....and stretch: How far will O2 be able to stretch it's brand?
Last week Ronan Dunne the thrusting CEO of O2 UK proclaimed a bold vision to create a lifestyle superbrand selling financial products, health and education as well as just plain old mobile phones.
I love a good vision, even more than the next man, but it's always an idea to keep one's weather eye alert when a CEO makes these sort of proclamations.
Stretching a brand convincingly and with commercial success is a real challenge. Many attempt it but few succeed. Those that pull it off usually have a powerful structural source of competitive advantage that they can use to ensure that the stretching delivers value to the customer. Rarely is this competitive advantage the brand.
Tesco have a retail distribution network that ensures that customers get a significant convenience benefit from the co-location of goods and services. Add their now legendary scale and they can provide aggressive pricing. The Tesco brand helps because it promises the customer these benefits but, to be clear, it isn't the reason why the customer buys from them.
Apple have created technology platforms that have allowed them to develop lucrative content delivery businesses in addition to the hardware sales. These revenue streams are based on providing access, integration and ease of use benefits to their customers. Their brand surely helps but for most of us the reason we use iTunes is because it’s easy rather than Apple.
Virgin is somewhat the exception that proves the rule. The Virgin brand has stretched across multiple products and services with the brand promise of something different, younger and more entertaining. Oh and Richard Branson to carry it through. These benefits create stretches that work for them in the service space where the customer gets a better experience: Virgin Atlantic, VirginMedia, to a certain extent VirginMobile, and even (when they work) VirginTrains. Many of Virgin's stretches haven't worked; VirginVie, VirginBride, VirginWine, VirginBooks are much less convincing.
Stretching too far has even taken the scalps of some of the best management companies in the world. Anyone remember Saatchi's red balls falling onto shopping baskets that heralded Procter & Gamble's stretch of Olay into Cosmetics? That lasted only a few years and made no money.
So where does that leave the Mr. Dunne's superbrand vision? Well I think O2 are still searching for their stretchable competitive advantage. The best they’ve come up with so far is "the mobile phone is the remote control for your life". What this means is a bit of a mystery to me apart from a dangerous throw back to one of the worst movies of 2006 - Adam Sandler's Click
(no -don't see it).
(no -don't see it). Maybe they mean that the mobile phone is a portal to other aspects of your life. Well that maybe true but that doesn’t provide a compelling reason to buy home insurance from my mobile phone provider.
Given it’s sounding all a bit unconvincing so far Mr. Dunne then tries to persuade us that O2 is (or will be) a trusted brand; that in a world of low-trust brands this will have us flocking to buy health and education from O2. This is dangerous territory - a word to the wise - anyone, CEO or not, who tells you "trust me it will be alright" is almost always, car-salesman-like, clutching at straws. Trust is built within a specific context of delivery and doesn’t easily transfer to other non-similar product categories.
However on the plus side the move to introduce member rewards such as free concert tickets at the O2 arena starts the notion of O2 being a "members club" which enables the stretching idea. The significant £5m investment O2 is making into social innovation in local communities through the “Think Big” campaign is also laudable and has the potential to add another dimension to the brand.
But are these advantages enough? I doubt it unless O2 can go back to the basics and clarify for their customers what real, tangible benefit O2 can consistently deliver as it moves from phones to finance to education.
Do you want O2 to stretch its brand? What risks and opportunities do you think they should take?
Justin
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