Grow the Core: How to Focus on your Core Business for Brand Success

Chapter 2

Stretching the brand, forgetting the core

 Headlines

Many companies over-rely on stretching into new markets to grow and, in doing so, forget about the core. In reality, brand stretching is much harder to do well than most teams realise. In many ways they forget what made their core business successful, expecting brand values alone to be enough to win in the new market. Furthermore, the new launches that do survive are often small ‘dwarf’ extensions. These pose a serious risk for the core business, diverting both management talent and financial investment.

Getting it right … brand stretch can work – Apple

Brand stretch is a hot topic for marketing teams. And there is no doubting that when you get it right, brand stretch can drive brand and business growth. Apple's stretch beyond the core Mac computer business with the iPod, iPhone and iPad has transformed the business. Revenues in the quarter to December 2011 of $45 billion were a staggering five times the level of those in the same quarter only four years earlier, and the iPad and iPhone now account for over 70% of the company's revenues 1. Importantly, this success has come from leveraging the key strengths of the core to enter or create new markets, both in terms of brand equity and know-how (Figure 2.1). Apple also had the incredible fortune to have been blessed with not one, but two creative geniuses in CEO Steve ...