We will discuss Brand Marketing for a minute. In this discussion we would like to talk about brand line extension and how to do it correctly. First we are not sure if you have been looking in the grocery stores lately, but you might have been noticing some very interesting things amongst America's top selling brands, this has been increasing for about the last 5-years. For instance look at GE Light bulbs sometime. They have not only the original light bulb that GE is known for they now have; Soft Pink, Crystal Clear, Original, Standard, Miser (The energy saving light bulb), and of course Party Light Bulbs in colors of yellow, red, green, blue, and orange.
If you do not find this interesting perhaps you might find the line extension of Kingsford Charcoal interesting. 3-types now. What about Raid, the bug killer, they have it now for ants, slugs, flies and ants/roaches, Roaches only. Raid for the garage, for the bathroom, for the kitchen and for the garden. 7 different types. They own the entire space for bug killer on many a store shelf. And what about our famous Lego Brand? They already have all the Star Wars characters and hardware of spacecrafts, and structures.
Yes we are very aware of Lego Brands. Lego is very aggressive promoting their brand identity and expanding their customer base, they have something for everyone, We are on the leading edge of these trends and have read all the same books and sometimes it amazes me how many large corporations in America make such unfortunate mistakes with their brands. Lets look a Hot Wheels line extension. Garbage trucks, Fed Ex Vans, Over the Road 18 Wheelers, Skateboarders, SUVs etc. And Barbie, judging by their books, cars, houses and clothes-lines. Interesting that the founder died and they simply did what Wendy's Hamburger did, use the PR to sell even more and extend the brand name even further, with books and video-tapes and newest lines. Look at Wendy's launching a new hamburger early ahead of schedule. Who else is going for it on the grocery shelves of America's largest chains? Windex with now 7 colors; Blue Original, Clear Vinegar, Purple Mountain Anti-Bacterial green, Aqua, no drip no streak. Lysol same thing. And 409 cleaner? Original green. Misty Breeze, Orange Power. We have brands everywhere and they sell too.
Now then if you look at the Fast Food Restaurant Corporations and their Multi-Brand Franchises in the QSR Sector, we see the leader McDonalds has diversified quite a bit. Recently we did a Multi-Brand Franchising Report Observation and we were quite interested in what we found. Well not everyone is aware that McDonalds also owns several other bands such as Boston Markets; 650 stores in 23 states, Chipotle Mexican Grill; 230 stores in 10 states, Donato's Pizza 200 stores in 10 states, Pret a Manager 140 stores in 4 countries, Fazoli's 400 units in 32 states and two countries. Of this the company derives 2 Billion in annual sales, this is not even counting McDonalds. Many people are unaware of this because McDonald's has not connected the dots.
However other franchise companies, which franchise and have multiple brands have. The question shall always be do they co-market to the same customers or serve separate niches. Do they buy out their competition yet sell and take away an cannibalize their own same store sales? It depends, McDonalds seems to be targeting different customers although if you consider in the US people eat major meals 2-3 times per day and there are 7 days a week, we are talking about 14-21 opportunities to feed them, now obviously other than single males, most of our population will eat the majority of meals at home. However how many of those meals will be eaten out side the home and of those visits to QSRs how many can McDonalds pick up. Apparently after considering the additional 2 billion a year in sales, quite a few and remember McDonalds is in 141 countries thus far so perhaps the cannibalization discussed in the franchising industry is a US thing for McDonalds and is not affecting it's other brands here yet or all of it's overseas markets for it's stead fast Mickey Ds Brand.
Think about it Pizza, Chicken, Tacos, Italian and Pretzels? Oh yah that Hamburger thing will never work? Sure, that is what they told Ray Kroc in the beginning, guess they were wrong. And today we see some interesting new factors to be considered namely; The New American diets and how these different food types are effected by the new perception of Atkins, South Beach Diet, etc.
Some stores allow for multiple brands inside the same establishment, this is prevalent in Fast Food, C-Stores and Auto-Service Businesses. We had recently did a small study on the Point of destination Theories or One Stop Shop Scenarios in Car Washes, C-Stores, Quick Lubes, QSRs or Other Auto Businesses and how they attempt to use the multiple brands to draw in customers. If you study Micro Economics of Multi-Revenue Streams Concepts and Co-Brands you will see this trend. In 1997 at the annual International Franchise Association Trade Show we saw that many break away forums focusing on this new rage at the time of Franchise Co-branding and as the moderators introduced the franchisors, Franchise Marketing Executives and Attorneys involved in some of these major projects of mini-franchises in side of C-Stores and Donut, Cookie, Pizza concessions in fast food locations, mom and pop shops, food courts, etc. they all admitted that about 50% of these deals failed when the franchises were owned by separate entities. However it was our observations that things like Starbucks, hair cut places, Mail Stops inside grocery stores were very successful and kiosks with low costs depending on the product did turn out to be profitable.
Let me take a quote from Plato, because it maybe more than relevant to this situation and discussion. This quote is taken out of context although there were none of these types of businesses during that time period. However the theory has not changed and may not change with regards to business operators who leave core components of their business model to create a one-stop shop scenario in order to take advantage of the similar theory of a regional shopping mall or Wal-Mart store. Small privately owned businesses should concentrate on what they are good at first and think twice about co-brands concepts they are unfamiliar with, are hard to learn or not their specialty. Many businesses fail and recently I watched and reviewed such a business that is not long for this world which I will be glad to describe without giving names and allow you to see our point of this discussion. Here is the famous quote by Plato in the Republic, which rings through to the topic some 2300 years later. Could have been written yesterday. You may wish to copy it down and teach it to your off spring.
"the result, then, is that more plentiful and better quality goods are more easily produced if each person does one thing for which he is naturally suited, does it at the right time, and is released from having to do any of the others."
There are many other later themes encompassing parts or all of this idea of specialization. Forget the equal pay for equal work communism or the socialist connotations that this might enter and think of the business aspects of free markets and core business models and current comments from fortune 500 CEOs to shareholders and of course the aspects of small businesses on relevancy. In Parenting too, for instance the quote you may have heard is "If you try to do everything, you will do nothing well?? Unfortunately this is used by many a lazy person to relieve himself of responsibilities of doing what is right or responsibilities he has already committed to or to get him out of responsibilities he is employed to do. In other words for excuses, however when used by a man of commitment to do what he says he was going to do, does it and then determines it to be something he should not be engaging his time in, in that case it is seen as a prudent insight.
I cannot tell you how many companies make obvious mistakes with their brand name, based on advise from experts, advertising agencies and academia, which in my opinion is always looking back, and has not a clue how to change the market direction midstream and take advantage of brand name value in opportunities right before their eyes, Service Master should be commended as they have done well, but they could do so much more really. I want to thank those students for their questions, which enabled me to formalize my worldly observations and enable me to define my theories on brand name.