Brands have become smarter about expanding their reach through coherent products and services. Some become lifestyle brands, centered on the aspirations of their target audience. The most successful become ecosystems. That is, an interconnected set of services that enable users to fulfill a wide range of needs in one integrated experience.
Here, we explore the different ways a brand can expand beyond its initial remit to the benefit of consumers and marketers alike.
From brand extension to lifestyle branding
In textbook marketing, brand extension consists of using the same brand name across a wide range of product categories. easyGroup exemplifies brand extension, stretching the name from EasyJet (the airline) through hotel, office, cinema and even pizza.
Today, brands can leverage technology and data to create a coherent consumer experience addressing various needs. Through this process, they become “lifestyle” or “ecosystem” brands.
Equinox, a brand known for its upscale fitness clubs, is now expanding into hospitality, opening its first hotel in New York’s Hudson Yards in a few weeks. Equinox has built a strong identity thanks to its provocative ad campaigns. It’s not just about going to the gym, but aspiring to living a life centered on movement, nourishment and dreaming.
In other words, Equinox is not marketing a gym facility, but a lifestyle reflected in its health clubs, hotels and beyond. Its research shows 90% of existing members would stay at an Equinox-branded hotel.
The ecosystem brands
Ecosystem brands serve as one-stop-shops for all consumer needs. These brands derive real benefits from the network of connections and interactions they can create with their customers — provided that data is collected, integrated and leveraged smartly.
Google, Apple and Amazon are master ecosystem brands. Their platforms allow multiple merchants and consumers to interact with each other, creating and exchanging value.
Not all brands can realistically cover such extended relationship with customers. But there is room for smaller, highly specialized ecosystem brands, particularly those products and services that stay offline by nature.
The building blocks of ecosystem brands
Silicon Valley’s holy grail is product-market fit. But today’s winners think about what difference they’re bringing to the world. It’s about solution-need fit. Knowing your customers, anticipating their future needs, and exceeding their expectations results in solutions that serve rather than products to push.
Through a combination of sensitivity, speed and agility, offer innovation stems from the world of opportunity – the ecosystem – around a singular need. This evolved offer is much more than a brand extension; it addresses peripheral needs surrounding the core one, creating more numerous and powerful synapses.
They not only forge stronger connections with more satisfied customers, but also equip brands with critical insight and ammunition to continue feeding the flywheel. Among the numerous competitive advantages that brands exhibit, it is worth noting ecosystem brands excel at delivering customer intimacy and personalization
More knowledge on customers (especially on a per-customer basis) means greater familiarity with key audiences at each stage of the funnel. Ecosystem brands collect a plethora of data across services, at user level.
They can then model this data to personalize the customer experience and anticipate the user’s needs, optimize the timeliness and effectiveness of their marketing, upsell companion products and address user pain points problem areas.
Winning brands further leverage this multifaceted view of their customers to constantly refine the personalization of the experience, better anticipate future trends and inform their product innovation efforts.
Ecosystem brands foster long-term loyalty
DTC, for example, is not a channel. It’s a personal and rewarding interaction with your local bakery, not a mass-produced dessert from the nearest grocer. The dialogue between the brand and the consumer is therefore more authentic, rooted in delivering real value to the human rather than chasing a share of his wallet.
Ecosystem brands also develop system-wide loyalty programs that are more rewarding for members. For example, the Virgin Red loyalty program personalizes its member experience based on data gathered from the media you consume (Virgin Media), your workout (Virgin Active), the trains you ride (Virgin train) and how you pay (Virgin money).
Ecosystem brands enjoy greater return on ad spend than any other brands
In an ecosystem, the advertising deployed to promote one service indirectly benefits all others. When Microsoft advertises its Surface product, the campaign also drives awareness for its Office 360 brand and equity for its Microsoft master brand. Ecosystem brands can measure and optimize the impact of each campaign toward each product, brand and Masterbrand. They can also measure the cumulative effect of different campaigns and optimize the sequencing of these campaigns and their components (media channels, publishers, creatives…) to maximize Return on ad spend.
With the inundation of options available, the winning formula is now less about what brands offer and more about the customer centricity (the human) and market responsiveness (their reality) surrounding that offer. As such, ecosystem-driven growth is the new era of brand-building.
The most effective ecosystems are not defined by costs and defending of market share, but by revenues and creation of new markets, which better satisfy real needs. Realizing that expectation is reality, these players have discarded cheaper in a battle for better – better quality, convenience, speed and relevance that translates to deeply connected and long-lasting relationships.