“Concept-brands” can straddle market, industry and competitive changes

Some years ago I started observing what I would call “concept-brands” (as I called it at the time) emerging. It was interesting for me to see that whilst certain brands found it “easy” to stretch into many product or service categories, most brands found it very difficult to do. In fact, there are many brands that failed in their attempts to do it. Even when they did most brands did not succeed in becoming as successful in subsequent product or service categories than they were in their original categories.

A “concept-brand” is a brand that is able to straddle a given product or service category because the “meaning” contained in the brand name is greater than any given product or service. The concept of “brand positioning” is about attaining a meaning in the minds of consumers that is unique (a given brand name = a given meaning). This meaning is mostly category related (i.e. Toyota makes good quality cars that are reliable). A concept-brand refers to meaning that straddles a given category (i.e. Virgin means greater value of money for the consumer, regardless of the product or service offered under that name).

Concept-brands are thus able to naturally “stretch” beyond a given product or service category, something that is important in an era where brand proliferation is high and brand communications at a global level have become prohibitively expensive. To launch a new brand is very expensive as the barriers-to-entry are high. Moreover, most product or service categories are already “taken”, meaning that a specific brand already dominates perceptions and usage. This makes it even more difficult for a new entrant to become successful.

Amidst the abovementioned circumstances, to be able to stretch a well established brand holds enormous benefits for a brand owner. If this name can be used across categories, it makes it more economical than to create another name for each category.

Many years ago, Theodore Levitt wrote about the dangers of defining your product or service category too narrowly by using the American railroads as an example (creating the now famous term he called “Marketing Myopia”). The US railroad industry narrowly saw themselves as only railroad companies, not as being in the transport business. This meant it could not adapt to changes in the needs of consumers and to the entry of new competitors. This seriously undermined their stature and profitability.

Many companies are constrained because they have conservative and non-visionary managements, yet as many are constrained because their brands are too narrowly defined.

There are many companies that are defining themselves narrowly – most telecommunications companies are still largely conduits (or pipelines) for content, albeit voice or data, that whilst many other industries around it are encroaching into their space (i.e. media, entertainment, search engines, social media sites, RIM). Are they defining their competitive space too narrowly? The same can be said for the banking and life insurance industries – many companies offer products that are encroaching into their territories, from investment banks to mobile phone companies. As Gary Hamel said, 90% of what one now has to know to foresee the future within your company will come from outside of your industry.

That irony is that most consumers are not that finite about how they satisfy their needs, they will use a combination of brands that satisfy their needs, regardless of the specific boundaries between them. They often look across boundaries - just comparing financial services we know that the product usage of consumers grew across different brands because existing brands were not satisfying all their needs.

A “concept-brand” is where the meaning contained in a brand is greater than any given product or service that is delivered under that brand name. A concept-brand is the ultimate brand differentiator, it gives an advantage to any product or service, even when other brands

are strong in a category, a concept brand will attain a certain degree of traction based upon its uniqueness or “set of meanings”. Whilst Red Bull is known to be the first serious brand of energy drinks, its strong attitudinal meaning as a brand has now enabled it to “stretch” into other product categories like telecommunications. Red Bull for instance used extreme sports to expand its meaning for consumers. Swarovski was known for making small crystal ornaments fifteen years ago, today it covers numerous product categories like cameras, jewellery, fashion, furniture, lighting, handbags and many other fashion and related items. Swarovski defined its business domain as its ability to make crystals of superb quality, and used that as the basis to drive its product expansion. It did not use the small category of crystal ornaments as defining it. By using the “Keep Walking” creative concept, Johnny Walker is extending its meaning as a brand, which means that it can potentially stretch into other categories should it wish to do so.

To understand the inherent meaning that can enable a brand to straddle categories takes hard work. It will most likely require a “lateral leap” of meaning. Some brands will never be able to do it, yet others can. It starts with knowing what the brand means, and how far it can stretch within its current meaning. Then one has to consider how this meaning can be extended. Sometimes it can, often it cannot.

It is easier for Apple to sell mobile phones under its name than it is for Nokia to sell computers under its name. The difference does not lie in the names themselves, but in the attitudinal associations contained within a given name.

In The Economist of 11th June 2011, it is asked why IBM has been able to be so successful for so long in an industry as fast moving as information technology. The article states that IBM has been as successful because it is built around an idea that straddles any particular product or technology. It packages technology for use by companies, in the respect, it has moved from punch-card tabulators, to magnetic tape systems, to mainframes, to personal computers, to services – and more recently consulting. It was able to do that because the company was built around an idea (concept) rather than a specific technology. This is the same principle that I call “concept-brands”. IBM is 100 years old now - simple logic will tell us that if it defined itself too narrowly, it would have been out of business a long time ago.

The other obvious example is Apple, it generates and packages technology in a way that make it easy to use, easy to understand and great to look at. In the process, it changed its name from Apple Computer to Apple Inc, signifying the move towards non-computer electronic goods. It has done this in the computer industry, mobile handsets, tablet computers and personal music systems. Because the meaning of the name is contained in a philosophy, rather than a product category, Apple is able to stretch into many categories. In South Africa, Discovery started as a medical aid company, yet its unique philosophy about how it treats risk, enables it to straddle other categories.

Creating meaning is largely what branding is about. In a complex brand world, concept- brands hold great potential.