By John San Filippo, jmsb@johnsanfilippo.com
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I want to take this opportunity to thank Jeff Bezos. Jeff, you make my job so easy. Every time I’m looking for a what-not-to-do example of brand management, along you come with your next hair-brained idea.
My very first blog was about Amazon and its ridiculous brand extension strategy. For anyone unfamiliar with this term, here’s the Wikipedia definition:
Brand extension or brand stretching is a marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. The new product is called a spin-off. Organizations use this strategy to increase and leverage brand equity. An example of a brand extension is Jello gelatin creating Jello pudding.
Extending one’s brand can make a lot of sense – and a lot of money. Using the example above, the leap from gelatin to pudding is a short one, so it makes sense to people.
Then there’s Amazon. Amazon seems to think it can be successful with any product or service just by stamping an Amazon label on it. When I wrote my previous blog on Amazon and brand extension, the company had just introduced the Fire Phone. I predicted that the Fire Phone would be a fiery flop – and it was. When a consumer wants a new phone, there’s no way Amazon can compete with Apple or Samsung for top-of-mind positioning.
That didn’t stop Amazon from introducing the Fire Stick, which appears to be a Google Chromecast knock-off. Amazon expects you to believe that they’re now experts in television viewing experiences.
Just when I thought I’d seen it all (or smelled it all, as the case may be), along comes the news that Amazon is getting into the disposable diaper business. Yes, you read this correctly and it’s not an Internet prank. Amazon has slapped its brand label on your baby’s butt – as long as you’re an Amazon Prime member, that is.
It’s true. Along with video streaming and free shipping on some items (whatever those two have to do with each other), your Amazon Prime membership now includes the privilege of buying Amazon diapers. Non-members will still need to find their diapers elsewhere.
It’s hard for me to even imagine the strategy session that resulted in this brilliant idea. Let’s see. We’ve already turned our bookstore into a big flea market. We’re trying to keep up with Google and Microsoft in the cloud computing business. We’re also-rans in a wide array of consumer electronic items. How can we screw this brand up even further? That’s it! Diapers!!
How should Amazon have extended its brand? I said years ago that they should have opened brick-and-mortar bookstores. An observation I made just the other day convinced me I was right.
My seven-year-old granddaughter is an exceptional reader and, unlike me at that age, she actually enjoys reading. When she needs a new book, does she say, “Nanu, log me onto iBooks,” or, “Nanu, bring up the Amazon website on your computer”? No, she says, “Nanu, can we go to Barnes & Noble?” Can we go to Barnes & Noble? That's a great user experience.
Banks and credit unions continue to build branches, and they’re not alone. Brick and mortar is making a comeback. You heard it here first.
But is there a lesson in all this for financial technology companies? I think the lesson is universal. The only thing that drives crazy brand extension is greed. So the simple lesson is: Don’t be greedy. Among the many other problems that greed causes, it will screw up your brand. And in the end, your brand is really all you have.
That is all.
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