Large corporates have always been good at adding new products to their offer and in the last 20 years or so have embraced brand extensions to add further growth and value to their company. Smaller SME’s have only more recently become adept at furthering their value this way and there are still untapped opportunities for most. How can you add value?
Building your brand, that is your company name being known and trusted in your chosen operating sector, is still not something that comes naturally to many smaller companies. This involves understanding your market, developing a clear identity and offer and having a strategic plan to meet these goals.
Also, once these are reached, many companies simply continue along the same lines only raising their financial goals each year. With many companies there is the opportunity to do more.
- Product extension – Sometimes a product is being sold into a defined market place and could be sold into another market with minor revisions, or sometimes just with a new marketing strategy. It is easy not to see the potential of a product when you have been working with it for a long time. A fresh pair of eyes can often see new possibilities.
- Product development – Some companies have a brand position that would enable them to develop a new product to sell into their current market and they might have the capacity to develop it themselves. They may also have the capacity to sell a product to their customers made by another company, or manufacture a product for others. Exploring these opportunities can help bring growth or extra value when you want to sell your company.
- Brand extension – Fashion companies really led the way in this by licensing their name to be used by fragrance houses and on other fashion accessory products such as handbags and sunglasses. This has now developed into a major area of business for all brand owners across many sectors including food, travel, automotive etc. This is where you can extend your brand name into a new product area. Often another company might approach you, as it sees the potential for selling a product you don’t make but with your name on. The advantage to the brand owner is that they don’t need to invest in scaling up for a new product area but gain a specialist partner to do this for them and in exchange get a percentage of all sales. You do need to have achieved a recognised brand status for this option and it’s important that you have a clear strategy so you don’t over extend the brand into areas or with partners that might devalue your brand.
In all of these options, if undertaken correctly and with the right fit, you will be adding growth to your company and adding value for the time you exit. You may decide not to do this but just want to put plans in place that can be developed by the next owner. In all of these cases you should protect your brand by registering the trademark etc and where suitable register this in other classes that might suit your brand. This becomes clear when putting together a long term strategy with an advisor who has experience in this area. It also happens in areas you might consider a service rather than a product.
Some examples of big brand successes and failures include Bic who had extended from biros to razors and lighters successfully but then added underwear that flopped. Virgin whose Cola did not take off as well as their airline and their Virgin Bride stores which were not a happy pairing to their successful overseas weddings and honeymoons holiday division. Pierre Cardin was early into brand extension but went into too many products areas and swamped the market so their high level brand became market fodder. Everyday we often unknowingly use products with brand names on that have not been made by the brand owner and this sector of business diversification continues to grow and offers consumers more opportunities to enjoy their favourite brand whilst offering companies new routes to growth.
If you want advice on growing your business in this way please contact Susan Flinders or call 07510 692969 She has extensive experience in product development and brand extension in the UK and internationally.