What Is One of the Most Important Lessons to be Learned from Fast Moving Consumer Goods Giants?
Are you the first player in a new market? Great!
Can’t be first? As explained in my previous post, you can create a market you can be first in by narrowing your focus.
And what if you are the market leader and want to enter a new category?
Don’t dilute your existing brand, create a new brand.
You will both protect your status in the category you lead and give a much better chance to your new venture.
Fast moving consumer goods companies, where I spent most of my career, have this attitude in their DNA. On the other hand, especially the BtoB / tech companies I have had a chance to observe, mostly use model names like XYX-159 for new products, all under the same company name.
At this point, I want to share some excerpts from Positioning in the 21st Century, the latest book by Al & Laura Ries, on the importance of a multi-brand strategy:
“Most single-brand companies [like IBM, GE & Xerox] are in trouble today because they expanded their lines to cover emerging categories. The future belongs to multiple-brand companies [like P&G, Unilever, Coca Cola, Pepsi and many others].
Typically, single-brand companies tend to be strong in one category and weak in all other categories.
A single-brand company continues to expand its product lines to cope with new technological developments.
This weakens the brand.
A multiple-brand company keeps its existing brands narrowly focused and launches new brands to cope with technological developments.
The most profitable companies in the world are multiple-brand companies.”
Single-brand companies, typically BtoB / tech companies, basically got away with this strategy in the 20th century when they had less competition.
With increased competition, especially in times of crisis, this is no longer a viable option.
Now is the time to dominate each new category with a separate product / service brand.
That is the only way to lead a new category as THE most trusted brand.
Multiple-brand companies like BtoC / packaged goods companies, were always more successful and will continue to dominate the 21st century.
Another example from Al & Laura:
Autos are filed in our minds as “sedan”, “SUV, “luxury”, “cheap”, “truck” etc.
All the major auto companies launched electric vehicles under their own brands.
None came close as a challenger to Tesla.
A new category requires a new brand name.
And what about the Internet?
The Internet is a new category that requires a new brand name.
Details on that in my next post.