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Monday, February 05, 2007

Laws of Branding: The Law of Expansion (#1)

Originaly by By Al Ries and Laura Ries

The power of a brand is inversely proportional to its scope.

If you want to build a powerful brand in the minds of consumers, you need to contract your brand, not expand it.

Putting your brand name on everything diminishes the brand name’s power. Take a look at Chevrolet, a company that used to be the leader in the automobile industry. It expanded its brand into Corvette, Camaro, Caprice, Lumina, Malibu, Prizm, and so many other brands. People don’t exactly know what a Chevrolet is anymore. What happens when you extend your product line into so many types?

You steadily lose your market share.

In 1988 American Express had 27% of the market. Then it expanded into offering Senior cards, Student, Membership Miles, Optima, Optima Rewards Plus Gold, and a whole range of other cards. Their market share is 18 per cent today.

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