Risk vs. Reward: What’s at Stake When You Extend a Brand?

Much has been written about the negatives and risks of brand extension. In reality, a lot of those warnings boil down to scare tactics. If a brand extension is off target or lacks fit and/or leverage, it likely will fail and do little damage. Typically, these misfires die in limited test market.

There can be real damage to the parent brand, however, when too many unrelated brand extensions are launched. Names like Betty Crocker, General Electric and Kraft have been extended profusely. While they have not lost their awareness as household words, the strong associations they once had to specific products and related qualities (e.g. cake mix, light bulbs and cheese) may be diluted.

This is especially dangerous when a brand is used synonymously with a specific product. Brands that are not legally generic but are used that way, such as Kleenex, Scotch (Tape), and Band-Aid should not be extended broadly or they risk losing this valuable quality.

Can a brand be all things to all people? Some like Virgin and Mitsubishi have tried. The few that have succeeded with broad based extensions have a benefit thread running through their products that customers of the respective categories want. Virgin offered value in differentiated services like their airline. The brand’s cola, jeans, vodka, and more flopped.

By contrast, Healthy Choice and Atkins offer the common threads of low fat or low carb in all branded products. It comes back to understanding a brand’s equity and staying focused by knowing what business we are in.