Krispy Kreme is a good example of brand expansion in the short term. Known for its neon sign indicating that the next batch was ready, people flocked in to be among the privileged few who could grab a donut while it was still hot. Just like the neon sign, this expectation was part of the brand experience.

Then came the moment when someone at Krispy Kreme decided that they should take advantage of the momentum to open up franchises everywhere. Thinking that once people got a taste for them they’d be hooked, this company manager decided that Krispy Kreme donuts should be available on the shelves of all the big outlets, like Wal-Mart and even Petro-Canada, to name just two. To make sure that people would stay close to the original concept, an “urban legend” was invented pretending that a donut reheated five seconds is as good as one fresh from the oven, and it would spare them having to wait in line. Unfortunately, it worked only for a short time. The brand was now everywhere and nobody believed the legend. Results: franchises closed, layoffs, the value of Krispy Kreme stocks dropped considerably and tons of donuts had to be sold to other distribution networks, thereby losing the original magic that the brand inspired.

I think the biggest mistake was not the expansion itself, but showing a lack of understanding of the consumer. We loved to wait in line and were proud to be among the lucky ones to enjoy a Krispy Kreme donut.

And now, if I may make a prediction, Starbucks has decided to follow the same path, tempted by quick results. This company is making its coffee available to anyone who wants to sell it; again, it’s a sale and visibility strategy that will quickly make the brand lose its prestige and its customers, including me. Both companies will probably manage to pull through this, but at what cost?