Tag Archives: Product category

General

Virgin – The Extension Empire

Virgin has extended to more categories than any other company. Does it do any good for the company?

The Entrepreneur Magazine did in June 2012 a special on Richard Branson, the founder of Virgin. The article opened up with the following:

‘Fueled by frustration with the status quo, Richard Branson built his Virgin Group empire attacking verticals that had long been dominated by lumbering legacy companies. Now he’s extending his entrepreneurial philosophies to a new market that’s out of this world.’

The extension referred to is Virgin Galactic, which aims to take people and satellites into space at ‘a fraction of the price it currently costs’.

The Virgin brand started as the label for a record shop founded in the 1970s. Currently, it operates in an extreme amount of categories. Virgin uses the simple Brand + Descriptor naming structure. The below list of extensions is directly from the Virgin Group website.

Entertainment: Virgin Racing, Virgin Bet, Virgin Books, Virgin Casino, Virgin Fest, Virgin Games, Virgin Megastore, Virgin Radio, Virgin Records

Health & Wellness: Virgin Active in Australia, Italy, Singapore, South Africa, Thailand and UK, Virgin Care, Virgin Pulse, Virgin Pure

Money: Virgin Money

Technology: Virgin Connect Virgin Media & Media Business, Virgin Media Ireland, Virgin Mobile Canada, Chile, Colombia, Poland, Saudi Arabia, and the United Arab Emirates, Virgin telco

Travel & Leisure: Virgin Atlantic, Virgin Australia, Virgin Balloon Flights, Virgin Experience Days, Virgin Holidays, Virgin Hotels, Virgin Hyperloop, Virgin Limited Edition, Virgin Voyages, Virgin Wines UK, Australia, and the USA.

Space: Virgin Galactic, Virgin Orbit

People & Planet: Virgin Money Giving, Virgin Startup

With this enormous list of companies and categories, most people think the Virgin Empire must be doing exceptionally well. The reality is that the group reported a profit in 2019 of £60 million, up from £53 million in 2018.

Virgin proves that a healthy business with a narrowly focused brand and a dominant market share is much better than having 30+ extensions with very low market shares.

Brand Promise, Brand Strategy

Categories come and go… and with AI faster and more impactful than before

Like everything else, nothing remains the same forever. New categories are born, evolve, and eventually fade away. Every change in a category has an impact on the brands within it. In today’s AI-driven world, category changes are happening at a rapid pace. Are you prepared for a brand repositioning?

When categories split, the mindshare is distributed among subcategories. For instance, when the family car category split into hatchbacks, sedans, family SUVs, and family 4×4, the mindshare of brands spread across these new subcategories. Some subcategories may only appeal to car enthusiasts.

At times, categories become irrelevant. The phone category transitioned from analog cabled phones to mobile phones and finally to today’s smartphones. In each step, we witnessed a new leader emerge. Motorola, renowned for its analog cordless phones, introduced the StarTAC clamshell mobile phone in 1996. The StarTAC achieved massive success in the USA and featured in numerous Hollywood movies. However, it was Nokia that became globally synonymous with mobile phones. Nokia evolved the category by incorporating computer-like functions such as an address book, calendar, notes, and simple games.

New categories, new leaders

Nokia was the first to launch smartphones, although they still had keys and resembled traditional mobile phones. In 2007, Apple revolutionized the category with the launch of the iPhone, featuring a touch interface that marked a clear break from the mobile phone category. The iPhone kickstarted the modern smartphone category we know today, causing Nokia’s global dominance to fade away. Presently, the smartphone category hosts numerous brands like Huawei, Oppo, Xiaomi, and Nokia, but it remains primarily dominated by Apple and Samsung.

Evolution of the phone category

 

In the phone category, the leading brand was able to evolve into the next category but never retained its leadership position. This pattern is not unique to phones but applies to nearly any evolving category.

AI accelerates category changes

Today, any category that can be AI-powered will undergo transformation. The keyword to watch out for is Smart: smart cars, smart watches, smart photo editing, smart ordering systems, and more.

When the leap from the current product or services to the smart counterparts is perceived as significant, it opens the door for a complete category shakeup, often accompanied by the emergence of new brands. We have witnessed this in the phone industry (Nokia to Apple) and the automotive industry, where underlying technological changes have been emphasized (leading to Tesla/Polestar). Similar “smart” shakeups will occur in many categories we currently take for granted, ranging from healthcare devices to photo editing software and customer support solutions.

For brands to survive within categories heavily affected by AI (which includes almost every category!), it is crucial to manage the category and brand association effectively and navigate the perceptual change of the brand in relation to the category’s evolution.

In my book Win With What I provide numerous methods and tools to help brands stay on the growth path or regain their position in a changing landscape.


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

Get your preview at WinWithWhat.com

 

Portfolio, Positioning

Volvo Corporation attacks electric with the Polestar brand

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

Blu-Ray is Dead, End of a category

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.

General

How iA Writer is reintroducing the word processor category

Something amazing happened last May when a company called Information Architects  released the Mac version of iA Writer, “a digital writing tool that makes sure that all your thoughts go into the text instead of the program.”.

Why is this is amazing? Well, iA Writer just entered the word processor category traditionally dominated by Microsoft Word and Apple Pages. Both Word and Pages are of course expected to do… well… lot’s of word processing…!

A closer look at the propositions of Microsoft Word and Apple Pages reveals that while these products in a distant past might have been about word processing today they are clearly about something else.

When looking at the Microsoft Word website the browser bar still says “Word 2010 – Document and Word Processing Software – Office.com” but in reality the focus of Word today is more on desktop publishing, as Microsoft says Word is “More than words”.

“More than words” is made possible through 3 sub propositions, none of them about word processing:

There you have it… Word 2010… bye bye word processing, hello to desktop publishing!

Over at Apple with Pages the situation is very much the same. The promise of Pages is to be “both a streamlined word processor and an easy-to-use page layout tool. It allows you to be a writer one minute and a designer the next, always with a perfect document in the works.”

There is a bit more word processing going on here but the end conclusion is the same: bye bye word processing, hello to desktop publishing!

While Microsoft Word and Apple Pages have left the word processor category and are moving into the desktop publishing category the move made room for new entrants: hello iA Writer!

What is iA Writer doing? Well, it simply is a 100% word processor. “One of our goals was to create a writing app without settings. When opening Writer, all you can do is write. The only option you have is full screen and FocusMode. To increase the pleasure of writing is exactly what we intended when creating Writer. A better tool doesn’t make a better craftsman, but a good tool makes working a pleasure.”

All of this supported by three propositions:

Yes, iA Writer looks a lot like… a word processor:

iA Writer has 8 key features: 1. Auto markdown; 2. Professional Typography; 3. Spell Check; 4. Words & Character Count; 5. Reading Time; 6. Focus Mode; 7. Disappearing Bar; 8. iCloud compatible

Amazing isn’t it? A product build upon 8 key features to deliver … a product that is really optimized for writing. While most of the 8 key features look familiar and can be achieved in e.g. Word there are four things that make the product stand out and differentiate:

  1. It is a true word processor, the only thing it does is … word processing and everything is optimized for that.
  2. No additional features included:  the creators of iA Writer were able to resist and keep focus
  3. Typography, designed by “the best type, screen and graphic designers in the industry”. Of course it makes a difference to look at something beautiful when writing something even more beautiful
  4. Focus mode: this is the real differentiator: in Focus mode all the text fades out except for the sentence you are working on so you can, well… focus.

The result of delivering a focused product is pretty stunning: iA Writer is a top 10 app in the productivity category on the Apple App Store. Even more stunning since in this category the top 4 apps are Apple products, including Pages ranked 2.

Furthermore the consumer ratings are high: 4.5 stars with lots of raving reviews with titles like “an app I didn’t know I wanted”, “Professional Writers, Rejoice” and “Insanely gorgeous”.

So here you have it: when companies or products leave the category in which they originally entered it leaves space for new entrants, even in the word processor category that I never thought would be such an exciting category! How wrong I was!

iA Writer shows us that when you focus your product in a category occupied by “do it all” products you do get noticed and can reintroduce the category to consumers. Well done iA Writer!

Mac owners: get iA Writer on iTunes

General

Statoil powered by gas

This photo was taken inside the AirBerlin terminal at Berlin Tegel Airport. When I walked by I was very confused: Oil powered by Gas? What is this all about? I checked the Statoil website and indeed Statoil is also in the business of selling gas… Wow! I did not know! The name Satoil did not make it any easier for me!

To me this is a very nice example why not to name your company or product after a category:

  1. its harder to expand in new categories
  2. feels awkward (“Statoil powered by green electricity” anyone?)
  3. once expanded to new categories the essence of the product/company is simply harder to grasp for consumers.