brand diversification reaching out
Reaching out. In both management science and practice, brands usually have a core and companies have a core competence. The positive results of the concept of core are focus, specialization and stringency. So far, so good. The bad results are however restriction and stagnation.

Not consumers, but brand owners are often the growth bottleneck when they stick to the concepts of brand core and core competence. Brand core means that brands have a well-delimited, rigid «core» within which the brand is doomed to stay. Even if brand owners realize that their brand core definition is too narrow and the brand could grow outside, they still realize that they do not have the business competence inhouse to take the brand to new horizons. As a result, they continue doing business as usual.

However, brands that don’t move become boring and old-fashioned in today’s fast changing environment. Brands like Adidas, Ralph Lauren, Samsung, Porsche Design, L’Oréal or Knorr took many steps to extend and diversify their offering into new markets. Today, they have a huge and up-to-date offering of countless different products which goes far beyond the experience of individual customers.

The secret in brand management is to combine concentration with diversification. In order to move on to new markets, brand owners have to overcome two hurdles: they have to redefine the cores of their brands, and they have to accept to source additional competencies from outside.