Large companies usually build a portfolio of products. That’s how they grow to become large, by acquisitions or by developing their own new products.
After years, in contrast with startups that focus typically on just one product, they almost become known for the things they don’t do. And this poses a challenge for their next acquisition or product introduction. How do you introduce a product that you are known for NOT having? Especially with strong brands, it is very hard to change the market’s perception.How many times have you heard the phrase “I didn’t know that __ also made that!” ?
So what to do?
There is only three options: 1.- make a conscious effort not to brand yourself in a way that will prevent you from going into important growth areas. This is of-course hard, because it implies you have full visibility into the future. 2.- You brute force into the market. Also hard (and expensive!) to shift perception of the market to perceive you as a supplier of A+B. 3.- have a child brand. This is probably the best option. It will prevent cross-talk among the brands, and satisfies the need for growth.
Two of my go to examples: Quaker Oats owned Fisher Price for some time (now is part of Mattel), and Kraft (yes, the cheese!), from 1988 until 2007 was owned by tobacco giant Phillip Morris.
Besides the surprising aspects of that, how fun would a Quaker toy would have been? or, how about really addictive cheese?