Are You Surrounding Your Market?
The IPO price [of priceline.com] was $16 a share, and the stock hit a high of $165. For one brief moment in time (April 30, 1999), the investment community was persuaded that Jay Walker’s 35,000 square feet of sublet office space in Stamford, Connecticut, with its little assemblage of computers, exotic software, and 177 employees were worth (on paper) $23.1 billion—more than United, Northwest, and Continental airlines combined. That’s roughly the GDP of Somalia.
Google “American Girl,” and amidst the 8.7 million entries you will start running into entrepreneurs and companies that have built businesses on top of American Girl:
Doll dresses, shoes and accessories; sewing patterns for American Girl dolls; matching mother, daughter and doll outfits; American Girl themed hotel packages that cater to visitors to the retail stores.
Beware of Trying to Compete with the Outsiders
It is tempting to try and lasso the money these interlopers are making off your brand. However, getting into areas that are outside your core competency can be dangerous—opening you up to a loss of control that ultimately causes a diminution of the brand. For example:
* Sewing patterns for American Girl doll clothes may be fine for expert sewers. However, beginners on a sewing machine could create ill-fitting, poorly finished outfits. American Girl would lose control of its perceived excellence and that would reflect badly on the brand. Picture the not-so-occasional person walking down Philadelphia’s South Street in a stained and filthy sweatshirt that has OLD NAVY or DKNY emblazoned across the chest. Yuck. Is that the image you want associated with your brand?
* Should American Girl get into adult clothes to match their daughter and doll outfits? Probably not. Fitting little girls age 7 to 12 is fairly straightforward. But adult female figures can get complicated with hips, bosoms, derrieres, shoulders and sizes that range from petite to full-figured. The seemingly good idea could quickly turn into a nightmare of SKUs and inventory write-downs.