outlets and sales associates.

Can Swiss Army enhance its brand? That will be the test, of course, and so far they've performed quite admirably. However, will Swiss Army begin to water down its core promise by extending into areas they are reportedly considering, such as women's and children's clothing?

Can a brand extend too far? Yes, indeed. Consider the overlapping General Motors brands. As each of GM's divisional brands has attempted to expand, the differentiation between the major brands has diminished, and core brand identities have become jumbled. Some would say these once-strong brand identities have disappeared. One result: Rest in peace, Oldsmobile.

Consider, too, the case of R.C. Bigelow, known for its specialty teas. Bigelow has recently introduced a line of Bigelow Dessert Coffees, following its recent introduction of Bigelow Honey Spread. It is not just a question of whether the new line of coffees will appeal to flavored-coffee drinkers. Rather, Bigelow's first concern should be how well the promise of specialty teas fits with the promises of flavored dessert coffees, honeys, and whatever else might be lying in wait. What does this expanded focus say to Bigelow's core customer base, who may cherish its historically consistent emphasis on fine teas? What is Bigelow's new brand promise? Part of the company's goal, according to its marketing chief, is to get the Bigelow name and products into other areas of the grocery store. For whom is that a benefit? The customer? The retailer? Or is it just a benefit for the manufacturer?

If it's not a benefit to the customer, if it in any way seems to dilute the brand promise or imperil the company's ability to deliver on its promise at each and every point of customer contact, then what is the real value of these additional opportunities? Is the company "leveraging?" Or are the company and its shareholders simply losing?