Virgin has extended to more categories than any other company. Does it do any good for the company?
The Entrepreneur Magazine did in June 2012 a special on Richard Branson, the founder of Virgin. The article opened up with the following:
‘Fueled by frustration with the status quo, Richard Branson built his Virgin Group empire attacking verticals that had long been dominated by lumbering legacy companies. Now he’s extending his entrepreneurial philosophies to a new market that’s out of this world.’
The extension referred to is Virgin Galactic, which aims to take people and satellites into space at ‘a fraction of the price it currently costs’.
The Virgin brand started as the label for a record shop founded in the 1970s. Currently, it operates in an extreme amount of categories. Virgin uses the simple Brand + Descriptor naming structure. The below list of extensions is directly from the Virgin Group website.
Entertainment: Virgin Racing, Virgin Bet, Virgin Books, Virgin Casino, Virgin Fest, Virgin Games, Virgin Megastore, Virgin Radio, Virgin Records
Health & Wellness: Virgin Active in Australia, Italy, Singapore, South Africa, Thailand and UK, Virgin Care, Virgin Pulse, Virgin Pure
Money: Virgin Money
Technology: Virgin Connect Virgin Media & Media Business, Virgin Media Ireland, Virgin Mobile Canada, Chile, Colombia, Poland, Saudi Arabia, and the United Arab Emirates, Virgin telco
People & Planet: Virgin Money Giving, Virgin Startup
With this enormous list of companies and categories, most people think the Virgin Empire must be doing exceptionally well. The reality is that the group reported a profit in 2019 of £60 million, up from £53 million in 2018.
Virgin proves that a healthy business with a narrowly focused brand and a dominant market share is much better than having 30+ extensions with very low market shares.
Like everything else, nothing remains the same forever. New categories are born, evolve, and eventually fade away. Every change in a category has an impact on the brands within it. In today’s AI-driven world, category changes are happening at a rapid pace. Are you prepared for a brand repositioning?
Category division
When categories split, the mindshare is distributed among subcategories. For instance, when the family car category split into hatchbacks, sedans, family SUVs, and family 4×4, the mindshare of brands spread across these new subcategories. Some subcategories may only appeal to car enthusiasts.
At times, categories become irrelevant. The phone category transitioned from analog cabled phones to mobile phones and finally to today’s smartphones. In each step, we witnessed a new leader emerge. Motorola, renowned for its analog cordless phones, introduced the StarTAC clamshell mobile phone in 1996. The StarTAC achieved massive success in the USA and featured in numerous Hollywood movies. However, it was Nokia that became globally synonymous with mobile phones. Nokia evolved the category by incorporating computer-like functions such as an address book, calendar, notes, and simple games.
New categories, new leaders
Nokia was the first to launch smartphones, although they still had keys and resembled traditional mobile phones. In 2007, Apple revolutionized the category with the launch of the iPhone, featuring a touch interface that marked a clear break from the mobile phone category. The iPhone kickstarted the modern smartphone category we know today, causing Nokia’s global dominance to fade away. Presently, the smartphone category hosts numerous brands like Huawei, Oppo, Xiaomi, and Nokia, but it remains primarily dominated by Apple and Samsung.
Evolution of the phone category
In the phone category, the leading brand was able to evolve into the next category but never retained its leadership position. This pattern is not unique to phones but applies to nearly any evolving category.
AI accelerates category changes
Today, any category that can be AI-powered will undergo transformation. The keyword to watch out for is Smart: smart cars, smart watches, smart photo editing, smart ordering systems, and more.
When the leap from the current product or services to the smart counterparts is perceived as significant, it opens the door for a complete category shakeup, often accompanied by the emergence of new brands. We have witnessed this in the phone industry (Nokia to Apple) and the automotive industry, where underlying technological changes have been emphasized (leading to Tesla/Polestar). Similar “smart” shakeups will occur in many categories we currently take for granted, ranging from healthcare devices to photo editing software and customer support solutions.
For brands to survive within categories heavily affected by AI (which includes almost every category!), it is crucial to manage the category and brand association effectively and navigate the perceptual change of the brand in relation to the category’s evolution.
In my book Win With What I provide numerous methods and tools to help brands stay on the growth path or regain their position in a changing landscape.
This article is from the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.
When publishing a book with the title “Win With What – How Smart Companies Thrive and Survive” it is only natural to compare to the well-known book “Start With Why – how great leaders inspire anyone to take action” by Simon Sinek. In this post I explain why both approaches are needed in any successful business: you start with why to win with what.
Start With Why
Sinek’s core idea is that by taking an inside-out approach, a company is much more effective in reaching its goals because employees are rallied around a shared belief. To inspire people to take action starts by giving a reason, the Why, and this is the reason the Why is at the core of the Golden Circle.
The Golden Circle (Simon Sinek)
A purposeful Why helps flow energy in the same direction – from How a company works, behaves, communicates and decides, to What is sold in terms of products and services.
Win With What
Without knowing the What, people will never experience the How or understand the Why. That is why the What is the outside layer of Sinek’s Golden Circle. Before getting interested, building desire, or making a purchase we must first know What the company, brand or product is.
When purchasing products or services, buyers take an outside-in or category-led approach.
Win With What advocates category-led growth because with a clearly defined What anyone can find, buy and promote a brand.
This article is from the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.
The category comes first and the brand second. Once buyers understand the category and desire the products or services, they will look for credible brands. In this blogpost, four important aspects of brand building in the market are discussed.
1. Get a follower
In the TED talk How to start a movement Derek Sivers shows how to create demand for a category in real life. He features a video of a guy dancing in a park full of people. At some point, the dancing guy gets a follower, and a movement starts to form. Sivers says:
‘It is the first follower that transforms a lone nut into a leader. The second follower is a turning point: it’s proof the first has done well. Now it’s not a lone nut, and it’s not two nuts. Three is a crowd, and a crowd is news. Everyone needs to see the followers because new followers emulate followers — not the leader.’
Brands need to go through the same process, growing desire for their category and connecting their brand to it. The dancing guy was not promoting himself. He did not do any advertisements. He just performed the act of dancing and got people interested. Successful brands promote their exciting category (the What of the brand) to get followers. Once people realize how it benefits and affect them positively the brand becomes an easier purchase.
2. Get people interested using the Stadium Pitch
An effective way to build a brand is by educating people about the category and using the brand as a prime example. The late Chet Holmes called this the Stadium Pitch. The idea is that a brand can take the stage with an audience that can leave at any moment. The purpose is to grab anyone’s attention and keep them as long as possible inside the stadium.
An ineffective Stadium Pitch would be something like ‘The top five reasons why you should buy my organic juice’. Probably only a few people are at the moment of pitching really interested in organic juice with an empty stadium as a result.
A much more effective Stadium Pitch starts by building the overall category and then slowly narrowing down to the category (the What) and finally the brand. An effective opening would be ‘The top five effective ways to improve your health right now’. The first way to improve health will have nothing to do with the organic juices the brand is selling. Towards the last step, the audience can relate the concept of Health with Organic juices, and the brand can start promoting the category. All the critical criteria for healthy organic juices can be reviewed. Of course, the brand fulfills all of them and many more! The presenter was a category educator and became a salesperson only in the very last step.
3. Get other people to talk about your brand
One of the best ways to promote the category and the brand is to have other people write or talk about it. When people read, hear, or see about categories and brands on trusted blogs, video channels, or review sites, they are more inclined to explore further. Credible voices in the Earned channel are required in building the category and attaching the brand to it. Established brands require a continuous stream of substantially new products, features, or stories to keep the Earned media interested. Without anything new, a brand becomes old news fast.
The brands’ Own channels are essential. Think of the brands’ social media accounts, website, and blogs. In the Own channels, it is also about creating a desire for the category/ the What. Research firm Nielsen published for years the report ‘Global Trust in Advertising’16. Every year, the most trusted type of ‘advertising’ is recommendations from friends and family. The second place is the brands’ website underlining that people do not expect a company or brand to lie on their own site.
Advertisements lack the credible voices of the Earned channel. The brand speaks in the Bought channel. People have learned how to read, watch or listen to advertisements. Contrary to what companies think, advertisements are not ranked high in trust. In the Gallup annual figures of the image of professions ranked by honesty and ethics, Advertising practitioners are at the bottom together with members of Congress and car salespeople.
Gallup Honesty and Ethics ranking – January 2020
The role of the Bought advertising channel should be to maintain or defend an already established position inside a category. Advertising should reinforce the unique What, the product, and benefits. Refrain from the fluffy ‘feel good’ commercials as these do not reinforce the position of the brand in de minds of people.
4. Keep excitement and interest high
Every brand has the task of keeping the excitement and interest in the category high. The excitement in the category will benefit every brand inside the category, relative to the market and mind share each brand has. The more the category remains on the radar of potential buyers, the more people will eventually convert and make a purchase.
This article is from the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.
Red Bull is the best-known energy drink globally. In 2019 Red Bull sold a stunning 7.9 billion cans. In a search for growth markets, the Red Bull company found the market for all-natural organic sodas. ‘ORGANICS by Red Bull’ stands for everything Red Bull is not: all-natural.
The Red Bull slogan ‘Red Bull gives you wings’ summarizes the brand very well. To get the drinker energized, Red Bull contains four key ingredients: caffeine, taurine, B-group vitamins, and sugars.
The brand has organized itself around the Energy Drinks category by connecting itself with high-energy sports, like Formula 1 and Football clubs. The brand is engaged in events like the Red Bull Stratos, where the Austrian skydiver Felix Baumgartner performed a free fall from approximately 39 kilometers / 24 miles above the Earth. Red Bull gives you wings.
In a search for growth markets, the Red Bull company found the market for natural products. In 2008 Red Bull introduced to several countries an all-natural Cola containing just natural flavoring and caffeine. The issue is not the category or product but the name. Red Bull Cola is Red Bull and Red Bull = Energy Drinks that are anything but all-natural. Red Bull Cola did not go well. In late 2011 Red Bull decided to only sell Cola in Austria and Germany with limited availability outside these core markets.
Once a company has identified a growth market, it will try to find a way to take the opportunity, even more, when the current business is going well. Red Bull decided to take another chance by introducing the new label ‘ORGANICS by Red Bull’ and expanding the all-natural range of sodas.
ORGANICS by Red Bull stands for everything Red Bull is not:
ORGANICS by Red Bull are made with ingredients from natural sources and are certified organic in accordance with the USDA National Organic Program.
Four Distinctive Varieties. Organic Sodas, Not Energy Drinks.
ORGANICS by Red Bull do not contain artificial flavors, colors, preservatives, GMOs, or other artificial ingredients. The end result is four distinct, great-tasting, and refreshing organic sodas made for your enjoyment.
It is clear that the perception problem remains:
Q: Are the new ORGANICS by Red Bull products energy drinks?
A: The new ORGANICS by Red Bull products are not energy drinks; they are lightly carbonated, organic soft drinks with a distinctive taste.
Unfortunately, the faith of ORGANICS by Red Bull will be similar to the fate of Red Bull Cola. In the mind of consumers, Red Bull = Energy Drinks. Nothing else. It is clear that Red Bull GmbH wants to succeed in the all-natural organic soda category. Success and growth are possible, but the What (Organic sodas) requires association with a different brand name and company name – removing all connections to Red Bull or Red Bull GmbH.
This article is from the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.
The Mercedes-Benz portfolio is confusing as I detailed in a previous post in Oct 2021. One of the most striking examples of bad portfolio branding and execution is the Mercedes-EQ product branding for all-electric cars.
“EQS by Mercedes-EQ”
There is so much wrong with that sentence. The car EQS is a model by Mercedes-Benz, not by the Mercedes-EQ model family. And of course, in the Mercedes-Benz context, there is no need to repeat the company brand at all.
A much better solution would have been “New era: the EQ line for all-electric”.
Mercedes-Benz took (I guess) the internal organizational division between Gasoline and EV very seriously and launched an entirely new line of cars, even though in terms of actual car type/categories (SUV, limousine etc) the electric cars are the same as the combustion engine car brothers and sisters.
The combustion engine B on the left, the electric on the right. Same category, same design but a different name.
A much better solution would have been to just use the EQ moniker to indicate the EV variant, similar to the fully descriptive “Plug-in Hybrid” to indicate the hybrid variant.
All Electric
The removal of EQ as a complete product line might take some time:
“The decision is based on Chief Executive Ola Kaellenius’ focus on electric-only cars, making the EQ brand redundant as Mercedes turns away from the combustion engine, Handelsblatt cited the sources as saying.”
In other words: Mercedes-Benz is not really intending to provide portfolio clarity or remove the EQ as a separate line. The company is simply replacing all combustion engine cars with fully electric cars.
The executed Switch Strategy does not come without risk. It is all about the ‘old’ gasoline car brands versus the ‘new’ electric car brands in a category shift. To compete in electric, Mercedes-Benz will need to be more convincing in the buyer’s mind than the perceived leader in electric. This means that when a consumer is in the market for an electric luxury SUV, the Tesla Model X has the leadership perception in terms of technology over the Mercedes-Benz GLC EQ.
Mercedes-Benz could have followed the Conquer Strategy, usually the safest and cleanest route to execute the company’s transition into a new category.
Read more about the Conquer and Switch Strategy in the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.
The golden rule of branding is simple: extend your business, not your brand. Say hello to brand extensions gone crazy, and meet the Mars, Twix, and Milky Way coffee capsules.
Recently I walked into an XXL version of the Dutch supermarket chain Albert Heijn. It is always interesting to see what products are sold in these bigger supermarkets.
In the coffee section, I noticed immediately the candy bar coffee cups. They were hard to miss, conveniently positioned at eye height.
When expanding the business there is a natural tension between brand owners and brands. Brand owners love their brands and find it natural to extend them into new and different categories. Brands, on the other hand, want to stay focused and become the leader of their category. Brands are right. Think about football players for a moment. Have you ever seen a premium league football player and gymnastic athlete in the same person? Of course not. Sports managers would not even consider their athletes to focus on many sports at the same time. They do not even remotely believe ‘their’ athlete might become leading in both fields.
The same goes for brands people buy. When a know or leading candy bar brand sells coffee cups, does that make them a leader in coffee? Not for those who care about coffee! In their minds, the quality of the focused brand is always better. The thinking goes, ‘if they only do that, the brand must be good’.
Mars and many other candy bar brands love to explore line extensions, probably from the believe that it is good to have consumers to engage with the brand at many different points of sale, functioning as a reminder for the real deal (the candy bar). It seems to me though that while that might be working it cannot be that buyers take a known Candy bar brands serious in coffee. In the same way chocolate bars of the “Hawaii Premium Kona Coffee Company” would not be taken serious by candy bar lovers either.
My advice is simple: keep your brand focused within the category it is known for. Any side steps will cost money, which needs to be balanced carefully against the value of the brand reminder. In other words: what is the loss in revenue for Mars candy bars if there are no Mars coffee cups at all.
Now I do have a question: who has purchased “Candy Bar” Coffee? Or other products like chocolade drinks, ice creams? Please leave your thoughts in the comments.
Meta is running the last leg of its once so-popular social media platform Facebook: Facebook is on its way out.
In 2013 the Facebook CFO already warned of upcoming problems in the Q3 2013 earnings call “We did see a decrease in daily users partly among younger teens. … This is of questionable significance.”
In 2015 I concluded that Facebook, the brand leader of the extensive category social network, will eventually face issues with focused brands taking small bites out of the big pie and capturing users from the leader (link).
The combination of brand decline with the youth (= looking for another brand than Facebook) and new brands coming in (Snapchat, Insta, TikTok, and many more) eventually will lead to the end of Facebook. Facebook is not attracting the youth and grows along with the old.
In 2018 while teaching second-year students, I learned that the Facebook issues were more significant than I had thought: a few of the100 students used Facebook very specifically to browse posts. They did not post anything themselves.
Recently I decided to recheck the Facebook status with a large group of students. The trend has only gotten worse: Facebook is hardly in use with the group <25 years – not even to browse posts.
The generalist category “social network” is disappearing; with it, the brand Facebook will eventually disappear.
The company’s rebranding from Facebook to Meta was a vital move. Under Meta, each product brand can flourish without a link to the fading Facebook brand.
Al Ries – the father of positioning, passed away at home peacefully at the age of 95. The books and lectures by Al and his daughter Laura Ries continue to be my source of inspiration.
I remember the first time I read the book Positioning – the battle for the Mind. The book describes an approach to creating a “position” in the consumer’s mind reflecting the brand’s strengths and weaknesses and those of its competitors. I was blown away by the simplicity.
I immediately purchased all the other books Al Ries wrote – they are all masterpieces and written in a distinct humorous way. Al also wrote great articles for AdAge. Reading was not enough; I watched most of his recorded speeches thanks to YouTube. While the core thinking of Al – positioning for the mind using categories- always comes through, I never got bored by his analysis.
Needless to say: Al Ries became my source of inspiration, and in 2020, I finally decided to thank him personally. I told him a personal story about Nokia – the company I worked for when first encountered the books of Al Ries.
To my great surprise and happiness, Al responded to me (fanboy moment!)
Dear Michiel: Thanks for your kind words and the Nokia story. We keep promoting the same thing. A new category, like the smartphone, demands a new brand name like the iPhone. Look at the electric vehicle business which Tesla dominates. Yet every major automobile company in the world did the same thing as Nokia when the iPhone was launched. They introduced electric vehicles with their existing brand names. All the best. Al
I end this post the same way I ended my message to Al: Thank you Al for all your insights, lessons, and clear & crisp analysis.
Mercedes-Benz Perfumes was launched in 2012 as “the new star of the perfume world”. Ten years later, the product line is still around.
The Mercedes-Benz Perfumes product line is according to Mercedes-Benz an obvious product range expansion because defined style and exquisite design are central to Mercedes-Benz as a leader within the design industry worldwide.
Design and style are not only essential ingredients for the world of luxury cars, it is a natural step to extend this expertise into other luxury categories.”
Creating luxury products beyond the cars has been a natural evolution, starting with Mercedes-Benz eyewear, leather accessories and other luxury goods. In recent years, the brand has naturally gained visibility and credibility in the most exciting, joyful and vibrant industry: fashion.
The Mercedes-Benz Perfumes are available for Him, Her and Home. The parfum product line follows eyewear, leather accessories and other “luxury goods”.
The idea behind launching all these extensions is of course that Mercedes-Benz owners would finally have an all-encompassing Mercedes-Benz lifestyle. Drink coffee in a Mercedes-Benz cup, spray some Mercedes-Benz perfume, leave home in a Mercedes-Benz Bodywarmer, drive in the Mercedes-Benz, call with an iPhone covered in a nice Mercedes-Benz cover and when it rains use the Mercedes-Benz umbrella. This is the Mercedes-Benz life.
The question is who is living the encompassing Mercedes-Benz brand life? And who wants to live life like this?
Still the Instagram account of the Mercedes Benz Parfums has 46.8K followers, not a lot compared to the fashion brands. The Facebook page has 1.36M followers and almost the same amount of likes.
Mercedes-Benz in a tax free shop
I cannot help thinking that this conversation feels weird for anyone linking the brand Mercedes-Benz with cars “Hey want kind of perfume are you wearing?” “Mercedes-Benz”.
And the reaction to the above question is the key to success: when buyers have a strong connection with the Mercedes Benz brand as a car, it will be much harder to accept the brand in another category. When there is no strong connection, the brand can be accepted in parfums.
An example of a brand like in the case of Caterpillar, the brand for tough equipment and shoes.
Most Cat work boots buyers are not Caterpillar equipment users. They might not even know at all that Caterpillar is heavy duty trucks. And when buyers somehow know that the brand has something to do with toughness then that is exactly the right connotation. On top of that: Caterpillar did something smart to distinct: in work boots the brand uses a different logo “Cat”.
Being successful in multiple categories with the same or similar brand is a careful balance of managing buyer perception. Usually this is easier and much more successful when the categories are perceived to be more distant, like in the Caterpillar case.
No-nonsense brand bites since 2009
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
