Tuesday, September 29, 2015

Can Expansion Hurt the Brand?

Not long ago I had a conversation with a business owner who is actively expanding the business into entirely new areas.  Not only that, but quite rapidly as well.  What is interesting is that the business owner is seeking to move aggressively into service areas that are almost completely outside the business' original brand footprint.

I won't get into the tactical questions that arise in this case study.  But I am very interested in the brand issues.  We have a business that has built its existing image on a certain menu of services.  Assuming they are done well, does it confuse the customer to substantially shift or augment those services?  Is there too high a risk that any disappointing outcomes in the new areas will damage the brand?  What happens if the business is spread so thin that all services fall off in quality?

Obviously, some businesses do quite well moving into other areas.  There may be excellent perception that a market is changing and the business must adapt to the changes, or there may be synergies that make the brand stronger with a greater collection of allied services.  But I think these are the exceptions.  Too many businesses take the risks and roll snake eyes.

The takeaway: think very hard about expansion into new products or services and be mindful that brand can suffer if things move too quickly or carelessly.  Don't take the old mix too lightly and absolutely ensure that service quality remains high for the older lines.

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