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Growing A Brand From Niche To General Market
Posted By: adman4* on 10/27/2004 9:37 PM (CST) 250 Points
We are a real estate firm that has been doing business in a niche property type and neighborhood for over a decade. Our agents have built good brand awareness and equity within this narrow market.

Someone recently bought the company with the intention of expanding our brand to the general market. We decided to do this (with essentially no advertising budget) by launching a new, umbrella brand, taking on a 3- to 5-year plan to reach people who already knew of us, and educating them about our new services by word of mouth. We quickly discovered that our most successful agents refused to let us cut -- or even diminish -- the old brand (it's making them rich -- why change anything?).

As we hire new agents, they find that our old niche brand is hindering their ability to pursue other property types/neighborhoods. As a result, the new owner wants the company to become visible in new markets as soon as possible to overcome this issue (again, with little money besides co-op dollars and possibly a new location). He is forcing us to grow the brand without any true explanation to old and new clients, thereby splintering both of our brands.

Now we seem to be stuck: we can't get rid of the old brand due to the senior agents (who are bringing in 90% of our business), and that is upsetting new and potential agents. We now have an ugly "merged" logo, utilizing both brands, but anytime we dare to use just the new logo, we get torn apart by the old agents.

Do we force the issue by eliminating the niche brand, possibly causing key agents to leave and causing significant financial distress? Do we continue with a "merged" concept and let our agents educate clients one by one? Is there any other solution that can possibly make all camps happy?

Please help!

Posted by: D4Demand Accepted Answer
10/27/2004 11:59 PM (CST)
This is a perfect example of how to KILL a company.

Whoever bought you with a look toward expanding your brand awayfrom the niche is trying to turn a sportscar into a station wagon.

Niche brands are niche brands. That's why they succeed -- they dominate a niche. there is no competition. they command the expertise. They have NO competition.

Taking a company like this out of the niche will lose a ton of money EVERY SINGLE TIME. (See AT&T and NCR merger, See Xerox's exapnsion into personal computers, see stories about new Coke. See Pepsi Clear))

If you flush the brand equity, your owner just flushed away all the money he invested!!!

I'd join the first wave of renegades who leave. The ones who fill the abandoned niche first will win. Better yet, get the best agents together with some money and lead the exodus.
 
Posted by: W.M.M.A. Accepted Answer
10/28/2004 12:07 AM (CST)
You dump the merged concept immediately. I am bad at math but 90% of the people bringing in all the money want the old niche to stay. DO IT.

Create another firm to move the general brand. Brand 2 a subsidiary of Brand 1. "Doing things the old fashioned way....only newer."

If the new "leadership' usely used term here, insist going in a new direction. Have a meeting with the best agents and open a company across the street called The New Niche Realty Group.

This is not an arguable proposal. it's math.The market is telling you to stay with what works. A few new outsiders are saying...ya know...we ain't never done dat ole way before, Ernie. I know dey are makin' money, but it's old way money. Da new way money is much bettah. If day wanna pull out and do dere own ting, let em go. We can start with 10% and build it up to 15% in two or tree yeahs.

Sorry...I thought I was writing a script for an Edward G Robinson and Judy Garland film, featuring Mickey Rooney.

Randall
WMMA
 
Posted by: Sanjeev Kumar Vyas Accepted Answer
10/28/2004 4:25 AM (CST)
Well I agree with the above two responses. You are facing what most of the companies face while merging or changing face.
Well I will totally agree with the above suggestions. You would be better of creating a 2nd brand for the new areas you are trying to add. Along with that you will be more better of communicating this properly among all your employees and agents. Because unless you keep your old agents happy chances are you will loose the 90% of your earnings. This is something you will explain to your new owner and I think hopefully he would understand the math as I think he bought the company to make money not loose money. And if he has bought the company to loose money you and your colleagues better be searching for a new company or better still open a new company and capture the niche that your current company will be leaving.
Regards
Sanjeev
 
Posted by: thinkmor Accepted Answer
10/28/2004 5:45 AM (CST)
Hi Adman

Agree with previous responses.

When new owners takeover a company there is almost a relfex action to make change without understanding the company's history and wanting to change long successful strategies for change sake.

How do you get buy-in from the new owners?

Consider polling a simple questionnaire to all agents asking whether:

1) The new brand should overtake the old one
including comments section they can explain why they don't want the new brand

2) How many agents will continue to do business with the new brand

This should explain to your new owners how may agents will walk and what does this mean for the financial position of the business, is the change worth losing $XXXX of revenue?

Next segment all you agents and break them down in terms of profitability.

Map these segments over the agents responses.

If you believe that most of your profitable customers will walk, this is one way you can communicate this to your owners in a very basic and direct manner.

You could also request an Urgent Agents meeting so your new owners could hear it from the horse's mouth, so to speak.

Before adapting this approach get your team on board from all departments and develop relationships with the most influential personnel within your company to get buy-in from them in addition from your agents to put the proposal together with a step plan how you will reverse the Brand's ill-fated changes.

As a consolation to the owners also put together a sub-brand as already mentioned that takes into account your new segments, their needs and the best channels to reach them. Make sure you have comprehensive research to formulate a sound strategy in your new markets before embarking on the new brand mission.

Hope this helps.


Zahid Adil
 
Posted by: W.M.M.A. Member Response
10/28/2004 8:31 AM (CST)
If I may add one more thing, when those agents walk, and the chances of them doing so is very high, they will more than likely take a substantial amount of the revenue with them.

Remember, customers do not necessarily buy from companies, they buy from people they trust.

Randall
WMMA
 
Posted by: Deremiah *CPE Accepted Answer
10/28/2004 11:01 AM (CST)
Adman4,

You're getting great advice. Split the company or kill the business / Split the business or Kill the company either way works. The problem is trying to keep them together which will not work. Let the 10% leave & start the niche business and claim stakes to 100% of the new niche market they are in. The businesses are counter productive inside the same company. I've got to go but I'll come back to this one. Is there anything I can do for you?

Your Servant, Deremiah, *CPE (Customer Passion Evangelist)
 
Posted by: adman4* Author Response
10/28/2004 12:14 PM (CST)
Thank you all for your helpful comments. I would like to clarify a few things:

The niche we have focused on is dwindling. The new owner's goal is to grow the company, and the only way to do so is to escape the niche that will ultimately be the death of us. Growth comes from A) moving away from this niche and B) hiring new agents that will work more of the city. And while most of these agents are bringing in little money right now, they are growing more experienced and are expected to increase their share of the income significantly. As a result, supporting new agents is the key to future success. In other words, it's a mess now, but I must trust things will get better.

Additionally, it is not feasible for us to maintain two separate brands. This would require duplicates of all marketing materials, and the budget will simply not support such an approach. That is why the original plan was to slowly sell the new brand internally, manage a merged logo in the interim, and let the benefits of the general market company reveal themselves. As agents start to drink the Kool-Aid, they tell more clients and other members of the real estate community, and the key influencers eventually become educated of our broader services.

Note that we are currently positioning the old brand as a sub-brand of the new, umbrella brand. However, the umbrella brand currently has little awareness, so our older, conservative agents are reluctant to support it.

I hate to be a naysayer, but I appreciate your input and want to get as much applicable information as possible. Ultimately I believe we will need to pick a "lesser of evils" solution. But the question is: which evil?
 
Posted by: thinkmor Member Response
10/28/2004 12:36 PM (CST)
Adman

Your Umbrella brand should of been your Original brand with the most equity and acceptance from your current customers with the new brand introduced as the sub-brand.

If you had involved your current customers in the brand process it may of been easier to migrate them along with sub-brand.

Your options are either to re-invent your Original brand by re-positioning and adding to your established propositions or 'Officially' killing it off and accepting the new brand and face the difficult challenges head on.

Going either way, you need to involve and engage with your customers to reassure them your levels of service and quality delivery will be the same. I'm sure if you are honest with them of your needs to change they will mostly accept your dilemma positively.

You will not be able to keep all customers but offering open and honest communication will be the best policy in the long term and the customers that stay with you, you will know truly value your business relationship and support you.

Hope this helps and Good Luck.

Zahid Adil
 
Posted by: W.M.M.A. Member Response
10/28/2004 2:10 PM (CST)
You may or may not recall when Foodmaker killed off their number one brand The Jack in the Box clown. Talk about dropping off the fast food map. It was almost a black listed company.

As you may know now, several years ago, they brought him back and the brand seems to have soared higher than ever before.

You are definitely going to have a back lash. Your clients will tell you when they have had enough, and what you will do about it.

Randall
WMMA
 
Posted by: Colleen Sharen* Accepted Answer
10/28/2004 7:59 PM (CST)
I feel your pain. My family run a real estate firm (third generation now...) and I've seen many of the challenges you are facing right now.

I wonder if the answer isn't helping your "older, conservative" agents understand the implications of staying with the old branding, and the issues with the customer confusion that the current "merged branding" is causing.

These agents probably know that that niche is starting to die, but they aren't comfortable with where the new brand is heading. In the end if they don't make the change, they will see their incomes decline. And money talks in real estate. It won't be easy, and will likely take a lot of hand holding from the new ownership. Some of them will leave, and move into competition with you, that's life.

If the niche is declining, and there is limited competition in the new markets, then you really have no choice.

But get on with it. The merged brand is likely doing damage to both positionings.
 
Posted by: fuelblue Accepted Answer
10/29/2004 10:38 AM (CST)
What about the concept of being in competition with yourself? Would it be possible to keep the old brand alive as long as the market is still viable, and start the new brand as a separate entity?

If the market really does switch from one to the other, your company will have retained most of its own clients. If the market does not sway as you predict, the new brand can go under, and its short life will not hurt the reputation of the established brand.

Whatever you do, I agree that merging the two brands is a bad idea.

Unfortunately, I don't have any experience with implementing my idea. It just popped in my head as I read all this. Maybe somebody here can expand on it, or give a good reason to shoot it down.

Bob @ Fuelblue
 
Posted by: maverick* Accepted Answer
11/4/2004 12:35 AM (CST)
hi adman
I must say u have been given some very quality input.. and i hate to add a new dimension to it but i feel u seriously need to consider looking at ur problem from a different perspective....

Please first and foremost come out of the groove of choosing between bad and evil, i think u are at a strong opportunity juncture,

As those who have mentioned above i totally agree merging brands could spell doom.
However please consider that the ur new top company has not entered into this business to loose money.
There is a famous saying. " The cost of change today, may seem high, wait till u realise at what cost have u not changed".
90% business is a big amount, but in a dwindling business? I guess not. Nestle is a classic example of a company that has lived on niche business. However understand that s not the only way to do business. the new company is just making a fundamental shift in ur operations. Don't resist it without understanding its long run strategic implications.
Like Thinkmor. has very adequately spelled out the steps get a feedback from ur agents however alongwith that discuss ur new found strategy with old agents. If they have feeling that the old brand can do gr8 business u need to make a choice.
1. If u have bought the idea that a new brand is needed for the general market. Cash in on the brand equity of the old brand and sell it to the agents who are too persistent and go ahead with developing a new brand for the new segment. In real estate the name of the promotors is quite an asset. IF as a promotor u launch a new brand with the right strategy u would have sailed safe. The revenue from selling the old brand will take care of ur advertising budget too.
2. If however somewhere within u. U are confident the old agents have a valid point and that moving from the niche could seriously damage ur revenues. Then i feel u can take the path as mentioned by the other respected experts who have previously chalked out a great plan.
hope this helps
regards
Maverick
 
Posted by: W.M.M.A. Member Response
11/4/2004 7:53 AM (CST)
Speaking of competition with yourself. A very successful restaurant group in Texas, now growing nationally...Pappas Group, has done just that.

On the same highway exit, in several areas, there is Pappasitos (Mexican food), Pappadeaux (Cajun), PappaMia (Italian), and Pappas Steak House.

If you're hungry for lunch or dinner, or traveling through, the chances that you will get all of the business in that area, is very high.

Look at Taco Bell, KFC...same company.

Randall
WMMA
 
Posted by: Val (Moderator)* Moderator Response
11/10/2004 9:23 PM (CST)
Hello all. I am closing this question since it's more than 10 days old. We do this to reward the contributions of participants in a timely manner + to give increased visibility to the newer questions.

Thanks, so much, for participating!

Val (Moderator)
 


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