Wal-Mart gets drunk.
Nothing like adding a little alcohol into the mix to get the party started. That’s apparently what Wal-Mart, the world’s largest retailer thinks. On the way to store shelves is something new, hard alcohol. What? Alcohol? Yes, that’s right. Wal-Mart, a company that strictly bans alcohol from its headquarters, company meetings and expense accounts is now going to sell the vice. A company headquartered in a dry county and bans risqué magazines and only sells sanitized versions of songs with controversial song lyrics because of its strong belief in family and decency is going against all that to make a buck. Unbelievable, but true. Big powerful brands do unbelievable things every day. So to help you from being a traitor to your own brand values here are some guidelines to help you before you get drunk and do something silly like Wal-Mart.
1. Does the line extension go against the core meaning of the brand?
Clearly Wal-Mart and hard alcohol don’t mix. Wal-Mart stands for low prices but they have also prided themselves on family values sometimes taking tough stands against racy music songs.
Volvo and convertibles did make too much sense either. Nothing is safe about driving a convertible; safety is usually the last thing on your mind while the wind is blowing in your hair. No surprise that the models weren’t big sellers.
2. Does the extension overly complicate your business model?
For Wal-Mart selling alcohol means negotiating complex and Byzantine laws that vary by state. Which include buying from distributors, a layer Wal-Mart typically eliminates to cut costs and streamline its delivery process.
On the other hand, Dell selling printers doesn’t much change its business model or go against its principles. Buy cheap and sell direct.
3. Do focused, successful competitors exist?
When Wal-Mart got into groceries, the big supermarkets were floundering. Trying to compete with Webvan, Whole Foods, Costco and CVS all at the same time by expanding their brands. So Wal-Mart was able to move into and dominate the grocery category.
But Gatorade making energy bars? There are too many successful focused competitors already in the category (PowerBar, Cliff Bar, etc.) that there is unlikely to be any room for such a silly brand.
4. Will extending the line again further complicate your product line to the point of insanity?
32 types of Tide? 13 types of Coca-Cola? When you need extra hands and feet to count the products in your line you are in trouble.
Does Wal-Mart really need to sell everything? What’s next stocks & bonds like Sears tried?
Or talk about crazy line extensions, what is a Bud Select?? I had one last night. I asked the waitress what it was and she said she had no idea. Was it a light beer? Was it low-carb? Was it great tasting? What was it?? If Bud doesn’t even know how are we?
5. Would the extension be better off as a new brand?
Many times a company has an idea that would be better served by a new brand instead of diluting an existing one.
Propel instead of Diet Gatorade.
Lexus instead of Toyota Deluxe.
Old Navy instead of Discount Gap.