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Parents know it instinctively. To differentiate one from the other, they give their newborn different names. Most businesses beg to differ and often end up giving the same name to multiple (and widely differing) products without realising the negative impact on the brand.

No matter if you've got a growing business or a well-established one: It's important not to ignore that important law of physics. Two objects cannot occupy the same space at the same time.

Why brand and line extension doesn't work

Heard of a cheese company called Kraft? You say Kraft and people say cheese. The amazing association of cheese with their name should have kept the company smiling for decades. Inevitably that didn't happen. Like most companies, Kraft figured they had a great brand name that would extend to a whole range of foods. So they went and line extended into jams, jellies and mayonnaise among other food stuff. By their reasoning, they were still in the food business.

Their accountants might not agree

In jams and jellies, the American brand Smucker's has a 35% share of the market(Kraft has 9%). In mayonnaise, Hellman's has 42% of the market share (Kraft has 18%). Despite being a cheese company, Kraft(amazingly) isn't hitting the top of the charts. The only winner it has is called, not Kraft, but a cream cheese called Philadelphia, which has 70% of the market. By being all things to all people, Kraft (like many other companies) has ended up with a great brand name, but few winners.

What goes through the customer's mind?

Remember your cousin John, the lazy guy? Or your brother Bruce, the industrious guy? Or Diane, the smart one? If you grew up with these pictures alongside a name, the attributes of that person stick with you for life. One name, one attribute.

Most customers are exactly like you. If you say Honda in Japan, people think of a motorcycle company. If you say Honda in any other country, you're likely to think of a car. People don't seem to make the leap at all. Once your product/service has a fixed attribute in their mind, it burns itself in. No matter what you try and do, it cannot be re-invented.

Saturday Night Fever made tons of money. So what did they do? They took the same formula and called it Grease. Same stuff, different name, but consistent profits. On the other hand, every part two of most movies has consistently gone downhill. Sure, ‘Rocky’ went the distance, but you have to question whether it fed Sylvester Stallone’s bankroll or his ego.

How successful companies power their brands forward

Know of Barbie and Ken? Your grandmother did and so will your kids. Barbie and Ken have never changed what they stood for. They've outlasted the Ninja Turtles, the Cabbage Patch dolls and every other toy in sight and will continue to do so in the years to come. That's because Barbie and Ken stand for dolls with interchangeable clothes. Nothing more, nothing less.

That’s exactly what successful businesses do. They occupy a niche and they defend it. Look at publishing companies. They bring out a magazine, they call it 'Men's Health'. Then they bring out another magazine and another one and yet another one. Every magazine is given a a different name. Go to a newsstand down the street and have a look at the magazines. No magazine is all things to all people. Each one has a specific positioning, name and target audience.

The problem with new brand names

It's expensive to launch a new brand. That's why most head honchos in companies take the 'safe'route to extend their line. Besides, it's not like line extension doesn't work. It works fantastically well. Then it sputters, chokes and dies slowly. This is because when brands are first extended, people are eager to try out products. However, they soon tire of it and go to the brand that defines clearly what they're after.

How creating a new brand can help you focus

Take a look at New Zealand today. There are two airlines from the same parent company. One is called Air New Zealand and the other is called Freedom Air. Air New Zealand stands for top class airline service with all the frills. Freedom Air is zero frills. All the tactics and the strategies can be worked out independently as they function(and exist) as two different companies. If Air New Zealand started an airline called Air New Zealand Budget, it would have watered the whole brand giving both airlines no identity of their own.

Less is more

A niche can make you more money than being a generalist can. Resist the urge to be sailor, soldier, candle-stick maker to everyone.

Jack of all trades, master of none

Surely, you've heard that. Now believe it and implement it.

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ABOUT THE AUTHOR

Sean D'Souza uses age-old psychology, marrying it to modern technology, on his Web site, psychotactics.com. Can "psychological tactics" make a difference? Go there and find out.