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
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.