Tag Archives: Brand portfolio

Brand partnerships, Brand Promise, Brand Strategy, Portfolio

Bugatti and TIDAL Audio – the brand partnership done right

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Bugatti’s expansion beyond automobiles requires preserving its core values. Successful partnerships, like the one with TIDAL Audio, set new benchmarks in luxury and performance, offering customers unprecedented quality and exclusivity.

 

Founded in 1909 by the renowned Italian-born French automobile designer Ettore Bugatti, the Bugatti brand has a famous history of crafting the world’s most exclusive and sought-after performance automobiles.

Over a century later, Bugatti is embarking on an exciting journey to expand beyond automobiles and venture into new product categories, including residences, watches, and audio. Diversifying a brand into new territories is never easy. Typically, brand owners may assume that the reputation they’ve built in one domain will naturally translate into success in others. However, this assumption couldn’t be further from the truth.

Every product category has its own established leaders, benchmark products, and unique customer bases. To make a mark in multiple categories, a brand’s core essence must be deeply understood by a broad range of consumers. Apple serves as a prime example, where innovation and style of their products consistently redefine categories, from the original iPod in music players to the iPhone as first touch smartphone and now into spatial computing with VisionPro.

 

Preserving Bugatti’s core essence in brand expansion

The Bugatti brand is synonymous with its core values of unparalleled luxury, performance, and exclusivity. These are not just principles but are deeply embedded in each Bugatti automobile. When venturing into new categories, this same core essence must be seamlessly carried forward. Any deviation risks compromising the brand’s image, as customers of incomparable products or experiences expect nothing less of everything carrying the brand name. Growing the Bugatti brand equity will be the result of reinforcing the brand’s core in behavior, communication, and products. This disciplined approach will also help determine which categories are suitable for Bugatti’s expansion. It becomes evident why products like water bottles, eyewear, or clothing that could possibly marked as merchandising accessories should be excluded from consideration, while timeless products and experiences in domains such as residences and audio can naturally align with Bugatti’s essence.

Expanding Bugatti into a new category and maintaining alignment with the brand-core from the outset is a major challenge. Crafting luxury and performance objects of this level usually takes decades of perfection. Therefore, extending the Bugatti brand beyond automobiles calls for strategic partners upholding the same rigorous standards and values in everything the partner does, as anything less could adversely affect the image of Bugatti and that of the partner.

The mindset of delivering the incomparable brand experience must be embodied in everyone working at Bugatti and its partners. Just adding the Bugatti logo on a product and charging more does not authentically make it a Bugatti product. In fact, the strategy of “logo plastering” is likely to have a negatively impact the reputation of the brands involved. The long-term effects of off-brand experiences don’t outweigh the short-term speed in go to market and financial gains.

An illustrative example is a recent case where a(nother famous audio) manufacturer thought to justify a 65% price hike by simply adding red paint and a little black horse to an existing product, without delivering any real benefit for the buyer. Speaking of pricing, the brand Bugatti would never associate itself with “our offers” and “best prices”- that is why you will not find this on e.g. their automobile pages. Bugatti should therefore insist that its partners never feature “offers” and “best prices” on pages associated with the Bugatti brand. The value of incomparable cannot be summed up with a simple price tag.

 

Entering the world of audio with TIDAL for Bugatti

The collaboration with TIDAL Audio is an exemplary illustration of how to execute a brand partnership successfully. TIDAL Audio is renowned for its loudspeakers and electronics, recognized as “the best-looking, best-built, best-sounding” in the industry. Founded in 1999 by Jörn Janczak, the company was driven by the unwavering ambition to redefine sound quality. The essence of Bugatti, as articulated by Ettore Bugatti himself – “if comparable, it is no longer Bugatti” – mirrors the core philosophy of TIDAL Audio. Both brands share a dedication to setting benchmarks in luxury and performance, and they succeeded in achieving this ambitious goal.

The “TIDAL for Bugatti” range has elevated audio performance and luxury to unprecedented heights. The ROYALE loudspeakers embody the spirit and idea of offering second to none technologies, execution and performance not done before and according to the experts in the audio industry setting the new benchmark.

This brand partnership is truly the blueprint for successful collaborations. And when a partnership is done right the benefits are mutual. Bugatti makes its mark in the world of ultra-high-end audio, redefining the category according to industry press and reviews, while TIDAL Audio enters the world of ultra-luxury lifestyle.

Ultimately, customers seeking incomparable luxury, performance, and exclusivity emerge as the ultimate winners in this extraordinary collaboration, reaffirming both brands’ commitment to being truly unmatched.

 

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.

Brand Strategy, Portfolio

Happy Socks is going slowly back to just selling Socks

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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:

  1. Stick with the category of socks – and take more market share
  2. 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.

Portfolio, Positioning

Volvo Corporation attacks electric with the Polestar brand

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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

Flip it!

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.

Portfolio

Flip your brand

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There are many logical reasons to line extend or stretch a brand. There could be an opportunity in a business domain close to your core business. In this case, extending the current brand into the new business area is often preferred over building a new brand, especially when budgets are tight. Perhaps the current core business is declining, and in order to survive, new business areas must be entered. Often the thinking is to save the brand in order to save the company.

Therefore, at some point most companies will think about stretching their brands. The assumption is that consumers can make the stretch too and will follow the brand into new areas, purchasing more along the way. “Consumers love our brand, so they will love our brand in the new product category too”. To prove this thinking, a healthy dose of consumer research is then conducted. And guess what? The consumers usually see an option for the brand to stretch! All good, so you think…

Unfortunately that is often not the case. In research situations, consumers are not actually buying the line-extended products. Rather, they are getting compensated to participate in the research. In reality, consumers do not always understand the extension and actually grab their wallets to make a purchase.

To find out if consumers will follow you and buy your brand in a new category, I suggest that you first try the “Line Extension Flip”. This test is a simple rule of thumb, and you don’t need any consumer research to do it. You just need a clear, open mind and lots of common sense.

First, think of your brand extended into the new target category. Then, imagine a brand already in the target category trying to extend into your current category. Finally, ask yourself, “Does this make sense?”.

I’ll try it with some examples:

Your current brand and category: Angry Birds mobile game
Your brand extended to the new category: Angry Birds children’s book
FLIP IT
An established brand in the new category: Pip and Posy children’s book
That brand extended to your current category: Pip and Posy mobile game
Does it make sense? Yes!

Current: Angry Birds mobile game
Extension: Angry Birds HDMI connector
FLIP IT
Current: BlueRigger HDMI connector
Extension: BlueRigger mobile game
Does it make sense? No!

Current: Fazer Blue chocolate bar
Extension: Fazer Blue chocolate drink
FLIP IT
Current: Oatly chocolate drink
Extension: Oatly chocolate bar
Does it make sense? Yes! (Cannot wait!)

Current: SOL cleaning services
Extension: SOL security services
FLIP IT
Current: Securitas security services
Extension: Securitas cleaning services
Does it make sense? No!

There are a couple of things to keep in mind before you start “Flipping”. First, only flip product brands. Remember, consumers buy products, not companies. Secondly, if the brand you want to extend is the current category leader, then it will have strong associations to that category in the consumer’s mind, and therefore you will find it is less likely to make the stretch. On the other hand, if your brand has no strong associations with anything in particular or has association with many things, it is more likely to be extendable. Finally, always Flip brands in the context of today’s market situation. Don’t use the Flip test to post-rationalise past decisions.

Now, try the Line Extension Flip test on your brand extension idea and let me know the outcome!

This post appeared in Markkinointi & Mainonta