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Bic Underwear: Brand Extension Gone Wrong

In: Business and Management

Submitted By mdupuy
Words 1612
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BIC UNDERWEAR: Brand Extension Gone Wrong
February 28, 2015

EXECUTIVE SUMMARY:
Brand expansion is an excellent way for a company to position itself in different markets. When done correctly, brand expansion can strengthen a brand and provide great financial growth for an organization. When a company already has a recognizable brand, it can make entering a new market a much more pleasant experience, if the new product clearly aligns with the other products of that brand.
In this paper we will discuss the brand expansion attempt of BIC. BIC is successful for its disposable consumer products. As of 2014, BIC holds 34% of the market for Stationary products (making it the second market leader in North America), 30% of the market for Lighters (making it the number one market leader worldwide), and 19% of the market for Shaving razors (making it the second market leader in North America). (BIC, n.d). BIC has held a dominant position in these markets for years (as early as the 1970’s). In 1998, BIC made the bold decision to try its luck at launching a line of women’s disposable underwear and panties. I. History BIC was founded in 1945 in Europe by Marcel Bich, when he manufactured the fountain pen and mechanical pencil. Around this time ball point pens were becoming increasingly popular in Europe and increasingly expensive (selling for $12.50 on average). In addition to being expensive, the pens available on the market were known to clog and leak frequently. BIC introduced ballpoint pens that sold for around 19 cents each and proved to be more reliable than the pens available at the time. At such a low cost, and providing such dependability, BIC achieved rapid success in Europe with sales exceeding 5 million dollars annually. Such success in Europe prompted BIC to then look at expanding to the United States. (Grant, 1998) In the United States, Bich purchased the Waterman Pen Company, which was, at one time, the world’s leading maker of fountain pens. With the growing popularity of the ballpoint pen, Waterman Pen Company was struggling to stay afloat, providing Bich opportunity to purchase the company for only 1 million dollars in 1950. The company was renamed Waterman-BIC Pen Company, and then renamed again in 1971 to the BIC Pen Corporation. (Grant, 1998) In the 1970’s, BIC decided expand its product line and challenge Gillette for the market position for two products, the disposable lighter and the disposable razor. In order to compete with Gillette, BIC lowered the wholesale price of its lighters so that they could sell for less than a dollar at retail. This was the beginning of an intense price war between the two until 1984, when Gillette waved the white flag. BIC controlled 65% of the disposable lighter market. (Grant, 1998) The battle for the disposable razor was also an intense one. Gillette had invented the safety razor, and dominated the market for over 70 years. In 1975 BIC introduced the disposable razor in Europe. Gillette anticipated the BIC disposable razor coming to the United States and launched its own disposable razor in the US before BIC. The demand for disposable razors was so high that Gillette could not keep up. Not to mention Gillette did not want to abandon is reusable razor line and it cost them more to make disposable razors that were sold a lower price than the reusable. Once again Gillette acknowledged defeat, deciding to focus more on its reusable line allowing BIC to seize 50% of the disposable razor market. (Grant, 1998) Perhaps all the victories against Gillette had gone to BIC’s head, because in 1998 BIC made the questionable decision to launch its own brand of disposable women’s underwear and panties. The product was first launched in Greece. The product was indeed a failure and was only sold in Greece, Ireland and Austria before BIC realized its blunder. II. Cause of Demise BIC was under the impression that its brand name was big enough to be applied to other product lines and categories. With its success in disposable pens, disposable lighters and disposable razors, BIC decided that it could launch its own line of women’s disposable underwear and panties. BIC assumed that the unifying factor of disposability was enough to tie this new product line to its brand. BIC also assumed that it could take advantage of its already established distribution network to sell the underwear line in the same outlets as its other products. There were several reasons as to why this attempt at brand extension failed so miserably. First, despite the fact that the underwear was disposable, customers were unable to see a connection between the product and the BIC brand. Brand extension, although generally a great move, is only effective if customers can link the product to the brand. Second, there was no need for disposable underwear, consumers were not attracted to the idea. The brands that dominate the market of women’s underwear (such as Victoria Secret) appeal to the consumers desire to feel desired, self-confident and comfortable. The disposable underwear launched by BIC did not appeal to any of these. The cheap material used to make the product were uncomfortable and unpleasant to the touch, something that should have been considered for a product intended to be worn all day. Ironically the only characteristic that linked the product to the BIC name, its disposability, was what made it most undesirable. III. Rebound
In 2005 BIC decided to abandon ship and made no attempts to rebound the product. BIC paid a hefty price for this product line as the cost of production and entrance into the market were high (McLean, n.d). A rebound of this product did not occur, and that was in BICs best interest. Poor use of brand extension aside, the concept of disposable underwear in and of itself was a horrible idea. There was no need for such a product, and no desire for it either. If BIC were to attempt another brand extension, and if it insists on sticking with its theme of disposability, it should be a product in which such a feature would be beneficial. Also if BIC would like to use its brand name, it must on a product that aligns with its already existing products. Customers need to be able to see a connection between a product and its brand name in order for it to be effective.
The product was only sold in Greece, Ireland and Austria, fortunately and since customers already had trouble connecting the underwear to BICs other products, the sales of BICs other products were not affected by this failure. Also, rather than laying off the employees that worked under the disposable underwear department, they were transferred to disposable razor departments. (Purcell, 2013). Aside from money loss and a damaged ego, BIC was able to move past this fiasco. IV. Philosophies
BIC’s products are intended to comply with four core values; simplicity, inventiveness, reliability, and affordability (BIC, n.d). With all of its product, starting with its first ballpoint pen, BIC has always made its mission to provide customers with “easy answers for everyday needs” (BIC, n.d). Frankly speaking, the disposable underwear met this requirement for simplicity. Underwear is something that we (most of us) wear every day. Disposable underwear eliminates a large portion of laundry that must be done. BIC is certainly inventive. When the company “identifies a specific need, it responds with technical ingenuity to optimize performance, thanks to its ongoing research and development.” (BIC, n.d). One would argue that with this particular product, there was no such need, and if there was, there was no desire for this product. Customers did not find disposable underwear necessary nor appealing. Although BIC may have discovered a need, there must be a desire in order to make a profit.
In terms of reliability, BIC’s lighters, pens and razors clearly exemplify this value. As they advertise on their web page “Every BIC® Cristal® pen draws a line 2 km long, which is as good at the end as the beginning. Every BIC® maxi lighter produces 3,000 flames, identical from first to last. Every BIC Comfort 3® shaver is good for 10 days of shaving, as efficient from the first shave as to the last.” (BIC, n.d). Reliability and quality are synonymous. The disposable underwear missed its mark in terms of quality. The underwear was reported to be uncomfortable to wear. It may have been durable, but not necessarily reliable, at least not in terms of comfort. Affordability has always been a strong value of BIC’s. It is its commitment to affordability that has allowed BIC to position itself in these various markets and take the lead from formidable competitors such as Gillette. What has made BIC a leader in so many markets is the affordability that they provide for products that consumers need and want. With the disposable underwear, since there was no need, and no “want”, affordability really had no effect on the product sales. No matter how affordable a product is, consumers will not purchase it if they don’t see the need or the desire to do so.

References

BIC. (n.d). Retrieved on February 23, 2015 from http://www.bicworld.com/
Grant, T. (August, 1988). International Directory of Company Histories, Vol. 23. St. James Press, 1998.

McLean, D. (n.d). Brand Extensions Gone Wrong. Retrieved on February 24, 2015 from http://www.talentzoo.com/beneath-the-brand/blog_news.php?articleID=16856

Purcell, T., Mateo, L., Nguyen, T., Manering, K. (November, 2013). Bic Underwear. Retrieved on February 23, 2015 from http://prezi.com/ms_mdsm1suiz/product-failure-bic-underwear/…...

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