15 Brand Extension

A brand may enter new product categories, new product formats within a category (line extensions), or new markets or market segments. Examples of the latter include taking a brand currently targeted to women and extending it to the male market, or taking a brand that currently appeals to adults and extending it to the teen market.

Another example of extending a brand into new markets is extending it down from its current position to the value segment or up from its current position to the premium segment. Often, to designate a premium version or offering, special words or phrases are used in association with the brand name—words such as gold, platinum, limited edition, signature collection, premier, elite, marquis, reserve, private, professional, or executive class. But, in general, the more subtle the allusion to a brand’s premium status, the more effective the approach.

The brand can be extended with or without using another associated brand. If another brand is used, it may be a subbrand or a brand endorsed by the original brand. Another option is cobranding. Hallmark created the “Confections” subbrand to extend into gift candies, but it did so in conjunction with Fannie May Candies Celebrated Collection (premium) subbrand. The product is cobranded with each company’s brand and subbrand. Cobranding may be a faster way to enter a new category and gain credibility within it.

Ways to Extend the Brand

Regardless of the branding treatment, extensions can occur in the following ways:

• You source the product or service from some other organization but put your name on it.

• You license your name for use by another company that makes the product or supplies the service. Use brand licensing to extend the brand into new categories, expand the meaning of the brand, reinforce key brand associations, build your brand as a badge, or bring your brand to life in new ways. You should avoid licensing your brand where it doesn’t make sense just to make a few extra revenue dollars. Where the licensing department resides in your organization structure will have a large impact on how well licensing is used to build (vs. bleed) the brand.

• You form an alliance or joint venture with another company to supply the product or service.

Obviously, the pros and cons of the various methods include speed to market, fit with core competencies, upside revenue and profit potential, asset risk, amount of control over the brand delivery, and the degree to which you are committed to the category in the long term.

Benefits of Brand Extension

Launching new products and services under (or linked to) an existing brand, if done properly, significantly decreases perceived customer risk and increases product/service acceptance, all at a fraction of the cost that it would have taken to launch a new brand. In addition to generating incremental revenue and profit for your brand, brand extensions can be beneficial in the following ways:

• Helping to clarify and broaden brand meaning to consumers. (For instance, extending Hallmark into candy and flowers may help redefine the brand, expanding it from “greeting cards” to “ways to show you care.”)

• Completely diluting brand meaning (if done in great excess with no focus) and overexposing the brand in the marketplace.

Dangers of Extending the Brand into a New Price Segment

One of the biggest dangers is a brand extension that repositions the parent brand in a negative light (like Bayer “aspirin-free” products or Fat-Free Fig Newtons). One of the trickiest extensions is creating a “value” version of the parent brand. Extending your brand up to a premium segment or down to a value segment has the greatest potential for negative impact, as a brand’s quality and value perceptions are often central to its positioning. You don’t want to create the perception that the original brand was overpriced.

Often the best solution is creating a new brand or subbrand. If the market is moving away from your brand’s position, it may be better in the long run, despite the cost, to create a new brand to meet and own the solution to the evolving needs of consumers. This is a more expensive approach with a higher probability of failure and is not a brand extension.

Linking Previously Unlinked Brands

If your company has just acquired another company or is considering entering a strategic alliance with another company, research is required to determine how, if at all, the brands should be linked. For instance, do you cobrand, use a parent brand/subbrand, an endorsed brand, have one brand replace the other, or create a new brand?

To decide the best approach to take, it helps to understand the impact of each branding approach on each of the following:

• The essence, promise, archetype, personality, and positioning of each brand involved

Brand Extensions and Global Branding

If you are in the process of building your brand globally, especially if your brand is in its infancy in some regions or countries, here is something else to watch out for with brand extensions. If a particular extension, especially one less central to the brand’s promise, has a strong presence in a marketplace before you have a chance to establish the brand essence, promise, and core meaning in that marketplace, it could be much more difficult to position the brand correctly. It would be better to withhold that extension from the marketplace until the core brand meaning is established there.

Brand Extension Questions

You should answer these questions as you consider each possible brand extension:

- Do you have or can you acquire the assets and competencies necessary to compete successfully in the new category or segment?

- Have you identified a profitable and robust business model for competing in the new category or segment?

- What type of competitive reaction might you expect as your brand enters the new category or segment?

- Do they matter enough vis-à-vis other (competitive) brands’ benefits to make your brand preferable, at least among some subsegment of the category?

- What impact would entry into the new category have on your brand’s essence, promise, and equity?

Brand Extension Steps

Brand extension work often starts with a brand asset study to identify the most promising avenues for brand extension (see Chapter 17 on Brand Research). This study is often followed by concept development and screening—from a simple “trigger” concept (a brief, several-word concept description, often not even in sentence form) used in focus groups, to “ad form” concepts (more fully developed to look like a full-page print ad, typically with a couple of paragraphs of copy and a visual) tested quantitatively against a normative database. Next steps often include developing business and marketing plans (including pro forma financial statements) for the most promising concepts and then more formal funding reviews and approvals leading to prototyping and eventually market testing.

It is important to pursue brand extensions in a very methodical order so that each extension builds on the previous one. Know where you ultimately want to take the brand, but do it in steps.

Developing Brand Extension Concepts

The concepts must be developed in a standard fashion to allow for comparison. (Do not stack the odds in your favorite concept’s favor by reserving score-enhancing adjectives or superlatives only for that concept.) The ideas should be both “close in” and “far out” to determine brand boundaries and associated risks. They can be trigger concepts (i.e., brief concept descriptions) or take a form that resembles a full-page ad. Visuals often help in communicating the idea. Ideally, the concepts are presented in the context of a competitive set to allow for comparison.

CONCEPT SCREENING

You should compare the brand extension concepts to current offerings in the category (and to a normative database of other previously successful concepts) on the following dimensions:

Many companies offer their own versions of this concept-testing methodology (usually with very large normative databases). At Hallmark, we used methodologies from The Landis Group and Home Testing Institute, but there are many others.

As part of a broader evaluation, there are other important areas to explore when concept screening. They include:

SUCCESSFUL BRAND EXTENSIONS

• Febreze (air fresheners, allergen reducers, additive in other detergent brands)

Question: For each brand, what was the transferable core-brand association that made a successful extension possible?

UNSUCCESSFUL BRAND EXTENSIONS: SOME EXAMPLES

• Bic perfume: How do you leverage the “small disposable pocket items” association?

• Levi’s tailored classic suits: What is Levi’s primary association? (Casual clothes.)

• Campbell spaghetti sauce: Why didn’t “tomato sauce” transfer from Campbell’s soups to spaghetti sauce?

• McDonald’s Arch Deluxe burger (for adults): What is McDonald’s primary association? (Fast food for kids.)

• Volvo 850 GLT sports sedan: What is Volvo’s primary association? (Safety.) What is a Volvo’s primary proof point? (Boxy armored-car styling.)

• Or, my all-time favorite, New Coke: What is Coke? (“It’s the real thing”—with a long time secret formula.)

WILL THESE BRAND EXTENSIONS BE SUCCESSFUL?

• Diesel wines (limited edition wines from Diesel clothing founder Renzo Rosso’s private estate)

The Most Common Problems with Brand Extensions

• Extending into a category in which the brand adds nothing but its identity (i.e., its products or services are not significantly different from current products or services in the category)

• Extending through opportunistic brand licensing without regard to its possible impact on the brand

Evaluating Brand Extension Concepts

Figure15–1 is a rudimentary matrix that I use to focus clients on the most important questions when evaluating opportunities for brand extension. Use each column (category A, B, C, etc.) to evaluate extension of the brand into a different product or service category using the evaluation criteria listed in the first column. The number listed for each criterion is the maximum score for that criterion. The scores for all criteria are additive for each product or service category at the bottom of each column (category A, B, C, etc.) with a maximum possible score of 145. The number of benefits included in the matrix varies by client. For instance, if there are no secondary brand benefits, one can ignore the criteria associated with those benefits, reducing the maximum possible score to 130. Clients can also choose to vary the maximum possible scores for each criterion, altering their relative weightings.

Figure 15–1. Brand extension evaluation matrix.

Generic New Business Strategies

Whether trying to grow your business through brand extension or by launching new brands, the following are generic approaches to creating new businesses:

• Identifying gaps in your product/service portfolio (for the category as currently defined)

When developing your growth strategies, you should clarify whether the growth will come primarily from existing customers, competitors’ customers, or nonusers. The tactics will vary greatly for each.

Now use the checklist in Figure 15–2 to assess the efficacy of your brand management practices in the area covered by this chapter. The more questions to which you can answer “yes,” the better you are doing. The checklist also provides a brief summary of the material covered in the chapter.

Figure 15–2. Checklist: Brand extension.

	YES / NO
Have you identified what your brand owns in the consumer’s mind?	—	—
Have you identified all areas in which the consumer gives your brand permission to operate?	—	—
Do you have a clear understanding of whether your brand is over- or underextended?	—	—
Have you identified all the ways your brand and others in its category have made compromises with the consumer? Have you found ways to redefine your business to break those compromises?	—	—
Have you identified new categories for growth? Can you create new categories that meet previously unmet consumer needs?	—	—
Have you targeted new market segments to which you would like your brand to appeal?	—	—
Have you explored ways to make your brand more relevant to the next generation of consumers?	—	—
Do you know what must be done to ensure the parent brand maintains a relationship with the consumer throughout his or her life (i.e., cradle-to-grave marketing)?	—	—
Do you have a plan that specifies what categories your brand will enter next, in what order it will enter them, and on what time frame?	—	—
Have you considered taking your brand global as an alternative growth strategy to brand extension?	—	—
Do you have a way to screen all new brand extension proposals for their congruence with the brand promise and impact on brand equity?	—	—
Are you sure that the brand’s positive associations will not become negative when associated with a new product category?	—	—
Have you thoroughly researched how proposed brand extensions might reposition the original brand in consumers’ minds?	—	—
Have you considered acquisition as a way to extend the brand?	—	—
Do you have a brand licensing department? Does that department have strict guidelines for licensing your brands out to others, in order to ensure brand image is not hurt and brand meaning is not diluted?	—	—
Have you developed decision criteria to determine whether an extension a) uses an existing brand or b) requires a new brand? And, if you require a new brand, have you decided whether the new brand is c) a subbrand or d) an endorsed brand?	—	—
Do you have organizational mechanisms to screen, test, and launch brand extensions?	—	—
Do you test each new product or service for its impact on your brand’s equity (i.e., quality, value, reinforcement of brand essence, promise, archetype, and personality)?	—	—

Table of Contents for 15 Brand Extension

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15

brand extension

Ways to Extend the Brand

Benefits of Brand Extension

Dangers of Extending the Brand into a New Price Segment

Linking Previously Unlinked Brands

Brand Extensions and Global Branding

Brand Extension Questions

Brand Extension Steps

Developing Brand Extension Concepts

CONCEPT SCREENING

SUCCESSFUL BRAND EXTENSIONS

UNSUCCESSFUL BRAND EXTENSIONS: SOME EXAMPLES

WILL THESE BRAND EXTENSIONS BE SUCCESSFUL?

The Most Common Problems with Brand Extensions

Evaluating Brand Extension Concepts

Generic New Business Strategies

Table of Contents for
15 Brand Extension