In 1999, Proctor and Gamble, the
prototypical House of Brands, decided to shake up its portfolio. It
chose a leading brand wherever it had similar products (it has more
than 250 brands), then enhanced those chosen brands with line
extensions and sold off the also-rans.
Thats why you can
now find Tide -- selected as the leading detergent brand -- in
multiple variations. Oxydol, on the other hand, has been a bit
harder to find since it was sold.
Brand managers the
world over took notice. P&G is credited with inventing the
discipline of brand management, and whatever the company does is
widely, perhaps reflexively, copied. Its strategy seemed to make
sense: It is much more efficient and less expensive to focus on one
brand than on multiple brands.
if companies didnt have multiple brands to consolidate, they
nonetheless embraced the concept of brand expansion. In fact, it
became conventional wisdom that, given the choice, it was
preferable to extend an existing brand rather than launch a new
But, recently, Ive
noticed a few deviations from this conventional wisdom, at least
among travel-related companies. And the reasoning behind this
apparent shift in the brandscape may have as big an impact as the
P&G branding revolution.
about line expansion can be seen in the trend of luxury fashion
brands moving into the hotel industry. Bulgari, Armani, Versace and
Missoni have launched hotels as extensions of their style
But a prime example
of the new brandscape thinking is also in this sector. The most
successful among the fashion-house hoteliers is arguably the
Salvatore Ferragamo Group. If youre not familiar with the Ferragamo
hotels, it may be because they arent branded with the name
Ferragamo makes no
secret that it created and manages the five hotels branded Lungarno
(two more are under construction), but it is not keen to promote
the connection. In fact, none of the hotels even has a Ferragamo
boutique on premises.
We look for
operational synergies with the rest of Ferragamo, but our goals are
different from the other style houses that are opening hotels,
Lungarnos CEO, Fabrizio Gaggio, told me. They thought, How do we
expand our brand? We thought, How do we diversify? We wanted a new
business, a new asset.
When you stretch a
brand, you risk blurring it, he said. We knew using Ferragamo would
have given us a quick start, but we asked ourselves, What would it
really mean to guests for a hotel to be a Ferragamo hotel? A hotels
identity is unique, influenced primarily by location.
A different path to
a similar branding conclusion occurred at the consumer publishing
house Conde Nast. Its travel Web site launched in 1999, not as
Condenasttraveler.com, but as Concierge.com.
Initially, it was a
placeholder name because the site contained information from
Fodors, which we also owned, and Conde Nast Traveler, said Jamie
Pallot, editorial director of CondeNet, the division that runs the
publishing groups Web sites.
CondeNet relaunched its travel Web site with a new look, new feel
and a new editorial direction. With Fodors no longer a
consideration, P&Gs approach would hold that here was an
opportunity to rebrand the site as
But CondeNet had
discovered along the way that with concierge.com it had built a
brand that has its own distinctive audience.
Theres only 20%
overlap between print readers of Conde Nast Traveler and users of
Concierge.com, Pallot said.
In other words,
Conde Nast now has a new audience to sell to online
diversification and brand consolidation seem to be polar opposites,
theyre perhaps better thought of as different points on the
continuum of a companys life cycle. Brand consolidation increases
profits through thoughtful cutting. Brand diversification increases
profits through thoughtful additions.
The only companies
that are truly likely to make the wrong branding decisions are
those who conclude that one or the other of these philosophies
holds the Ultimate Truth, and that brandscapes do not