Waking Up to Brand Extensions & Due Diligence

Posted on June 7, 2010 by Steve Baird

It appears that energy drink brands have found another way to expand or extend their reach while still getting their active ingredients into the bloodstreams of consumers. This past weekend I encountered the Amp brand, not only in the refrigerated cases of convenience stores, but also at the grocery store check-out register, side by side with other traditional chewing gum brands. Some other blogs have already reviewed Amp energy gum here and here. Apparently the new gum brand hit the streets earlier this year, as evidenced by this pending trademark application, owned by Pepsico.

The Rockstar energy drink brand, which is curiously owned by an individual named Russel G. Weiner, not some corporation or other liability-shielding entity, apparently was thinking about brand expansion all the way back in October 2005, as evidenced by this still pending intent-to-use trademark application. Other blogs already have reviewed Rockstar energy gum here and here, but they have not reported that registration of the Rockstar trademark for gum has been opposed by Take-Two Interactive Software, a video game computer software company with trademark rights in the Rockstar name as well.

Seems like a good time to remind brand owners and managers that they don't necessarily have the automatic and unfettered right to expand their brands to new products, services, and categories. Most appreciate the importance of conducting the necessary trademark due diligence before launching a new brand, but some may overlook the need for due diligence when pursuing brand extensions, operating under the misapprehension that they own the right to put the brand on anything they want to put it on.

There are other times too, when the need to consider trademark due diligence is sometimes overlooked, so I thought I'd share a handy checklist I put together several years ago:

  1. Before adoption and first use of mark anywhere within the United States;
  2. Before extending use of mark to new products, services, or categories;
  3. Before licensing mark to others;
  4. Before modifying or modernizing mark;
  5. Before extending use of mark in new geographic areas within the United States, if no federal registration was obtained at the outset;
  6. Before use of mark outside the United States.

Back to energy brands, you may recall, I previously blogged about the Bawls energy drink brand, and the unique product packaging, complete with tactile bumps, here. I'm not sure whether Bawls is considering a brand expansion into the gum category, but doing so would be interesting from a branding perspective.

Now, if I were creative enough to help the Bawls energy drink folks expand their brand into the chewing gum category, I'd probably anticipate and be hopeful that "Gum Bawls" (my idea, not theirs) was probably clear, but I'd double check with some appropriate trademark clearance measures and, if clear, promptly follow with the filing of an intent-to-use trademark application.

Marketing types, how did I do? And, yes, I'm keeping my day job.

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G Doesn't Grasp Successful Marketing

Posted on January 5, 2010 by Guest Blogger

Mark Image

In November, I wrote about how Gatorade’s 2009 re-branding as G has been a complete failure. G was an ill-conceived approach to slowing sales in 2007 and 2008. It damaged brand equity, confused consumers and didn’t reverse the trend of falling unit sales.

In the final paragraph of my last blog, I noted that PepsiCo CEO Indra Nooyi said the company is planning a “massive Gatorade transformation” for 2010. I recommended that Gatorade should follow the model of Coca-Cola when they decided to retire New Coke. By doing this, Coca-Cola admitted their mistake and moved on by hitting the reset button on their brand.

Initial details of PepsiCo’s 2010 “massive Gatorade transformation” have been made publicly known here, here and here. Gatorade’s brand strategy for 2010 seems mediocre. Although they are making some positive changes, other moves indicate that they still don’t understand how to successfully market their brand.

I commend Gatorade for shifting their philosophy in 2010. In 2010, they will redefine their target consumer. Their 2010 efforts will focus on the serious athlete that desires peak athletic performance. This is closely aligned with their origins. For many years, Gatorade has tried to widen their audience, and not succeeded. It is very difficult to be all things to all people, and a laser focus on a specific group of people is a strong strategic approach.

The best decision that Gatorade made for 2010 is to remove high fructose corn syrup from all of their products. A few years ago, Gatorade changed the sweetener from sugar to high fructose corn syrup. The nutrition value (or lack thereof) of high fructose corn syrup has been intensely debated in recent years (here, here and here). Many attribute high fructose corn syrup to causing higher rates of obesity. It is not smart strategy to use an ingredient that can be perceived as harmful to health, particularly when your target consumer is athletic and health conscious. This move gives Gatorade a competitive advantage over chief category rival Powerade. High fructose corn syrup is an ingredient in Powerade products other than Powerade Zero (low calorie version). It also falls in line with the Coca-Cola model of returning a product to the original formula.

Gatorade is planning to revamp their packaging, for both G and the lower calorie G2. Packaging was a key reason why Gatorade struggled in 2009. Consumers did not recognize the nebulous “G” packaging and had no perceptions of the meaning of the “G” brand. The decision to redevelop the packaging is correct. The execution is likely to be a failure. Recently, PepsiCo has redesigned the packaging on the Pepsi line of products and Tropicana. Both redesigns were poorly conceived and executed. There was such a strong backlash against the Tropicana redesign that PepsiCo quickly reverted back to the old packaging. With regards to Gatorade, the only acceptable package redesign is a reversion to classic Gatorade packaging. If the packaging does not resemble classic Gatorade packaging, they will be wasting time and money.

The worst aspect of Gatorade’s 2010 marketing strategy is the expansion of the product line. A product line extension should accomplish at least 1 of the following 2 things: expand the size of the market and/or expand the number of a brand’s product offerings that a given consumer purchases. Gatorade’s line extension will not accomplish either.  By adding the “Prime” and “Recover” beverages to the existing product line (G and G2), Gatorade now has at least 4 distinct segments of their product line. It is bound to cause consumer confusion.  Generally speaking, it is difficult for consumers to perceive how the brand’s multitude of products is going to benefit them. Because of this confusion, consumers are more likely to choose a simpler alternative. This strategic problem is augmented by the current economic climate. Asking the target consumer to adopt product line extensions in the worst recession since the Great Depression is a recipe for disaster. Through this decision, Gatorade is showing how out-of-touch they are with their target consumer.

Gatorade’s stubborn refusal to return to its roots and provide simplicity in its branding strategy will continue to damage brand equity and negatively impact revenue. In the first four decades of its history, Gatorade had all of the makings of an iconic brand. The product was consistent, as well as the overall themes of the marketing communication messages. Consumers perceived the brand as valuable in its category. This is similar to iconic brands such as McDonald’s, Nike, Budweiser, BMW and Crest. Coca-Cola also fits this description, with the exception of a period of temporary insanity in the mid 1980s. Coca-Cola remains the best precedent for Gatorade, but Gatorade continues to reject their methodology in restoring a classic brand after an ill-conceived revitalization.

—David Mitchel, Norton Mitchel Marketing
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