Tag Archives: Perception

The Line Extension Trap

Tuesdays With Coleman

The following blog was written this past February and was originally scheduled for publication in March. After COVID-19 hit, our Tuesdays With Coleman blogs shifted to content focused on the crisis. When most stores were forced to close due to the pandemic, I wondered if this blog would come across as insensitive and untimely.

Ultimately I decided to run it because a) branding challenges are evergreen, whether the country is in a pandemic or not; b) it serves as something of a time capsule, me taking notes in a store without wearing a mask or fear of catching something.

I was beer shopping with my friend Andy recently when he stopped and stared back and forth at two packages at the shelf. “I’m no branding expert,” he said. “But this is weird.”

These were the two packages he was looking at:

“They both say Fat Tire, but only one is Fat Tire. The yellow one is a completely different beer.”

Indeed it is. One is the original Fat Tire, an amber-colored malty ale launched in 1991. The other, a Belgian wheat, is a completely different style, gold colored and citrusy.

I really like New Belgium Brewing beers and they generally come with their own unique names. But in this case, the brewery went with a line extension of the flagship Fat Tire brand.

According to marketing strategist Al Ries, “Line extension is a loser’s game. It doesn’t usually work, but even if it does, it almost always damage the core brand.”

There was that time recently when my wife and I popped into Macy’s, and saw the signs for “Macy’s Backstage.”

The idea of a department store having its own lower-priced outlet is not unusual in and of itself.

There’s Saks Off 5th, Nordstrom Rack, REI Garage and Gap Factory to name a few. But Macy’s Backstage isn’t in an outlet mall, or even another location. It’s inside Macy’s! The real Macy’s is on the other side of that mirror!

A few things happened in my brand perception of Macy’s that day.

I was distracted from the Macy’s shopping experience. Rather than search through Macy’s for deals, I got lost in “Backstage” looking for deals. Once I ventured to the other side of the mirror, I found myself comparing Macy’s prices against themselves, because some similar products were priced drastically different–in the same store! And Macy’s Backstage didn’t always have the best deal.

The checkout aisle was loaded with things like a vending machine, candy and stuffed animals. Is this Marshall’s or Macy’s?

On a clearance rack, I found:

  • A heated steering wheel cover;
  • Kenneth Cole underwear;
  • A Bubba Gump Shrimp Co. hat;
  • A resistance band;
  • Two Nike wallets.

This looks like something I might find at Kohl’s, but I just have a hunch like they might separate underwear, a wheel cover and a resistance band into different sections.

And I definitely would not have expected to find a Bubba Gump hat and wheel cover at Macy’s.

But, you may say, this is Macy’s Backstage, not Macy’s!

Therein lies one of the dangers of line extension. I’m going to mentally associate the two because they share the name. The fact that the two stores are literally in the same space only exacerbates the association.

Let’s say you walk into Nordstrom Rack and find some good deals but still determine the clothes are Nordstrom-level quality. Your perception of the Nordstrom brand is likely not eroded.

Would the same be true if you found Nordstrom Rack loaded with Jordache, Fruit-of-the-Loom and Bubba Gump hats?

It would not.

The point is, you must treat your brand with delicate care. Brand erosion is generally a slow process that is hard to come back from and opens up opportunities for focused competitors. It’s also why tracking your brand in perceptual research is so important.

Even Bubba Gump knows the power of brand focus. Sure, he serves a lot of different styles in many different ways.

But, you know what? It’s all shrimp.

Perception is Reality. But Whose Reality?

Tuesdays With Coleman

You’ve heard the saying, “Perception is reality.” Taken at face value, it’s not accurate. Perception can become a person’s reality.  Explained by Dr. Jim Taylor in Psychology Today, “Perception has a potent influence on how we look at reality.” Taken one step further, “Our perceptions influence how we focus on, process, remember, interpret, understand, synthesize, decide about, and act on reality.”

So, we know perceptions are important. But what happens when your perceptions are not the same as those of your consumer? You make decisions–important, impactful decisions–that influence the strategic direction of your brand based on your perceptions and not the perceptions of the people that really matter.

There’s a legendary Silicon Valley story from the first dot-com boom of the late 90s. In its telling, in 1997 when Yahoo! and Excite ruled the search engine roost, Larry Page and Sergey Brin met with the leaders of Excite to show them the potential of their new search engine. As the story goes, Page and Brin demonstrated their new product by typing in the word “Internet.” While Excite’s search was filled with non-relevant pages with the word “internet” stuffed into them, the other search included webpages that explained how to use browsers. According to the tale, Excite CEO George Bell saw the other results as too good. If users found results that quickly, they wouldn’t spend as much time on the Excite interface.

Excite was given the opportunity to purchase Google for one million dollars and turned it down.

Excite turned down the chance to buy Google from co-founders Larry Page and Sergey Brin for one million dollars in 1997.

Here’s the important part to remember. Excite didn’t turn down Google because Google had an inferior product. Excite turned down Google because of their perception that it wouldn’t benefit their business.

Remember Ask Jeeves?

In 2005, InterActiveCorp bought Ask Jeeves for $1.85 billion.

Ask Jeeves was all about perception. It had a great name that easily explained the function. It had a butler for a mascot. You could tell your friends, “I asked Jeeves about bikes and it recommended the best one for me!”

In theory that last part was true, except for the fact that Jeeves was great for a marketing campaign but not great for search results. Today, the relabeled Ask.com has only 2% of the search market and you likely tell your friends you Googled that bike and got some pretty outstanding recommendations.

Ask Jeeves was purchased for $1.85 billion in 2005. Its branding was stronger than its functionality.

Excite turned down Google at a ridiculously cheap price and InterActiveCorp bought Ask Jeeves at an overly inflated price not due to functionality, but rather because of their perceptions.

These two examples additionally validate the importance of which quadrant your brand occupies in the Coleman Insights Brand-Content MatrixSM.

In 1997, Google (which, up to the point of the Excite meeting had been known as BackRub) had great content but a weak (unknown and undeveloped) brand. Therefore, it was undervalued. In 2005, Ask Jeeves had a strong brand so it was overvalued. But because it had poor content, Ask Jeeves fizzled quickly while a company that spent a decade building a strong brand and developing great content (wonder who that could be?) dominated the market.

Brand Content Matrix

Brands should aim to be in the upper right quadrant of the Brand-Content Matrix.

Now, put this into practice with your own brands. You may think you know what your consumers really think of your brand, and you may be correct about some of those perceptions. But there are two important things to consider. First, no matter how brilliant a strategist you may be, everyone falls into the Inside Thinking trap. Because you are too close to your brand, it is very difficult to view it from the perspective of your consumer. Second, can you think of a time in recent memory (or perhaps, ever) in which consumer behavior has changed so rapidly over the course of a few months? The altering of behavior that we have experienced recently has surely impacted your brand in ways both expected and unexpected.

A “wait and see” attitude is not unusual and completely understandable during times of turbulence and economic uncertainty. But we hearken back to Taylor’s quote on perception–“Our perceptions influence how we focus on, process, remember, interpret, understand, synthesize, decide about, and act on reality.” How can your brand align itself with how it is perceived? One way is by conducting perceptual research. We can surmise that brands that invest in perceptual research, particularly during a time when perceptions may be actively changing more rapidly than normal, will have the upper hand versus brands that do not.