Some companies spend millions of dollars (or even billions) creating a brand and many are successful in backing up that brand with the products or services that people expect. Apple is a good example of a company that has differentiated itself from the competition and has been unwavering in its approach to design and ease of use1. However, there are arguments for and against using a brand to diversify into other product lines.
An argument for diversification can be best seen in Coca-Cola and how this multi-billion dollar brand (worth about $84 billion according to the American Marketing Association2) almost became irrelevant because it refused to diversify, in fact, for almost one hundred years, Coca-Cola only made one thing using the brand …show more content…
As a result, Coca-Cola lost market share. "In 1950, Coke had outsold Pepsi by more than five to one, but by 1984 Pepsi had a 22.8 percent share of the market while Coke had a 21.6 percent share."4 While CCL did diversify during this period - everything from wine to water, even starting Fanta - it was reluctant to dilute the brand of Coke with an offshoot. Finally, in 1982, Coca-Cola launched Diet Coke and the cola wars were all but over - Diet Coke was the most successful product launch in history and quickly became the number two soft …show more content…
Consider Sony. In 1979 Sony Corp. launched the Walkman. This portable cassette player changed the way people listen to music forever - music became portable and personal6. This one invention helped make Sony Corp. one of the biggest electronic companies in the world. There was a time in the 1980 's and 1990 's that if you were in the market for electronics - specifically music or TV 's - Sony was the name brand that you could rely upon. Its brand proposition was about quality. However, it kept expanding, both inside the electronics market and even outside (movie and music business, for example). The problem is that they lost focus on the one thing that consumers relied upon - quality. They focused on manufacturing technics to bring the cost down instead of focusing on new technologies and improving the quality of products. After decades of quality issues, Sony has finally reached what many believe to be the end of the road. In 2000, Sony had a market capitalisation of $100 Billion - by 2011 it had dropped to $18 Billion. By 2014 Sony had been forced to sell its headquarters building and Moody 's classified the stock as essentially 'junk '.7 This example highlights, I believe what happens to a company that dilutes its brand so much that it loses the very competitive edge that built
An argument for diversification can be best seen in Coca-Cola and how this multi-billion dollar brand (worth about $84 billion according to the American Marketing Association2) almost became irrelevant because it refused to diversify, in fact, for almost one hundred years, Coca-Cola only made one thing using the brand …show more content…
As a result, Coca-Cola lost market share. "In 1950, Coke had outsold Pepsi by more than five to one, but by 1984 Pepsi had a 22.8 percent share of the market while Coke had a 21.6 percent share."4 While CCL did diversify during this period - everything from wine to water, even starting Fanta - it was reluctant to dilute the brand of Coke with an offshoot. Finally, in 1982, Coca-Cola launched Diet Coke and the cola wars were all but over - Diet Coke was the most successful product launch in history and quickly became the number two soft …show more content…
Consider Sony. In 1979 Sony Corp. launched the Walkman. This portable cassette player changed the way people listen to music forever - music became portable and personal6. This one invention helped make Sony Corp. one of the biggest electronic companies in the world. There was a time in the 1980 's and 1990 's that if you were in the market for electronics - specifically music or TV 's - Sony was the name brand that you could rely upon. Its brand proposition was about quality. However, it kept expanding, both inside the electronics market and even outside (movie and music business, for example). The problem is that they lost focus on the one thing that consumers relied upon - quality. They focused on manufacturing technics to bring the cost down instead of focusing on new technologies and improving the quality of products. After decades of quality issues, Sony has finally reached what many believe to be the end of the road. In 2000, Sony had a market capitalisation of $100 Billion - by 2011 it had dropped to $18 Billion. By 2014 Sony had been forced to sell its headquarters building and Moody 's classified the stock as essentially 'junk '.7 This example highlights, I believe what happens to a company that dilutes its brand so much that it loses the very competitive edge that built