Undermining the Power of a Brand Name
That's what a brand is: A name that stands for something in the mind of the prospect.
What's a Saturn? A Saturn is a small car. You could usually recognize a Saturn on the street because for a while the company made only one model, which was available in two doors or four, or in a station wagon version.
For a number of years, the average Saturn dealer sold more vehicles than any other car dealer in America, despite Saturn selling only that one model. So what did Saturn do for an encore? It introduced the Saturn L (for large) with expectations of doubling its sales. That's how it goes in America. Most companies try to broaden their lines, not narrow them.
With two models to sell, the average Saturn dealership sold no more cars than it did with one model.
What's an Amazon? It used to be a place to buy books, but now management is thinking bigger. As founder and CEO Jeff Bezos said, Amazon is the place for millions of consumers to find "anything that they might want to buy online."
"Anything" currently includes furniture, drugs, cosmetics, videos, electronics, toys, games, groceries and Xerox copiers.
Can this work? In the short term, sure. But in the long term, definitely not. In the long term, this line extension will destroy the meaning of the Amazon brand. A brand that tries to stand for everything ends up standing for nothing. The most successful companies and brands usually focus on a single word or concept they can own in the mind. Volvo owns "safety." BMW owns "driving." Mercedes-Benz owns "prestige."
"There's no reason for Amazon not to sell other merchandise," Microsoft chairman Bill Gates said recently. Yes, there is. It's called "perception," and it's a critical aspect of the human mind. You see examples of Amazon.com thinking all over the physical world.
What's a Blockbuster? A Blockbuster is a store that rents videos. "There's no reason for Blockbuster Video not to sell other merchandise," someone at corporate headquarters probably muttered to themselves years ago. So Blockbuster Music was born. After years of losses, the company faced the music and spun off the division last year.
What's a Boston Chicken? A Boston Chicken is a chicken that has been cooked on a rotisserie grill. It's tastier and has fewer calories. "There's no reason for Boston Chicken not to sell other food products," figured top management. So the company changed the name to Boston Market and expanded the menu. Were you surprised that Boston Chicken recently went bankrupt? You shouldn't have been.
"You'll see more Amazon-like cases in which a company that is strong in one online area expands its product offerings," added Gates. Sure, you will. Line extension is popular in corporate America, almost as popular as stock options. Both feed the corporate ego.
Bezos said, "It's very natural for a customer to wonder, 'Can you really be the best place to buy music, books and electronics?' In the physical world, the answer is almost always no. But on the Internet all the physical constraints go away." (A sign of the times: The company recently registered "Amazoneverywhere.net" as a Web site name.)
All the physical constraints may go away, but what about the mental constraints? What about the mind of the prospect?
What's an Amazon.com? It is an Internet bookstore that is undermining the power of its brand name.