OPINION: MILLS ON ... DIXONS AND BRAND EXTENSIONS

I’ll say it loud and say it proud. I am one of the 900,000 satisfied Dixons Freeserve internet customers who helped to give Sir Stanley Kalms such a happy Christmas.

I’ll say it loud and say it proud. I am one of the 900,000

satisfied Dixons Freeserve internet customers who helped to give Sir

Stanley Kalms such a happy Christmas.



In fact I’ll go further: Dixons Freeserve (which for those who don’t

know does exactly what it says on the tin - ie allows free internet

access) will go down as one of the most inspired marketing ploys of this

decade - smarter even than BA’s ’World’s Biggest Offer’.



But Freeserve’s real significance is that it is a brilliant piece of

brand extension.



At a stroke Dixons gets to sell more kit and reinvent itself away from

being an old-fashioned high street retailer into both a media owner and

an internet shopping intermediary.



Here’s how: with 900,000 users (and climbing) Dixons is now one of the

UK’s biggest internet service providers, as big if not bigger than

rivals such as AOL or Yahoo!. Thanks to the registration process, Dixons

not only knows where its Freeserve customers live, but also a lot about

them (as a database-building exercise alone, Freeserve is probably worth

millions).



Armed with that information and that number of eyeballs it can sell

online advertising and, over time, become the conduit for virtual

third-party retailers, taking a fee for every online purchase.



As luck would have it, the Dixons news coincided this month with other

examples of brand extension by a service or leisure company, which is

probably the kind of activity which will dominate the marketing agenda

over the next few years.



Birmingham City football club announced last week a joint venture to

sell financial services. The idea, of course, is to channel fans’

loyalty to the team into mortgages, insurance and so on. But this is

based on the assuredly dubious assumptions that a) there is a common

theme between football and financial services and b) their emotional

commitment to the Birmingham City ’brand’ is sufficient to permit fans

to make the required leap of faith. I think not.



The second example is Shell’s plan to develop a chain of high street,

non-petrol convenience stores, the key phrase here being

’non-petrol’.



The business logic is three-fold: first, petrol retail margins are under

huge pressure; second, Shell is a trusted brand, at least to motorists;

and third, it hopes to replicate its forecourt success.



Shell may be right to think it has sufficient brand power to pull the

move off - in theory. The reality, however, is that non-petrol retailing

is a vastly different game from retailing in a petrol environment. It’s

a bit like a Sunday footballer dreaming of playing for England - it

looks like the same game but in reality it’s another league

altogether.



And that, ultimately, has to be the acid test of such activity: Dixons

succeeds because Freeserve is logical, credible, rooted in the core

activity and, above all, viable. And neither Birmingham City nor Shell

can justifiably claim they tick all the boxes.



Have your say in CampaignLive’s forum on channel 4 at

www.campaignlive.com.



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