ORGANICS by Red Bull – Great range wrong endorsement

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.

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Mercedes-Benz may drop its “EQ” branding

Mercedes-Benz is starting to solve its confusing portfolio.  Reuters reports that Mercedes is to drop the EQ product brand.

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.

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Do you want to wake up with a nice cup of Mars, Twix, or Milky Way coffee?

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.

The End of Facebook

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 – Father of Positioning passed away

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: wanna buy one?

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.

 

Birkenstock – from “sandals and shoes” to “sleep systems” (Part II)

Birkenstock makes moves outside the perceptual category of “comfortable and stylish quality sandals and shoes”  

I discussed the Birkenstock Natural Skin Care line extension in the previous post. After sharing it on LinkedIn, I learned from Ruben Lekkerkerker that Birkenstock had already extended into sleep systems.  

To recap: Birkenstock is known for its quality sandals and shoes, and Google confirms its strong positioning. Yet the company wants to be known for: sandals, shoes, socksbags, cosmetics (creams, cleansing, oils) and belts, mattresses, frames, beds, and pillows.

 

Birkenstock also saw the opportunity in sleep systems and connected the world of a Shoe with Sleeping. In their words:

“Taking a great idea one step further: Just like the original BIRKENSTOCK footbed, our anatomically designed sleep systems also adapt to the shape of your body. This enables our mattresses, slatted frames and beds to support and ease the strain on the human body in an ideal manner when lying – helping you sleep as comfortably as possible. Feel refreshed from tip to toe.”

If you think this sounds like any other sleeping systems brand, then you are right – it does. Great mattresses adapt to your body and all great sleeping systems help you sleep as comfortably as possible, so you can feel refreshed when it is time to wake up…   

The thinking inside the company must have something like this: we are known for our “anatomically shaped cork-latex footbed” – this is all about adapting. In which growing category can we extend this thinking? SLEEP SYSTEMS!

The question is: will consumers buy Sleep Systems from a high-quality shoe and sandal brand?

Turn it around, would people buy Shoes or Sandals from sleep systems brands like Tempur or Hästens because they have great nights of sleep?

I seriously doubt it.

The secondary problem with these many line extensions is that Birkenstock signals that they are not so serious about what the brand is known for: shoes and sandals. Shoes and sandals are now part of the many other things the brand does.

In other words: if you have to make a call on buying shoes and you can choose between a brand that is only designing, manufacturing and selling shoes or one that does shoes, skincare, bedding and more… which one would you pick? Most often, the specialist wins over the generalist.

The best path for Birkenstock would have been to do exactly what Google and Facebook recently did: sell products with different target audiences or purchase intensions under different brands. The product looks so great that it would be a shame if they do not succeed because of the position Birkenstock has in the mind of the buyer: Birkenstock = Shoe/Sandals.

Birkenstock sandals and shoes going natural skin care

Birkenstock stands for comfortable and stylish quality sandals and shoes. With Birkenstock Natural Skin Care, the company moves into a new category. 

Birkenstock is known for its quality sandals and shoes, using the legendary footbed, providing support and comfort since 1774. A quick search on Google confirms the strong positioning.

The brand is moving in many directions. Its 1774 line is taking a position in the luxury sandals and show segment. Birkenstock joined forces with, for example, Maison Valentino, “Dior by Birkenstock” (reread the last three words again…), and other high-end brands.

At the same time, the brand is moving into a new category with “Birkenstock Natural Skin Care

Birkenstock line extensions
Birkenstock line extension logos

 

While the 1774 product line is connects to the Birkenstock core, Natural Skin Care is an actual departure into a new category.

The product development team connected the world of sandals and shoes with skin care  using a cork cap on all-natural skin care products.

The question is: will consumers buy natural skin care products from a high-quality shoe and sandal brand?

Like any other professional company, Birkenstock has probably done all the research to answer the question with a firm Yes.

My experience is that consumers who purchase the core product are often asked whether they would buy the line extended products as well.

The answer is often Yes, simply because the people who were asked the question already like the core product. Never mix the intention to purchase with an actual purchase decision. People buying skin care products will do so in the context of the skin care category. Birkenstock competes with brands like SkinCeuticals, CeraVe, Kiehl’s, and Rituals. A tough one!

To answer whether Birkenstock Natural Skin Care will be a huge success inside the skincare category, we could turn the question around. Would Kiehl’s “Finest Apothecary Skincare” ever be a success as the finest shoe and sandal brand? I doubt it.

What Birkenstock could have done is to apply the Conquer strategy: growing a new brand in a new category. Using a new brand gives freedom to operate and grow into currently impossible areas. At the same time it is also easier to stop without harming the brand in the original category. The Birkenstock Natural Skin Care products look great on the paper – it would be a shame if they do not succeed because of the “wrong logo”.

The brand iPod is dead – the brand Apple lives on

Apple announced the end of iPod. It is not only the end of a well positioned brand, but also the end of the portable music player category.

 

In 2001 Apple launched the iPod. One look at the above advertisement made clear what the iPod brand was all about: a digital music player holding 1000 songs in your pocket. The advertisement combined a clear product image, brand name, and category benefit.

 

Strong brand

Consumers went en masse to the shops to buy iPods. Repeat: consumers went out to buy the iPod, not the Apple. For many it was in fact the first real encounter with the company Apple.

The advertisements were very consistent and therefore recognizable for consumers:

The portable music category got an enormous boost and iPod became very quickly the leading brand inside the category. In fact the brand iPod became synonymous with music player.

 

Changes inside the category

Inside the overall music category, the medium to enjoy music changed in the last decades. It went from CDs bought in record stores and played on CD players to digital music players (iPod) and digital music stores (iTunes). For years the iPod and iTunes brands made room for the smartphone and apps such as Spotify. Every change impacted the brands representing the category.

The shift from music players to phones impacted Apple, iPod and other electronic brands operating inside the ‘Portable Music Player’ category.

Companies only manufacturing & selling portable music players do not exist anymore in the same way Apple would not exist anymore if the company would only be active in portable music.

The change in medium and ultimately killing iPod does not harm Apple. Apple uses a Multi-Category Strategy with strong brands like iPhone in phones, Mac in computers. Unfortunately over the last years, Apple started using descriptively named line extensions. For example, the company bought the Beats streaming music service, merged it with iTunes, and renamed it to Apple Music. The company launched Apple TV and Apple Watch. Often the line extensions are inspired by the company leadership.

Line Extensions

The Multi-Category Strategy using descriptive line extensions make a lot of sense with the leadership team and shareholders. The thinking could go like this: ‘when we rename all our products Apple, then they contribute directly to the Apple brand, a key indicator for shareholders and investors.

The thinking goes wrong with the consumer. Unique names are so much easier to talk about and recommend.

‘I stream music using Beats on my iWatch’ is much better in terms of positioning and owning a unique category than ‘I stream music from Apple Music on my Apple Watch’. Consumers are likely to even remove the Apple brand in the conversation – the exact opposite Apple these days wants to achieve.

The success of the iPod and iPhone were instrumental to the success of the Apple brand. But too often, successful companies fall in love with the company name, forgetting that people buy brands and not companies.

 



This article is based on content in the book Win With What – the first category-led growth book for anyone who wants their business to thrive and survive.

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Segway – a brand that failed to take a position

Segway is a brand that failed to take a position and communicate clearly the What of the brand.

According to Wikipedia, Segway is ‘a two-wheeled, self-balancing personal transporter’ .  The problem is apparent: it is not possible to relate Segway to anything we know. Until a brand can be related to something people know, the brand keeps drifting in the brain – trying to find a category to ground itself.

Below is the hompage from March 2002. Segway is welcoming visitors to ” the evolution in mobility” without explaining What the  product is.

 

When diving into the “Segway HT” section the focus is on communication what the product does “Human Transporter” and the benefits “that functions like an extension of you”.  Also on this page it is still unclear what the Segway exactly is. Human Transporter comes close, but nobody would say “hey, can you get my human transporter?”

 

After almost 20 years of trying to convince people to buy a Segway, the company decided in June 2020 to stop making the product. FastCompany wrote, ‘Exclusive: Segway, the most hyped invention since the Macintosh, ends production’.

The expectations at launch were enormous :

‘Its inventor, Dean Kamen, famously predicted in a 2001 Time magazine interview that the Segway ‘will be to the car what the car was to the horse and buggy.’ In the same story, venture capitalist John Doerr predicted the company would be the fastest ever to reach $1 billion in sales.’

Unfortunately the company failed to create a clear need by explaining the What of Segway. Those who bought Segway would likely not refer to it as the ‘human transporter’, ‘personal transporter’, or the ‘two-wheeled self-balancing personal transporter’.

What Segway could have done is to stay closer to what people already knew and were familiar with at the time of launch. Explore a variation of the scooter category, promote the What and create a need by showing how people benefit from the new category and with that, the Segway.



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.

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