Brand Extensions: Worth Doing or Not?

11.02.12 / David Lemley

Quick: how many new brand extensions made an impact on you last year? Can’t remember many, if any, can you?

That’s the problem.

So many new products come out and fail; So few are memorable. Even fewer are hits.

It’s just too tempting. That’s why brands repeatedly go out on the proverbial limb and extend their brands. The problem is that it’s ill-advised to extend brands without answering fundamental questions first. “What is the #1 ownable aspect of the brand in consumers’ view?” Then: are there logical reasons for wanting to extend the brand? What are they? After all, it has to make sense to the company involved or it surely won’t make sense to consumers.

What many people perceive as brand extensions are in reality, line extensions. If an established brand adds a new variety to its existing assortments, it’s a line extension. Brand extensions take an established, well-recognized, respected brand into an entirely new category or categories of consumer products.

6  reasons for considering brand extensions:

  1. Finding logical categories to expand the brand’s footprint. Ocean Spray is a great example. Leveraging its cranberry business into the juice category and the snack category with Craisins were both logical moves and they’ve paid off.
  2. Creating a new category that makes so much sense consumers marvel that it hasn’t been thought of before. The Tide To Go stain removing pen that treats spots no matter where consumers are is a perfect example.
  3. Leveraging the equity of a respected brand’s assets and raising its visibility to more consumers. Harley Davidson’s biker boots and apparel are a winner for both bike owners and wannabes.
  4. Expanding the business with products in viable categories when sales are mature in existing ones. Kellogg’s Special K is a great example of a brand that leveraged the idea of losing weight from cereal to cereal bars, shakes, waffles and crackers.
  5. Reducing potential risk and lower costs of entry since going to market with a recognized brand is far easier than trying to build a new one from scratch. There’s inherent trust among consumers which is a major asset. Crayola is a brand that went from being a crayon company to a provider of paints, markers and creative play sets for kids.
  6. Ability to utilize the company’s expertise in branding, marketing and advertising and sharing these resources for the fledgling brand extension until it gets established and merits its own dedicated team.

By making rational assessments and tapping into consumer research, potential mistakes that can possibly harm or dilute the parent brand can be avoided. There are plenty of examples of brand extension failures; some of them embarrassing the most powerful of consumer brands. Who remembers Richard Branson’s powerful Virgin brand’s failures: cola, jeans, liquor? Thankfully for the company the brand name is so strong that its brand extension flops didn’t damage it. That’s a rare phenomenon when a brand has experienced a number of failed extensions.

While the Virgin brand offers consumers more value, more enjoyment and an unwaveringly high level of customer service and satisfaction, it could not break into categories where it didn’t seem to “belong” in consumers’ eyes. Or in categories where powerful brands already dominate: Coca Cola, Levis jeans, Smirnoff vodka. Extensive research would have uncovered that.

7 dangers when it comes to brand extensions:

  1. Stretching a brand that doesn’t have an ownable asset other than its brand name. There are high recognition brands that have considerable value but don’t “own” a specific asset in consumers’ minds. As a result, their brand extensions often fail. Xerox found that out. The brand is synonymous with “copiers”, not high tech. Repeated attempts to launch high tech office products and office networks failed.
  2. Stretching a brand with an ownable asset too far. Does anyone remember Bic underwear? What is Bic’s ownable asset? The concept of “disposable”; that’s why pens, lighters and razors work for the brand and underwear was a total flop.
  3. Not assessing what is truly ownable to the brand and then leveraging that in appropriate categories. A Harley Davidson cake decorating kit? Really? What on earth does that have to do with the rugged individualism, freedom and celebration of the open road embodied by the brand?
  4. Launching without consumer research: finding out whether consumers will accept the brand in a specific category is crucial. Do they associate the brand with the category or not? Is it acceptable to them or not? That’s how Hershey’s launched a chocolate milk product: research.
  5. Getting into incompatible categories in consumers’ view. LifeSavers soda? Is it obvious why this brand extension was a bomb?
  6. Getting into categories that are so dominated by other brands, it is hard to gain traction. Heinz is almost synonymous with condiments and food. When the company decided to stretch its brand to bring cleaning vinegar to market, it went up against major players in the cleaning category. It didn’t make sense to consumers, either. So it failed.
  7. Diluting and eventually destroying the brand by extending into too many categories, often via licensing agreements. Dior. Period.

As is the case with everything else, there have been solid successes and spectacular failures when it comes to brand extensions. Jello pudding snacks, Arm & Hammer baking soda toothpaste, Starbucks coffee liqueur and Planter’s peanut butter make sense so they’ve done well. But does anyone remember Pond’s (of face cream fame) and its ill-fated launch of toothpaste? Of course it bombed! How about Coors spring water? And Colgate, the oral care company’s foray into frozen entrees? Anyone can easily see why these brand extensions failed.

The moral of the story

Some of the best brand extensions include retailers’ store brands from Starbucks to Macy’s and retailers in all channels and sizes.

As long as the retailer has a loyal following, and an ownable brand there’s no reason why well-planned and developed brand extensions can’t be successful.

Retailers’ brand extensions appear in every category from apparel and hard lines to packaged consumer products. But they, too, have to make brand sense. And they have to have appeal to the customer because every category is crowded with competitive products. Otherwise, they won’t succeed.

Getting brand extensions into meaningful categories is only the first step. Labeling, hang tags, packaging and advertising—each consumer touch point has to carry the message and the brand forward. Brand extensions can be risky and even major brands have experienced failure, but the rewards can be great. It just takes asking the right questions, doing the research and making sure that extensions align with the ownable assets of the brand.

Best advice to brand owners: don’t go this one alone. Get expert help and advice. Too much is at stake: no less than the health and well-being of the brand.

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