Why do companies need to enter new areas, or enter new market segments? This is probably what most business owners think about and confuse about.

Businesses, no matter how big or small, need to grow, just as people need to keep absorbing nutrients from infancy to youth to adulthood. When an enterprise develops to a certain stage, it needs to open up new markets and new categories through the extension of the brand to maintain the continuous growth of enterprise performance.

However, the probability of success of a company's brand in the extension of new categories or new markets is not very high. The Nielsen Company once calculated that in China, the average success rate of FMCG new product launch is less than 5%, and the average new product lasts only nine months.

Therefore, it is indeed very difficult for enterprises to enter new fields for brands, so how to improve the probability of success in entering the market?

Different situations where brands enter new territory

When an enterprise's brand enters a new field, there are usually the following situations:

First, the main brand of the enterprise has entered the market field similar to the enterprise. For example, Liushen Flower Water has successfully extended its brand to shower gels and soaps, both in the personal care market.

Second, the company's main brand has entered a diversified market with the same population. For example, many luxury brands are an extension of related diversification, CK can be a perfume brand, but it can also be a clothing brand, but their target group is actually the same group, which is the pursuit of quality and fashion.

Third, the company has entered a new market with the main brand. For example, Bawang Group once extended the Bawang brand to the herbal tea industry, which is a completely new market, and the crowd is not completely consistent with the original crowd. This kind of brand extension has greater risks, especially when the new market and the original market, the category gap is too large, and it is easy to produce negative associations in two different areas.

Fourth, the sub-brand entered the market segment of the same market. For example, Liby Group once entered the detergent market with the brand "Caiqi", and now there are new sub-brands in the detergent market, but they belong to the market segments, such as "Misi".

Fifth, the company has entered a new market with a sub-brand. For example, Unilever has about 400 brands worldwide, covering a variety of sectors such as food, beverages, detergents, and personal care products. Generally speaking, companies that adopt a multi-brand strategy adopt new sub-brands when entering a new market.

How entering a new field can increase the probability of success

How can companies improve their success rate when they enter new fields? Personally, I believe that this is related to whether the company grasps the methodology of brand extension, as well as the strategic planning of the new brand, as well as the company's own operational capabilities.

To improve the probability of success, the main aspects are as follows:

First, the methodology of brand extension.

There are several important principles that need to be grasped in brand extension to increase the probability of success:

First, the brand extends from one brand to another, and there is a greater correlation between the two to avoid adverse effects. For example, from shampoo to herbal tea, it is easy for consumers to have bad feelings, especially since the main category has successfully occupied the minds of users.

Second, the core personnel of the extended new category are the same group of people as the original category, or similar people. For example, from luxury goods to fashion, the crowd is actually the same group of people, or similar people.

Third, after extending multiple categories, it is necessary to maintain the tonality and style of the original brand.

Second, the strategic planning of the brand.

Whether it is to use a new brand to enter a new field, it is to enter a new field with the old main brand, and in this field, consumers recognize it as a new brand.

The success of the new brand is related to whether the enterprise has mastered the underlying logic of brand success. The strategic planning of the new brand is the key factor that determines its life and death. Therefore, from the brand's strategy to tactics, whether a series of complete systems can be planned and executed well has a great impact on the success rate.

Third, the company's own operational capabilities.

The company's own operational capacity is also crucial. Enterprises with a multi-brand matrix must adopt the brand responsibility system to achieve the development of multiple brands, that is, the brand manager system. The reason why international giants such as Procter & Gamble and L'Oreal can occupy a large market share in many markets is because of their brand management mechanism, which can better enable brand development and success.

The same is true for companies that adopt a single-brand but multi-category strategy, and only matching brand organizations and talents can increase the probability of success in entering new fields.

Concluding language

How can brands increase their probability of success when entering new territory? To sum up, enterprises first need to confirm the portrait of the target group of the new brand, carry out strategic planning around the crowd more clearly, and also need to have matching mechanisms and talents to help promote its strategy, positioning, etc., so as to better improve the success probability of the brand entering the new field.