When to launch a second brand. Plus: The ins and outs of outsourcing.
Our apparel business is considering launching a new product line in the same collegiate outerwear realm as our current brand but as a separate division. Managers are debating whether to create the new division now or wait until we have increased customer awareness of our original business, which has grown consistently for 10 years. Is it too risky to allocate resources to a second brand?
Barry Lipsett Charles River Apparel, Medford, Mass.
In the decision to start a second brand -- as in the decision to have a second child -- resources are not necessarily the most important issue. In both cases you've already got a lot of the necessary stuff. Companies that sport multiple brands on the outside may operate a single back office on the inside, and scale, as you've probably heard, has a habit of producing economies. Yes, you'll have to hire. But you may not have to hire much.
First, says Robert Brunner, CEO of Pentagram Design, a specialist in brand development, consider how the new brand is likely to contribute to your customers' experience and whether it communicates your company's core values: "Many companies get ahead of themselves by focusing more on operations and less on what they are selling."
What matters most, of course, is whether the new entity will be welcomed into the world. Finding entirely new customers is the best bet; existing customers will only embrace the upstart if it offers something that differs significantly from what you sell now. Ultimately, says Irene Steiner, vice president of marketing for the Vermont Teddy Bear Co., fortune favors the cautious: "Listen to what your customers have to say. Grow conservatively, and don't gamble with what you can't afford to lose."
Our small machine shop has found it cheaper to import some products from overseas than to build them in-house. I am charged with learning all the relevant rules and regulations, establishing contacts overseas, and arranging for freight. Where should I start?
Mike Broxterman Youngers and Sons Manufacturing Co. Viola, Kansas
We notice you don't use the "O" word, which is probably wise. Offshore outsourcing presents an opportunity to save money and take sides in one of the political season's ugliest brawls. But you're not asking whether to outsource; you're asking how. For starters, rules and regs are posted on the U.S. Customs and Border Protection website (www.customs.ustreas.gov). The document "Importing to the United States" is particularly helpful. If the prospect of navigating government bureaucracy fails to delight you, consider retaining a customs broker. Those handy folks will file all your documents, arrange inspections, and ease your importing travails in general.
As for the rest, when doing business in Rome (or India or China) do as the Romans (or Indians or Chinese) do. First, choose vendors who have experience working with American companies and check out their work. Then ask those vendors for guidance. "If the manufacturer has shipped to the United States, he can put you in touch with a freight forwarder to discuss shipping rates," says Sam Wiseman, founder of watchmaker Oui Bee Art in Casper, Wyo. The freight forwarder, in turn, can put you in touch with a good customs broker.
Finally, don't let distance discourage you from hands-on management. Wiseman, for example, purchases watch parts from Japan and ships them to China for assembly. He visits the factories frequently to ensure that the process is running like clockwork.
How do you achieve balance between marketing and sales? Too often, I have seen one get dangerously ahead of the other. For instance, the marketing group may go into high gear for a product launch, but the offering never takes off because the sales team hasn't been sufficiently trained.
Barbara Johnson MQSoftware, Minneapolis
Remember the parable about six blind men trying to "observe" an elephant based on touch? Each describes a different beast depending upon whether he's probing an ear, a tusk, or the trunk. Now imagine those six blind men trying to sell that elephant, despite lacking even a basic understanding of its features. Well, sales and marketing often suffer from that kind of narrow view. To get past it, they should try working together.
Steve Winterhouse, CEO of the Winterhouse Group in Scarborough, Maine, believes mixing up sales and marketing teams is a great way to foster communication. Even better, he suggests: Have each group walk a mile in the other's shoes. He likes to play role reversal, asking sales to present a mock marketing program to the marketing department and vice versa. That gives both groups a new perspective and sparks ideas for supporting one another.
Energy Brands Inc., maker of Glaceau Vitaminwater and Glaceau Smartwater, is another breeder of hybrids. "I saw early on we needed to have close cooperation between sales and marketing," says CEO J. Darius Bikoff. "When we built our office we built it without walls. Sales and marketing sit together." Recently, sales and marketing shared the reins of a product-sampling program. The marketing team ran it, and a sales manager designated sites and best practices. Bikoff credits such collaboration with making his company the top seller of bottled water in the natural foods market.
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