While walking through Whole Foods this weekend I came across a life size poster-board cutout of a well-known New Orleans chef who has had a successful cooking show and condiments/seasonings line. What caught my eye is that this posterboard chef is holding in his posterboard hand a whiteboard in which anything could be written upon it. Example: Rocky Mountain Oysters @ $6 A Dozen. Obviously not was written, but it made me wonder how does someone surrender control of his likeness/identity - his brand - so easily?
This apparition triggered other random thoughts that tend to jump through my mind like a cable remote control on amphetamines; which ultimately brought about the following question: "Why is that companies that do one thing well feel the need to branch out into other sectors that have no correlation to their core business and dilute their brand?" Are they attempting to attract new customers? Build customer loyalty? Or are they just trying to add to the bottom-line?
In an article from April 25th, Eric Newman who writes for Brandweek tells us that Starbucks is restructuring its entertainment division and shedding its Hear Music label. That a coffee purveyor even has an entertainment division is beyond me. Starbucks customers don't go into a Starbucks for books or CDs, which are impulse buys like candy at the checkout aisle of a supermarket; they go for its coffee. It’s apparent that Starbucks has been attempting to become a lifestyle brand alah Martha Stewart while neglecting its core business. At least branching out into breakfast sandwiches and providing wi-fi internet are related to the coffee shop experience in general.
Keeping with the coffee theme, McDonald’s is another example of a core business strategy gone astray. McDonalds, following Starbucks and Dunkin Donuts, has decided to jump into the caffeine frenzy by promoting its own line of premium coffee drinks.
Jack Russo, an analyst with Edward Jones recently commented in Medill Reports, the journal published by Northwestern University School of Journalism and Marketing Communications, that the addition of coffee bars within McDonald’s could hamper the efficiency of the stores service and adversely influence its bottom line. Russo added further that "McDonald’s can’t afford to lose focus on its core menu; stores have to make sure they have enough space, enough training and enough personnel to continue providing food to customers fast. It might hurt their sales otherwise."
Personally, I’m not a patron of McDonald’s, but I think ordering a premium coffee from a fast food restaurant is akin to eating at Morton’s steakhouse and ordering fish.
Business need to stay focused on their brand DNA – what makes them successful – and carefully choose what ancillary business lines, products and services to invest in which can distract them from their core business and ultimately dilute their brand’s identity.
***Chase Wegmann is Director of Business Development & Client Strategy for a advertising, branding and marketing agency in New York City***