Brand Extensions Many firms have decided to leverage their most valuable asset by introducing a host of new products under their stronge...
Brand Extensions
Many firms have decided to leverage their most valuable asset by introducing a host of new products under their strongest brand names. Most new products are in fact line extensions typically 80 percent to 90 percent in any one year. Moreover, many of the most successful new products, as rated by various sources, are extensions. Among the most successful new product brand extensions in supermarkets in 2008 were Dunkin’ Donuts coffee, Progresso Light soups, and Hormel Compleats microwave meals. Nevertheless, many new products are introduced each year as new brands. The year 2008 also saw the launch of Zyrtec allergy relief medicine, G2 thirst quencher, and Ped Egg foot files.
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ADVANTAGES OF BRAND EXTENSIONS
Two main advantages of brand extensions are that they can facilitate new-product acceptance and provide positive feedback to the parent brand and company.
Improved Odds of New-Product Success Consumers form expectations about a new product based on what they know about the parent brand and the extent to which they feel this information is relevant.
When Sony introduced a new personal computer tailored for multimedia applications, the Vaio, consumers may have felt comfortable with its anticipated performance because of their experience with and knowledge of other Sony products.
By setting up positive expectations, extensions reduce risk. It also may be easier to convince retailers to stock and promote a brand extension because of anticipated increased customer demand.
An introductory campaign for an extension doesn't need to create awareness of both the brand and the new product; it can concentrate on the new product itself.
Extensions can thus reduce launch costs, important given that establishing a new brand name for a consumer packaged good in the U.S. marketplace can cost over $100 million!
Extensions also can avoid the difficulty and expense of coming up with a new name and allow for packaging and labeling efficiency. Similar or identical packages and labels can lower production costs for extensions and, if coordinated properly, provide more prominence in the retail store via a “billboard” effect.
Stouffer’s offers a variety of frozen entrees with identical orange packaging that increases their visibility when they’re stocked together in the freezer.
With a portfolio of brand variants within a product category, consumers who want a change can switch to a different product type without having to leave the brand family.
Positive Feedback Effects Besides facilitating acceptance of new products, brand extensions can provide feedback benefits. They can help to clarify the meaning of a brand and its core values or improve consumer loyalty to the company behind the extension. Through their brand extensions, Crayola means “colorful arts and crafts for kids,”Aunt Jemima means “breakfast foods,” and Weight Watchers means “weight loss and maintenance.”
Line extensions can renew interest and liking for the brand and benefit the parent brand by expanding market coverage. The goal of Kimberly-Clark’s Kleenex unit is to have facial tissue in every room of the home. This philosophy has led to a wide variety of Kleenex facial tissues and packaging, including scented, ultra-soft, and lotion-impregnated tissues; boxes with drawings of dinosaurs and dogs for children’s rooms; colorful, stylish designs to match living room décor; and a “man-sized” box with tissues 50 percent larger than regular Kleenex.
A successful extension may also generate subsequent extensions. During the 1970s and 1980s, Billabong established its brand credibility with the young surfing community as a designer and producer of quality surf apparel. This success permitted it to extend into other youth-oriented areas, such as snowboarding and skateboarding.
DISADVANTAGES OF BRAND EXTENSIONS
On the downside, line extensions may cause the brand name to be less strongly identified with any one product. Al Ries and Jack Trout call this the “line-extension trap.” By linking its brand to mainstream food products such as mashed potatoes, powdered milk, soups, and beverages, Cadbury ran the risk of losing its more specific meaning as a chocolate and candy brand.
Brand dilution occurs when consumers no longer associate a brand with a specific or highly similar set of products and start thinking less of the brand.
If a firm launches extensions consumers deem inappropriate, they may question the integrity of the brand or become confused or even frustrated: Which version of the product is the “right one” for them?
Retailers reject many new products and brands because they don’t have the shelf or display space for them. And the firm itself may become overwhelmed.
The worst possible scenario is for an extension not only to fail, but to harm the parent brand in the process. Fortunately, such events are rare. “Marketing failures,” in which too few consumers were attracted to a brand, are typically much less damaging than “product failures,” in which the brand fundamentally fails to live up to its promise. Even then, product failures dilute brand equity only when the extension is seen as very similar to the parent brand. The Audi 5000 car suffered from a tidal wave of negative publicity and word of mouth in the mid-1980s when it was alleged to have a “sudden acceleration” problem. The adverse publicity spilled over to the 4000 model. But the Quattro was relatively insulated, because it was distanced from the 5000 by its more distinct branding and advertising strategy.
Even if sales of a brand extension are high and meet targets, the revenue may be coming from consumers switching to the extension from existing parent-brand offerings in effect cannibalizing the parent brand. Intra brand shifts in sales may not necessarily be undesirable if they’re a form of preemptive cannibalization. In other words, consumers might have switched to a competing brand instead of the line extension if the extension hadn’t been introduced. Tide laundry detergent maintains the same market share it had 50 years ago because of the sales contributions of its various line extensions—scented and unscented powder, tablet, liquid, and other forms.
One easily overlooked disadvantage of brand extensions is that the firm forgoes the chance to create a new brand with its own unique image and equity. Consider the advantages to Disney of having introduced adult-oriented Touchstone films, to Levi’s of creating casual Dockers pants, and to Black & Decker of introducing high-end DeWALT power tools.
SUCCESS CHARACTERISTICS
Marketers must judge each potential brand extension by how effectively it leverages existing brand equity from the parent brand, as well as how effectively, in turn, it contributes to the parent brand’s equity. Crest Whitestrips leveraged the strong reputation of Crest and dental care to provide reassurance in the teeth whitening arena, while also reinforcing its dental authority image.
Marketers should ask a number of questions in judging the potential success of an extension.
• Does the parent brand have strong equity?
• Is there a strong basis of fit?
• Will the extension have the optimal points-of-parity and points-of-difference?
• How can marketing programs enhance extension equity?
• What implications will the extension have for parent brand equity and profitability?
• How should feedback effects best be managed?
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