Al and Laura Ries

Rather than repositioning a brand, Al and Laura Ries, marketing consultants and authors of two bestsellers on branding, recommend creating a new one. Why? A brand can stand for only one idea, and trying to extend it will weaken it. Here are some of their tips for launching powerful new brands.

Explain the concepts of brand divergence and convergence?
The hottest concept today, especially in the consumer electronics and high-tech fields, is convergence. Convergence means to try to bring two categories together. Most companies or organizations are chasing this dream with products like interactive television, the tablet computer, the TV computer and the smart phone. Divergence means to create a new category, have a new name and perform a single function. Apple’s iPod is a divergence brand. And the new Nano enhances Apple’s reputation as the country’s most brilliant exploiter of divergence concepts. Divergence creates endless opportunities to build new brands. The day is coming when the convergence bubble bursts.

Why do you believe that new, successful brands can be created only through divergence?
Our studies show that virtually every successful new brand was created by divergence of an existing category. Take the first commercial computer, the mainframe computer, the category that built the IBM brand. Did the mainframe computer converge with another product to create an opportunity to build a new brand? No, the mainframe computer diverged creating endless opportunities to build brands.

Some computer divergence categories and the brands they spawned include: the minicomputer (Digital Equipment); the workstation (Sun Microsystems);the 3-D workstation (Silicon Graphics); the personal computer (Apple); the business personal computer (Compaq); the personal computer retail store (Comp USA); the personal computer sold direct (Dell); the handheld personal computer (Palm).

Virtually every product or service category goes through the same process. It starts with a single product and then through the process of divergence creates many new categories and many new opportunities to build brands.

What have been some of the worst branding mistakes you have witnessed over the past few years?
Without a doubt, product or service line extension. Instead of launching new brands, companies and organizations try to cover diverging categories by line extending their brand names. Companies often line extend because they are focused on building brands rather than creating new categories. But brands are worthless unless they stand for something in the mind. And the more things you try to hang on a brand name, the less it stands for.

Invariably the long-term winners in new categories are the brands with new names, not the brands with line-extended names: Dell, not IBM personal computers; Palm, not Compaq handheld computers; eBay, not Yahoo! Auctions; Quicken, not Microsoft Money; PowerBar, not Gatorade energy bars; Red Bull, not Arizona Extreme Energy; H&R Block, not Merrill Lynch Tax Service.

Tell us some branding success stories?
Dietrich Mateschitz was traveling in Thailand when he encountered a popular health tonic called Krating Daeng. When he returned to Austria, he decided to introduce a similar product, which he called Red Bull. Even more important than the Red Bull name was his choice of a category name. He called the category an“energy drink.” As it happens, the first energy drink. Red Bull benefits from an analogy with PowerBar, the first energy bar.

Marketing can be visualized as filling a hole in the mind. If there is a category called energy bar, the prospect thinks, there must be a category called energy drink. Red Bull, of course, was the first brand to fill the empty hole in the mind called energy drink. Today, Red Bull does $1.5 billion in sales worldwide.

Almost every branding success story follows the same pattern. An innovator notices an empty hole in the marketplace and then introduces a new brand that goes on to exploit that new category. Some examples: Starbucks, the first high-end coffee house; Häagen-Dazs, the first high-end ice cream; Silk, the first soymilk; Spin Brush, the first battery-operated electric toothbrush; Glide, the first flat dental floss; Body Shop, the first natural cosmetics company.

The list is endless and they all follow the same pattern. Find an open category and then develop a new brand to dominate that category. As the category takes off, your brand also takes off.

A challenge for organizations is how to develop customer loyalty to online and offline brands. What’s the key?
By expanding a brand to include both online and offline operations, you muddy the brand’s perception in the mind. Not only should your online brand have a different name, it should probably also have a different strategy. The most powerful Internet brands have no offline counterparts, Yahoo!, eBay, Amazon.com and Priceline.com, for example.

Is there ever a time to reposition an organization or brand?
The right time to reposition a company or brand is when the market changes. For example, the market for mainframe computers has been dying a slow death over many decades. IBM has successfully repositioned itself as a “global computer service company.”

You need a lot of patience to reposition a company or brand. It’s harder to change a brand in the mind than it is to put a new brand in the mind. So you need to give the repositioning process enough time to make the changes you want to make. Also, you need a link to the past. IBM was successful because it traded on its mainframe reputation to build a new position as a computer service company. You can’t walk away from what you already are.

How important are “differentiation” and“innovation” for organizations to stand still and live longer?
You need to differentiate between a brand and a company. A brand lives or dies by its category. Polaroid was a powerful instant photography brand. But when instant photography declined, so did the Polaroid brand. The Polaroid company, however, could have prospered by introducing new brands to exploit new categories. They probably should have introduced a new brand of digital cameras. Instead, they tried to use the Polaroid brand on regular film and a variety of other products. They all were failures and Polaroid, the company, went bankrupt.

Kodak is making the same mistake. They are trying to save the brand when they should be trying to save the company. The Kodak brand means photographic film. Yet because the photographic film business is dying, Kodak is trying to use its brand name on digital cameras and other digital products. Big mistake. They should use a new brand.

Can you break down the steps that an organization should take in creating a new, successful brand?

1. Find an open category in the mind.

2. Give that open category a simple name. Sports drink, energy bar, energy drink.

3. Select a powerful brand name that conjures up vivid imagery. Red Bull energy drink, DieHard batteries, Amazon books, Silk soymilk.

4. Launch the brand with an intensive PR campaign.

5. When the brand is established, protect your position with a massive advertising program.

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