Is Branching Out the Future for Big Brands?

Do you remember Virgin Cola? The fact that we can even ask this question says it all. Brands looking to branch out into areas they aren’t naturally identified with can end in disaster if not done sensibly after thorough research in the build-up. Brands who do it badly can suffer embarrassment, serious financial loss, and a crippling fear of branching out in the future.

However, and there is a big ‘however’ here, some businesses have truly hit the nail on the head, making new business ventures huge successes to the extent that consumers now link the brands with the new product or service without even thinking twice.

Cafes And Bingo the Future for Banks and Newspapers?

One of the most remarkable recent examples of brave moves from big brands has been the decision from Capital One – initially popular due to their background as a digital-only bank – to set up 13 banking cafes in the US. Consumers at these cafes can buy a cup of coffee or munch on a muffin while enjoying free wifi in a relaxed social setting.

Capital One’s branching out move was doubly brave due to the fact that they weren’t only branching into a sector they were unfamiliar with, but also doing so in the non-digital domain, where they had built up their brand previously.

It was also bold because it involved competing with big, established operators like Starbucks. One of the reasons for Virgin Cola’s failure was the unexpectedly ferocious reaction of Coca-Cola to the new kid on the block stepping on their toes. Coca-Cola hiked up their marketing budgets, put pressure on distributors to stay loyal to their brand, and before long Virgin Cola were toast. Capital One weren’t put off by the thought of the big boys being offended by their business move, and their bravery paid off.

Speaking of bravery and not worrying about stepping on the toes of established players in a specific market, Sun Bingo did something similar in the UK. Identifying new revenue streams has been crucial for newspapers since the digital boom, and, alongside sales of its paper and online advertising, The Sun decided to branch out completely by setting up a bingo operation under the brand name Sun Bingo.

The Sun used its brand strength as well as the ability to advertise itself on its own website and in its newspaper to create a bingo brand that today offers popular game variations like 90-ball bingo and 75-ball bingo, as well as other games including slots and scratch cards, becoming an award-winning bingo website on multiple fronts.

Where Next for Big Brands?

Capital One and The Sun offer two great examples of established brands branching out into new products and service offerings. However, not all of the best moves from big brands have focused on a new product or a brand new service offering. In fact, some of the ‘business branching out’ done recently by big companies has focused purely on self-marketing, with unusual collaborations at the heart of them.

Take the example of Grazia magazine, which opened itself up to the public by bringing Grazia Live to the Westfield shopping centre in London, effectively moving the entire Grazia office to the middle of the retail hub. Shoppers passing by were able to hear conversations and debate thanks to microphones strategically placed in the office environment.

This unusual collaborative event not only showed the public the inner workings of one of the biggest fashion magazines in intimate detail but also allowed the magazine to generate some publicity about itself. This move was clever because it played on emotion to push a business strategy, with consumers feeling like they were actually a part of a busy publishing business as they were going about their day in Westfield.

With a little faith and belief in the potential of brand strength, branching out is something that no brand should be scared of if they want to grow their profits and appeal to new demographics. The best that can happen is increased sales and increased interaction with consumers, and even if that doesn’t happen, at least useful business lessons can be learned. Even Richard Branson looks back on the Virgin Cola failure now as the birth of Innocent Drinks, co-founded by someone who worked on the ill-fated Virgin Cola experience!