What Is One of the Most Important Lessons to be Learned from Fast Moving Consumer Goods Giants?

Original: June 2020, Repurposed: June 2020, Update: June 2020

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.