Below Laura Reis responds to my question – “Is brand extension is ever a good idea?”
Thanks for your email Sean. The laws of branding are simple, but applying them is not always easy. There are times when line extension is the best way to go. But you need to remember that it does dilute the brand in the mind.
Some companies focus on a customer and then sell them a wide variety of services. USAA is a good example, selling all types of insurance to Army officers. The line is extended but the customer is focused.
The software industry does have some differences. Microsoft can get away with rampant line extension because they have a monopoly on the operating system. But in areas where they face strong competition this strategy has not worked, MSN, Money are far behind.
I’ve long since finished reading both Marketing Warfare and The Long Tail and had plenty of time to reflect on both books. I’ve even reached out to both Jack Trout and Al Reis (the authors of Marketing Warfare) for their perspective on The Long Tail. They both had differing views. Al Reis called The Long Tail an important book. He suggested that “while Marketing Warfare deals primarily with strategic issues, there are many new tactical ideas that emerge from time to time. And the long tail is one of those important tactical ideas.” On the other hand, Jack Trout had doubts about the numbers used to support The Long Tail, citing a recent article in the Wall Street journal.
Yesterday Errol Smith (who produces Jack Trout Radio) posted a comment on the Metrics Driven Marketing Blog about Jack Trout’s radio interview of Chris Anderson (the author of The Long Tail). Talk about a fascinating interview! In the interview Jack Trout seems to be a bit more accepting of The Long Tail than he was in my original correspondence with him. Of course he may have just wanted to be cordial to his guest. Still, by listening to the two authors discussing their views I have crystallized many of my conclusions. To me, it’s not really a question of The Long Tail being right or wrong. It’s more a question of how important the emergence of a “long tail” sector is to the overall economic landscape. While in some industries it has very little impact, in my industry – software – it is extremely important.
As Jack Trout points out in many of his books on strategy: proper marketing situation analysis is an important part of shaping marketing strategy. Because of the Internet, consumers have more choices than ever. This is starting to shape their expectations. For example, I can rarely buy a marketing book in Barnes and Noble anymore, since most of the books are too main stream. However, at Amazon there are hundreds of marketing books that I would like to buy. In software, buyers no longer want mega-products that can do everything. If they have a problem, they Google for a solution and download a couple free trials of “perfect fit solutions.” Research indicates that this is the case for buyers ranging from an individual consumer up to a large enterprise buyer. For a marketer, this offers an opportunity for a very fast conversion from trial-to-purchase and also a clean digital trail for tracking ROI. Contrast this against the major challenge facing all marketers – getting attention in a world of extreme advertising clutter. A good software strategy in a long tail world suggests breaking mega products into many micro products and finding all opportunities to market these micro products to active seekers. Each product is an onramp to acquire new customers and an up sell for existing customers.
I completely agree with Jack Trout’s insight in the interview that “the long tail” can be an important place for market research. By using Google Adwords to reach all active seekers of a specific product, marketers can identify vertical segments where a product is getting the most traction. With this research, a company can define a relevant value proposition for the product in that segment and concentrate advertising funds to build awareness and demand within that segment. Obviously it is important for the segment to offer enough headroom for growth and for the company to have a competitive advantage within the segment.
Overall both books are extremely important for shaping marketing strategy. If you haven’t read them yet, I highly suggest doing so.
I am currently in the middle of two fantastic marketing books (one an audio book for my commute and the other a printed book for home). They often seem contradictory – but both have my mind racing 1000 mile per hour.
The first book is Marketing Warfare, by Jack Trout and Al Reis. It is a classic marketing book from the 80s that is extremely relevant today. I really consider it light reading, since it is as much about history as marketing. I’ll write a full review when I’m done with it, but I can already highly recommend the book (especially for someone who likes history). The most relevant “lesson” the book has taught me (or at least reminded me) is that you shouldn’t spread yourself too thin – it is essential to concentrate your marketing resources on the best opportunities. Fighting a multi front war is dangerous. It’s always tempting to want to place a chip on every good segment or product idea, but history teaches us that this is a mistake that often drives companies out of business.
The other book that I just started today is The Long Tail, by Chris Anderson (I’m about 1/3 of way done with the audio version). Talk about a book that has just reached the tipping point! I had never heard of it, then within a week heard the book referenced by several different people. It provides some cutting edge marketing data that supports almost the opposite view of Marketing Warfare. According to the book, many successful companies are generating a substantial amount of their profits from niche products. This is particularly true for internet retailers that aren’t constrained by shelf space. By having thousands of products available, online retailers can have a very “long tail” of profitable products. From just listening to the first CD on my way into work this morning – the book triggered some really great ideas for altering the marketing strategy for one of our products. I’ve bounced the new ideas off a few colleagues and they are as equally excited about them as I am.
While I’m sure my conclusions will evolve as I get further into the books, both books definitely have merit. The web (particularly Google Adwords) makes it easy to harvest demand from multiple segments. But effective demand creation requires a tight concentration of funds into a specific target customer segment. Good marketing strategy finds an optimal balance between both demand creation and demand harvesting.