The secret to brands living forever

It’s feeling quite gloomy on the British high street. The Christmas boom is over and late January tends to be the time when the effects of recessionary consumers and increased competition takes its toll on formerly big brands that discover they are unable to carry on.


So far, three big trees have fallen in the retail forest. First was photographic retailer Jessops, which was founded in Leicester in 1935 and has a long and proud history of being Britain’s leading photographic specialist. The second chain to enter administration was entertainment retailer HMV. Its landmark store on London’s Oxford Street was opened in 1921 by Edward Elgar. The third was completed barely 48 hours later when Blockbuster’s 528-strong British operation brought in the receivers.

What can we conclude from these fatalities? We might assume that they had reached the natural end of the road. After all, there would appear to be limited growth opportunities for companies that offer photographic services, CD sales and video rental. All three are, to use the strategic term for it, knackered.

You can make a strategic argument that there was little the management teams could have done to prevent failure. After all, when the fundamental product or service you offer becomes redundant what else can you do except fail?

I’m amazed that Jessops even made it into the 21st century let alone 2013. And any company that is still associated with the image of an old dog listening to a gramophone should probably have been expecting the worst too.

But all that assumes that what these companies were selling was a commodity service that became defunct. But this is simply not true. All three businesses might now be bankrupt and fading icons, but that was not always the case. Each brand was once not only commercially successful, it also enjoyed big brand equity among the British population.

Unfortunately, they all chose to leverage that brand equity solely within the category they were based and not into new ones through brand extension. HMV stayed in music retailing and rode that wave beautifully for almost a century until it disappeared into the digital sand. Jessops remained focused on cameras while Blockbuster kept renting movies.

At some point the original reason for a brand’s creation and its core business usually become threatened and eventually obsolete. The older the brand, the more likely this threat becomes. Brand extension, however, provides the proverbial promise of eternal youth. Big brand awareness and distinct brand associations will always offer many opportunities to diversify into new categories that can complement or supersede a brand’s original category.

Take Halfords for example. Founded in 1892, it’s older than the three brands about to exit the high street. Its origin as an ironmonger is also a more challenging starting point. But the difference is that Halfords used its brand and strong customer relationships to open up new lines of business that were unconnected to its origins but directly applicable to its strong brand equity: bikes, automotive, DIY. The brand is healthy, modern and growing.

Imagine the challenge of being a 200-year-old locksmith from Winchester in the digital age. Chinese competition and advances in security have made your business entirely untenable. And yet Chubb remains a strong and profitable brand. The fact that it now make most of its profits from diversifications like security alarms and fire extinguishers, speaks to the ability to diversify into new, rejuvenating businesses.

Nokia would be long gone if it was still making paper. The same is true if Sony had remained focused on transistor radios. And Apple would be struggling to exist if it was making printed circuit boards. Brand extension is the eternal gift that brand equity gives an organisation, provided those in charge are smart enough to realise that diversification should always be considered while the brand is at its zenith and full of cash.

HMV, Jessops and Blockbuster had opportunities to not only survive but prosper into the 2020s through brand extension. When we talk about this as marketers, too often we look at the approach as a way of adding minor new revenue streams to existing business. But the reality, when viewed from a much longer perspective, is that brand equity is perhaps the greatest of all the advantages of building brands.

If we can build brand equity, we enjoy a multitude of advantages. Price premium, brand loyalty, increased advocacy, improved marketing efficiencies – the list is long and attractive. But at the top should be brand extension because it’s rare to find a business more than 75 years old, still doing well, that has not only diversified but is making most of its profits from those diversifications rather than its original core.

That is the true advantage of brand extension and the real tragedy of Jessops, HMV and Blockbuster. Their current businesses are defunct, but their brands could have lived forever.


Why EU data opt-in is one to fight

Tess Waddington

The optimism held by Michael Barnett regarding the possible impact of the draft EU Data Protection Regulation (DPR) on businesses that use one-to-communication to drive sales is dangerously misplaced. The DPR poses a very real threat to our industry and the UK economy, so we can’t afford to slip into complacency, cross our fingers and hope for the best.


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