Business Decisions and Branding Strategy
The old school train of thought surrounding branding strategy is to keep a brand within a single category to ensure keeping the brand strength high and the category recall by consumers even stronger.
By taking lessons learned from Strategic Theory we can see how to make such decisions and the effects that they will have on the strength of the brand and revenue generated or lost by such decisions.
There are several keys to ensuring the right decisions. The factors to consider when making such a shift include: revenue, markets, brand impressions, consumer perception and current position protection.
After considering such factors and identifying possible outcomes, one can use strategic theory to anticipate what the competition’s move will be and to identify a company’s best move.
By taking a look at the decision by both Energizer and Duracell, we can identify the each company’s best strategic decision and how they came to the decision to extend their brand into the rechargeable battery category.
When looking at the new category, there three strategies that the companies could employ. The first and most obvious is doing nothing, keep the status quo. The next two are similar, but the execution varies and is the main difference between the two. The companies could choose to enter the new category by launching a new brand or by launching a brand extension into the new category. (Acquisition is also a possibility, but is very similar to launching a new brand and in this case, there is no viable brand on the market for acquisition.)
Energizer and Duracell have both analyzed the decision to extend their brands into the rechargeable battery category and both have similar decisions to make as the affects of such a decision will have similar impact on both companies. Revenue is one of the heaviest factors for these two companies and when looking into the revenue, the companies need to look at their current market size, the growth of the current category as well as the size and growth of the new category.
Both companies have invested large amounts of their budgets to advertising and branding efforts and because of this, launching a new, a co-branded or even a sub-branded brand within the new category will be very costly. There is such a large overlap between the new category and old, that the launch of a new brand would be too costly and the return too small.
Looking at the situation where a company A launches a new brand, while company B extends their brand into the new category. By choosing to launch a new brand, Company A must incur a large advertising loss for a successful launch of the new product, because they are launching a new brand, the canabalization of Company A’s brand is lessoned, but because of the lack of awareness of and trust in the new brand, market success tips in favor of Company B who extended the brand rather than launched a new brand.
For both companies, the strategy of the Status Quo is Dominated by the two Expand strategies. And because it is in Company B’s best interest to move into the new category, Company A should expect Company B to do just that, planning accordingly and vice versa. Both companies can essentially remove the ‘Do Nothing’ strategy from the matrix and identify the best plan moving forward.
Both companies now have a best strategy to launch a brand extension into the new category.
By taking lessons learned from Strategic Theory we can see how to make such decisions and the effects that they will have on the strength of the brand and revenue generated or lost by such decisions.
There are several keys to ensuring the right decisions. The factors to consider when making such a shift include: revenue, markets, brand impressions, consumer perception and current position protection.
After considering such factors and identifying possible outcomes, one can use strategic theory to anticipate what the competition’s move will be and to identify a company’s best move.
By taking a look at the decision by both Energizer and Duracell, we can identify the each company’s best strategic decision and how they came to the decision to extend their brand into the rechargeable battery category.
When looking at the new category, there three strategies that the companies could employ. The first and most obvious is doing nothing, keep the status quo. The next two are similar, but the execution varies and is the main difference between the two. The companies could choose to enter the new category by launching a new brand or by launching a brand extension into the new category. (Acquisition is also a possibility, but is very similar to launching a new brand and in this case, there is no viable brand on the market for acquisition.)
Energizer and Duracell have both analyzed the decision to extend their brands into the rechargeable battery category and both have similar decisions to make as the affects of such a decision will have similar impact on both companies. Revenue is one of the heaviest factors for these two companies and when looking into the revenue, the companies need to look at their current market size, the growth of the current category as well as the size and growth of the new category.
Both companies have invested large amounts of their budgets to advertising and branding efforts and because of this, launching a new, a co-branded or even a sub-branded brand within the new category will be very costly. There is such a large overlap between the new category and old, that the launch of a new brand would be too costly and the return too small.
Looking at the situation where a company A launches a new brand, while company B extends their brand into the new category. By choosing to launch a new brand, Company A must incur a large advertising loss for a successful launch of the new product, because they are launching a new brand, the canabalization of Company A’s brand is lessoned, but because of the lack of awareness of and trust in the new brand, market success tips in favor of Company B who extended the brand rather than launched a new brand.
For both companies, the strategy of the Status Quo is Dominated by the two Expand strategies. And because it is in Company B’s best interest to move into the new category, Company A should expect Company B to do just that, planning accordingly and vice versa. Both companies can essentially remove the ‘Do Nothing’ strategy from the matrix and identify the best plan moving forward.
Both companies now have a best strategy to launch a brand extension into the new category.
posted by Advertainer at 11:44 AM
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