The Life Cycle of a Brand

In our consulting practice, we work with big companies, small companies, old companies and new companies.

While the actual laws of branding never change regardless of an agency’s size, which laws are most relevant for a particular agency often do. What might work for one brand is not necessarily going to work for another. What might work at a big agency is not necessarily going to work at a smaller agency. The most frequent troubles occur with the law of the second brand.

Launching a second brand is a powerful tool in expanding the power, success and growth of a company. But companies often misunderstand when a second brand is necessary and which companies should launch second brands. All too often, companies that should launch second brands often don’t want to and companies that shouldn’t launch second brands often want to.

A company should launch a second brand when its initial brand is so strongly positioned in the mind that the new idea will supplement its meaning. But sometimes launching a second brand undermines the focus of a company and overtaxes management’s time and attention.

Here are six brand attributes to analyze before your company launches a second brand:

1. Size. Bigger companies have more to gain from second brands. Smaller companies have more to losefrom second brands.

2. Age. Older companies need to launch second brands to enter new markets. Newer companies need to dominate an existing market before moving on to a new market.

3. Competition. Companies with many focused competitors need second brands more than companie swith fewer line-extended competitors

.4. Opportunity. The bigger the opportunity, the more important it is to use a second brand. The less significant the opportunity, the more confusion a second brand will cause.

5. Resources. The man who chases two rabbits catches neither—unless he hires another man. Can your company afford the resources required to launch a second brand? And resources don’t just mean the money for a second marketing budget, but also the additional drain on management’s time and attention.

Coca-Cola would have been wise to make Diet Coke a new brand instead of a line-extension, while Snapple would have been foolish to give Diet Snapple a new brand name. Why? Big companies should generally launch second brands. Small companies should not.

General Electric, a company more than a century old, can survive with one brand because in most categories it does not face focused competition. But GE got slaughtered in mainframe computers because it faced IBM and other focused competition. Why? Companies with focused competitors need second brands.

Toyota needed a second brand to move up-market into luxury automobiles (Lexus) and a third brand to move down-market into cool, hip machines for the younger crowd (Scion). Lexus smartly keeps its brand focused by using model numbers instead of new brand names for its sedans, SUVs and sports cars. Both luxury cars and cool cars are big opportunities that deserved new brands.

Knowing the immutable laws of branding is easy, but understanding where and how to apply them is often difficult.

Laura Ries (www.ries.com) is president of Ries & Ries consulting in Atlanta

Carrier Branding Connection: Harleysville Insurance

Research shows that most consumers who choose the independent agency distribution system identify their independent agent as their “carrier” rather than the actual insurance company writing the policy, according to Michael Browne, Harleysville Insurance’s president and CEO.

This concept inspired the insurer to adopt a branding philosophy centered on agents— the face of the industry. “Because the independent agent ultimately determines where to place the customer’s business, we have created a brand that reflects Harleysville’s value in this decision-making process,” Browne says. “Our tagline— ‘Good people to know’—places our people and our service at the heart of our brand. Although product and price easily can be duplicated, our brand—and the names and faces of the people behind it—are difficult to replicate.

“As trusted advisors, consumers place their confidence in their independent agents first,” Browne says.

Harleysville has traveled on a branding odyssey of sorts during the past 20 years. As it grew rapidly through acquisition in the late 1980s and early 1990s, the carrier brought multiple brands under its fold. In 2001, the carrier decided to re-brand its local and regional companies under the unified Harleysville name.

The carrier encourages agencies to get into the act by participating in co-branding efforts ranging from consumer and cooperative advertising to sponsorship of community events and activities.

A staunch Trusted Choice^® supporter, Harleysville integrates the consumer brand into its own branding initiatives by regularly featuring the logo in its advertisements, news releases and promotional media. “The Trusted Choice^® brand serves as a powerful reminder to consumers of the tremendous benefits associated with entrusting their insurance needs to an independent agent,” Browne says. “In addition, our local and regional personnel—including field underwriters and loss control consultants—all serve to reinforce the Trusted Choice^® brand established by our agents.”

—Jennifer Sikorski