Business growth is a risky thing, particularly if that growth takes you off your home turf. If your growth activities simply involve doing more of what you already do (market penetration), then the risk is much less than launching new products, entering new markets or diversifying. These levels of risk are illus- trated in Figure 9.1, the Ansoff Matrix. The percentage figures indicate the comparative like- lihood of success for each strategy.
Risk is necessary in business, but managed risk is usually best, and brands provide an excellent means of managing the risks involved in growth strategies beyond market penetration. A successful brand can act like a protective halo to be put around the more risky of your growth activities. It can also lead you into foolish and lazy actions – relying on the halo effectcan work for good or ill.
The brand halo can reduce the risks of growth, but be sure you know what you aim to grow – the brand, or the business?
New product development
The hugely successful launch of the Mars ice cream bar created an entirely new market worth millions, but that success was due to the healthy existence and protective halo of the original Mars Bar brand.
Would the launch of a Tunnock’s ice cream bar (Tunnock’s is a thoroughly splendid but rather low profile chocolate wafer biscuit) have made as big a splash?
Each time Kellogg’s launches a new breakfast cereal, it rides in on the back of its Kellogg’s name, acting as a ‘validated identity brand’ (see Chapter 13) and providing a protective halo. The new trial rate by consumers is guaranteed to be higher because of the Kellogg’s name, and the chance of getting it on to the supermarket shelf is increased (though never assured).
While FMCG and retail may provide the high profile examples, it is perhaps in the B2B and
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Understanding risk: the Ansoff Matrix
products
penetration new product development
market extension
diversification exist
new
exist new
65%
45% 15%
30%
markets
Figure 9.1 Understanding risk: the Ansoff Matrix
industrial branding area that the halo effect can be of greatest value. Launching new products is hard work if it relies principally on a physical sales effort rather than a high profile media campaign. Getting the customer to give you the time to present your ideas is not easy, even if they are a regular contact – today’s emergencies tend to squeeze out discus- sions on tomorrow’s opportunities. A strong brand doesn’t guarantee a hearing, but it makes it more likely, and broadens the base of those who might want to hear. So often in B2B relationships it is the breadth of contacts that is vital to success and the brand halo can help you to extend your reach.
Diversifying for growth
Virgin
Almost every step along Virgin’s growth path has been diversifi- cation – from record label to airline, to hotelier, to cola producer, to financial services provider, to train company, and so it goes on. Virgin is very clear what it must do to reduce the enormous risks inherent in these ventures. It conducts more market research than most businesses would think necessary, it makes use of expert partners, in particular its suppliers, and it makes full use of the Virgin brand halo. Its ability to transfer the values behind the brand name to each of its diversified ventures is a role model for any company seeking to use a corporate brand to support and manage the risk of an ambitious growth strategy (see Chapter 13).
Diversifying to escape decline
A rather more challenging use of a brand is seen when a business chooses to diversify in order to escape decline.
Rather than making Ansoff’s predictions seem very pessimistic, Virgin’s success demonstrates the value of the brand halo
Marlboro
Philip Morris, owner of the Marlboro brand, envisages a slow decline of that brand as a result of increasing restrictions on tobacco advertising. This is not a situation that it is about to take lying down, not least because the brand is one of its most important assets, valued at $23 billion. Plans under consider- ation include diversification into hotels and leisure, under the Marlboro brand. It hopes that the halo effect will ease its path into this highly competitive market. But there are some mighty big challenges. Can the Marlboro brand values be translated to a hotel? Presumably guests will still be urged not to smoke in bed? Might it be that this particular brand halo will prove to be an obstacle rather than an assistance? Some argue that a better use of its assets would be to milk Marlboro as it declines and invest the funds in growth strategies for other established brands in the portfolio, such as Kraft or Miller.
Entering new markets
This is fertile ground for horror stories, particularly where brand managers have an over-inflated conception of the power of their brand halo, or are just plain lazy.
Ben and Jerry’s
Ben and Jerry’s ice cream was a phenomenal success in the United States with its quirky mix of showmanship, fun, local referencing, entrepreneurial spirit and social conscience, a formula and definition that meant very little when the brand was launched in the United Kingdom. Not only did UK consumers care little for the plight of Vermont dairy farmers (the brand’s support of this beleaguered group in the United States won it a warm following), but few of them got the jokes behind ice cream names such as Cherry Garcia.
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Brand halos work only if brand names can be transferred – a challenging time for Marlboro
Supposed brand halos can lead to laziness – the UK launch of a US
phenomenon, Ben and Jerry’s
Imagining that you have a protective brand halo when either nobody has heard of you, or is confused by your brand definition, or has a different conception of what it stands for, can be an arresting experience.