The brand extension crisis of Microsoft, Xiaomi and LeTV

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Microsoft, the world's largest software company, has launched mobile phones and tablets; LeTV, which makes online video content, has launched mobile phones; Xiaomi, which started out as a mobile phone product, has started to make televisions, water purifiers, and power strips. Their common feature is that they have extended their main business to other industries, even industries far away from their main business, which is a typical "brand extension" behavior. A major problem they face is how to make internal employees, external investors and users confirm that their company and brand can be extended to other fields without damaging the company's positioning and brand image, and making new products. For example, Microsoft's mobile phone business will confuse consumers. Is Microsoft a software company or a hardware company? What's more, the company name has a "soft" in it; LeTV makes mobile phones, but the word "TV" is actually in its product logo; Xiaomi, isn't it a mobile phone company? Why is it selling water purifiers and scales? What do water purifiers and scales have to do with "fever"?

In fact, Lei Jun has been explaining to the public recently why Xiaomi makes weight scales, power strips and water purifiers that have nothing to do with mobile phones. Moreover, one of the key points of the so-called Internet thinking he has always advocated is "focus". Now it is difficult for him to justify himself because the public's perception of Xiaomi as a mobile phone brand is too profound. In fact, Lei Jun and Xiaomi are facing the crisis brought about by brand extension, but Xiaomi has not explained and solved this problem well.

With the digitization and Internetization of various industries, it has become easier and more common for companies to cross borders. It is not difficult to expand technology and products, but brand extension is not an easy thing: First, it must explain to internal employees what kind of company your company is (for example, Xiaomi is a mobile phone company? A water purifier company? A hardware company? An Internet company?), and where the company wants to go? Secondly, it must explain to investors where the company's business boundaries are? What is the market size and profitability of the new business? Finally, and most importantly, it must explain to its loyal users whether the brand positioning and image have been adjusted, and whether they will be abandoned. Brand extension means changing the user's mind and changing the user's perception of the brand. It is not difficult to lose the original brand loyal users, but also hopes that new products will gain new users. In fact, Baidu makes smart hardware, 360 makes mobile phones, Alibaba makes social networking and games, and Tencent makes e-commerce and OS. They are all doing "brand extension" and must face and solve these problems, otherwise it will lead to widespread doubts, lose public trust, and finally turn into a crisis for the company. Regarding brand extension, Zeng Tao suggested that manufacturers can carry out the following work:

***, reposition the company, reinterpret the company's values ​​and business model internally and externally, so that the company's investors, employees and consumers realize that the company is not doing its job, nor giving up its main business, but is doing derivative industries and products related to its main business, so that consumers are no longer confused and uneasy, and they will not lose loyal fans. A successful case in this regard is the repositioning of 360: 360 announced in early 2015 that it would expand its company positioning from "a company doing Internet security" to "a company doing security Internet". Just by swapping the two words "security" and "Internet", the business has extended from Internet software services to any security-related software and hardware security business, including children's safety watches, driving recorders, and home cameras. I believe that its Qiku mobile phones are also likely to focus on security performance. 360 is still doing security, but it has expanded its business scope, which can be well explained to both the inside and the outside. Apple also changed its company name "Apple Computer Inc." to "Apple Inc." to adapt to the company's expanding product line.

Second, recreate the brand and slogan, and de-industryize the brand and slogan so that it can cover new and future industries. Apple was originally a PC brand, but later successfully transformed the Apple brand into a digital product and even Internet brand. Lenovo also faced this problem. It successfully expanded from a PC manufacturer and brand to the mobile phone industry, and during this period it also experienced two changes in brand and slogan.

Third, logo adjustment. Obviously, Letv is no longer suitable for LeEco, which is starting to make mobile phones and even wants to make cars. It should either change its logo or reinterpret it. Just like BYD interprets BYD as "building your dream"; Microsoft, which makes hardware products, also needs to de-soften, either by changing its name or reinterpreting its logo with soft. Apple has also changed its logo many times.

Brand extension (especially large-scale cross-border extension) will bring a series of problems, and brand extension needs to be handled with caution. This is by no means a simple technical and product extension issue. If it is not handled properly, it is likely to become a crisis, which will result in both losing the wife and the army, losing old users and failing to gain new users. Given that many companies will inevitably expand their business and extend their brands, Zeng Tao recommends that corporate brands, slogans and logos should not be too industry-oriented or product-oriented, as this will likely limit the expansion of the company's business, unless your company decides to work in one industry or product for a lifetime (but is that possible?).