In marketing there are so many marketing case studies that talk about brand stretch. It is a popular topic in marketing exams and assignments. Current marketing practice is to build brands. The importance of branding cannot be under estimated. Kotler famously said that ‘without brands products become commondities’. One of the key tasks of any marketing manager is to build the brand. This is equally important in all sectors from the popular consumer goods such as Coke Cola, to banks to branding people. For example building X Factor as a brand, Simon Cowell as an individual and the latest in the family is Cheryl Cole.
Once the brand is built the level of brand equity develops. That gives the business opportunities to expand. We have seen that followed by the likes of Tesco. From a start of food retailing the brand how expanded into clothing, electrical goods, financial services and so on.
One of the latest businesses to stretch the brand is o2. From a mobile phone business which was originally part of BT it has built the brand from scratch. It has grown to be the largest mobile phone provider in the UK. The consumers are across the spectrum but it boasts a large number of younger customers. These are difficult to access for marketers. This customer base is now so valuable and o2 are now able to offer more to these customers. They can see the needs of the customers and that is the key for marketing managers.
The expansion for o2 is into financial services with the latest card. The benefits are that you are able to manage your cash and be alerted , by text of course, when the balance on the card falls. This is really helpful and offers a personalised service. Visit www.o2.co.uk for details. The question in any brand stretch or expansion is how far can it go? If it is over stretched it loses the equity in the brand. Some of the exclusive brands offer diffusion lines and low cost items but it is an aspiration to own an expensive product. If it becomes too available it loses the very reason for purchase. The marketing lessons and best marketing practice is to carefully select the markets to enter and to ensure that the brand equity is built not reduced