What if you have two things you could do?  You do not want to leave out one for fear of closing off that opportunity.  The dilemma is very common for entrepreneurs: the company can do two things very well and it is struggling for cash flow. They are not established enough to have two brands, or well understood brand extensions.

First, let us examine the entrepreneur case and why this is important.  As an investor, there are many questions that come up. First, are these products (and/or services) related? Second, does the entrepreneur truly need to spend the resources promoting both or are they better off picking one and spending double the resources on that one? Thirdly, are they mixing the message too much to the marketplace and thus confusing them? Fourth, is the entrepreneur just unwilling to focus on one thing?

All are valid questions, but as you can see, there could be a tendency for the investor to start thinking along the negative path. This puts doubt in their minds about the company and about the entrepreneur. This also troubles potential customers, because they are now taking a risk on a startup and want to know whether the company will deliver on-time, on budget, and with the expected quality and service.  (Please note, I did not say best price, best quality, best service…that’s for a later article).

The suggestion is for the entrepreneur to ask themselves the same questions.  If the answer comes up that these products (and services) are related then the question is how to pitch them?

This is nothing new, so we can look at the traditional marketing answer: Know your target audience, and pitch the appropriate message to the right channel!  Pick the channels and understand how they work. Deliver the focused message on each product to that channel. 

As an example, let us take a shoe company that has a patented shoe which provides the best support to active people.  This company could make basketball shoes, running shoes, football shoes, soccer shoes, climbing shoes, and even men’s and women’s dress shoes.  They have a factory and craftsmen that can make any type of shoe; and needing cash flow they instruct manufacturing and sales to sell to everyone.  (Note: Everyone is our customer is for another article)

What if the company came out and said: “We make the best shoes, whether you it is a business dress shoe or a basketball shoe, then you need to come to us?”  People would not believe it because there are already companies out there that specialize in one over the other and they do not mix up their brand. 

One answer is for the company to break it up into channels.  They pitch the sports shoes publically as an active shoe company: We make the best sports shoes because we understand the needs of the athlete! Advertisements during basketball games are for the basketball shoe. Advertisements during football games are for the football shoe.  They could even make crossover advertisements that feature athletes from multiple sports with the common theme that they need these shoes to compete better in their sport.

For the dress shoes, they instead partner with another company that specializes in dress shoes.  The sports company provides the technology to make the dress show more comfortable and fit better. They can even co-brand the shoe with their name; however, they let the dress shoe company lead off with their brand and their advertising.  The sports shoe company hopes that their sports advertising creates enough of a brand impression that the dress show buyer wants that dress shoe. The dress shoe company hopes the same thing, obviously.

How do they pitch to investors?  First, since they are going to promote themselves as a sports shoe company, they should pitch as a sports shoe company with a patented shoe.  In the pitch, they describe how they will target the different sports channels and leverage their ability to make sports shoes to go after these channels.  Also, in the pitch, when they come to product line extensions, then they can discuss their partnering opportunities, “Since we hold the patents on the technology, we will also be seeking out licensing arrangements with companies establish in other channels that do not compete with ours: dress shoe companies.” To the investor, that seems like a logical extension and comes off smart because the sports shoe company realizes their strengths and is selling that to the unrelated channel.

FYI, Nike is the sports shoe company. They sold the technology for Nike Air to Cole Haan (a dress shoe company). Cole Haan has a Nike Air line, which are essentially Cole Haan shoes with a Nike Air insole.  It is sold under the Cole Haan name at Cole Haan stores.  You cannot walk into a sports shoe store and find a Cole Haan dress shoe.  The salesperson may know about it, but only bring it up if asked. They would direct you then to a Cole Haan store.

In conclusion, the entrepreneur needs to pick the focus of the company and market that in the primary channel. If there are multiple channels that are related, then they could still market their product. However, for truly unrelated channels, they need to very wary.  One answer is to partner with another company, letting that company sell their product under the other brand name.