Chicken Soup For The Soul? Sure, But Served In A Bowl?

The book brand has di­ver­si­fied but ad­mits it has suf­fered more misses than hits

Bangkok Post - - CONTENTS - Story by Paul Sul­li­van/NYT

In early 2008, Wil­liam J. Rouhana Jr. closed a deal to buy Chicken Soup for the Soul, a com­pany known for a se­ries of in­spi­ra­tional books, with the goal of ex­pand­ing the brand into a host of other prod­ucts.

The pop­u­lar line of books was started by Jack Can­field and Mark Vic­tor Hansen in 1993, but the com­pany had also ven­tured suc­cess­fully into cal­en­dars, greet­ing cards and even pet food.

Today, Rouhana, an en­tre­pre­neur and phi­lan­thropist, can cat­a­logue the brand’s at­tempted ex­pan­sions — even a line of soups, in­clud­ing chicken — that have failed in the last nine years.

The com­pany tried dif­fer­ent ap­proaches in the dig­i­tal space, where, Rouhana ad­mit­ted, “we’ve had our most colos­sal fail­ures”. He added: “We thought a big mo­tion pic­ture would be help­ful to the brand.”

Rouhana al­most had a movie un­til the stu­dio pro­vid­ing fi­nan­cial sup­port backed out, cit­ing losses from a block­buster movie that cut into its bud­get for smaller films. Yet he has ex­panded the brand again, and is a lot more op­ti­mistic this time.

En­trepreneurs are idea-gen­er­at­ing ma­chines, and the urge to ex­tend a brand is nat­u­ral. Yet even the big­gest com­pa­nies in the world reg­u­larly fail when adding new prod­ucts. So what chance does an en­tre­pre­neur have?

An en­tre­pre­neur has to be sure the brand tells con­sumers what to ex­pect, said Kelly Gold­smith, as­so­ci­ate professor of mar­ket­ing at Vanderbilt Univer­sity.

“Häa­gen-Dazs tells you to ex­pect high-qual­ity ice cream,” she said. “It’s a bless­ing and a curse. It sets ex­pec­ta­tions for qual­ity and ev­ery­day lux­ury. But it lim­its you, be­cause the ice cream as­so­ci­a­tion is al­ways there.”

Imag­ine, she said, Heineken pop­corn or Exxon ice cream. The dis­so­nance be­tween the brand and the new prod­uct is too strong to let the new prod­uct work.

Some ex­ten­sions work be­cause they draw off a larger emo­tion as­so­ci­ated with the brand, not a spe­cific prod­uct.

Jules B. Kroll, who started his cor­po­rate in­tel­li­gence ser­vice, Kroll Inc., in 1972, is cred­ited with cre­at­ing the in­dus­try of root­ing out fi­nan­cial crim­i­nals around the world. He had the bona fides to prove it, find­ing money hid­den by dic­ta­tors like Fer­di­nand Mar­cos in the Philip­pines and Sad­dam Hus­sein in Iraq.

In 2004, Kroll sold Kroll Inc. to Marsh McLen­nan. Mo­ti­vated by the bad job that bond rat­ing agen­cies did dur­ing the fi­nan­cial cri­sis, he started Kroll Bond Rat­ing Agency in 2010.

The es­o­teric world of bond rat­ings, on the sur­face, would seem to have lit­tle in com­mon with the glit­ter of in­ter­na­tional money laun­der­ing and cor­po­rate chi­canery. But Jim Nadler, Kroll’s co-founder in the bond rat­ing firm, said Jules Kroll was trad­ing on his rep­u­ta­tion for in­tegrity and tenac­ity.

“It was Jules’ rep­u­ta­tion for get­ting the story straight and not stop­ping un­til he got it straight,” Nadler said. “He was tena­cious in eval­u­at­ing the

sit­u­a­tion. I thought that’s ex­actly what we need.” Nadler said the firm was pro­jected to re­port US$90 mil­lion (2.9 bil­lion baht) in rev­enue this year. “We’ve done so well,” he said, “be­cause we’ve con­nected with in­vestors on this is­sue of trans­parency”, an at­tribute that Kroll cham­pi­oned in his pre­vi­ous busi­ness.

Most ideas for brand ex­ten­sions are bad ones, Ta­tiana J. Whytelord, pres­i­dent and founder of In­tel­li­gent Brand Ex­ten­sion, said.

“It’s not just ‘I’ve just launched a vodka and it’s work­ing very, very well, and now I’m go­ing to go do a gin’,” she said. “Vodka and gin are very dif­fer­ent worlds — dif­fer­ent con­sumers, dif­fer­ent ways of pro­duc­tion, very dif­fer­ent im­ages. The fact that you were suc­cess­ful in mak­ing a vodka doesn’t mean you’ll be suc­cess­ful in mak­ing a gin.”

In that ex­am­ple, she said, it may make more sense for the com­pany to try branded bar­ware in­stead of an­other spirit. “That re­quires know­ing what the mar­ket is look­ing for at that par­tic­u­lar mo­ment,” she said.

Why Chicken Soup for the Soul strug­gled to sell soup would seem baf­fling, but the prob­lem turned out to be a bad part­ner­ship. Rouhana said he had worked with a com­pany, Day­mon World­wide, that made generic, white-la­bel prod­ucts. The soup sold well, but not well enough.

When prob­lems arose with the part­ner, Rouhana said, he knew he could not con­tinue the line on his own. “I didn’t have the cap­i­tal or the ex­per­tise to fix it,” he said.

But the pet food, which the com­pany now pro­duces it­self, is thriv­ing.

“The pet food clearly suc­ceeded be­cause of their emo­tional mes­sage, which ap­peals to a seg­ment of dog own­ers who think of their an­i­mal as their child,” said Ed­ward M. Tauber, pres­i­dent of Brand Ex­ten­sion Re­search.

An­other risk is go­ing too fast. When a brand is do­ing well, en­trepreneurs want to ex­pand it quickly, but some­times they do so be­fore get­ting the orig­i­nal prod­uct right.

“In or­der to ex­tend your brand, you have to have a brand first,” Whytelord said. “It’s not just that you trade­marked a name. It’s that you have an ex­ist­ing prod­uct or ser­vice that has good­will in it and value and is sell­ing in good vol­umes.”

One of the cau­tion­ary tales in rapid brand ex­pan­sion is Pierre Cardin, the fash­ion de­signer who was once syn­ony­mous with French lux­ury style. But then he ex­panded the brand too quickly and broadly. What was once a pres­ti­gious name is now a mass-mar­ket brand.

It’s bet­ter for en­trepreneurs to go deeper into what they al­ready do, brand con­sul­tants say. This is what Chicken Soup for the Soul has done with its books. Amy New­mark, pub­lisher and edi­tor-in-chief of the books and Rouhana’s wife, said there were about 180 ti­tles when they bought the brand but that only 150 con­formed to the se­ries’ for­mat, con­tain­ing 101 in­spi­ra­tional sto­ries. As part of the ac­qui­si­tion of the brand, the com­pany started pub­lish­ing the books in­house. New­mark re­designed the books they had, cut the ones that did not con­form to the for­mat and cre­ated new ti­tles.

The key to this, she said, was chang­ing the ti­tles of the books. Un­der Can­field and Hansen, the pat­tern was “Chicken Soup for the Fill-inthe-Blank Soul”. She sim­ply branded the books Chicken Soup for the Soul at the top and then gave each book the ap­pro­pri­ate ti­tle with­out the old con­straints. The line now has some 300 ti­tles.

“My ex­pe­ri­ence in book­selling was coloured by my ex­pe­ri­ence on Wall Street,” New­mark said. “I put my heart into these books, but if they’re not sell­ing, I cut my losses more quickly.”

Rouhana said he was ready to try again with an ex­pan­sion into video. This time, he said, he has the rev­enue to sup­port it.

Rev­enue for Chicken Soup for the Soul is 17 times higher than it was nine years ago, and its in­come is four or five times higher, Rouhana said.

In 2015, the com­pany started a sep­a­rate en­ter­tain­ment divi­sion and cre­ated se­ries like

Hid­den He­roes and Project Dad. Last year, it bought A Plus, a dig­i­tal me­dia com­pany started by ac­tor Ash­ton Kutcher, and with it, the com­pany has a dig­i­tal strat­egy that is work­ing: The divi­sion’s rev­enue jumped to $8.1 mil­lion last year, from $1.5 mil­lion in 2015.

Rouhana, whose brand is pred­i­cated on pos­i­tive think­ing, is op­ti­mistic about the ex­ten­sion into web-based video. Why will it work this time?

“The di­rect-to-con­sumer on­line busi­ness is go­ing to be our fastest-grow­ing busi­ness by a lot,” he said. “It’s ac­tu­ally a mar­ket­ing de­vice.”

Most ideas for brand ex­ten­sions are bad ones

Wil­liam Rouhana Jr., the head of the Chicken Soup for the Soul com­pany, and Amy New­mark, who runs its book se­ries.

Some of the ti­tles in the Chicken Soup for the Soul se­ries on dis­play.

Dur­ing Amer­ica’s in­ex­orable march to­ward pro­cessed food, chicken soup be­came some­thing to buy, not some­thing to make, but it is one of the most pain­less and pleas­ing things to cook in a home kitchen.

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