Re: Barrier to entry.

From: Kim Brooks <kbrooks_at_bardo-brooks.com>
Date: Mon 03 Apr 2000 12:30:32 -0700

ROB FRANKEL WROTE:
> Doesn't that strike you as weird? If Amazon WERE a
> great brand, it SHOULD be Amazon Drugs!

JOHN WHITESIDE REPLIED:
> "Branding 101: brands don't transfer across all
> categories. Which is why you don't see Ivory motor
> oil or Pennzoil dishwasher detergent....."

TO WHICH PAUL WHITELAM RESPONDED:
> Maybe Richard Branson failed Branding 101. How else
> could Virgin Atlantic, Cola, Music, Phones, Financial
> Services, Holidays etc....be so successful?

Egads, everyone is comparing apples to oranges. And
making some hugely faulty assumptions about Amazon &
Drugstore.com.

Virgin is the exception to most rules. But in general,
you could say that brands can cross lines within a
general kingdom. Like Nestle can sell cake mixes, hot
cocoa, chocolate, cereal. (NB: they keep their
cigarettes brand SEPARATE so that it won't contaminate
hot cocoa sales and branding.) I'm not sure that they
can sell database software as well as, say, Oracle (or
that they would want to).

Microsoft has also crossed alot of lines - they can
sell online services, consumer software like games and
encyclopedias, development software, servers, clients.
But I'm not sure they could sell hot cocoa (or that
they would want to).

The case of Amazon and Drugstore is something wholly
different. Sometimes you might **want** to keep a
separate service as a wholly unique identity, even if
you do have a strong brand. Like the Nestle cigarettes
example. You might want to do this because:

a) you want to keep the core brand "pure", eg,
   solely associated with books/music/video;
b) you plan to spin off in a separate IPO or
   organization;
c) your marketing is totally different;
d) one is a venture that is still being tested,
   the other is a solid, established company.
   Nobody knows where regulation of prescription
   drugs on the web will go; Amazon may want to
   distance itself from a concept in development.

ALL of these caveats apply to drugstore.com. But the
most important difference that everyone seems to be
skimming over through all these assumptions:
DRUGSTORE.COM IS NOT AN AMAZON COMPANY. From the
drugstore.com site, "Amazon.com is our largest
shareholder, and Jeffrey P. Bezos, Amazon.com's
chairman of the board and chief executive officer, is a
member of our board of directors." It is not a
subsidary of Amazon or started by Amazon. It was
funded by them, and they own a piece. But Drugstore is
an entirely separate entity that happens to have
leveraged it's relationship for a close marketing
partnership. But geez, they are separate! It's not a
reflection of Amazon's poor branding power, it's a
reflection that they are separate companies - and they
both want it that way.

Even if Drugstore.com were wholly owned, they might
want separate marketing strategies. I worked with
another company, Cartia, that was bought by Amazon.com
last year. Yes, the brands are separate still.
Because Cartia does information mapping server for
corporate applications; Amazon does consumer stuff.
Why would they confuse either brand when these will be
marketed and monetized totally separately?

Amazon owns a lot of subsidaries and pieces of many
other companies. Microsoft owns a lot of subsidaries
and pieces of many other companies. Lots of other
companies own pieces of lots of other companies. You
might leverage these networks, publicize them, work
them, and weave them. But you don't necessarily brand
your investments.

Kim Brooks



Received on Mon Apr 03 2000 - 14:30:32 CDT