By: Michael Cooney
Which fast food chain has more locations in the U.S. than any other? If you answered McDonald’s, you’d be mistaken. With over 13,250 locations, Subway surpassed McDonald’s last year in number of outlets in the United States.
McDonald’s still leads in worldwide outlets, totaling about 30,000 in 121 countries to Subway’s 20,060 locations in 73 countries. And McDonald’s worldwide sales far surpass those of Subway. Nevertheless, Subway is expanding more rapidly than McDonald’s, opening 904 new stores here last year, compared to 295 for McDonalds.
Why bring this up? Because it illustrates an important principle in maintaining a strong brand.
You’ve heard it before—you can’t be all things to all people. That is certainly true when it comes to brand power. A narrow focus is critical for the health and long life of your brand.
The trap many fall into is called “line extension.” Executives figure, for example, that since their company’s current line of products is so popular, and its brand name is so respected, then why not capitalize on that name and put it on more types of products? Surely the reputation they’ve gained with their original line will transfer right over to the new product lines, won’t it? And if they could extend their product lines out further and further, they’d capture more and more customers, right? Well, not so fast.
Let’s return to Subway. After seeing the success of its sandwiches, what if founder Fred DeLuca fell into the line extension trap and added more types of food to try and attract more customers? Let’s say he added tacos. And pancakes. And chicken drumsticks. And cookies. And pizza. And lobster bisque. What would Subway represent then?
Right now, Subway owns the word “sandwich” in our collective mind. As long as it serves only sandwiches (along with a few drinks, of course), it will continue that dominance. If it strays off the path and goes the line extension route, it will loose that dominance. It’s that simple.
McDonald’s, by contrast, continues expanding its menu to multiple dozens of items in ever-expanding categories. And its brand strength is gradually diminishing. Subway specializes in sandwiches. McDonald’s doesn’t specialize in anything.
Compare Chevrolet and Ferrari. Which one tries to be all things to all people? Which one has fierce customer loyalty?
Chevrolet, naturally, sells more cars than Ferrari. But if you look at brand strength, there’s no comparison. Ferrari sells every car it can make. Chevrolet sales have tumbled. In 1987, Chevrolet sold 1,500,398 cars and trucks. By 2001, the number had dropped to 830,038—little more than half of what it sold just 14 years earlier. Ferrari specializes in high performance sports cars. Chevrolet doesn’t specialize in anything.
Continuing with cars, Porsche began selling trucks in 2003. Its Cayenne SUV, based on a Volkswagen concept truck, has moved Porsche off track. In the short term, if SUV sales remain strong, Porsche may recoup its development costs and eventually profit.
In the long run, however, Porsche’s brand strength will suffer, because it has left the path that made it famous. Its clientele of hard-core enthusiasts already feels the sting of having this world-renowned sports car manufacturer dilute its image by selling trucks. The name “Porsche” carries a bit less weight as its product line widens. Porsche used to specialize in ONLY high performance sports cars. Now it’s a company that makes sports cars and SUVs.
You can see the difference in brand strength between those who specialize and stick to a core product line, and those who are widening their brands to become more things to more people. In the long run, specialization builds and maintains strength. Line extension weakens brand strength. (There are exceptions to this apparent branding dilemma when it comes to licensing, which I’ll cover at a later date).
This doesn’t mean you can’t make or sell more kinds of products. You must carefully consider, though, when it makes more sense to create a new brand rather than widen your existing brand. Only if the new products you contemplate are true to the public’s view of your brand can you safely add them. So….
Should Tiffany sell 10k gold plated Cubic Zirconia pendants?
Should Rolls Royce put its name on a 4-cylinder economy sedan?
Should Pepsi bring out Pepsi Beer?
Should Target offer $350,000 emerald and diamond rings?
Not any more than Subway should sell pancakes.
Michael Cooney, co-founder, Global Development, a marketing and advertising consulting group