The ANALyst

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Brand (R)evolution


A few days back I visited BBS to have a look at a typical day and attend a classroom session. One of the events included in the day’s schedule was BBS’s marketing club’s annual panel discussion. The event was titled Brand (R)evolution i.e. brand evolution vs brand revolution. The keynote speaker was the GM of Nokia Emerging Economy.

Brand evolution, as the name suggests, refers to the organic growth of a brand. This could refer to a high-end cosmetics maker moving into high-end fragrances. Brand revolution on the other hand refers to a complete shift in the intended market of the product. For example, Nokia making watches. Brand revolution, according to the GM, is a lot more risky than evolution. Not only may the new intended audience not accept the product, but the brand runs the risk of alienating its established customer base. A conservative financial services institution (if any such things exist) that caters to an older audience might scare away its existing customer base if it started offering (and advertising) a lot of high risk investment products to a younger market.

This is not to say brand revolution never works. Better known and respected brands have a better chance at revolution than other brands. Lets take the example of the Virgin group. What started of as a music records selling business has now diversified into airlines, cola, railways etc etc – i.e. almost everything under the sun.

Why do I bring this up? Apart from it being a very interesting talk by the GM of Nokia EE, it is also a very relevant problem facing strategy consultants working in the customer and market space. Often, in a bid to move ahead of the competition, companies tend to think a bit too out-of-the-box, moving in a direction that is not only costly, but in the end proves futile. This can be especially true in a recessionary environment. It is an age old saying, “When in trouble, go back to the basics”. This holds true in this situation as well. Always build on your core competency. Do not diversify in a way that will hurt your core product or your core market.

Having said that, brand revolution certainly has its place. In boom times, when things are good and you have cash to spare, not only is it a good idea but sometimes it may be the only idea. Even then one can’t be complacent – a good idea may not always translate into a good product/service. Companies need to watch out for ‘escalation of commitment’ or ‘sunk cost fallacy’. These refer to a phenomena where companies keep investing in projects (new products, services etc.) even if they are not yielding good returns. Ideas that do not work need to be chopped. Period.

What are your thoughts on brand (r)evolution? Feel free to share.

PS – Thanks to the GM of Nokia Emerging Economy for his insightful talk on the same.

 

November 16, 2009 Posted by | Consulting, General | 1 Comment