Limitless extension: on learning how to stretch your brand when you are a platform

The concept of brand extension isn’t new. Brands have been trying to “stretch” since, basically, branding became a thing. Caterpillar and Virgin have been doing it very successfully. Some others, like Colgate’s attempt to launch a range of frozen meals, not as much.  

In the case of platform business models, stretching your positioning and broadening your offering into new spaces is not only an extremely natural strategy to pursue; it can also unlock an astronomical growth potential.  

Once established as a platform, opportunities for diversification can seem endless. But which are the ones providing a licence to play for your brand? How far can your brand stretch? 

Well, in the case of super-platform Amazon, obviously a lot! Recently passing the historic $1tn mark to become the second most valued company in the world (ever), it has come a long way from the small online book store Jeff Bezos started up in a garage in 1994.  

This is a now well-known story. Amazon has been very busy, moving beyond just selling books to CDs, software and pretty much everything else, becoming today’s behemoth platform of (nearly) everything. People there certainly have figured out the right way to endlessly stretch the Amazon brand to play into new spaces. Spaces they can comfortably own and disrupt. Let’s figure out how.  

So, what’s stopping the likes of Netflix, Spotify or AirBnB from branching out into different spaces?   

In the old days of battling for market share – the crucible where branding strategy was originally forged – options for brand stretch were relatively simple. Stretch comprised: 

• products (from bottle to can),  
• line (Diet Coke or Fanta),  
• category (Guinness beer and records book),  
• expertise (Michelin guide or Disneyland).  

This approach no longer holds in the case of platform businesses, or at least not without some re-thinking. Because of the sheer scale that platforms seek to achieve in a category, the most widely-adopted product and line extensions strategies quickly become ineffective. Think about this: Amazon could have added one product or service offering at a time for the next hundred years. This way, however, it would have never secured the skyrocketing growth it did. 

The solution is to combine expertise and category extension strategies; that is harnessing your core platform competency in ways which are meaningful and relevant for the new category you are trying to enter. This, as you can imagine, is not easy to do and three fundamental building blocks are required to succeed.  

1. Be extremely considerate and careful about which categories you want to extend into 

Figuring out which category to extend into can be tricky. On the one hand, it makes sense to look for adjacent opportunities, where one can capitalise on infrastructures, resources and know-how. On the other hand, though, risk of cross cannibalisation or reputational damage can be extremely high. Choosing the wrong category to extend into will not only distract your business, it will also divert and drain valuable time and resources into a hopeless venture.   

Because platforms need to connect users and producers, they need to be careful in exploring extensions, which can attract new platform participants, without alienating the existing base of users and producers.  

For example, we know from several studies (including research from Harvard, MIT and UCLA) that AirBnB has the effect of driving up rent prices. This effectively limits them from extending thier offering into lettings, as they would end up competing with locals for space.  

This is when your brand can play a very important role, setting the right direction of travel and guiding your strategy through the endless diversification options, giving you focus. 

2. Make the art of shape shifting your core expertise 

It is difficult enough to manage to be successful as a platform in one category, imagine doing that in many categories at once. To master this, you will need: 

• a willingness to experiment, take risks and a license to fail on occasion 
• access to copious amounts of capital, skills and resources 
• excellent executional capabilities, strong know-how and exclusive IP.  

Amazon has managed this exceptionally well and eventually built a brand around its ability to reinvest itself into pretty much any business it wants. Its ability of reinventing itself and disrupt market is the main reason why shareholders think it is worth $1tr.  

Your brand must earn the right to stretch by constantly flexing its role in the mind of your customers, pushing category boundaries and having something new to say. Innovation must become codified in your brand DNA.  

3. Keep focus on your core promise and defend your reputation at all costs 

Finally, a platform business, like all businesses, has a reputation to defend. The only difference is that, in the winner-takes-all game of platforms, such reputation acquires disproportionate value and the price of failure can be death.  

Not many platforms can afford to mess up! Users, producers and particularly investors will quickly lose their patience with repeated missteps in pushing the brand promise into new categories. Remember: a dissatisfied UberEATS customers might be less inclined to ride with Uber next time. 

Case study: Uber, trying to become the Amazon of transportation 

Uber is an interest case study. It has been trying to stretch its ride-hailing proposition into electric bikes and scooters, Freight, Health and food.   

In particular, UberEATS has registered discreet success, growing 200% year on year. In the US, the company plans to expand its on-demand food delivery service to cover more than 70% of the US population by the end of 2018. 

Uber is evolving from a transport platform into a platform for moving people, goods and services anywhere. Dara Khosrowshahi, the CEO, recently described Uber's strategy as becoming “the Amazon of transportation”.  

It recently announced that it is considering entering the grocery delivery game (in spite of a failed test with Walmart earlier this year) as well as experimenting with Uber Works in the staffing business, matching part-time workers with various businesses needing an extra hand.  

Some, however, remain sceptical about Uber's ability to sustain this strategy of extending its offering. For instance, it has taken Uber eight years to get here (almost double the time it took Amazon to launch marketplace) and the ride was not without bumps.  

Its ride-hailing business is still losing lots of money and earlier this year it had to cut its losses in SE Asia, a region of 620m people, and hand over its operations there to Grab for a minority stake and a sit on the board.  

Bloomberg recently reported that Uber is considering a deal to acquire Deliveroo, its direct European competitor, last valued at more than $2bn. Whilst there can be several strategic reasons to justify such a move, we cannot but think that the Uber brand struggled to replicate the success it registered in the US and to stretch into the European food delivery market. It is hard to predict what Uber would make of the Deliveroo brand were it to eventually acquire it, or even to declare it will be better off keeping it. 

To learn more about platforms and branding, download our ebook: Branding in a Platform World.  https://brandcap.com/branding-in-a-platform-world/