Energy drinks company's category diversification decision

Brand diversification is a means to grow overall brand revenue by extending the brand to a new category. A company might choose to diversify its brand in order to tap into a new market opportunity, reach new customers, or increase revenue by offering complementary products or services.

Use the Remarkly app to assess when it is appropriate to diversify a brand into new segments and what modifications it requires.

Let's explore how

Hypothetical example:
Inspired an actual client issue
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Situation:

You are a brand manager for a leading energy drinks brand.

The head of your business has asked you to grow brand revenue.

Competition in the energy drinks category is fierce so you are considering diversifying your brand into other categories.

Your strategy team has suggested yogurt, snacks, and water as feasible options each representing a sizeable market opportunity.

How should the company diversify its brand to maximize revenue growth?

Approach:

Using Remarkly, you can easily determine the most suitable category for your brand. Simply create a brand project for each category that you are considering and evaluate brand fit by evaluating the category across strategic criteria as guided by the app. Next rate the outcomes to see which represents the most opportunity.

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Understanding the Results:

Let’s say you start with yogurt. you would want to ensure that your brand is attractive to the target audience for yogurt. At the same time, you want to make sure that current customers wouldn’t be alienated if you moved into yogurt.

If the system recommends:

core brand, yogurt is a great match for your brand and you can move forward without making any major investments in brand modification. (On the downside, yogurt may not bring that much new equity to your brand but you might not care about this.)

unrelated brand, yogurt is not a great match for your brand. Expanding into the category will require investing in a new brand.

hybrid or related brands, yogurt could be an interesting category for your brand but it will require modifications to your brand.

Outcome:

After repeating the process for all three categories, and taking into account market potential, profitability, time to market, etc., the brand manager settles on Water as the category to go forward with and presents a recommendation to the business unit manager the next morning.

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Impact:

Where before the brand manager might have engaged an agency to help them explore and analyze the options, Remarkly’s AI-powered system provided immediate recommendations using a consistent, proven framework on which teams can collaborate.

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