Continuing more of the conversation. This is just a relevant portion thereof, with much of it redacted for privacy. However, you'll probably find the content just as useful...
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Off the bat I want to say THANK YOU in all caps for your awesome help. Many of the points you mentioned I felt in my gut but didn't have the experience or perspective to encapsulate it coherently. .... Our business is on a critical cross roads at the moment thus such quality advice is invaluable to us.
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Again, glad to help, and happy to hear you're finding the info useful.
Much of what I'm telling you is the fruits of many years of research, with variations of application in the past decade. The topic of branding has been an interest of mine since I was a kid, mystified by the brands of food or gas we'd buy, and how those brands would change and grow (or fail) through the years.
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I'll begin with the red hot question of - to multibrand? - or to not multibrand? My initial reason to multibrand began when I bought the domain name XXXXXXXX over 12 months ago. At that time, there were a fraction of the amount of competitors as today and the barriers to entry (at least in regards to Google rankings) were slim.
But our XXXXX offering took longer than expected to reach market and the date is now August 30th 2010. The competitive landscape is different and the market's readjusting. First mover advantage is now only a memory while the dread of market maturity strikes panic in the heart of those that might be left behind.
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It really doesn't matter. A lot of people find it hard to believe, but it's a good news that allows you to focus on the important aspects of marketing and the business. Don't fret about being "too late" to anything.
I'm reminded of two great men:
(1) my college journalism professor, and
(2) George Carlin
Let me start with my mentor (or rather, one of my mentors):
- From the photography aspect, he would remind us that humanity has been around for thousands of years. Whether you're a strict religious person who believes in just a few thousand, or a scientific type that believes it's hundreds of thousands of years old, the bare truth is that everything has already been done. Every image has been drawn, photographed, etc. All we can do is create a new interpretation that some may find more favorable than others. Put 100 skilled photographers at an event, and you'll always be able to choose an image you like "best" -- and sometimes it's the "new guy" that shot it.
- From a story approach, everything has already been written. Whether it's the lying politician or the new beauty queen, it's all been done. How we tell it is all that matters. (Of course, there's a deeper discussion there, about objectivity vs bias, but that's not important for this discussion on branding.)
And then George Carlin used to say the same thing about words. He often had funny skits trying to assemble strings of words that "nobody has ever said". For example, the dragon's monkey ate my pancakes.
So being first doesn't matter. Google wasn't the first search engine, or even one of the first dozen, but it's the one everybody knows in 2010. Even giants like Microsoft are in awe of it's clout over that market. Remember Webcrawer, Excite, Altavista, AskJeeves, or Dogpile? Better yet, Jughead, Archie and Veronica? (No, I don't mean the comic books!)
Worth noting, however...
The only thing unique to this situation is age deference by a search engine, in regards to domains. But you already have an aged domain for the company, and this is simply a new product to expand the business. So for you, this isn't a worry.
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To answer the litmus test:
1. Is there “some inherent risk or danger to the new venture that may reflect poorly on the main brand?”
No
2. Is there “potential that the whole product line may be sold off or spun off into its own entity down the line.”
No way!
3. Do “you want to create your own competitor, to effectively be on short lists (lists put together by clients making decisions) multiple times?”
No Again –
Case being that - He who wants dress shoes will not put Nike on the short list. But he who wants Nike will put Adidas on the short list because it is cheaper of the same functionality.
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Noted. Having three "no" answers definitely points to that new product being added to Brand1, instead of having it's own brand. This also allows the new product to carry the "prestige/premium" aspect from Brand1, which may help it long-term. You might find that comforting, too, since there was some worry about being late to market. You can start it off with the right image.
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This was our strategy with XXXXXXX(brand2). We saw that the XXXXXXXXXXX market was burgeoning and thought that adding an XXXXXXX product line to XXXXXXX(brand1) would tarnish its brand image of “premium priced – but quality.”
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Exactly! That product meets litmus test 1! By adding that particular a new product to Brand1, you would have harmed the integrity of the brand. As such, creating Brand2 ("economy"/unmanaged) was a very wise move.
Until now, I didn't realize you considered Brand1 to be "premium" (and I DEFINITELY won't argue it being that, either! -- it most certainly is top notch in its industry).
Nor did I necessarily equate Brand2 as being sub-premium. Of course, I would NEVER suggest marketing anything as sub-premium, as a consumer interprets that to mean "crap". The term "economy" is good, although it does carry some negatives among some audiences. Again, provide an "out" call to action, to the Premium brand, in case that audience lands on your economy brand site.
Aside: I'm reminded of blank video tape sales in the 1990s. Sony used "Premium" as the sub-branding moniker for normal quality tapes. It went up to "Professional" and "Broadcast Grade" and some other non-sense BS terms. Those were sold in bulk, up to 20 tapes in a pack, for $1 each, while the better tapes were sold as singles or maybe in 3-packs for about $3-4 each. Other brands, like Maxell, used Bronze, Silver, Gold and several higher meaningless quality-sounding words. JVC and TDK used somewhat more obscure sub-brandings like SX and EX, or HSG and EHG -- which didn't help consumers. While JVC and TDK clearly made better tapes, the word "Premium" or "Gold" snagged more buyers. Sad, really.
Consider inserting the "premium quality" imagery into Brand1**, while focusing on the "economical" for Brand2. I've always known that your Brand1 was not budget priced, but that never bothered me, as it was truly a "premium quality" product and I felt the value was worth the extra cost. This is where counteractive marketing comes in ("why not to use cheap XXXXXX"), but that's a whole difference conversation.
** I've not checked the site yet, so maybe this is already in place? **
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We strategized that by multibranding we could skim both XXXXXX and XXXXXXXXX market groups simultaneously - while adding brand equity (XXXXXX2 brand) in the process.
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I like it. Indeed you can probably do this.
The only challenge is going to be age deference in SEO algorithms, as well as having to dual up the marketing for two main brands.
In fact, you may find Brand2 required more marketing than Brand1, so hopefully the profits margins will justify it. That's an issue when Product2/Brand2 is supposed to be the "cheaper" item. In fact, I think that's what may have led to some of the muddying of American auto brands through the 1990s. (That's a hypothesis level statement, which would require further review. So don't quote me!)
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My vision was to create 5 complementary brands that would be known as “XXXXXXXXX Group.”
They would include:
1. XXXXXXX1 – Premium XXXXXX
2. XXXXXXX3 – Enterprise Grade
3. XXXXXXX2 - Economy, Would later evolve into XXXXXXXX
4. XXXXXXX4 – XXXXXX would also act as a consultancy arm that would help ISV’s evolve
5. XXXXXXX5 – Budget XXXXXXXX with a 1 Plan Only pricing scheme. The logo, and design, have already been created. We are ready to launch this one immediately actually.
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This does somewhat change the conversation now. You're wanting to move to a corporate structure, and some of those business plans will clearly require separate sub operations to maintain. Multi branding becomes necessity at this point. However, you still want to minimize it. For example, Economy vs Budget -- to most people (myself included), this means the same thing. Of course, I've redacted the product differences.
In general, I'd suggest Budget(#5) could be part of the core #1, where Brand1/Premium is the self-labeled brand of the corporate entity. Then again, we get back to litmus test #1, where the new brand could harm the image of the main "premium" status of the main brand. So Brand5, a new brand, is a necessity.
Aside: This reminds me of GM trucks, the only General Motors product to really carry the "GM" branding. That's a product they really built their name on, and are very proud of. You're clearly not much different here, quite proud of your main brand (and I don't blame you -- it's good).
Looking over the list, I think you've done pretty good paring it down. Including the new product line from the above post, into Brand1, is wise. I don't see need for Brand6 there. Indeed, you've planned to add similar products into both Brand1 and Brand5. So you've actually increased your share for that type of product, by having both a premium and non-premium version available. Had you started a new Brand6, and wanted to offer both quality levels, you'd be at the drawing board again, trying to work out a way to not harm the upper end product by having them share a brand.
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I bought the name XXXXXXXXX while I was XXXXXXXX 3 years ago. The “XXXXX” centric branding’s been in discussion for a loooong time. And it can still work with XXXXXXX(Brand4) as it’s dissimilar enough to not confuse, yet complementary enough to make sense and reciprocate value between brands.
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I know that domain has been in "use" for a while now -- online but not really doing anything. That will help in the age-based SEO, so you won't be punished for the new domain. Won't help much, but won't be a disadvantage either, and that's what we're really going for.
I like this brand of yours. If I had to gamble, I'd bet on this one being the best of the "new" brands. I think there is a lot of growth in this sector. In time, I wonder if it will outpace the main brand, and due to the "centric" naming setup, thereby pass some prestige on to your current Brand1 (+group name) product? I've seen this.
In fact, I did it by accident once. Oops! Not a bad mistake. There was some new confusion created, however, which had to be countered by re-marketing the main brand up to the level of the popular one. But I digress...
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But as things have it, I think that a "Brand6" is wholly unnecessary. XXXXXX Group will make more sense if Brand1 is the obvious Group leader. Imagine a new brand is created for this “up and coming” XXXX business. If it takes off, then Brand1 may become redundant and play second fiddle. Then the whole vision falls on its face and becomes irrelevant.
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I tip my hat to you, in respect. Wise thought process!! Very good analysis.
Too many brands can just make a mess of things. It always comes back to X product and how it might harm X brand.
Aside (RE: harm) -- I'm reminded of Miramax, and it's R-rated movies, which was spun into it's own brand/company under Disney, to "keep the mouse safe". That is, until the usually-ignorant masses discovered the relation, which caused backlash. This is one case where the branding firewall failed. (But I would note that it did not "fail" as much as it was "overrun" by counter marketing by grass roots interests.)
"Too many brands" is always an issue after a merger, too, even when products are not identical. Bank of America, during the past 10 years, makes a great case study here. MBNA services, for example, did not necessarily overlap into BofA, but the MBNA brand carried some baggage that forced a rename. Indeed, similar products from BofA and MBNA eventually folded into a larger subsidiary brand that uses BofA branding on its products. (The entity is not BofA, but FIA, and that's not really important, just trivia bits for this conversation.) BofA could have kept two separate-but-similar products, had it wished. But that carries costs, both monetary and psychological. In the late 90s, BofA had quite a few brands, and those really have consolidated as time went on.
When internal and/or external audiences are confused between the differences in product lines (brands or sub-brands, everything that affects identity), then quite frankly you've screwed up. Again, GM and Ford come to mind.
Better stop before I get too complex.
Having flashbacks to my senior thesis from many, many years ago.
This is one of my favorite topics, and it's not often I get the chance to jabber on about it at length.
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It’s healthy to be flexible with long term marketing strategies in order to stay relevant. But it’s just as prudent to have faith in your instinct and push forward with your underlying corporate philosophy and culture. I’ll scrap the XXXXXXX brand, but the rest are definitely going to become reality.
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I think the keyword here is "corporate philosophy". While limiting brands is still prudent, the nature of such a multi-faceted business will require several brands -- especially if you're wanting strong growth in all sectors. And that appears to be the case. And I certainly wish you well in these endeavors. I've watched you grow from the early days.
Note that "corporate philosophy" also carries with it the understanding that all brands will share some sort of philosophy underlying the speciality. Again, going back to the Miramax/Disney example, they screwed up because R-rated movies was counter to the core beliefs of Disney (excluding profit - MONEY MONEY MONEY!)
What is the core philosophy of the group? Do you have one yet? (bolded due to importance!)
And then how does each brand fit into this vision? Imagine a puzzle. A basic one, 6 pieces, for an infant, not 100-500. Each piece should complement a bigger picture. Again, Miramax/Disney, which I consider to the fruits of an "allowed risk" interpretation from item #1 in the litmus test -- and it's the WRONG interpretation. You're firewalled (security with some traffic holes), not impenetrable (no traffic).
To some degree, growth is really a determining factor on new brands, too, and should probably have made the litmus test. I falsely assume this was going to remain a small/medium sized operation. When you're trying to grow into a multi-million/billion dollar operation, it can affect identity decisions. At some point, you don't want your "
Walmart section" of the company to be associated with the "Macy's section" of the company. Large growth also expects that each brand/company will have many product/sub-brands, so it won't look wimpy and sparse. There's still some prestige factor to consider, in terms of quantity. Nobody puts a dollar in an empty tip jar, but everybody gives to a near-full jar. If your company/brand looks mostly empty, people won't buy. Three brands with one product each is pointless, while three brands with 13 products each makes sense.
You seem to be more solid in your branding strategy than when we first talked. And your desire to maintain multiple domains can still play into that -- even if it's solely from a marketing stance. Not the BS crap blackhat type sites, but legitimate microsites that bolster products/sub-brands for those main brands you've created or are creating.
Your plan is sound, as far as I can tell. I'm assuming you've done your market research -- and based off comments you've made, I'm betting you have. For me, you're entering what I call the "fun part" -- creating all the creatives (logos, designs, slogans/taglines, etc).
It's a ton of work, no doubt. Been there, done that, have the t-shirts. Yet I always go back for more.
FINAL NOTE: This isn't my best writing here, especially after I made edits. Consider it a brain dump. My news editors would cringe.
And back to email...
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