Tuesday, April 06, 2004

Brand week question #2 . . .

. . . What factors do you consider when deciding to create a new brand within an existing business?

Before answering, one of the examples that A Penny For . . . uses in this second question post is -Ted, United's low-cost arm. I followed a little bit of the marketing campaign that -Ted did in Colorado -- it involved advertising that asked "Who is -Ted?" Some of this was handed out by gentlemen on Segway scooters on the pedestrian mall, some of it ran on scoreboards at Avalanche and Nuggets games, some of it was included in newspapers, etc. People in Colorado were pretty excited an intrigued by this ad campaign and there was a lot of free media coverage for the campaign. What happened? Frontier still seems to be the low-cost carrier of choice in Colorado. I am a United frequent flier member and I have been getting lots of e-mails regarding -Ted. I never opted into receiving -Ted information, so I know United is using their database to send me these e-mails -- end result: there is no difference in my eyes between United and -Ted. If I want to fly a low-cost carrier, I would still choose Frontier because of the new planes, comfortable, seats, legroom, DirecTv. If I want to fly Business Class or First Class, I would still fly United and use my miles to upgrade or fly for free.

Ok, so this particular example seems to teach that there needs to be a true separation between the existing brand and the new brand. It would seem to me that easiest way to do that is to simply create another company (it can be wholly-owned by the parent) and not necessarily advertise it as being part of the same company -- do you really want to hear that the Kraft cheese your kids eat and the Marlboro cigarettes you don't want them to smoke are part of the same corporation? While I get why Altria may have decided to let the world in on the fact that they were parent to these two diametrically opposed brands, I think it was a poor long-term strategic move.

Take a look at Sony. When I say Sony, do you think Playstation? When I say Playstation, do you think Sony? Sony has done an excellent job spinning Playstation into its own brand by almost making Playstation a company separate from the parent. However, Sony did use its Sony brand pull to launch the Playstation product in order to enable the brand to stand on its own. It is important to note that Sony very quickly began to phase the Sony brand out of the picture once the Playstation brand had developed significant momentum.

Ok, so here's my short answer:

Clearly separate the newly developed brand from the existing brand. Do it by creating an entirely separate company/division. If you absolutely must use the parent brand to launchpad the new brand, quickly develop a unique identity for the new brand a phase the existing one out as soon as possible. It is not always the best idea to educate consumers in brand relations or parent companies. The driving decision factor is going to be the perception of the consumer.

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