Beware Expansion Strategies that Undermine Your Brand

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“We are in a time where we have to transform how we connect with and engage consumers,” Seth Kaufman chief marketing officer for PepsiCo beverages in North America, recently said. “If brands don’t do that today, they will be irrelevant tomorrow, whatever tomorrow is.”

As companies expand core offerings to keep up with a fragmented customer base, sometimes without clear voice of customer guidance, risky experimentation has become the name of the game.

PepsiCo, the parent company of the Pepsi brand, reported that its sales dropped 5 percent in the third quarter, to $16.3 billion. To drum up new business, the company will be going into the upscale restaurant business with their new Manhattan-based, Kola House. And, rather than shouting the brand, the company will almost disassociate itself from one of the most well-known names in the consumer marketplace. Only time will tell if this off-brand strategy will work, but at the very least it is a big brand risk.

Similarly, Burger King decided to go into the HOT DOG business. The company put a big social media push behind the experiment which has sparked consumer curiosity.



“There has been an overwhelming response,” Burger King CEO Dan Accordino said. “The advertising for the grilled hot dogs didn’t even start …. So all you have seen so far is what you have seen on social media…. We are selling between 80 and 120 grilled hot dogs per store per day…. the hot dogs are “incremental,” meaning consumers order them with other items.”

Again, is this hot dog curiosity a flash in the pan? No one knows. The dogs have yet to find a permanent home on the Burger King menu so it remains an experiment. And with all the sales news, consumer confusion over the dogs is also playing into the equation.

In a recent McKinsey & Co. article it was noted, “The best customer-experience efforts begin with… perspective driven by the customer’s wants, not the company’s traditional organizational structure. … Providing a seamless customer experience thus begins with the customer’s perspective at the center of the organizational structure…”

One brand that had an expansion experiment that stayed “on brand” and stayed true to their core audience with great success has been Taco Bell.

“Breakfast was a big launch for us,”said Juliet Corsinita, VP of media and brand partnerships at Taco Bell. “[Our Millennial audience has] messages being thrown at them every which way … we’re keenly aware of the fact that we need to be the one that breaks through to them.”

The brand teamed up with music giant Pandora on a “Breakfast Defector” campaign which prompted consumers to get rid of their old breakfast routine and try something new.

A brand study during the campaign found a 26% boost in awareness, a 28% increase in message association, and a 16% lift in product association. A follow up study confirmed these findings with one in seven exposed listeners returning to a Taco Bell store within a 10-day period. And, the exposed group was 15% more likely to visit a Taco Bell than people in the control group.

TakeAways:

1. Brands are rushing in to keep up with “tomorrow’s consumer” without a clear understanding and corresponding data to take a calculated risk. While all brands engage in tests, make certain that your tests do not risk hurting your brand.



2. Audit your expansion plan to verify if it is “on brand.” If it is not, objectively determine if the expansion risks creating confusion among consumers.

3. When measuring early data from a test, take into consideration that initial curiosity could skew results. Measure. Then measure again in a few months. And do another follow up a few months later.

While brand expansion will always have some degree of risk and experimentation, marketers need to remember that customer-centric strategies must remain at the core of these efforts. Not using the voice of your customer as a driving factor will hurt your brand and the quality of your customer experience.

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