If violating any of the marketing laws were a punishable offense, a large portion of corporate America would be in jail.
By far the most violated marketing law is the law of line extension. What is even more diabolical is that line extension is a process that is carried out continuously with almost no conscious effort on the part of the corporation. It’s like a cupboard or desk drawer that fills up with almost no effort on your part.
One day, a company is very focused on a single product that is highly profitable. The next day the same company is scattered across many products and is losing money.
Take IBM. Over the years, IBM has been a mainframe company that made a lot of money. Then they became a company that had everything, mid-range computers, personal computers, laptops, workstations, software, networks, phones, and of course, professional services. They even tried to break into the home computer market with the PCjr.
Along the way, IBM spent millions on copiers (later sold to Kodak), Rolm (sold to Siemens), Satellite Business Systems (shut down), the Prodigy network (which became an ESPN website and a Yahoo! content portal). ), as well as software products including SAA, TopView, OfficeVision, and OS2.
In the early 2000s, IBM nearly collapsed under its own weight. It diversified, sold, or closed most of these product lines and focused on professional services around the world.
When a company becomes incredibly successful, it invariably plants the seeds of its future problems.
Let’s take Microsoft as an example, undoubtedly the most successful company in the field of software. Microsoft has been heard to say that it intended to aggressively pursue dominant share in all major categories of software applications in the field of personal computers with the goal of having up to a 70 percent share in all major categories. of software.
Microsoft Corp has continued its online quest for extension with online products (MSN), games (Xbox), and smartphones and mobile devices (Windows Mobile). Even with competitors in all of these categories, as of 2008, MSFT had global annual revenues of more than $60 billion with nearly 90,000 employees in 105 countries. It develops, manufactures, licenses, and supports a wide range of software products for computing devices.
However, there remain ominous signs of weakness in Microsoft’s overall strategy.
Who does that sound like, IBM? Microsoft is preparing for a collapse similar to that of IBM ten years earlier.
When you try to be everything to everyone, you inevitably end up in trouble. “I’d rather be strong somewhere,” said one manager, “than weak everywhere.”
In a strict sense, line extension involves taking the brand name of a successful product and putting it on a new product you plan to introduce.
It sounds so logical. But marketing is a battle of perception, not product.
There are as many ways to extend the line as there are galaxies in the universe. And every day new forms are invented. In the long run and in the presence of serious competition, line extension almost never works.
Despite the evidence that line extensions don’t work, companies continue to pump them out. Here are some examples
Ivory soap. ivory shampoo?
Lifesaving candy. Lifeguard rubber?
Bic thinks. bic lighters?
Tanqueray gin. Tanqueray vodka?
USA Today. USA Today on TV?
Why does top management think line extension works, despite overwhelming evidence to the contrary? One reason is that while line extension is a loser in the long run, it can be a winner in the short run (previous article entitled The Law of Prospect). Management is also blinded by intense loyalty to the company or brand.
More is less. The more products, the more markets, the more alliances a company develops, the less money it makes. “Full speed in all directions” seems to be the call from the corporate office. When will companies learn that line extension ultimately leads to oblivion?
Less is more. If you want to be successful today, you need to narrow your focus to build a position in the prospect’s mind.
In the conventional view, a business strategy is often about developing an all-encompassing vision. In other words, what concept or idea is big enough to house all of a company’s products and services on the market today, as well as those planned for the future?
In the conventional view, the strategy is a tent. You put up a tent big enough to hold anything you might want to get into.
For many companies, line extension is the easy way out. Launching a new brand requires not only money, but also an idea or concept. For a new brand to be successful, it must be first in a new category (previous article titled The Law of Leadership). Or the new brand needs to position itself as an alternative to the leader (previous article entitled The Law of the Opposite). Companies that wait until a new market has developed often find that both of these leadership positions are already filled. So they fall back on the old reliable line extension approach.
The antidote to line extension is courage, a rare commodity.
It takes a while, but many Internet marketers resist the pressure to expand their brand value. As a result, they participate in affiliate marketing programs. They use various methods, tools, and follow a traffic formula to build relationships with their leads and customers. They build websites that build trust. They collect names and email addresses via a signup form on a landing page. They use email systems with autoresponders and broadcast capabilities to send messages to their leads and customers. These emails typically send information, provide insight, and sometimes promote an offer. Many internet marketers learn that prospects and customers don’t like being sold to no matter how they browse and buy. Over an extended period of time, internet marketers can use hypnotic writing skills in their marketing campaigns to get prospects and customers to take the action they want. This is how they learn to add value and leverage the equity in their list and succeed in the world that includes the Law of Line Extension.
It sounds easy, but marketing is not a hobbyist’s game. Marketing is not a battle of products. It is all about the strategy you use to benefit from the Law of Line Extension, as there is irresistible pressure to extend the value of your brand.