Think Chevrolet. What immediately comes to mind? Having trouble? It’s understandable. Chevrolet is a large, small, cheap, expensive car . . . or truck. When you put your brand name on everything, that name loses its power. Chevrolet used to be the best-selling automobile brand in America. No longer. Today Ford is the leader. Think Ford. Same problem. Ford and Chevrolet, once very powerful brands, are burning out. Slowly heading for the scrap heap. Ford buyers talk about their Tauruses. Or their Broncos. Or their Explorers. Or their Escorts. Chevrolet buyers talk about their . . . Well, what do Chevy buyers talk about? Except for the Corvette, there are no strong brands in the rest of the Chevrolet car line. Hence, the brand-image problem. Chevrolet has ten separate car models. Ford has eight. That’s one reason Ford outsells Chevrolet.
The power of a brand is inversely proportional to its scope. Why does Chevrolet market all those models? Because it wants to sell more cars. And in the short term, it does. But in the long term, the model expansion undermines the brand name in the mind of the consumer. Short term versus long term. Do you broaden the line in order to increase sales in the short term? Or do you keep a narrow line in order to build the brand in the mind and increase sales in the future? Do you build the brand today in order to move merchandise tomorrow? Or do you expand the brand today in order to move the goods today and see it decline tomorrow? The emphasis in most companies is on the short term.
Line extension, megabranding, variable pricing, and a host of other sophisticated marketing techniques are being used to milk brands rather than build them. While milking may bring in easy money in the short term, in the long term it wears down the brand until it no longer stands for anything. What Chevrolet did with automobiles, American Express is doing with credit cards. AmEx used to be the premier, prestige credit card. Membership had its privileges. Then it started to broaden its product line with new cards and services, presumably to increase its market share. AmEx’s goal was to become a financial supermarket.
In 1988, for example, American Express had a handful of cards and 27 percent of the market. Then it started to introduce a blizzard of new cards including: Senior, Student, Membership Miles, Optima, Optima Rewards Plus Gold, Delta SkyMiles Optima, Optima True Grace, Optima Golf, Purchasing, and Corporate Executive, to name a few. The goal, according to the CEO, was to issue twelve to fifteen new cards a year. American Express market share today: 18 percent. Levi Strauss has done the same with blue jeans. In order to appeal to a wider market, Levi introduced a plethora of different styles and cuts, including baggy, zippered, and wide-leg jeans. At one point, Levi’s jeans were available in twenty-seven different cuts. And if you could not find a pair of jeans off the rack to fit, Levi’s would even custom cut jeans to your exact measurements.
Yet over the past seven years the company’s share of the denim jeans market has fallen from 31 to 19 percent. Procter & Gamble has done the same with toothpaste. When we worked for Crest, the marketing manager asked us, “Crest has thirty-eight SKUs. Do you think that’s too many or too few?” “How many teeth do you have in your mouth?” we asked. “Thirty-two.” “No toothpaste should have more stock-keeping units than teeth in one’s mouth,” we responded. When we were asked that question, Crest had 36 percent of the market. Today the brand has more than fifty SKUs, but its market share has declined to 25 percent. And not surprisingly, Crest has lost its leadership to Colgate. Many companies try to justify line extension by invoking the masterbrand, superbrand, or megabrand concept.
Chevrolet is the megabrand and Camaro, Caprice, Cavalier, CorsicaBeretta, Corvette, Lumina, Malibu, Metro, Monte Carlo, and Prizm are the individual brands. Pontiac is the megabrand and Bonneville, Firebird, Grand Am, Grand Prix, and Sunfire are the individual brands. Buick is the megabrand and Century, LeSabre, Park Avenue, and Regal are the individual brands. But people don’t think this way. In their minds, most people try to assign one brand name to each product. And they are not consistent in how they assign such names. They tend to use the name that best captures the essence of the product. It could be the megabrand name. Or the model name. Or a nickname. The Lumina owner will say, “I drive a Chevrolet.” The Corvette owner will say, “I drive a Vette.” There are thousands of tiny teeter-totters in the consumer’s mind. And like their real-life counterparts, both sides can’t be up at the same time.
On the Chevrolet/Lumina teeter-totter, the Chevrolet side is up, so the car owner says, “I drive a Chevrolet.” On the Chevrolet/Corvette teeter-totter, the Corvette side is up, so the Corvette owner says, “I drive a Vette.” Marketers constantly run branding programs that are in conflict with how people want to perceive their brands. Customers want brands that are narrow in scope and are distinguishable by a single word, the shorter the better. But marketers, in an effort to distinguish their products from other similar products in the marketplace, launch ridiculously overzealous brand names: Vaseline Intensive Care suntan lotion Neutrogena oil-free acne wash Gillette ClearGel antiperspirant Johnson’s Clean & Clear oil-free foaming facial cleanser St.
Joseph aspirin-free tablets for adults Kleenex Super Dry baby diapers Fruit of the Loom laundry detergent Harley-Davidson wine coolers Heinz all-natural cleaning vinegar Marketers often confuse the power of a brand with the sales generated by that brand. But sales are not just a function of a brand’s power. Sales are also a function of the strength or weakness of a brand’s competition. If your competition is weak or nonexistent, you can often increase sales by weakening your brand. That is, by expanding it over more segments of the market. You can therefore draw the conclusion that line extension works. But in so doing, the only thing you have demonstrated is the weakness of the competition. Coca-Cola had nothing to lose when it launched Diet Coke, because the competition (Pepsi-Cola) also had a line-extended product called Diet Pepsi. While extending the line might bring added sales in the short term, it runs counter to the notion of branding. If you want to build a powerful brand in the minds of consumers, you need to contract your brand, not expand it. In the long term, expanding your brand will diminish your power and weaken your image.