Take A Seat For Sales Diversification

In my opinion, the email inbox represents the ultimate paradox. On one hand, it offers immediate access to a wealth of valuable information. On the other . . .

This editorial originally appeared in the May/June 2012 issue of Industrial Distribution. To view it in its original format, click here.

In my opinion, the email inbox represents the ultimate paradox. On one hand, it offers immediate access to a wealth of valuable information. On the other, it can consume precious hours of the work day as one attempts to analyze, organize, and fully realize the benefits of all the information it houses. Despite the double-edged nature of this tool, it often serves as a great source of inspiration.

Quoting the press release forged from a crowded inbox after some time on the road, “A dynamic design idiom expressing incredible ease and perfectly crafted luxury materials – Mercedes-Benz now brings their unmistakable styling and high standard of quality to the living room. In collaboration with the Formitalia Luxury Group, one of the leading Italian manufacturers of designer furniture, Mercedes-Benz has created a furniture collection under the Mercedes-Benz Style label.”

I thought this was interesting from a personal standpoint, but it also helped hammer home some thoughts pertinent to industrial distribution, and business strategy in general. Mercedes-Benz is an iconic brand, synonymous with style and luxury. In the U.S. owning such a vehicle symbolizes accomplishment and upward mobility, serving as a source of pride for the owner.

That said, one of the dynamics that helps strengthen the brand is also the largest contributor to the limits it faces when looking at ways to grow. All of that precision engineering comes with a price, so the company has to look at unique ways to diversify its offerings and grow without tarnishing the power and status of its brand. For Mercedes, offering a B- or C-level vehicle simply is not an option.

So, they lend their name to other products which share the same type of customer and represent the same level of quality found in their high-end vehicles. Although I doubt that engineers at Mercedes are lending their expertise to the lines and contours of couches, this expanded use of their brand allows them to diversify and expand without potentially losing customers with a shift to lower-priced or lower quality vehicles that would tarnish the brand.

Similarly, the name on your buildings and the logos on your signage house significant brand equity. Your customers know what they get from you and expectations in terms of price, quality, and customer service have been well established. This can make diversifying your offerings or expanding into new service areas seem like an unnecessary risk.

However, as referenced by the example of Mercedes going into the furniture business, diversifying your offerings and approaches doesn’t have to be a source of worry, provided you understand the value proposition of your brand and look to capitalize on it appropriately. In other words, taking on new lines or implementing new value-added services based solely on competitive influences or pressures to quickly boost the bottom line don’t take advantage of the brand you’ve established. As a result, they could simply be ignored by your loyal customers and your investment proves worthless.

Expanding and growing based on your areas of strength and in line with what will provide greater value to the customer will prove to be much more successful. At the end of the day, you can simply be the source of a lot of stuff, or the source of really good stuff that will keep customers loyal and your brand strong.
“Progressive design with an unmistakable automotive identity.” That’s how Mercedes described their most recent brand diversification project. In other words, they know what they do best and are simply looking to expand upon their brand recognition in diversifying into other markets. By staying lock-step with your customers, you can do the same.

Jeff Reinke is the editorial director of Industrial Distribution. You can reach Jeff at [email protected].