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.
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.”
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.
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.
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.
Happy Socks is going back to its core of selling socks. The website is restructured around Socks. The Happy Socks Underwear is gone.
The brand’s core idea, to bring happiness and color to every corner of the world, can be replicated to other categories as well – but in the case of Happy Socks, the brand name will forever be limiting.
Back in 2018, I wrote a post discussing the brand stretch of Happy Socks into underwear, swimming gear, and much more. I did not see a future for Happy Socks Underwear,Happy Socks Swimsuits, or Happy Socks Pool Sliders. Strategically I saw two options for the Happy Socks company:
Stick with the category of socks – and take more market share
Bring the other products under a different brand
It seems that Happy Socks company is moving into the direction of option 1. The website is reworked, and the homepage has a clear focus on Socks.
The web menu makes the distinction even more clear. It is all about Socks and Not Socks.
The Not Socks section cover face masks and swimming gear. By positioning the products clearly as “Not Socks” it feels these products are more like accessories, not part of the brand’s core. This positioning gives Happy Socks Company more freedom to make changes to the portfolio. For example, if a line does not work, the company can easily replace it without hurting the core Socks offering. Of course, it is still weird to walk around in Happy Socks Swim shorts.
But how did the company get here?
Happy Socks got famous for its colorful socks. When the company was founded in 2008, most of the socks in the market were plain. The founders decided to change that and bring more color and design to our feet. Something remarkable happened: they made a boring accessory item (socks) into a hip fashion statement and succeeded.
The mix of focus on colorful socks, decent quality, and a brand name that boozes energy in a boring category worked well. Happy Socks are truly happy compared to traditional socks.
In 2017 the company sold most of the shares to a private equity firm – usually one of the warning signs that growth needs to be accelerated. The shareholders must have been thinking: the company knows about color and design, there are contracts with factories that can produce socks. Why not do some clothing? Happy Socks quickly expanded the product portfolio to underwear and swimwear.
Today the company seems to be getting more and more back to its core: socks. By positioning everything else as “Not Socks” it allows for freedom to experiment with the portfolio – without hurting the core.
The car category is already for some time in turmoil because of the change to electric. On top of that, in the conventional car category the Volvo brand is struggling because of changes in positioning. The owner of Volvo Corporation, Geely Holding has determined that Polestar will be the brand to compete in electric. Is it the right move?
The change to electric genuine for car owners and drivers as they need to change the way they think about driving and “refueling” cars. Consumers experience, therefore, electric cars as a different category. There are conventional cars, and then there are electric cars – both require a different way to interact with driving and moving you from A to B.
When something so impactful happens in any category, we will likely experience a change of brands. There will be brands that only focus on the “new” electric category. There will be existing brands trying to extend from conventional to the electric category. When a category changes so profound, some of the car brands of today will need to make space for the electric car brands of tomorrow.
The impact to the current brand owners has everything to do with whether the existing car brands can compete with electric cars – at least on a level to be on par with the perceived leader in the category. In other words, if you are in the market for an electric luxury SUV, then it is easy to go for the Tesla Model X because the perception is that it is the best in electric and in-car technology. The Mercedes-Benz EQC would come close, but it needs to deliver more to change the perception of Mercedes-Benz and that of the perceived leader Tesla.
Volvo is executing two different strategies to conquer the electric car category. First, the company is moving the brand Volvo from a conventional to an electric car brand. At the same time, Volvo Corporation is following a conquer strategy with their new brand Polestar. Polestar is a standalone brand to focuses on electric cars.
The Polestar brand is not new to Volvo. It used the brand in the past for Performance upgrades of their vehicles. The real Volvo enthusiasts will know the brand with the desired perception of performance, technical advancements, etc. Unless you are a Volvo enthusiast, the Polestar brand will be new. As a bonus, the Polestar name has a nice Nordic / Scandinavian ring to it. Volvo bought Polestar in 2015. In 2017 Volvo Cars and their owner Geely Holding announced that Polestar would become a standalone to focus on electric cars.
Applying the earlier discussed Flip-test would indicate that Geely Holding made the right call to bet on two horses.
When we apply the Flip-test:
Current: Volvo gasoline cars
Extension: Volvo electric cars
Current: Tesla electric cars
Extension: Tesla gasoline cars
Does it make sense? Perhaps not so much. Geely Holding does the right thing to compete in electric with the new brand Polestar while not giving up on Volvo. It would be a shame if the Volvo brand will not make the transition to electric in the minds of buyers. The success of making the transition will depend on the number of cars at different price points from new electric car brands.
Personally I am very happy to see Volvo to take action. The brand has been in turmoil for years. I have written about Volvo in the Volvo Positioning series Part 1, Part 2, Part 3 and a Reflection why successful companies change their positioning.
I found this Snicker Shake image on my phone. I took this photo back in 2017 to keep it as a memory of yet one more failed line-extension.
It is quite amazing to see big brands falling for the line-extension trap. In The Only Book You Will Ever Need on Branding, we introduced a simple tool to check whether a brand extension makes sense. We called it the Flip Test.
If your brand and category are Snickers candy bars, and you want to see whether consumers could make the stretch and buy Snickers Shakes, then… flip it! Take an established brand in shakes, like Ripple, and extend it to your category of candy bars.
Then ask yourself… does this make sense? NO! So, in this case, the brand Snickers should not extend into Shakes.
Current: Red Bull energy drink
Extension: Red Bull Cola
Current: Pepsi cola drink
Extension: Pepsi energy drink
Does this make sense? No.
So Red Bull should not have extended into cola drinks.
The Apple The Future of Mac event was a big bold move as Apple transitions away from Intel processors to in-house developed silicon. The move is in fact a redefinition of the PC industry business from ‘processor speed’ to a pure choice in form factor. Yet another industry will get a rude awaking.
One to rule them all
The reason for Apple silicon is obvious: when you own the full stack from silicon to the user interface you are in control of the total experience while reducing interdependencies.
There is however one drawback to this approach and that became painfully obvious during the presentation of the new Macs: Apple has just one chip which is not advertised in speed.
Consumers have learned that processor speed and the type of processor determines the processing power of a computer. Secondly, by using different processors manufacturers are able to differentiate between their line-up.
An entry laptop will not have a 3.0Ghz 6 core processor with a turbo boost for example. The fact that it was technically not possible (battery and heat-wise) helped to differentiate in various product-lines built around the processor.
No more differentiation around theprocessor
With the introduction of M1, Apple uses the same silicon in their-line up. It was clear from the launch events that Apple struggled with the differentiation between the products.
There are some small differences, like Touch Bar, Wide Stereo Sound, nits brightness, expansion ports… but nothing more.
Even on the individual product pages, the same M1 information is presented:
The future is form
Going forward the difference will be in the form, additional gimmicks, but not speed. In fact, just like with the iPhone product platform the difference will be the form factor: iPhone 12 Mini, iPhone 12, iPhone 12 Pro, iPhone 12 Pro Max
This change in dealing with a computer portfolio is probably the biggest change we have seen.
Taking this approach makes it easy for Apple to create product update cycles based on the M processors, which could go like this:
Macbook Air M1
Macbook Pro M1
Mac Mini M1
Macbook Air M2 Macbook Pro M2
Mac Mini M2
With heath and power consumption for the first time not being an issue anymore in the computing industry line-ups can be dramatically simplified.
During the launch event, the positioning between the Macbook Air and Macbook Pro was far from clear. Both are exactly the same, except for some small features like ports, touch bar etc – so why would Apple keep in them in the long run? The answer: for the form factor, think screen sizes and future platform enhancements made possible by the total control of everything from processor to UI.
Redefining the PC industry
With the move to form factor based differentiation Apple is redefining the PC industry. The same portfolio simplicity that works with the iPhone, iPad, and Watch has now finally entered the desktop and laptop market. The PC manufacturers with Intel will be in for a rude awakening.
I would have not ever thought to buy a real notebook ever again…. but I did! While walking around in a stationary store , many colorful notebooks from Leuchtturm were looking at me.
And I could not resist… why? Because the brand works!
The Leuchttrum brand: a promise made is a promise delivered.
Leuchttrum is around since 1917, that is a very long time indeed, and according to the message, they firmly believe that details matter.
2. Details make all the difference
Leuchttrum does live up to their belief. This ‘simple’ notebook has the following features:
Page markers (2x)
Ink proof paper!
Table of content
Pocket to store stuff
Perforated sheets (8x)
Thread bound & acid-free paper
Leuchtturm does one thing and one thing very well: Notebooks. Their product offer is huge.
From the Notebook category, they moved into Planners and a few storage options
This is very different than Moleskine, offering everything from notebooks to bags, to device accessories.
The ‘better’ notebook brand is perceptual of course the brand creating only notebooks! A quick look at the Instagram account will convince you immediately. The books are not only beautiful but also very functional.
The Leuchttrum brand in a nutshell: a promise made is a promise delivered.
The first ever Blu-Ray player to ship was the Samsung DB-P1000. Back in June 2006 there were only a few titles available but the market grew fast – in June 2008 there were more than 2,500 titles available in Australia and the UK, 3,500 in the USA and Canada. In Japan, as of July 2010, more than 3,300 titles have been released.
Blu-Ray was a growing category, the standard got the movie studios behind the specs and forced the HD-DVD competition to quit.
Fast forward to February 2019 and the same company, Samsung, the leading OEM simply quits the production of future Blu-Ray players. No more new players mean no incentives to produce content, which of course means that Blu-Ray is dead.
Streaming has taken over and will do so for any other physical medium. The DVD market will follow and so will finally the CD market.
The brand lesson? This is what we wrote in The Only Book You Will Ever Need on Branding“Brands and product categories are locked. Category relevance drives brand relevance. When the product category is new and growing, your brand grows with it. When your brand is associated with a category that has evolved into something else or your product category is simply no longer relevant, then your brand will die with it.”
I am curious to see if we will see in the future a revival of the format – similar to what we see in the Turntable – record business with currently over 3000 turntables on Amazon.
The once extremely logical naming structure of the iPhone product range has gone bananas with the iPhone XS Max and iPhone XR
In product naming, it seems to happen a lot – the once so easily understood structures become very complicated. In cars, the same is happening to Mercedes-Benz and in some way to Volkswagen as well. These I will cover in an upcoming next article.
Apple was so simple from the start, in 2007 Apple launched the iPhone. Then it made the decision to add a key feature in the name, the iPhone 3G in 2008. So far so good.
The 2009 model was an improvement over the 2008 model, but not a revolution. Apple decided to introduce the S marker for these improved (supercharged?) iPhones. The 2009 model was called iPhone 3GS.
This logic served well with the next models:
2010 – iPhone 4
2011 – iPhone 4S
2012 – iPhone 5
2013 – iPhone 5S
2014 – iPhone 6
2015 – iPhone 6S and 6S Plus (the bigger screen variant).
2016 – iPhone 7 and 7 Plus
Back in 2013 Apple tried the iPhone 5C, the model name could be post-rationalized: the C for color – it came in many different colorful covers.
Apple also tried in 2016 the iPhone SE, also here the model name could be post-rationalized to perhaps Slim Edition. Apple never told consumers the meaning of the name even though consumers always like to put meaning in names, it makes them easier to remember.
But in 2017 it went wrong…. Apple skipped the iPhone 7S convention and went straight to iPhone 8.
Then it introduced the iPhone X (“ten”) as the new full screen most advanced product. It worked – the iPhone X was the future and sales went well.
But what comes after the future? In the case of Apple, an improved future, the iPhone XS. So far so good… but instead of sticking to a successful and commonly understood naming convention Apple decided differently: it introduced the Apple iPhone XS Max, yes this is the previously called Apple iPhone Xs Plus and introduced a new iPhone called the iPhone XR.
At the moment of writing, sales have gone on for some time. It becomes very clear that the naming structure has gone bananas.
First of all the iPhone XS Max is a drag of a name for a consumer product. What comes after Max? The Max II? The MaxS (I hope not!) Why not simply stick with what people already know? There are the iPhone XS and the iPhone XS Plus for the bigger screen variant.
It might have been that the naming team at Apple decided to change to Max as the screen is the biggest of them all. But that would be a mistake as consumers read Product Brand – Identifier – Variant. So, consumers compare the “Max” against the version without the Max, and not against the iPhone XR.
Clearly, the screen is the differentiator if you follow the Apple messaging – but comparing the key messages on Apple.com does not make this very clear either.
Even comparing the screen sizes does not help – it turns out that in terms of Big Screens, the iPhone XR has a BIGGER screen than the iPhone XS. (of course, Apple is after screen resolution between the XS and XR but what you don’t tell, people don’t know)
In fact when going through the comparison on https://www.apple.com/iphone/compare/ you will find it very difficult to spot real differences between the XS and the XR. And when there are differences it is not clear how they impact you as a future user.
So the question becomes obvious – what is Apple trying to achieve with the iPhone XR? Is the confusion this product obviously is causing (through bad naming and communication) worth the effort?
Could Apple do without the product? I think so, the less the better. That is what the market has told Apple before, first with the iPhone 5C and another time with the iPhone SE. Now the market will tell again that there is no space for an iPhone above, beyond or below the core range of products.
The real question is: how will Apple fix the naming structure going forward?
Happy Socks is not anymore just socks, it is underwear and now as well swimwear. How a great brand idea to turn everyday accessories into happy designed colorful items gets limited by the name.
I am a huge fan of the Swedish brand Happy Socks. In fact, my closet is full of their happy colorful socks 🙂 Happy Socks did something remarkable – they made a boring accessory item (socks!) into a hip fashion statement and succeeded.
The mix of focus on colorful socks, decent quality and a band name that boozes energy in a boring category works well. Their socks are truly happy compared to the traditional socks – and don’t we all need a little bit more happiness once in a while?
So, I understand that at the Happy Socks Headquarters the owners must have been thinking…. let’s replicate the success to other closely related categories like underwear. Now, I do have a couple of Happy Socks underwear items too, and it is just weird. I mean, a logo that reads Happy Socks on underwear is not the best possible combination.
Recently I got an email about a new line of products: swimwear. Yes, seriously – think about the following conversation:
-A- You wear cool swimwear!
-A- What is it?
-B- Happy socks
Of course, the core idea of the brand can be replicated to other categories as well – but in case of Happy Socks, the core brand name will forever be limiting.
In this case there are two options:
1. Stick with the category of socks – and take more market share
2. Bring the other products under a different brand
Do you recognise the challenges of your company in this article? Do you need clarity in brand architecture and optimising it for long term cross-sell and up-sell? Just get in touch with me.
No-nonsense brand bites since 2009