Category Archives: Portfolio

Naming, Portfolio, Positioning

ORGANICS by Red Bull – Great range wrong endorsement

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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.

Get your preview at WinWithWhat.com

 

 

Brand Strategy, Portfolio, Positioning

Mercedes-Benz may drop its “EQ” branding

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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.

Get your preview at WinWithWhat.com

 

Brand Strategy, Portfolio, Positioning

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

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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.

Brand Promise, Brand Strategy, Perception, Portfolio, Positioning

The End of Facebook

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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.  

Portfolio

Mercedes-Benz Perfumes: wanna buy one?

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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.

 

Brand Promise, Brand Strategy, Perception, Portfolio

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

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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, socks, bags, 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.

Brand Promise, Brand Strategy, Perception, Portfolio

Birkenstock sandals and shoes going natural skin care

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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”.

Brand Strategy, Portfolio

Apple is finally back at its core with the all-new Mac Studio and Studio Display

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Over the years Apple lost its touch with the creative sector. The Mac Pro got very little attention and hardly any updates. The iMac Pro came and vanished again.  But now Apple is back with the Mac Studio.

The launch of the Studio was about time.  In 1997 Steve Jobs returned to Apple and launched the Think Different campaign. The campaign was the start of the reintroduction of Apple and linked the company brand to a new computer category: the computer for creatives.

Between 1997 to 2002, Apple told buyers of PCs that a better and more exciting alternative was required next to the IBM PCs. The reason? If every human did the same, using the same tools, the outcome would be similar, and society would not progress.

To support establishing the new category, Apple featured and promoted the creative ideas of people like Alfred Hitchcock, Pablo Picasso, Mahatma Gandhi, and Thomas Edison in ads.

The company established the need for the computer for creatives and successfully linked it to the brand Apple. The Apple company and Apple products became known for products optimized for the creatives of our time. Apple computers quickly found their way into marketing, creative agencies, DTPers, designers, musicians, writers, and anyone who aspired to be creative. Apple linked the brand to those who shape business, science, or society.

After the successful linking Apple with the creative sector the company got very sluggish in serving the creative crowd.

The release dates of the Mac Pro (a product made for the PROs!) tell it all:
2006 – First generation
2013 – Second generation
2019 – Third generation

The iMac Pro did not even get pass one generation.

Any Studio owner must have been thinking many times to switch to powerful Intel and Windows machines!

Till now: The Mac Studio is the answer to the creatives. Even the name indicates where the product will be used: in the Studio.

Brand Strategy, Portfolio, Positioning

Facebook going Meta(verse)

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Facebook is making a smart move – rebranding the corporate brand to Meta, linking itself directly to Metaverse  while allowing each of the product brands to flourish.

 

Facebook follows the strategy of Alphabet Inc. Back in 2015, Google implemented the critical principle of brand building: expand your business, not your brand. Google Inc changed its corporate brand from Google to Alphabet – to undo the Google link: “the whole point is that Alphabet companies should have independence and develop their own brands.”

Facebook Company was struggling in a similar way, because of the direct link with Facebook the product. The company even made the mistake to bring the company brand Facebook into the UI of Instagram and WhatsApp. Visually showing the Facebook brand impacted clarity of all brands involved- imagine the screens with ‘From Microsoft’ or ‘From Google’.

 

Not only did the clarity of Instagram and WhatsApp start to dilute, but also that of Facebook and Facebook Company. If a brand tries to be everything to everybody, it will ultimately become nothing to no one.

So on the 28th of October 2021, Facebook “did an Alphabet” – and changed the company name from Facebook Company to Meta. A brilliant move and name. By disconnecting the Company from Facebook it gives all products room to expand.  The Meta products:

The name Meta is directly linked to Metaverse – the virtual reality-based successor to the Internet. Perceptually Meta and Metaverse might become the same.

“Metaverse was originally coined in Neal Stephenson’s 1992 science fiction novel Snow Crash, where humans, as avatars, interact with each other and software agents, in a three-dimensional virtual space that uses the metaphor of the real world. Stephenson used the term to describe a virtual reality-based successor to the Internet.” (wikipedia)

 

Under the new corporate brand Meta the company can align all product brands and efforts under the strong mission “help to bring the metaverse to life“. The mission can now be executed with focus and without diluting the Facebook product brand or the other product brands.

 

Portfolio

Mercedes-Benz transitioning to electric

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Mercedes-Benz moves into electric using the ‘half-pregnant’ EQ sub-brand approach. The company misses  the point that buyers first and foremost need portfolio clarity.

Whenever there are ground-breaking developments, the incumbent businesses need to watch out. Category shifting breakthroughs are most of the time developed by new companies. They can be so impactful that complete new categories are established and make today’s brands look old and obsolete. Bad news for existing brands!

In the past, we saw it was Nokia versus iPhone, and today it is in the car business Tesla versus the rest. It was not Mercedes-Benz who established the new electric car category globally – it was Tesla. Interestingly, it was Karl Benz who invented the first gas-powered automobile already in 1886. Quite a few years later, in 1901, the Daimler Motors Corporation began selling cars.

Often when a category shift happens, and your brand represents or is a significant player in the old category, the brand will eventually follow the faith of the category. As a brand owner, you need to do everything you can to prevent a downfall.

At Mercedes-Benz, they saw the change to electric coming as well. The company was clearly not ready, and it took time to adapt. For the company, it was vital to continue selling the old gasoline cars to not go out of business. The ‘half pregnant’ business strategy translates directly to the product portfolio strategy. The current Mercedes-Benz portfolio visualizes a company in transition, and it is far from the Mercedez-Benz slogan “The Best or Nothing.”

Look at the entire portfolio as presented on https://www.mercedes-benz.com/en/ and ask yourself:

    • what is the car type? (small family, business, SUV, etc.)
    • what is the ranking of the car inside the overall portfolio (good, better, best)
    • what are the electric cars
    • what do all the letters and combinations of letters mean?

None of it is clear.

Unclear portfolio

 

To make things worse, Mercedes-Benz applied a strange form of sub & endorsed branding with the electric range.

Headlines in car magazines said “Mercedes-Benz’s EQ Sub-Brand Aims to Launch a New Electric Model Every Year” (Car and Driver in 2016) or just as recently as 14 Oct 2021 “Mercedes EQ subbrand to launch in U.S. with electric variant of S-Class sedan” (Automotive News).

What happened at the marketing department at the Mercedes-Benz headquarters? A sub-brand, really? Master-brands and sub-brands are all marketing talk, and they do not exist in the buyer’s mind. People are not shopping for sub-brands or master-brands. They shop for brands and might look for a product within a range.

The basic rule is that people think and buy in the following order:

Brand -> Product range -> Model
not Brand –> Brand -> Product range or Model

It is Mercedes-Benz (brand) -> EQ (range) -> Model
and not ‘Model by Range’ as the Mercedes-Benz Me Lifestyle magazine wants the reader to believe.

So what could Mercedes-Benz have done differently? There would have been two ways to transition the company Mercedes-Benz into the new category or electric.

 

1. Conquer and Switch
The  Geely Holding /  Volvo Corporation strategy. The company repurposed the Polestar brand for just electric cars to compete (conquer) in the electric car segment, while Volvo can switch to electric at its own pace.  For the Mercedes-Benz Company, a new brand (not EQ!) would take on electric while Mercedes-Benz could transition at its own pace.

 

2. Fix the portfolio outside-in and Switch
Let’s face it; the current portfolio is a complete mess with cars inside and outside classes (ranges). This does not help navigate the portfolio and  does not help buyers  relate or understand the order in the portfolio.

Mercedes-Benz should first create ranges that make sense to the buyer or already have meaning, like the A, B, C, G, M, S and V class ranges.  Then slot all cars inside the ranges. No exceptions.

The GLB would move into the G class, and so would the electric EQB. To create clarity, the car model would be renamed GLB EQ.

Then the brand can Switch at its own pace into electric, eventually letting go of all the gasoline models.

Inside-out portfolio

 

Outside-in portfolio

Mercedes-Benz in executing a Switch strategy without clarifying the portfolio to buyers. At this stage option 2 is  the  route to go. Does it come without risk?  Not at all.  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 the technology over the Mercedes-Benz EQC. Internally there will be a division between those who work on the cool new models and those who need to maintain the old – till the last old gasoline car is sold.

Generally the Conquer strategy is the safest and cleanest route to execute company transition into electric.  The Switch strategy involves  perception risks and can be complicated to execute internally.