Branching out into a niche

We all kinda know what a Holiday Inn is. I say “kinda” because you know what it is except when you don’t. Do you know what the difference is between a Holiday Inn, a Holiday Inn Hotel and Suites, a Holiday inn Resort, a Holiday Inn Select, the Holiday Inn Sunspree Resorts, the Holiday Inn Garden Court, and the Holiday Inn Express?

“It’s a hotel?”

Technically, yes, but what are the differences? Don’t worry, I don’t know either. It’s a real clusterfrack that I’m sure means something to someone in their HR department. It’s also a classic example of what’s called “brand overextension”.

Take another example. Imagine you’ve got this nifty business or service you offer. Now you want to offer something else, but it doesn’t quite “fit” as neat as just adding another product or service to your existing selection. Maybe you offer low-cost manicures, but you’d like to offer some higher-cost and higher-profit manicures, but you probably can’t do both because you’re known for one or the other, or your customers are of one class or another. Or maybe you offer doughnuts and you’re renowned for your doughnuts, but you want to start making sandwiches and soups for the lunch rush. But offering sandwiches at a place called “Just Doughnuts” doesn’t work, does it?

I bet you feel like you’re pigeon-holing yourself or limiting yourself. That can be good, especially if you’re “the doughnut guy”.

Customer expectations set the bar for what you can and can’t do

It has a lot to do with customer expectations. It’d be like if you were a plumber and you said, “I’m only going to work on toilets”, and you had to turn down everyone who asked for sink repair. That may or may not be a good idea, but there are an awful lot of people who need just toilet repair, and when they go looking, they won’t find a plumber, they find the toilet guy. “Hey, I bet that guy knows toilets and won’t even try to upsell me on replacing the grout in the shower.”

Just like when your car is on the blink you take it to the Dealer when the random guy down the road might just as well be able to fix it, because we know the dealer will fix it because they know everything and have everything for everything about your brand of car. Or we expect them to, at least. It’s the perceived notion that with all that specificity and experience, they are the go-to source.

Toys R’ Us is another example. They started off as a general store called Children’s Supermart during the baby boom. Initially just selling baby furniture, people started asking a lot about baby toys. So the owner started selling baby toys, then older kid’s toys, and then finally just toys and rebranding as Toys R’ Us. With a name like that you know exactly what you’re going to get when you go in, and that specificity is sometimes really, really good for consumers and business.

For a long, long, time they were #1 in the category — until Wal-Mart, which sells everything. Now Toys R’ Us sells all sorts of things and they’ve opened up Babies R’ Us and more generic stores that confuse people to try and be like Wal-Mart. “Can’t I get baby toys at Toys R’ Us? Or do I have to go to Babies R’ Us for baby toys?” It sounds silly, but do you know the answer to that?

But you don’t look at Wal-Mart and think, “Wow, these guys are really good at everything they do!” In fact, most people would objectively conclude they’re good at nothing except low prices and supply chain management. They’re just good enough at everything else.

That gets us back to The Holiday Inn. They wanted to be the hotel for business, for commuters, travelers, and upscale and downscale and everything in-between. So they slapped their name on everything and suddenly the one thing they stood for in the mind of the consumer is gone. It’s ruined, forever, and the market is so muddied by it no one pays attention anymore.

So don’t be like Holiday Inn, or Toys ‘R Us, or settle for being good enough like Wal-Mart, which succeeds only because of high demand for low prices at large scale.

Instead, take the good parts of big companies that keep their brands separate, like Yum, which owns KFC, Pizza Hut, Taco Bell, Long John Silvers, and A&W Root beer stands. You know exactly what you’re getting with those (insert your own joke here). They’ve started to slip by building multiple restaurants into one storefront, but you get the idea.

Or General Motors, which makes a long line of cars, but each exists as their own kind. Just because the Pontiac brand is kinda crummy and non-existent now, it doesn’t mean the whole company is.

If you’ve got one successful brand and business, don’t go muddying it up by over-extending its meaning. If you sell great doughnuts and want to sell soups and sandwiches, open another shop with another name. Maybe people will know you own and run both, but more than likely they won’t know and won’t care. They just want a great product and you’re there to deliver both, whether they’re craving doughnuts or a club sandwich.

About the author

Justin Harter

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