Big Brand Solutions: Extending Brands for Survival

Economic, technological, and societal changes have forced big brands to adapt. The small town rule of creating multiple lines of income can be a problem for brands that succeed best by focusing on one thing across geographic boundaries. But, knowing that markets can shift out from under them and needing to plan for the long term, brands have to make smart moves into new products or lines following the small town rule to build one line at a time: establish first, then extend.

When does a brand extension become a brand dilution instead? It’s largely a matter of hindsight. If it succeeds, it’s a brand extension; if it fails, the term is dilution.

Small town rules dictate that a successful business should only expand one line at a time, establishing the primary brand first. The management team should only “sell what they know.” Then, it is smart to add additional lines of business after there is a sufficient foundation to build on. This is the same pattern farmers use to establish multiple crops: Make sure the primary crop is working well, then add side crops one at a time to the farm. Virgin Brands, Zappos, and Amazon have all used the same small town rule.