We’ve previously looked at the strategic mistakes of Nokia, the missteps of Monster.com, and the perils of poor decision in a start-up technology company, but for this edition of Strategic Mistakes we’re taking a look at when diversification goes wrong.
If you're considering going through diversification in your own company remember to check out our strategic diversification guide.
Companies diversify for many reasons, be it growth, risk reduction or enhancing capabilities, and many do so extremely successfully. You probably found us on Google search, but how often in the last week have you used other Google products? Maps, Mail, Docs… all great examples of diversification.
On the opposite end of the spectrum, let’s take a look at some of the lesser known diversification attempts. There’s no Google Plus or Apple Newton on this list. We’ve gone for the more slightly more obscure...
Bic Launches Disposable & Cheap Perfume
Bic, famed for disposable but usable pens and razors, decided to enter the perfume market.
In a market where perfume brands often encapsulate feeling and ignite emotion, it wasn’t a surprise people didn’t want to feel disposable and cheap. The perfume didn't last long.
Main Problem: Perfume is a luxury item that has emotional connections, people didn’t want to feel disposable, even if it was at a low price.
Harley Davidson Develops Perfume
Sticking on the perfume theme, Harley Davidson launched a perfume for men in the early 90s… because the first thing that comes to mind when you see big, hairy, middle aged bikers is “Wow, I bet they smell good…”
Main Problem: Brand clash, similar to Bic...
Cosmopolitan Randomly Launch A Yogurt
Popular magazine Cosmopolitan decided that what it really needs to do is launch an expensive yoghurt range to compliment the magazine.
Given the subject of many of the articles in the magazine, one can only wonder what they expected the yogurt to be used for... but ultimately, it didn't succeed.
Main Problem: No synergy between the two items or brand credibility in the diversification.
Colgate Invents World’s Worst Beef Lasagne:
There's a rumour that Colegate, the company that produces toothpaste, decided to launch a series of ready meals in the early 80s.
Colegate Beef Lasagne was an unappealing concept, while the choice of imagery made the lasagne look like it actually contained Colegate toothpaste as an ingredient. The series did not last long.
Main Problem: We're not convinced this one is real, though it's famous so we'll include it. If true, the brand clash is the main issue as the association of toothpaste flavour and food doesn’t work.
Coors Confusing Bottled Water
Coors is a popular beer brand, so when it decided in the early 90s to launch bottled water you can see the logic. They had a history and association with spring water, whilst bottled water as a market was growing significantly.
Unfortunately, a brand that was heavily linked to alcohol launching bottled water was confusing to the consumer, some of whom were put off whilst others perhaps disappointed.
Main Problem: Confusion to the consumer and a brand clash.
HMV Lose £35m
HMV attempted to diversify from their struggling retail business by purchasing a group of struggling live event venues. They purchased MAMA Group in 2010 for £46m before selling it for £7m three years later. The numbers speak for themselves.
Main Problem: Wrong decision on the diversification, entering another market that was struggling at the time.
Harley Davidson Cake Decorating Kit
Back to our friends at Harley Davidson, who must have discovered their core customers love nothing more than visiting a biker bar and exchanging tips on how best to decorate their home made French Fancies.
Main Problem: Brand clash, better approach would have been to licence pre-made cakes for children.
Bic Invents Disposable Underwear:
You can imagine the marketing team at Bic considering this one. Razors are used and thrown away, so why not underwear too?
Move over Victoria’s Secret, wear some Bic disposable underwear, slap on some Bic perfume, and then use your Bic pen to write a lonely hearts advert… because hey this was the 80s, people used pens.
Main Problem: Everything
There's many more examples but I think we'll leave it there!
Hope you enjoyed our rundown of some of the odder examples of diversification, no doubt you'll have more luck with your approach if you follow the diversification guide!
That's all from us, we're off to plan the release of our Lucidity perfume yogurt...