Google's recent announcement that it is creating a holding company named Alphabet shows a level of brand sophistication not seen before from the search giant. Apart from acquisitions of other brands such as Android and YouTube, most Google brand names have been line extensions such as Google+, Froogle, Google Maps, Google Docs, Google Alerts, Google Analytics. While many of these gave some indications as to what the product is, others such as Google+, did not add much value.
As a branding strategy, line extensions typically have one important benefit - they give comfort to buyers of new products if they like and trust the corporate brand. They work best if the company has a good reputation for the product area represented by a line extension. That is, if IBM is known as "the computer company" calling its first microcomputer offering in 1981 the "IBM PC" was a good idea. The proof? It was a big hit.
When they don't work
Unfortunately, line extensions typically do not work well in some cases.
- Company is too closely identified with a type of product and introduces a different product type for which it is not known. IBM came out with a copier line that many thought was better than Xerox. It did not sell well because IBM was not known for copiers. Ironically, Xerox introduced its personal computer in the 1980s. It was not a winner. Xerox is known for copiers -- not computers. The line extension in these cases did not work. Why? If your corporate brand is too closely identified with a certain type of product, introducing a product that is a departure from those for which your company is known under the same corporate brand is quite often a mistake. There are rare exceptions -- especially in Japan where lineage is extremely important (Yamaha motorcycles, musical instruments, motorcycles, etc.).
- A disaster could taint other products. If the company uses a line extension and the product blows up or the company acquires a bad image, the damage can spill over to the other products. BP was known as British Petroleum, and changed its branding to mean "Beyond Petroleum" to acquire a softer more environmentally friendly image. BP acquired the ARCO brand and was in the process of changing ARCO gas stations to BP. Then the 2010 oil spill happened. Many stopped buying their gas at BP stations, and BP changed many of the converted gas stations back to ARCO.
Google's biggest line extension mistake
When Google introduced its social media product that was intended to be a Facebook killer, it used the brand name Google+. Why was this a big brand mistake?
- Too closely identified as a search engine company. Google was primarily known as the search engine company (case 1 in the section above).
- What is the product? Google+ implies a better search engine. Since the new product was intended for social media, many were confused.
- The "plus" often creates a "minus" for the non-plus brand. There are so many examples. A classic case is that of Alka Seltzer (a stomach medicine) and Alka Seltzer Plus (a cold medicine). People were confused because they thought Alka Seltzer plus was a better stomach medicine. What's worse, they thought of regular Alka Seltzer as Alka Seltzer minus. Sales of both fell.
Proof that Google+ was a mistake
Google+ has fallen far short of expectations despite Google's best efforts to promote it. An ex-Google executive has called it a "stupid Facebook clone." Even worse, many are calling Google+ a failure.
What's good about the Alphabet branding platform?
The fact that Google has chosen to name its holding company Alphabet enables Google to widen out its corporate brand platform to accommodate virtually any type of product without harming the Google brand. Here are just a few of the benefits.
- Unlimited expansion potential. Alphabet implies the company does anything and everything from A to Z.
- Minimizes possibility of major brand damage. If one of the products in its line or family blows up the brand damage is much less likely to carry over to the other products.
- Listed before rivals. It can appear before its arch rivals (Amazon, Apple, Facebook, and Microsoft) in directories.
Indication it is already working well
After the announcement of the holding company name, Google stock shot up 27 points. This is only one indicator, but so far the name and its branding implications appear to be a sure winner.
I hope the examples and lessons contained in this post help you with your branding. Best of luck.
Start your workday the right way with the news that matters most. Learn more