One more set of ideas on the product: co-branding, extensions, and too many products!

Hey-

As I was thinking about what to write this week, I realize I had been doing a pretty good job of taking y’all through the process of product creation recently.

We’ve discussed NPS Scores, using my score for this newsletter as a way to illustrate the point.

We discussed touchpoints and the importance of recognizing that the buyer’s journey is often much longer than we realize it is.

A tidy way to wrap up the last few weeks on the product is to cover co-branding, line extensions, and whether or not you have too many products.

Because as we head through the pandemic and try to find a way forward, we are going to need to think about what we can do to get our businesses back running again and how to maximize our value to our customers.

That happens with the product through the core benefit, the actual product, and the augmented product.

Let’s add to this basic of product creation by looking at the power of co-branding. This is when two brands come together, bringing their best parts and leaving the bad things behind.

A few examples to explain this:

Think about the way that Apple has partnered with Hermes to create a co-branded Apple Watch where Hermes’s luxury cache combines with Apple’s technology and innovation to bring them together to create something appealing to two different audiences.

Another one I really love is the partnership between Paris St-Germain and the Air Jordan brand. This was done at a time when PSG wanted to help accelerate their ambition to become more of a lifestyle brand.

We can go on like this for a while to cover cars, watches, pens, and many other types of co-branding efforts.

The key here is that you want to make sure your co-branding efforts help you and your partner reach different market segments, that you and your partners bring different core competencies to the deal, and that you position the collaboration differently than you would your normal offering.

The second idea to look at this morning is the line extension. This is when you work to get yourself into a brand new area of the same category.

A great example recently is the way that Coca-Cola is adding new beverages with coffee to their lineup.

You can also look at the introduction of the Model 3 and Model Y by Tesla that were targeted to the mid-market and below to try and introduce folks to electric cars.

And, Mercedes Benz went through many line extensions over the last several years adding many lower-priced options to allow Mercedes to be an option for more buyers.

There is another term you might hear thrown around: brand extension.

There is a difference.

A brand extension is when a company puts its name on something that is outside of its area of expertise.

In this example, think about when you see a pen made by Ferrari, or as I saw in the grocery store the other night, Rao’s has extended their brand into frozen dinners.

The key point here is that most brand extensions fail. The good news is that if the brand extension is far enough away from the core sector, it probably won’t hurt either.

Like, let’s say a Rao’s frozen meatball dinner stinks…that won’t stop me from trying to get a table at Rao’s when I’m back in NYC.

For the line extension, they can hurt you because they can dig at the perception of the quality of your brand.

Recently, I heard a high-end Mercedes owner complaining about having to take in a $180,000 car to the same spot as someone bringing in a $35,000 mini-SUV. Those might seem like ridiculous complaints, but that’s the danger of the line extension.

So these things are a balancing act.

This brings us to product creation.

It can be easy to go nuts on product creation. It can feel fun like you are just going to create a bunch of stuff and see what fits.

In the world of tickets, it isn’t uncommon to see 40-50 different products all listed on one website or for a consumer to have 100 different price and seat combinations. We’ve misunderstood the idea of giving people choice.

People don’t want more choice. They just want to be confident of the decisions that they are making. If you haven’t read the book, The Paradox of Choice, it goes into this topic in great detail.

And, having too many choices can make folks decide to not decide which is to end up saying, “no.”

This brings up the idea that you can create products and must, but you also have to be willing to kill off some of them as well. You can have too many products, you can end up undermining your business because you have too many products.

To illustrate this point, let’s look at what Steve Jobs did when he returned to Apple in 1997. At the time of Steve Jobs return to Apple, the company made more than computers. It made printers, the Newton, ports, digital cameras, and tons of stuff that made little profit.

In fact, Apple was in such a state that Michael Dell said if he were in Steve Jobs’ shoes he would shut the thing down and give the money back to shareholders.

But Jobs killed about 70% of the products, giving the company the ability to focus on the core products that they could deliver on a couple of models of laptops and desktops.

Fairly quickly, Apple returned to profitability.

Culling the herd of average products to focus on the things that they could be great at helped propel Apple forward to become the company we know today that launched the iPhone, the iPod, the iPad, and so many other items that are a part of our lives.

As we wrap up this miniseries on the product, remember you can create but you have to kill some as well.

Let me know how y’all are doing.

Until next week,

Dave