Why Equipment Brand Extensions Go Wrong
Foodservice equipment manufacturers pursue many strategies in their quest for profits during difficult economic times. Some drop prices, hoping to make up in volume what they sacrifice in margins. Others add more bells and whistles to existing models to gain competitive advantages and avoid commoditization. Perhaps the most commonly adopted approach, however, is to introduce new product line-ups, to take market share from rivals by offering types of equipment hitherto not sold by a company. Unfortunately, this inn initiative can too often prove problematic. Here’s why.
First, there’s the risk of diluting a brand’s hard-won reputation for quality by extending it onto unfamiliar products. If a well-regarded smallwares maker, say, decides to introduce a line of hot holding cabinets or food preparation equipment, the traditional values of its products are not likely to transfer to the new offerings in the minds of customers. Then, if an established equipment manufacturer sets out to produce unfamiliar products, there are likely to be problems with build quality and component performance, customer support, maintenance and service information, and parts availability. Even training operators’ staff to use new types of equipment properly can cause difficulties, especially if the supplier cannot or does not employ qualified category experts.
Marketing products not previously associated with a brand also poses potential challenges, since manufacturers rarely understand fully what motivates end-users to buy such items from other suppliers. Is it price, performance, features, dimensions, service, ease of use or reliability? Or, most likely, is it some particular combination of all these attributes, equations of value that differ among operators in separate market sectors?
Another concern is distribution and representation. Which incentives will be required to induce dealers and reps to “pioneer” a manufacturer’s new product line? Will expanding into a new equipment category cause conflicts for channel partners with other suppliers or harm long-standing, profitable relationships?
It’s not that equipment and supplies providers shouldn’t venture into new areas of manufacturing and sales. E&S customers are always looking for new, better choices. But, as this article describes, the obstacles manufacturers must surmount – especially in an over-supplied market – can often mean that the effort is not worth the result.