The Law of Line Extension: There is irresistible pressure to extend brand equity

If violating any of the marketing laws were a punishable offense, a large portion of American businesses would be in jail.

By far the most violated marketing law is the line extension law. What is even more diabolical is that the extension of the line is a process that takes place continuously with little conscious effort on the part of the corporation. It’s like a closet or desk drawer that fills up with almost no effort on your part.

One day, a company focuses on a single product that is highly profitable. The next day, the same company has many products and loses money.

Take IBM. Over the years, IBM has been a mainframe computer company that made a ton of money. They then evolved into a company that had it all, mid-range computers, personal computers, laptops, workstations, software, networks, telephones, and of course professional services. They even tried to break into the home computer market with the PCjr.

Along the way, IBM spent millions on copiers (later sold to Kodak), Rolm (sold to Siemens), Satellite Business Systems (closed), the Prodigy network (which evolved into an ESPN website and content portal for Yahoo), as well as software products, including SAA, TopView, OfficeVision, and OS2.

In the early 2000s, IBM nearly collapsed under its own weight. It diversified, sold or closed most of these product lines and focused on professional services around the world.

When a company becomes incredibly successful, it invariably plants the seeds of its future problems.

Take Microsoft as an example, arguably the most successful company in the software field. Microsoft has been heard to say that it intended to aggressively pursue dominant share in all major categories of software applications in the personal computer field with the goal of having up to 70 percent share in all major categories of software. software.

Microsoft Corp has continued its quest to extend the line with online products (MSN), games (Xbox), and smartphones and mobile devices (Windows Mobile). Even with competitors in all of these categories, in 2008, MSFT had a global annual revenue of more than $ 60 billion with nearly 90,000 employees in 105 countries. It develops, manufactures, licenses and supports a wide range of software products for computing devices.

However, ominous signs of softness remain in Microsoft’s overall strategy.

Who does that sound like? IBM? Microsoft is preparing for a collapse similar to that of IBM ten years earlier.

When you try to be everything to everyone, you inevitably end up in trouble. “I’d rather be strong somewhere,” said one manager, “than weak everywhere.”

In a strict sense, line extension involves taking the brand name of a successful product and putting it on a new product that you plan to introduce.

It sounds so logical. But marketing is a battle of perception, not of product.

There are as many ways to extend the line as there are galaxies in the universe. And new ways are invented every day. In the long term and in the presence of serious competition, the line extension almost never works.

Despite evidence that line extensions are not working, companies continue to use them. Here are some examples

Ivory soap. Ivory shampoo?

Life Savers candies. Life saver gum?

Bic pens. Bic lighters?

Gin Tanqueray. Tanqueray vodka?

USA Today. USA Today on TV?

Why does top management believe the line extension works, despite overwhelming evidence to the contrary? One reason is that while line extension is a long-term loser, it can be a short-term winner (previous article titled The Law of Perspective). Management is also blinded by intense loyalty to the company or brand.

More is less. The more products, the more markets, the more alliances a company develops, the less money it makes. “Full speed in all directions” seems to be the call from the corporate office. When will companies know that the extension of the line finally leads to oblivion?

Less is more. If you want to be successful today, you need to narrow your focus to building a position in the prospect’s mind.

From the conventional point of view, a business strategy usually consists of developing an all-encompassing vision. In other words, what concept or idea is big enough to contain all of a company’s products and services on the market today, as well as those that are planned for the future?

In the conventional view, the strategy is a tent. You put up a tent big enough so that it can hold everything you might want to get in.

For many companies, the line extension is the easiest way out. Launching a new brand requires not only money, but also an idea or concept. For a new brand to be successful, it must be the first in a new category (previous article titled The Law of Leadership). Or the new brand needs to position itself as an alternative to the leader (previous article titled The Law of the Opposite). Companies that wait until a new market develops often find that these two leadership positions have already been superseded. So they turn to the old reliable line extension approach.

The antidote to the extension of the line is courage, a commodity that is in short supply.

It takes a while, but many internet marketing entrepreneurs resist pressure to expand their brand equity. As a result, they participate in affiliate marketing programs. They use various methods, tools, and follow a traffic formula to build relationships with their leads and clients. They build websites that build trust. They collect names and email addresses using a subscription form on a landing page. They use email systems with automatic responses and relay capabilities to send messages to their leads and clients. These emails frequently send information, provide insight, and occasionally promote an offer. Many internet marketing entrepreneurs learn that potential customers and customers don’t like being sold, yet they search and buy. Over an extended period of time, internet marketers can use hypnotic writing skills in their marketing campaigns to get leads and customers to take the action they want. This is how they learn to add value and leverage equity on their list and be successful in the world that includes the Line Extension Act.

It sounds easy, but marketing is not a game for amateurs. Marketing is not a product battle. This is the strategy you use to benefit from the Law of Line Extension, as there is irresistible pressure to extend your brand equity.