Ben Wise on Branding

Watching the world through the lens of the brand

Posts Tagged ‘Brand Portfolio

Lexus Saved By Toyota’s Brand Portfolio

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Large companies often debate if their expansion should be done through brand extensions or by launching new brands. There are strong arguments for both. Brand extensions let you leverage an existing brand into a new product or category with much less investment in marketing and brand awareness. Conversely, a new brand can let you go after a drastically different value proposition. Additionally, any damage to the brand is relatively limited from other brands in the portfolio.

It is this last point that has become apparent recently in the case of Toyota. As this blog (and most other business or branding blogs) has noted, the Toyota brand has taken a beating amid the unprecedented product recalls. Amazingly, the Lexus brand, owned completely by Toyota, hasn’t suffered.

A New York Times article says that Lexus sales are up 5% so far in 2010, in line with the average for luxury car brands. Toyota sales, on the other hand, are down 15%.

The recent success of the Lexus brand was only made possible by being distanced from the Toyota brand, despite being the same company.

This is a great example of the benefits of a brand portfolio. The combination of Lexus and Toyota allows the company to credibly play in the mainstream and luxury markets while protecting each brand from any problems experienced by the other. Had the problems been primarily with Lexus, the Toyota brand would have likely been fine.

What do you think? Will the Lexus brand be hurt by Toyota’s problems?

Written by benwisebranding

March 12, 2010 at 9:37 pm

Posted in Brand Portfolio

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Starbucks Benefits From A Portfolio Of Brands

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Since Starbucks invented the mass market for upscale coffee shops, there has been great competition in this space among quick serve restaurants (QSR). McDonald’s is increasingly pushing coffee and has launched their posh McCafe’s across the US. Now Burger King is entering the fray with the signing of a deal with the Seattle’s Best coffee brand.

The most interesting part of this deal is that Seattle’s Best is actually owned by Starbucks. Starbucks is cleverly using a portfolio of brands to reach a more diverse set of consumer without sacrificing the integrity of their core brand.

The Starbucks brand is positioned as your ‘home away from home’. They could not credibly maintain this position if they were to offer their coffee through fast food chains like Burger King (although I believe they are pushing the boundaries on their brand already with instant coffee for the home). However, the number of consumers of fancy coffee is increasing and are looking for more product distribution. Emerging segments are more concerned with the coffee than the atmosphere.
Starbucks has realized that the market for upscale coffee is becoming more mainstream, and thus consumers are willing to purchase it on a more regular basis from more traditional outlets. By selling Seattle’s Best instead of their Starbucks branded coffee ensures that they do not miss out on this growing segment of the market. And, the core Starbucks brand is untouched and able to remain your ‘home away from home’.

What do you think? Is Starbucks making good use of a portfolio of brands?

Written by benwisebranding

February 19, 2010 at 1:58 pm