There is a tendency by production divisions to measure their success by how many different items they produce within a certain category. This usually happens when you achieve a measure of success with the initial offerings you entered the market with.
At first, it seems like a great idea to simply offer another line extension to your existing buyers and hopefully attract new buyers who are interested in your larger line of products.
When we started the Barefoot Wine brand, we entered the market with only two items in only one size. We deliberately chose those items and sizes because we knew there was less competition with those particular offerings. For years, we built up our business by only focusing on those two products. It was easy for our sales staff to focus on the limited offerings. And our buyers could readily understand where our brand fit into their brand sets. We were becoming a national brand, offering only two products.
Cannibalization Due to Brand Proliferation
Then, after a few years of success, we gave in to sales and production pleas to create new products. Shortly thereafter, we had ten offerings. But a curious thing happened; the sales of the two original offerings we entered the market with took a dive, apparently cannibalized by our own new offerings. There was no real increase in overall sales!
The result was increased overhead and handling costs, and we gave our buyers a selection from which they could pick and choose. Now we had to keep producing all the new products even though sales were stalled. Eventually, we were able to start growing again, but it took a large investment in the sales force.
We learned the hard way that brand proliferation can actually hurt sales. Today, we see some companies trying to milk all they can out of any producing brand they have. They obviously think that they can throw anything out on the market as long as it’s labeled with the “winning” brand. They seem to feel obligated to test the brand’s bandwidth to the breaking point.
Focus on a Narrow Niche
The concept of being all things to all people may work well in an election campaign. But when you are growing a brand, watch out. Don’t dilute the focus you’ve taken years to build. Remember how you got into the market in the first place. You distinguished your product and dominated a narrow niche.
We’ve seen whole brands disappear because their proliferation diminished their relevance. GM’s Pontiac and Oldsmobile went the way of Ford’s Edsel and became superfluous. How many different kinds of vehicles can the brand support before the brand itself collapses and is just another generic choice? The key to brand success is to understand the reasons for brand success.
Just like any bubble, be it real estate or dot com, putting too much faith in the power of the brand can lose you the solid underpinnings of your success. Is it really the brand that makes the offering, or is it the offering that makes the brand? At least in the early days of brand growth, we would venture that success is driven by the offering. Don’t take it for granted and bet too soon on the idea that the brand has a power all on its own. Why push a perfectly good brand beyond its bandwidth?