According to Forbes (as of November 2014), Apple ranks 1st as the world's most valuable brand, and the only non-technology company in the top 5 is Coca Cola, which is ranked 4th. When you ask people what's their first word association with Apple, Inc. you may hear computers, smartphones, tablets, or great design and products. Perhaps the last thought on people's minds is automobiles. When you ask them about Coca Cola, you are likely to hear cola or carbonated beverages. It is hard to imagine that anyone would say milk. Even so, Coca Cola is planning to make milk, and Apple, according to The Wall Street Journal, is working on an electric car, code named Titan, to rival Tesla.
Why some think this is insane
Apple making cars and Coca Cola making milk is nuts because both brands are so closely associated with images that are far from milk and cars. The company graveyard is littered with product lines that departed from those for which their companies had good reputations. Examples include: Xerox computers, IBM copiers, Clorox detergent, and Virgin cola. Companies that have strong identities with one type of product area are rarely able to transition to another type of product under the same brand umbrella - even if that brand name is well known and trusted by the public. Not only that, automobile brands that have been successful are few and far between. Hundreds that once graced our planet are gone, and most of them focused on making and marketing cars. They did not have resources also devoted to making smartphones, computers, and other high-tech devices.
Why others believe it makes sense
Coca Cola has had considerable success selling other beverage brands, such as Sprite, Dasani, Simply Orange, Minute Maid, Fresca, Smart water, and Vitamin water. They should be able to make and sell milk - especially since they will be distributing it through most of the same channels with which they have an established relationship. As with its other successful brands, Coca Cola will be using a brand separation strategy - selling its milk under the Fairlife brand (more about this name later). More importantly, this milk is not like any other milk. It targets a high-end health conscious segment and sells for more than twice the price of ordinary milk. It will have a unique bottle, contain 50% more protein, 30% more calcium, 50% less sugar, and be lactose free - qualities that appeal to its target audience.
As for Apple, it has acquired, and continues to lure, talent with experience in the automobile business. Cars being developed today have a lot of computer technology built in, and Apple has considerable experience making high-quality devices in high volume. With all the talk of smart and self-driving cars, Apple has the technology chops to make them happen. More importantly, Apple does not have the "not-invented here" syndrome. They are willing to outsource the manufacturing to others, such as Foxconn and Pegatron.
Branding is the real problem
So the real challenge is not the manufacturing. It is the branding. There is no doubt that Apple could make a good-quality, high-tech automobile, and Coca Cola could manufacture a healthier high-end version of milk. The key issue is the perception of the public. It will be up to Apple and Coca Cola to come up with a branding strategy that...
- Helps to sell these products even though they are not known for making them.
- Convinces the public that these brand titans can make better milk products or automobiles than already-established competitors.
- Does not hurt the images of their other brands if these products become plagued by serious defects, health, or safety issues.
What they have to do to succeed.
To achieve a successful brand that departs from the products for which both these companies are known, both companies need to do the following.
Effective positioning. They need to create positioning strategies that separate the image of these products from their corporate brands. This involves developing new names, logos, and slogans that are separate and apart from Apple and Coca Cola to give their target audiences (1) good unique reasons to buy these products in a crowded field of competitors, (2) erect a firewall to protect the company brand if these products blow up, (3) position the products in such a way that their target audiences will be excited to buy them.
If Apple were to brand its electric car the Apple Car, it would fail to create a firewall or get people to believe a company known for making computers and smartphones can also make better cars. The current code name Titan might work, but does it help prospective buyers understand why they should buy this car? Not likely. If they use it, they will need to develop a compelling slogan that does.
Fairlife is a big yawn that does not conjure up a clear image in buyer brains, focus on any of the unique benefits of the product, or connote "upscale" to help buyers understand why they should pay more than twice the price of ordinary milk. In many minds, "fair" equates to a mediocre grade for performance. It does not produce an image that is upscale or superior. Perhaps the only positive connotation of fair is even handed.
Superior communications. To change buyer habits and to get them to think of buying cars or milk from companies that are not known for making them, the unique positioning has to be promoted in the proper media to reach the right target audience with effective messaging to convince the audience to change their behavior and buy milk and cars from companies that do not have a track record for making and selling them.
Create a well-coordinated marketing mix. The upscale image for both products needs to be accompanied with a high-quality product, upscale price, proper distribution channels and merchandising, and promotion channels that balance out the mix. A good marketing information system has to be employed to measure performance and quickly take corrective action.
Anything is possible
While it is hard to imagine Apple making better cars and Coca Cola making better milk, anything is possible if the branding is done right. Both companies have big wallets and successful corporate brands. Being ranked 1 and 4 on the brand value list equates to great success. However, this high ranking means our brains so closely identify with their current lines of business that it will be hard to think of them as good at making other types of products for which they not known. I wish them luck.