What if Xerox had launched multiple brands?
Among 20th century high-tech brands, Xerox was right up there with
IBM. But like IBM, Xerox failed to capitalize on its position.
Both companies seemed to be confused about the best time to
launch a second brand. The best time to launch a second brand is
when the core brand is at its zenith. But that's exactly the time
when management thinks the opposite. "Our brand is so powerful it
can be infinitely expanded."
Back in the 1980s, Xerox introduced a complete line of printers,
fax machines, personal computers and workstations. All under the
Xerox name and all marketed under a "Team Xerox" strategy. It was a
Since then Xerox has been moving sideways while many other
high-tech companies have been expanding rapidly. Ten years ago,
Xerox sales were more than double that of Apple.
Last year, Apple's sales were more than triple that of Xerox.
And furthermore, Apple made 23 times as much after-tax profits as
Companies such as Dell, Polaroid, Digital Equipment and Kodak
have followed a similar single-brand strategy. At some point in
time, a single-brand company hits a wall where further growth is
difficult or impossible.
Kodak in 1996, according to Interbrand, was the fourth
most-valuable brand in the world. Today, it's not in the top
Actually, Kodak is still the world's most-powerful
photographic-film brand, if you happen to want to buy photographic
film. And Polaroid is still the most-powerful instant-photography
brand. And Xerox is still the most-powerful copier brand.
A brand stands for a category. And if the category declines, so
does the brand.
The world's most valuable brand is Coca-Cola, worth $70.5
billion. But per-capita cola consumption in the U.S. since 2003 has
been declining about 2.2%. Which accounts for Coca-Cola's flurry of
new product introductions, including the purchase of
Vitaminwater-maker Glaceau for $4.1 billion.
In theory, a company should be able to grow forever, as long as
it continues to launch new brands to dominate new categories.
What if the media conglomerates had launched new
What accelerates the need for new brands is the arrival of a new
category. And the more revolutionary the new category, the more
urgent the need for new brands.
Take the internet, the most revolutionary new category since the
arrival of the personal computer.
You might think the sophisticated, all-powerful media
conglomerates would have jumped on the internet with new brand
names. But they didn't.
Every media conglomerate line-extended its existing brands on
the internet. The New York Times, the Wall Street Journal, Fortune,
Forbes, Business Week, etc.
When Newsweek plus Newsweek.com is worth $1 and the Huffington
Post is worth $315 million, you know that something is wrong with
traditional line-extension thinking.
(I should mention The Daily, recently launched by News Corp. as
the first national publication created for the iPad. But it's
awfully late in the game for a media conglomerate to be planning an
internet-only brand. Furthermore, The Daily's generic name is going
to be a serious handicap.)
One of the next revolutionary developments is going to be the
electric car. And guess what? The sophisticated, all-powerful car
conglomerates are following the same line-extension strategy. The
Chevrolet Volt, the Nissan Leaf, the Ford Focus Electric, the Audi
e-tron, the Fiat 500 EV, the Honda EV.
So who will win the electric-car sweepstakes? My bet is on the
Tesla or one of the other new electric-car brands. Or even
possibly Toyota if it can successfully transform its Prius hybrid
brand into an all-electric brand.