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Careful brand building as PCs, toys and consumer electronics converge

April 9, 2004

Whereas five or ten years ago, PC companies, consumer electronics companies and toy companies each occupied distinct product categories with distinct distribution channels, the recent convergence is hard to miss. The general trend is for PC companies and toy companies on the edges to migrate to the consumer electronics center. At the same time, traditional consumer electronics companies are expanding into the PC and toy markets.
Article entitled ‘when companies collide’

But in the hustle, many firms are ignoring a hard-learned lesson of successful brand-building: consumers want to be assured that the company really knows what it’s doing, that it’s committed to the product category and isn’t experimenting only to abandon the early buyers. That delicate confidence can be diluted both by failed brand extensions or too many brand extensions because they imply a lack of foresight and commitment. The import of this truth is sometimes forgotten when R&D departments yield exciting temptations to create new converged products or to add features that take a product above and beyond its core functions, simply because the manufacturer can. Successful brand planning involves constantly working to maintain and strengthen that core market strength the brand is known for, through each stage of product development.

A perfect example of the tendency for product diversification driven by opportunism and desperation, and not good strategy, is China’s brand giant, Haier, which currently sells over 150,000 products in 96 categories from their core of home appliances extending into computers, mobile phones, interior design and even pharmaceuticals. A recent Economist article talks about why Haier and other Chinese brands will not be competitive global brands: they are spreading themselves too thin over too many industries without focused long-term brand planning – a must for successful global brand.

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