Many manufacturers do not understand what makes a brand extension succeed. In some cases, brands are extended just to save the money it takes to establish a new brand. In other instances, companies want to stretch a brand to as many categories as possible in hopes of just adding sales. The starting point for any successful brand extension is researching the consumers’ view of the boundaries and leverage of the brand.
Is the new category a good fit?
The boundaries issue is what we call “Fit.” Research attempts to see which categories consumers will accept for the brand (its stretch-ability). In our research, consumers accepted the concept of Duracell flashlights but not Duracell cameras. Consumers didn’t see Duracell as having photography expertise. These perceptions dictated that Duracell cameras would be at a competitive disadvantage. If a brand does not fit well in a category, it will likely perform poorly or fail.
Do you have any leverage?
A brand has leverage when the distinctive properties that it “owns” lead customers in the new category to perceive the brand extension as superior to existing competitive products. In studies conducted by my company, we have discovered that there is often an inverse relationship between fit and leverage. Brands that consumers will allow to be on a wide range of products have little leverage (own nothing special).
Consumers may think the Betty Crocker brand would be fine on many food product categories. But if that brand brings little strength other than recognition and a general good feeling, it may have little leverage. In contrast, the Philadelphia brand stands for cream cheese. This limits its extendibility but it means that any brand extension where cream cheese is an important ingredient will find the Philadelphia brand to be a strong competitor.
Successful brand extensions are not that easy to identify, develop and position. Just sticking a known name on a new product does not guarantee its success. If it were that easy, companies with national brands would not have so much difficulty launching big new product successes.
Having a great reputation for quality is not enough to launch a brand extension. Hundreds of brands have a great reputation. What is relevant is whether customers in the new target category find some reason to prefer the new brand extension to current offerings.
