The ultimate goal of nearly all marketers, and especially consumer-oriented companies, is to get to the point where the name of a product or company is instantly recognizable. As we note in our Product Decisions tutorial, building a strong brand offers a number of benefits. And one of the major benefits is that when customers see or hear the brand name they associate this name with important attributes of the brand, such as great taste, excellent service, low cost, etc.
While the benefits of strong brand recognition are indisputable, there is a major downside that comes with this. The downside is that perceptions customers have about the brand can hinder the expansion of the brand into other markets. This is especially a problem for brands targeted to either very high-end, high-income markets or targeted to markets at the lower end of the economic spectrum.
Why is this a problem? Because people perceive a brand as serving a certain population. And targeting customers outside this population may not only be difficult (i.e., targeting high-income customers with a brand perceived as a value brand), it can also impact existing customers’ perception of the brand. They may wonder if the brand is still as good as the brand they have come to know because it is now targeting customers who may not be like them.
So how does a company with a well-recognized brand name grow if they are stuck with a brand perception that may impact current customers if changes are made? Well, high-end food retailer Whole Foods is about to find out. According to this Fortune story, Whole Foods will attempt to grow its business by creating a new grocery chain targeted to more cost-conscious customers.
It appears from a company announcement, Whole Foods will launch this chain using a “uniquely-branded” approach. This appears to be code for naming it something other than Whole Foods. This is also a bit of a gamble as there are not many examples of retailers that have successfully launched a new retail concept using a name that does not contain the well-known brand name. For instance, Nordstrom has their Nordstrom Rack outlets stores, Target has a smaller version of its store for urban locations called TargetExpress, and Macy’s has said they are testing a discount store approach. But each has retained its well-known name for the new outlets. Developing a new brand of retail outlets, with a name and retail model that is quite different from that of the main brand, is not easy. So it will be interesting to see how Whole Foods moves forward with their new retail concept.
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